Somebody needs to say something, so I guess it will be me.
Though I’m still shocked that realtors and their management are willing to stay this quiet, for this long – their silence is deafening. The disrupters are the only ones doing the talking, and because no one else objects, they are getting away with lies and deceit. The consumers deserve better.
This guy does what Glenn and the rest of them do – constantly reminds the viewer that the standard commission is 6%. If you are selling a median priced home (or higher) in Southern California, and think you have to pay 6%, you haven’t looked very hard. Myself and most other agents are happy to deliver full service for 5% or less.
Rex listings aren’t in the MLS, and they are only making sales with buyers they find themselves. But the highly-motivated buyers – the ones who pay top dollar – work with an agent. Why? Because they like the advantages an agent offers, which include convenience and expertise. Because Rex won’t deal with other agents, it narrows the potential buyer pool. If your house isn’t being offered to the highly-motivated buyers, then your bidding war won’t be as robust, and you will sell for less than you could have if you would have hired me.
The buyers they do attract are unrepresented, and deal with robots. The comfort level of those buyers will be lower, and their offers will be too.
It is a fact that buyers who get little or no representation are more likely to fall out of escrow. It might seem sexy in the beginning to make a deal through a new-fangled disrupter, but only the perfect houses at the perfect price make it through escrow without issues. Seen many of those lately?
He agreed that lousy agents aren’t going to survive, but good agents will. In reality, the disrupters are offering an alternative to the lousy agent – for consumers who are willing to put up with minimum service with the illusion of saving a buck, plod ahead. Great agents deliver maximum service, which results in top-dollar sales for sellers, and the best houses for the buyers.
The disrupters have one thing in common – they want you to think that their automating of the process will deliver the same results, and make selling homes easier and cheaper.
But it takes an expert salesman to get personally involved with creating a bidding-war environment to cause a top-dollar sale for sellers. You don’t get that with disrupters (or lousy agents) who just want to process your paperwork.
These differences need to be clearly identified so consumers can make an informed choice. Get Good Help!
More to come later – I have to go beat a robot out of a sale!
The basic premise that drives the real-estate-selling industry is that agents ‘cooperate’ with each other, which is code for ‘I’ll share my listings with you, and you share your listings with me’. We have a written agreement, and subscribe to the strict code of ethics, of course.
But these days, there just aren’t enough sales to go around.
These has always been an undercurrent of pocket listings and off-market deals. But when the president of one of the largest brokerages in California gets quoted in the L.A. Times like this, it makes you think the whole system is unraveling.
Especially with the promise of vetting the properties, what does he mean? Just the hot buys? The easy sales to keep in-house for the new agents to sell? (upon whom the house makes max $$)
The sellers suffer from less exposure, and buyers have fewer choices. But hey, at least the real-estate-selling business will survive, in some form.
When Barbara Hendrickson’s 90-year-old neighbor needed to sell her Berkeley home, crammed with 40 years’ worth of belongings, Hendrickson, a real estate agent, sold the house for her without putting it on the market.
“She was not up to the task of cleaning out all that stuff,” said Hendrickson, an agent with Red Oak Realty. The off-market sale enabled the neighbor to quickly dispose of the house and move to Baton Rouge to be closer to relatives. The buyers took on the onerous job of clearing out the accumulated furniture and possessions.
In general, selling a house off-market isn’t the best approach, experts say. The California Association of Realtors recommends against it, as do East Bay agents including Hendrickson. But sometimes, as in the case of Hendrickson’s neighbor, there are exceptions.
To be clear, “selling off-market” means not listing the house on the local Multiple Listing Service, and is also described as off-market sales or pocket sales.
Greg should disclose the secret weapon mentioned – because if the new website isn’t substantially better than Zillow, then we are wasting our time and money. His list of features is not impressive, and no one is going to leave Zillow – consumers or agents – unless he has a spectacular idea up his sleeve.
Having our own portal is a good idea and within reach if every agent chips in a few bucks. Are there enough who care? Most will assume it is a duplication of the MLS and not really needed.
