patrick.net

The status quo serves the interests of the intermediaries (RE agents) who use their control of the data to preserve their position in the transaction. Any benefit to the seller is largely a side-effect because the agent and the seller have some overlapping interests - namely to make the sale go as fast and as high as possible. Controlling access to the data allows RE agents to influence buyers AND sellers, but the confluence of interest between sellers and agents makes this pain more acute for the buyer than for the seller.

It is obvious that transparency would benefit the buyers by eliminating a major assymetry. If you can achieve this transparency in a way that also provides a benefit to the seller, you will have a good shot of success. Disintermediation requires compelling benefits to flow to both parties - only then will you be able to kill the entrenched middleman.

Buyer interests:
low price, local information, comparison shopping, trend analytics.

Seller interests:
high price, painless sale, cost-effective 'help' (staging, pricing, etc.).

Common interests:
reliable & efficient transaction, no 'surprises', help with transaction process (appraisal, approval, legalese, etc.)

RE intermediary interests:
high churn, commission, captive market, uninformed clients.

Pretty clear what needs to go. :-)

SP

The professionals can be counted upon to oppose this; transparency is rarely the friend of any transaction intermediary.

A crying child awaiting rescue has very little leverage.

I'm still trying to grasp some of this stuff. Can someone please explain this article to me.

http://tinyurl.com/224kfb

Given that some Sarbanes-Oxley-magnitude “reform” of the residential mortgage system is likely to come out of Congress,

Riiiiight.

Have you forgotten that the NAR, Fannie Mae, Freddie Mac, etc are all in the top 25 lobbying spending groups?

Obviously asking NAR (and local thugs) to report DOM etc. accurately and honestly isn't going to work. I believe some time back the SB thugs decided they were no longer going to report median prices?

AFAIK there was absolutely NO pressure from NAR to bring one of their cartel members into compliance? It wasn't a matter of *not* h-a-v-i-n-g the data, it wasn't flattering so the simply elected not to share it.

Can you say... "Revoke Charter"? If NAR can't bring their own members into compliance it's pretty clear (to me anyway) that they've given up all right to "self regulate". Just have OFHEO report the damn numbers and tell NAR to stick it.

Have you forgotten that the NAR, Fannie Mae, Freddie Mac, etc are all in the top 25 lobbying spending groups?

The NAR can spend all they want, but it means jack if you can provide the congresscritters some convincing graphs of torch-and-pitchfork sales.

I think you can completely displace NAR if you can present the latest, most detailed sales info. I am not signed up on propertyshark's payment program only because they have not come up with a standard pricing scheme yet, you need to call to let them know what you want to know to determine how much to charge. I think they should start with a low monthly fee of presenting just the basics (owner name, loan taken on, transaction price, lot and house info) for $5-10/month.

I look at this way. Most males I know have a porn site subscription (you're out there, come on, don't be shy) for $5-15 a month, depending on how perverted the viewer is. Propertyshark is just another sort of porn/ entertainment site for me, what can be more satisfying than knowing how much everyone else biggest asset is worth and how much can he really afford that asset? People who want to maintain their privacy can do so by paying propertyshark $5 a month to keep their info off the list, just like the phone company does with telephone listing.

If you pay more, you can even get all the photos of the property (recorded from the time the house is on MLS), so that a potential buyer can get a really good idea of what the comp is. Other premium info can also include owner's exact loan terms up to the last 6 months (it takes county 6-9 months to record refinancing), all permits filed for this property (how much remodeling, addition done without permit), all other properties under this owner's name, etc.

None of the agents that I know can provide info up to this kind of detail. Coupled with increasing coverage of google's street view, someone please tell me why do I need a realty agent ever again?

Even without an immediate purchase plan, I am more than willing to pay $10 a month to propertyshark for basic info (zillow doesn't provide owner name, but I need owner name for amusement).

Zillow is pretty close.

http://www.zillow.com

You can check price data for houses sometimes, closest thing I can think of, though.

DOM is useless info.

If you are planning on buying something, you follow the area very closely. Most potential buyers don't have short term memory problems, so they recognize the lingering inventory that have been delisted, relisted, and sitting forever.

Compared to DOM, I am much more interested in
1) Owner loan terms (toxic loan? When is the reset date?)
2) Owner name (so that I can do a background check on him)

By knowing 1) and 2), I know his bottomline. DOM tells very little about the owner's bottomline.

Sadly I think Realpolitik wins and there is more chance that I'll catch a falling meteor than there is of Congress effectively regulating the real estate industry. Regulation will *not* be the disruptor here. Regulation is reactive, and the threshold for reaction is very high in this case. Even the bubble popping will not be sufficient in terms of political capital.

