John Paulson was an interesting figure in the whole SEC vs Goldman Sachs stink-eye contest, which ultimately ended up with Goldman getting slapped on the wrist with a fine and restitution to damaged investors for ‘making a mistake‘.  Looks like J-Paul managed to stay out of range of any collateral damage and made billions by helping build the elegant piece of financial engineering that enabled Goldman to make their ‘mistake’…directly contributing to the housing bubble and subsequent *pop*.

Former Treasury secretary and Goldman Sachs exec Henry ‘Hank’ Paulson (of no relation to John) donned his 20/20 hindsight glasses for the Financial Crisis Inquiry Commission.  Too bad he didn’t practice what he preached while he was in the middle of it all…

Ben Bernanke the Federal Reserve Chairman warned about warning of pending warnings as to what the Feds future economic policy changes may look like.  This ‘no surprises’ strategy is intended not to spook investors and/or cause knee jerk reactions.  Unfortunately well prepped domestic policy changes wont do much to reduce the anxiety of investors as global headline news continues to cause such spooky, knee-jerk reactions…but thanks for the warning ahead of the warnings about your read and react strategy Ben.

More in line with the real estate (and mortgage) markets proper, I started a series about how some real innovation was required in the aspects of business and cost modeling for the industry’s to change in meaningful ways.  New sexy search UI’s and social media are fun and all but they do little to address the core problems at hand.  Beauty is only skin deep and the insides of these industries are nothing short of fugly.

Politics tend to get in the way of meaningful change when it comes to the real estate industry, evidenced by the strong aversion from real estate professionals to offering consumers a peek into their professional track records or ‘report card‘.  The Houston Association of Realtors (HAR) launched an Agent match product that was by most accounts very benign in regards to the information being displayed for public consumption.  Nonetheless they had to take the product down within 48 hours of its official launch because inmates run the asylum in real estate-land.  Thats sad.  I applaud Bob Hale of HAR for having the guts to push for this type of initiative and believe he is 100% correct when stating: ‘It will happen outside of the industry, and everybody will be mad’.

Another Captain Obvious moment- Alan Greenspan.  The former Fed Chairman really stepped out on a limb recently by prognosticating that another dip in home prices could cause a double-dip in the overall economy.  Never mind that no one can agree on what really constitues a double dip recession, outside of the notion that the economy shrinks, then grows, then shrinks again, then…doesn’t the economy do this all the time?  Double dip, W-shaped, recession, depression, correction…all economic semantics for:  Our economy is going nowhere fast with long term issues like high unemployment, shadow inventory and mortgage underwriting standards so tight you couldn’t pull a pin out of a lenders ass with a John Deere tractor…

——————————————–

All real estate, economics and the unimportant aspects of life aside-

A dear friend, peer and overall great human being passed away last evening.  Joe Ferrara may have lost his battle with cancer but he won the hearts and minds of countless people through his unselfish nature and consistent nurture.  While I mourn your death, I celebrate your life.  Rest in peace Joe…

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Honest Mistakes, 20/20 Hindsight, No Surprises, Real Innovation and Double Dip ‘Psycho-Semantics’

I decided to present on ‘3 Strategies to Futureproof Your Business’…hoping the cliche-ish title would draw in a few extra attendees.  During my discussion group disguised as a presentation, I spat off a myriad of names of businesses, vendors, websites, and applications that would assist in such ‘Futureproofing’, which I promised to put online for reference.

So, here’s Part 1 of a very general recap of the three ’strategies’ with links to the resources intertwined the best I could.  Actually I’m going to break this into 3 posts rather than cram a 4000 word mini-novel and worry about your head hitting the keyboard as you zone out or pass out…

Strategy #1- Establish Your Blogsite as the Hub of Your Marketing Efforts.

We start at the top of the funnel with Marketing.  REBarCamps are dominated by Social Media presentations since thats what most agents who attend Bar Camps are interested in learning more about.  Give em what they want.

