The internet has magnified our quest for instant gratification.
In real estate, the internet helps to stir up a frenzy by allowing a potential home buyer to search for an attractive property – and when they see a hot one, they’ll look into it. But by the time they react, it’s already sold. Buyers learn to react faster and faster, and after missing one or two good ones they’re on the edge of their seat, checking for new meat every few minutes!
Here’s more:
The transparency your describing Jim hit the computer industry 10 years ago. Those that embraced open source tools and ideas were shunned and laughed at first. But over time open source ideas have proven that they’re the way to go. The people that initially shunned and laughed at the open source defenders either quickly got themselves in line with the changes taking place or they aren’t around anymore.
BTW, Your idea of putting videos on the MLS is great.
Here’s another idea. How about creating a type of “Home Sellers Clearing House” Here’s how it would work.
1. Home seller wants to sell their house
2. Home seller goes to a website who takes all the important info and signs an exclusivity agreement for X amount of days.
3. The website shops the home seller info to realtors looking for a listing.
4. Realtors submit an offer for what they think they can sell the house for and how long they think it will take to sell.
Here’s the twist…
5. Realtors also put Money into an escrow account (say $3000) if the house doesn’t sell at the contracted amount and the the contracted amount of time the Seller and the website split the money in the escrow account.
This puts realtor “skin in the game” forcing realistic pricing that is designed to sell fast and most likely create bidding wars.
It’s true. When the information is available to everyone at the same time, of course you’re going to get a crowd. I have a feeling a lot of these offers are coming from the same crowd of surfers with their fistfuls of cash from selling around the right time.
Same idea as our ADD media. We’re getting scared by crimes happening hundreds or even thousands of miles away in a nation of 300 million people. I am so glad I missed that shiny balloon on TV, the third time I heard an “update” on radio, I changed the station.
shadash,
Your 1-4 package sounds like homegain, but usually it’s the sellers who want to start high and loiter – the #5 point would have trouble finding an audience.
Imagine how the instant gratification of the internet comes back to haunt virtually every seller. They see a big rush of buyers the first couple of days, and think, “Wow, wait until we do this for a couple of months!”
But after Day 4 the listing goes stale, and two weeks later they’re sitting around wondering what happened.
Senior,
Give me one chocolate double dip taco and one fried escrow company… Please include video.
Adios.
Hey Jim. Thanks for the kind words. You are correct all around.
The problem with frenzy is that it isn’t sustainable. It also gives a false indication of market demand. Houses with 30 offers are often the same pool of 80-100 investors, flippers and buyers trying to make the deal. They’ll evaporate at the first sign of price increase or interest rate or whatever.
“#5 point would have trouble finding an audience.”
Depends on who’s playing. If banks decided to sell properties this way it would work. If you hold the cards you choose the game.
It would also work great for nice houses in nice areas with lots of demand. Everyone knows those houses will sell quick if the price is right.
You made a lot of good points on the video… but that drive… whoo-eee, I was getting carsick just watching.
Imagine a world that we in engineering called whiteboard. The person with the “problem” posts up the particulars. The people with the expertise bid on the solution. Brokers openly revealing their proposed charges and conditions? Oh the humanity!
“I can sell that house in 60 days at a list price of $649,000 and will charge the seller side NTE $18,459. Sale in excess of $649k will devolve 90/10 twixt seller and broker. Seller required to post $800 non-refundable initiation of services fee.”
Internet tools and videos are great tools, but I don’t think they will ever substitute for having boots on the ground.
As a seller, I would be suspicious of someone who made an offer solely based on what they saw on the internet, especially if the offer was contingent on an inspection.
Whether or not Shadash’s specific idea would work is less important than the underlying theme of making sure the realtor has skin in the game, and therefore I like it. The lack of regulation in the real estate business is mind boggling to me.
Jim, I like your thinking on doing videos for out-of-towners. You’re a man who understands his marketplace and is savvy enough to capitalize. As for people buying homes without seeing them in person . . . mmmph, I hope that works out for them.