But the reason we need it is because having our own portal would help create the ultimate club for agents. Let’s build the portal outside of the N.A.R. and other top-heavy administrative bodies that suck down profits yet provide little if any benefits to agents themselves.
You would think groups like N.A.R., C.A.R., Zillow, big brokerages, etc., provide some structure for the industry, but they don’t. Yes, there are rules, but nobody enforces them. Brokers who are supposed to be supervising their agents will look the other way if it means making more commissions.
We don’t even need rules – an agent’s reputation among their fellow agents is enough to keep them in line. The rule most broken is the sharing of listings with fellow agents, but that’s been abused for so long that most agents don’t remember signing that form when they joined the MLS. We will have to live with single agency (aka dual agency for now), but it is already upon us anyway.
More of the upstart companies are choosing to advertise on radio and TV, and distorting the truth is widespread. If we eliminate all the unnecessary money-grubbing entities, be honest with ourselves and the public about the (no) rules, take the gloves off and fight it out with our fellow agents for the business while cooperating on our own powerful portal, then the best agents would survive – which is ultimately what the consumers deserve.
Thanks daytrip for sending this in – a surprising verdict, and if it wasn’t such a high ticket price, it may not have gone this way:
MSNBC host and former ad exec Donny Deutsch scammed a real estate broker out of a $1.2 million commission in the sale of Deutsch’s $30 million Hamptons home, a Manhattan judge seethes in new court papers.
Justice Charles Ramos says Deutsch’s lawyer was acting on his client’s behalf when Sotheby’s broker Edward Petrie was schemed out of his 4 percent commission, The Post’s Julia Marsh reports.
Petrie had brought a potential buyer, LA hedge funder Howard Marks, by Deutsch’s Tyson Lane home in 2010.
After Deutsch realized he knew Marks, he went behind Petrie’s back and brokered the sale privately to avoid the fee, Petrie claimed.
“This court considers that and refusal to acknowledge [Petrie] as the broker to be marks of dishonesty and greed,” Ramos writes in the Oct. 23 decision awarding Petrie’s employer, Sotheby’s, $1.2 million.
“Both characteristics are particularly unbecoming when exhibited by those blessed with great wealth,” the judge scolds.
A representative for Deutsch says, “Mr. Deutsch is shocked and outraged by this ruling, which is wrong based on law and fact. The ruling was based on the Sotheby’s broker’s contention that Mr. Deutsch agreed to a 4% commission arrangement. This is an outright and absolute lie. There was no such agreement, neither verbal nor written, and internal Sotheby’s email communications confirm this. Mr. Deutsch will vigorously defend his position in court and is very confident this decision will be reversed on appeal.”
Notorious Rob has a series of posts about the new CEO for the National Association of Realtors, and the future of the realtor industry. The interesting part is that the current president of the N.A.R. responded, which only brought up more questions.
The first two posts get into how Bob Goldberg became C.E.O. But the post linked above could be a catalyst for change. Hopefully the N.A.R. folks are listening, and are serious about doing something to help agents!
With so much focus on HGTV real estate shows, it’s inevitable that our marketing will go Hollywood too:
A woman in a red dress twirls with a dark and mysterious man through light-filled hallways. Music flutters and surges in a romantically lit courtyard overlooking the twinkling city. A mischievous coda plays, and then the credits roll.
It’s a classic scene plucked straight from Hollywood. But this eight-minute mini-movie is far from a silver-screen blockbuster. It’s a real estate advertisement for an $8.5-million, 1.5-acre compound in Encino:
Successfully marketing a mansion now requires much more than panning shots from an iPhone or even expensive videos shot by drone. Real estate agents with luxury listings are now experimenting with full-on property movies — films featuring actors, story arcs, scores and Tinseltown-caliber cinematography.
“The classic old-school walking tour of the house is becoming more and more obsolete — with all the content that’s thrown at us these days, it’s hard to hold someone’s attention with that,” said Kristine May, who directed the Encino shoot and owns If I May Films in Woodland Hills. “People get attached to a story, and they want to stick around and see what’s happening.”
So what if the narrative and performances are sometimes more Razzie than Oscar? Real estate agents contend that movies showcase their properties in a way that helps buyers envision themselves there.