**Disclaimer:  I am not in any way compensated by any company mentioned in this article, outside of the occasional drink…

A Blogsite or Hubsite or content management system (CMS) is an extensible website, one that can be dynamically changed to reflect the current look, feel and opinion of its main proprietor.  Architected thoughtfully, built by a quality engineer using the right parts, a blogsite can be developed into the hub of a potent interactive marketing ecosystem.

Wordpress is the de facto CMS for the real estate and mortgage industries due to the sheer amount of developer support for the open source platform, specifically in the real estate arena.  Yes, you can DIY depending on how how well you understand what is effectively a second language and how much time you have.  In most cases working with a professional will yield far better results far quicker.  I’ve seen the work and know the principles of  Dakno, Real Estate Tomato and Virtual Results, all are well versed in working with Wordpress and Real Estate/Mortgage professionals.

Whatever provider you decide to use, keep your hubsite as aesthetically clean and simple as possible…less is generally more.  You can implement anything below in a well organized, uncluttered manner…take time to funnel and categorize your content thoughtfully.  75 buttons and links and other bling-flair flashing on every single page is more often a distraction than a call to action.

CMS’s with sound interactive marketing (Social Media) strategies should contain some flavor of the following:

Opinion- Have one, please.  Although we’re talking about content management systems and strategies, people don’t hanker for ‘content’.  You’re going to upset 50% of the crowd most of the time so get used to trolls and other nill wishing folks when you actually form and articulate an argument instead of regurgitate what the talking head on the TV said.

Listings- Listings used to be #1 in importance but the industry has evolved to where they are almost ubiquitous.  Its not if you show all the listings and accompanying information anymore, its how and how to get found because of them.  The how resides in User Experience which is paramount to an effective IDX solution.  Certain IDX providers (like Diverse Solutions) include an ‘Indexable‘ option where listings are converted to SE friendly content which creates organic traffic to your hubsite.

Engagement- There are essentially five mediums to engage someone:  Online Comments, Instant Message, Text Message, Email and Phone.  Readily implement each one into your hubsite, giving everyone their own preferred way to contact you.  If someone writes an article that stimulates you to write a post, link back to them.  Give what you get, the law of reciprocity lives and its great for your interactive ecosystem.

Market Statistics- Probably the most underutilized resource of data available to the professional and consumer.  Up until not too long ago, crunching the information required to accurately gauge where a local market was performing and giving qualified advice on the best value for a given property amounted to ordering an appraisal and going off that. The Case Shiller Home Price Index reports on where certain markets were 3 months ago.

Fortunately there are companies like Altos Research that do a great job summarizing local real time housing data, they’ll even generate custom reports for your hubsite.  Look for new market stats providers from initiatives like RPR to MLS’s directly, this field is about to get white hot as vaults of data are being opened for interpretation and presentation.  Visually augmented information of this quality makes you look really smart, is hard to negotiate against and should help better set expectations between consumers and professionals when it comes to establishing sales/buy values for housing.  Of course, add some of your own opinion to the mix.

Social Network Integration- Other places you ‘hang out’ that are extensions or syndicators of your hubsite…and each should tie back in some way, shape, form or fashion.  There  many (many) opinions on how to engage the communities below down to a very (very) granular level, I’ll leave that to the respective authorities…for this posts purpose, I’m identifying how a few of the more popular venues can interact with your hubsite for communal benefit.

Facebook- ‘Like’ your way to engagement with their syndication button, make sure you (or your developer) implements the ‘Like’ button on your hubsite so people can push your content for you.  Create a Fan Page (for business) and explore using some of the widgets on your hubsite.  There is a strong engagement factor with Facebook, it’s reach is deep and potent to a very relevant audience.  There’s so much more to Facebook, I know this.  Check out LoCo Heather, Mike Mueller, Derek Overbey of Roost or JB140 for some killer Facebook advice.

Twitter- Include a link/button to this text message based social network so potential clients can follow you.  Consider placing your twitter stream on your hub.  ’Social Media’ etiquette (who ever sets such policy) says that tweeting your listings or mortgage rates or anything to do with business is a faux pas, but you are looking for business right?

