Healthier Living Involves an Urban Home January 29, 2006
A recent study was just released that concludes that living in a walkable neighborhood is healthier than living in the suburbs! Another good reason to live in Seattle!
The Seattlest nominated this article for the “No Shit Sherlock” department in that it does not take a study to conclude that people who walk more will be healthier. However, to the study’s benefit, this kind of data gets used in the most obscure (yet important) ways. For example, I found the data to be extremely useful for a transportation demand management (TDM) tool I recently built for the Washington Department of Transportation (WSDOT). It can be so darn hard to quantify the benefits that make neighborhoods special that sometimes us engineers, (yes, I am an engineer by training) latch onto relatively obscure concepts like “walkability” in order to differentiate good neighborhoods from bad! Besides just letting us know that a walkable neighborhood is a healthier place to live, the study also helped to define what it means for a neighborhood to be walkable!
Bonus: One piece of my involvement in the TDM study involved creating a map that displayed the walkability of every single neighborhood in King County. My memory of the map was that the most walkable neighborhoods were almost all located in Seattle (surprise) with only a few located in the Eastside. If you’re really interested in learning more about what makes a neighborhood “walkable”, let me know!
The moral of this long-winded post? Living in a walkable neighborhood is not only more pleasant, but better for you!
History of the mls - Part 3 January 28, 2006
The mls was created to protect the seller, not to provide a means of sharing listing information between brokers. As you have seen in The History of Real Estate - Part 2, the brokers already had a loose system of sharing info and cooperating among one another. Some companies were excluded, similar to the “opt out” provision being challenged by the DOJ today. If a local broker was not supervising his agents and the agents were leaving doors unlocked, tracking mud into people’s homes, misrepresenting the house by “puffing” or outright falsehoods, that company was removed from membership. That is why the mls reserves the right to “opt out” by not cooperating with a company doing “bad” things and refusing to be associated with a company that does “bad” things. “Guilt by association” should not be forced on anyone and brokers should have the right to “opt out” and not allow their listings on that “bad” members website. But that’s a whole nuther thread.
The mls, as a system of rules, was created to protect the seller. The mls is a system of RULES, not an inventory of homes. The rules protect sellers because we, strangers, come into their homes with other strangers (buyers). We agree to abide by many, many rules when given the privilege to enter their homes while they are off at work.
The rules also protect the seller from multiple claims to be paid. The seller was happy to have every agent in town bringing buyers, but worried that he might have to pay two agents who both brought “ready, willing and able” buyers to his house. And so the mls was created to prevent the seller from multiple claims to be paid the buyer agent fee. Now of course buyers’ didn’t have agents, this was then (and by some still) called “the co-op” fee. The fee paid by one broker to another. The fee the listing broker pays to the “cooperating office” who brings the buyer.
The mls books were not “the mls”, just as “the mls” is not a system of data. Books were just “inventory” and mostly stale inventory. They were picture books for buyers to look at the same as viewing property on the mls is today. Agents still came in and wrote listings on the chalkboards, as the books weren’t printed quickly enough nor often enough to be the information sharing tool. Agents writing down where new signs were posted and coming in and putting that on the board, was still the key to knowing what was for sale on a day to day basis. Before you assume this is “ancient history”, know that in many markets where multi million dollar homes sell within hours of people knowing about it (often before it hits the mls), this system is still used today. Three years ago in some markets, relying on the mls computer system to find property was useless, as the property had 5 offers by the time it was entered and available to be seen. This is true to some extent today.
The mls system is to provide rules because we are entering peoples homes with strangers in tow. The mls is a system to provide rules because we have keys to lots of people’s homes and need lots of rules in that regard.
Establishing an mls for members only, was a means to control the conduct of agents in peoples homes, as well as a means to determine which agent the listing broker would pay. That took the seller out of the loop and made the listing company responsible for knowing whom to pay. This is called “The Doctrine of Procuring Cause”. When one agent brings an offer, but another agent claims that he was the one working with the buyer all along, the seller does not have to worry. The seller does not have to try to figure out who actually “sold” his house.
The listing broker decides whom to pay “the co-op/Buyer Agent” fee. If an agent disagrees with the listing broker he submits a claim to the mls and the mls has a panel who reviews “the chain of events that led to the eventual sale” and determines who is to be paid. If they determine that it is a different individual than the one who wrote the offer, they take the money from whomever received it and pay it to the broker “deemed to be the procuring cause” of the transaction.
That is why when a buyer looks at property on the internet and then goes to see that property with an agent, they have initiated a “chain of events”. If that buyer then goes directly to the listing agent saying “I don’t have an agent so I want the buyer agent fee taken off the price”, the listing company may still have to pay the agent the buyer used to see property.
Nothing has really changed, Robbie, except that there are people who are becoming members of the mls, without any intention of knowing or abiding by the rules of entering people’s homes, because they think it is a data source. Unfortunately, those non LIBB members have the same access to people’s homes as we do. Maybe they think they can bring all of their friends through a 3 million dollar vacant house, because now they can get the key.