Real estate agent Ben Bacal, an early innovator of high-gloss property films, worked with married clients Ori and Nafisa Ayonmike to craft a $20,000 film to market their home in Hollywood.
The Ayonmikes star in a fictional narrative that begins with Ori skulking through the sleek, contemporary rooms of his 5,500-square-foot, five-bedroom estate. In the next 11 minutes, Ori tells Nafisa he wants a divorce, a passionate fight ensues, Ori gets kicked out and Nafisa chucks her massive diamond ring into the pool.
Amid all the high drama, production company Rafiki captures the home’s 20-foot ceilings, high-tech security system, marble fireplaces and tony Hollywood Hills neighborhood. The video of the property listed at $3.65 million has generated nearly 61,000 views since being posted on YouTube last year.
Online video platforms have become a key component in property sales. Some 36% of home buyers used YouTube, Vimeo or another video hosting website in their search last year, despite only 8% of real estate agents using film in their marketing strategies, according to the National Assn. of Realtors.
Bacal posted another movie trailer-esque listing video last year for a Bel-Air property, in which two children develop Ferris Bueller fevers and spend the day playing hooky. The pair splash in their infinity pool, shoot golf balls over the Los Angeles skyline from their lawn, try on outfits in their generous closets and have a puppy delivered by drone.
The 14,230-square-foot spread sold in December for $39 million.
Typically, the filmmaking cost is covered by either listing agents, sellers or both. Movie-style real estate videos can cost anywhere from $5,000 to upward of $30,000 to make, directors estimated.
“With a record number of home buyers out there, this is officially the most competitive, fastest-moving spring housing market in decades,” said Javier Vivas, manager of economic research at realtor.com. “Following a furious start to the season, the median days on market for homes on realtor.com in May is the lowest since the end of the recession, and marks the first time that 1 in 3 homes is selling in under 30 days nationally.”
The median age of properties on realtor.com in May is 60 days, which indicates that properties are selling five days (8%) faster than this time last year, and two days faster than last month.
“The lack of affordable inventory remains a critical issue, particularly for a growing number of first-time home buyers and millennials lining up for starter homes and urban dwellings.”
So where in the U.S. are things the craziest—those places where homes fly off the market the fastest, and buyers are up all hours, clicking on listings? When we pulled together this month’s list of the hottest markets in the country, the top markets were a one-two punch for the Bay Area, with San Francisco (including nearby Oakland and Hayward) at No. 2 and Vallejo, just to the north, at No. 1.
I don’t think a faster-moving market is crazy – instead, the tight inventories have caused us to naturally evolve to quicker pace. It’s not just the buyers – agents, lenders, appraisers, and inspectors all move faster now, and you could say, ‘it’s about time’.
Words like ‘craziest’ are just headline porn – the market evolution is on track.
Is there a potential benefit to slowing it down?
Agents dig the face pace – buyers and sellers have less time to think, and deals close quicker so we can get on to the next one.
How would sellers and buyers benefit from slowing down the process, and how could it happen?
Imagine if we eliminated the ‘Coming Soon’, ‘Sold Before Processing’, and other ways that agents wrongly tilt the table. Instead, we adopt an industry-wide standard process for selling homes so everyone has a crack at buying each house. After all, shouldn’t that be in place already?
If everyone knew that the seller would pick the buyer on Friday afternoon (or some other deadline), then we’d have an open, honest, and predictable marketplace. If we added a open bidding process at the deadline, the resulting transparency would help even more.
The frantic running-around today is from agents abusing the system, which causes buyers to pull their hair out every time they lose a property unfairly. They are determined to get the next one, no matter the cost, because they abhor the way they are treated.
You could say that the realtors’ unethical behavior that has helped to create the frenzy does benefit the sellers. Most will say that as long as sellers benefit, then all is good.
But is it a long-term solution?
We will eventually run out of buyers who are willing to put up with this environment. Then what, another dip? Great.
The conversion to The Slow-Down Plan outlined above (adopting a industry-wide process for selling homes) is our soft landing. If we continue at a break-neck speed with no solution in sight, won’t we crash….again?
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