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Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Jim Klinge
Cell/Text: (858) 997-3801
klingerealty@gmail.com
701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011


Category Archive: ‘Realtors Talking Shop’

“The business model is flawed”

They charge even less in America, and you need good help to handle the load:

“Broke” real estate agents are quitting British disrupter Purplebricks in droves as the fixed-fee agency’s low-margin, high-turnover business struggles to achieve enough sales amid a slowing Australian housing market.

Research by The Australian Financial Review found at least 27 agents had quit Purplebricks Australia since March with overall agent numbers now down to 88 from 105 reported by the company in October when it filed its British interim results.

Purplebricks territory owners (franchisees) and agents, who spoke to the Financial Review, said they were struggling to make a living and were preparing exit paths after the $100,000 to $180,000-a-year salaries they were told they could earn failed to materialise.

Employment contracts show Australian agents earn just over $1000 out of the $5000 to $6000 upfront fee vendors pay when they list with the Purplebricks.

Internal sales figures obtained by the Financial Review for NSW – where the market has slowed the most – paint a picture of struggle for many.

They show that 15 agents undertook a combined 768 home appraisals between February and April, but have so far secured just 189 listings between them

While two of these agents have 72 instructions between them, the remaining agents have won between zero and 18 new listings each over the three-month period.

“The concept is brilliant, but the business model is wrong for Australia,” said former Purplebricks Newcastle agent Steve Bashford, who quit in May. “There is a big difference between what they promised us and what we achieved.”

Many other current agents and franchisees, who asked not to be named, made similar observations.

“There’s no money in it. The business model is flawed,” said a current franchisee.

“I’ve sold 50 properties in 18 months and I’m broke,” said another agent who recently quit.

Apart from the $1000 instruction fee, agents can earn additional fees if a customer arranges a Purplebricks home viewing or signs up for a mortgage with one of its partners.

However, much of this additional income has vanished as franchisees have had to hire and pay sales assistants to help clear the backlog of listings.

In addition, agents told the Financial Review, Purplebricks clawed back money from them if a customer complained and obtained a refund.

They also said the company had been “turning off postcodes” in places such as Sydney’s eastern suburbs without notice as agents battled to manage their ever-growing number of unsold listings.

According to its Australian website, since launching in September 2016, Purplebricks has secured more than 5200 listings and sold more than 3600 homes. It currently has 1563 properties for sale.

It reported a £5.1 million loss from its heavily marketed Australian business for the six months to the end of October 2017.

Read More

Posted by on Aug 11, 2018 in Jim's Take on the Market, Listing Agent Practices, Market Conditions, Realtor, Realtors Talking Shop | 1 comment

Real Estate Disruption

The idea of disrupting realtors has been around for years, but now several companies, backed with mega-millions in VC money, are making a dent.  They may not be taking a lot of the business away (yet), but they are being noticed.

It appears some of the big brokerages might be starting to feel it:

http://www.notorious-rob.com/2018/07/stages-of-decline-the-keller-williams-edition/

KW isn’t going anywhere – they have 180,000 agents.

But there is an underlying threat, real or imagined, that the entire real estate industry will be upended by technology that could change everything.

From the link above:

Zillow spent $320 million in 2017 on Technology and Development. In 2016, they spent $255 million on Technology. Over the past five years, from 2013 to 2017, Zillow spent a total of $893 million on Technology and Development with significantly more than 200 people who touch code.

The mom and pop brokerages are getting smashed by this tech steamroller.

Combine the tech advances with higher home prices and fewer sales, and we have a toxic blend for the old-fashioned veteran agents.  Many are getting out of the business, and others are left wondering what happened.

Realtors who plan to get out of the business in the next couple of years will just ride it out.  But those in for the long haul need to buck up.

If your not moving forward, your going backwards.

Nothing stays the same.

Posted by on Jul 20, 2018 in Jim's Take on the Market, Realtor, Realtors Talking Shop | 7 comments

Turbulence


https://twitter.com/bradInman/status/1011730002570719232

For an industry that has been stagnant and mostly unaffected by disintermediation/disruption over the last couple of decades, you get the feeling that change might be afoot now.