While I’m sure consumers are interested in where you’re headed for dinner, enjoy that witty sense of humor and general life musings in 140 characters or less…they’re also very interested in what it is you do for a living and what your insights are…thats why they followed you.  If I’m following you and you’re a mortgage broker, I’d like to know where rates are trending, what you think of the market on your blog or other relevant opinion.  As an agent, I would expect to hear about new listings or market news from you.  Your true friends will understand if you occasionally engage in business speak…Im getting tangental, time to move on.

ActiveRain- The largest and most active social network in the real estate space.  ActiveRain is probably the most important social network for you to participate in if you are relatively new to ’social media’.  The sheer volume of information and generally altruistic membership offers tremendous support to those who seek it.  Since 2006 I’ve made some of the most important relationships, both business and personal, on or because of AR…I’m deeply indebted to the community.

AR ranks very well in Search Engine Result Pages (SERPS) for longer tail real estate search queries.  Longer tail search queries (anecdotally at least) suggest a consumer who is much further along in the buying process.  Put one and one together and…you should at the very minimum cross post your opinion within the AR network.  I’ll typically post an article here on my hubsite and post the same into my AR account ~24+ hours later, linking back to my site somewhere in that post.  If you don’t want to deal with the point seeking ‘Thanks for sharing’ comment spam and inbox stuffer, turn off the comments and direct them to engage you within your hubs commenting system.

Some people say AR is just Realtors talking to Realtors, which is what it looks like.  However, people, like consumers people, may not be commenting but they are watching.  I’m routinely contacted via email regarding articles published on AR and know many others who have derived a good bit of business from their engagements on the network, even if it is as simple as outlined above.

An agent/professional would be doing well to have a hub where a given article generated 10,000 page views.  Have a post featured on AR and this is normal, thats 10,000 potential very relevant visits to your hub.

I could give you 5 other reasons why its a good idea to make AR a part of your marketing strategy, similar to FaceBook, but I’m really trying to keep things brief. For more on AR, go sign up or login to AR…theres plenty of people ready to help you around.

Flickr- Online photo sharing and organizing social network.  Rumor has it that Flickr provides for great SEO juice to your hubsite if your business happens to depend on photographs…real estate sales depends on photographs, preferably very good photographs.  For some succinct advice on how, click here.

Posterous- Mobile life streaming, content syndication platform that can seamlessly integrate within your hubsites domain.  A novel way to keep business speak and more personal musings on separate channels within the same soapbox.  Post links, opinion, podcasts, video and pictures from your mobile phone/PDA through Posterous to your hubsite, FaceBook, Flickr and/or Twitter.  They also have a web based platform to manage everything from.

Oh, yeah…create a LinkedIn profile and link back to your hubsite too…

With any social network or 3rd party community, its important that you make it evident where else you ‘hang out’ and give obvious directions as to how to get there.  In other words…loud calls to action on at least the Contact page of your hubsite.  OK, thats it…

Next…Strategy #2: Customer Relation Management and other integrated information systems.

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3 Strategies to Future Proof Your Real Estate or Mortgage Business

To qualify for the tax-credit, borrowers had to have an approval from a qualified lender and files submitted, effectively gone to contract, by April 30th 2010. This much has not changed.

It remains to be seen if the 90 day extension to the end of September is enough time to alleviate the back log considering the extreme labor contraction in the mortgage industry. The underwriting staff that’s pushing these loans toward the closing table are either overworked or lack sufficient experience causing the delays.

With approximately 180,000 potential home buyers who met the April 30th deadline, simply waiting for their files to clear the underwriting log jam, losing up to $8000 in tax-credits could’ve caused many to walk away from the transaction. This subsequently could have caused a significant negative ripple effect on the housing market with a sudden surge in supply and decreased sales, torching professionals and consumers alike.

Demand for mortgages are already at rock bottom despite historically low rates. New mortgage applications are at their lowest point since 1997, suppressed by increasingly stringent mortgage qualification guidelines. Throw those facts in the bag with the lingering bank owned shadow inventory that needs to be released into the marketplace, and you have a recipe for protracted depressed home values.  Extending the closing deadline to September 30th was the right thing to do and surely caused a collective sigh of relief for real estate professionals and mortgage professionals everywhere.

