Friction

I’m a visual learner. From my many years as a high school teacher I know that many of you are probably visual learners as well. I’ve found that once I have a mental “picture” of an idea then I really own it.

Picture a small snowball rolling slowly down a hill. The bottom of the hill is about 50 miles down. Parts of the hill are really steep, parts are pretty flat. As the snowball rolls down the hill it will continue to get a little bigger with each roll. When it’s rolling fast, it grows faster. When it’s rolling slow, it grows slower. But it’s just about always growing.

Now picture trees and rocks lining the sides of the hill. Down the middle of the hill it’s clear. Along the sides there are trees and rocks. When your snowball bumps up against a rock or tree part of the snowball falls off. Sometimes it’s a small piece, sometimes a big piece.

This is my understanding of Warren Buffet’s investment strategy and his concept of frictional costs. Everyone knows that Buffet is the buy-and-hold guy. Buy an undervalued company stock. Hold it for the long run. Big returns. Buffet warns investors to steer clear of frictional costs. What’s a frictional cost? Well, every time you trade a stock you are charged a fee. That’s a frictional cost. Maybe you don’t trade your own stocks, maybe you have someone manage your money. Your money manager’s fees are a frictional cost.

The rocks and trees in my little mental picture are the fund managers and trading fees. The snowball is my money. The 50 mile hill is my investment life. Start with a little snowball and get rolling. Over time it will get bigger. Just stay away from as many rocks and trees as you can.

This picture popped into my head today as I was reading a couple of blogs and real estate forums where people were asking if it was a good time to buy Denver real estate. So many of the respondents simply said that it was a good time to buy. It made me wonder. A brokerage house makes money every time an investor buys or sells a stock. Doesn’t matter if the stock went up or down. The house makes money.

I think a more honest answer to the question: is it a good time to buy real estate in Denver, is: it depends on you. I don’t know if the market is at a bottom. I do know that real estate generally goes up over time, and that if you as an investor are planning on holding real estate as part of your overall investment strategy then it might be a good time to buy. Especially if you are sensitive to your frictional costs. When you are selling real estate your major frictional costs are taxes and real estate commission fees.

Just think of the snowball. If you start rolling a little snowball down the hill and you only let it roll for two miles before it bumps up against a tree and a rock, how much of the snowball will be left? Depends on how steep the hill is, right? Yes, to a certain extent it does. But isn’t it also clear that if you simply let the ball roll for a few more miles that it will likely get a lot bigger?

I don’t think it’s a great idea to buy a house with the intent of selling it in a year or two. Especially now when we can’t tell how steep the hill is. Be smart about your investing. Avoid the trees and rocks as much as possible and let it roll for as long as you can. There’s no arguing that the odds will swing in your favor the longer you let that snowball roll.

Share This

Posted in Colorado Real Estate, Denver, CO, Boulder, CO | No Comments »

Membership Dues Put to Good Use

The National Association of Realtors has decided to allow boards to “voluntarily” restrict its members from using the term “MLS” in their websites, urls, and marketing.

In other news:

• The New York Stock Exchange decided to allow brokerages to voluntarily restrict the usage of the term “dot com bubble” on official company websites.
• Texas legislators have passed a law forbidding newspapers to use the words “Ken”, or “Lay” either in the same sentence or successive sentences in the same paragraph.
• The American Chemical Society has decided to rename “chloroflourocarbons” as “lovie-dovie-dust”
• Donad Trump has purchased all 546 SuperCuts franchises in an effort to restrict their use of the the words “comb” and “over”. Franchisees are asked for their voluntary participation. Franchise owners who don’t agree to the restrictions will be forced to watch all 72 hours of ET’s coverage of the Rosie O’Donnell/Donald Trump media fight until they agree with the voluntary restrictions
• AT&T has decided to change their name back to Cingular
• Jell-O’s board of directors have decided to rebrand the wiggly treat as “Jell-A”, in hopes of capturing the Hispanic female shopper demographic
• The National Arbor Foundation has enlisted the help of the board of directors of the National Association of Realtors in devising a plan to reverse the annual fall foliage massacre. “Every year”, says the Arbor Foundation Chairman, “we are forced to watch perfectly good leaves change color and drop to the ground. This is an unnecessary and dangerous pattern that must be nipped in the bud. We thought it was time to honor the spirit of our founding members while simultaneously increasing the publics awareness of our efforts and value. What better group to help us achieve our goals than the NAR?”

