Matrix Blog

Adventures in Media & Marketing

…and the Home Seller will give you a Free Tesla!

July 12, 2014 | 7:26 pm | nymaglogo |

SodFarmtractor

Back when I was in college, a good friend of mine owned a large Michigan sod farm with his father – acres and acres of putting green quality sod. They wanted to upgrade their big tractor so I joined him on his visit to the local tractor dealership – International Harvester (my parents tell me I am a distant – really distant – relative of John Deere).

1979IHscout

[Source: Hemmings]

The tractor they were looking at included air conditioning and a surround sound stereo system. It was impressive. The salesman said that if they bought the tractor that month the dealership would throw in an International Harvester truck.

My friend’s comment to me under his breath was something along the lines of “looks like we are actually buying the truck too.”

Jhoanna Robeledo’s New York Magazine piece on the guy who throws in a Tesla if you buy his condo talks about this marketing technique.  Using a Tesla is buzz worthy as a well thought of brand – after all marketing is about getting eyeballs on the listing – but is it effective?  Does this technique actual sell properties?

In my view throwing in such a large concession is a red flag signifying the property is over priced enough to cover the seller’s cost of the “gift.”

Econ 101:  There is no such thing as a free lunch.

We’ve seen this marketing gimmick attempted with other cars such as a Prius, a Porsche, a Cadillac and Ferrari.

The funny thing is, you never read a follow-up article that shows how this marketing technique/gimmick was successful.

JohnDeereLM

A buyer for the condo in Jhoanna’s article would have the financial wherewithal to buy their own Tesla and likely isn’t thinking about buying a car during their visit to the property.

We don’t see these extreme marketing gimmicks tried with low margin properties. “If I buy this $75,000 condo I get a free Tesla!” Of course not – the condo seller in this “Tesla” story is telegraphing to a potential buyer the listing is over priced.

Yes, in a typical suburban transaction, a seller may throw in a used lawnmower to close the sale, but this is not something that is usually promoted during the actual marketing of the property.

NEWSFLASH Buyers are a lot smarter than this Tesla-giving away seller is giving them given credit for.

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Gold Jacket: How Does The Real Estate Brokerage Industry Change Its Image?

June 28, 2014 | 11:52 am |

I’m not sure we needed all of the (Century 21 – style) gold jackets, 4 women to 1 (bumbling) man ratio and house pocket logo imagery to get the stereotype being portrayed in this AT&T Mobile television commercial.  It is played over and over and I find it really annoying. The gold jacket stereotype has appeared in movies, ie War Games, Adam Sandler’s Happy Gilmore.

This tv ad use of props to convert the stereotype is intended to insure that the viewers understand that these people are aggressive, almost cartoonish, real estate sales agents. There are plenty of sales related industries with exaggerated stereotypes like used car salesman, stock brokers and insurance salesmen (of course some would argue they are accurate portrayals).

abcgoldjacket

The gold jacket was a marketing idea from the 1970s designed to thwart another company’s use of red jackets. And do you remember ABC’s Wide World of Sports Blazer?

Appraisers are also stereotyped as wearing polyester blazers (infers they are out of touch), carrying clipboards (most still do) and a “wheel” or tape measure.  All fairly benign when compared to the C21 gold jacket.

I wrote about this back in 2006 back in the early days of this Matrix blog.

Century 21 ended the gold jack requirement way back in 1996 but tried to implement again in what one would argue as a failed 2008 rebranding – but the stereotype lives on.

Should the real estate brokerage industry combat this portrayal? Is it too late? Does it even matter?

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How Real Estate is Presented on TV (Thank Goodness for Canada)

May 29, 2014 | 5:21 pm |

hometvchart
[Source: Time, click to expand]

This is an amazing graphic on the progression of real estate TV shows.

I retrace my housing on TV experiences back to “This Old House” with Bob Vila. He was interviewing Donald Trump during a years ago inspection of a Trump Tower apartment and commented, “this kitchen is pretty small” to which Trump replied, “If you can afford to live in one of my buildings, you make ‘reservations’ for dinner.” Perfect.

Smash cut to “Trading Spaces” on TLC which was more closely aligned to the modern day real estate TV format. Then “Flip This House” which became the catch phrase of the new TV genre.

When the US housing bubble burst in 2006 and flipping no longer worked here, many of the shows were produced (like many movies), in Canada, where the market continued to rise (until now) and the production elements removed city names and locations so it felt generic.

Smash cut now to reality programs like “Selling New York” and “Million Dollar Listing” with all their spin-offs which get more into the nuts and bolts of a transaction and puffed up melodrama to keep our attention.

To date I’ve been approached, or my name has been thrown in a hat to host 4 reality tv shows – as someone who has the potential to bring bad news to nice people and possibly ruining their lives as a result. I’d never agree to do one of these but the fact they are approaching an appraiser means they are any topic in the real estate spectrum is fair game.

We can’t get enough of it.

My white noise maker TV show continues to be House Hunters International which lets me test my valuation skills while I am usually doing something else.

