Time management

Trying to get over head cold. Haven't had classic like this in years. So far the only benefit has been very strange dreams. Two nights ago I had a dream about what's wrong with real estate brokerage business (not a surprise!).
Nothing totally new, but a more crystalline view of exactly where most of the practitioners left the path toward improved service to their principals and became focused on standardized methods and procedures.

I'll wait till the cold leaves to write that post, but for New Year's Eve let me leave you with some simple questions.

What proportion of agents' time is spent doing paperwork and computer research--ie standard forms, disclosures, MLS searches. etc. NOW, as compared to 25 years ago?

How much of that paperwork and computer research has a directly positive impact on the Buyers' likelihood of purchasing the RIGHT HOUSE and the Sellers' likelihood of finding the RIGHT BUYER?

If they understood this CURRENT time management scheme, how many Buyers and Sellers would approve?

New family member

The small local cell phone company I've been using for 14 years or so was purchased by AT&T recently. Received friendly letter that I had till end of year to convert. No real choice for Cayucos and Cambria coverage. The small local company got the prime cell tower sites years ago and regardless of any other benefits of a particular carrier, if you can't get a signal you're screwed.

Should have gone in a couple weeks ago, but was busy and didn't really want to decide on a phone--of course my smart phone wouldn't work with AT&T. After some online research and asking friends for their opinion, I decided to get anApple iPhone 4. Went to local AT&T factory store in SLO late afternoon--jammed with customers like myself, but a storm was on the way, so I stuck out the wait. Staff was busy, but pleasant and competent (always a plus!). After about 45 minutes my name was called and the process only took about 15 minutes. Thanks to my old phone keeping contacts on the sim chip, they all migrated into the iPhone--all 200+ of them. That was a big relief.

Still far down on the learning curve, but the amazingly clear display and the interface very quickly convinced me that this is a small computer that happens to make phone calls. I got the 32GB version. 16GB was out of stock and I sorta wanted the 32GB anyhow. I have 2 manuals on the way from Amazon--about 1000 pages as I remember. Less than 24 hours after going active I can call, voice mail. email, web browse and see how wall street did. About as much as I did on my old phone and the display makes it all so much more appealing. Voice quality is better, signal reception a little better and the weight is about same--Nokia E75 is no lightweight. The clearer signal is important to me--hearing voice inflection is critical to quality communication. Just understanding the words isn't enough.

Typing is a work in progress. The Nokia had the biggest slide out keyboard out there. Touch screen on the Apple is an adjustment. The keypad is huge though and dialing is easier. Have not experienced the "death grip" thing so far--maybe they finally did a firmware fix? I got tired of reading Google matches after the first 3 pages.

Yeah, the phone cost a bunch and AT&T is about 2.5 time as expensive as the old carrier, but I got a nice signal in Cayucos (4-5 bars), plus plenty of head room in the technology learning arena. This is my 5th or 6th cell phone--going back to 1996--remember analog days--those were fine signals. I had an NEC that weighed close to a pound and looked like a rechargeable telephone. We've come a long way! I sold real estate for 10+ years without cell phones--gee how did we do it? LOL!

Cell phones allowed agents to leave the office and the office culture that allowed them to soak up the nuances that make the real estate business all that it can be. Communication technology has advanced, but the quality of communication? Not so much!

mindset musings

Remember that I read Dan Pink's "Drive"? One of the books he recommends, is Mindset by Carol Dweck.
The concept of mindsets predisposing portions of the population toward certain behaviors struck a chord (or a nerve) where real estate is concerned, so I bought the book and started reading. About half way through and enjoying the insights into why agents are the way they are. I trained and managed agents for 18 years. Wish I'd had the book back then. I did some of the right stuff, but could have done better, particularly with some of the gifted agents starting out. 


Dweck's "Mindset" breaks the population into two groups. 1. fixed mindset and 2. growth (AKA learning) mindset. The fixed mindset people buy into the nature mode (as opposed to nurture)--you have intelligence and abilities that stay largely fixed throughout life. The Run What You Brung philosophy. Can't change how smart you are. If you believe that, you tend to be a little insecure about how smart you actually are--because it really matters--you're stuck. You look for opportunities to prove your "smarts". Activities that you're good at, bringing rewards (external motivational rewards) with the least possible effort. Effort doesn't make you smarter, so what's the point. It's a simple world and it sound a lot like real estate. 

The Growth/Learning mindset people believe that you can change your "intelligence" by practice and study and discovering new ways to do things. Effort brings more intellectual capacity (if not native intelligence) and so even if success is illusive, the effort may still be worthwhile immediately or down the road. The effort may even be FUN! 

The real estate industry is predominantly a fixed mindset business in which agents do repetitive activities and have an opportunity to make lots of money. It's all about PROVING that you're good (by making lots of money) over and over. Some people are great salespeople, some aren't. Many in management positions feel that you can't improve salespeople through training. That's why large firms are always recruiting. They hire many agents, then put them through some preliminary training and let most of them go. The training isn't for training, it's to weed out those not deemed winners. That fixed mindset is pervasive. It also inhibits the ability of the industry to provide increasingly better service in the best interests of the Buyer and Seller. The industry prefers to keep things simple rather than explore the host of ancillary intellectual realms that overlap with real estate decision making. To discourage discovery and exploration, the trade organizations standardize almost everything possible in a business that assists unique people in buying what are usually unique properties. MLS databases, standard forms, Codes of Ethics etc offer a secure environment for those who don't want to explore and discover. Real estate is the perfect habitat for the fixed mindset. 

I've observed some very smart and extraordinarily successful people in real estate who became visibly uncomfortable at the mere suggestion that there might be different, perhaps better ways to approach the business. These icons of the fixed mindset are driven to prove their "innate" skills over and over in an artificially simple world reduced to the bare basics, list, sell, collect commission check. Disrupting the security of repetitive "success" just because Buyers and Sellers might benefit through making wiser decisions has little appeal to those with a fixed mindset.   

  

Drive and real estate II

Dan Pink's book flows from the idea that there are 3 layers of motivation which he compares to operating systems. A primal motivational layer (Motivation 1) focused on survival. A somewhat more advanced and nuanced layer (Motivation 2) of more recent origin that embraces reward/punishment (AKA carrot and stick) motivation. A third layer (Motivation 3) is designed to accommodate the intrinsic motivational drive toward mastery of the known and exploration of the unknown-- regardless of the benefits and, to a certain extent, the costs.

Real estate is one of those antediluvian business processes still stuck in the Motivation 2 realm. It's largely driven by extrinsic rewards, ie commissions. The punishment phase arises from inadequate risk management or a broker not happy with the Gross Closed Commission figures. Carrot and stick in classic mode. Is there any hint of Motivation 3 present in real estate? Very little. Real estate runs on a very simple dinosaur brain, despite what your impression might be if you read an independent contractor agreement oh so carefully worded to imply that the agent has considerable latitude in creatively achieving the desired end. In the real world, the latitude may be there, but there aren't many explorers hiking down freshly blazed trails where no foot prints are visible ahead.

Why? Two main reasons. The measure of success in real estate is very simple---money. The business involves an incredible diversity of skills and knowledge, but the only manifestation of success is the commission check at the close of escrow. The spellbinding leaps of creativity that might have occurred on the way to close the escrow are never on the radar screen of success. All that matters to the industry is the sides and the money. Heaven forbid the escrow didn't close. If a wondrous new idea sprung forth during an ultimately failed escrow, it would very probably vanish forever by its association with a negative event. It's a superstition thing.

The other factor is the rampant standardization engineered by the state and national trade organizations to provide a one size fits all approach to business, politics and real estate life. The forms are standardized, the political views are standardized, the services provided to the public are largely standardized. The trade organizations set the standards of practice and to do business in any other way increases risk--or that's the impression conveyed. After creating this sweeping standardization the state association conveniently develops and sells products and services to assist their members as they engage in standardized activities.

There are 180,000+ captive (and largely standardized) consumers (AKA members) of state trade association products who are for the most part motivated (as in Motivation 2) by money, rather than an intrinsic urge to discover more effective ways to deliver service consistent with the best interests of their clients. If an agent did make such a discovery, fellow agents would casually ask "but does it increase money or decrease work?" Some Kool Aid Krowd agents would also ask, "isn't that discovery inconsistent with trade organization standardized recommendations".

This this pattern bad? Not necessarily. Like any "one size fits all" plan, it does fit a lot of the business pretty well, but it also discourages evolution of the standards to meet changing needs and also fails to accommodate any exceptional outliers that require a solution totally outside the box.

So here's the interesting part. Does the profession of real estate tend to attract and retain Motivation 2 type people, rather than Motivation 3 people? Alternatively, does the real estate profession change Motivation 3 people in ways that make them conform more closely to Motivation 2 behavior?

