Pending Death and Future Living. Transparency, Technology, Social Media, Business Strategy, With Some Economics Sprinkled On Top
January 4th, 2009 Categories: Uncategorized
Pending Death and Future Living. Transparency, Technology, Social Media, Business Strategy, With Some Economics Sprinkled On Top
And…I’m back, with my longest title and quite a rambling, yet thoughtful post. Although I could have posted here and there, I just haven’t been compelled to do so. When the itch would hit, I’d often read well articulated similar opinion else ware. Anyway…
Before I get started, a quick note: Inman Connect NYC 2009 is just around the corner (…this Wednesday, Jan 7th 2009, this post has been sitting on draft for about 2 weeks, whoops…). No, I’m not speaking, but I will be there so if you were on the fence about going, you can officially go buy your tickets now. The day prior to Connect NYC 2009, REBarCamp NYC is a go as well at the Mariott Marquis on Jan 6th. <<–A Cannot Miss.
So, I’ve been running my mouth about this word called ::Transparency:: for a few years now. When you wax philosophic on a topic for so long, watching it manifest in the main stream elicits redemptive emotions.
What is Transparency? The word has a far reaching and fascinating taxonomy depending on what the corresponding topic is. Generally, its a noun that suggests that the given topic can be seen and understood clearly with little left to the imagination. Transparency fosters a greater sense of awareness around a given topic. Most people will say that greater transparency regarding a given topic is generally a good thing.
So, is Transparency a good thing for business?
On paper, as an ideology, Transparency represents practices performed in a more truthful, enlightened and thus positive light.
In practice, in real life, Transparency tends to compromise established industry’s, institutions and individuals ability to continue to function as they traditionally have, more often than not with extreme deleterious consequences to a rigid status-quo.
You can’t handle the truth! - Colonel Nathan Jessup.
Copious amounts of raw disseminateable data, a byproduct of our progression into the The Information Age, has catalyzed the virility of Transparency creating fast moving paradigm shifts that corporations and industry stalwarts are simply unprepared to handle. Transparency exacerbates underlying ‘issues’ and causes rapid disintermediation to legacy industries like ::wait for it:: real estate (and mortgage).
The writing has been on the wall for years now:
- From 1997, Clayton Christensen’s The Innovators Dilemma articulates that a ’successful company with established products will get pushed aside unless managers know when to abandon traditional business practices.’
- From 1999 Blown to Bits states that “the Internet and other technological innovations are changing the basic structures of most industries and simply destroying the remainder.” and “Increasingly, your customers will have rich access to a universe of alternatives, your suppliers will exploit direct access to your customers, and your competitors will pick off the most profitable parts of your value chain. Your competitive advantage is up for grabs.”
Transparency has brought many an industry to its knees. While it seemed like a good idea at the time, it’s clear today that the money that was printed to create the Mortgage Backed Security Market created a bubble that popped. Consequentially bubble based business models are taking it on the chin, drawing out the knee jerk reaction of indiscriminate cost cutting. As a business, trimming unnecessary fat is very prudent right about now, but what shouldn’t be ignored is investing in the type of innovation required to compete for future discerning consumers (and agents).
Today, more than ever, its time to ‘abandon traditional business practices’ if you want to stay in business much less maintain a competitive advantage.
Back in late 2007, I quickly rambled about three topics that represent vanguard of the future of real estate:
- Compensation reformation or divorcing real estate commissions is coming, since inter-broker compensation can be handled outside of the traditional MLS…A different version of the same thing isn’t a viable solution and mass adoption of isn’t probable considering the openness of the technology landscape, 2007-08 forward.
- Zillow and Trulia aren’t it either…Both well funded 3rd party destination real estate information websites business models revolve around advertising. Advertisers pay money to players like Z & T because consumers are carousing their sites, not an agents or brokerage, so it would seem fair to say that both entities would like to keep the consumer there. This isn’t a knock against either company, they do what they do and make no bones about it, however their respective agendas don’t line up with the individual agent…
- An application (technology, widget, et al.) that allows for a real estate professional to ’share’ their valuable information and market their services to others within similar spheres, while insuring an acceptable assurance of reciprocity has yet to be identified…though it should involve a strategy that implements an open Social Networking Optimization framework that allows birds of a feather to flock and fly together…
1) Compensation reform (initially) on the Broker to agent level (CGI splits, desk fees) is manifesting out of brute downward pressures on the market: depressive home values, heavy inventory and lack of credit. These conditions are pushing many agents out of the industry and causing the best agents to become rather brand or franchise agnostic, perpetually asking: What have you done for me lately? Loyalty means little in a Bear market. Broad compensation reform between agent and consumer is an inevitability.
