Started revising a presentation I did in November regarding photographs and psychology. That effort produced the post from yesterday, but it also raised further questions about the property resource issues and even the direction MLS evolution is headed (at an excruciatingly slow pace--more on that aspect later).
I think we'd all agree that the Public has access to a great deal more real estate data than they did, say, 10 years ago. 25 years ago they had ready access to very little data--brokers and agents had access to very little data. Despite increases in the availability and amount of data, there remain many attributes that are not among the existing datasets. Do those attributes make a contribution to value, at least to some Buyers when looking at some houses? Seems a safe assumption, particularly for qualitative, non-linear and otherwise difficult to quantify variables.
So, the property resource RVM application produces a valuation figure that doesn't take those attributes into consideration. That raises some interesting questions about marketing, winners, losers and respect for wisdom among any and all of the stakeholders.
Lets suppose a house has some very nice attributes that produce outstanding emotional appeal among a large percentage of those viewing it. It's probable that the MLS dataset, and even the property resource dataset, don't capture all, or at least a majority of those special attributes. After all, MLS and property resource datasets are a "one size fits all" solution. Same dataset for the property resource all over the US.
It seems likely that the RVM figure for that house has a good chance of being low. Now that sort of occurrence happens all the time with "zestified figures" and no one pays much attention. This is the official property resource, though, WITH MLS data. Will Sellers and Buyers and Agents and Appraisers just blow it off?
If they do, what's the point in creating it? It's another "zestification" of reality and little more.
If they don't blow it off, Sellers of very nice properties with value cues beyond the dataset will leave some money behind at close of escrow---if they can sell at all.
Lets consider the reverse situation. A house that just doesn't quite get it together. It looks OK from the dataset perspective, but it's just a little tired, with an immediate neighborhood that's sketchy, subpar landscaping, slightly quirky floor plan, etc. etc. The property resource RVM figure may be on the high side.
So, does the Seller price the house below the RVM figure and use that in marketing. Maybe price at the RVM figure and hope some Buyer doesn't notice?
Again, do the Sellers, Buyers, Agents and Appraisers blow it off or take the RVM figure seriously? If they take it seriously are they willing to experience the consequences (and explain them to the members of the Public they represent)? The Seller might luck into a nice deal if a Buyer would pay the RVM figure, but where does that leave the Buyer? Where does that leave the Appraiser? Go with the RVM (AVM in that case) figure and move on, OR perform a scratch appraisal with careful attention to adjustments?
The underlying issue involves the credibility of an application that bases value on a subset of the attributes considered by the Public in evaluating prospective future homes. Ultimately, the RVM disrespects Buyers, Sellers, Agents and Appraisers who do their research, gather their information, analyze it in the process of arriving at a valuation that closely matches the real world figure based on market value. Will everyone go to all that trouble? Of course not, and even fewer will after the RVM comes into wide use. Clicking a button is intoxicating!
The property resource may well be another one of the fast, cheap and out of control advances in technology based more on Trojan Horse psychology than on member service. Did someone mention the Public??
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Monday, February 21, 2011
Sunday, February 20, 2011
More photo insights
Rainy day on the coast, so was at office instead of open house. Read some psychological papers re decision making and had another insight into the significance of photographs and their implication in the process of selling houses. The photographs create impressions of a home's ESSENCE--- if they're well done. We kinda knew that already, but here's the new wrinkle—when the Buyer sees the real house later during showings, it looks familiar because it matches (hopefully) the impression he or she developed upon seeing the photos. It is a reassuring, reinforcing experience. Compare that with the experience of seeing a house for the first time when it is actually shown—OR if the real house doesn't look like the photos suggest it looks. Which house is more likely to be perceived in a favorable way when decision time rolls around?
Still convinced that until MLSs and property resource systems do a much better job with photos they're going to fall far short of optimizing their potential in assisting Buyers in finding the RIGHT HOUSE and Sellers in finding the RIGHT BUYER.
But maybe that's not what they're supposed to do? Does anyone look at real estate business practices and technology from the public's perspective anymore?
What if I absolutely did NOT want to buy a Short Sale or REO. I wanted a quality house at a fair price with predictable closing date and in impeccable condition. How would I feel, knowing that almost all the educational offerings being pushed at the agents involve Short Sales and REOs.