Some in the real estate industry embrace the phenomenon and some harshly criticize it, but as this interesting Time Magazine piece which included the above graphic “The House Shows Boom: How the Real Estate Market Is Reflected on TV” provided a quote from one of show stars:

“No matter who we are, no matter how much money we have or don’t have, no matter where we are in the world, everybody wants to live better,” he said. “When we watch shows that inspire us to make changes in our own homes, when we see how other people live, I think that’s a really powerful message.”

Of course this doesn’t explain why I watched “Ice Road Truckers” or still watch “Cops.”

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Stories on Chinese Overtaking Russian Home Buyers in Manhattan is Purely Anecdotal

May 4, 2014 | 4:21 pm |

russiavschina

I’m not saying the US isn’t seeing an uptick in buyers from China, especially housing markets such as Manhattan. After all, there is a global trend where money is chasing stability and safety. US real estate has been a key beneficiary of this trend.

However it is important to realize that there is no US data from independent sources that links overseas nationalities with residential real estate purchases. Why?…because of long time concerns in the US about fair housing laws and by extension, the gray area of tracking nationalities to housing purchases although it is the norm outside the US.

When any housing trend is discussed, it is important to understand where the source of the trend came from. I’d really like housing market followers to appreciate that the trend analysis on the foreign buyer subject bantered in the media as of late is literally based on nothing. There has been an outpouring of coverage of the topic over the past few months, but the sourcing is only from real estate brokerage anecdotes because that is all there is for reporters to work with. I was interviewed for some of the following articles but disagreed with the general story premise, and I assume that is why my view wasn’t inserted.

Whichever stance you take on this particular trend – that Russians used to dominate the Manhattan housing market and how the Chinese have taken their place at the top – there really is no wrong answer, because there are no facts. All sourcing on the topic to make that point are from real estate agents referring to their opinion, often based on their past few transactions.

Russia
I first noticed this new new storyline when Russia invaded Crimea. Would the Russian position as the number 1 foreign buyer of real estate in Manhattan now go away? The brokerage community, or at least a couple of real estate agents claimed this to be the case.

I have no evidence to the contrary even though there are huge capital outflows from Russia that began with the Russian invasion of Crimea. In my view, the real estate agents were confused by the high profile sales by Russian buyers (think of Russian Oligarch buying 15 Central Park west for $88M) and perhaps has some direct feedback in some of their own transactions. However I don’t think Russians were ever the top homebuyers in Manhattan, just the highest profile.

If we have learned anything from the current Manhattan new development boom, it is the fact that high profile, high end transactions are not a proxy for the balance of the market much like a handful of high profile Russian purchases are not a proxy for some sort of Russian real estate dominance.

Manhattan Real Estate Feels a Russian Chill [NYTimes]

China
Now that the Russians are “out” (see previous) of the top spot, that must mean that the Chinese are “in.” Check out the headlines to this storyline although much of these articles build on the Reuters piece (linked below) which is based on real estate agent anecdotes. A slew of brokerage PR driven stories on the Chinese are now dominating the real estate headlines in New York City.

Perhaps this uptick as something to do with recent closings at well published Chinese buyer favorites like One57 and perhaps the fact that China is poised to become the world’s number 1 economy.

NY real estate firms woo Chinese buyers [China Daily] The Chinese take Manhattan: replace Russians as top apartment buyers [Reuters]

U.S.CHINA’S RICH BECOME BIGGEST FOREIGN APARTMENT-BUYERS IN MANHATTAN [Al Jazeera]

Who are the dominating the foreign buyers of Manhattan real estate?
Anecdotally I think it remains Canadians but is dominated by Europe (UK, France, Germany, Italy, Spain, Ireland, etc combined) because they are still the largest tourism group. Brazil doesn’t get enough respect since they are the 3rd highest source of tourism to NYC. This list is 2 years old but I doubt China has passed Europe or even come close but this is, shall I say, “anecdotal.”

From NYC & CO., here are New York City’s top international sources (2012 figures):

  1. Canada 1,063,000
  2. United Kingdom 1,033,000
  3. Brazil 806,000
  4. France 667,000
  5. Germany 605,000
  6. Australia 595,000
  7. PR China (excl. Hong Kong) 541,000
  8. All Middle East (incl. Israel) 478,000
  9. Italy 449,000
  10. Mexico 387,000
  11. Eastern Europe 384,0000
  12. Spain 380,000
  13. Japan 328,000
  14. South Korea 281,000
  15. Argentina 272,000
  16. Ireland 224,000
  17. India 215,000
  18. Israel 203,000
  19. Netherlands 203,000
  20. Sweden 190,000

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New Yorker Cover’s “Crossroads” (aka Urban v. Suburban)

September 10, 2013 | 12:05 pm |


[Click to see cover article]

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Broken Appraisal: Lack of Market Knowledge Overpowers Lack of Data

January 27, 2013 | 6:06 pm | nytlogo |

There was a really good appraisal story in the Sunday Real Estate Section this weekend by Lisa Prevost focusing on appraising high end properties whose theme is well-captured in the opening sentence:

As home sales pick up in the million-dollar-plus market, deals are being complicated by unexpectedly low appraisal values.