Share This

Posted in Colorado Real Estate, Our Company | No Comments »

Realtor.com: Lovechild of the DMV and Airline Industry

Imagine a company that combines all the satisfaction of a trip to the DMV, with the pricing, comfort, and customer service of the airline industry. That’s what Realtor.com is to us real estate agents.

Let me put it this way– a really, really bad day for me would include:

1. Waking up on December 23rd and realizing that I need to go stand in line at the Post Office to mail all of our gifts
2. Follow that with a trip to the DMV to register my car–long line, wet floor, perfectly timed lunch breaks…
3. Then, it’s off to the dentists office for a root canal
4. And just to make things perfect, my wife tells me we have tickets to the musical “Oklahoma!” that evening (Sorry, but I just don’t understand the concept of the musical- so this is a form of torture in my book)

I’d rather repeat this series of events like Bill Murray in Groundhog Day than deal with Realtor.com for one extra minute.

Why do I dislike this company so much? Well, for starters they charge way too much money to us Realtors for “enhanced” listings. The company teases us by offering to list our properties “for free”…but I can only upload one photo. Most brokerages worth anything choose to upgrade their listings on Realtor.com so that they can upload more pictures, change the text, add Virtual Tours, etc. And the fun part is that the more successful I am, the more Realtor.com will charge me for this service.

The folks at Realtor.com have had real estate agents over the proverbial barrel for many years due to the fact that their site draws soooo many visitors every month. It is (was?) considered by many to be the go-to site when it comes to finding real estate listings.

But all that is changing with the advent of sites like Zillow, Trulia, and local sites like Real-a-Save. I happen to think that our website here at Real-a-Save is better than Zillow, Trulia, or Realtor.com. We have all the listings, updated constantly, in an easy-to-use interface, and we don’t demand that you sign in to use our site. If you’re in the market for Denver real estate, or want to peruse Boulder real estate listings, then you will be hard pressed to find a better search feature than ours at realasave.com.

My point is that regional companies like Real-a-Save are making a play on the big dogs like Realtor.com. Our search feature is better, we’ve got more information, we’re nimble and able to add features that our customers want on very short notice–so we’ve got you covered locally. Sites like Zillow and Trulia have the national exposure and growing name recognition that Real-a-Save does not have (yet), and so they present a national alternative to Realtor.com.

As more and more people turn to websites like Real-a-Save locally, and Zillow, and Trulia nationally, Realtor.com becomes less and less of a must for us agents. There may come a day very soon when my clients really don’t care if their homes are on Realtor.com…as long as they’re on Googlebase, Yahoo Real Estate, Trulia, etc. The list of new, cool listings sites grows daily. How long can Realtor.com remain relevant? How long can they continue to charge such outrageous fees?

Stay tuned…

Share This

Posted in Colorado Real Estate, Our Company, Denver, CO, Boulder, CO | 3 Comments »

Zillow is the new MLS

Or will it be Trulia? Or another, yet unnamed player? I don’t know. What I do know is that the local MLS providers here in Colorado leave a lot to be desired. Our company, realasave.com, deals with 4 different MLS providers currently and we’re planning on expanding to include another 4 or 5 very soon. Most small brokers don’t have to deal with multiple different MLS providers because they concentrate in just one area. So a broker dealing mainly in Denver real estate would have to deal with Metrolist (the Denver MLS provider), while a small broker dealing mainly with Boulder real estate would likely just deal with IRES (Northern Colorado’s MLS provider). So small brokerages don’t get the perspective that we have in dealing with all of them.