Bear in mind that politicians and their sycophants have always derived their wealth from real estate/land; from the Congress all the way down to your local City Council. They are beneficiaries from the current system and will only disassemble it if they face eminent removal from office at the hands of the electorate.

If there is going to be a disruptor here it will have to be good, old fashioned technology. Zillow had a chance (and still does), as do some of the ala carte discount firms.

If I'd guess how it will unfold, some tech company like Zillow and/or a number of discounters will eventually force the NAR cartel into actively erecting/enforcing barriers. Likely they will have to commit collusion or other anti-competitive behaviors to do this. If the starts align and timing is good then the victim can bring anti-trust action (and provoke criminal anti-trust investigation), which will turn the whole thing over to the courts. Once moved into the courts there's at least a chance the RE Cartel's back gets broken finally and once and for all.

Zillow's major drawbacks are:

1) No owner name (so no background check, cannot cross reference)
2) No loan terms (cannot estimate owner's financial situation)

graph is not needed here. A potential buyer knows his target area very well, and he tracks price monthly. Propertyshark allows one to check by owner's name in certain states, that is very useful, because I can see how leveraged the owner is (or how deep of a pocket he has).

OO,

That's more or less where I was trying to go with my post. If there's something out there that's as good or better... who needs flawed and tortured NAR data? I don't know if OFHEO is necessarily the proper agency to task with that or even if the answer need be a gov. agency at all?

Our local paper's web-site shows all RE transactions that have closed AND WHO... paid HOW MUCH! Granted, it's a little delayed but you definitely get the idea.

It is important for any data aggregation firm to offer a paying option to keep one's housing info off from the public, to fend off lawsuits. Also, it is a great proposition for those of us who want to keep our lives private while getting the chance to peek into other people's lives, for a small fee.

OO,

Damn, we're getting personal here aren't we! Yeah, I'd like to know if the guy is going through a divorce etc. but I'm not quite ready to dismiss DOM altogether. It tells me, it's over-priced! It tells me the seller is a knucklehead specializing in mental accounting waiting for just the right schmuck to come by and make his retirement!

I've always viewed it more as a tool for eliminating certain homes from my watchlist as a "disqualifier". Now... if you use DOM in conjunction with price reductions (as in fast and furious) you can get a pretty good idea of the seller's financial state of affairs.

Have you forgotten that the NAR, Fannie Mae, Freddie Mac, etc are all in the top 25 lobbying spending groups?

I think they are all smaller than AARP, right?

Perhaps we should convince the old folks that a transparent RE market is better for seniors.

It is not quite clear to me why some people should be able to opt out. What is the lawsuit risk OO?

Also, it is a great proposition for those of us who want to keep our lives private while getting the chance to peek into other people’s lives, for a small fee.

We cannot have a transparent market with people all trying to maintain privacy. There should be no opting-out.

My list of most advanced RE websites out:

zillow (for zestimate +mapping/sales data)
redfin (best mapping+previous sales prices and allow sort by price/sq foot)
trulia (scraping mls+fbso+nice mapping)
foreclosureradar (for mapping+NOD/REO data+previous sales)
propertyshark (for large amout of data)

I must mention that realtor.com recently added mapping and its sadly a pathetic implementation.

I think 2 different types of transparencies are being mentioned here. One is related to the local market - other homes, neighborhood information, comparable sales etc. This is becoming easier and easier to get.

The second is about an individual. The type of loan information available on propertyshark is bordering on privacy violation. It is very useful for negotiation as a buyer, no doubt. But why is it a public information what kind of loans the current owner has taken ?

On a broader issue, IMHO, the lack of transparency was only a small factor in bubble. I am all for increasing the transparency, but the bubble of similar proportions would have been there even with all the transparency, and it will burst even without the transparency. The stock markets are way more transparent, but manias and busts still happen.

AARP is below NAR, Fannie Mae, Freddie Mac.

http://www.publicintegrity.org/lobby/top.aspx?act=topcompanies

Top 100 Companies and Organizations
Companies and Organizations Reported Lobbying
Chamber of Commerce for the U.S.A. $204,614,680
Altria Group Inc $101,220,000
General Electric Co. $94,130,000
American Medical Association $92,560,000
Northrop Grumman Corp. $83,405,691
Edison Electric Institute $82,866,628
Verizon Communications Inc. $81,870,000
Business Roundtable $80,380,000
American Hospital Association & State Affiliates $79,205,772
Pharmaceutical Research & Manufacturers of America $72,720,000
National Association of Realtors $68,810,000
ExxonMobil Corp. $59,672,742
SBC Communications Inc. $58,035,037
Freddie Mac - Federal Home Loan Mortgage Corporation $57,740,000
Boeing Co. $57,258,310
Lockheed Martin $55,373,840
AT&T Corp. $53,349,499
Fannie Mae (Federal National Mortgage Association) $50,777,000
Blue Cross and Blue Shield Association and state affiliates $48,790,000
General Motors Corp. $48,260,000
American Association of Retired Persons (AARP) $47,790,000

BTW, speaking of transparency, it's kind of interesting that the AMA is also high up there.

