Why is everyone up in arms about Redfin?

OK, so I don't have all the info about Redfin, but man are they causing a stir. Every Seattle Real Estate Blog seems to have something to say about it - including Redfin, which has their own blog. Here's what I know:

• They've pissed off the traditional real estate agents (I think I like them already)
• They place a lot of their marketing eggs in the internet basket (i.e. they are an online business)
• Their President & CEO, Glenn Kelman, has testified in front of the Congressional subcommittee on Housing and Community Opportunity
• They currently only do business in Seattle and San Francisco

Since my knowledge is minimal, I thought I would post the various blog posts and articles that comment on Redfin:

360 Digest - Marlow Harris

Redfin's Response to Marlow Harris

TechCrunch on Redfin

Seattle Times Article on Redfin

Real Estate 2.x "Redfin will flop like a fish out of water"

Rain City Guide

New York Times: The Last Stand of the 6 Percenters

I've Joined Redfin - Why an employee chose Redfin

Redfin Launches Industry's First Online Home-Selling Service

Redfin Blog Post about testifying in front of Congress

The Beauty of Craigslist

Who would of thought that an unattractive website that has categories like "Casual Encounters" and "Men seeking Men" would have such an incredible impact on the real estate market. Craigslist, a city by city directory founded by San Francisco's Craig Newmark is changing how people shop for homes.

Basically the concept is this: Why pay $30-$300 to have your home advertised in the Seattle Times or Tacoma News Tribune, when you can post it on Craigslist for free and get a much better response. There are no restrictions on who can post either. For Sale by Owners are posted right along side John L Scott and Windermere listings... who would have thought!

And its effective, oh boy is it effective. I have closed 13 deals since March, 2006 - 3 of those have been from people that either found me or my listings on Craigslist! Bye Bye Tacoma News Tribune... Move over Real Estate Magazines... Ta Ta Seattle Times... Craig is in town, and he's my friend.

BTW: One concern I do have about Craigslist is this: Craigslist is free in Seattle - Tacoma, however apparently it is pay to play in San Francisco and other areas, I have a feeling Seattle will be paying up soon too.

Excise Tax

Howdy to all you perspective sellers out there in Washington State. Just a friendly reminder that when you figure out how much you are going to net on the sale of your home, don't forget to factor in the excise tax. Where I am at (Pierce County & King County), Excise tax usually runs around 1.78% - 1.87%. That can be a substantial amount of money (Over $5500 on a $300,000 house). It's incredibly frustrating to get to the closing table and think you have more cash coming to you than you do.

Check out what the Washington State Department of Revenue has to say about excise tax.

Trulia

I have recently noticed a rapidly expanding company called Trulia. I have to say I am impressed. When you go to the site you'll notice listings from multiple Broker and Agent websites. Trulia compiles the listings from these various websites, formats them, maps them, and poof you have a mini-MLS. Well, I am sure its missing quite a few listings still compared to the MLS, but it definitely has a good chunk of them.

I have placed my listings on Trulia, and I am liking the results. This will definitely be a company to watch in the next few years.

Rain City Guide Discussion

Here is an interesting discussion that arose about commissions, Broker's opens, and all sorts of other real estate related things - Rain City Guide

Buyers Bonus

Ever seen a sign hanging on a new home exclaiming "$5000 Buyer's Bonus." These come in different shapes and forms, but they are definitely the most popular with new constructions sites. So whats the deal with these? Well, I would like to say to you, "Its $5000 free cash to decorate your house or put towards closings costs." However, that would only really be a half truth.

The full story is this: The majority of the time, in order to receive the "Buyer's Bonus" you must use the builder's "preferred" lender. No preferred lender - No Buyer's Bonus. Does that raise a red flag with anyone else? Where is that $5000 coming from? Who is getting kickbacks on this deal? How is your loan being adjusted in order to cover this "buyer's bonus?"

This whole thing is a little scary to me, and appears that some lenders, builders, and agents are getting called out by the feds on this. Anyhow, something to keep in mind when you think about purchasing a new home - your buyer's bonus may be something more that new curtains or closing costs.

Why are Realtors scared?

