So it had to happen. I was in Starbucks yesterday waiting to meet my client. I had arrived early, and caller her to ask what kind of coffee she wanted; I had 2 grande espresso drinks on the table and a big stack of disclosures in a legal sized folder for my client to review and sign. There wasn't any doubt what my occupation. A couple of minutes later my client walks in, and I hear the guy at the next table say to whoever he was talking to on the phone: "I gotta go, one of my clients just walked in". He stood up and was ready to say hi, when she sat down at my table and thanked me for the Carmel Macciato with soy milk and no whip cream.
Well, who's to say that she doesn't have a separate deal going with him. I don't doubt that she does. I just thought it was funny.
Thursday, August 31, 2006
Sunday, August 20, 2006
Wallmart, Home Depot, and my vacation to Germany
What do all of these things have to do with real estate? well, really they all concern banks. We all know (or should know anyhow) that the Banker, not a real estate agent is the 1st person anyone needs to talk to when they decide that its time to purchase a peice of real estate.
Ironically, while the bank does know this, most buyers don't. The first thought the typical buyer has when making the big leap, is better go talk to a Realtor. hmmmm. That's good for real estate agents, since if buyer thinks he should first talk with a real estate agent, then the real estate agent has a chance to set the hook in and direct what banker the buyer goes to, instead of the other way around.
But of course, right now, banks are somewhat special here in good old America. You see, not only do you have to be a "bank" and follow "banking rules" if you do things like lend money and take deposits and other "banking" things; Also, if you are indeed a bank, you can't do other things like sell groceries, toilets, BBQ grills, cheap plastic stuff from China, and most importantly, you can't sell real estate. Banks are banks and everything else is not a bank. yup we keep it simple.
Of course, things are getting more complicated. And this is where the likes of Wallmart and Home Depot come in. You see, recently they have recently requested permission from the federal goverment to start to do some banking things. Both want to set up banks so that they can extend credit to their customers to buy more shit from China. And since that will cut the [established] banks out of the loop, they'll make more money!!! Good for the evil big box stores and bad for the [not so] poor banks. Further, while Wallmart "says" they are not going to offer customers more traditional banking service in their one stop money sucking wearhouses, once they are given the "banking" status, who's to stop them.
Now I have no particular love for the big banks of this world, but I think generally we can all agree that this development is not such a good thing since this all would give big boxers yet another strangle hold on our wallets and make every house in this land fill even faster with the same HomeDepot/Wallmart crap that we see all too often these days. And our little groceries, and hardware stores and other individual stores will have one more struggle to struggle against.
Ah, so we've got the HD and W-Mart connections, how does my vacation fit in here? You see when I was in the German countryside recently, I found it very interesting that every time I found the bank in one of these small towns (looking for the ATM), what do you think I saw plastered in their window right in the center of town? A whole bunch of real estate listings!!! wow, I thought "Here in Germany, the banks sell real estate, cool".
Well, I never knew that; never even dreamed that a bank might go there. I'm guessing since our federal system has not allowed banks to get into other industries, that most people, buyers/sellers don't know that either. But the banks do. Oh they know. And this is how banks will make lemonaide out of the lemons that are being passed on from the big boxers. They will pass the lemons on to the real estate brokerages. This will force (allow) banks into the real estate sales business and they they will have the first crack at buyers and sellers and be able to bundle financing with houses, which in the short term might lower the cost of purchasing a property, but as we all know, once they have the consumer locked up, prices, fees, cost will go up.
The consumer might not even notice it the likely way things will proceed is not that we'll see listings in bank windows overnight, rather banks will start merging (buying) real estate brokerages. They will partner with the financing part of the bank and eventually, the goal will be to squeeze out the little guys.
Up to now, the none of the big (corprate) brokerages like Caldwell Banker have been able to effectively squeeze the little brokerages like Brown Bear Realty. They have a bit of an advantage in advertising, but since realtors are such an independant bunch and even the agents in the big brokerages mostly do their own thing and advertise individually.
Now however we have the likes of the banks, and the internet companies which are aiming for all of those tastie (read well deserved) commissions that we and the Association of Realtors have been working so hard to keep. I want to be clear, I don't think that the compensation is undeserved, real estate agents work extreemly hard for their pay and it is indeed well deserved as I joked about above. However with the synergy of technology, consolidation of industries, and corprate leverage, there is likely some changes due in the way real estate is sold in the united states.
Think about this for example. E-bay created Pay-Pal to facilitate their huge on line auction business. No other auction business comes close to Ebay for that reason. craigslist is great (I use it more than I use ebay) but without the online payment scheem craigslist is a local thing.
My point is not that we will use Pay-Pal to buy/sell real estate (though that is not far fetched). Rather, and I've long said this about things in general, that when you combine two technologies, or industries, or anythings well, you can get more than the sum of their parts. On the other hand, when a big greedy corporation is mixed in with that combination, lots of time the savings in efficiency will go not back to the consumer, and not back to the poor employee that the consumer deals with (i.e. the real estate agent), but a corperate bank acount and eventually, to the guys who control it. The CEO the Board and the controlling shareholders.