What happened here?

Listed around then:
http://www.burbed.com/2007/05/28/576-sqft-home-great-for-2-families/

Sold on 7/12:
Date Amount Type Transaction 1st party 2nd party Event ID
7/12/2007 $350,000 Grant Deed Resale Gomez, Rafael G & Maria I Martinez, Luis G 626844676

4/4/2005 $350,000 Grant Deed Resale Martinez, Luis G Gomez, Rafael G 101256267

Guy sells house. Guy then buys house back 2 years later for the same price. Huh?

eburbed,
The AMA has always been high on the lobby money lists. They as an organization (to me at least) do not represent most MD's views and opinions. They are all about preservation of self interest, without much concern for the bigger picture of actually improving American medical care. As a result, most MDs I know at least are not members (me included). I think their true constituency are profit-oriented private practitioners.

Capital One's mortgage unit is shut down, and 1900 employees are ousted. That would count as the financial sector "newly revealed corpse of the day" for today, IMO.

Capital One’s mortgage unit is shut down, and 1900 employees are ousted.

What's in your wallet?
A: my pink slip.

"Perhaps we should convince the old folks that a transparent RE market is better for seniors."

Not a chance! Unless you can repackage transparency as herba1 V1agra.

HARM,

You just beat me to the punch - good one. Time for those wacky marauding vikings to auto-digest themselves...

StuckinBA,

one's marriage info is also a privacy issue, but you can certainly obtain check one's marriage records at the county office and even look up his divorce papers, it is already out there.

All the information available on propertyshark is readily accessible if you care to make a trip to the county office, it is public information already. Propertyshark is just saving you that trip.

Opting out on propertyshark doesn't mean that you can opt out on the county level. If you piss off someone, he can still make the trip himself and dig out as much dirt on you as possible through public records.

Not a chance! Unless you can repackage transparency as herba1 V1agra.

How was Finland?

OO,

You are correct. But I was not accusing propertyshark. I just find it weird what information is public and what is not.

The second is about an individual. The type of loan information available on propertyshark is bordering on privacy violation. It is very useful for negotiation as a buyer, no doubt. But why is it a public information what kind of loans the current owner has taken ?

Yes and no. I think posting people's complete financial history/credit reports/tax returns, etc. crosses the line on privacy. However, when you "buy" a property with a neg-am, IO, NINJA or some combination thereof you are a high-risk borrower by definition. And when you buy multiple properties with these loans, you are also a speculator by any reasonable definition. Also, as Dinor has often pointed out, when you refi your house, you are essentially "re-buying" it (often with cash-outs, another FB red flag).

The seller's RE transaction history and details/status on current mortgages is all information directly relevant to the negotiating process. Knowing the seller's degree of leverage, loan types, LTV ratio, current # of properties mortgaged, etc. could be *critical* information to the buyer, and seems like fair game to me. Just as getting a full credit work-up on the borrower could be critical to the lender and seller, and --in normal markets-- often required.

So you wanna be mini-Donald Trump, do ya? And you wanna play with the financial equivalent of lit dynamite sticks? But you still want to keep your privacy (even while I'm forced to allow lenders to probe my nether regions with a flashlight and latex gloves)?

Hmmm... Seems to me what's good for the goose is also good for the gander.

IMHO (and IANAProductManager), the discussion here is focusing on the wrong end. Information is a byproduct* of transactions - so a service that provides superior efficiency in transactions is the key to breaking the status quo. All the information in the world won't help if buyers and sellers have no efficient alternative to their local realtwhore in order to get the deal done.

There was a discussion about a year ago, when someone (HARM or DinOR?) proposed a bank-centric process by which RE-transactions could be handled.

SP
* Before someone points out that transactions cannot happen without information, please keep in mind that most of that information is itself derived from some history of transactions. So aside from the bootstrap issue, the precedence is pretty obvious.

There was a discussion about a year ago, when someone (HARM or DinOR?) proposed a bank-centric process by which RE-transactions could be handled.