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Senate Extends Home-Buyer Tax Credit Closing Deadline

Well you can throw all that logical shit out the window.

There are days when stocks rise and rates fall.  There are days when rates rise and stocks fall.

I pride myself on staying pretty up to date with what goes on in the financial markets, particularly their actions subsequent effects on prevailing mortgage rates…and I have no f*cking clue where mortgage rates are going on a daily or weekly basis, no one does.  Anyone who says they do is guesstimating at best, and my guess is that even the best market prognosticators are maybe 50% correct 50% of the time.

Its pretty safe to say rates are going to trend upward at some point because they can’t get any lower.  Like any other instapundit I can tell you why they moved the way they did after the fact.  When money en masse moves into Mortgage Backed Securities, rates go down.  When money moves out of MBS positions en masse, rates go up.  Outside of that, there are so many variables effectuating the market, I hereby deem predicting the short-mid term direction of mortgage rates with any sort of consistent accuracy logically impossible.

For example, the Euro has taken a beating because its connected to the troubled economies of PIIG countries (specifically Greece), subsequently strengthening the dollar causing investors to move to the relative safety of US backed Treasuries.  Couple that with the ban on naked short selling in Germany because financial institutions were creating mortgage investments that are (secretly) designed to fail and you have market conditions to keep mortgage rates low.  Yeah, that shit was easy to foresee.

FTW!

Markets are emotionally supercharged akin to an estrogen laced PMS’ing bitch, effected by wide ranging global events and as such there is simply no logical way to predict if rates are going to rise or fall on the short and mid term.  Rational economics left with the industrial age and technical investing is quickly following.  Floors, ceilings and other traditional technical investment indicators are being shattered and/or crushed.  These are the days of behavioral economics where cognitive biases rule over rational decisions.  When emotions run high, there’s no telling what happens 4 minutes from now let alone 4 weeks.

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Estrogen Infused Markets Equals Unpredictable Mortgage Rate Forecasting

From the Daily Show with Jon Stewart:

Posted via web from JeffX Surf Files

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Our Government is The Worst Loan Shark Ever…

Things may look funny here for a few days…or more.

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Work in Progress…

I’ve had the honor of knowing Joe Ferrara for a number of years, I ‘met’ him in typical Joe-Fashion…he came to my defense in the comments of some blog post I wrote that was the talk of another blog post or some such.  The details aren’t important, his actions were.

For those who don’t know Joe, he’s co-founder of Sellsius real estate blog, attorney, blogger, speaker and all around good human being.

Joe inspired me (and countless others) to speak, write and act.  He’s offered advice, encouragement and/or just an ear to listen, Joe is a giver while expecting nothing in return.  If you’ve met Joe for any longer than 5 minutes you know he’s a warm soul, someone you would be hard pressed to not smile about upon hearing his name.  I’ve met Joe in person maybe 10 times over the years…not enough for one to typically consider a ‘close’ friend…but Joe isn’t typical.

Today Joe is struggling for his life, and because of which I struggle for words.  My heart sank and stomach twisted when I heard the news, as if Joe was my best friend.

Get Well Joe…

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Get Well Joe…

You can’t make this stuff up:

Magnetar Capital, a Chicago based hedge fund, went into business in 2005 at about the time that Sub-Prime mortgages were recognized as being ‘toxic’ in the sense that they don’t perform, as in- Homeowners don’t make their payments and investors don’t get paid.  Nonetheless, they started buying up these toxic loans (through various conduits) and bundling them up in Collateralized Debt Obligations (CDO’s), creating huge demand and liquidity for dogshit mortgages to put people in.

All Magnetar CDO’s contained the worst kind of mortgages…the No Income No Asset, No Job, Low FICO, short term ARM variety located in states with the highest appreciation mortgages…the mortgages that default like the consumers they gave them to had no income or jobs with a poor track record of paying debts back.