I recently was happy to find my business website posted on a blog run by some of the Seattle PI Real Estate Bloggers. "I'm really moving up in the world," I thought. Unfortunately, they weren't giving me positive attention. They were threatened. You see, I am a full service Realtor who lists homes for 4% commission. The Realtors out there who list homes for 6% commission "cause that's the way its always been done," seem to not like folks like me. I don't know why - I'm nice, I work hard, I don't smell bad (I don't think). Nonetheless, they seemed appalled by my business model, and even more appalled that my John L Scott broker would allow such nonsense to continue. Must I remind Realtors (who are supposedly well educated in Real Estate and Real Estate Law) that FIXING COMMISSIONS IS ILLEGAL.

Like it or not good ol boys.... real estate commissions are falling. You may actually have to work for a living. I know, you may have to only golf 3 days a week, and cut your Martini hours back, but I think our clients deserve it. We should not be getting rich off our clients backs.

I can't wait till the day I can go to the HQ of the National Association of Realtors and they have a display labeled "In Memorial of the 6% commission - A tribute to the history of overpaid Realtors."

Investing in Real Estate

During the real estate boom everyone was flipping houses. Aunt Edna, the Priest, and the high school quarterback would form an investment team, purchase a home, make some minor repairs, and sell it for a profit. The flipping boom was fueled by cable TV shows like "Flip that House." And for the most part these amateur investors did well too. However, as the boom ends, is this realistic anymore? Is flipping even a good strategy at all anymore?

Well, here's my opinion on real estate investing. Take or leave it, but I think it makes sense.

1.) Never count on appreciation when investing. If you are going to put a number to appreciation I think 3% annual appreciation is a good, safe average.
2.) Plan on holding your real estate investment long term. Even if you don't hold it long term, be prepared to.
3.) You have to make the deal going in. It has to be a bargain property at the time of purchase.
4.) Flipping is not a good investment strategy. Usually you are counting on appreciation and a strong real estate market to carry you - that's not smart. Plus. you've got your real estate fees, title fees, escrow fees, capital gains, excise tax, and other fees that eat into your profits.
5.) Single family homes are not a good bet. Why? A single family home is either 100% vacant or 100% full. Multifamily homes spread your risk over multiple units. You can usually purchase up to a fourplex with a residential loan.
6.) Commercial buildings are where most successful real estate investors usually go. This is not to say you have to start out with commercial buildings, but they're a good goal.
7.) Think about your tax burden. How can you use your investments as a tax advantage, not disadvantage.
8.) Are you a real estate investor or is it a hobby? If its a hobby, be sure you have the time, energy, knowledge, and finances to support what you're doing.
9.) Put your heads together. Investing is always done better in teams then solo. It spreads the risk, and you'll gain knowledge from your partners. On the other hand, be careful about investing with friends and family. Deals can go bad, and people can get hurt. Be prepared.
10.) Have fun. Real Estate investing should be a bit of an adventure, so have some fun doing it!


Best of luck to you real estate investors... much success in your future ventures!

It looks like Seattle and Tacoma are still winners

Washington State appears to be bucking nationwide real estate trends by reporting double digit appreciation for 2006. It appears the market may remain strong even into 2007. Check out this CNN Money Report. This report is not alone. The NWMLS (The MLS system serving the Seattle- Tacoma area) is reporting that sales in August were higher than those in July. What is going on here? I guess only time will tell.

Why is it so busy?

Despite today's Seattle Times Article about the softening of the Real Estate market, this has been the busiest week in my real estate career. Perhaps the fall weather has gotten the sun hungry Washington residents "back to business." Maybe its that kids are back in school and parents finally have 2 minutes to call on a listed property. I'm not sure. However, I do know that I have shown over 50 listings to buyers in the last 2 weeks, listed 4 homes, and closed 2 deals... I am beat. I can't complain though, business is business, and I would rather be busy then slow.

Real Estate Bullies

This is a follow up to my previous blogs. If you are a real estate consumer, please forgive the minutiae of Real Estate Politics. Anyhow, please find a great article from Morgan of Real Estate Webmasters regarding the use of the term MLS on websites. I also encourage you to look at the REW forum in which this topic was discussed at length. On the forum, I am 4PercentRealtor.

Much Love to all, and may equity, fairness, and the little guy prevail!

Morgan's Blog: NWMLS threatens fines on its own Realtor
REW Forum: NWMLS threatens fines on Directory Listings