Back to the NEW

Listed spec house last week and back to open houses on a brand new construction. Fun talking to the public about real estate, general views on economy, the future, etc. Despite the national trade association (or union) proclaiming the recovery is underway, the public is not convinced. Bouncing along the bottom through mid 2013 was prevailing opinion among the dozen or so offering comments. It was breezy, but ocean views were stunning. Open houses are key, because from a drive by you'd never imagine the views were even half as good. Stairs in this houses have 6 inch risers and wide treads--makes a big difference--particularly to me after going up and down for 4 hours. Another of the little things Buyers should pay close attention to in seeking the RIGHT house. Stairs can be changed, but it's usually costly and often the space for the run just isn't there--so you're moving walls, taking up floor area.

I just finished The Thank You Economy by Gary Vaynerchuk--excellent read. Like many I'm still pondering where social media really fits in with real estate. Of course there are numerous seminars, webinars, face to face courses, etc. pushing the marketing opportunity--more business with less work approach so popular with many agents, but that seems to miss the transparency, relationship, communication (like---two way sharing) aspect.

Assuming Buyers want the RIGHT HOUSE and Sellers want the RIGHT BUYER, a pure marketing thrust misses the mark. What do Buyers and Sellers really want? It's unlikely they're worried about how the agent can do more transactions with less work. The Buyers pay for the whole show, in the final analysis, so getting them into the RIGHT HOUSE is probably a good way to evaluate success in social media.

I'm going to be posting some insights from my 26 years in this crazy business intended to expand the perspective of Buyers as they review property. MLS information is inadequate and because most agents and Buyers rely on local and national data sources that are no better than MLS data, it's a challenge to even approach the real world benefits of individual houses. House hunting has become a virtual experience, but living in a house is not. Sure, Buyers go see the houses at the tail end of the process, but by then they have preconceptions that may color their reactions. They may also totally miss the RIGHT HOUSE because it fell between the information cracks created by virtual bias in the systems that compile and distribute data.

Speaking of which, our access to the national trade associations property resource is now turned on. We gave our MLS data away and now have techie bling in return. I'll be posting some reaction as I test the system. It lacks commissions, but otherwise it is very MLS-like in appearance. It was created by an MLS vendor and cost is rumored to be in the $12M area. It ought to be good.

You may have read my posts expressing aversion to automated valuation models. That's what pays for the property resource. They sell the AVM to banks, etc. and it probably works OK if you want to get a rough estimate of the risk factor associated with a bundle of thousands of loans that might become a mortgage back security. Average accuracy falls into the 8-10% range. You gotta wonder what use that is for a real estate agent. Keep in mind that's average--there are some valuations that are better--and some are worse. There are predictable patterns to the accuracy. Houses with some characteristics will tend to be undervalued and some overvalued. No one is saying where these known shortcomings in the AVM are positioned. If we look at an $800,000 house that would mean the AVM could be, on average, $64,000 high or low. Acceptable for banks and bundles of loans, but agents? What about the public--would a Buyer or Seller want an agent to rely on an AVM that could be off over $60,000 in estimating the value of an $800,000 home? I'll have more to say about how AVMs will actually perform in traditional real estate situations.

Another aspect of AVMs is that they give appraisers a bleak view of their possible future and it's already pretty beak with HVCC insanity still getting worse. AVMs are fast, cheap and out of control--isn't technology swell! Create a virtual world and then sell it as a substitute for the real deal after convincing those impacted that it represents progress. Progress toward what?