Today Apple announced their new iPad (a third category of mobile device with the other two being phones and laptops). I my initial reaction was that this could be a really interesting advancement for sales people of all kinds but especially the Realtor.

They have already created an updated version of Keynote for the iPad but you could also use digital reports such as those from Cloud CMA in customer presentations (listing or sales). But what if we took it a step further… What if you handed the device to your client and while you drove they could be exploring the next property, comparable sales, or even school district data on their own terms. Would that improve the customer experience? Would that speed up the decision making process?

Another likely scenario would allow for the review and execution of documents in the field in a digital format. An elegant device that is easy to read and use might be appreciated (especially with aging baby-boomers who might need digital magnification of the fine print).

The implementations of MLS information, workflow improvements, and connectivity solutions for mobile devices has not yet met my expectations. Maybe with a new category of mobile device that will start to change. Time will tell.

Back in 2007, at the TED conference, Kevin Kelly spoke about the how the “web” was only 5,000 days old (the internet itself is older – yes, there is a difference). He looked at where it had come and where it is going.

My view is that the creation of the internet (pre-web) was the linking of computers; the linking of pages (Web 1.0) was very static circa 1993 yet many are still building stale static websites; the linking of data and ideas (Web 2.0) is currently a work-in-progress; the next decade will see progress in linking people, lifestyles, and communities (Web 3.0) possibly with predictive technology or human aggregation serving as a catalyst for grouping behaviors.

Watch this 19 minute video and let me know what you think…

Kevin Kelly: Predicting the next 5,000 days of the web

After a three year battle, the FTC has ruled that a Michigan MLS (multiple-listing service for real estate) had unfair policies that restricted trade. They have been ordered to change their policies and provide a level playing field for all participants.

The Federal Trade Commission issued an Opinion finding that Realcomp II – a Michigan-based realtors’ group – violated federal law by restricting the ability of member real estate agents to offer consumers lower-priced alternatives to traditional real estate services. Realcomp refused to transmit discount real estate listings to its own and other publicly available Web sites and excluded such listings from the default searches within its own database. The Commission found that these policies restricted access to these listings and harmed competition. The FTC’s Final Order requires Realcomp to provide its members non-discriminatory access to non-traditional and lower-price listings on its Multiple Listing Service (MLS) and to stop preventing such listings from being sent to its public real estate sites.

The Commission found that “the practices at issue improperly limit consumers’ access to information about the availability of these lower-priced alternatives,” and . . . concluded “that [Realcomp’s] acts and practices unreasonably restrain trade in violation of Section 1 of the Sherman Act . . . and Section 5.” The Commission’s administrative decision resolves litigation arising from a complaint charging that Realcomp’s policies violate Section 5 of the Federal Trade Commission Act.

In my opinion, this is a very important decision that will allow for greater competition and more new media business models in real estate. The FTC said that, “The Internet has become vital to selling homes, and a majority of buying and selling homes begins on the Internet.” I completely agree with this statement and believe that if the current leadership in the real estate industry does not embrace technology then they will become increasing irrelevant.

These changes, the Commission wrote, “illustrate how technological dynamism and organizational innovation can place enormous pressure on traditional business models and create possibilities for ‘the new commodity, the new technology, the new source of supply, the new type of organization’ [Joseph A. Schumpeter, Capitalism, Socialism, and Democracy 84 (1942)] that can transform markets. Because [these] are powerful stimulants for economic progress, an especially important application of antitrust law is to see that incumbent service providers do not use improper means to suppress innovation-driven competition that benefits consumers.”

NAR financially supported the MLS in defense of these anti-competitive practices. We can only speculate as to whether the nations’ largest trade group was providing support based on preexisting mutual aid agreements or if they agreed with the policies of the MLS.

The National Association of Realtors has taken a major step towards a property centric MLS. The Realtor Property Resource (RPR) is not intended to become a national MLS system but it has the potential to provide vast amounts of property centric data. This is big news that has not yet been covered by the major press or tech news. Yet, this has the potential to be a GAME CHANGER in online real estate. So far the best information has come from blogs like 1000watt, Agent Genius, MLS Tesserat, and The Notorious R.O.B. and for real-time comments see #RPR.