Having non-LIBB members (Legitimate Internet Based Businesses) gaining licenses and mls membership, who have no intention of representing either buyers nor sellers, but having the same access to keys to homes, is nothing to take lightly.
The mls is not a data system, not even close. It is the means by which we enter people’s homes and the rules that control our conduct when in their homes. Common fine for “rule breaking” is $5,000. That includes the rule “not to advertise another broker’s listing without their express permission”, as the seller may not want everyone peeking in his living room on the internet. And only the listing broker knows what restrictions each seller has placed on that information.
What was your question again? Hope I answered it somewhere in these three posts 
Happy Birthday Lenderama
Lenderama turned 1 year old today!
Rather than let Lenderama slow down in its old age, it is pretty obvious that Todd Carpenter is going to make sure Lenderama is always on the cutting edge! Just before announcing his one year birthday, Todd released a dynamic bookmark tool that mashes-up the Firefox browser, RSS feeds and del.icio.us.
I’ve been playing with the bookmark tool for a few hours now, and I’m completely impressed. He’s categorized more mortgage related sites than I knew existed! It includes news sites, forums, directories, and a huge number of lenders. While this list could be useful if you’re a potential home buyer or a real estate agent, this bookmark tool is a must if you’re a mortgage broker.
To learn how to install this tool, check out the Bookmark Spotlight site.
History of Real Estate - Part 2
Robbie asks: “On a related thought, how did people buy & sell homes in the “dark ages”? That seems more mind boggling to me than anything I or the folks at Zillow are going to be doing in the next year.”
Ardell responds: Below is the system used just prior to the mls, which was the “precursor” of the mls.
Just prior to the first mls, a real estate office was comprised of a core of agents. A typical office might have 6 to 12 agents, each of which was assigned a “farm area” within the “territory” of the office. John’s “farm” was Greenlake, Joe’s “farm” was Ballard, Pete’s “farm” was Queen Anne and so on. Agent training to this day uses the term “farm area”, though for the most part, “protected farming” went out in the early 1990’s. I had a “protected farm area” until about 1993 or 1994.
Every day the agents would come to the office via a different route through their individual farm area. When they arrived at the office they would write down the addresses of any houses with new for sale signs on “The Board”. At that time there were two chalkboards in the office. One to write down the signs they passed each day that were listings of other brokers, and another to write down the listings they had personally signed up for the company (in-house sales). To this day, most offices have “a board” for in house transactions. It is generally a whiteboard and not a chalkboard, but I have seen both used in recent times. “The Board” is usually hidden in the back where clients and agents from other offices cannot see it.
Any agent who only brought buyers to other agent’s listings, was eventually fired and replaced with an agent who would both list property and sell property. All agents with only buyers, that waited for someone else to do the the “hard work” and obtain the listings, was considered a “parasite”. To this day, you will see this type of discussion in agent message boards and forums, criticizing agents who only work with buyers and “feed off” the efforts of the listing agents. Obtaining listings has always been perceived as being more work than walking a buyer into the front door who likes the house. There was no such thing as an agent who only worked with buyers. Since companies could not survive without listings, agents who didn’t list were fired.
Originally there was only one chalkboard in the office and agents only sold the listings of their own company. At some point a few brokers got together and created a loose system of “cooperation” between certain Brokers (but not all) to sell across company lines. The broker of one company agreed to pay the broker of another company, should one of the agents at the other broker’s company bring the buyer. This is not the first mls. It is the precursor to the first mls.
This established the rule, which is still in place today, that agents are paid by their brokers ONLY, by law. Sales involving two companies involves a broker payment from one broker to the other broker, and then each broker pays their own respective agents. Every closing, to this day, shows only the company, and not the agent, on the closing sheet. Each state requires that the broker receipt the monies and pay the agents as well as supervise the activity of the agents. This is about to change slightly if “Broker Only Licensure” is passed here in Washington.
Only the company who lists the home can advertise it (proprietary rights) and only those offices with cooperation agreements could sell each other’s listings. To this day if John at ABC Realty lists a property for sale, only John has the right under the listing contract with the seller, to advertise that property. Any broker or broker’s subagent “in the system of agreement” can bring a buyer. But only the listing company can advertise it. That is where the internet, as an advertising tool, may be breaching the proprietary rights of the listing contract which are still in place today. The seller doesn’t contract with the mls, the seller contracts with the listing broker. The broker then contracts with the mls and all “members” agree to the terms of interaction, and are “ousted” from membership or fined severely, if they do not comply with the terms of membership.
But I’m ahead of myself there. This loose system of cooperation between brokers is not the mls. It is the precursor to the mls.
