More Evidence the Bailout is a Handout - and a Lie
October 2, 2008
Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself.
- Mark Twain, a Biography
If at first you don’t succeed, try to destroy the economy again. That seems to be Congress’ motto these days, as they prepare to vote on the “revised” bailout bill.This, time, however, the proposed bill is so full of spending pork - from exempting children’s wooden arrows from excise taxes to increased cover of rum excise tax revenues - that proves Twain’s other saying that there was nothing a Congressman knows that couldn’t be taught to a flea.
What a scam!
The Bailout will Destroy the Housing Industry
September 26, 2008
Only in the United States Congress can a plan to destroy the housing industry and credit markets be called a “rescue” plan. It’s almost as farcical as calling “card check” bill that effectively kills secret voting for unions a “secret ballot bill.” Far more troubling, however, is the fact that the elements of the plan are laid out - in plain sight - for everyone to see and think about.
Why, then, does the real estate industry and average homeowner, not see the danger?
Why do Brokers Hire Sellers?
September 24, 2008
(Podcast Version) Ask any broker today what his “number one” problem with the market conditions, and he’ll tell you either there’s too much inventory or it’s all overpriced. Granted, if sellers want to put their homes on the market, nothing can stop them, with so many “for sale by owner” options out there. But that still leaves the issue of the overpriced homes that are represented by brokers. And that begs the question:
Why are brokers hiring sellers to sell their own homes?
Where is Your Government Bailout?
September 10, 2008
Over the weekend, the United States government tried to correct one mistake with another: Under intense pressure from foreign governments - especially the Chinese government who are the single largest investor in Fannie Mae and Freddie Mac - Uncle Sam took out its checkbook. With a flourish of the pen, the Treasury nationalized these failing financial behemoths. In the process, it wiped out any remaining common shareholder value, eliminated stockholder control over the company’s operations and fired (but will still pay millions in golden parachutes) one of the most inept management teams in the history of any undertaking.
In yet another stunning example of crisis management, lack of planning, and most of all - lack of leadership control of an organization - a pillar of both the real estate industry and the global economy itself crumbled. If the situation sounds a little too familiar to you, perhaps you’re wondering: Where’s my government bailout?
It’s the Housing Market, not the Stock Market
September 9, 2008
For some months, REALTORS have been fretting that buyers are “sitting on the sidelines” waiting for the market to “hit the bottom.” We constantly hear news reports with interviews of “savvy” sellers who are trying to “time the market just right” to get the most for their home’s sale while getting a “bargain” for their next home. Timing the market - to sell high, and buy cheap - is a strategy for buying and selling stocks or bonds.
But when it comes to housing, it’s the entirely wrong market model. It’s time REALTORS started saying so.
Five Reasons REALTORS Are Losing Market Share
August 20, 2008
Amongst the growing list of reasons some REALTOR firms are losing market share today, there’s no lack of ‘blaming the consumer’ causes. Brokers and agents who repeatedly target the “market” or the “economy” as the culprits are just substituting politically-correct keywords for “the consumer” as the problem. Buyers won’t come off the sidelines. Sellers are unreasonable and won’t price their homes to market conditions. Lenders won’t offer credit easily. The usual suspects of the downturn are either consumers or third parties working together in a full-blown conspiracy to destroy the real estate industry.
Perhaps we could find a few simpler reasons?
How to Measure REALTOR Performance
May 28, 2008
Here’s a daily dose of Peter Drucker for you to consider:
In some knowledge work - and especially in some work requiring a high degree of knowledge - we already measure quality. Surgeons, for instance, are routinely measured, by their success rates in difficult and dangerous procedures, for example, by the survival rates of their open-heart surgical patients. But by and large we have, so far, mainly judgments rather than measures regarding the quality of a great deal of knowledge. The main trouble is, however, not the difficulty of measuring quality. It is the difficulty in defining what the task is and what it should be.
- Peter Drucker, Management Challenges for the 21st Century
Now, let’s apply Drucker’s sagacity to the real estate industry as it is today - and how it might evolve in the future. How should we be measuring the knowledge work of today’s REALTOR?