How might the real estate industry change into a more creative mode? Technology? Not likely because technology tends to provide the adopters with new ways of accomplishing old things. Technology seldom IS a new thing. Technology in the form of social networking, digital communications, information display etc hasn't really changed real estate basics, just offered new ways to address the basics. Those new ways are further and further from the real world and, as such, may not be in the best interests of the Buyers and Sellers. Of course if you ask the Buyers and Sellers, they'll say "sure I want more technology and I want it now!"    

home on the range

I finally got Internet at home! After decades of only doing online work at the office, I'm on cable broadband and can operate more efficiently. More business in SLO , but Cayucos is the other direction. I'll go to Cayucos most days, but not always first thing in the AM.

I'm already reading and writing more in the evenings. My remaining cat likes that--she has a nice bed on the dining table (which I never use to eat on) and offers purring encouragement and a pithy comments from time to time. When the time change occurred this year it just seemed WRONG to work at the office for 2+ hours after the sun went down. I run in the AM now, so there's no racing the sunset each day to break up the afternoon.

This schedule has produced real progress on the screenplay I started over a year ago. It sat idle for about 5 months, but is moving ahead every day now.

I finished Drive by Dan Pink a couple days ago. Digesting what the meaning of his simple messages might be to organized real estate. That's one of the problems. Real estate is organized, but for whom? Not the Buyers and Sellers. The underlying problem with standardization is that it suppresses evolution. The entity creating the standardization controls change, but that change isn't driven by market forces or the best interests of the Buyers and Sellers. It's driven by the same entities that created the standards in the first place. Those entities, like all organizational entities, have only ONE primary goal. To sustain their control, or better still, expand their control. There is no secondary goal.

That's what happens in Washington, Sacramento and the PTA. It's a flaw that humanity has yet to solve--the planet is the largest stage and we're not doing well with that either. The climate is headed in a very bad direction, but the world's various organizations must have their power tipping opportunities on the way to an ineffectual attempt to extend the planet's ability to sustain human life. It's like being an observer in a leaky row boat equipped with a bucket for bailing, but sinking slowly into the still dark waters as the other occupants tenaciously discuss the political implications of the bailing process.

Drive (the book) and real estate (the business?)

Started reading Drive by Dan Pink a few days ago--going slowly with the busy holiday season--about 130 pages in so far. I mentioned in an earlier post that real estate has always been a little hard to understand--despite the fact I've been doing it for 25+ years. More recently, I've had trouble understanding the wikinomics phenomenon whereby people extend significant amounts of effort and talent to accomplish tasks for no compensation ---other than the satisfaction of purpose and enhanced mastery.

And along came Drive to explain both gaps in understanding.

You'd think I wouldn't have a hard time with either. I've never been a very skillful technician of the age old real estate algorithms that, when repeated over and over, produce celebrity agents and huge annual statistics. I've managed several agents who were skilled in that respect. I like to think I added a dimension to their success, but I'm a creative sort and after spending 20 years as a scientist focused on finding new species in unexplored habitats, doing the same thing over and over had little appeal --- even if it did come with extrinsic motivation and reward.

On the wiki side of things, I've done many thousands of hours of volunteer work for real estate and environmental organizations-certainly enough to fund a nice pension plan-- if I'd been paid minimum wage, much less what I was arguably worth. Why? The experiences were interesting (mostly--leave out the petty backstabbing) and added facets to what has become a very unusual life. When I get time to write books, the background information will be almost limitless. I also discovered that I'm pretty good at some things I would have never imagined. Oh, and I met some intriguing people along the way.

The book Drive addresses MOTIVATION--subtitle being "The Surprising Truth About What Motivates Us". That surprising truth is that extrinsic motivation--long the bastion of business enterprise, may not work all that well over the long haul. Carrot and stick are simple to understand and relatively easy to implement, but the ultimate effects may not be beneficial to a majority of the stakeholders. We're certainly in the middle of a very sluggish economic recovery (I'm being optimistic there). Extrinsic motivation, as in pay, bonuses, aggressive pursuit of greater and greater short term rewards, played a starring role.

Extrinsic rewards are the primary, if not the sole, basis for motivation in real estate. I've never heard an agent say they choose real estate because they felt a burning need to discover an innovative, just plain better, approach to providing outstanding service to the public. Service that was in the best interests of the public--not necessarily limited to what the public wanted. It's a performance based profession--only the performance is measured by a very special yardstick--close escrow and you get paid. What you did along the way, or afterwards hardly matters to that yardstick. Cross the magic escrow threshold X number of times and you get paid X number of times. Nice symmetry! You measure your year by commission volume. What about the public? What about the quality of service? What about the type of experience the principals had during the process. Oh! You mean the way the public measures success should have some considerable nexus with the way the brokers measure success? That sounds complicated!

The real estate environment is further complicated because individuals only use the services of a broker every few years--if that often. The Public never gets far along the learning curve measuring skill levels among brokers. They seldom experience the efforts of more than a handful of brokers in their lifetime. Most of those brokers are trudging along the old--please get me across the threshold to the commission check so I can work on other deals--business plan, so what's to choose from? When I was managing offices, one of the kernels of wisdom I repeated from time to time was this: Buyers and Sellers measure the quality of the service they receive ONE TRANSACTION AT A TIME. Do they care if a broker had 20 sides or 5 in the previous 12 months? Obviously many principals would assume that the more productive broker had better skills because of his or her higher production. No one has ever had the courage to test that hypothesis--and probably never will. It's way easier to tally commissions.

Do members of the Public ever say--"I want you to sell my house to the RIGHT BUYER (see earlier posts for definition) and I want you to use techniques to find the RIGHT BUYER that no one has ever used before--better techniques. I want you to create and innovate and discover . What would that cost? Hard to say, because it's a least common denominator world out there in real estate land. There no extrinsic reward for innovation and mastery and those with intrinsic motivational preferences usually gravitate to more fertile fields. Commissions are based on sales price, not new ideas. Work those algorithms hard and become rich and celebrified.

The trade organizations like it that way and the major brokers do too and they demonstrate that by standardizing nearly everything they can. Standard forms, office procedure manuals, franchise agreements, training classes--all aimed at delivering a certain one size fits all level of performance. Much of that is focused on risk management, not on delivering better and better service in areas that benefit the Buyers and Sellers by improving their real estate decisions.

Much like the book The Three Laws of Performance I read a few weeks ago, Drive holds up examples of enlightenment arising from a very few concerned corporate leaders willing to cooperate and compromise to improve things for a broad swath of the stakeholders (as in consumers, workers, executives, stockholders, etc). Nice, but if you polled all the stakeholders in all the companies (and they were candid), you'd find some really don't want to change, even if those changes would better the situation for the majority of the stakeholders. Majority doesn't always rule in the real world.

The evolution of nearly anything depends on variation. If there's little variation, there's little evolution and little progress toward an improvement in circumstances. That works well for those with power and position--they stay in place in a comfy habitat.

More from Drive as it applies to the wonderful world of real estate in future posts.

Closing of the year-prelude

Ok, so I a borrowed the title of a favorite Christmas song (from the movie TOYS)--but it is the closing of the year. Don't worry, I'm not going to go though the WHOLE year in one post.

This year has been remarkable in many ways--but so are they all. This one is extra special because it raises the very difficult question of whether WE (as in humans), as individuals, groups, organizations, cults, political parties and even the entire human species can learn from history. One would think that is possible, given our high opinion of ourselves as a species), but if you study history carefully--not the high school textbook sanitized stuff, but the real deal, there is doubt that learning from past events is often accomplished by humans. Oh, we get through a couple decades of schooling and pass drivers tests, that sort of thing. Oh, and some of us are really good at learning new tech gadgets (not necessarily what they're good for). When we get to--"that didn't work very well and I should try something different--maybe radically different" we kinda freeze up and glance at the comfort of our old path, then realize that accountability in our current world is about a mile wide and an inch deep--you ain't gonna drown, even if you are found out to be wandering down the wrong path yet again! The other worrisome thing is the number of BOOKS written on how to learn from history and CHANGE! There are thousands--and like cold remedies--if there was one that worked, there would not be thousands.

As a species, and all the way down to individuals, we seem to find ourselves in the Oliver and Hardy world of "This is a fine mess we got ourselves into" deja vu syndrome. How come? Two main reasons: comfort and accountability (or lack of same).

The plan for this blog is to look at some major policy and strategic agendas that were front and center in real estate for a portion of 2010. Then figure out what happened (not always easy--transparency is right up there with accountability as a word that means something in dictionaries, but not so much in the real world) and what should have happened instead. If there's still courage left (yours and mine), I'll ponder whether comfort and a lack of accountability may well leave us on the same questionable paths in 2011. That leaves us at one of my favorite quotes--the difference between a rut and a grave is the configuration of the hole (the original said shape of the hole, but that's not quite right--they are both sorta rectangular--OK that's my OCD kicking in).

