Big fish eat small fish: a parable
A Brief? History
In the 30+ (gak!!) years I have been in real estate, I have worked with a number of different companies. I began my career in a small local firm (Norman Block Realtors) and then moved to one of the first national franchise companies: Merrill Lynch Realty. At the time I was quite excited about the amenities offered by the franchise such as notepaper, brochures, marketing information which were of a much higher quality than those of the local company. Merrill Lynch Realty sold the franchise to Prudential and the chain kept growing.
I became disillusioned with the big company ideology which requires the hiring of many agents in order to support the heavy overhead. With 30, 40, 50, 80 agents there is no way to ensure any kind of standardization of service or ethics. So I went to work with another small local company that friends of mine had recently opened. This company was called TriPointe Properties and was limited by space considerations to twelve agents, all top producing, high quality real estate agents with proven track records.
Over the years it became difficult to sustain this kind of mid-size company as agent commission splits began to change from the traditional 50% model in order to reward high producing agents. Meanwhile York Properties and Simpson and Underwood, two locally-based Raleigh companies, had merged in an effort to compete with other large companies as the real estate model shifted from smaller local companies to large firms with multiple offices and hundreds of agents. It wasn’t long before York Simpson Underwood purchased TriPointe and the management shifted to Raleigh.
I left the company during this period and moved on to a more stable situation with another large firm, but watched as Prudential swallowed up TriPointe York Simpson Underwood, resulting in a company with the longest name in the Research Triangle real estate world. Prudential itself sold its real estate companies last year to a Canadian investment firm that had also purchased the GMAC real estate franchise.
So it was with interest that I learned this week that Warren Buffet’s Berkshire Hathaway company had purchased the Prudential brand of real estate companies, including Prudential TriPointe York Simpson Underwood.
How is the consumer affected?
Having worked at a couple of big firms I know the spiel. ”You have our team of 1000 agents helping to find you just the right house/sell your house.” “Our national advertising program helps to sell your property.” But really, in today’s Internet age the consumer doesn’t care how big a company is. They want great service from their agent. I love it when we get a call from buyers or sellers that say “We want to work with a small company like you.” These consumers understand that at a small company you are valuable to each and every member of the team.
According to Berkshire HomeServices CEO:
With consumers typically starting their home search on the Internet, creating a single destination website under the Berkshire Hathaway HomeServices brand will benefit both company-owned brokerages and franchisees, Peltier said.
“At some point, you can’t ignore the fact that if you want to attract customer eyeballs, you have to have a presence on the Internet, and you can’t do it with local independent brands” alone, Peltier said. “You have to have a single brand.”
I disagree. Since the internet data exchange program enables any agent to host the entire MLS on their website. a big company really has no advantage over a smaller one in terms of delivering a quality real estate experience. A mega-company like Berkshire HomeServices has multiple profit centers, with lenders, insurance companies, and title companies all under one roof. Is there any real advantage to the consumer, or is there a greater benefit in the competitive marketplace?
And it’s not just me. Barbara Corcoran, founder of the incredibly successful Corcoran real estate group in Manhattan, said in 2005:
“I think the future belongs to small brokers.”
[W]hile the big firms were richer and had more resources, the little ones were more creative and nimbler, having far less bureaucracy and layers of management. “We need to be responsive to a changing market,” Ms. Corcoran said. “And more often than not, the little guy can move. The big guy is still thinking about it.”
Reached last week, Ms. Corcoran, who sold her firm in 2001, stood by her pronouncement. “Definitely,” she said. “On the Internet everyone is equal. The small agent can look as classy as the big agent.” She added, “Ten years ago, if you wanted your property noticed you were far better off with large brokerage firms because they were the big buyers on the print ads. That’s out the window now.”
In fact, in the Chapel Hill area it tends to be the smaller firms or individual agents that still advertise in print.
I have good friends at Prudential and I wish them all the best. But for me, I’m glad to be working in a great team at a small company where we know all of our clients and can be flexible enough to take care of all of their needs with excellence.
How accurate are Trulia and Zillow?
Last year I wrote a post about the inaccuracy of Zillow listings after a client sent me a series of properties to see and none turned out to be active listings. I tend to favor Trulia, and I often use the Trulia mobile app when driving clients through neighborhoods.
The WAV Group recently completed a comparison of Trulia and Zillow relative to independent brokerage websites that use the Internet Data Exchange (IDX) to share listings via local multiple listings. Large real estate franchises in five major markets were used to compare with Trulia and Zillow, but the conclusions indicated that any local real estate brokerage website will be more complete, accurate, and timely than national real estate portal sites.