I cannot take credit for this idea (Randy H?), but wholeheartedly endorse it, and other forms of substantive disintermediation. However, even if the banks manage to break the NAR's spine and completely cut them out (unlikely) the transparency issue will still remain. In fact, it could be even worse if the banks & Wall Street run the show 100%. If you think those DOM/inventory figures or "median" prices are manipulated now, imagine how they'll be when Goldman Sachs or Citigroup start reporting them.

HARM said:
when you refi your house, you are essentially “re-buying” it

A cash-out refinance effectively is a partial sale (equity to cash) and should automatically bump your tax-assessment to the current market value of the property (or the current loan balance, whichever is higher :evil: ).

I would specifically exclude non-cashout refi's since it is not a sale, and is a legitimate part of financial planning when interest rates are falling.

SP

I have nothing against Tracy or its people. I simply look at it as a gauge of what will happen to the core BA.

http://realtytimes.com/rtmcrcond/California~Tracy~christinepapworth

Excerpts.

Do you want the truth? Are you strong enough to handle the truth? Then, here it is!
The entire Central Valley of California(and, in fact, the entire State, with a very few exceptions) is in the worst real estate downturn in my 30+ year career.
THERE, I'VE SAID IT!
My opinion of the market is that we are in the beginning of the third year of a five to eight year cycle
...
If you know you will have to sell in the next five years...SELL NOW..as in... TODAY! Everyday you wait your equity is melting away with the market.
...
How serious am I? From 2005 to 2006 we lost 13% value. From August 2006 until now we've lost another 18%! Many of you have lost more than $100,000 and it's getting worse.

Tracy inventory currently has around 1000 homes - equivalent to 14 months of supply. So it is not surprising that RE agents are unable to spin it any longer and that shows. Still it's a brave post. Worth a read.

Still it’s a brave post. Worth a read.

Sort of.

She also says this:

My opinion of the market is that we are in the beginning of the third year of a five to eight year cycle. Yes, we have a long way to go before we start to build values again, but everyone knows the only way you loose on real estate in California is if you HAVE to sell in a down market. IT ALWAYS COMES BACK...eventually!

Isn't that another way of saying "Now's a great time to buy!"

eburbed,

Are you kidding me? That's long-term bear-talk coming from a *gasp* real CA agent and broker. Partially hedged or not (and note Casey spelling of "loose"), she at least deserves credit for trying to break bad news to the flock.

KT Says:
I’m still trying to grasp some of this stuff. Can someone please explain this article to me. http://tinyurl.com/224kfb

IMHO, they don't want to go through a sale of FNMA securities because they don't want to receive low-bids in the current environment. You can look at it as their way of avoiding (or at least delaying) a mark-to-market.

SP

eburbed,
Notice the first sale was from a couple, and the second to a single man (if your report is correct). Maybe this was a divorce-laundry sale?

After reading the posts on transparency, particularly from OO, I think total transparency is the way to go. A buyer should be able to do a background check on the seller, see their present loan status, their marital status and all other private information. In return, the seller should get to know the buyer's total net worth, their asset distribution, their marital status and whether the wife is pregnant, their religion, their complete background check, whether or not they have rich parents, their credit score and any blemishes on their criminal or credit record.

You know what? All of this privacy invasion is just buyers trying to create information asymmetry so they have an advantage over the sellers. Isn't that the exact damned thing you're allegedly complaining about? Information asymmetry is the total 100% opposite intention of voluntary transparency. Transparency is to allow both parties to enter a negotiation in good faith with all cards on the table. It isn't a tool via which buyers screw sellers.

People have stated the following premise in various forms, notably Randy in his Bubblizer. You should have a target price for any given property you wish to purchase. Your target price should be based on well-researched comps, taking into account future price appreciation or depreciation and the prevailing local rents, and then incorporating your own personal utility value for the property. All the rigamarole about knowing the seller's financial situation and previous purchase price is bullshit. That information might be useful, or it might be patently misleading, and people have no idea which one it is.

You could have a seller who has 50% equity but it's their only earthly asset and they would take 25% below asking. Maybe a seller is leveraged 105% because they just did a cash-out refi with a jerkwad mortgage broker, but they have $5M in other assets that you don't know about. Maybe the neighborhood has experienced huge growth or depreciation since the last price baseline was established. Why do neighborhoods two blocks down the street from each other with similar homes and identical schools sell for a 15% differential? Because people fixate on the original price, estimated appreciation and spoon-fed data. None of that crap matters.

Offer what you think a house is worth; if the seller thinks it's a fair offer, they will accept. All other information is secondary if it does not lead to a good transaction for both parties.