It’s asking a lot, but what we really need is transparency.

We are at the fork-in-the-road where agents and consumers alike want and need to choose between the traditional model of selling homes, or one of the newfangled disrupter ways.

But the services being offered are blurry.  The disrupters call themselves realtors, and say they provide the same full service.  Big teams say because they’ve sold so many homes that their way is the best.  Individual agents get caught in the middle somewhere.

If every agent described exactly what they do to earn their fee, then at least the consumers might be able to compare apples-to-apples.

Every agent has their 100-point marketing plan, a fabulous support team, and is in the Top 1%.  Let’s go beyond those basics.

To make it easier for consumers, let’s boil it down to the most important part of the equation – what is the one critical question to ask an agent?

‘Who and where are you at the point of sale?’

The frenzy has simmered down, and we’re back to the regular hand-to-hand real estate combat in the streets.  This is when buyers and sellers need real and effective guidance on when to make the deal.

If you choose a discounter, inexperienced agent, or get stuck with an assistant, you will get a tepid response.  Their lack of experience at guiding you to make the right decision when everything is on the line will cause them to be conservative, and not commit.  You will be left to your own devices.

When you choose a great agent, he delivers facts and opinions for you to use to make the right decision on the spot – that is real guidance.

This is where consumers need the real help, but the industry fails miserably because when you need us most, we’re not there.  We don’t insist on having top-quality help in place at crunchtime.

It hasn’t mattered in the full-blown frenzy – buyers just pay the price or higher, and everyone is happy.  You don’t need much help then.

But now that sales are receeding, and more homes are lying around not selling, real help is needed to figure out what to do.

Sellers are always prone to add a little mustard to their price, and without proper guidance on when to accept a lower offer or when to reduce their price, they can miss the selling window and chase the market down.  Buyers can pay too much and regret it later, or not enough and miss out on a good match.

Get Good Help!

Posted by on Jun 27, 2018 in Jim's Take on the Market, Listing Agent Practices, Market Conditions, Realtor, Realtor Training, Realtors Talking Shop | 2 comments

FTC and DOJ Realtor Workshop

The FTC and DOJ conducted a workshop this week about the competitiveness in real estate.  There hasn’t been much press coverage, but Rob has summed up the bulk of it here:

Link to Rob’s Blog

The actual proceedings can be seen here on the FTC Facebook page:

Link to FTC FB

In San Diego County, you can’t say there isn’t enough competition.

There are around 20,000 realtors, and last month we only sold 3,288 houses and condos!  You can list your home for sale on the MLS for as little as $95, and every agent offers their own service/commission package for the consumers who are willing to shop around.

The main beefs:

  1. Commissions aren’t disclosed.  The realtor community will fight hard to keep the actual amount of our commissions private, but it’s not that big of a deal.  The buyer-agent commission is disclosed in every MLS listing, so it’s just the seller-side – which is disclosed, and agreed to, by the most important person – the seller!  But if they were disclosed to the general public, we’d probably find that there isn’t as much difference between traditional and discount agents as we thought.
  2. Commissions haven’t changed with higher pricing. An ivory-tower professor ranted on and on about this topic, and cited two ancient studies of other industries that weren’t applicable. She needs to do a current study of actual commissions taken from the closing statements for accurate comparisons.
  3. Decouple the commissions, and have the buyers pay their own agent.  While this sounds like a great way to lower the buyer-side commission in theory, it ignores two critical facts.  A) Sellers are offering a reward, or bounty, to buyer-agents to sell their home, and should have every right to do that, and B) the likelihood of an agent being able to steer a buyer towards a home just because of a higher commission is extremely remote.  If the FTC didn’t agree, then publicly displaying the buyer-side commission could help, and allowing rebates pretty much covers it – no other change needed.

What wasn’t covered:

A. What you get for the money.  If the FTC and DOJ wanted to impose one thing to help the consumer, it would be requiring that every agent publish the exact services they provide for the money, and their actual recent experience in selling homes.  Realtors have fought every attempt at publishing the sales history of individual agents, but have somehow allowed Zillow to do it openly.  I think it’s time that consumers know the truth.

