A commodity is anything for which there is demand, but which is supplied without qualitative differentiation across a market. In other words, copper is copper. Rice is rice. Have real estate services become a commodity? Let’s examine this idea:
OUR FIRST HOUSE IN SHORELINE, WA
My wife and I purchased our first house in 1989. It was a small 2 bedroom, 1 bathroom home in the Shorecrest neighborhood of Shoreline, WA. We lived there for 16 wonderful years. It was 810 square feet, had a perfect-sized yard (about 6000 sq ft) and I remember we bought it because there was a raspberry patch in the back yard!
THE VALUE OF A REAL ESTATE AGENT THEN
The real reason we purchased that particular house was because we were working with a good Realtor. In the late 1980’s there was a rush to purchase homes as property values were rising quickly. This was due, in large part, because the Puget Sound was experiencing a huge migration of people, especially from California. We were afraid that we would be priced out of the market, so we went in search of our first home.
We worked with our agent for about two months, made several unsuccessful offers and were beginning to get worried when our agent was tipped-off about a house that was being remodeled by an investor. It was not yet listed. We rushed over to see the house, decided we liked it and wrote an offer on the trunk of our agent’s car at the Bite of Seattle. It was an exciting event. The house cost us $85,000.
Please ponder this for a moment: in the 1980’s there were 30-year mortgages and much tougher underwriting criteria. There were no mobile phones. Our agent used print-out reports that were produced by the “multiple service” only periodically. No one “owned” a fax machine, you had to go to an office or your bank to receive documents. There was no Internet, no websites, no blogs, no text messaging, no social networking……………….my gosh, email didn’t exist……..So why did we work with Margie, our Realtor?
1) She was highly recommended to us by a colleague of my wife. As it turned out, this was a good recommendation. She had years of experience and was great to work with!
2) She worked for a reputable real estate brokerage. The agent’s brokerage was located in the vicinity of the neighborhoods we were interested in.
3) She had access to the “listing information.” All we had were newspaper ads and yard signs.
4) In our world, she was an expert in the marketplace. We simply did not have resources or time to do our own research. Real estate was (or was perceived as) a complicated and difficult business.
To this day, I feel our agent’s greatest value was her ability to give us access to potential homes and facilitate us through the sale process. Additionally, she was sharp enough to keep her eyes and ears open for a home that was not on the market.
HIRING A REAL ESTATE AGENT TODAY
Let’s say you were going to purchase or sell a home this month, January 2009. And let’s say you were looking for an agent. What criteria would you use in today’s world, to select a real estate professional? Let’s use me as an example. How do I rate with my own criteria of 20 years ago:
1) I have been a Realtor for almost eight (8) years. In this time I have helped close to 100 families purchase or sell their homes. I am an Associate Broker. I specialize in North King and South Snohomish residential properties. My particular expertise these days is my current home-town, Kenmore, WA. In short, unless you and I have a personality conflict, I have the makings of a good agent.
2) I have worked for two very reputable brokerages: Prudential Northwest Realty and, currently Keller Williams Realty.
3) I have access to highly sophisticated technologies and databases that allow me to gather and interpret a huge amount of information about the real estate market. My main source of information as an agent comes from the Multiple Listing Service to which I subscribe. Non-professionals don’t have DIRECT access to this data. What do you, the consumer, have in today’s world? No longer does the consumer have only newspaper ads and yard signs. The consumer has access to highly sophisticated technologies and databases that allow them to gather and interpret a huge amount of information about the real estate market.
4) I consider myself to be an “expert” in residential real estate; however, is my value as a broker of information and market knowledge as valuable in today’s world?
REAL ESTATE REALITY IN THE 21ST CENTURY
“I’m worth every penny for my services and I’m not cutting my commission!” Such is the mantra of most real estate agents. Unfortunately, the market (and the consumers) don’t really care what real estate professionals think. With the advent of new Internet technologies, consumers simply don’t need to rely on real estate agents the way they once did. To the public, there is little differentiation between us. We can no longer claim to provide “value-added” to this part of our services.