- Brokerage sites show 100% of the agent-listed homes for sale. Trulia scored best with 81% of the listings, and Zillow trailed with 79%.
- The local websites were more accurate, with under 2% of homes shown as being for sale when in fact they were not for sale. 36-37% of the Trulia active listings were actually not for sale.
The Trulia and Realtor.com mobile apps are the best in the business, and independent brokerages can’t compete with their technology. But when you are actively searching for a home, you need accurate results. For this you need a website like ours with fresh and accurate data! Here’s where to find the most accurate property search for homes in Chapel Hill, Durham, Hillsborough, Pittsboro or other Triangle communities.
About homeowners insurance and policy linking
I didn’t realize this trend towards insurance companies requiring an auto policy before providing homeowners insurance until I sold a house last summer to a client who bought a home but didn’t expect to live in it quite yet. Living abroad, she did not own a car and it was nearly impossible to obtain homeowners insurance for her.
I have used Farm Bureau Insurance for 25 years – I love the small town service and the fact that their prices are nearly always well below the national companies and usually the independent companies as well. Where some companies will balk at insuring homes with older electrical systems or a variety of anomalies, Farm Bureau has always come through. Until this time. Fortunately, my agent was able to find a local independent agency that would write the insurance policy without an accompanying auto policy.
This year, two of the most popular underwriters of homeowners insurance policies in North Carolina – Allstate and N.C. Farm Bureau – have adopted underwriting guidelines that link homeowners policies with auto policies across the state.
Both companies cite economics as the reason for their stance.
In the case of Allstate, if you don’t have an auto insurance policy from us, they’re telling customers, your homeowners policy won’t be renewed.
The Farm Bureau’s guidelines are slightly different, winnowing out those who don’t have a Farm Bureau auto policy and who also have filed a claim on their homeowners policies within the past five years.
Similarly, new Farm Bureau customers who want to buy a homeowners policy also will have to buy auto insurance.
This is how we DON’T sell real estate
One of my guilty television pleasures is the Bravo program Million Dollar Listing where young real estate agents say things like “Get your guy to take the offer and let’s move on to the next deal.” This idea that clients are little more than notches on a real estate belt or production numbers is antithetical to the way we do business at Lynn Hayes Properties.
So I was amused to see this article in my inbox this morning:
Why would your prospects submit an offer if they saw no benefit or had no fear of losing the homes you showed them to another buyer?
“There is no way I can create urgency if it is not there,” say some real estate agents.
Uh … that is exactly what we do for a living. We help real estate buyers find deals so good that the self-imposed pressure is so great — they have to buy it if they can.
Really? I thought what we do for a living is help human beings find places to live where they can live a good life while making a solid investment for themselves?
In all fairness, this article is written by an agent who works with new home sales which are generally more sales oriented than general brokerage where as buyer agents we represent the buyer in an effort to find the best property for the client. New home sales agents are trying to sell their product and it’s not their jobs to be concerned about the buyers’ needs.
Still, this article is aimed at agents in the general brokerage community and opens with this line: ”Question: When is the last time you sold a home when the buyer had no urgency to buy the ones you showed?”
Personally, I become concerned when a buyer feels urgency to buy a home. When you are making the biggest purchase of your adult life, you want to be able to make smart, informed decisions rather than rash impulsive ones driven by a fear that someone else will get a house before you do.
This is not to say that there is never a circumstance in which a buyer will be in competition for the home of their dreams and will NEED to act out of urgency. But it certainly isn’t something that we as agents want to create for our clients. Instead, we want them to be comfortable with their choice and happy about their decision. Few if any of our buyers ever experience buyer’s remorse BECAUSE we never push them into a decision that they might regret.
If you are looking for a home and want to work with an agent who will care about what you need and not just turn you into a number on their production board, check us out!
Why you have to get rid of that wallpaper
Photo from House Beautiful.com
Nothing makes a decorating statement like wallpaper. Back in the 20th century, if a home didn’t have wallpaper in the kitchen and bathrooms it was considered underdressed. Wallpaper has been a feature of home decor since the 1400s.
The problem is, no two people like the same wallpaper which means that when we list a home we try to convince the sellers to remove the wallpaper and paint the rooms with neutral colors.