Are we to assume that ALL the agents already know ALL they need to know about resales and other regular real estate stuff? I suspect they don't, at least from my personal experience. In some areas, Short Sales and REO aren't even very common--they certainly don't control the markets everywhere. What about those areas--OH, we're still in "one size fits all" heaven, home of the trade association profit machine.
What about the public? The trade associations don't represent the public--just to repeat myself.
Thursday, February 17, 2011
Property Resource Theater
Ever seen a really nicely done Playbill for the production of an original play--that SUCKED? The quality of the Playbill is not always a good predictor of the quality of the play. Real estate faces a similar situation with data, whether from MLS systems or other aggregations. The data don't necessarily predict the appeal of the property. In the early days of the MLS no one expected there to be a correlation between appeal and MLS information. The information was rudimentary, the photo (if there was one) was generally smudgy and fuzzy, barely good enough to allow recognition of the house for sale. Agents went out and looked at the real deal.
MLS data became much more comprehensive over the years and the ability to post photos improved, although most systems do a poor job with photos even today---LOTS of information in those photos adding to download times and refresh rates. Compromise usually dumbs down photo quality.
Now we have a burgeoning property resource, in fact a couple of them, that promise to consolidate tax data, MLS data (perhaps), neighborhood data, etc, etc. into a nifty container that will---what will it actually do?
Some think it will enable AVMs (automated valuation models) to put an accurate value on every property in the US. The key is "accurate"--who measures and how?
MLS data is far more detailed than property tax data, but has it become a good predictor of appeal? More to the point--are there attributes that might contribute significantly to appeal that are not represented at all in the data set or that are not very well represented? YOU BET!
The property resource advocates seem comfortable with that situation. The resource is not intended to be perfect, just significantly better than anything before. Nevertheless the latest AVM is touted as a major feature and that feature is a key marketing point in selling the resource to Banks and Appraisers AND convincing MLSs to hand over the data.
In theory, appraisers create an adjustment to accommodate attributes not covered by the data set, but there's an urge to suppress that kind of subjectivity because it may incur scrutiny from the AMC, trigger reviews or revisions that make the assignment less than profitable.
Bottom line--how valuable is a value estimate that leaves key attributes out of the consideration? Do we even care about MARKET VALUE anymore? The national and state trade associations seems to be saying NO!
They're, once again, creating a new reality that they can manage and profit from. That reality has little to do with the best interests of the public.
Cookie cutter, one size fits all solutions inevitably screw some individuals out of receiving optimal consideration for their needs and wants and assets. To an institutional/organizational mentality measuring success by the tens of thousands of sides closed, that's is just fine and dandy. It may not be the RIGHT house, but it's a house and it's a revenue statistic.
When I managed offices and trained agents back before techno-bling and corporate excess grabbed control of real estate this was a key mantra:
The Buyers and Sellers measure success ONE TRANSACTION AT A TIME!
If the property resource represents progress toward increasing that measure, I'm missing something.
MLS data became much more comprehensive over the years and the ability to post photos improved, although most systems do a poor job with photos even today---LOTS of information in those photos adding to download times and refresh rates. Compromise usually dumbs down photo quality.
Now we have a burgeoning property resource, in fact a couple of them, that promise to consolidate tax data, MLS data (perhaps), neighborhood data, etc, etc. into a nifty container that will---what will it actually do?
Some think it will enable AVMs (automated valuation models) to put an accurate value on every property in the US. The key is "accurate"--who measures and how?
MLS data is far more detailed than property tax data, but has it become a good predictor of appeal? More to the point--are there attributes that might contribute significantly to appeal that are not represented at all in the data set or that are not very well represented? YOU BET!
The property resource advocates seem comfortable with that situation. The resource is not intended to be perfect, just significantly better than anything before. Nevertheless the latest AVM is touted as a major feature and that feature is a key marketing point in selling the resource to Banks and Appraisers AND convincing MLSs to hand over the data.
In theory, appraisers create an adjustment to accommodate attributes not covered by the data set, but there's an urge to suppress that kind of subjectivity because it may incur scrutiny from the AMC, trigger reviews or revisions that make the assignment less than profitable.
Bottom line--how valuable is a value estimate that leaves key attributes out of the consideration? Do we even care about MARKET VALUE anymore? The national and state trade associations seems to be saying NO!