My hope is that the Association of Realtors gets its act together and does the following:
1) It needs better technology for searching and listing properties. It needs to hire some serious software architects to create some effective easy to use software for interfacing to the data. It has to come to grips that control over information is gained by the one who has the best interface. After all the customers as a whole really own the data, not the association of realtors. The internet is all about providing an interface to data that is highly distributed.
2) They need to keep the banks out of the real estate market. Because they will squeeze out the little home town brokerages like brown bear and will make real estate agents into employees instead of independent contractors. Keeping the entreprenurial spirit in the real estate market is very important; that spirit is what drives the best agents to get the most for their clients.
Ironically, while the bank does know this, most buyers don't. The first thought the typical buyer has when making the big leap, is better go talk to a Realtor. hmmmm. That's good for real estate agents, since if buyer thinks he should first talk with a real estate agent, then the real estate agent has a chance to set the hook in and direct what banker the buyer goes to, instead of the other way around.
But of course, right now, banks are somewhat special here in good old America. You see, not only do you have to be a "bank" and follow "banking rules" if you do things like lend money and take deposits and other "banking" things; Also, if you are indeed a bank, you can't do other things like sell groceries, toilets, BBQ grills, cheap plastic stuff from China, and most importantly, you can't sell real estate. Banks are banks and everything else is not a bank. yup we keep it simple.
Of course, things are getting more complicated. And this is where the likes of Wallmart and Home Depot come in. You see, recently they have recently requested permission from the federal goverment to start to do some banking things. Both want to set up banks so that they can extend credit to their customers to buy more shit from China. And since that will cut the [established] banks out of the loop, they'll make more money!!! Good for the evil big box stores and bad for the [not so] poor banks. Further, while Wallmart "says" they are not going to offer customers more traditional banking service in their one stop money sucking wearhouses, once they are given the "banking" status, who's to stop them.
Now I have no particular love for the big banks of this world, but I think generally we can all agree that this development is not such a good thing since this all would give big boxers yet another strangle hold on our wallets and make every house in this land fill even faster with the same HomeDepot/Wallmart crap that we see all too often these days. And our little groceries, and hardware stores and other individual stores will have one more struggle to struggle against.
Ah, so we've got the HD and W-Mart connections, how does my vacation fit in here? You see when I was in the German countryside recently, I found it very interesting that every time I found the bank in one of these small towns (looking for the ATM), what do you think I saw plastered in their window right in the center of town? A whole bunch of real estate listings!!! wow, I thought "Here in Germany, the banks sell real estate, cool".
Well, I never knew that; never even dreamed that a bank might go there. I'm guessing since our federal system has not allowed banks to get into other industries, that most people, buyers/sellers don't know that either. But the banks do. Oh they know. And this is how banks will make lemonaide out of the lemons that are being passed on from the big boxers. They will pass the lemons on to the real estate brokerages. This will force (allow) banks into the real estate sales business and they they will have the first crack at buyers and sellers and be able to bundle financing with houses, which in the short term might lower the cost of purchasing a property, but as we all know, once they have the consumer locked up, prices, fees, cost will go up.
The consumer might not even notice it the likely way things will proceed is not that we'll see listings in bank windows overnight, rather banks will start merging (buying) real estate brokerages. They will partner with the financing part of the bank and eventually, the goal will be to squeeze out the little guys.
Up to now, the none of the big (corprate) brokerages like Caldwell Banker have been able to effectively squeeze the little brokerages like Brown Bear Realty. They have a bit of an advantage in advertising, but since realtors are such an independant bunch and even the agents in the big brokerages mostly do their own thing and advertise individually.
Now however we have the likes of the banks, and the internet companies which are aiming for all of those tastie (read well deserved) commissions that we and the Association of Realtors have been working so hard to keep. I want to be clear, I don't think that the compensation is undeserved, real estate agents work extreemly hard for their pay and it is indeed well deserved as I joked about above. However with the synergy of technology, consolidation of industries, and corprate leverage, there is likely some changes due in the way real estate is sold in the united states.
Think about this for example. E-bay created Pay-Pal to facilitate their huge on line auction business. No other auction business comes close to Ebay for that reason. craigslist is great (I use it more than I use ebay) but without the online payment scheem craigslist is a local thing.
My point is not that we will use Pay-Pal to buy/sell real estate (though that is not far fetched). Rather, and I've long said this about things in general, that when you combine two technologies, or industries, or anythings well, you can get more than the sum of their parts. On the other hand, when a big greedy corporation is mixed in with that combination, lots of time the savings in efficiency will go not back to the consumer, and not back to the poor employee that the consumer deals with (i.e. the real estate agent), but a corperate bank acount and eventually, to the guys who control it. The CEO the Board and the controlling shareholders.
My hope is that the Association of Realtors gets its act together and does the following:
1) It needs better technology for searching and listing properties. It needs to hire some serious software architects to create some effective easy to use software for interfacing to the data. It has to come to grips that control over information is gained by the one who has the best interface. After all the customers as a whole really own the data, not the association of realtors. The internet is all about providing an interface to data that is highly distributed.
2) They need to keep the banks out of the real estate market. Because they will squeeze out the little home town brokerages like brown bear and will make real estate agents into employees instead of independent contractors. Keeping the entreprenurial spirit in the real estate market is very important; that spirit is what drives the best agents to get the most for their clients.
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