As for accountability, I now feel obligated to explain the paucity of posts, because I promised a plethora. Been sick with sinus and middle ear problems, plus I was writing other stuff during periods of relative lucidity the past week. In addition, lack of open houses has cut into my reading time (that is changing this week), but I'm started on a new book (Drive) that will generate a rich assortment of posts. It explains some misgivings I've had about the real estate industry and wikinomics for the past few years. Any one book that can do that has got to good.

Seminar musings delayed

Started writing this before Yeti's problems and some other stuff assumed high priority. Still some good thoughts, so I'll finish now.

Wasn't ready for the Photography Seminar (that was more about psychology than cameras), but I never get ready. It is easier to go with the flow when you're sorta prepared, but not married to the content. I did a PowerPoint thing that served as a matrix and will provide a starting point if I do something like this again. I had about 2 hours of stuff to get through in an hour, but did pretty well. I always learn more in the process of preparing for a seminar than the attendees learn by being there, but that's OK. They still get bleeding edge stuff they wouldn't get elsewhere (see earlier post re Back to the Future seminar in 2007(?)).

I'm still learning after all these years in a business not driven by theory or creative insight or anything more intellectual than incessant repetition. There's plenty of room for theory in real estate, but when the only metric of success out there is gross closed commissions, the status goes to those agents and firms with the biggest GCCs. There's no compelling incentive to break out across new horizons of quality service. The consumers use real estate services so seldom that most never actually figure out what quality service might represent.

Anyone ever ponder what would happen if real estate agents disappeared from the face of the earth? Buyers and Sellers would still do transactions--and they might do them better and more cost effectively. Other countries have very different real estate business traditions--and in those countries that are greatly different from the US, there are typically no powerful trade associations. It is miraculous how people manage to find homes and build subdivisions without a huge real estate industry to help them!

Do the trade association actually improve the process or do they impede progress by creating a least common denominator, one size fits all standard of practice that raises the bar a little., but discourages the exuberant leaps skyward that signal those game changing epiphanies that make human existence fulfilling. In recent years  the trade organization have entered the business end of real estate in a major way. They sell products to the captive member audience who also received educational opportunities that--you guessed it--suggests that those trade association products are the best, if not the only way to run a real estate brokerage properly.

The trade associations are defining the cutting edge and also selling the whetstones to keep it sharp. It's a capitalist tradition!

Anyone ask the buyers and sellers if they are happy with the process, the forms, the quality of service etc.
No need--there's little else to choose from. You get what the trade organizations decide you get. Want more? Good luck!

NOTES from AFTER THE SEMINAR
It went well--PowerPoint was good and time wasn't a huge factor--ran a little over and didn't get much time to play with enhancing photos, but that gets pretty dull unless your really motivated and already familiar with the software. A couple of area need more work, but I've got ideas already on how to improve integration. The other benefit of PowerPoint is there something permanent created--I can expand, or divide it into several shorter segments, etc. Otherwise the notes get lost in the computer files and development ends.

Hope to do more seminars next year--this is the only seminar this year, aside from the Energy Rating event. The state association decided to take over the education business and local content is rare or nonexistent anymore.The title companies can't do much of anything after latest regs kicked in, so its a desert wasteland out there. The state association offerings do have value, but they are loaded with legal, risk management stuff, that ignores how the real world works and considered the principals a threat, rather than the stakeholders that support the whole real estate industry.

The little details and techniques that characterize excellent agents are lacking from these generic offerings and with a minimum of office culture in the current business model there's no place for new agents to pick up that sort of knowledge.

The real estate office was a much different place 25 years ago. Technology hasn't been kind to the Buyers and Sellers in terms of real estate service levels. The irony is that they WANT MORE technology, not less, but consumers don't always know what they NEED, particularly when the industry admires many things with greater intensity than service levels (as in GCC).

Look at automobiles as a comparison. There are inexpensive cars that perform well. There are more expensive cars that perform somewhat better. Then there are very expensive cars that boast even more performance, cutting edge engineering and outstanding styling/design down to the last detail. Some consumers are willing to pay the extra to get the very best. Watches are similar. I use a discontinued sports watch I got at a discount sporting goods store--keeps good time and cost $20. A friend has a Rolex, a Breitling etc. etc. They keep excellent time and look fabulous. There are fine watches for those who value the ambiance, aesthetics and performance of quality.

In real estate, there's really not much difference in service levels. What if you wanted the VERY best representation in selling a fine home? We're talking attention to every detail from diverse analytics to compelling ad copy to exquisite photography, dynamic videographyGCC world runs quite nicely just the way it is--sides and commissions measure success. List the house, lower the price and it will eventually sell and then go do that again and again. If you do it often enough celebrity status is possible. The superstars have the same tools as everyone else and know how to use them relentlessly--like a skilled production painter spraying a stucco wall and moving on to the next job. Technology plays a role in this pattern--offering a least common denominator platform, but at what cost to the consumer? How many Buyers miss buying the RIGHT HOUSE. How many Sellers miss the RIGHT BUYER. We don't really know! Where are the true artists of real estate sales? Most of the singular artists are in other professions where creativity and innovation are rewarded and appreciated. Real estate mostly appreciates gross closed commissions.

Will those trends change in the future? If they do, it won't be due to the encouragement and nurturing of the trade associations.

Turkey days

Another of my cats, Yeti, is at peace. Second in a few months, following Eva the office cat who had a stroke at 13 year (or so).

Yeti, nearly 16 years, was born in my bed and was a gentle giant of a Ragdoll. He weighed almost 30 pounds in his prime and was just a spectacular cat in so many ways. Huge blue eyes. Whiskers a foot wide. Athletic to an amazing degree, considering his size. He just seemed to levitate! His 30 lbs would effortlessly leap up on counters or sail up stairs like he was a giant chipmunk. He did well through his 13 th year then started to loose weight. Thyroid issues forced him on meds and he gained some weight back in first half of 2010. Later his kidneys got progressively worse. His condition took an abrupt nose dive on Saturday, Nov 20th. Test results were not good so I made the difficult decision. He is survived by his sister Sasha--different father, but also a big cat--22 lbs. She's adjusting and so am I.

Cats are perfect at being cats. Much better than humans are at being humans. Most of us never figure that out.
They offer unconditional support--something unknown among humans. They don't care how your day went, or if you were victorious or fell on your face. They purr regardless. They also choose not to be trained. They are what they are--perfect. My mother was always trying to train them--and in her own mind was successful. In her estimation no living creature was ever worthy the way it was. There was always room for improvement and she knew the path--LOL. Yeti and Sasha seemed to smile at her efforts. After all, they'd lived with me for 12 years before they met her!

2010 made my life simpler. My mother died, two cats died, divorce is underway and a friend or two drifted off. Simple is good in some ways, but as the connections decline, so does socialization.

At open house today, I resolved to get back on the blogging with greater intensity. The vacation rental issue is settling down a little and there's sure not much real estate business going on. I certainly have the time. New books to read and comment on too.

More posts this week!

The art of politics

Installation dinner last night at one of the associations I belong to. Food was pretty good for a change--at least warm and edible--big plus for banquet fare. Small turn out, but evening events tend to be lightly attended because of cost and timing. Lunchtime installations are well attended, but fewer of those present are really interested in the purpose.

Those involved in local associations, and other organizations big and small, tend to fall into two general groups. Those who pursue the political arts and those who'd rather engage in the creative arts. There's not really much crossover. This being the US, the political types get the spotlight--and usually love it with boundless intensity. The creative types run the gamut, some crave admiration of their art and others focus primarily on art production, with little concern about who appreciates it.

The evolution of real estate, or just about anything else, is not driven by the politicians. They'll take credit for progress when they can get away with it, and any member of the public who doesn't understand the difference between new ideas and spin doctoring will believe them. The true creative artists know that innovation and purity of thought cannot be molded, spun and summarized to suit the ever changing political winds, without a large measure of damage, dilution and mutation. We live in a world of mutated ideas, a sure indication of political ascendancy.

Occasionally an individual is thrust into the opposite mode. Typically the creative artist treads into the political spotlight. Politicians usually know better than to try the other direction. The result is seldom pretty. I have some experience in that area--LOL. The political types become instantly uncomfortable with a creative person in close proximity. The usual motivational hot buttons (power, control, celebrity) are not easily pushed. There's also the chance that the misplaced creative person might actually do work and achieve something tangible, maybe even something game changing. That would reset the political terrain in a very awkward way.