To discover the what and why I went to the source and found some documentation by NAR leadership:

The Opportunity: Collectively Realtors® know more than anyone else about individual properties, communities, local trends, regulations, and other factors related to local real estate. If this collective knowledge (sometimes called “the wisdom of crowds”) could be organized and archived in a single industry sponsored and operated database, Realtors® could share their expertise and leverage their collective experience to provide broader, deeper, and more timely and accurate information to their customers.

The Solution: Creating a property or parcel centric national library or archive that has robust and useful information on virtually every property in the US.

Source: NAR Whitepaper (May 2008)

According to one of my sources, the NAR09 Conference next week is going to be the “first and best place for RPR related information”. I’m trying to find as much information as I can as soon as possible. This is supposed to be a major value proposition for brokers that is “industry-friendly” allowing us to be a reliable and “trusted advisor”. To date millions of dollars in Realtor dues have been spent on this initiative and it has now finally being unveiled. Time will tell if it was money well spent.

While the specifics are vague, I believe that RPR has the potential to be a very important development in real estate. At a minimum, it is moving us towards better, more accessible, data on all real estate properties (not just those currently for sale or lease). It should, in theory, make life better for the consumer. However, before we get there we’re going to have to deal with a lot of growing pains.

This year at infiniteROI we started an internship program. We’ve been blessed to have a very smart and curious intern named Kyle Chezum (a senior business management major from Biola University). Kyle accompanied me on the trip to San Jose and he had a different take on the California Realtors Expo. I asked him to write down his thoughts and decided to share it with you.

Two weeks ago I accompanied Paul Mobley, CEO of Infinite ROI, Inc., to San Jose for the annual California Association of Realtors Expo. Seven hours in the car each way with Paul was time enough well spent, but the ensuing two days of seminars, expo booths, and networking opportunities were equally valuable. I say networking opportunities because I didn’t actually do much networking. I felt somewhat out of place at the convention almost immediately when I discovered that no, the name is not misleading—nearly everyone in attendance was a Realtor, and, more specifically, a real estate agent. As the intern-assistant to an out-of-town broker, I was afraid I wouldn’t be taken seriously. This never became a problem, however. Everyone seemed eager to talk, and through numerous interactions on the expo floor and a few surprisingly meatless seminars I had the chance to develop some first impressions of the industry. It was not what I expected.

I concluded from this initial exposure that the real estate agency industry was an arena full of older men and women who were unfamiliar with new media and technology and were not interested, or at least not aware that they ought to be interested, in becoming proactive, transformational leaders in the business. I attended several technology-related conference sessions and was surprised to find speakers presenting Internet tools such as Facebook and LinkedIn as novel outlets for social interaction and marketing. Many of the sessions focused on how agents could use Facebook to garner a presence within a community and develop clients and buyers from that presence. I had assumed such tactics were intuitive. I guess I was wrong. In this and other ways, I learned that the real estate industry has, at least on a broad level, not fully acclimated to the information age.

The CalREDD demonstrations offered a glimpse into a brighter future. California’s local MLS systems, I learned, vary widely from region to region with regard to their structure, user interface, and capabilities. CalREDD’s product, a statewide MLS that takes real estate information systems to a whole new wondrously adaptive level, began its gradual takeover just a handful of months back. From the short demonstration I saw of it, CalREDD is real estate’s answer to new media and the changing face of the global marketplace. It’s a few years late, in my opinion, but it’s encouraging.

All of the above notwithstanding, I came away from the conference with more respect rather than less for the real estate agents who ply their trade across this vast state day after day. My intensive two-day plunge into the guts of real estate provided me a view of the business I hadn’t seen before. It gave me a view of the heart. Selling real estate—at least in the single-family-home arena—is, I think, less about hawking a product and more about meeting the life needs of families and individuals. It’s about caring for people who need advice and aid as they transition from one chapter of life to another. It’s about creating and strengthening communities. I had never seen real estate sales in that light before. It gave me something to think about. What can I bring to this business? An intuitive sense of how to use technology for marketing and leverage? Passion rather than dread for coming changes such as CalREDD and whatever else may lie on the new media horizon? This and more, I think. I’m glad the expo opened my eyes to it.

