Matrix Blog

Migration, Psychology, Demographics

The Fabulous, Gracious Language Of BrokerSpeak Used To Be Triple Mint

September 17, 2005 | 7:20 pm | |

Over the past 20 years, real estate brokerage has evolved from a part time, to a full time profession. Many accomplished professionals from other industries have switched careers to fill the ranks. As buyers and sellers have become more sophisticated having access to more information, the brokerage profession has worked hard to keep pace. The sales agents that will succeed in the future will likely embrace changes in the industry.

One of the residuals of the past, now on the decline, is the language of brokerspeak: [“This apartment has the most dramatic bathroom in New York City”]( http://www.newyorkmetro.com/nymetro/realestate/columns/gothamrealestate/5106/). Its the slang of superlatives used to describe property listings. The irony here is that the purchase or sale of a residential property is one of the largest financial transactions in anyone’s life and yet it can be reduced to brokerspeak.

Successful real estate brokers seem to rely less on brokerspeak to sell their listings than in prior years. Brokers still use plenty of superlatives, but hey, they are selling something, so thats ok. The major brokerage firms seem to be paying more attention to this and it shows in their online listings…brokerspeak is on the decline.

How To Classify A Phrase As Brokerspeak
A simple test: try saying the phrase This living room is absolutely sun-drenched to a loved one and not feel awkward.

How To Translate A Phrase From Brokerspeak
See: Reader’s Digest’s Speaking the Real Estate Language: What Brokers Say vs. What They Really Mean.

Favorite Brokerspeak Phrases
Triple Mint and Mint (no Double Mint? perhaps due to Wrigley’s copyright?)
Fabulous (or Fab) Views (An adjective that provides no explanation)
Gracious Living (what is that?)

Low End BrokerSpeak
From the basement of brokerspeak, here is a great post presented as only Curbed.com can.



Fed Study: Sub-Prime Lenders Serve 3x More Blacks Than Whites

September 16, 2005 | 11:13 pm | |

According to a study by the Federal Reserve [PDF] blacks are 3 times more likely to borrow through sub-prime lenders than whites. Sub-prime mortgages are typically 2% above prime rates.

[New York Times] Blacks Hit Hardest by Costlier Mortgages

The new report, based on data collected from 8,853 lenders, is the Fed’s first attempt to look for evidence of racial and ethnic discrimination in the booming business in exotic mortgages and subprime lending.


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When The Levee Breaks: Media Bubble Coverage Replaced By Katrina Tragedy

September 16, 2005 | 7:28 am |

Media coverage of the housing boom this summer crested in August after dominating the headlines, especially in Big Media. It was placed on the back burner once Hurricane Katrina inflicted its damage, particularly on New Orleans. The scope of the tragedy makes the real estate boom sound fairly petty given amount of human suffering in Louisiana, Mississippi and Alabama. The Federal Government gave the press plenty of subjects to write about as we enter the blame game so popular in Washington.

  1. Did the housing boom end?
  2. Have we entered a slow period for real estate news because nothing new is really going on?
  3. Were readers ready for a break from the real estate housing boom coverage?

The answers are no, kind of and yes.

  1. The housing boom has continued through the summer as mortgage rates remain low.
  2. August is often a particularly slow news period yet it seemed that real estate coverage was disproportional to other issues because its become an American obsession (and an easy sell to advertisers).
  3. Readers were starting to get pretty cynical about the quantity of coverage and jaded about some of the warning signs of overheating.

The hurricane’s affect on the economy will likely segue into exhaustive housing boom coverage. In the near term, the effect of the now limited coverage may benefit the housing market because the intensity of the coverage is less “in your face.” However, in the long term, it probably won’t make any difference at all. There’s a lot of psychology to consider, but at the end of the day, the market is the market.


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The Real Estate Brokerage Business: Its Intense

September 15, 2005 | 10:56 pm |

Penn State University completed a 12-market study that looked at patterns of competition in each market between brokerage firms. Some of the highlights:

  • Real estate sales is an intensely competitive business, surprising since the real estate boom was expected to reduce competition.
  • Franchised firms have a larger market share than local firms.
  • No single firm dominates any one market.
  • Sellers are more informed about property values.
  • Consumers are demanding and brokers are providing a wider range of services.
  • No evidence of increases in For Sale By Owner and Discount Brokers.



Length x Width Is Negotiable

September 15, 2005 | 10:42 am | |

In most major commercial office markets, leasing is typically done on a monthly or annual “rent per square foot” basis. So, in order to calculate the total rent all you need to do is multiply the rental rate by the unit size, right? Not so fast. Unit size can change like the weather and tenants are well advised to negotiate not only the rental rate, but the unit size as well.

First, the tenant needs to recognize that there are different types of area measurements. Gross floor area refers to the size of the building envelope, from outside wall to outside wall. Useable area, sometimes known as carpetable area refers to the portion of the floorplate that will actually be used by the tenant. And, rentable area (which, as the name implies, is what the tenant’s rent is based on) refers to the size of the actual tenant suite, including all mechanical rooms, stairwells and elevator shafts, plus an add-on for common areas (for example, a pro-rate portion of the corridor for a multi-tenant floor, and the lobby). The spread between the tenant’s actual useable area and the rentable area can be as much as 30% or more, depending on the efficiency of the building.

Unless the tenant is going to retain his own architect to measure the spacce (unlikely for all the but the largest space users), the rentable area is, simply, whatever the landlord says it is. We saw this first-hand when leasing office space last year. For some strange reason, most of the 5,000 square foot suites we looked at measured 50′ x 90′.