Magnetar subsequently bought Credit Default Swaps (CDS’s) or insurance policies against the dogshit CDO’s (they created) just in case they defaulted.  CDS’s cost money in the form of premiums, just like you pay on your car insurance.  Magnetar used the higher yields from the CDO’s they created to pay the CDS insurance premiums…until the CDO’s defaulted that is…then they collected the insurance policies payout.  These insurance policies paid out far more to the hedge fund than any  loss they would incur if, err, when the CDO defaulted.

This became known as ‘The Magnetar Trade’ as is being pegged as the primary reason the US Housing market crashed so hard and pulled the world economy down with it.

For review:  The Magnetar Trade strategy was to fuel the marketplace by purchasing dogshit mortgage securities (creating liquidity and loans) bundle them up into CDO’s, sell them to investors as AAA rated then bet Big Money on the fact the CDO would default, and collect said Big Money when they did.  It was simple, elegant even, and legal.

Almost every major institution on Wall Street played this game, executing ‘Magnetar Trades’…Merrill Lynch, JP Morgan, Lehman Brothers even the Streets most prestigious firm: Goldman Sachs.  John Paulson of Paulson and Co. (near future scapegoat/pariah) created the Abacus Fund for Goldman.  Abacus was architected after the Magnetar blueprint.

Recently the SEC decided to bring a lawsuit against Goldman Sachs alleging fraud around the Paulson created Abacus hoo-ha.  The core of the suit alleges Goldman deceived and sold investors on a security that Paulson helped design to fail, and made a bunch of money because of it.

Regardless of lawsuits and agendas, there is no getting around the fact that these sort of ‘investment strategies’ by ‘Wall Street’ negatively effected millions of homeowners…fuck the investors and investment banks.  It’s not hard to draw a pretty straight line between Wall Street greed and the implosion of the US Housing market.

I don’t think the lawsuit sticks but it raises an incredible amount of awareness in the public arena around a sophisticated and sinister Wall Street play that negatively effected millions of homeowners.  That’s great for pushing an agenda, especially a political one as the timing of all this is obviously politically motivated…but this isn’t a political post- I pro-actively filibuster myself from political arguments so this doesn’t turn into a 3000 word circular argument.

Consumers were unwitting pawns subsidizing this game of sophisticated capitalism…that’s whats going to be played out in the press on on TV. So, will a public growing more weary by the day of Big Government side favorably with Big Government having its way with Wall Street?

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How to Short The US Housing Market and Throw an Economy Into a Recession

In the spirit of taking action to reverse the negative stigma around the industry, there has been a spike in conversation recently around the cause of ‘Raising The Bar’ (#RTB) by real estate professionals, including an REBarcamp session before Inman Connect NYC, Twitter-speak, blog posts, podcasts and blog talk radio shows.

With lots of conversation comes lots of ideas, including:

• Raise the barrier to entry (Keep out the stupid, poor agents)
• Kill the barrier to entry (Increase competition)
• Increase continuing education requirements and ethics standards (Create smarter, more ethical agents)
• Only hire honest, empathetic, generally good people who have a strong work ethic (Make the consumer LIKE me into doing business)
• Acquire pretty technologies and engage in Social Media best practices (Apply the Laws of Attraction)

All of these ideas focus on the top of the industry funnel – marketing, messaging, advertising, massaging, allure, the ‘easy to manipulate’ aspect of reputation management…they are too far removed from solving the real issues at hand.

The common thread I’ve heard is that the industry must increase its ‘Professionalism.”

My Notorious partner posed ‘The Single Question to Rule Them All‘, all Lord of The Rings style:

“Is professionalism a competitive advantage in real estate or not?”

In short, Rob says if this is the case, the riff-raff will eventually be driven out.  If it isn’t the whole RTB exercise is anti-competitive in nature and generally deceptive.

Robs logic is sound, but there is very little context to the question, so it’s just that…logically correct with alot of ambiguous conjecture and talking heads spewing esoteric, self-serving opinion around the definition of professionalism and how to raise That.