Politician want to remain on the path that brought them to their present exalted status. They don't want to leave the path. They are comfortable there. They have control there. They have power there. They have stability there. The public may need the politicians to embark on a new path to meet new challenges, but the interests of the public are seldom given higher priority than the comfort of the politicians---by the politicians or the public. The public always gets the quality of political artists they deserve. The seldom get the quality they need.

Technology and Wisdom

Did the seminar last Friday and among the powerpoint gems (those are really cool phrases that you come up with to fill up powerpoint pages) was a one liner I've used before "Technology is good, Wisdom is better".

One of the people at the seminar (among the very few--hey we're talkin real estate agents here, I wasn't surprised or anything) mentioned that line from the seminar in a Facebook post AND that started me thinking about why technology DOES NOT necessarily make us smart. We THINK it does. I mean we learn to work some new cell phone, or computer or Blu Ray player and we're stoked. WOW! Forget the passing years, we're really with the program! I'm thought a techie 'cause I can work a lot of techie stuff and got my higher education during the rise of the computer. Fortunately I also read a lot and most of the books I read back in the day had NOTHING to do with today's technology. Some of the books are just as golden today as they were 40-50 years ago.

What if technology doesn't work like that? What if we don't get smart? What if we actually get less smart and farther away from wisdom than when we started?

Driving home, I asked the question--WHY?

In one sense technology does make us smart---about the technology. Yes, we can use it, but that's a mixed blessing, because it's cool and it's generally quicker, or more satisfying than what it replaced--THAT is a key. REPLACED. What did the technology replace?

Technology SAMPLES and PROCESSES and COMMUNICATES information about the REAL WORLD. It tends to incorporate errors into each of those steps and they are seldom linear or predictable to the recipient of the communication, who gets a biased subset of the information available in the real world. The recipient could take a critical look at the communication and the process and the sampling, but that defeats the whole purpose--besides, surely someone already did that, HUH?

I was a scientist for about 20 years in another lifetime and did a fair amount of field work sampling habitats.
We were very concerned with those samples and started with carefully thought out sampling designs, then moved to protocols and finally determined the best sampling apparatus or on occasion built a new apparatus. Then we tested the sampling against other sampling regimens before we did full blown field work.

Today things are different. The technology drives the sampling design and protocol and analysis and communication. A new technology arises and it's assumed it's better and out it goes into the real world to do its thing and we wave the results gleefully in the air--eureka! Technology triumphant and we're smarter already! Oh really?

In businesses such as real estate where theory is treated like a guy wearing a tux at a bull riding contest, there little interest in what information is being left out, sampled in a biased way or just mismanaged. There's also the fear that someone else may out tech our business model--OMG!

Too bad, because real people live in real houses. They don't live in a virtual world defined by technology. The basics of living in a house or a tent or a cave haven't changed much since humans evolved. Can technology replace all that primal stuff just because the cerebral cortex is a pretty versatile and plastic part of a very complicated brain? Probably not.

Technology is good, but Wisdom is better.

Perhaps wisdom doesn't need technology as much as technology needs wisdom.

computer note

I've been so busy I missed the debut of the new Mac Book Air models. There's 11.6 inch and 13 inch models. They are REALLY cool. Form factor is great and the tomorrowland design elements are Apple through and through.

The smaller model isn't much heavier than an iPad and of course it has a keyboard and runs the full Apple OS. For those pondering an iPad purchase--consider the new smaller Mac Book Air. It's about the same size, it's a computer (albeit not the only computer you'd need) and for those who write a lot, the keyboard is actually pretty nifty. Processor is not cutting edge, but the performance tests suggest the whole thing runs faster than you'd expect from the pieces. Boot to browser is less than 20 seconds--that is amazing with PC boot times in the 2 minute range these days.

I typed on one at the Apple Store and the keyboard has pretty good touch and spacing. I am a touch typist so keyboards are important. The kid at the store was amazed to hear my story of buying a Mac 512K and Imagewriter I in 1985 for $1900. He wasn't born yet. At first I had external and internal 400K single sided disc drives--later upgraded to double sided, providing 800K a drive. Data on one, OS and application on the other. Things worked fine--word processing, using WriteNow, was faster than PC Word today. Have we advanced all that far in 25 years?

Now I'm leaning toward a new small MacBook Air and maybe later an iMac as my main computer. This laptop is 3+ years old has some quirks and is full to the brim--photos do that. I like texting on my cell phone, but have never been excited about email and Internet on it.

I know, things just get more complicated. That's the one sure thing about technology.

One more quick topic!

Heard a brief talk re the statewide MLS that isn't, and isn't even called that anymore. Being run by the large mergor for the small mergee (actually the state association rag tag assortment of small contracts). The old application has a new name, but is still not fully finished--after two years of development.

Here's the point I want to make. Where is the 4.5 million dollars (and all the hidden costs in terms of volunteer time and staff time that doesn't show in the 4.5)? There is now optimistic talk of the great job the mergor staff is doing running things at the new merged entity and the tacit admission that the committee/staff of the state association didn't really have the ability or inclination to accomplish the original goal--do ya think??? So the money is gone, the time is gone, the competitors for MLS technology leadership marched on as the money and time left--two f them are rolling out Flex based MLS applications in beta already.

What are the consequences of this episode at the state association? Apparently none. It's being treated as an oops! Were there lessons learned? There weren't any learned when they dropped over a million dollars into the stillborn intelligent agent money pit not so many years ago. This may be no different. Teflon coating for everyone?

Accountability is in short supply among the Kool Aid Krowd. Too busy climbing ladders and kissing anatomical metaphors. After all, it's only member dues money and the cost per member isn't much--hey, it's our organization so we're just stuck when things go sideways. Bad stuff happens---but why does it happen again and again? Could it be that the core leadership and staff stay in place for decades? Same people doing the same stuff generally leads to the same results. There is no effective way to change that with the present political system in place. It takes a long time to enter the ranks of leadership and only those who chug the Kool Aid ever last that long--once approaching leadership levels, those power-inebriated aspirants would never jeopardize their ascent by suggesting things weren't perfect the way they are. Great system, except the real world operates in a different arena----AS DOES THE PUBLIC, whom we represent.

Slow start for Nov!

Many distractions going on now making it abundantly clear that BLOGGING is not a really high priority in my life at present (probably a good thing). My seminar is coming up Friday and I'm not ready. Trying the get the divorce settlement agreement finished and approved--looking pretty good now. Vacation rental hearings continue--been doing a lot of writing on those. A listing I have in SLO has new price and new ads and open houses coming up AND the photo business is seeing a little bump in activity. In addition, I injured my foot, can't run for a couple more days, and that always puts me in a funk. Endorphins are my friends!

Don't get me started on the elections. California fared better than rest of nation for the progressive agenda, but overall, it was disturbing to see the politics of fear and self/other loathing win a major share of the votes.

The best and the brightest are not running for office at a time when we need them as much as ever in the history of the US. The sobering thing is that politics has become a non-intellectual pursuit. Knowledge, theoretical skill and creativity mean nothing in today's political climate. It's all about pandering to latent fears and base instincts. You could call it the tribal imperative, but that would be unfair to the ancestral hunter gatherers.

No sign of a change and no sign of a middle ground where cooperation and bipartisanship might actually focus on problems instead of doctrine. The PACs and major corporate contributors tend to push money to the extreme ends to the political spectrum. Know any PACs that specialize in supporting moderates? That needs to change, but all the politicians who are in office are loath to sacrifice their campaign money to achieve better result for the public. Job number one is to get elected and job number two is to hold that office or get elected to a higher office--there are no other significant jobs in the priority list.

whose party?

This is sorta a follow-up to the Anaheim meetings regarding the "Realtor Party" and it's relationship to traditional left/right ideologies. The PAC monies from the state and national association action funds are indeed distributed to both sides of the isle. See Open Secrets for an education on the allocations. There are fewer Republicans so the distribution of funds per candidate doesn't reflect the distribution per party. The key is that voting record on real estate related issues is the extent of the consideration. The remainder of the recipients voting and other activities is not considered, including deranged comments to the press and receipt of other campaign contributions from other PACs. Whatever the PACs and positions, it's all fine if the voting record on real estate matters measures up. I'm sure the many right leaning members of the state association are inflamed that some of the pinko progressives on the left fringe get real estate PAC money, just like the few liberal progressive members cringe at the thought of their PAC contributions going to a radical pro life candidate.

The real question is whether supporting correct voting on real estate related matters is getting in the way of electing quality candidates. The recent performance of Congress could dispute the wisdom of focusing on one aspect of a politicians voting record. We need better people in Washington. Much better people. Another failing is that the PAC monies dolled out for real estate voting records do NOTHING to build a middle to the political spectrum. Having an extreme far right/tea party group on one side and a not so progressive left on the other with little in the middle is clearly not working. There are essentially no moderates and no inclination to be bipartisan at anything more contentious than a July 4th BBQ.   