SAN JOSE – Every October the California Association of Realtors holds their annual expo. I attended, along with our intern Kyle, on Wednesday and Thursday (Oct 7-8). I enjoy this convention because it’s attended by the leaders in the CA real estate and innovative service providers. The fact that this year the event was in the Silicon Valley is one of the things that influenced the tone (at least for me). Tech innovations in all fields are common in San Jose. Some of them were even inside the convention center.

General Thoughts

Green. MLS. Search. Mobile.

These are the four things that really stood out to me at the Expo. Yes, there were a lot of people talking about short sale systems and REO tools but those are temporary. The future of real estate is really in these four things.

Green.

Green building and retrofitting techniques, energy efficient mortgages, and existing home certifications were all passionately discussed (even if the seminars were not well attended). John Shipman of Energy Efficiency Management explained to the real estate professionals that green techniques and thinking are more of a shift than a trend. He believes that agents should become the “source of the source” for green facts, inspections, and financing. If this happens then the agents would not only obtain a competitive advantage over the competition but they’ll help to provide better living environments for California families. Extra focus was placed on the physical inspection of a property combined with a financial analysis of the proposed green projects. They are advocating not doing green for the sake of green but rather dual benefit of both environment and economy.

MLS.

There are approximately 900 MLS systems in the United States. Some states only have one system while others have taken a regional approach. This was necessary when population, geography, and technology made it impossible to consolidate the data. The technology now exists to have an entire statewide MLS for California but there appears to be a resistance to change. There have been two approaches that have been successful in reshaping the MLS landscape this year. They are calREDD and CARETS.

calREDD is an inititive of the California Association of Realtors to create a single MLS for the entire state. Local associations (AORs) can chose to adopt this system or continue to use their existing provider. I saw a demo using live data from several regions that are early adopters. In my opinion, it’s the best MLS platform based on the integration of cutting-edge web application frameworks (at least by real estate standards). They have excellent transparency in their feature set and bug issues and have launched more versions in the last few months than most MLS systems have for their entire history. An agile web development approach gives them a clear competitive advantage over other systems. While they have accomplished a lot in 2009 there is still a long way to go. There are currently about 1,000 users on their system (with more planned) and their are integrating with CARETS in 2010. The promise of a “statewide MLS” has resulted in some wonderful accomplishments, however, it will be a while before the single-system with property-centric data is actually in use in California.

Another approach to the same problem is CARETS. They haven’t tried to create a new MLS system but rather to aggregate the data of multiple separate systems into one source. This has resulted in some MLS systems upgrading their data standards to be RETS compliant. To date, this method has been more successful (with more than 100,000 users) in part because it doesn’t require abandonment of existing MLS providers or changing of service contracts. For the agents, it’s also less disruptive because the system they access doesn’t really change.

Long-term is is likely that both methodologies will be necessary to marry real estate with current technology standards. By the two working together it will increase the speed of integration. Ultimately, the lessons learned on both sides will consolidate information from a regional or statewide system, to a national or international standard. Things are getting better but they’re a long way from fulfilling the dream.

Search.

Just as Google and Yahoo! changed the shape of the internet… search is transforming the real estate information game. Three companies that are dedicated to real estate information and search are Trulia, Roost, and Zillow. Roost was the only one of the three that didn’t exhibit at the conference but they were talked about inside the convention center. All three are companies to watch in 2010.

Zillow is different than the other two because they didn’t start with the active listings but rather they took a property-centric approach. Their database of all of the residential properties in the United States is clearly the consumers favorite in getting an estimate of property values. Recently have they began to partner with agents to augment the data with current information and photos (instead of sometimes stale public records) and direct potential buyers to their agent network.

Both Trulia and Roost are undertaking the daunting task of nationwide real estate search. They’re taking advantage of the fact that people are spending 8-12 weeks online doing research before they even contact an agent (according to a study by the California Association of Realtors). While their revenue models are different, than traditional players in the real estate business, they are clearly establishing themselves as the leaders in real estate information. They are focused on the needs of the customer.

Mobile.

The use of mobile in real estate makes perfect sense. If you can get the information to consumers when they are out in the neighborhoods (instead of at home with the computer) then you’ll have a competitive advantage. SMS has been used for a while to provide instant information about a property. But with the advent of smart phones new ways of accessing the information are being demanded by consumers. There is clearly a lot of growth potential in this area. Two players in this field (one who exhibited and one who did not) are planetRE and aumnia.