Rewind— REBarCamp San Francisco 2009.  Sitting in a group of well respected real estate ‘thinkers’, Rob Hahn asks:  ’What is the next big thing in real estate?’  With my head focused on the cornucopia of tech related products and services, I didn’t have an answer and admitted to such.

Today–- My answer is pulling the veil back around performance related metrics relative to market baselines for practicing real estate agents.  Establish a Bar, establish accountability, demand greater transparency and Raise The Bar along the way.

So, I propose ‘The Single Question To Rule Them All’ then becomes:

‘Is Performance a competitive advantage in real estate or not?’

Rob’s logic applies to this question and fits like a rubber glove.

If Performance is a competitive advantage, the riff-raff will eventually be driven out.  If its not, then the whole RTB exercise is anti-competitive in nature and generally deceptive.

Performance is a competitive advantage.  I trust I don’t have to write 400 words to explain why.

I’m not sure that the greater industry is ready to RTB…it can be done in pretty straight forward fashion but there are substantial ramifications.

Lets begin…

Social Media Can Help Raise The Bar.

Generally speaking, Social Media provides a two-way conversation medium that ideally compels some level of engagement between two parties.  There is an emotional connection that Social Media taps into for people and it works (very well) when implemented thoughtfully and engaged consistently…a good strategy here will drive potential clients.

Social Media should not be postured as a chronic popularity contest where thou with the most ‘friends’ wins.  The term friend has a diminished meaning in the world of  5000 Twitter and FaceBook ‘followers’. Being named to ‘influential’ lists and the such amounts to little more than superficial ‘pat on the back’ contests amongst inter-industry professionals and is of little value to a consumer…I digress.

Where Social Media really stands to help RTB is rooted in the caveat of the medium:   If you don’t follow up your dynamic online persona with performance driven results, consumers are likely to wield Social Media against you…As stated, its a two way street and bad news travels fast.

Set The Bar With Transparent Access to Relative Performance Metrics.

Open the MLS data vaults to establish a baseline (or bar) around local market performance metrics such as:

• What is the average Days on Market for a $Xk to $Xk house in my market?
• What is the average List to Sales Price difference for similar homes in my market?
• How many sides did an average agent close in the last 6 mos, 12 mos, 24 mos?
• What is the average # times a listing re-priced or re-listed in a given market?
• What is the average final Sales to List price ratio?
• What is the average commission charged on a property within my search criteria?
• How do REO’s and Foreclosures affect a property in a given area?

Once I have a flavor for how my market is performing on average and a Bar has been set, the second and more important question is:

Which Agents/Offices/Brokerages/Franchises Outperform These Averages and by How Much?

You can’t argue with real, empirical data.  You can’t fake the grades on your bell curved report card.

Allowing consumers to evaluate which real estate professionals outperform local averages (Baselines or Bars) that are important to the specific consumer would go a long way toward increasing the likelihood of a positive experience, as well as aid in improving consumer perceptions and expectations.

In addition, consumer access to performance based information (currently locked under MLS data use Rules and Regulations) would:

• Drive out the under-performers or force them to do what it takes to raise themselves above the Bar
• Spur innovation in the sector of commission reform <–A big deal to consumers
• Increase good competition

I can hear the arguments:

‘Just because Sally transacted more sides, doesn’t mean she’s a better agent.’    Very true.  Johnny could have sold 4 properties to Sally’s 20 over the past 12 months, but Johnny sold each one in far less time than the market average.

‘Billy took, on average, 30 more days to sell a property.’  Yes, but he did so at a List to Sales price that was well above market averages.

‘My consumer wouldn’t listen to me and insisted I list the price way above market value, thats why I had to reduce the price 3x and it sat on the market for 462 days.’   Well, you should have passed on taking that consumer as a client.

There are many such what if scenarios.  Performance based data isn’t of much value when analyzed in a vacuum.  It becomes very valuable when compared and contrasted against market averages and considered in conjunction with a unique consumers wants and needs.  Throw in consumer ratings, other forms of feedback on some level and now you’re serving steak instead of sizzle.