It’s hysterical, really, to look at the rules that these companies have. The MLS provider in Colorado Springs, for example, forbids brokers from giving out address information unless you force a person to sign in to your site. Seriously, they absolutely forbid it. They even forbid you to show pins on a map. Pins on a map! But go ahead and Google “Colorado Springs real estate” and see what you find. You see various companies that are in flagrant violation of these MLS rules. So not only are the rules silly, and in many cases senseless, but many companies simply don’t follow the rules at all.

In Grand Junction you are actually not allowed to speak to the MLS provider. I’m not kidding. You MUST go through the local board of Realtors. I spoke with a very nice lady at the local board of Realtors who was aghast when I asked her for the phone number for the local MLS provider, “Oh no! You can’t TALK to them. You can’t EVER talk to them! If you talk to them then they’ll call me and yell at me and say ‘Keep your people in order’!” I’m not kidding. This conversation actually took place.

Some of the MLS providers are a pleasure to deal with. IRES has a staff that is always helpful. The same cannot be said for some other local companies.

There are over 900 MLS providers in America. And they all operate in a vacuum. They all have their own rules, and each thinks that their rules are the right rules. They don’t communicate with each other…they often don’t even know that the other exists. Again, I’m being serious. Do a little experiment: try to find out how many MLS providers there are in the state of Colorado. Does the National Association of Realtors have this information? You’d think so, but they don’t. Does the Colorado Associate of Realtors have a list? You’d think so, but they don’t. Well, maybe you know a few of the local providers so you call them and ask for a list of their colleagues. They don’t have it. It’s a mystery. Total UFO time. Close Encounters of the MLS Kind. It’s freaking hysterical.

I hope that Trulia and/or Zillow either a) forces a national consolodation of MLS providers into one, giant national MLS, or b) replaces all of the current MLS providers.

You can’t even imagine the expense of dealing with 6-10 MLS providers. We’re talking around $10,000 in monthly fees, local board fees, and upgrades. I’d much rather deal with one provider who doesn’t want to screw me over by selling MY information BACK to me at an exorbitant rate. Yes, they actually sell me back information that I technically own. Let’s leave that for another day. And next time I’ll get on my soap box about what an evil, vile, monster Realtor.com is. Trust me. They are.

Share This

Posted in Colorado Real Estate, Our Company, Denver, CO, Boulder, CO | 2 Comments »

Millionaire Habits

I remember reading the book The Millionaire Next Door a few years ago and being surprised at a few of the common habits of millionaires. I had this picture of the typical millionaire in my head: fancy car, huge house, expensive lifestyle and habits. It turns our that most of the millionaires interviewed were quite frugal. That is:

“economical in use or expenditure; prudently saving or sparing; not wasteful”, according to dictionary.com.

I would say that most of our real estate clients fall into this “frugal” category. The simple fact is that traditional real estate fees are not a frugal way to spend your hard-earned equity. The equity in your home is, after all, yours. Why not keep it? Why not spend it wisely? Be frugal. It’s a common theme echoed by some of our recent Boulder real estate clients. They see the services that our company offers in a simple, side-by-side comparison to traditional real estate and realize that their money is better spent with us.

To quote Paul Clitheroe: ” The amount of money you have has got nothing to do with what you earn.. people earning a million dollars a year can have no money and.. People earning $35,000 a year can be quite well off. It’s not what you earn, it’s what you spend.”

Well said.

Share This

Posted in Colorado Real Estate, Boulder, CO | No Comments »

Market Watch

Is Wall Street crazy or is it just me? Why is it that CEO s seem to get paid more money if they screw up? The fabled golden parachute is in full effect on Wall Street for several CEO s of large financial institutions who jumped on the sub prime market, only to lose billions for their companies.

Locally, the market is steady. We’re in a confirmed buyer’s market, but Boulder real estate continues to attract local and relocating buyers. Pricing is realistic in most neighborhoods. Here are the latest stats courtesy of IRES:

Share This

Posted in Colorado Real Estate | No Comments »

Rebates Make Buying a Home Less Expensive

The title of this post is taken directly from the US Department of Justice’s new website which focuses on competition in real estate.  Needless to say, we were very happy to see that the Department of Justice supports companies like Real-a-Save, going so far as to say: “Offering rebates and incentives is one way that real estate brokers can compete for consumers’ business, leading to lower prices to consumers.”