Alexis just listed a beautiful home in Chatham County that I will be featuring here in a few days. The home is lovely and there were only a few touches needed to ready the home for the market, and one of those touches was removing lavender wallpaper from the bathroom. Here is the finished result – a lovely bathroom ready for a new owner to make it their own.
I have some wonderful clients that have been dear friends for many years. A few years ago when they decided they were ready to move to the next phase of their life they invited me over to help them get their house ready to sell sometime in the future. As with many homes built in the early 1980s, their bathrooms featured wallpaper in a bold print that made a statement that was strong and personal, but one which would probably not reflect the taste of most home buyers today.
“You’ve got to get rid of the wallpaper,” said I. This is always a challenging subject, because we choose our home’s decor because we think it’s beautiful. We don’t want to be told 30 years later that it has to go, and my clients were horrified. Still, they have known me for a long time and they decided to take my advice. It wasn’t easy to remove the wallpaper because in those days wallpaper was often applied without priming the walls which necessitates sheetrock repair along with the wallpaper removal and repainting. I was worried that my wallpaper advice might come between me and my clients. Instead, they decided it was all worth it when we saw a home with fussy and formal wallpaper. I cracked up when Mr. Client turned to me and said, “Their Realtor should have told them to remove the wallpaper!!”
D. R. Horton to return mineral rights, if asked
A brief history
Back in April I wrote about the sneaky way that Texas-based new home builder D. R. Horton had sold the mineral rights under most of the homes that they built in the Triangle since 2005. This is evidently quite common in Texas and in some communities in western North Carolina, but until it became know that there was a disputed amount of shale gas in the Triassic area of North Carolina (on which most of the Triangle is built) mineral rights were never an issue.
Most of the homeowners were not aware that they purchased their homes without the mineral rights until news reports began to disclose the practice. In the wake of a great deal of bad press D. R. Horton has relented and will be notifying the homeowners from whose property the rights were stripped that they have the option of regaining those rights.
Advice for new home buyers
It is unclear how many homeowners will actually understand the process and will seek the return of the mineral rights. In the meantime, if you are planning to purchase a new home in the Triangle it would be a good idea to use your own closing attorney rather than the one required by the builder.
Often new home builders require buyers to use their own attorney for closing, and nine times out of ten this does not pose a problem. But in light of this situation it would be wise to at least have an independent attorney review the documentation before you sign the closing papers.
A Chapel Hill “nanofarm”
Urban gardening is all the rage throughout the country, and our own client Tom Grizzle’s farm in the heart of a Chapel Hill neighborhood recently got some great press.
Tom Grizzle’s back yard used to be a forest. Now if you walk into it, you’ll see a pocket farm or what the Chapel Hill resident likes to call his “backyard nanofarm.”
Tom, a native Chapel Hillian, is a really interesting guy and you can see the thoughtfulness he has put into his urban farm. He is a toxicologist by training so his interest is not only in the food growing aspect of farming but in maintaining the ecological balance of his home and family’s personal environment.
The north-facing rectangular back yard features a 30-by-70-foot garden plot in its center with a landscaped berm that runs along the fence on its eastern side and hosts a number of edible plants. Between the berm and farm rows is a road in both gravel and grass that leads to a drop-off point in the rear of the yard for rotting hay, railroad ties, mulch or whatever else is next on the farm’s project list.
At the end of the berm, in the yard’s highest point, sits a 500-gallon cistern near a hand-pump well and a photovoltaic panel that powers the drawing of water from a second pump. The yard’s rear also houses a beehive, brought in this year to aid in pollination; apple and Asian pear trees; and a cold frame, where Grizzle will grow spinach and lettuce this winter. The western side of the yard features a three-section barn, with a chicken coop, run and covered potting shed in the first section; a barn in the middle with a wood oven and stove; and an equipment storage area in the last section. A three-bin composting system sits by the chicken run. All of it is part of Grizzle’s constant experimentation with farming.
read more about Tom’s farm here.
Are you looking for a place where you can have your own urban garden? Contact us today and we’ll help you find it!
Another “best” for Chapel Hill
When you really love something it’s hard not to talk about it, even though in some ways you’d like to keep it a secret so that it will never change, like Brigadoon or some magical and mythical spot that remains the same throughout thousands of years.