The higher the price strata of the market, the smaller the data set is to work with so the conventional wisdom seems to be that less data = more unreliable appraisals. However I believe the real problem is lack of market knowledge by more appraisers today as a result of May 2009′s Home Valuation Code of Conduct (HVCC) – the lack of data at the top of the market merely exposes a pervasive problem throughout the housing market.

To the New York Times’ credit, they are the only national media outlet that has been consistently covering the appraisal topic since the credit crunch began and I appreciate it since so few really understand our challenges as well as our our roles and relationship to the parties in the home buying and selling process. Appraising gets limited coverage in the national media aside from NAR’s constantly blaming of the appraisers as preventing a housing recovery (in their clumsy way of articulating the problem, they are more right than wrong).

Here’s the recent NYT coverage:

January 27, 2013 Appraising High-End Homes
January 11, 2013 Understanding the Home Appraisal Process
October 12, 2012 Scrutiny for Home Appraisers as the Market Struggles
June 14, 2012 When the Appraisal Sinks the Deal
May 8, 2012 Accuracy of Appraisals Is Spotty, Study Says
September 16, 2011 Decoding the Wide Variations in House Appraisals

The general theme and style of coverage comes about when Realtors start seeing an increase in deals blowing up that involve the appraisal. The Prevost article indicates that higher end sales are more at risk because the market at the top (think pyramid, not as in ponzi) is smaller and therefore the data set is smaller.

This may be true but I don’t think that is the cause of the problem but rather it exposes the problem for what it really is. I contend that the problem starts with the appraisal management company (AMC) industry and how it has driven the best appraisers out of business or pushed them into different valuation emphasis besides bank appraisals by splitting the appraisal fee with the appraiser (the mortgage applicant doesn’t realize that half their appraisal fee is going to a bureaucracy).

My firm does a much smaller share of bank appraisals than our historical norm these days but it is NIRVANA and we’re not likeley to return to our old model anytime soon.

Since the bank-hired AMC relies on appraisers who will work for half the market rate and therefore need to cut corners and do little analysis to survive, they generally don’t have local market knowledge often driving from 2 to 3 hours away.

Throw very little data into the equation as well as a very non-homogonous housing stock at the luxury end of the market and voila! there is an increased frequency of blown appraisal assignments.

There is always less data at the top of the market – the general lack of expertise in bank appraisals today via the AMC process is simply exposed for its lack of reliability. Unfortunately the appraisal disfunction affects many people’s financial lives unnecessarily such as buyers, sellers and real estate agents (and good appraisers not able to work for half the market rate and cut corners on quality).

The appraisal simply is not a commodity as it is treated by the banking industry. The appraisal is a professional service so by dumbing it down through the AMC process, they have succeeded in nearly destroying the ability to create a reliable valuation benchmark on the collateral for each mortgage in order to be able to make informed decisions on their risk exposure.

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A La Mode Software Tells Our Appraisal Story

December 5, 2012 | 9:00 am |


[click to open flyer]

This post is really meant for my appraiser readers because they’ll appreciate this:

A La Mode software has well over a 50% market share of residential appraisal software used today and I was flattered when they approached me, as a user of their product, to associate our brand with theirs. They sent this flyer out to appraisers across the US this week. Very cool.

Branding and marketing…Yes they are important to an appraiser’s success (in addition to being great at analysis!)

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The Good Life Magazine – The French View of NYC

November 25, 2012 | 7:53 pm |

I provided some insight to a recent edition of a new French Magazine called The Good Life – the issue was dubbed 100% New York.

Since we make so much of the influence of international buyers in the New York City market, I found the issue to be refreshing as I flipped through it in its entirety, as if providing some sort of validation that the way we see the market as locals is how others outside of the US see it.

Of course this is a stretch because the issue is entirely in french, but hey, I took five years of french in school and on a good day can remember how to ask for permission to sharpen a pencil.

For the real estate portion, you can open it here, for the entire magazine – you can buy it here.

With the recent ratings downgrade to French banks, I wonder if the flow to US assets will accelerate.

Jonathan Miller
fondateur et président de Miller Samuel Inc.

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[666 Park Avenue] Appraising Fictitious TV Celebrity Apartments

September 28, 2012 | 9:46 pm | Articles |


[click to expand]

In lieu of the new TV show 666 Park Avenue (the devil passed the board interview apparently), the Commercial Observer asked me for some thoughts on the value of some fictitious apartments and properties in some notable TV shows using what limited information was available back in the day and some strained logic (with a slew of hypotheticals and disclaimers) all in the name of fun.

Although the graphic incorrectly uses the building square footage total for no. 3, the graphics people at CO did an absolutely brilliant job with this – love it.

Here’s a cool web site I came across with theoretical floor plans for popular tv shows.



Lifestyles of the Rich and Fictitious [Commercial Observer]
Celebrity Floorplans [Deviant Art]
666 Park Avenue [Wikipedia]

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[Interview] Guy Kawasaki, Author, Enchantment, Founder, Alltop.com, Garage Technology Ventures, Chief Evangelist Apple

March 8, 2011 | 10:35 am | Podcasts |

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