Archive for February, 2008
Lack of ‘Make Sense’ Business Models In Real Estate and Mortgage Still a Cause for Concern
February 15th, 2008 Categories: Mortgage News, Real Estate News, Real Estate Technology, XBanker, alternative real estate commission models
When the real estate and mortgage industries realize their traditional business models are now broken, the world will be a better place for all.
Words of advice: Pay more attention to the Loss side of a P&L and the right side of the balance sheet. Too much attention toward generating more revenue and not enough consideration to stopping the internal bleeding is the core of the overall problem…akin to emptying the water from a boat with a hole in the bottom using a (small) bucket.
This problem’s solution is routed in the fact that most professionals within these communities are not astute at running a business. A testament to this statement lies in that many RE and MoPro’s operate as ’sole proprietors’ (or submit as W-2 employee’s) when they should choose a corporate structure more in tune to maximizing income via benefits afforded other corporate structures. Just because one can sell doesn’t mean one can run a business.
The 6% real estate commission model is a horrid example of sound business practice. Economists routinely wonder aloud how this model has stood the test of time (answer: The omnipotent NAR ether/kool-aid). The commission ’split’ model commonly found in the mortgage broker industry (coupled with serious lack of disclosure issues), is far less discussed in open forums, yet just as fundamentally challenged.
It’s evidently apparent what happens in the down part of what are cyclical marketplaces…a mass exodus from the small business world, and thats not good.
I’d like to explore alternative business models that could work for both real estate and mortgage professionals by laying out some succinct recommendations and strategies for 2008, going forward…
I’ll be recruiting some seasoned experience from the world of business to opine via future posts regarding this topic. One of them is an XBanker 
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Project Lifeline Works Both Ways
February 12th, 2008 Categories: Mortgage News, project lifeline
Project Lifeline benefits must work for the bank first, the borrower second.
Bank of America, Citigroup, Countrywide Financial, JPMorgan Chase, Washington Mutual and Wells Fargo agree in unison to adopt a policy that offers borrowers who are at least 90 days late a ‘30 day window’ to try and negotiate a foreclosure saving deal, loan modification, what have you. The New York Times reports this could help ~425,000 homeowners, albeit the actual number is likely a fraction of this.
While this may seem like a thoughtful gesture by the big six, agreeing to try to negotiate better terms with delinquent homeowners has potential significant benefits for the banks too.
They’ve all got REO inventory that is swelling, which is dead money on the books, which causes quarterly reports to look bad (via write downs et. al.). Bad quarterly reports typically yield a Wall Street downgrade or some other bad press and a resulting (further) loss of stock value. Renegotiating to keep (reduced) cash-flows coming in is better than paying out to repossess the property through the expensive foreclosure process.
There are a couple provisions of note to qualify to play Lifeline or No Lifeline with the big six lenders:
As mentioned above, the borrower must be at least 90 days late but not within 30 days of foreclosure. The thought here is, ‘If the bank has already spent the money on attorneys etc to take the home, why stop now?’
The home must be owner occupied, 2nd homes and investment properties need not apply.
The lack of provisions in this ‘package’ is far more noteworthy since there appear to be no other guidelines that the banks have promised to follow. My guess is that they’ll look at each borrower and situation and asses whether renegotiating is economically in their best interest.
Does the home appraise for $200k today and the principle balance is $210k? Lifeline!
Does the home appraise for $200k today and the principle balance is $150k? No Lifeline!
Can the borrower actually prove he/she has a job and assets to sustain a slightly lower mortgage payment? Lifeline!
Is the borrower working the fry station and scraping by with little to no money in the bank? No Lifeline!
…You get the point.
In the end, this announcement amounts to little more than whats been going on in the loan modification / loss mitigation departments of banks for awhile now.
Matt at Inman keenly observes that these announcements come at a time when Congress is considering tinkering with bankruptcy laws that would allow judges the right to modify mortgage terms and payments without nearly as much consideration to the bank.
One does get the feeling that the banks are saying ‘Look, see, we’re doing our part, we promise! Please stay out of our sandbox :)’
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THIS SITE SCRAPES CONTENT
February 12th, 2008 Categories: content scraping
This post is dedicated all the ’sites’ that scrape my content without my permission, you unoriginal hacks.
You’re killing my Technorati rating, WTF…
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Yahoo!, Zillow and Trulia Talk About Merging Ideas to Create a New Data Standards Format
February 12th, 2008 Categories: Real Estate Technology, Trulia, real estate seacrh, third party destination sites, yahoo, zillow
Yahoo!, Zillow and Trulia Talk About Merging Ideas to Create a New Data Standards Format.
Hooray! The single largest issue that bogs down better real estate Search is the hieroglyphical nature of the data between repositories (MLS’ primarily).
Many times cooperative yields far better results than competitive…but then the id, ego, and/or super-ego goes and gets in the way of things. Galen openly loathes MLS data normalization, so this appears to be a good thing. Looks like these current pillars of real estate Search have put aside their respective psyche’s in attempt to make real estate Search better for everyone.
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HubSpot. All the SEO You’ll Ever Need to Know
February 11th, 2008 Categories: HubSpot, SEO Tips
Hubspot has been a favorite SEO resource of mine for almost a year now, for both their blog and marketing advice. Their Website Grader is a phenomenal tool and a ‘must do’ for any website proprietor.
The information it yields in 20 seconds is worth what many SEO pundits will try and teach (and sell) you over the course of a year. Only fault I noticed: They recognize TXB for a Page Rank 3, when it’s really a 5…but I can let that slide for now…
The company is funded as a start up (mad props for that) run by a couple M.I.T. grads, so you know they must be pretty smart. As a funded start-up they do sell products for profit and probably have an exit strategy with a $100M valuation.
After seeing their product demo, they have to offer the closet thing I’ve seen to robust auto web(blog)site SEO’ization on the market. If you close 2 more Internet related leads this year as a result of their products and services, you’re probably going to see a positive ROI.
With all the SEO’ologists out there slingin snake oil, it’s nice to see some straight shooters with a real product worth paying for.
I was neither solicited nor paid to make this post.
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