See [Soapbox] Real Estate Taxes: The Size Of Homes Expand And Contract

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Wondering Aloud: Its All About Leverage

September 13, 2005 | 11:02 pm |

Appraiser John Philip Mason writes in:

I can’t help but wonder if the stock market will do better if the real estate market cools off.

It’s easy to understand why people are investing greater sums of money in a real estate market with double digit returns, while the DJIA and other indexes have been pretty flat for the past few years. Especially when you consider that most securities can only be purchased with up to a 50% margin (if at all), but some real estate deals are being financed at up to 100%.


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Housing : Placing Bigger Bets By Placing Less Down

September 11, 2005 | 11:16 am |

Many homebuyers are being more creative, taking more risks in getting into the housing market. According to SMR Research 38.1% of home buyers put less than 5% of the purchase price down, up from 30.6% in 2000. [USA Today] Piggy back financing, obtaining a line of credit simultaneously with the house purchase to put 20% down to avoid PMI insurance, has also been rising. SMR says 48.2% of buyers used piggy backs up from 19.9% in 2001.

Americans now shoulder record levels of housing debt — more than 8 percent of homeowners spend at least half their income on their mortgage. [Washington Post]

So What?

Well, as more people increase their borrowing risk, foreclosure rates rise.

Foreclosure.com published a list, by state, of foreclosure inventory available for sale in August. [Valuation Review: Pd. Sub.] There was a 3% increase from 90,611 units in 93,440.

Sample media foreclosure coverage from around the country:

Texas Up 6.6% from July to August 2005 [San Antonio Bus Journal]

Massachusetts Up 29% from August to August 2004 [RISMedia]

Georgia Up 4.4% from June to July 2005 [Realtor.org]

See previous post: PMI Gets You In The House: Now Get Rid Of It

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DOJ Sues: NAR Must Let Everyone Join The Party

September 8, 2005 | 10:31 pm |

The Justice Department [DOJ] is suing the National Association of Realtors. [Reuters]

The NAR created a bylaw in 2003 that allowed members to opt out of sharing their listings with online real estate brokerage firms. The DOJ wants the rule struck down because it discourages competition and hurts the consumer. The NAR had been negotiating with the DOJ and had modified the rule but not to DOJ’s satisfaction.[Valuation Review: Paid Subscription]

DOJ states that the original rule:

prevents consumers from receiving the full benefits of competition and threatens to lock in outmoded business models and discourage discounting

and the revised rule still:

discriminated against “brokers who use the Internet to more efficiently and cost-effectively serve home sellers and buyers.”

Besides going after NAR for limiting competition, the DOJ seems to go after the broker business model, saying the rule was forcing the use of a dated business model.

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Katrina Aftermath Is Expected To Cause Higher Building Costs

September 4, 2005 | 10:37 pm |

The National Association of Home Builders just released a study on the impact of Katrina in the housing market. More than 200,000 homes in New Orleans alone were wiped out.

The building industry is already experiencing the effects of Katrina due to the loss of a number of lumber mills in the south Building material costs were already rising due to the strong housing markets across the country. Real demand for materials hasn’t peaked yet since clean up has not yet occurred. Building supplies aren’t expected to see the same magnitude of price increases because the supplies are not shipped through the Gulf.

The prices of local building supplies in the Alabama are already increasing. Building labor is expected to rise as well.

“Ken Tennefoss, publisher of Crow Publications, which produces a number of lumber-product-related reports, said the industry is better prepared to provide materials than it has been in the past because of the bigger customer base created by stores such as Home Depot and Lowe’s.”


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Katrina Causes Surge In Demand For Rental Housing In Outlying Areas

September 4, 2005 | 9:54 pm |
Source: NCAR

On August 29th Hurricane Katrina brought devastation to the housing markets of New Orleans, Biloxi and the surrounding areas. Now the outlying areas are anticipating a housing boom. Mobile, Alabama is seeing a scarcity of rentals.

Housing developers are looking at what type of housing they can build quickly to meet demand.

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Out Of Commission

September 1, 2005 | 8:35 pm |

Despite unusual examples of higher brokerage commissions, as was raised in the recent New York Post Story: Climbing Commission [Note: Reg.], only a small number of brokers are making significant income during the current real estate boom.

Why?

Well, most sellers have the perception that since properties have generally doubled over the past five years, commissions should have followed suit, since the commission is a percentage of the sales price. This is the topic of an excellent article in Slate.com called: Bubble-lusions – Why most real-estate agents aren’t getting rich.

One of the reasons that individual real estate brokers are not doing as well as everyone thinks, is based on the economics principle “zero-profit condition.”

In a business with free entry, new participants will keep entering until no money remains. And becoming a real-estate agent is almost free…With all these new agents swarming onto the scene, the price they charge may remain constant, but the number of houses each sells will not.

In other words, as more agents flood the market to get a piece of the pie, there is less of that pie to go around.



Disaster Relief Aid After Hurricane Katrina

September 1, 2005 | 5:19 pm |

This has turned out to be a larger disaster than anyone imagined. Here are some ideas on how you can help in the relief effort.

Relief Organizations

[American Red Cross through Apple iTunes]

I used Apple iTunes (100% goes to the Red Cross) but all are great organizations.



[American Red Cross]



[Salvation Army]



[North American Mission Board Disaster Relief Fund]



[FEMA]


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