Evolve The Traditional Real Estate Commission Model

I know, its not supposed to exist, ‘there is no set commission model’- humor me.

The fundamental issue in the ongoing consumer vs. real estate professional beef is the gross misalignment of performance for consideration.  Consumers generally have a negative opinion of real estate professionals because they believe they overpaid for services compared to the value received.  This is likely because the agent they ended up retaining had poor performance metrics or their positive metrics didn’t align with the consumers wants/needs.

Access to such transparent performance metrics relative to a baseline would blow a hole in the bow of the traditional real estate commission model. Underperforming, inexperienced agents could no longer ride the coat tails of top performing seasoned agents.  Top performing agents could set new pricing models, justify a retainer for services, charge for services using a ‘cost plus’ model…they could make MORE money instead of subsidizing Ron the part time Realtor who botched his last three listings, yet scored a listing that would have otherwise been yours because his college friend Bill said something about needing a real estate professional on FaceBook.

I can’t think of another industry that pays entry level employees on the same scale as long standing executives.  Consumer confidence and perception could rise substantially if they knew who they were paying for up front rather than after the transaction closed, didn’t or worse.

If you’ve followed along to this point I’m sure many are screaming that something like this will never happen, because…:

MLS’s are funded by and thus beholden to the agents they serve.

If an MLS decided to adopt some crazy cavalier attitude and turn this performance based data consumer facing, many agents would likely get upset…read: violent rebellion amongst natives, loss of revenue, mass firings at Cowboy MLS.

Since MLS’s are generally for profit enterprises and the people that run them probably like the fact they have a job, this type of a mass public outing is a non-starter.

So, what about a version that displays all the pertinent individual performance metrics and how they rank against the given baseline/bar, but leaves the agents personal information anonymous?  The only time an agents personal information becomes available is when a consumer pays for the privilege.  Unlimited access to all agent profiles wouldn’t be prudent for obvious reasons…rather a set amount, say 5 profiles per subscription. Those below The Bar remain anonymous and left to think about how to raise their Bar.

In the alternative, Stan finds a real estate professional on Facebook, Blogsite, Zilow, Trulia, IDX, ActiveRain…pick your Social Media outlet.  They like the personality and now want to check how deep the beauty runs.  Dial up the agents performance related data and get a holistic view of who you might retain to handle the largest transaction of your life.  Think Carfax for real estate professionals.

Shame on the agent or broker that would threaten to pull out of an MLS for offering this anonymous data for public consumption, that would be like saying you want the industry to remain in the gallows of consumer perception, deceptive beasts of no prestige.  And if shame isn’t enough, I’m sure there are other incentives to keep everyone submitting their data…

In the ugly and very likely circumstance that agents and/or brokers still balk at the idea, make it opt-in only.  No personal information available unless you as an agent give the MLS the express right to do so.  Pay agents to opt-in, every time their personal profile is requested.  Share the wealth a little.

The big question is always:  Where is the money?  I’d be willing to bet that (ALOT of) consumers would pay for access to such information presented in an intuitive UI-sortable and searchable by what metrics are important to their situation (much like Diverse Solutions did).

This isn’t some pipe dream that would take millions of dollars in development or years to implement.  It could be done quickly and at relatively little expense.  In fact, the primary reason this data isn’t already available is due to simple economics and complex politics…there is alot of money in keeping the data under lock and key…economics rules politics, so where there’s a bigger dollar there is a way.

There are Agent ranking systems out there.  Most allow the agent control over what information is displayed and/or claimed…rendering the system and information skewed at best.  This type of agent rating system must have a very complete set of market data and be maintained by 3rd party providers that simply maintain its purity and integrity.

Diverse Solutions has created the closest product I’ve seen to a tangible, working model using MLS direct data.  Agent Scouting Report was the result of a 48-hour developer competition at the Inman Connect conference in San Francisco last summer.  In its current edition Agent Scouting Report doesn’t work because it shows every agents stats…effectively ostracizing those that happen to fall below the Bar.  I don’t think they’re far off, their product was well thought out given the limited time they had to develop it..a few turns of the dial and some thoughtful considerations in how the data is displayed (see above), and..?