Back to Anaheim. A brief comment about the process at the state association exemplified by Land Use and Environmental motions/discussion of Prop 23. The whole process might have unfolded more smoothly if an overview of the significance of the various possible positions the state association could take had been presented by the Chair, or the state or national political lobbyists BEFORE discussion commenced at the microphone. People like to make decisions and take stands---up or down. The so called “Realtor Party” is allegedly neither right nor left, but it is important to realize that it has a delicate existence only in a very tightly defined political habitat where an immediate, direct and readily apparent nexus exists between the issue at hand and the interests of the real estate industry (and in most cases, current buyers and sellers). If the nexus is clouded, a half step removed, results from a secondary effect or is fuzzy in any other way, discussion of the issue in committee tends to depart the bounds of the Realtor Party and revert to conventional right/left political ideology. The results are predictable, but not always in the best interest of the organization, because legislators, real estate practitioners (and the public) span a much broader spectrum of political beliefs than those attending CAR meetings. There are allegedly liberal progressives among the state directors, but I'm not sure I've ever seen one admit to it. Where there is a range of opinions among the directors and an uncertainty about the actual effect of the proposition, a neutral position is clearly the best outcome. The neutral position to a long way around and there was considerable doubt on the way to the floor of the directors session. In addition, a “For” position would have created ripples in the energy/environmental arena impacting CAR's credibility in commenting on future legislation with much more direct importance to real estate.

On more random political observation. Regulation and control take on an ominous meaning for many purporting to be conservatives--unless THEY are doing the regulating and exerting the control. Governmental bodies are most often associated with regulation, but in the absence of governmental regulation we don't actually have a lack of regulation, we have regulation by the private sector. Deregulation of the banking industry produced regulations crafted by the banking industry. Does anyone feel all comfy after the banks regulated the public into an epic fiasco of lending largess that produced world wide ripples that may not attenuate during my lifetime? There is little real difference between the regulatory greed of big government as compared to big corporations, who in turn have big PACs to influence big government to selectively defer regulation to the big corporations.

The state and national real estate associations have a plan for how the public should buy and sell residential property. Through their products, training and forms they attempt to regulate the residential sales arena (commercial is a whole 'nother story). They want to keep the banks out of real estate and keep the government out of real estate so they can regulate it themselves. As I've posted before, in many cases what's good for the trade associations, the industry and the brokers is good for the consumers, but not always. Where interests don't coincide, as is the case with green issues, such as energy labeling, the real estate trade organizations follow their doctrines to a fault. The public can push back and have whatever kind of real estate experience they want--fiduciary duty and all that---but only if they know where their interests really lie. In an industry measured by GCC (gross closed commissions) the level of effort to educate consumers is seldom noteworthy.

In a final note, I will be joyous when this election is over. The candidates, the mud, the rhetoric and the posturing have explored heretofore unimaginable depths of political depravity. Time will tell, but there may be no real winners on November 3rd.  

outa the groove

Been lax about posting since state association meetings. They are mind numbing in their predictability, but that's only a partial excuse. I also had to write a report on one of the committees, which turned out to be a bigger job that I anticipated, because of the political leanings of the readers, me and the state organization. All leaning in different directions--LOL. Finished it and submitted it and have heard nothing more--few ever read the reports. The amount of interest in state association activities among the rank and file practitioners is slim and none.

I'll throw in a part of the report that turned out to be enlightening to me--that's next post on the state organization "party" and how it relates to the right/left, republican/democrat ideology.

Today (see, I'm getting around to it--finally) I want to comment on a segment of the main event, a real estate show put on each year to raise funds for the region. One of the presenters focused on social media, other technology and what the consumers of real estate services really want from their agents. Interviews were done recently in Phoenix (I lived near there in Scottsdale for 30 years) and the results were reviewed. Many of the conclusions were based on the assumption that the consumer is right, that more technology is always better and that having more information helps the decision process. Those are typical viewpoints in the industry and they shape the state organization, the various vendors and the real estate community. Are they valid? Minor point?

If you've read way back among my early posts, you know I once did a seminar titled Back to the Future in which I argued that real estate had a golden glow 20-30 years ago that's lacking today.

Technology is here to stay and it's VERY easy and VERY profitable for the trade associations and the vendor industry to pander to the current consumer enchantment with new technology and strongly urge the adoption (and purchase) of all manner of technological bling by real estate agents who desire to remain in line for impressive business volumes. The inference is that without technology agents will suffer financial failure. The old fear factor at work.

Relatively impersonal Twitter and Facebook communication is becoming the norm, at least for the tech generations. Facial expressions and body language and vocal intonation are rarely in the mix in this new world. Information and research tools are made available to the consumer with little background or training. It's assumed that there is a universal genetic ability to perform multivariate analysis on several hundred fields of data and magically reach the perfect decision about which house to buy. Don't need an agent for that--the consumers can do it themselves. Of course many of the agents are so immersed in the technology pool that they believe this approach works. It sure is easy--turn the consumer loose with the data and get ready to write a contract--which can be done with e-signatures. Sure, the consumers will understand the 30-40 pages of paperwork! Using technology makes people really smart about whatever the technology touches, doesn't it?

The bigger question involves whether the real estate industry gives the consumers what they want or provides what is in their best interests.  Many would argue that isn't an important question because getting what they want is ALWAYS in the best interests of the consumer. What about subprime mortgages, super sized fast food, botox, mega SUVs etc., etc. Maybe real estate is just different?  

Back to the RIGHT HOUSE and RIGHT BUYERS concept as a measure of success (see earlier posts). If the Buyers don't always buy the RIGHT HOUSE, but do always get the technology and information they want, is that enough to represent success for the industry and the agents on the front lines? Many would say--DEFINITELY! Money metrics still prevail. Turn the sides and cash the commission checks. If technology makes that easier, technology is good and worth the expense. Technology is far easier to obtain that wisdom--it just takes money and if it makes money too, so much the better.

That's enough to digest. I'll continue to develop this argument, but rest assured I am not against technology, I'm in favor of wisdom applied in full consideration of human behavior, evolution and capabilities.

The place in which we live has a primal role in our existence dating back before we became human. Technology is an overlay that may not always assist in decisions involving the RIGHT HOUSE or in many other areas of our lives. Technology is seductive in its ability to replace ancestral patterns, but how plastic is the human brain in the face of unprecedented stimuli? How well do those signals map onto the foundations of human experience--like choosing a place to live?

back from disneyville

Back yesterday from Anaheim and the fall meetings of the state association. Anaheim is a strange experience. Nothing is human scale--the hotels, the parking lots the sidewalks the streets are all designed for hoards of people in their quest for escape from reality with the mouse and company. I stayed in a vintage motel about a half mile from convention center--got to see the homeless on my morning runs. I made at least two walking trips a day from motel to hotel. Got a nice tan.

Meetings were pretty typical for fall. A few landmarks were notable. The new state regional (whatever that means) MLS was top of the list. There was a sorta farewell to the old statewide committee and chair. The baton is being passed to the mergee's leadership from the mega regional in LA area, although there is a new board of directors, but there was also an old board (with many of the same people) allegedly supervising the old statewide MLS as it twisted and turned in the wind----while running up over $4 million in debt (that's not including the intelligent agent fiasco--another million). With luck the Board will not be involved with actual project supervision this time. The mega regional has a good track record of achievement and the state association has amply demonstrated that the politically astute ladder climbers are not necessarily well equipped to run a tech corporation.

The real question is whether the application entity that evolved from the old statewide will survive the need to achieve sufficient user base to survive. The application is still not fully complete and I expect that most new accounts will opt for the mergee's existing vendor.

Personally I'd like to see attention turned in the direction of making MLS system reach more of their potential, enough of their potential to compete with the 3rd party aggregator sites that now attract much of the public's interest with their entertainment value, despite having data of much lower quality than MLS public portals.

Next post will delve into the real estate political arena. The politics of the state association were showing in the discussions of ballot propositions and other matters. The real estate "party" attempts to create a strange world that could easily become the basis for a theme ride at Disneyville.

I'll end with an image only possible in LA---I saw a late model 5 series BMW--with a Domino's Pizza sign on the top --- out making deliveries--OMG!

Also went to the OC Car Show Friday night--that produced some other classic images of LA.

Talking and Tightrope Walking

Finally, after two issues with virtually NOTHING green, the state association magazine has a green feature story.

Greening the MLS. Old news, but they take a big swing at it, although they really mention only a handful of the many MLSs that already have green features in the data (including the regional I belong to). There's still a feeling permeating the content that it's all about using green for business purposes, not in recognition of a greater planetary goal of enhancing the quality of life of subsequent generations. Guess that's some other entities task.