The bottom line is that consumers benefit whenever companies compete for their business.  We know for a fact that our own efforts have saved consumers hundreds of thousands of dollars in commission expenses.

Here’s another interesting quote from the FAQ section of the Department of Justice website:

“Do refunds and incentives pose any risk to consumers?

Some have argued that refunds and incentives can tempt consumers into closing on real estate transactions against their best interests. The Antitrust Division has found no evidence that refunds and incentives harm consumers. On the contrary, they can dramatically lower the price that consumers pay for brokerage services.”

Share This

Posted in Colorado Real Estate, Our Company, Denver, CO, Boulder, CO | No Comments »

New Website Launched

We’re thrilled to announce that we’ve just launched our new website. New features include:

• Custom home-search feature
• Detailed neighborhood pages
• Easier navigation
• Comparable sales information
• Home-valuation tool information
• Saved search feature
• Emailed update feature- allows you to receive the most recent listings every morning

We’ll be adding to the website on a daily basis. A couple items that we’ll be bringing to you in the very near future include:

• MLS listings for Summit County and Colorado Springs. Soon thereafter we will have coverage of the entire state of Colorado.
• Detailed schools information

We hope you enjoy the new site. Feel free to contact us with any feedback at info@realasave.com

Share This

Posted in Colorado Real Estate, Our Company, Denver, CO, Boulder, CO, Niwot, CO, Longmont, CO, Littleton, CO, Lafayette, CO, Highlands Ranch, CO, Erie, CO, Superior, CO, Louisville, CO, Broomfield, CO, Fort Collins, CO | No Comments »

New website

We’ve been working away at Real-a-Save to create an entirely new website. Our new home search feature will be the best one in the entire state of Colorado. We’re confident that you’ll love the new site, and we’re really looking forward to feedback from our loyal users.

Give us about another week or so and you’ll see an incredible new site, with a really cool home search feature.

Share This

Posted in Colorado Real Estate, Denver, CO, Boulder, CO | 2 Comments »

The Big Business That Hates Competition

I could have said, “The Big Business That Hates ITS Competition”, but that may not be entirely true. I don’t think traditional real estate HATES the competition, I think that simply want us to disappear. And with oodles of money, lobbyists, and the heavy momentum of “tradition” on their side they are certainly making small gains on the realization of this dream.

With the recent decision in Tennessee which bans cash rebates to buyers, the honorable Gov. Phil Bredesen shows his true colors. But are they red, white, and blue? You decide.

Is it American to try to outlaw competition? Because that’s exactly what this law attempts to do. A new wave of real estate companies offer cash rebates to buyers. This is strong competition from a relatively new type of brokerage, and it’s bound to benefit the consumer because it means more money stays in their pockets, not the pockets of real estate professionals. There are currently only about ten states with anti-competitive laws like this on the books. And the trend is that these old laws are crumbling (like in West Virginia, Kentucky, and South Dakota). So this move by Gov. Phil Bredesen is all the more confusing.

In the Internet-induced age of unavoidable transparency and instantaneous commentary by the blogosphere, a decision like this is bound to be ridiculed and exposed for exactly what it is: a protectionist nod to the deep pockets of traditional real estate. Let’s protect the good ol boys for a while. Let the gravy-train roll on for a few more months or years.

Am I alone with this opinion? The Unites States Department of Justice is firmly against this protectionist decision in Tennessee, and has already sent a letter to the honorable Gov. Bredesen. Hmmm, I wonder how long it will take them to reverse this decision?

A note to the good people of Colorado: our company is here to stay. Colorado is one of the 40 plus states that allows cash rebates to buyers, and our company has already rebated around $100,000 to Colorado real estate buyers and sellers. We’re proud of that fact. And we’re proud to be part of the solution when it comes to the changing face of real estate.

Share This

Posted in Colorado Real Estate | No Comments »