They're, once again, creating a new reality that they can manage and profit from. That reality has little to do with the best interests of the public.
Cookie cutter, one size fits all solutions inevitably screw some individuals out of receiving optimal consideration for their needs and wants and assets. To an institutional/organizational mentality measuring success by the tens of thousands of sides closed, that's is just fine and dandy. It may not be the RIGHT house, but it's a house and it's a revenue statistic.
When I managed offices and trained agents back before techno-bling and corporate excess grabbed control of real estate this was a key mantra:
The Buyers and Sellers measure success ONE TRANSACTION AT A TIME!
If the property resource represents progress toward increasing that measure, I'm missing something.
Sunday, February 13, 2011
Saturday, February 5, 2011
Double Speak?
Remember when the national and state association went bonkers to keep BANKS OUT OF REAL ESTATE?
Last year I posted that the Banks are still way into real estate in that many market areas are controlled by short sale and REO properties with banks pulling the strings in the marketing and transactions, then there are the many wishful souls trying to figure out what makes mortgage modifications fly (maybe same thing that makes pigs fly?). Good luck!
The national and state associations are certainly murmuring about this dire situation, but to admit that the Banks are controlling the business in many areas would call to question the victory dance performed after congress sorta did what the trade associations lobbied for. Sorta--the Banks are creative and powerful--there are other ways to gain control--which we are now confronting with the property resource being seductively dangled in front of MLSs around the nation by the national association (with tacit support by the state association).
The MLS signs a contract to provide data to the property resource and they get this really cool application and a whole cart full of data--for free!! What a deal!! BUT WAIT--these same trade organizations were for many years promoting the idea that listings had VALUE--the listing brokers controlled the industry because they had contractual rights controlling the data. Well, we now know what the trade organizations feel the value of MLS data actually is--ZERO, at least where the national association's property resource is concerned. Just give it up, cause it has no value.
It gets worse. The property resource application and the creation of the database cost several million dollars (no one is saying just how much). How does that work? Give the application and data away for free--after paying millions of dollars to create them? Here's the kicker, the property resource will be SOLD to Banks--and appraisers and that money will pay for the creation. So brokers GIVE their data to the national association so it can SELL it (after doing whatever it wants to with the MLS data) to Banks and appraisers. Why will the Banks and Appraisers want it? Well, (yes it gets still worse) there's also an application called an AVM (or RVM--you know what the "r" stands for)--automated valuation model that allegedly will spit out a value on ANY PROPERTY in the US. Supposedly it is better than the "zestified values", but we know how good they are. So how does this benefit agents and brokers and the public? A computer program that has the same, not always accurate, MLS data that we already have, plus some other data that we already have, albeit in various places, will now produce a value based on that data, but none of the other attributes that help shape value to real people in the real world. The human element is on the way out of appraisal and real estate.
If a Buyer really likes a property--doesn't matter how well he or she knows the neighborhood and real estate values--the application will second guess that Buyer's opinion--which used to be called fair market value based on what a knowledgeable Buyer would pay for a house exposed to the full market. Wonder if the BANKS will make a loan based on the Buyer's opinion or the AVM figure that the property resource produces?
The BRAVE NEW WORLD is peering over the hillside! Yes, there's something perverse about agents and brokers putting their local experience, expertise and knowledge into an new environment where those attributes have NO VALUE and doing it because THEIR trade associations say it's cool. Oh there's also an agent valuation model, icing on the cake! I could push some buttons and easily develop a value on a property in, let's say, Beverly Hills--where I have never even been inside a house. That's what the public wants and needs--opinions of value unpolluted by anything representing knowledge and expertise.
I still maintain REAL PEOPLE live in REAL HOUSES--the virtual world of databases and techno-BLING applications is very cool, but it is NOT where we all LIVE.
This is ultimately a "one size fits all" problem--common with state and national trade associations. Stuff works better when you only develop it ONCE and then you're good to go. You can sell the product to ANYONE who has the money. If the product doesn't match the real world--what the hell, change the definition of the real world. One size fits all is best--it's so elegant and clean--all those complications that once made life worth living are magically GONE, to be replaced by the ultimate one size fits all commodities, MONEY and POWER.
Last year I posted that the Banks are still way into real estate in that many market areas are controlled by short sale and REO properties with banks pulling the strings in the marketing and transactions, then there are the many wishful souls trying to figure out what makes mortgage modifications fly (maybe same thing that makes pigs fly?). Good luck!
