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New Marketing Strategies Via Social Networking Optimization for Real Estate and The Big Push for Compensation Reform

November 13th, 2007 Categories: Mortgage News, Real Estate News, Real Estate Technology, Realespace, Social Networking, social networking optimization

New Marketing Strategies Via Social Networking Channels for Real Estate and The Big Push for Compensation Reform.

‘We are the fossils, the relics of our time, we mutilate the meanings till they’re easy to deny…be ashamed of the mess you’ve made.’

- William Corgan

I hear many mortgage and real estate professionals within the industry still spouting off about how no technology will ever replace them…no, technology won’t, but the professional that leverages technology properly will eliminate the agent that doesn’t.

Today, I’m hyper-focused on two issues that are effecting both the mortgage and real estate industry’s:

Both issues are intimately connected via the advent of progressive Technology (proper).

SEO vs SNO…
SEO is an eyeball catcher that brings potential buyers to your front door, however, what you show them, the level of service you provide, and the subsequent chance for referrals is rooted in proper SNO strategy, a strategy that involves giving a network the ability to spread your seed for you.

As a service provider, there is no higher compliment than a referral from a satisfied client that generates a new client. All the SEO in the world isn’t going to help a company foster satisfied clients. If you think about it, a bad service provider with good SEO is dangerous, it’s very indiscriminate in this way… Proper Social Networking Optimization is where it’s at for the future of real estate and mortgage marketing and will pave the way for future compensation reformation.

Side note: Real estate and mortgage professionals should stay away from technology providers who are in the business of selling you ‘SEO solutions’. Chances are they have no idea WTF real estate and/or mortgage is about, and are solely in the biz to make money off of your ignorance. They’re the type to buy a house on emotion, try and get you to commit fraud in the process, get it financed any way they can, then blame you for paying too much and having an effective interest rate in the 14% range. These are the same people who will tell you blogrolls are bad, although sites with PageRanks of 7 and higher routinely have home pages with hundreds of links on them.

SEO is getting to the point of ‘fire and forget’, and is getting easier for the laymen to implement…here watch, I’ll demonstrate:

I use WordPress for my website and a few free SEO plug-ins (and here too) that automate those ’secret strategies’ that are supposedly the proprietary wares of other so called company’s.

Use this plug-in so Google and Yahoo can crawl your sites ’site map‘.

One-click makes it easy install and activate any of these plug-in’s, with, well, one-click.

Want great SEO and/or blogging advice? Get it straight from the sources, like SEOMoz, Copyblogger, Pro Blogger, and HubSpot.

Want a canned proven and ‘packaged’ solution provider? Check out Real Estate Tomato, Incredible Agent, and Realivent.

Need ground level, top notch, hands on education and consulting? The fellas at Domus are second to no one…

There, you have 97% of the resources you’ll ever need to maximize your sites potential SEO. Now you just have to write (or aggregate) some compelling content to keep those unique visitors coming back for more…

Please excuse the following ’self-promotion’, I’m going to make a point as to how SNO can serve as a new marketing strategy through compensation reformation in the mortgage industry…

I’m currently working on a few initiatives for the mortgage and real estate industries, one of them is called RateSpeed. If you’re a regular reader of The XBroker, you have heard me talk of this ‘tool’ before (many delays with many reasons that really don’t matter at this point). RateSpeed has absolutely nothing to do with SEO, it’s all about SNO.

For those who haven’t heard of RateSpeed, real quick…It’s akin to a ‘black box’ that aggregates a mortgage professionals wholesale lender interest rate pricing feeds, organizes and redisplays them according to best case results dependent on the consumer end-users credit and financial risk data.

Mortgage professionals will have no ability to manipulate the data between the wholesale lender and the consumer using the application and MUST disclose up front a flat fee (of their discretion) for services…These are the issues at the core of the problem to today’s mortgage mess, IMHO. RateSpeed displays raw rate pricing, showing the exact YSP down to the $.01, and how it can be applied to closing costs, if that is the consumers want, but most importantly it shows this directly to the consumer.

It’s also happens to be a an efficiency and lead generation tool for mortgage pro’s willing to embrace transparent philosophies. RateSpeeds ability to auto-price and sort through the myriad of lenders they’re approved with stands to save a mortgage pro’s inordinate amounts of time and related cost. RateSpeed, at it’s core, stands to alter how mortgages are sold through compensation reformation. By showing consumers exactly how mortgage professionals make money, reform will (is) be(ing) demanded, evidenced by HR 3915. (Nod to Brian Brady for his copious amount of research and opinion on the issue).