THE INTERNET IS NOW USED BY 84% OF REAL ESTATE CLIENTS

• The Internet is used 9X more often than newspapers
• The Internet is used 34X more often than real estate magazines
• Internet users are better informed, have higher incomes, and take 40% less time in transactions

Social media, outsourcing, and other new tactics have been described within the real estate industry as proof of a major change in the business. People talk about them as the magic bullets for an industry that is in crisis.

Most people will agree that the real estate industry in 2009 is in crisis. However, I don’t believe that it is because of short-sales, foreclosures, or the mess in the financial industry. It is my thesis that the real estate industry is in a crisis of identity. Realtors don’t know what role they are supposed to play in this new world so they search for answers to explain why things are not working like they did ten years ago.

A recent study by the California Association of Realtors said that people are using the internet to research properties for 8-12 weeks BEFORE they contacted a Realtor. This new behavior lends itself to some of the methods used in social media and outsourcing but it doesn’t answer the question of why.

I believe that Realtors are no longer the gatekeepers of information and that we can either fight against this shift or adapt to it and benefit from it. To adapt to a changing industry, Realtors will be expected to become local leaders and aggregators of useful information. A greater percentage of the work will fall into these two areas with the individual transactions becoming a much smaller aspect of the business.

Jeff Monfils (a Realtor® from North Carolina) said to me yesterday…

“Success is not reached through making more money or advancing your career or even by public recognition, but rather whether or not OTHERS benefit from what your hands have done.”

Well said.

What if you were given the opportunity to have lunch with Seth Godin or Donald Trump but you could only pick one. Who would you dine with? Would the choice change if you were paid $5,000 to sit down with Donald but it would cost you $5,000 with Seth?

If given that choice I would chose Seth gladly paying the $5,000.

Why would I make that illogical choice when I could have been PAID $5,000 to have lunch with Donald Trump? Because it’s not about them it’s about me.

I would chose Seth Godin because he has had a bigger impact on me and my business. In my opinion, he is also more humble and approachable. I believe that I can become like Seth but it would be very hard to replicate the same business playbook as Donald Trump. I can start a website that makes money by connecting people. I can’t, and don’t want to, build a 50 story skyscraper in the OC and call it Mobley Tower. I think that best way to make your first billion today is different than when Trump did it. Maybe that belief comes from the fact that I’ve done experiments with Seth’s teachings but I don’t have a lab that would work for doing trial and error in major real estate development projects (once again all about me). I can have a feature page on Squidoo but becoming the next “The Apprentice” isn’t high on my priority list.

Don’t get me wrong. This isn’t a bash Trump and praise Godin post. They have written two of my favorite books (All Marketers Are Liars: The Power of Telling Authentic Stories in a Low-Trust World & Trump: The Art of the Deal). The both are successful entrepreneurs and I’d like to meet them both in person some day. I’ve learned a lot from both of them and I will continue to in the future. The same decision might be different for you and that’s o.k. because when it’s your choice it’s all about you.

Ten years ago the reach of a small business expanded from a local sphere of influence to a global one. Initially that was great and the advantages resulted in more competitive prices, greater diversity of product offerings, and an expectation of instant results.

One thing that was lacking was trust. Companies like Amazon and eBay have been successful because they built it back into their business models with customer feedback.

The next trend that I see is a reinvestment in what is local. Online and in stores people like to feel connected to place and community.

The challenge is taking the skills and advantages that were learned by opening up the boarders and applying those standards to local enterprises. Even a small business that has a brick-and-mortar business needs a website. Do they need full eCommerce functionality? Maybe not, but they might need an online menu or store hours. People expect that now.

What will people expect tomorrow? I think it will be a hybrid of both that I like to call hyper-local.

I’m trying to accomplish this with my hyper-local real estate brands like Homes Near Campus or Columbus Square. I’ve found it difficult finding quality, consistent, and relevant content that is valued by the community. It requires an investment that doesn’t always have a clear ROI but one that I believe will pay for itself long-term. I fear that if we’re not leading the trend then it will be so much harder catching up.