B. Enforcing the rules.  With no enforcement, there are no rules.  The FTC and DOJ could at least publish their opinions on pocket listings so agents know what is legal, and what’s not.

A couple of people mentioned that they should do another workshop with actual realtors working the street.  I’m available!

Posted by on Jun 7, 2018 in Ethics, Jim's Take on the Market, Listing Agent Practices, Realtor, Realtors Talking Shop | 0 comments

‘Litter On A Stick’

We won’t police ourselves, so…..

Hat tip to SM for sending this in:

Link to Article

Jerry Del Mauro hoped to score a $1.4 million sale last month when he staged an open house near the water in Huntington Beach.

Instead of a sale, the Re/Max agent got a $2,750 fine for putting out too many open house signs.

Del Mauro said he had no choice. The house sat on an island at the end of a semi-desolate street almost 2 miles from the nearest traffic light. To guide buyers to his open house, he put out some 18 signs — 11 more than the city typically allows.

A city code enforcement officer spotted the signs and issued a citation, fining him $250 per “excessive” sign.

“These open house sign laws are getting out of control,” said one of the 140 comments on Del Mauro’s Facebook post following the citation.

City officials are “Nazi Sign Police,” another commenter said, and a third called the citation “a Communist joke.”

The case is one of the more extreme examples of ongoing tensions between real estate agents and city officials throughout the region – and across the country.

On the other side of the controversy are city employees who have been inundated with citizen complaints about the virtual forests of open house signs sprouting up on corners, median strips and curbside over the past three years, fueled by a frenzied housing market.

“We have received pushback from residents,” Huntington Beach code enforcement Supervisor Rich Massi said in an email. “A few Realtors … started to blanket the city with open house signs at various locations, which created a nuisance and blight.”

Massi said several other agents also have been cited for violating city sign policies, with fines ranging from $250 to $3,000.

Similar tensions have cropped up in cities throughout the region, and across the country.

“We are being bombarded, and Realtors aren’t taking their signs down,” said Lula Davis-Holmes, a Carson councilwoman for 11 years. “It became an eyesore. And it became a public safety issue.”

In February, a Tulsa, Okla., city councilman called all temporary signs — including open house placards — “litter on a stick” and sought to have them banned on public rights of way, the Tulsa World reported.

Davis-Holmes called open house signs antiquated in the internet age, questioning why agents even bother to hold open houses.

“My impression from real estate agents is those signs attract more lookie-loos than actual buyers,” she said.

But Kissinger, the South Bay Realtor official, said they may be antiquated, but signs remain the most effective way to draw buyers to an open house.

Posted by on Jun 1, 2018 in Jim's Take on the Market, Open House, Realtor, Realtors Talking Shop | 11 comments

Ethics and ‘Sold Before Processing’

The selling of listings prior to MLS input has happened since the beginning, but in the era of inventory desperation, we’re now seeing companies openly advertising ‘previews’ of their listings before they put them on the MLS.  Before long, the MLS will just become the market of last resort, much like Loopnet is for the commercial brokers.

Home sellers expect and deserve open-market exposure, but nobody in the business wants to give up the hope of double-ending a commission, or making a quick deal and moving on to the next.  Many of these off-market deals involve an outside buyer’s agent, which is really mind-boggling that listing agents are so lazy that they are willing to compromise their fiduciary duty to their own seller just to make a quick buck.

Frankly, this issue is only going to get worse.  Redfin (dozens of times) and other disrupters are doing it too, and we are heading towards having only one agent per sale – which sounds efficient, but will sellers get full exposure?

 

Here’s a solution for those agents who insist on doing it, and a way to ease into a more-ethical era (hopefully):

DON’T PUT THEM IN THE MLS – EVER.

For agents who say that they have to input their listings per the rules, give me a break. You already broke all the other rules, don’t go holy roller on me now.

Here are the benefits of not inputting your off-market sales onto the MLS:

  1. Other agents won’t have to explain to their waiting buyers why they didn’t get a chance to make an offer.
  2. Other agents won’t think you’re a sleazebag.
  3. Other agents won’t be encouraged to do it too.
  4. You won’t leave a trail of evidence for the district attorney.
  5. Help preserve the MLS and our business.