I know many mortgage professionals who practice this level of transparency in their day to day business, but there are too many who don’t, and they’ve screwed it up for the rest of us. Some will say it’s too confusing to the consumer, others just want to continue the practice of personally enriching themselves through consumer ignorance. Anyway, how RateSpeed specifically works isn’t what this post is about, so I’ll move on.

RateSpeed will be distributed via a network mortgage professionals as a widget, a chunk of code that is embeddable on current web/blog sites to professionals who embrace transparency and ‘do business’ in such fashion. Real estate professionals can also embed RateSpeed on their sites because it will (must) be directly connected to their selected (and approved) mortgage pro(s) who are ‘in the network’.

From a Social Networking aspect, it will seam together hubs of like real estate agents and mortgage professionals who appreciate, practice and preach a common, open philosophy when it comes to providing mortgage services. To take it a step further, RateSpeed will have the ability to permeate existing social networks like LinkedIn and FaceBook (if think you are reading between the lines here, you are).

*Pause* (Switching Industry’s) 

After reading Brian Larsons piece last year and (at about the same time) engaging in a mile long comment thread on Redfin.com(s) former ‘Wall of Shame’ category that involved the ethereal term ‘Procuring Cause’, I was drawn to Greg Swann’s perspective on the issue of divorcing real estate commissions. It is voluminous, the most comprehensive resource and reasoning of it’s kind. I’d be lying if I said I read it all, though I’ve been a proponent of much of the content within the diatribes I’ve speed read. What’s most compelling about the topic for me is two-fold: A. Who is tirelessly arguing for it…a practicing real estate professional, and B. The argument is synonymous to calling for the end of the MLS as it still stands today, a dinosaur of a database that was meant to guarantee inter-broker compensation.

Compensation reformation or divorcing real estate commissions is coming, since inter-broker compensation can be handled outside of the traditional MLS (as Greg and company tirelessly articulate). There have been a plethora (more than I care to link to) of proposed solutions, albeit most of them still require prohibitive adoption methods and maintain confinement to, and within, a defined box. 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, nor are their widgets. Why would an agent want to feature an application on their website that leads a potential client away from their website? 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. Both company’s (I can hear David G. coming now) will maintain that they exist to improve the consumer experience and send visitors (back) to the individual professionals. This may work in theory, but in the end both are pretty much destined to become Phone Book 2.0…which is fine.

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…

More on this later…I wanted to get at least this much out before I left for NAR…*whew*

I’ll be at Incredible Agents Booth #3444 in The Sands on Wed, 11/14 @ 1pm…

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Authored by Jeff Corbett | Comments

10 Cities that are Prime for Real Estate Investment

October 23rd, 2007 Categories: Investing, Mortgage News, Real Estate News

This months copy of Business 2.0 magazine features an article to help one navigate the real estate markets pending ‘bounce back’, identifying 10 cities primed for pumping (I’ll disclose them in a minute). What the core of the article is about, is a tried and true investing practice that I’ve mentioned here before, yet seems to escape the minds of the statu-quo reader out there:

If you want to make money on a commodity (like property) you must buy it lower than you sell it for, in short…Buy Low, Sell High. (Yes there are plenty of ways to make money when a commodities value goes south too…short selling, put options et.al., but thats not pertinent here.)

Markets across the nation are generally soft right now and getting softer. Why? Foreclosures and other ‘fire sales’ by individuals who bought real estate during the stooopid appreciation curve are starting to effect the current and immediate future value of property. There is an innate lag effect as these reduced sales prices are booked as sold, thus becoming viable comparables for new sales, thus driving down overall values going forward.

So, for once I’m going to agree with the NAR and say: ‘It is a great time to buy real estate.’ Property is on sale and it’s not uncommon to find deals 20%-40% off on the open market, not just via foreclosure or short selling.

According to Biz 2.0, the following cities are about prime for buying:

  1. Dallas/Ft Worth, TX
  2. Indianapolis, IN
  3. New Orleans, LA
  4. Atlanta, GA
  5. Montgomery AL
  6. Memphis, TN
  7. Mobile, AL
  8. Austin, TX
  9. Houston, TX
  10. St. Louis, MO

View Larger Map

There are a few things about these cities that intrigue me…(I’ll bold out the reasons speculation for appreciation is high, so you can look for such trends in other markets).