The national and state associations are certainly murmuring about this dire situation, but to admit that the Banks are controlling the business in many areas would call to question the victory dance performed after congress sorta did what the trade associations lobbied for. Sorta--the Banks are creative and powerful--there are other ways to gain control--which we are now confronting with the property resource being seductively dangled in front of MLSs around the nation by the national association (with tacit support by the state association).
The MLS signs a contract to provide data to the property resource and they get this really cool application and a whole cart full of data--for free!! What a deal!! BUT WAIT--these same trade organizations were for many years promoting the idea that listings had VALUE--the listing brokers controlled the industry because they had contractual rights controlling the data. Well, we now know what the trade organizations feel the value of MLS data actually is--ZERO, at least where the national association's property resource is concerned. Just give it up, cause it has no value.
It gets worse. The property resource application and the creation of the database cost several million dollars (no one is saying just how much). How does that work? Give the application and data away for free--after paying millions of dollars to create them? Here's the kicker, the property resource will be SOLD to Banks--and appraisers and that money will pay for the creation. So brokers GIVE their data to the national association so it can SELL it (after doing whatever it wants to with the MLS data) to Banks and appraisers. Why will the Banks and Appraisers want it? Well, (yes it gets still worse) there's also an application called an AVM (or RVM--you know what the "r" stands for)--automated valuation model that allegedly will spit out a value on ANY PROPERTY in the US. Supposedly it is better than the "zestified values", but we know how good they are. So how does this benefit agents and brokers and the public? A computer program that has the same, not always accurate, MLS data that we already have, plus some other data that we already have, albeit in various places, will now produce a value based on that data, but none of the other attributes that help shape value to real people in the real world. The human element is on the way out of appraisal and real estate.
If a Buyer really likes a property--doesn't matter how well he or she knows the neighborhood and real estate values--the application will second guess that Buyer's opinion--which used to be called fair market value based on what a knowledgeable Buyer would pay for a house exposed to the full market. Wonder if the BANKS will make a loan based on the Buyer's opinion or the AVM figure that the property resource produces?
The BRAVE NEW WORLD is peering over the hillside! Yes, there's something perverse about agents and brokers putting their local experience, expertise and knowledge into an new environment where those attributes have NO VALUE and doing it because THEIR trade associations say it's cool. Oh there's also an agent valuation model, icing on the cake! I could push some buttons and easily develop a value on a property in, let's say, Beverly Hills--where I have never even been inside a house. That's what the public wants and needs--opinions of value unpolluted by anything representing knowledge and expertise.
I still maintain REAL PEOPLE live in REAL HOUSES--the virtual world of databases and techno-BLING applications is very cool, but it is NOT where we all LIVE.
This is ultimately a "one size fits all" problem--common with state and national trade associations. Stuff works better when you only develop it ONCE and then you're good to go. You can sell the product to ANYONE who has the money. If the product doesn't match the real world--what the hell, change the definition of the real world. One size fits all is best--it's so elegant and clean--all those complications that once made life worth living are magically GONE, to be replaced by the ultimate one size fits all commodities, MONEY and POWER.
Friday, February 4, 2011
SD pageant
Meetings were unusual in that very few bills have been introduced in Sacramento this year--lots of attention devoted the modest budget shortfall and the new Governor. The tsunami will come in about a week, but in SD there was little to look at. The down side is the next state organization meetings in May (first time ever--always in June since they went to 3 meetings a year in mid 90's) will start from ground zero and seriously test the still new committee system. Meetings already run over the time limit--inconvenient at least, but if an important issue ends up at the crunch toward the end of the agenda discussion could be truncated and that opens the door for complications in Leg. or Exec. and when that still leaves doubt the terrifying result is "doing committee work on the floor of the Director's Session"---OMG! That can get a little contentious--1000 people all with their own view--and often with barely slight understanding of any view remotely related to the matter on the floor.
Next post will address some recent examples of GroupThink and DoubleSpeak, the mother's milk of state association organizational culture. They just get better and better! We're talkin Banks--alternating between good, bad and ugly. It's actually humorous--unless you're short selling, REOing, or modifying--or know someone who is--OK maybe not so much humor after all--the only ones laughing would be. . . the banks and the politicians--and perhaps some higher ups with the state and national associations. That's not funny!
