September 2006 Archives

Real Estate Agents vs. Net

Red Herring:

Despite a market slowdown and repeated attempts by Internet-only companies to wrest business away, the brick-and-mortar real estate industry still has a firm hold on home sellers and buyers in the United States, according to the results of a survey released on Monday.

[Survey Details].

In its September 2006 survey of consumers, the Discover Small Business Watch found that traditional real estate agents did well with home buyers, and exceedingly well with home sellers.

The survey shows that people selling their homes see much more value in having personal help when seeking buyers. Sixty-one percent of home sellers said they would prefer the services of an agent versus only 4 percent who said they would prefer an online service to help sell their homes.

Online services fared much better with buyers. Only half (49 percent) of buyers said they would prefer a real estate agent for their home search, while 22 percent would rather use an online service.

Exotic Mortgage Brokers: The New Boiler Rooms

Barry Ritholtz:

How did we go from a nation of fixed-rate loving mortgage holders to this sudden spike in toxic mortgage products? It turns out that hard pitching telemarketers, in the best boiler room fashion, have been jamming these products down the throat of unwary consumers. Consider the following discussion from our media shy denizen of Maine:

Freebie's Galore! Home Builder's Incentives

Barry Ritholtz:

David Seiders, chief economist for the National Association of Home Builders says 75 percent of the nation's builders and developers are offering incentives.

Those incentives range widely. "Developers will upgrade appliances, put in a Garland range or a Sub-Zero refrigerator," says Diane Saatchi, a vice president with the Corcoran Group who specializes in Hamptons properties...

The Associated Press reported last week that a new San Diego condo development, Atria, was giving away plasma TVs and $5,000 home renovation gift certificates. Other popular options include fancy kitchen cabinets, granite countertops and marble baths.

A Closer Look at Housing Deceleration

Barry Ritholtz:

One of the issues I am constantly pushing back against are the spinmeisters who purposely falsify data, news or commentary to meet their agenda. At best, they ignore the obvious and spin the not so obvious. Many of the subjects I cover are a result of trying to clarify the bull$%# I read and hear elsewhere.

The latest source of nonsense courtesy of the sunshine crowd? The Q2 OFHEO report. I took particular issue with comments like "Home Prices Holding Up." That represents willful ignorance to me.

Who Killed the Newspaper?

The Economist:

"A GOOD newspaper, I suppose, is a nation talking to itself,” mused Arthur Miller in 1961. A decade later, two reporters from the Washington Post wrote a series of articles that brought down President Nixon and the status of print journalism soared. At their best, newspapers hold governments and companies to account. They usually set the news agenda for the rest of the media. But in the rich world newspapers are now an endangered species. The business of selling words to readers and selling readers to advertisers, which has sustained their role in society, is falling apart (see article). Of all the “old” media, newspapers have the most to lose from the internet. Circulation has been falling in America, western Europe, Latin America, Australia and New Zealand for decades (elsewhere, sales are rising). But in the past few years the web has hastened the decline. In his book “The Vanishing Newspaper”, Philip Meyer calculates that the first quarter of 2043 will be the moment when newsprint dies in America as the last exhausted reader tosses aside the last crumpled edition. That sort of extrapolation would have produced a harrumph from a Beaverbrook or a Hearst, but even the most cynical news baron could not dismiss the way that ever more young people are getting their news online. Britons aged between 15 and 24 say they spend almost 30% less time reading national newspapers once they start using the web.
Related: Warren Buffet: "Newspapers are a business in permanent decline."

Roundup of Economic Indicators

Barry Ritholtz:

With the Summer officially over, the masses of traders, fund managers and corporate honchos return to their trading turrets, offices and desks, ready to kick it out for the last four months of the year.

What's on their minds? Here's a quick overview:


  • Its no coincidence that Crude Oil is at a 3 month low and the indices are at a 3 month highs.
  • The biggest North American Oil find in a generation may add further pressure to Oil prices;
  • Performance anxiety is a powerful factor that could draw more players into equities;

Janie Ho:

A quick glance at housing data from the U.S. census shows that the metro areas that are home to healthy technology, manufacturing, entertainment, or financial-services companies, as well as big employers like top universities, enjoy equally healthy property values.

Areas such as San Jose, San Francisco, and Anaheim have buyers paying nine times their median incomes on new homes. At $744,500, the San Jose/Sunnyvale/Santa Clara (Calif.) metropolitan statistical area has the highest median home sales price in the country, according to the National Association of Realtors. The reason, says Mark Zandi, chief economist for Moody's, is that "these local economies are among the nation's most productive. Housing values are driven by the activity on the land."

DIRT: NOT CHEAP. The median home price in the U.S., according to the National Association of Realtors, is $231,000. While San Jose is at the top, the least expensive area is Danville, Ill., where the median is an anemic $67,000.

Just because it's not 'for sale' doesn't mean you can't offer

Gayle Pollard-Terry:

We're not actively listed, but if we got an offer and could sell it immediately," he said, he would be tempted.

How many people who fall in love with a house that is not on the market are willing to make an unsolicited offer? Zamani is betting that thousands will.

His website,, launched a new service Aug. 23 that allows consumers to make a bid on just about any house in the United States.

The site won't sell the names of buyers who use the new feature to its network of 15,000 real estate agents, according to Zamani, although makes money by generating leads.

Last Stand of the 6 Percenters?

Damon Darlin:

Redfin and other innovators, including ZipRealty and, are using technology to reduce costs and to save time for their brokers. Agents don’t find and recommend homes — customers do that on their own, using Internet listings — and that enables agents to charge less for the services they do provide, chiefly handling the paperwork and negotiations.

The Internet has radically changed the way consumers buy books and airline tickets, trade stock and learn news. But the real estate industry has resisted change — and protected its commission structure — by controlling the information on its Multiple Listing Service database of properties for sale.

“You can find out more on the Internet about an eBay Beanie Baby than you can about a $1 million house,” said Glenn Kelman, chief executive of Redfin, a licensed broker in Washington State and California.

The M.L.S. is the only place that contains nearly all the homes for sale in a community. Only brokers can post there, but agents can also display selected information about a listing on their own Web sites and on, a site that works with the National Association of Realtors.

More on Redfin's flat fee model here.

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