First, none of these cities experienced the rapid appreciation curve that consumed many markets, so there is/was far less room to fall. They’re all in the South/South East, not areas of the country where ‘Housing Bubble’ crossed many pundits lips. Ominously absent are any cities in California…which is an economy in and of itself. It’s hard to tell where, when, what, or how this market will shake out…

Mobile, Montgomery, and New Orleans were ravished by Hurricane Katrina, thus making them prime rebuild areas. New construction will help raise values in a market, especially these…they really have no where to go but out of the ground and up.

St. Louis is the very definition of ‘average’. It’s in the middle of the country, average per capita income equals the national average ($36k), it’s pretty much an average city…The optimism comes from the fact that people are moving back to the urban core, where developers are converting old warehouses into swanky lofts, apartments, and condos. Urban sprawl steadily depreciated city real estate for years as the population moved to the suburbs, polarizing it from achieving any measurable appreciation during the refi boom.

Indianapolis is one of two state capitals on this list. State capitals mean government jobs, government jobs mean above average salaries and security, which equate to a solid economy. Plus the Colts won the Super Bowl…

Atlanta has the state of Georgia to partially thank for appearing on this list. The state is a pioneer of many anti-predatory mortgage laws that kept artificial housing appreciation from getting out of hand. Atlanta is also a hub of industry (Fortune 500 companies are also abundant in Hotlanta) making it a hot spot for young professionals just entering the job market. Hartsfield airport is an international hub and the worlds busiest. All of these factors make for a very active market, consistent turnover of housing inventory will spell an earlier relief for the center of the Dirty South…

Memphis was considered to be one the foreclosure capitals of the United States very early in the game, it was the early mover to bottom out, if you will. This is another ‘no where but up’ scenario…as a matter of fact Memphis is now considered one of the most undervalued cities in America.

Dallas/Ft. Worth. The Metroplexicalmegapolitan. I recently moved to Plano, TX (Northeast side of Dallas), and this area is freaking HUGE. It just goes and goes and goes…according to Business 2.0, this area will add 6.4 Million more people to it’s infrastructure in the next two decades. WTF, thats ridiculous. Moving from Greensboro NC, the 3rd largest city in the entire state, Plano has more people and it’s just a measly little suburb…Everything is big in Texas.

Houston. Hot, humid, and hot…did I say humid? All I remember about Houston, besides it being prohibitively hot and humid, is sitting in the most amazing traffic jams. Being the oil and gas hub of the USA is a plus for the economy and apparently the inner city is going through a housing revitalization…apparently other people really don’t care to sit in traffic when it’s 105 degrees with 95% humidity either.

Austin. Solid industry with big name tech companies like Dell and IBM, being the state capital (see Indianapolis), as well as home to the University of Texas makes Austin an uber-progressive city. The inner cities housing infrastructure is new and highly coveted. Austin retains many college grads where other college towns typically lose their graduates to other cities.

The three cities in Texas: Dallas/Ft Worth, Houston, and Austin.
While each city has their upsides as far as industry and the such, there is one main reason why three cities from Texas made this list that the article failed to identify.
There is a lending law in the Lone Star state that prohibits anyone from taking cash out of their home in excess on 80% of it’s appraised value. You can buy property at (up to) 100% of it’s purchase price, but you cannot cash-out anything above 80%. This law has effectively prevented consumers from using their house as an ATM, thus repressing the artificial appreciation that has stung places like California so hard.
You can get alot of house for your money in Texas, and land too.

This is a law that should be looked at real hard by other states in the Union. It’s a simple and effective measure to countering irrational personal finance decisions and keeps home values in relative check.

There are many other cities that should have made the list, but 10 was a good number. In any case, I don’t see cities like Montgomery, Mobile, Memphis, and St Louis as the next great places to live, though for investors looking to make some nice acquisitions and gains, all of the above markets seem ready to put the days of a housing recession behind them.

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Authored by Jeff Corbett | Comments

Redfin The Transparent Real Estate Brokerage

October 2nd, 2007 Categories: Mortgage News, Random, Real Estate News, Real Estate Technology

Yesterdays News:

Active Rain vs Move.com

Todays News:

Redfin…Whipping Boy, Industry Innovator, and a Transparent Real Estate Brokerage…

BloodHound

FoREM

3Oceans

Read the 3 articles above if you want my comments to make sense.