A telling paragraph features a quote from a national association leader of matters green stating "one of the obstacles to faster implementation of greening the MLS is the erroneous belief by some that green practices are a left political agenda". OMG! Can you imagine how a member of the public with a progressive liberal political slant and a sincere concern about the global climatic trends would react to that statement! The mere suggestion than some of those practicing in the real estate industry would put politics above client interests, planetary priorities and good sense is an striking indictment of the industry and it's leadership. That sort of non-fiduciary attitude didn't appear by magic. It was fostered by industry practices and leadership over the past several decades. The greening of real estate ushers in a time for a change of attitude in the industry and among the leadership. The are now talking the green talk, but the walking part isn't happening just yet. It may not happen with present leadership--something about dogs and tricks.

Received an email from the state association that my committee appointment requests for 2011 were approved. Land Use/Environmental and Housing forums, same as last year. The show is always entertaining and there may be some new scenes in the pageant this year. The green mist is slipping into the foreground and threatening to obscure some of the doctrinaire attitudes of past agendas and individuals. Will the organization persist along a well worn path or break out across new landscape to follow the public in a quest for a more sustainable future?

Climate change?

The Central Coast has had record heat the past several days. SLO hit 112 and Cambria even exceeded 100. Seem to remember Sept had some hot periods last year too. Maybe just normal variation, but maybe not.

Saw a National Geographic show last night that described the consequences of the melting of the tundra in Alaska (and presumably elsewhere in the polar areas). Carbon is locked in the permafrost--not released into the atmosphere as vegetation dies and decay releases carbon. As the tundra melts because of warming caused by GHG emissions the carbon then released further accelerates the warming--classic positive feedback loop with the potential to assume non-linear onset. Another reason to believe that climate change could be much more rapid than most accounts suppose.

Reviewed the state association committee documents over the weekend, including the propositions. Typical political slant to everything. Some things never change--regardless of the laws of nature (they must not be real estate related!!). Will there be a position taken on Proposition 23??? That will be interesting.

A couple posts are in progress. Will get them up before the meetings.

what's in a name??

Got the meeting materials for state association fall meetings coming up and an agenda items under MLS/Bus Tech meeting mentions a new name that MAY actually be the new name for the statewide that isn't. It uses the term "regional" together with CA--odd combination, given the statewide mentality. We'll see if that name is for real or just a placeholder.

Nothing exciting on the agenda in terms of action items re MLS--SO FAR. It's been 3+ months since approval of the merger--aside from the actual signing it's hard to say what's happening because it's all secretive at least to those who are paying for it with their dues.

Some comments tomorrow on public MLS portals, 3rd party data providers, franchise/mega independent sites and the public (remember them, those folks who pay the overhead of this crazy industry).

not real estate related

Just a quick post reminding readers of Open Secrets the website that posts PAC contributions by election cycle.
Checking the national real estate trade association's PAC contributions to House and Senate candidates is always entertaining and a little bewildering.

I was drawn to the site to check on monies received by the senior senator from AZ after that amazing display yesterday during discussion of DADT with the press. He received $3000 in the 2010 cycle through August. Guess that means he's a friend of real estate--but is that really all there is in measuring character? Maybe real estate related voting records supersede all other measures?

(un)green ripples

Other possibilities are raised by the one size fits all, no point of sale anytime, anywhere for any reason doctrine apparently espoused by the trade associations where energy efficiency and home energy ratings are concerned,. This is particularly true with the ever expanding left coast trade association/mega business enterprise. 

If indeed there is going to be an effort to minimize the consequences of owning a house with poor energy efficiency at time of sale, there are some hard questions to ask about other aspects of the business of real estate under various degrees of control by that trade association.  

The vast majority of the transactions done in the state employ that association's standard forms array. The content of those forms represents the legal basis for the transaction and accounts for much of the information about the house, the community and the decisions facing the Buyer and Seller in the transaction. Does the present set of forms adequately represent the relatively new world of green housing, energy efficiency and climate change issues? Will they evolve in that direction? Will the political (leaning just a bit to the right--LOL) underpinnings of the association influence that path? In the near future I'll run through the forms looking for content that addresses green and forms that could address green in a more helpful way. 

The association is also still attempting to gain control of MLS services in the state--thus far with little success. 

None of the existing MLS systems do a very impressive job of displaying green features, ratings, etc. in their databases or reports. Our present MLS system already has an array of green features, but the agents are very slow to populate the fields so it has little effective value at this time. There a great deal of improvement in the display of MLS information to better facilitate buyers and sellers making wiser and greener decisions about housing, but if the parent corporation behind the MLS subsidiary is not enthusiastic about perceived negative effects of bringing energy efficiency into the mix of factors in housing decisions, there's a real  question about how the subsidiary's new statewide (that's not) MLS system will represent the greening of the housing market. 

In all fairness it should be pointed out that the state association does not represent the public, it represents the members and the most powerful members are the broker/owners of the larger firms, mostly in the metro areas. That group largely represents "the industry" when lobbying promotions mention protecting "the industry". In many cases what's good for "the industry" is good for the member practitioners and also the public, but not always. It's that one size fits all syndrome again. 

Then there's the planet. I keep mentioning the planet, but there's a higher purpose involved with the greening of the housing market, at least if you believe that climate change is real and that human activities played a significant role in creating it.

The trade associations aren't very forthcoming with definitive positions on climate change and the causes. That topic is a political tightrope considering their base. Green is good because it saves homeowners money in utility bills--that's the thrust of all the promotion behind green features and the certification courses for agents--oh and the agents that are green certified allegedly do more business and make more green stuff. The ultimate greening of real estate!  

Green glimmer

Here are some way points I passed on the journey to prepare for the Home Energy Rating event. When I taught in college (another lifetime) I always learned so much more than I did as a student. Nothing like thge being able to stand at a podium and explain a topic to an audience that's following the logic and understanding the content.

First, here's a link to a Fact Check entry re the energy bill and the removal of point of sale provisions once therein regarding home energy ratings on resale houses. Makes the national real estate trade organization's position pretty clear!

1. Energy efficiency can (and should) be treated like any other measure associated with the decision process in purchasing a home. A HERS II rating is an attribute of the house, albeit not one that's readily seen. This is an important point in the event efforts are marshaled to limit use of Home Energy Reports, either by opposing point of sale mandates for Home Energy Reports or otherwise seeking to deny Buyers access to what is a material fact associated with each house and its cost of ownership.

2. In addition, if a HERS II score is just another measurable characteristic, it follows logically that some houses will have better scores than others. Scales of measurement run both ways. Some houses have more living area than others--we don't assume the smaller homes are UNDULY stigmatized and devalued or that a need exists to suppress the availability of living area figures to Buyers--and in fact small houses DO tend to be worth less than larger homes--other factors being equal. Ask any appraiser. The same thing should happen with HERS II scores. Less energy efficient homes may well be devalued by SOME buyers, but more energy efficient homes will be valued higher by SOME Buyers-- helped by the verification of fine HERS II rating. The trade associations only focus on the possible decrease in value--NEVER mentioning the other end of the scale and the benefits associated with a good energy efficiency rating. The proportion of Sellers and houses adversely affected by HERS II information is likely to be relatively small. Another tail wagging the dog scenario. Oh, and remember the planet?  

The objective (at least for many people, if not organizations) is to increase the energy efficiency of the existing housing stock in the most efficient way in the least possible time USING EVERY means reasonable available.

3. All Buyers won't have the same interest in energy efficiency ratings. Buyers differ in their priorities--be they ocean views, yard area, etc, etc. There seems to be an assumption that all Buyers will share a common perception regarding energy efficiency and ratings. That won't be the case. For a variety of reasons, some Buyers may not be sensitive to energy efficiency differences at all--that would decrease the dread decline in value used to justify lobbying pressure from the trade associations. Buyer just trying to enter the house market may seek out the most affordable houses regardless of the energy efficiency and even then may value the recommendations for upgrades included in HERS II reports.  

4. Home Energy Ratings produce index numbers that are not predictable by the intuitive expectations of the public, the real estate agents and in most cases the energy raters themselves. This contrasts with Home Inspections--that often confirm fairly accurate expectations about condition issues. As a result, the HERS II rating should be available DURING the decision process to enable comparison of energy ratings along with other variables before the RIGHT house is selected for purchase. Adopting the Home Inspection model of performing the HERS II tests after the house is in escrow will not work well at all. The benefits of being able to provide an objective energy efficiency number for comparison, offering upgrade suggestions and removing a source of uncertainty from the Buyer's decision process will more than offset the Seller's expense in obtaining a HERS II rating.  

Greener than what?