In the last year, I have communicated with many agents who describe situations in which they had been working with “a good client” only to be released when a “less expensive” agent agreed to write a contract. One agent cynically said, “there will always be someone out there who will do the job for less.”
The professional’s “value proposition” has been diminished because of the information age. In his provocative book Freakonomics, economists Steven Levitt and Stephen Dubner suggest that real estate agents are like the KKK because both groups traffic in “secret information.” In the case of real estate agents, this secret information has traditionally been the listing service. Indeed, this was very much the case when I bought my first home. Not anymore. In fact, I believe that a large part of professional real estate services have been com-modified.
Please understand, I believe you should use an agent to help you buy or sell your home. I’ll be the first to tell you that dealing with all the details and emotional baggage in a transaction should be facilitated by agents. AND, consumers need to understand that real estate professionals deserve to be paid for their services. I, for one, am not running a non-profit corporation; however, I have come to the realization that my value is no longer tied to the “research” end of the process.
I appreciate any comments you have on this subject both as consumers and agents. The reason I wrote this post is because I believe the difficulties we are facing in the financial and housing markets along with advances in technology are going to forever change real estate services. The classic brokerages and business models are under huge stress today. Many are closing while others are attempting to redefine their relationships with the agents. Let me know what you think.
After stewing over what to say about the Real Estate Market in 2009, and knowing full-well that I’m not qualified to make profound “predictions” about the marketplace, I have chosen to take my own advice and “outsource” the job to one of my favorite resources: HousingPredictor.com. I highly recommend you take a look at this informative website.
Some of the more interesting topics are the Top and Worst Picks for 2009. As you can see, the Top 25 Housing Markets are not expected to experience much appreciation in the coming year:
And if that wasn’t inspiring, please turn your attention to the Worst Market numbers:
As you can see, Seattle is not likely to avoid the overall downturn in the housing market. Many experts have been saying that we tend to trail behind national trends, which means we may be in for a long 2009. The chart below shows the major metropolitan areas in Washington State:
On a positive note: with prices so soft, there should be opportunities for buyers in 2009. If the financial and credit markets awaken from their veritable hibernation and start lending again, there will be some winners. Just remember, always seek professional advice from a real estate professional before you make an offer on a home. If you ever need help understanding the process of buying or selling a home, please don’t hesitate to contact me at 206.713.2102 or email me at jlupori@comcast.net.
Crystal Ball Courtesy of Isobel T
This evening I was reading through one of my favorite political blogs, www.truthdig.com, and I came across an interesting presentation tool used by the author to illustrate the current economic breakdown. If you click on the picture, you can see how it works. It's actually quite powerful:
So, the blogger is using a very clever, visual time line to describe the financial meltdown. He's using Capzles.
Capzles allows the blogger to create a very nice slide-show/time-line style presentation for almost any subject. I wanted to see if we "average" bloggers could utilize this technology, so I created a very basic presentation on how to set up your own Google Alert. Here's how it turned out:
The great thing about Capzles is that it provides the new user with an adequate number of design templates to make a basic presentation look good. You can even add music if you wish. Also, I really didn't need to use the tutorial. Capzles has a wizard that walks you through the process quickly and easily.
GOOGLE ALERTS
Now that you watched the capzles presentation about setting up Google Alerts, I wanted to say a few words about how important it is, as a blogger to use this tool. If you put in some key words related directly to your blog such as the name of your town or neighborhood, whenever this word is used in Google, you will receive an email. It's interesting to see who is looking at your blog. On a personal note, because I have an uncommon last name, Lupori, I've connected with some interesting people in Argentina, Italy, etc.. Generally, these alerts are generated by Facebook.
So, now you have more technology at your finger tips. I hope you incorporate them into your blogging.
If I, Mr. Freeze, the Financial Curmudgeon, had a dime for every news story in 2008 that reported on yet another failed bank, or multi-billion dollar ponzi scheme, failing car company, disappearance of the American manufacturing sector, hundreds of thousands of lost jobs, crumbling infrastructure, unbelievable corporate bailouts/bridge-loans, outsourcing, no-bid contracts or the real estate disaster......then I would be able to pay off the whole national debt three times over. By the way........