How bad is it? An agent who sells 100+ homes per year recently told me that half of their listings sell before MLS-input!

Did you have special circumstances that required an off-market sale, and you insist on MLS input? No problem – mention the special circumstances in the remarks so others don’t jump to their own conclusions.  But special circumstances are rare – most common and unsuspecting residential home sellers deserve open-market exposure.

We’d like to believe that realtors are ethical – heck, we have a Code of Ethics!  But when tempted to make a quick and sexy off-market deal, most agents can’t resist, even if it’s not in their sellers’ best interest.  I’m convinced that the vast majority of agents don’t even know the difference.

Posted by on May 30, 2018 in Auctions, Ethics, Jim's Take on the Market, Realtor, Realtors Talking Shop | 3 comments

The Trojan Horse of Real Estate Sales

What never gets mentioned is that every realtor has signed an agreement to share their listings with one another.  This is how realtors are destroying the industry from within – because we foster the illusion of having a cooperative MLS but are happy to deprive our own sellers of open-market exposure in hopes of making two commissions. 

The practice is so common that I don’t think realtors give a second thought to upholding their fiduciary duty to their own client, the seller:

Pacific Union International, California’s second-largest residential real estate broker by volume, is launching a new service this week that will give the public a peek at its “off-MLS listings,” meaning homes for sale that aren’t on a Multiple Listing Service.

It’s the latest in a growing number of ways home sellers can test the market — and maybe get an offer — before embarking on a full-on marketing campaign.

Putting a home on the MLS is usually the best way to get top dollar because it provides the greatest possible exposure. But in a red-hot market, some sellers figure they can bypass the MLS — and the real estate websites that repost their listings for the whole world to see.

Currently, agents circulate these “off-MLS” or “pocket” listings inside their firm and with other agents through Facebook groups or email lists. Some share them with groups such as Top Agent Network or Marin Platinum, which restrict their membership to high-volume agents.

Instead of holding a public open house — with strangers and neighbors traipsing through — agents arrange private showings.

Pacific Union estimates that 20 percent of its home sales in the Bay Area and 30 percent in Los Angeles last year closed without appearing on the MLS.

Mark McLaughlin, Pacific Union CEO, says Private View will help buyers and sellers by giving greater access to his firm’s off-MLS listings: “We are taking secrets in our filing cabinet and exposing them to the public.” He agreed that the MLS provides “maximum exposure,” but for clients who don’t want that, this is “an incredible” alternative.

“Once we get critical mass, I think more sellers will be part of this,” Segal said.

In a market starved for inventory, that may not be welcome news.

Pocket listings have always been used, mainly by celebrities and people selling extravagant homes that only a few could afford. But their use in California has grown since 2013, as the housing market rebounded and bidding wars broke out.

“As inventory goes down, off-MLS practices go up,” said Jim Harrison, president and CEO of MLSListings, the listing service for Santa Clara, San Mateo, Santa Cruz, Monterey and San Benito counties.

He estimates that 21.6 percent of all homes sold in those counties in the first quarter did not hit the MLS before they closed. That compares with 12.6 percent in the first quarter of 2012. (Many agents enter a sale into the MLS after it has closed to help establish comparable prices for an area).

The California Association of Realtors discourages pocket listings. In a 2013 press release, it said most sellers want the highest possible price from a well-qualified buyer, and the best way to get that, the association said, is to put the home into the MLS.

Most Multiple Listing Services are owned by local Realtors associations. Agents who join an MLS generally must post homes on the MLS within a few days of signing a listing agreement, unless the seller signs a waiver.

Every member of an MLS has access to those listings. They also go out to real estate websites such as Zillow and Redfin.

Pocket listings can lead to ethical, antitrust and fair-housing issues, the state Realtors association said in 2013.

Sellers typically pay a commission to their agent, who shares the commission with the buyer’s agent. In pocket listings, it’s easier for agents to keep the entire commission to themselves, or within their brokerage firm or a small network of outside agents.

Agents say there are many reasons to keep a home off the MLS, at least temporarily.