 The Home Energy Rating workshop on Sept 15th is history. Turnout was OK, fewer real estate agents than expected, but more members of the public than I anticipated. Event was reportedly mentioned at the SLOCo Board of Supervisors session the day before.

A couple of ideas occurred while I was running a couple days before (good thing the ideas were good, the run sucked--felt every one of my 62+ years--hate it when that happens).

Houses have a wide array of characteristics, features and attributes related to the house itself, the yard, the location etc. Some of these are obvious, some not at all. Some are easy to evaluate and compare, others are more difficult and still others involve personal taste that may defy analysis--the art effect--I know what I like.

Energy efficiency fits in there somewhere as an attribute of the house. With HERS II we have a standardized way of measuring energy efficiency that holds the potential to allow comparisons among otherwise similar houses (and dissimilar houses too). Predictably, trade organizations don't want point of sale HERS II reports--that's consistent with their historic doctrine, but this point of sale issue isn't about retrofitting or upgrading, it's just about measuring and making that measurement available to the decision process. That information may be a material fact to many Buyers. Buyer have the right to determine what their array of material facts are--the trade associations don't. Based on their own documents, trade associations don't want information about energy efficiency made available to Buyers, because it might devalue some houses with poor energy efficiency and it might trigger pressure to upgrade older houses at time of sale. It's important to note that this argument isn't really limited to Home Energy Ratings mandated at point of sale by ordinance. Logically, the trade associations would similarly oppose voluntary adoption of Home Energy Ratings as a prevailing practice at the time of a sale transaction. Put another way, the industry seem to believe energy efficiency should not impact value or desirability of existing housing stock, apparently to protect the "private property rights" of owners of older less energy efficient homes. What about owners of newer MORE energy efficient homes? What about owners of homes that received energy efficiency upgrades? Do those owners have a "private property right" to fully experience the benefits of energy efficiency in resale value or future appreciation? Measurement scale run both ways! Do we suppress sqft of living area because some houses are smaller than others? Decisions are made on the basis of differences--points of distinction. Prejudging what points of distinction the public might deem important is just bad policy.

In the more global view, how is this particular application of historic trade association doctrine consistent with increasing the energy efficiency of the exiting housing stock by the greatest amount possible in the least amount of time? It isn't. How does it benefit Buyers? It doesn't. How does it benefit Sellers? It might benefit a few Sellers of older, less energy efficient home who are able to complete a transaction to a Buyer who didn't care about energy efficiency (perhaps for economic reasons--could only afford the least expensive house regardless) or didn't understand the role energy efficiency will very probably play in present utility costs and future appreciation. MOST Sellers would actually benefit from wide use of Home Energy Ratings. Moreover, Sellers are often Buyers at a later time. Whose private property rights are being protected?

The ideal (you've read this before) is for the Buyer to find the RIGHT house--one that best meets the wants and needs of the Buyer from among all the houses available to purchase. Those wants and needs span the gamut. To evaluate how a house meets those wants and needs Buyers should have access to information across the full spectrum of attributes. Without that information, the decision is based on partial information reducing the probability that the house chosen is actually the RIGHT house. If the Buyer fails to buy the RIGHT HOUSE, an unknown Seller missed a sale and the Buyer made a less than optimal decision that could have significant financial and psychological implications.

On a larger scale, the real estate industry and the trade association are not concerned, at least in a statistical sense, with whether Buyers find the RIGHT house. The industry is focused on houses sold--two sides per sale--RIGHT houses are just another sale--it's the same commission whether it's the RIGHT house or not. GCC (gross closed commission) defines success -- just like it did 100 years ago.

Where's the Green come into the picture (aside from the commission currency color)? There may be a faint tint on the distant horizon--but it begs the question--Greener than what?

Maybe this climate change stuff is just a phase some of the public is going through?

Next post will cover a few bullet points from the event--pulled from my slideshow entitled Framing the Early Adoption of Using Home Energy Ratings in Real Estate Decisions.

sneaking up

In a little over a week, the Home Energy Rating event will unfold--how it will unfold is still pretty much up in the air. Another meeting in a couple days and then serendipity will take over--we hope.

I've been pondering how to summarize and pull the information together without excessively irritating the Kool Aid Krowd--there will probably be a few devout state association ladder climbers there. Sorta leaning toward just ignoring the state association--they've ignored energy rating of houses because of their persistent point of sale paranoia, so that's kinda logical.

The challenge is to stress to the public and agents that if helpful tools are available to assist in choosing the best possible home to buy, they should be used. Sounds simple, but the real estate industry doesn't like change and it doesn't like complications. New tools inevitably bring change and complications. The industry would rather just continue to do business like it does now (or even better-- like it did 25 years ago--BHI (before home inspections)).

State association leans in the direction of the Sellers (as always) and infers that information from home energy rating could decrease the value of their house if it's older and not upgraded. That's true, but continuing along that path you reach an end point suggesting that its OK for Sellers to transfer ownership to Buyers minus important information about the cost of ownership and potential future appreciation. That opens up the fair and honest dealing vs fiduciary duty threshold. Buyers agents certainly have the fiduciary duty going on. Sellers agents owe fair and honest dealing to Buyers and their agents. Where does Seller's agent fiduciary duty end and fair and honest dealing begin? Is there a gap just the right size for home energy ratings? I think not.

Home energy ratings provide potentially important information about houses, information that many Buyers would consider to represent material facts about the house. Home Energy Ratings are very seldom ordered, even though they've been available for years. There's a disconnect somewhere in this system of representation. The optimistic view is that home energy ratings are relatively new and most agents really don't understand the what, why and how just yet. The cynical view is rather darker.

It will be interesting to see how the event turns out next week---what the vibe is from the public and the agents--if anyone shows up at all.

I've got the beginnings of a slide show and will flesh it out later in the week.

real quick review

New state association magazine arrived yesterday--they exceeded last month's avoidance of green coverage. As you recall last month there was an ad from the national association re a green certification course and a promotion placed by a home warranty company to announce a new green tips booklet available for download.

This month--NOTHING. That point of sale doctrine is wagging the dog! The problem is the tail isn't connected to the public. They're more interested in green matters than ever. Who pays out the commission checks? The PUBLIC! Who do real estate agents represent in a fiduciary manner? The PUBLIC! Is it in the best interest of the public to ignore the green aspects of real estate (and the planet) and purchase houses without having a clue about their energy efficiency? NOPE!

Sounds like some changes are up ahead.

Discovery?

Saw a blog and press release re the former Statewide (but really not) MLS vendor firm, now morphed into another firm with a new name and a plan to market some iteration of the allegedly groundbreaking software nationwide. The R/D for which was paid by state association members money--ironically the members never really got a fully functional product and with the recent merger the new application may soon be history as the few MLSs using it may opt for the other vendor (which is a leader and will certainly be around in 5 years). I seem to recall that there is some royalty fee involved with proceeds coming back to state association--IF there are contracts with MLSs in the nationwide release. The exact arrangements there were never disclosed, even though the state directors voted "aye" with enthusiasm--it's that Kool Aid again.

It would be very cool if the application was finished at some point--been in development over 2 years and it's been over a year since the Fresno debacle. The Hybrid version--allowing existing MLS application and the new application to run in parallel is still a non-entity and may never see daylight, what with the availability of a strong alternative system used by the other mergee.

Meanwhile, the rest of the MLS vendor world is moving ahead, but there's more looking over the shoulder than looking ahead to glimpse a future marked by major advances in MLS technology to better accommodate the decision process that remains the hallmark of the real estate industry. Data quality and relevance to the decision process needs major upgrading, as does photo display and control. The technology is there, the will is not, largely because the users remain relatively passive players. They use what is available and complain about it all the while. Political forces control the users and ultimately the MLS vendor world.

As is usual, I'll point out that the interests of the public lie elsewhere.

TMI?

Reading another Summer book--probably the last I'll finish by Labor Day (have one more to go, so I came close). Cognitive Surplus by Clay Shirky is interesting--in a techie, social networking, wikinomics sorta way.

Premise is that because of the ability of the Internet to facilitate communication and participation there is a surplus of cognitive resources. People will make time to participate, given the right circumstances and often choose to produce and share, rather than just observe (as is the case with media like TV, books and other print media.

On the other hand--several million people following the tweets of a celebrity may not elevate the status of humankind in the greater scheme of things.

There are institutions and organizations that don't necessarily want participation by stakeholders--I suspect more than commonly thought. Complications arise and the status quo can be threatened--never palatable for individuals who've invested decades in climbing a ladder to leadership. Job number one is to get to the top and job number two is to stay there as long as possible--much easier if the ladder stays put.

Shirky goes into considerable detail in discussing the development of the printing press and how that changed the intellectual landscape of humans in remarkable ways. There are some parallels between that episode of rapid change and the Internet's ability to provide a forum for nearly everyone.