But Mr. Freeze lives in the real world. Mr. Freeze has never felt comfortable with investment banks, hedge funds, derivatives, or the regular old Stock Market. Mr. Freeze always tells people to live within their means. Keep a rainy-day fund of three to six months cash in the bank. Have just one credit card. Practice a little frugality for heaven's sake.........................
But I, grumpy Mr. Freeze know that no matter how hard I huff and puff, gripe and complain, bellow or yell, people simply won't listen. Do you know why? Because America has a disease. It's called the STUCK ON STUPID SYNDROME. We caught this disease in the late 70's and early 80's when a bunch of privileged, upper class jerks told us GREED IS GOOD as if it were some sacred mantra. The God of Greed was aided and abetted by corporate idolaters such as the heartless economist Milton Friedman who told America that "the free market will always prevail in the end." Phrases such as "a rising tide raises all boats" and "wealth will trickle down and create more wealth" were repeated over and over until people started to believe this garbage. Even George Bush Sr. called this voodoo economics!
GREED IS GOOD.......YA, RIGHT
So, here we are, in the midst of the worst financial crisis since the early 20th Century and Mr. Freeze can't believe there isn't a revolution brewing out in the heartland. A year ago, if someone had told Mr. Freeze that TRILLIONS OF DOLLARS OF WEALTH would suddenly disappear from the face of the earth, Mr. Freeze would not have believed his ears. Face it, my dear readers....(pardon my language), we are getting screwed: regular people, working people, honest people.
CRY BABY CAPITALIST - "BUT MOMMY, ALL I WANT IS AN $800 BILLION BRIDGE LOAN"
The most ironic thing of all is that the very "free market" capitalists who lived by the sword of economic Darwinism are the very cry babies that have their hands out for as much tax payer money as they can get. Mr. Freeze believes that the financial markets need re-engineering. Let's hope the new administration addresses this.
Whew, now that I, Mr. Freeze, got all that off my chest before I had a grand-mall stroke, I would really like to spend a few moments before the end of this tumultuous year and consider the following:
The next time you're listening to some moron from a conservative think-tank going on about the virtues of capitalism and free enterprise, ask yourself if you feel wealthier today than you did 1 or 2 or 5 years ago. Ask yourself if you're going to retire when you thought, or if your children are going to the nice college you had planned for. Ask yourself if privatizing Social Security would have been a great idea given the criminals in charge of the financial markets. Ask yourself why the top 1% of Americans control 90% of the wealth and why they fly in corporate jets when you can't get health care. Then do this: PROMISE YOURSELF THAT YOU'LL PAY MORE ATTENTION IN THE FUTURE AND THAT YOU WILL QUESTION ALL THE ASSUMPTIONS ABOUT OUR AMERICAN ECONOMIC SYSTEM. THEN CONTACT YOUR ELECTED OFFICIALS AND TELL THEM YOU WANT CHANGE FOR EVERYONE. YOU WANT A BETTER LIFE FOR EVERYONE, NOT JUST THE FEW.
My friends, in spite of what "the rich and powerful" say, we are all in this together. There is no such thing as a self-made man or woman. We are successful as a people when we work to improve the lives of everyone. Mr. Freeze hopes that 2009 brings you good health, joy and prosperity!
Mr. Freeze Pic courtesy of ElDave
I began blogging in April as a means to advertise my real estate business. At that time it was simply a dollars and cents decision. I thought it would be less expensive than print advertising (which didn’t seem to be very effective anymore). What I didn’t realize was how blogging would fundamentally change my perspective about EVERYTHING! It started out as a high-tech way to convey real estate statistics and talk about the market (not too exciting). It has ended up being far more than that:
1) It has become the creative outlet I’ve always wanted: writing, interviewing, interacting, taking pictures, educating, journaling and philosophizing ALL IN ONE PLACE!!!!!