“My preferred way is to market heavily off-market for a week or two, and then go onto the MLS,” said Cathy Youngling, an agent with Paragon Real Estate Group of San Francisco. That way “I have built a level of excitement and enthusiasm” before the “time on market” clock starts ticking.

Link to Full Article

Posted by on May 24, 2018 in Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training, Realtors Talking Shop | 12 comments

“Losing Steam”

The real estate business has been too easy the last few years, and it appears a tougher market is coming, which will help weed out the agents.  Unfortunately, downturns don’t discriminate – a slower market will cause the retirements of realtors young and old, of every age, and every color.  Be happy it lasted as long as it did, and you made the best of it.  I hope we all make it!

But let’s deal with the reality – we can handle the truth:

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Apparently, this is a topic that draws interest.  When first mentioned on Monday, we had the highest readership of the year:

P.S. The 60,949 is the # of comments over the years – thanks for being here!

Posted by on Apr 17, 2018 in Jim's Take on the Market, Market Buzz, Market Conditions, Realtor, Realtors Talking Shop | 5 comments

Logo To Lead Us

This ought to fix everything!

The REALTOR® brand represents the organization’s unique role and heritage in shaping the real estate industry over its 100-year history, where it has built tremendous brand equity among its members, partners and property buyers and sellers. But after 45 years, even an iconic brand needs an evolution to better represent our multi-faceted members and REALTOR® organization.

Evolving the REALTOR® logo required keeping the equity and recognition of the current bold, powerful and trusted trademark, while modernizing it to meet the realities of today’s marketplace and digital distribution. It also signals where the organization is headed and how it will continue to lead the real estate industry in the years ahead.

Technology, shifting market conditions and consumers are reshaping the real estate industry at a breakneck pace; and when I became NAR’s CEO last fall, I vowed to lead the association into the future and ensure that our members can compete and thrive in a dynamic marketplace. The new brand embodies the association’s rich history, but better reflects our forward-thinking focus and how we’ll stay ahead of industry evolution and disruption and continue to lead the real estate industry in the years ahead.

– NAR CEO Bob Goldberg

Posted by on Apr 9, 2018 in Jim's Take on the Market, Realtor, Realtors Talking Shop | 1 comment

Get Good Help

They had the big meet-up in the desert – where a ‘cohort of startup entrepreneurs; disruptive company founders; top-producing practitioners; owners of brokerages big and small; coaches; executives across new and old franchisors; MLS and association leaders; big data experts; and technology giants’ got together to discuss the future of real estate selling business.

These articles are typically behind a paywall, but here’s the link in case they excluded it and want to reach everyone:

Link to Inman Article

The goals they set out are about what you would expect – simplify the home buying and selling process, be more transparent, enforce ethical standards, insist on diversity, etc.

What wasn’t mentioned was educating the consumer on how to hire the best agent for you.  The associations of realtors, big brokerages and other industry types leave it up to the individual agents to do their own advertising, so all you hear about is how great we are just because we listed or sold another house.

Or maybe no one in the industry wants the truth to be told.

This is an excerpt from someone in the comment section:

My firm analyzes MLSs across the entire country, with coverage of 95% of all residential resale transactions and nearly 1.4 Million member agents. In calendar year 2017, these were the grim production statistics:  Only 65.4% of MLS member agents closed 1 or more transactions annually. (About one-third of agents did not sell a home in 2017).

Of the active agents, consider that:

  1. The median count of closed transactions annually was only two.
  2. The average of closed transactions annually was 8.8.
  3. The top 1% of active agents (or teams) closed 13.4% of all sales volume.
  4. The bottom 50% of active agents closed only 11.1% of all sales volume.

The consumers get blamed for not investigating their choices more carefully when selecting an agent, but they aren’t getting much help.  When was the last time you heard a realtor team or company suggest that you should review an agent’s sales history to learn more about their ability to help you?  Or do anything to educate the consumer on how critical it is to Get Good Help?

Posted by on Apr 2, 2018 in Jim's Take on the Market, Listing Agent Practices, Realtor, Realtors Talking Shop, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 8 comments