The average quality of the information available declined in both cases. There was MORE information, but quality declined. From some perspectives that may not seem a problem--there is better stuff out there, but there is also an abundance of information of minimal utility. The filter is ultimately the human mind, a device evolved pre printing and pre Internet for purposes considerably different than those facing it today.

This theme carries over into MLS systems. The present MLS systems have much more data that the systems of 25 years ago. The average quality of the data--not the accuracy (that's another topic) has declined considerably. Many of the data fields are very rarely used. It takes longer and longer to input a listing and because the MLS Vendor and the entity receiving the MLS experience no human costs for input, that's just fine with them. How much time is wasted each year by agent inputting data that will rarely if ever be accessed?

With the recent turf wars, the MLS arena will be shaped by mega entities plotting to acquire users, mostly through political means. Groundbreaking technological advances are unlikely until an eventual shakeout occurs. Leaping ahead into a new tech habitat only happens when the resources to support the business side are present. Politics trumps technology when leadership can remain detached from a rank and file focused on a success metric only remotely related to the technology. Houses will sell and agents will make commissions, regardless of technology. Agents will use whatever technology is provided--they'll always complain, but they'll seldom do more to improve their future. That's an ideal landscape upon which to exercise the politics of leadership. The technology vendors, have little motivation to innovate beyond keeping pace with their competitors, because without a politically arranged user base any truly groundbreaking MLS system would fail to launch and survive.

Where's the public in all of this? They're actually in a little better position, in that the public data display sites are supported by traffic and more traffic is determined by user experience, not politics. Unfortunately, most of the data come from the MLS systems one way or another--and the average quality of that data in assisting in the decision making process is declining with time.

the devil is in the doctrine

In 2007 I was working in an office with some elaborate lighting for artwork displayed on the walls. One of the incandescent bulbs burned out, so I offered to replace it, being a handy kinda fellow. At the time, CFLs were becoming available in a variety of sizes, styles etc and because the light was high on a track system I decided to find an appropriate CFL to take advantage of the longer life and lower energy consumption. Getting up on a ladder isn't one of my favorite things, thanks to bad knees and mild acrophobia.

I found a CFL at a local hardware store that seemed OK and clambered up on the ladder--had trouble getting the old bulb out and as I was struggling had an idea.

WHAT if all the houses had CFLs, as if by magic? That would save a huge amount of energy, but there is no magic that could accomplish that swap. How could the most CFLs be placed in the most houses over the shortest time? The prices, even in 2007 were very affordable--subsidized by a local utility company. Price wasn't the answer. What do all, or at least most, houses have in common? When they're sold, there are real estate agents involved in the process. The cost of the CFLs is negligible, even for a big house--what if the real estate agents made a commitment to replace all the bulbs in the house with CFLs? The listing agents could do it before the house came on the market or the buyer's agents could do it before the move in. In the heyday of the bubble era, over 600,000 houses sold every year--closer to 350,000 now. That is a lot of CFLs. Over a million houses sold since 2007. What a possibility for energy savings AND lower utility bills!

That possibility never materialized. Why? It's the good old point of sale doctrine thing espoused by the state and national association trade organizations. The day I had the idea I emailed a local broker prominent in state association leadership--he sounded excited. I also contacted the AE from one of the associations I belong to. She was excited, so excited that the association started a program promoting CFLs within a couple weeks. The president of the local association got on board and soon pallets of CFLs were delivered to the association and made available at a very reasonable price to agents. The agents were also enthusiastic. They took them on listing appointments, installed them in houses, gave them as closing gifts. The program worked very well through 2008. So what was the state association doing during that time. Well, they were thinking about it and I heard that the national association was also thinking about it. Word had spread, because the national association leadership always includes some past state association luminaries. They may have been excited, but in the end nothing happened. I was puzzled for a brief time, but then realized that swapping out the old bulbs was associated with the point of sale and that violated the trade organization doctrine of no point of sale expenses or complications, ever, for any reason---even if they are voluntary. They might give the governmental bodies THE IDEA of making them mandatory.

Is having CFLs and lower energy use and lower utility bills good for the Buyers? Yes. Is it good for the Sellers--there is some cost, but that's minimal and most agents would gladly pay for CFLs during the listing process. It is clearly good for the Sellers to market a home all equipped with CFLs and they save in utility costs during the listing period (that could be a long time). How about the planet? I don't know about the math, but a million houses with CFLs would save the energy in quite a few thousand barrels of oil. None of that happened because the trade organizations put their point of sale doctrine ahead of the interests of the BUYERS, the SELLERS and the PLANET and apparently felt good doing it.

We're all going to be confronting this issue again with home energy ratings. Trade associations don't like them because they typically occur at point of sale and there's a possibility that municipalities may make them mandatory--as is already the case in Austin, Berkeley, other parts of the US and throughout the UK. The interests of the trade organizations will be defended again with lobbying efforts, as they have been in the recently gutted Senate energy bill, which won't move this year anyhow, thanks to Republican obstructionism.

Agents have a fiduciary duty in most states to conduct themselves in ways consistent with the best interests of their clients. The trade associations have no fiduciary duty and defend their doctrines, even though they aren't always in the best interests of the clients their members are representing. In terms of logic, that's a very curious approach to take, particularly when the planet is in peril, as is the quality of life enjoyed by future generations of homeowners.

Although, the conservative right maintains that human activities have nothing to do with climate change--- if there really is such a thing as climate change. Could it be that the trade organizations lean just a bit to the right?

The PUBLIC has the power to change the stage by merely asking the question "what's a home energy report and should I get one to satisfy my interest in the energy efficiency of this house that I may be living in for decades?" Sellers should ask too. Would having a home energy report to offer Buyers help sell my home?

Agents will squirm at first, having been exposed to the aroma of trade organization Kool Aid

The alternative will soon be mandatory home energy reports at time of sale-- produced to satisfy municipal code. The trade organizations will fight and spend huge amounts of money and energy opposing required home energy reports, but I feel they'll loose the battle in the end and further erode their credibility with the public and the members who represent them.

Agents need to ask--what have BUYERS, SELLERS and THE PLANET done for me lately? Then ask, what have the trade organizations done for me lately? Make lists, then pick your path!

demographic delight

Here's a quick post re a small item in the state associations magazine for August. California brokerages by size analysis is surprising, at least to me. 58.7 percent of brokerages are individuals--ie firm has one agent--the Broker. That's unexpected, although I are one, at least in one business. 16.5 percent are 2 agent firms with 7.2 percent having 3 agents and 3.9 percent 4 agents. Add those up and you get 86.2 percent of brokerages have 4 or fewer agents, leaving 13.8 percent with five or more.

In a former life I ran two offices owned by a small corporation and affiliated with a national franchise. Did it for 18 years. It just seems that a bigger percentage of the offices had 5 or more agents back in the "old days". Wonder how many of the one agent offices are actually full time in real estate? May be populated with some semi retired agents who keep broker license active, but don't do much business except for old clients.

What the study doesn't address, and I know the numbers are available, is what percentage of the state directors and more importantly the state association leadership are from firms with 5 or more agents. Wanna bet the percentage is just a little bit higher than 13.8 percent?

There are some among state association leadership who are from small firms, but not very many. The state association leadership is dominated by members from large brokerages from large associations. Not surprisingly, the profitability of those larger brokerages is very high on the priority list for education, government affairs and the development of the ever expanding array of state association business ventures, run by various subsidiaries (allegedly controlled by state directors--but not really in practical terms).

So what's that mean for the offices with less than 5 agents? Not much--you get the same stuff everyone else gets who is member of the state association. Much of the education and materials are fine for any sized office, but not all. It's a matter of being aware and asking yourself--does this idea, educational offering or product fit a large office's needs particularly well? There's a reason!

For example, transaction management applications are seldom used by very small offices. They are popular in larger offices with transaction coordinators who actually use the application. The state association has invested heavily in its product--that still has little market penetration. Nonetheless, the larger brokerages believe they'll enjoy a reduction in risk/liability with files approaching perfection and electronically archived. Economically, the transaction management product doesn't make the best of sense, but it's popular with the power part of the demographic, so it stays, regardless of use.

In an odd twist the higher profile of the state association may be a partial reason for more smaller brokerages. 25 years ago the state association was not a big part of the real estate scene. If you wanted to really learn the ropes, you went to work for a large office who had experienced managers/brokers who could guide your learning process through their experience and knowledge. Larger offices were training grounds. Now, the state association has no much information readily available the role of the larger offices has shifted.

Does the state association offer all the information needed to become a quality real estate agent? Not entirely. 
The complex skills needed involve nuances well beyond the vision of the state association and even the franchises because Buyers and Sellers have interests that may not be well described by profitability metrics.