2) Blogging has made me smarter. Really!!! Just ask my wife. Strike that, just take my word for it!
3) Blogging forced me to incorporate a lot of new, useful tools and skills such as google, the “blogosphere” and social networking. We really are living in a hyper-connected world.
My wife, Virginia, and I first visited Italy in 1981 during a foreign exchange program in Kiel, Germany. My mother wanted me to visit our Italian relatives while we were in Europe as non of our immediate family had ever gone back to the “fatherland.” Needless to say, my family was wonderful. The funny thing is, it took us 25 years to return. In 2006 we went back for one month and discovered just how wonderful my families are (my mother’s family in Torino and my father’s family in Lucca). At that time we started learning Italian in earnest. We returned this last summer (August-September) for five weeks and during this visit we celebrated our 25th Wedding Anniversary in Torino. It was one of the proudest moments of my life. I was with the woman I love, in a country of unfathomable beauty, celebrating with some of the most joyous people on earth: my Italian family. Good times! Today, Virginia and I can speak and understand enough Italian to be quasi-functional. I’m glad my family is understanding……
I’m a NON-FICTION reader these days. This is ironic because I studied Greek, Latin and Comparative Literature in college. I love all sorts of literature, but there’s nothing I like more than reading about the anthropology of this or the economics of that. Hey, I used to like Classical music but now I listen to Korn and Marilyn Manson………things change. So, here’s my reading list for 2008. If you click on the individual book pictures, you will be taken to some interesting reviews:
I read some utterly fascinating books in 2008. As you can see, I have a penchant for reading books about “how people/organizations/cultures work. I can still remember being knocked-over by the late anthropologist, Marvin Harris’ “Cows, Pigs, Wars and Witches” way back when. I was hooked.
ALL THINGS GOOGLE - Google has become the most powerful player in the world of the Internet. If you are not already connected with several of the tools Google offers, I highly recommend you consider using the following:
GMAIL - Easy to use and universally accessible, having a email account through Google is one of those basics we all should have.
GOOGLE READER - As a blogger, I scan a huge number of publications every day. This seemingly difficult, time consuming chore is simplified by setting up a Google Reader. Click here to learn more.
GOOGLE ALERT - If you want to know if your name or other important word comes up on a google search, set up a Google Alert. I have mine set to inform me when the words Lupori and Kenmore are referenced in cyberspace. As a result, I’ve made contact with some Argentine folks who are also Luporis. As it happens, their ancestors come from a town close to my relatives in Tuscany. Wow, who would have thought…….
Google has a huge number of tools. Go there and find out for yourself. By the way, most everything in Google is FREE!
Flickr.com is a Yahoo product that allows you to download your pictures (and video) from anywhere in the world to your own, personalized site. There you can edit, organize and store your photography. You can also see literally millions of other pictures from around the world. This is an amazing tool if you do a lot of traveling as you can safely put your pictures into Flickr.com. If you lose your camera, your pictures will be on Flickr when you get home. For $25 a year, you can download an unlimited number of pictures. It’s free to set up. How cool is that????
I’ve been a very fortunate man over the years. I’ll be 50 in April and, other than the gray hair (which I blame on my wife) I feel pretty good. How many guys can say they look good in an apron (a red one at that)? My greatest strength and gift in the world has been my beautiful wife, Virgina. We’ve been together almost 30 years and we’ve done a lot of wonderful things together. How she puts up with me, I’ll never know…….but I’m damn lucky to have met her.
We are living in extraordinary times. I have a sense that adversity will bring all Americans closer together and in that coming-together we will find new strength and vision. My most sincere hope is that the coming year will bring you all good health, joy and prosperity.
 |
|
|
I am an Associate Broker with Keller Williams North Seattle. I have lived in the Northwest for 22 years, grew up in Utah and was born in Nevada. A real Westerner who prefers a tandem bike to a horse!
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
Powered by the ActiveRain Real Estate Network
© 2009 ActiveRain Corp. All Rights Reserved