But Chapel Hill, and the area surrounding it, is such a great place to live that we can’t help but get excited every time its attributes are made famous by the national press. This year Chapel Hill ranks #10 on Money Magazine’s 100 best places to live:
Locals aren’t exaggerating when they refer to Chapel Hill as a “town within a park.” The roads wind through tunnels of arching trees, and the area has a rain forest-like charm.But Chapel Hill isn’t just a pretty face. It’s part of the state’s Research Triangle, which boasts one of the highest numbers of Ph.D.s per capita in the U.S. The town also houses the nation’s oldest public university, and interesting educational opportunities abound.
The main drawbacks? Parts of the downtown aren’t in great shape, and some areas feel overrun by students.
Well the fact is, Chapel Hill is a college and the town sprung up around it, so it’s not surprising that some areas are overrun by students. That is after all the beauty of a college town. And in the 33 years I’ve lived here I’ve never once heard Chapel Hill referred to as a “town within a park.” And a rain forest? That is kind of crazy.
This is a short article, but nowhere does it mention the fact that in five minutes you can drive out of town through some of the most beautiful farmland imaginable. Or the wonderful restaurants that line West Franklin Street. Or the Paperhand Puppets that entertain us every year at the Forest Theatre on campus.
But don’t tell anyone, although we want everyone to know how wonderful Chapel Hill is, we would hate for the word to get out!
The only other town that made the magazine’s top 100 is Cary, clocking in at #56. Raleigh made the Money Magazine list of the 25 most affordable towns, coming in at #24. Durham has been recognized by other publications: In 2009 Durham made the top ten list of the US News best places to live which focused more on affordability.
You can live in the Flintstones house
Or one just like it, anyway! The late Dick Clark and his wife Kari are selling their Flinstones-style home on 23 acres in Malibu California according to the Los Angeles Times. For $3.5 million this one-bedroom cavern home can be yours!
The home appears to have been hand-hewn from the rock just as it would have been built in the stone age.
It’s hard to imagine cooking in this kitchen, but it IS fitted with all of the latest modern conveniences.
Imagine sleeping in this bedroom nestled within the earth. Talk about a natural home!
The listing agent’s website doesn’t mention the word “Flintstones,” but the virtual tour has some pretty incredible photos of the acreage and the incredible views. According to an article in Realtor.com,
Set atop a secluded 23-acre plateau, the Clarks’ home boasts expansive 360-degree views that stretch as far as the Channel Islands, Boney Mountains, Serrano Valley and the bright city lights of Tinseltown. It has a very cave-like architectural feel, hence “The Flintstones” reference, and, despite offering just one bedroom and two baths, has a voluminous feel due to use of vaulted ceilings and an expansive use of glass in the design. Living and dining rooms, intimate seating areas and a wood-burning fireplace round out this one-of-a-kind real estate offering.
Read more: Dick Clark’s Bedrock-styled Malibu Estate Lists for $3.5 Million (PHOTOS) | REALTOR.com® Blogs
“Generation Rent”
Over the past 30 years or so the housing market has worked like this: first-time home buyers come into the market and buy up entry level homes which then allow homeowners with growing families to move into larger homes. After working for a number of years those move-up homeowners may decide to purchase their dream home, and then later on after retirement they may purchase a retirement home or downsize into a smaller home that is easier to manage when the kids are gone.
Of course there was the occasional family that stayed in the same home throughout their entire life, celebrating the payoff of the mortgage and then living happily ever after, but that was the exception rather than the rule.
The process described above requires those first-time home buyers in order to facilitate the moving up of the growing families, and as I have stated previously, we are dependent on these younger people to drive the economic engine of our housing market.
This article reveals why we are seeing fewer and fewer new homeowners, despite record low interest rates and the highest affordability index in years:
Kristi Taylor can pinpoint the precise moment she let go of the dream of homeownership. It was a few months ago, as she and her husband and infant son were driving through a neighborhood of homes near their apartment in Athens, Ga.
“As we were passing through, I realized that I don’t really look at houses like I used to, when we would point out homes and say, ‘That can be ours someday,’ ” says Taylor, who is 28. Now, she says, “the idea of homeownership is so vague, it doesn’t even strike me as something that’s in our future.” …
In a nation where homeownership is part of the American dream, a generation of renters could alter communities where they live and redefine the idea of middle-class success.
As this article reveals, a higher percentage of renters affects the property tax base of a community and will have other long-term demographic changes.
As the presidential candidates discuss their budgets and the mortgage interest deduction is once again on the table, I hope that this issue will help to protect the one thing that makes buying a home a more attractive option than renting for these young people that are the potential drivers of tomorrow’s economy.