One of my targeted real estate brands is Homes Near Campus. As such I have been following the real estate market since 2003 near Biola University. Recently when reviewing the data I noticed a positive bounce in prices and a drop in inventory. Plus the days on market has stabilized. If this continues then my investors who own properties within one mile of the campus will be happy.

Do you know how much actual income is derived from your business? In real estate many investors have never sat down to see how much their property actually makes for them. To see how strong the business is you should first ignore financing, income taxes, and depreciation and find out the net operating income after you subtract revenue from required expenses.

I sat down with an investor who owns a property in Portland, OR. A rough calculation of his cap rate identified that it was only 1.74%. This one bedroom condo was limited in the rents it could obtain, had high HOA costs, property taxes tied to current value, average management fees, and a vacancy rate of 8%.

The only reason that this landlord wasn’t writing checks all the time to subsidize the property was because he has approximately 75% equity. This creates a situation where it took an outside point of view to show that it is an under performing asset.

When was the last time that you sat down to see what your operating income after accounting for the input costs? Unless there is another reason to keep that product or service maybe it should be removed from your portfolio.

Some say that greed caused the markets to over price assets. Greed causes you to take on too much risk and ignore rational strategy and conservative business models.

Fear is actually stronger than both rational thought and greed. Fear leads to undervaluation and emotional transactions.

How will the current market madness imapact your business? Who knows? The only thing that you can do is take a realistic assessment of your strengths, weaknesses, opportunities, and threats.

If you have extra time because sales have dropped off then take this as an opportunity to work ON your business! Remember that successful businesses can start and/or grow during periods of economic downturn. You just need to focus on the needs of your customers and solving their problems.

The Fed failed to take action and liquidity concerns appear to have pushed up the mortgage rates today. Rates increased about 1/8% this afternoon after the announcement compared to what was available this morning. They’re trying to balance the need to stimulate the economy with the side-effects of higher inflation. With all the problems in housing and finance we need a Fed that actually does something instead of sitting on the sidelines. Yes, they did add about $70 billion to the banking sector but apparently that wasn’t enough!

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Strains in financial markets have increased significantly and labor markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending. Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.

The downside risks to growth and the upside risks to inflation are both of significant concern to the Committee. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Source: Federal Reserve

There has been a lot of talk lately about the housing and credit. Most people know that their properties would appraise for less now than a year ago. But did you know that the softening market by itself changes the requirements for new loans? Wells Fargo is one of many lenders that has imposed a 5% reduction from maximum financing on ALL transactions (regardless of whether or not the property county is identified by Wells Fargo as at risk) when the appraiser identifies any of the following:

• Declining property values
• An Oversupply
• >6 months marketing time

For example, take a $700,000 primary residence purchase at 80% LTV in a market where the appraiser indicates declining property values. The LTV must be reduced to 75% as 80% is maximum financing and the appraiser has identified declining values.

So if you’re looking to take make a purchase, make sure you have enough cash to put down 25% or more, or be prepared to pay extra on a second (if available). My guess is that these new policies are going to slow down real estate transactions and make it tougher for banks to get rid of their REOs, it will encourage people who want to move to stay put for a few years, and make it hard for time home buyers.

The secondary market for loans has dried except for “conforming” loans. This has made it hard for people to purchase or refinance real estate in an already difficult housing market. Here’s my summary of the good and bad of the Economic Stimulus Act of 2008 that Bush will sign soon sign into law:

• The best part is that it will be retroactive to July 1, 2007. This will allow banks to improve their balance sheets by selling of existing jumbo loans. With improved financial stability it’s likely that the banks will then begin to loosen some of the extremely tight lending standards that have been in effect for months. This will help add liquidity to the market.

• The next best thing is that the new conforming loan limit will no longer be a national number but instead vary by region. If they qualify, borrowers could obtain “conforming” loans up to 125% of an area’s median home price (maximum of $729,750). This will help adjust for variations in housing markets.

• The worst part of this package is that it is temporary. It is slated to expire at the end of 2008. Therefore, congress will need to act again in order to provide long-term solution. This will cause more liquidity problems in 2009 unless congress acts.

Most people talk only about the “rebate” checks but I think more people should talk about the new conforming loan limits. These adjustments are only temporary, but they will likely have a larger impact on our economy than a few hundred dollars per person.