Shadash – I’ll bet you’re using firefox or chrome on some obscure linux build, with cvs open somewhere on your desktop. This is the last place I expected to see talk of open source. There is extremely little that is open source in my industry, but then again IP sometimes seems like more of a commodity than the end product.
It’s not ever a good idea to buy into a frenzied market. Great for sellers though.
Yesterday toured 7 properties listed for sale in RSF, at price points at the lower end of the scale for that area. No frenzy there. Listing brokers were surprisingly frank of the current state of the market in RSF and a three of them opened up saying that the short term outlook, (appx. 6 months),looks bleak.From my amateur perspective, sellers there are still living in 2006 and some are outright delusional.
Rob Dawg,
It’s called Yahoo answers and it’s free. Half the time the answer is “Yes, you should break up with her.” Payment is handed out in the form of virtual thanks you accumulate in points. Which can never be spent.
Putting an ante that you lose if you don’t sell the house would really put such a market in a niche. It perversely rewards sellers who lie to their realtors about critical defects so they don’t get passed over and make a quick $3000 if their broken house isn’t sold. “Oh I didn’t know” is never going to be tested in court, let alone arbitration.
It also forces the realtor to make decisions against the seller’s interests (and even wishes!) because of arbitrary deadlines and incentives. For example, the realtor would gladly take the worst offer over the best offer if the worst offer makes the cutoff and the best offer misses it by 1 day. Seller be screwed, it’s in the contract and if the seller balks the contract would be easily ruled unenforceable in court. Same if the buyer is buying contingent – even in good faith with a deal 80% likely to go through. The realtor can’t risk $3000 on that chance and would choose another offer even if the seller doesn’t want to. If the seller doesn’t go along, again either the realtor is off the hook or the contract would be unenforceable. At all points in time, the realtor is helpless but to act against the seller’s interests.
The same phenomenon happens if people are forced to shred brand new cars that run 21 mpg and buy a car that runs 22 mpg because of a new government regulation. Just an extreme example.
I’ve been enjoying Redfin’s iPhone app lately. It’s still just one tool of many, but as we become always on-line over the next few years, we’ll be relying more and more on such tools. I think these tools will expand and evolve at an exponential rate, and home shoppers will be much more well informed nearly instantly.
While I embrace the Internet for many reason, It would be used by some as another way to disguise the snake oil. WYSIWYG is not always true because GIGO.
Genius,
I run CentOS 5.3 as it’s packed with yum. I try to keep my system as default as possible. (default = Less problems)
For store bought laptops/PC, the first thing I do, is blow away everything and reinstall the OS and necessary drivers 😀
The popularity of Internet-based realty companies like ZipRealty and Redfin demonstrate the power of the Internet in bringing data directly to your desktop, laptop, or mobile device. I first got hooked on Zip, because it was the original one-stop shop for multi-media information on real estate. The combination of MLS photos, Google maps, aerial view, Bird’s-Eye views, and StreetView allow virtual flyovers and drives of almost any area. These tools are invaluable, and work especially well for areas which you are very familiar.
In cases where a buyer has already predetermined their area the only thing missing is a video tour inside the house. This is where I think Jim’s service provides the missing essential component. An on-site video with honest commentary can provide the pre-qualified buyer with direct eyes-on observation as remotely viewed through a surrogate (wow, sounds like science fiction). Of course, this requires an element of trust between the buyer and their agent.
Obviously, at some point the buyer will need to see the house firsthand, probably during the inspection period; but friends and/or family in the area can also vet a property beforehand. I’m comfortable with Internet realty, though for me it only works well with areas I know well. Heck, people buy automobiles on eBay (my uncle bought a Studebaker that way), and I heard Jim Cramer say that Florida is selling foreclosures on eBay.
So, it looks to me like the Internet holds the future for some (maybe large) aspect of real estate. Of course, that’s just my opinion. I could be wrong.
The other benefit of buying from a video online, is the buyer can’t be subconsciously turned off by their sense of smell. The place doesn’t have to smell bad, just incompatible, and that goes right to the lizard brain, which is tough to overcome intellectually.