Personally I’ve been a fan of the Fin since day one, citing them as the most progressive real estate player in this space on more than one occasion. (Search Redfin on this site for more info)

I’m high on these guys primarily because they’re not trying to be another destination site set on profiting from pumping their sites traffic metrics for the promise of advertising dollars…instead they buck the system by promoting transparent pricing policies that are more about common sense than vaporous Realtor value propositions. They also maintain a very nice user interface thats intuitive, search friendly, and comprehensive..leveraging technology for the consumers benefit as well as their own.

They’ve thought this whole process out, which is a far cry from the mentally challenging model that is still in wide practice amongst the disciples of NAR.

Redfin actually has a business model with actual projections on a scale smaller than “We need to sell more houses this quarter” This is pretty much unheard of in the fu*^ed-up-enomics world of traditional real estate brokerages (Kevin articulates this very well, using a killer-app).

Considering that anything except a brutal undressing at the hands of the BloodHound is almost non-existent, Greg seems to have tipped his hat to the red headed step-child of real estate for once…kind of:

“Glenn Kelman lives in a world I know nothing about. I find the idea of salaried agents interesting — by which I mean exotic — and I could see a benefit to a coordinated, centralized back-office operation…”

He continues:

“In comments here yesterday, Kelman said, “At Redfin, we would prefer it if both buyers’ agents and sellers’ agents each charged a fee.” That would be much easier to effect if the commissions were divorced, a topic I definitely am interested in taking up again — and again.”

I would consider this a major coup for Glenn Kelman and Team Redfin ;)
Back to business models…Realtor math or Realtornomics looks like something like this, assuming a traditional broker house is in play:

((6% * Sales Price/2) * (~50%-80%)) - (taxes) - (fees, dues, expenses, advertising/marketing) = Crap.

6% * $300,000 = $18,000 Cost to Consumer.

$18,000/ 2 = $9,000 Buyer/Seller Agent Split.

$9000 * 80% = $7200 Post Broker House Split
$7200 - 33% in Earned income taxes = $4824

$4824- $2500 in fees, dues, advertising/ marketing, and other incidental expenses = $2324
Sell 8 houses per year (if you’re good) @ $300,000 a piece (if you’re lucky) = $18,592 Annual take home income = Crap.

You are a multi-million dollar producer, $2.4M to be exact, and take home $18,592 per year…ehhh no thanks.

The scary part is that many Realtors are fighting to maintain this type of commission structure…while sipping Kool-Aid, praying at the Temple of NAR. Can you not see the BIG conflict in the above equation? A consumer sees $18k+ in equity or cash evaporating while the individual agent only sees ~$2400 in their pocket. The consumer and the Realtor both feel cheated, and rightfully so.

Anywhoo…Hats off to Redfin for having the courage to move against the grain…Here’s to hoping your initiatives are contagious.

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Authored by Jeff Corbett | Comments

Random Thoughts

September 29th, 2007 Categories: Mortgage News, Random, Real Estate News, Real Estate Technology

Perusing my feed reader on a Saturday afternoon…

Active Rain vs Move.com. Nothing says I love you like a lawsuit.

There is plenty of speculation out there regarding it’s merit, likelihood of success, practical economics of it all, ramifications towards members…

One point sticks out to me…If Move told the guys of AR not to engage in talks with anyone else about strategic partnerships et. al. and stalled AR out until they opened the Kimono (regardless if this was smart or not), then Move should pay.  Not that this was their intention, but since when did intent ever matter?  When was the last time ‘I didn’t mean to’ worked for anyone?

AR was white hot at Inman NYC 2007 and they had plenty of options as to what to do with their platform and bustling community. It was at Inman that Jon Washburn told me he didn’t think he could engage in a previously discussed project due to some big yet still confidential news involving AR. He was definitely stoked about this new relationship yet admirably kept ‘the secret’ to himself.

If it can be shown that Move prevented these guys from engaging in what could have been other beneficial relationships, intently holding them ransom with the promise of money (women) and power, and then pulled the (BIG) rug out…it would seem to be rather easy to see that AR as a company and community have been damaged (intentionally or not) and should receive restitution.

RIM, Apple or both?

Im still using Nextels BlackBerry 7520 (their top-o-line), but continued unit failures and the subsequent misery has caused me to say ‘no-mas’. I love the Crackberry UI…been hooked on it for 4 years . I’m in contract with Nextel for another 9 months, however I can move over to Sprint at no penalty and get their BlackBerry 8830, which is very hot cool (love the trackball), for $199.00. Problem solved, right? Nope.blackberry 8830

I just got a MacBookPro and love it, so the iPhone caaalls tooo meee. This is the first time another Super-Mobile has caught my eye and down right wooed me to the point of considering leaving Berryland, however the notion of transferring and using AT&T’s service causes enough revulsion to allow the rationalization of not purchasing the stickiest sickest damn mobile device ever…I can live with that (so I tell myself).