2) My overall point that the agendas of the Zillow’s and Trulia’s of the world don’t line up with the individual agent brokerage is shared and expounded on (far better than I could) by my very smart friend Rob Hahn. How long is it before a critical mass of the best agents adapt to open their own (very virtual) brokerages, adopt these types of sites as primary marketing channels, utilize their superior products and services in place of the expense of affiliating with a broker-franchise-brand that provides diminishing, even negative value?
3) The ‘open web’ proliferated by the likes of Facebook Connect and Google Friend Connect offer the ‘open Social Networking Optimization framework’ described above on highly scalable and cost effective levels. Aggregating and sharing granular information has never been faster, easier or cheaper with free communication syndication platforms like blogs, Twitter, FriendFeed and FeedFuze. Agents that have learned to harness these tools and services don’t need to work for a major brand to succeed. They are becoming the brand.
Instead of dismissing these thought threads and seemingly diminutive products and services, real estate Franchises and Brokers would be wise to listen, adapt and adopt before they trip the line irrelevant. Over the past couple years a new position within the social spheres of the online real estate industry has popped up: Director of Social Media. It’s a fancy name for someone who knows how to communicate online using the products and services mentioned above. Broker-Franchises should also seek ‘Social Media Directors’ and promote them from within their current contingencies. They represent a worthy investment as these folks have learned how to leverage information and create conversation around themselves and/or their business far more effectively than traditionally expensive marketing campaigns…they represent the future of real estate.
The generation that will pull this recession up from the depths knows nothing but the internet and how to communicate with the world using its cornucopia of social products and services. Tech savvy consumers will only connect with similarly tech savvy real estate professionals.
To tie this all together, I don’t believe the real estate market will simply correct without major Transparent changes from and by the people who serve it. With money continuously being printed and infused into our economy, when things do turn inflation will be hard to control. Real estate is usually a sound hedge against inflation, as real assets typically rise in value in relative correlation with inflation percentages. These aren’t ‘usual’ times. When real estate values do stabilize (aka bottom out), monetary inflation will likely increase at a hefty tick, further diminishing the buying and borrowing power of most people. Tough times are still ahead, there is no quick fix. Consumers will demand (and need) great service for less cost, or they simply won’t buy.
The agent and business who ends up succeeding in this market will be the one who kept one eye on cutting costs and the other on investing in innovative resources, specifically industry relative content syndication applications like the examples mentioned above, and other similar technologies that promulgate Transparency. On the upside, these tools and technologies are rolling out cheaper and better than their predecessors…evaluate, adapt and adopt…or start looking for a new career.
::Done Rambling::
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Political Fear and Loathing on Wall Street
September 24th, 2008 Categories: Investing, Random
There is so much involved with all the ‘economic crisis’ news…trying to analyze, rationalize and otherwise debate it all is something I’ll leave to the pundits and the history books.
Between all the yelling and screaming three points are compelling to me.
1. The FBI is investigating every company that is ripe for or has already received a ‘Wall Street Welfare Check’ (aka bailout), for fraud.
Whats does this mean to me? The politicians have called in the hounds to flush out a few scapegoats. Considering there is a very fine line between a ‘high risk investment’ and ‘fraud’, there is a lot of chalk dust being kicked up right now, blurring those lines. Yesterdays ‘investment’ looks to become tomorrows ‘fraudulent transaction’.
Politicians, never afraid to insert sharp objects into the dorsal side of public adversity (even if it was very recently a friendly opportunity), appear to be on a witch hunt, ready to burn the C-Suite executives that ran their personal beltway lobbyist cash machine Company’s on Wall Street at the stake in an epic public spectacle.
Seems to me that Washington will blame this entire mess on the ‘monsters’ they helped create and took gobs of cash from (legally of course), still profit from it all and then claim they did everyone a favor by cauterizing losses now instead of letting the bleeding continue at a far higher cost.