What REALTORS can learn from Memorial Day
May 26, 2008
Memorial day traditionally honors those fallen soldiers of war in our country. Since the end of the Civil War, the holiday has been an opportunity for ordinary Americans to set aside some time - officially, without work - to remember those who gave their lives to defend our way of life. And while most wars are fought in defense of “liberty” and “democracy” and “freedom” they are all ultimately struggles for the one item on the planet that makes all of those concepts possible:
Property.
Jefferson’s famous statement in the Declaration of Independence - “life, liberty and the pursuit of happiness,” was essentially a modernization (in its day) of John Locke’s tripartite formulation of good government. The job of government was to defend, “life, liberty, and estate (or property).” The basis of a just society was one where “no one ought to harm another in his life, health, liberty, or possessions.” (See Locke, Second Treatise on Government).
So Long, Housing Crisis
May 22, 2008
Well, thank goodness for someone who understands the markets - other than the lopsided “woe-is-us” viewpoint of the National Association of REALTORS (NAR). In fact, when it comes down to it, maybe we should ask more Wall Street analysts and hedge fund managers to really monitor the markets for us. Here’s the good news, from the Wall Street Journal:
The Housing Crisis Is Over
By CYRIL MOULLE-BERTEAUX
May 6, 2008; Page A23The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now….
Apparently, the real estate market is better understood by measuring housing inventory than simply hand-wringing over dropping prices. Since bubble-pricing had nowhere to go but down, then the true measure of the market cycle is better monitored by measuring absorption rates rather than price swings. This makes sense because commodity prices rise and fall with the volume of sold; not the other way around.
Of course, in REALTOR mentality, the reverse is true: if prices rise, the number of homes is expected to rise; when prices crash, REALTORS can’t sell homes - not because buyers don’t like a bargain, but because too many REALTORS don’t know how to put homes on the market at the right price. And the right price is always determined by the buyer, not the seller. As long as REALTORS take their pricing orders from the sellers, they won’t recover their sales volumes. Once they understand that their job is to create a transaction, not represent the pricing strategy of an unskilled seller, they will be back in the saddle. Commodity (stock) brokers have always understood this: If a stock holder calls and asks to sell their shares at 20% above the current selling price, the broker attempts to explain to them how a market works. If the seller insists on an inflated price, the broker hangs up the phone. Only REALTORS agree to take on the expense and waste their time trying to sell overpriced commodities - because they agree to run their business according to the seller’s insanity, not the buyer’s authority.
Real Estate Chickens Come Home to Roost
May 21, 2008
Consider it a wake up call: interest rates are a little higher (but still a 45 year low), inventory is a lot larger and days on market are far longer. Certainly, it’s a crisis but not a depression - homes are still selling. So get over it, and get a strategy in place to sell in this kind of market, because it’s here to stay for a long time. The challenge facing real estate professionals today is the result of the investments they made - or failed to make - during the last decade in sales, marketing and technology. For some agents, the challenge is welcome; they are ready to compete with the latest consumer techniques, online marketing and wireless tools.
For others, the chickens have come home to roost.
New Housing Deal or New Deal Housing?
May 19, 2008
Real estate professionals should be upset today. A terrible blow for the integrity of the real estate industry - for housing as a foundation of personal equity and wealth, for the rule of law in mortgage lending, for simply doing good for ordinary Americans - has just been dealt by the government. A so-called “great compromise” has just laid $300 billion - financed by Fannie Mae and Freddie Mac - in bad debt at the footstep of the taxpayer. According to the Wall Street Journal:
The legislation combines the regulatory reforms for government-sponsored enterprises Fannie Mae and Freddie Mac with a proposal to use the Federal Housing Administration to offer up to $300 billion in federal guarantees to help refinance struggling borrowers into new mortgage loans.
One compromise proposal discussed last week would use the money from an affordable housing fund created from Fannie Mae’s and Freddie Mac’s earnings to help pay for the FHA guarantee program.
Real Estate Sales 101: Say No to Bad Listing Deals
May 15, 2008
Here’s a really simple idea for REALTORS who are struggling to sell “overpriced listings.”
Just Say No!
Call it the Nancy Reagan Rule of Real Estate: Some listings are “bad” for you - kind of like certain kinds of substances are bad for you. But sometimes, we REALTORS just get on a “listing high” when we get a homeowner all geared up to sign on the dotted line. After pouring our our hearts in a listing presentation, filled with facts and figures and advice, we become momentarily vulnerable to a moment of insanity called “I’m gonna get this listing!” And that’s when we all-too-often shoot ourselves in the foot.