As an agent or broker would you be adverse to this?  Why?  :)

The Broker/Franchise Perspective.

I own a brokerage or franchise and want to fill my office with agents who exceed certain performance metrics for certain property types in certain areas of town.  My brokerage is conducive for these types of agents to excel.  As a broker/owner, I would pay to know who these agents are.  This would be an immensely valuable tool in analyzing my own brokerage as well as my competition on key performance indicators.  I could derive all sorts of actionable data to use as a recruitment and retention tool.

So is everyone ready to Raise The Bar?

It depends on if those who talk the talk about Raising The Bar are indeed serious about doing so and walk the talk.  It will take open minded professionals from MLS directors, their boards as well as the brokers and agents they serve.  I’ve laid out some top level ideas on how economics could cut through the politics, there are more.

The upside for the industry is huge from customer service, commission model and perception standpoints.  It risks shaking the long standing economic model right down to its core, which is a good thing.  In the right hands this very well could and should be the next big thing in real estate.

Comments, opinions, thoughts, flames?

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Is The Real Estate Industry Really Ready To Raise The Bar?

Uh-oh.  This is kind of a big deal.

Lets reflect back for a minute…

Back in September 2008 the bottom fell out of the mortgage and housing industry, the pillar of our economy at the time, as the MBS market was more or less exposed as a fraud and subsequently deemed toxic rather than the AAA rated investments they were being pimped out as.   Former Wall Street stalwarts like Bear Stearns and Lehman Brothers were heavily invested in such securities and subsequently imploded almost overnight.  Banks, lenders and the credit (mortgages) they offered disappeared like a David Blaine magic trick- *poof*

Crisis ensues and the government steps in to cauterize the gaping wound, funding the market to the tune of some trillion or so dollars in lieu of risking a catastrophic ceasing of our (and the worlds) economic engines.

Fast forward to January 2010.

The trillion dollar capital infusion coupled with keeping the overnight funds rate at or near zero has kept interest rates low and market volatility in relative check.  Well this is about to change.

First, you can’t print a trillion new dollars and not expect inflation at some point on a relative level.  Apart from the inflation dynamic, the Fed has decided that its time to cease backstopping the MBS market, and as a direct result, the housing market…preferring to hand things back off to the private sector.

Wait a minute…What private sector??  Who has an appetite for MBS’s and more importantly at what yields?

You can bet as sure as the sun will rise in the east tomorrow that the private funds, banks, lenders and their managers who do play in this sandbox will buffer margins to mitigate perceived risk in such securities, which all but guarantees higher interest rates.

The remaining banks are well capitalized for the most part (compared to late 2008, early ‘09), though they are still very gun-shy to lend except under the most pristine personal credit and financial conditions.  Ask any mortgage originator about perpetually moving underwriting guidelines.

Pundits have warned of a ‘false bottom’ when it comes to the housing market for some time.   Feel the floor shaking yet?  As interest rates rise, housing affordability decreases subsequently exerting downward pressure on housing values…again.

What happens if the bottom does fall out?

I’m sure President Obama and his staff aren’t keen on sending the economy back into a tailspin.  Surely the Fed has thought through the potential ramifications of their pending actions.  They could simply step back in at anytime to shore up the market if things got too volatile, using Fannie Mae and Freddie Mac as the primary vehicles to do so…alas there are calls to abolish these GSE’s all together.

As stated, inflation has to be a big concern here too.  How does the Fed pull all the ‘new capital’ out of the market to avoid hyper-inflation in a way that doesn’t send the economy back towards a protracted recession?  One way is something called a ‘reverse REPO‘, where they sell their stockpile of MBS’s with a guarantee to buy them back in the future at a profit for the purchaser.  Seems that this obscure company called ‘Google’ (among others) may be interested in this play…

Interesting times to say the least…the stakes are HUGE and not for the faint of heart.

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Mortgage and Housing Volatility Far From Over