2. The S.E.C. has banned short selling on over 1000 different financial institutions.
Shorting stock is the equivalent of betting that a companies stock price will fall, and profiting from that fall, should it happen. Short selling is the reason you hear people say that you can make money when the market is going up and down. Heavy ’shorting’ tends to drive down the price, value and thus liquidity of a company.
Apparently a vast majority of the the recent ’shorts’ came from overseas, most specifically London’s and Dubai’s markets. London has also initiated a similar ban. Is it possible that there is a case of ‘economic terrorism’ here? I’m not usually one for conspiracy theories, and usually brush off such notions for what they’re worth, but this one has me thinking…it is plausible.
The government could never lend credibility to this theory even if it were true or our entire economy would sink faster than the Titanic. Consumers would withdraw all their money from financial institutions, go all 2nd Amendment and bear arms, looting and rioting would probably ensue.
A more likely explanation lies in the fact that if the Government is going to write a check to bailout a company, they don’t want anyone ‘riding down’ their investment any further. In any case, banning a practice that’s been part of a capitalistic ‘free’ market almost since its inception is…interesting?
3. Warren Buffet is back in the game. He made a $5B investment in Goldman Sachs which would lend one to believe that one of history’s savviest, fundamentally sound investors believes the market is at bottom or damn near close.
The deal was a sweet one for Berkshire Hathaway…Buffett paid a low price, got a high return (yield) and insulated it all with attractive warrants that are already well in the money, all for Wall Streets strongest name, Goldman Sachs. Maybe the man with a name and credibility almost as big as his wallet can infuse some much needed confidence into our battered economy.
Whatever happens from here forward, getcha popcorn ready…it’s going to be great theater.
Aside: Someone better watch Lou Dobbs before he goes postal and starts ‘offing’ politicians. Lou’s pretty pissed about all this.
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Wholesale Conforming Mortgage Rates and Pricing 9/18/2008
September 18th, 2008 Categories: Tranparent mortgage pricing, ratespeed, wholesale mortgage rates
Wholesale Conforming Mortgage Rates and Pricing 9/18/2008
No comment on why rates a slightly higher today even though Treasuries are lower…Maybe I need an abacus.
In any case, rates are still low but trending higher.
Conforming 3 Year ARM
Conforming 5 Yr ARM
Conforming 15 Year Fixed
Conforming 30 Yr Fixed
Wholesale direct Conforming rates and pricing shown are based on the variable factors below:
- Primary Residence
- Purchase or Rate Term Refinance
- Single Family Residence
- Loan To Value Ratio <80%
- Credit score <720
- Debt To Income Ratio <42%
- Loan Amount $100,000 to $417,000
- Fully Documentable Income and Assets
For a detailed explanation and definitions click here.
Information is derived directly from wholesale mortgage banks inter-daily program and pricing sheets and is deemed reliable but not guaranteed.
Mortgage rates and pricing may change up to 3 times daily, check often.
Rates and Pricing Provided by RateSpeed…
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Yet Another ‘Black Monday’ on Wall Street
September 16th, 2008 Categories: Mortgage News, Real estate economics
Talking about Wall Streets most recent ‘Black Monday’ over at the Genius Bar…
Blood in the streets folks, watch your step…
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Wholesale Conforming Mortgage Rates and Pricing 9/16/2008
September 16th, 2008 Categories: Mortgage News, Tranparent mortgage pricing, risk based pricing, wholesale mortgage rates
Wholesale Conforming Mortgage Rates and Pricing 9/16/2008
Rates bumped up considerably late today losing everything they gained yesterday afternoon. Expect sideways adjustments for awhile as Wall Street gets its bearings back about it.
In any case, rates are still low low low…
Conforming 3 Year ARM
Conforming 5 Yr ARM
Conforming 15 Year Fixed
Conforming 30 Yr Fixed
Wholesale direct Conforming rates and pricing shown are based on the variable factors below:
- Primary Residence
- Purchase or Rate Term Refinance
- Single Family Residence
- Loan To Value Ratio <80%
- Credit score <720
- Debt To Income Ratio <42%
- Loan Amount $100,000 to $417,000
- Fully Documentable Income and Assets
For a detailed explanation and definitions click here.
Information is derived directly from wholesale mortgage banks inter-daily program and pricing sheets and is deemed reliable but not guaranteed.
Mortgage rates and pricing may change up to 3 times daily, check often.
Rates and Pricing Provided by RateSpeed…
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