Next post will address some recent examples of GroupThink and DoubleSpeak, the mother's milk of state association organizational culture. They just get better and better! We're talkin Banks--alternating between good, bad and ugly. It's actually humorous--unless you're short selling, REOing, or modifying--or know someone who is--OK maybe not so much humor after all--the only ones laughing would be. . . the banks and the politicians--and perhaps some higher ups with the state and national associations. That's not funny!
Thursday, February 3, 2011
Back from San Diego
Been a long time-didn't realize!
Proves that if you want to blog, you need to work on it daily--or the weeks slide by. Why? No really credible explanation. Worked a lot on vacation rental documents--was invited to speak at state trade association meeting in SD and spend ungodly hours prepping for 15 minutes. The talk went OK. Not necessarily because of my input, but the organization is going to gather all vacation rental ordinances in the state and perhaps build a database. --so if a local government seemed inclined to inflict an ordinance or an amendment--it would be possible to check to see where else in the state that type of regulation had been tried already--then contact folks there, get insight into why it didn't work (almost all vacation rental ordinance provisions don't work). Should have been done years ago, but, until recently, the number of communities imposing ordinances to satisfy the fringe opponents who really believe they have the right to keep strangers out of their neighborhoods was small. The key is the fringe opponents vote and neither the vacationers nor the out of area property owners do. Not a surprise the politicians pander joyously, promising ever more restrictive provision that are needed because the previous set didn't eliminate the problems, mostly because there's no real effort at enforcement. Common governmental pattern--failure to enforce an ordinance produces a more restrictive ordinance instead of renewed efforts to enforce the old ordinance.
That sort of gathering of documents and sharing information is the thing the state association can do remarkably well--then there are the other things--more on those later.
San Diego was amazing--warm days, balmy nights, full of energy and hope. Young people with good jobs and better prospects in sufficient numbers to create an aura of optimism. Gas Light Quarter always an experience. I spent Friday AM in Coronado--feeling quite at home--probably because of advancing maturity. I sure haven't acquired old money lately. Drive back to SLO took 5 hours flat and was astounding for the mass of humanity and development I whizzed by in my rental car. OMG!
It's a very big urban area--the residents see little pieces--see the big chunks is scary! How will we control energy use to extend the life of earth as a human habitat when we obviously can't control much of anything related to human habitation?
Ok back in the blogging groove. More on meetings in next--which will be SOON!!
Proves that if you want to blog, you need to work on it daily--or the weeks slide by. Why? No really credible explanation. Worked a lot on vacation rental documents--was invited to speak at state trade association meeting in SD and spend ungodly hours prepping for 15 minutes. The talk went OK. Not necessarily because of my input, but the organization is going to gather all vacation rental ordinances in the state and perhaps build a database. --so if a local government seemed inclined to inflict an ordinance or an amendment--it would be possible to check to see where else in the state that type of regulation had been tried already--then contact folks there, get insight into why it didn't work (almost all vacation rental ordinance provisions don't work). Should have been done years ago, but, until recently, the number of communities imposing ordinances to satisfy the fringe opponents who really believe they have the right to keep strangers out of their neighborhoods was small. The key is the fringe opponents vote and neither the vacationers nor the out of area property owners do. Not a surprise the politicians pander joyously, promising ever more restrictive provision that are needed because the previous set didn't eliminate the problems, mostly because there's no real effort at enforcement. Common governmental pattern--failure to enforce an ordinance produces a more restrictive ordinance instead of renewed efforts to enforce the old ordinance.
That sort of gathering of documents and sharing information is the thing the state association can do remarkably well--then there are the other things--more on those later.
San Diego was amazing--warm days, balmy nights, full of energy and hope. Young people with good jobs and better prospects in sufficient numbers to create an aura of optimism. Gas Light Quarter always an experience. I spent Friday AM in Coronado--feeling quite at home--probably because of advancing maturity. I sure haven't acquired old money lately. Drive back to SLO took 5 hours flat and was astounding for the mass of humanity and development I whizzed by in my rental car. OMG!
It's a very big urban area--the residents see little pieces--see the big chunks is scary! How will we control energy use to extend the life of earth as a human habitat when we obviously can't control much of anything related to human habitation?
Ok back in the blogging groove. More on meetings in next--which will be SOON!!
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