Now Apple releases the iTouch iPod, everything cool about the iPhone (pretty much) without the phone part. Shit. So now Jeff is looking at $199.00 for the BlackBerry and $399 for the iPod…too rich for me, can’t justify $600+++ for two devices (so I tell myself). I need a new phone, I’m hooked on CrackBerry, yet can’t get the iTouch out of my head.

ipod itouchDo I stick it out with the 7520 and get the iTouch, only to feel buyers remorse in 9 months when I’m out of contract with Nextel and iPhone adopts more than AT&T as a service provider? Get the new BlackBerry (locked into Sprint for two more years) and ignore the benefits of an iTouch/MBP combo, violating a fiduciary responsibility to myself?
I’m so confused.

More Mortgage Vomit

I’m tired of the ‘Mortgage Meltdown’ news, ad nauseum. So sick in fact, I can’t bring myself to conclude the Great Mortgage Correction series. Worse, the industry is locked up in such analysis paralysis that now very qualified buyers are suffering.

It’s so bad for mortgage bankers that (in Texas at least) if the APR on a loan closed via a correspondent credit line isn’t correct down to one-hundredth of one percent when using the ambiguous (at best) APR formula, the banker must cut the consumer back a check for the difference. While this may sound like a good thing, it’s not. In order to calculate a (semi) correct APR on an Adjustable Rate Mortgage you need to know the interest rates index and margin. The index on many ARM’s can change daily, so bankers would have to be able to see the future to give an accurate APR disclosure for the day of closing. This dumb rule makes good mortgage professionals look bad and hangs them out to dry on something they have no control over. The fact that there is no standard methodology to calculate APR makes this practice even more retarded.

Man I’m glad I don’t own a brokerage anymore. It’s like when you’re out real late and 2-3 drinks past your normal tolerance level, having a great time talking to what you’re sure is some hot girl, then the lights go on and reality sets in (so I hear). Everyone in the industry was high on the atmosphere choosing to ignore the pending…Flood Lights! were turned on and there were more than a few blemishes to see. Since the party lasted for years this hangover is especially bad and probably won’t go away until mid-late 2008 :(

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Authored by Jeff Corbett | Comments

The Best Mortgage Blog

September 27th, 2007 Categories: Mortgage News, Random, Real Estate News, Real Estate Technology

The best mortgage blog?

It probably isn’t…I really wanted to test out some SEO tactics and the title seemed really SEO friendly.

While I’m here, I might as well ‘talk’ for a bit. I’ve got this reputation as The XBroker, people tend to believe I’m some (wannabe) hard ass, loose cannon who writes with this indiscriminate hand and looks to battle anyone willing to disagree with my perspectives regarding the mortgage and real estate industries, all in the name of self-promotion…but I’m really just misunderstood.

Circumstance would have it that I’m very involved with a Company that is set on providing solutions to the problems and issues I write about. ‘Shut up or do something about it’ is what my grandfather used to tell me when I’d whine about my daily problems as a child…it must have resonated.

Back to the ‘best mortgage blog’ claim…Below are some of the reasons that this blog is far different than most any other blogs about mortgage and/or real estate…I won’t say better because taste is a matter of opinionated preference. How can someone have an objective opinion? Isn’t all opinion subjective on some level?

Most Unique Mortgage Blog seems like the more appropriate claim for this mental therapy of mine. I happen to believe that there are plenty of other blogs out there that are far better than The XBroker when it comes to consistent content, as evidenced by my link love in the sidebar. Social networks may not be the ‘Web 2.0′ play but using social networking principles assuredly is.

I can’t find The XBroker via any relative popular search queries on the major engines (hence the title experiment), yet my traffic metrics tell me I have a pretty robust readership…20k+ unique visitors/month and six figure ‘hits’ (not bragging here, more flattered than anything). Since my SEO blows, (I didn’t even link to anyone in this post, though I usually do) my readership must be straight up viral in nature. This is also a testament that SEO should be part of an overall marketing strategy, not a marketing strategy…IMHO.

Well, thanks for reading…I’ll post something worthy about mortgages, real estate, marketing, or technology next time…

Cheers!

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Authored by Jeff Corbett | Comments

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