Every REALTOR “knows” better than to take an overpriced listing. But they need to start “doing” better if they want to survive the downturn. Here’s a simple economic fact: the buyer of any product sets the price. Period. No ifs, ands or butts, unless you’re a one-of-a-kind painting or bejewelled egg. As long as there are “other options” in the marketplace similar to your product - other computers, MP3 players, airline seats and houses - to choose from, the buyer sets the price.
Selling Homes to Generation Y
May 15, 2008
Here’s a real dilemma for real estate companies today: Can their agent successfully build relationships with the next generation of real estate buyers? Right now, honest brokers would have to answer a “qualified maybe at best” if we were to take a look at what they’re doing to prepare their agents for the 45 million Generation Y buyers starting to enter the housing curve.
Let’s start with some data: Generation Y is in their 20s. Graduating college, these kids are the new first-time home buyer. No, it’s not Gen X anymore; there are a few X’ers who still won’t get out of the house, but the bulk of newbie buyers are Y’ers. What do we know about them? First, they are highly networked. They have grown up online, playing online games with friends thousands of miles away, online. Their social circles are highly structured – they went on “play dates” that mom setup with their friend’s mom – and they only make new friends by “adding” them to their official page of friends online, at MySpace. They have had a cell phone since they were 10 and they don’t make calls on it. They fully expect IM to replace email and think voice mail is what Edison used to tell Watson to “come here.” They get a constant flow of information by text message – updates from friends, weather, movie times and sports scores – and they don’t “check” the internet because they are always connected to it. Speaking of the dial-up days of the internet is like remembering the Pony Express.
Jump Start the Housing Industry by Mandating Blackberry Usage
May 14, 2008
Fact: 24% of Buyers found the home they actually purchased on the internet last year.
Fact: 80% of consumers stick to the first agent who “responds” to them.
Fact: 23% of real estate agents have an email capable phone.
Fact: You can’t make sales to consumers you continue to ignore.
First, let’s just put your first objection to rest, shall we? Blackberries aren’t expensive. Shhh. Zzzt. Shtttt. Zip it! Any excuses that it “costs money” to get a Blackberry tells me that you just don’t belong in real estate. Is your business down? Cash flow a little slow? Well, so is business at cellular phone companies - that’s why most are virtually giving away Blackberries and other smartphones in the hopes that you’ll upgrade your plans and pay for some data services. Oh, well, then: doesn’t that mean that it is expensive to own a Blackberry, smarty-pants? No, dolt: You’re paying $99 a month now for too many talk-time minutes (you’re not using them phone prospecting buyers, are you?). When you get your Blackberry, you’re going to simply switch to a 50/50 plan: $50 worth of chatting and $50 for unlimited data and email. Same bill. Better business opportunity, though. Remember, Generation X prefers email and there’s no way Generation Y is going to pick up the phone to call you. No chance.
REALTORS’ Deal with the Devil
May 12, 2008
After recently taking REALTORS to task for advocating more “government backed mortgages” and looser credit limits as the way out for the real estate industry crisis, I thought perhaps I was too harsh on the industry. It’s possible that most REALTORS don’t realize that every time they argue for the government to subsidize un-credit-worthy taxpayers that they are really arguing that the government steal money from the existing homeowners - through taxation to bail out Fannie and Freddie everu so often. Maybe most REALTORS were just too shortsighted to understand that every increase in taxation hurts their future source of business - the future seller who becomes the future buyer. And since most REALTORS only last about 18 months in this business anyway, maybe most REALTORS really don’t care about this stuff, since they are only focused on where they can get a commission in the next 45 days.
Then, something frightening was quoted in the Wall Street Journal on Friday, May 9th, page A3 and I realized that the REALTORS have made the ultimate deal with the devil. In an article by Ruth Simon and Nick Timiraos entitled “Mortgage Firms Cool to Principal-Cut Plan,” no REALTORS are mentioned. There is a proposal by the U.S. House of Representatives that was passed this week that calls for:
…mortgage companies to reduce the principal on troubled loans. In exchange, the Federal Housing administration would pay off the current loan and issue the borrower a new FHA-backed mortgage.
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