The mls was created to protect the seller, not for the agents at all. For how that came about, see History of Real Estate - Part 3
History of Real Estate - Part 1
Robbie asks: “On a related thought, how did people buy & sell homes in the “dark ages”? That seems more mind boggling to me than anything I or the folks at Zillow are going to be doing in the next year.”
Ardell responds: The first ever “recorded” real estate transaction, involved a “life estate” (not to be confused with landlord/tenant laws). The beneficiaries of the Life Estate breached the minimal conditions of occupancy and were ejected from the property, due to their failure to comply with the conditions of occupancy.You can find the details in the Bible under Genesis. Adam and Eve being the beneficiaries of the life estate, God being the owner and “The Garden of Eden” being the property from which the life tenants were ejected.
The second recorded real estate transaction involved the first ever “foreclosure” procedure. The “purchaser” defaulted on his “mortgage” and the owner foreclosed and took back the property. You can find this case in the same reference book noted above, under Cain and Abel. Cain foreclosed by killing Abel and burying him in the property, which he later resold with Abel still “in it”.
This method of sale and foreclosure (the “death for default” method) continued through most of history. You will recognize this through the “Feudal System” wherein the first “middle man” to the transaction was introduced. The owner, the King, transferred land to “the middleman” the fief/Lord, as a reward for services performed, who then implemented the use of serfs for property maintenance and profit. The King could then foreclose on the fief/Lord by means of death and likewise, the fief/lord could eject the serf for lack of performance , via the same death remedy.
The transfer of property rights via death of the losing party to the transaction, continued through to this Country via gunfights, executions and mass massacre until about 1850 to 1930 or so, depending on where in the country one happened to be.
This brings you up to the original mls and just prior. You will find the details of how real estate was sold just prior to the mls, in the early stages of the mls and through to the present, in the History of Real Estate - Part 2
Electricity isn’t a competitve advantage anymore January 27, 2006
I find all the F.U.D. regarding opening up MLS data to be kind of overblown. Perhaps, it’s because I’ve been a software engineer my entire career, and the notion of technology changing business models and society at large seems anti-climatic to me. Perhaps, I have this attitude because my former employer, embraced the notion of "Only the Paranoid Survive"? Regardless of the root causes, the fact that the N.A.R., and other members of the real estate industry are so scared of the upcoming tidal-wave of technology changes just seems so short-sighted.
After all, during the past 100 years or so, the only constant has been change. So the fact that more technological change is coming, shouldn’t surprise anyone. I don’t remember the explosion of digital photography during the past decade cause anywhere near this much fuss, do you? What about the growth of photocopiers & other printing technologies during the last 40 years? Before computers, I’ve heard that people used to use a device called paper to exchange & store information, and the ability to manage these paper records efficiently was a key competitive advantage for many businesses. And yet, I can’t help but wonder if the MLS placed the same kinds of restrictions on printed property listings 30 years ago that they are trying to place on digital property listing today. Surely those all free real estate magazines at the grocery store are harming agents & brokers, by giving away valuable information for free?
I’d argue that associating digital photos with electronic MLS records on free web sites has done more to decrease the value that people place on a real estate agent, than anything I or other software engineers are going to invent during the next few years. Maybe the embrace of digital photography was just a way to get back at all those real estate magazine publishers?
Anyway, my advice would be to tell the powers that be to get over it. Things are changing: deal with it. Nobody thinks electricity is a competitive advantage anymore and in a few years from now, I suspect nobody will give the new generation of real estate web applications a second thought. I suspect very few realtors are afraid of the value that maids, handymen, and landscappers bring to the real estate industry but yet somehow software engineers & database administrators are out to destroy the industry. I can’t speak for all IT professionals, but I think it’s safe to say our area of expertise is NOT in the sale, finance, or purchase of properties (which should be the core competency of any real estate agent/broker). Similarly, it’s foolish for the real estate industry to think that they can job a better job of developing tools that let Joe & Jane Consumer search & browse listing data than software engineers. After all, if the engineers at Google can search 20 billion web pages in a fraction of second, processing the 20,000 properties in the MLS is sleepwalking by comparison.
On a related thought, how did people buy & sell homes in the “dark ages”? That seems more mind boggling to me than anything I or the folks at Zillow are going to be doing in the next year.
In closing, it’s not geeks with SQL Servers or even free web servers you should be scared of. It’s those real estate androids showing homes at a holodeck near you that should keep you up at night. That’s REALLY going to shake things up.
Robbie
Caffeinated Software
Randy & DR Miller
I just wanted to take this opportunity to tell you how absolutely amazing DR Miller is! (Sorry Randy and any other lender types in here.) I have been around the block quite a few times, in five states, so know from where I speak here. This guy is Aces!!
Not only knows his stuff, but presents it, by email, in clear complete fashion, from all angles, and in a jiffy.
Kudos!
As an aside, for those of you doing 80/15 financing, don’t forget to peek at the old FHA option. It’s starting to look pretty good by comparison for some people.
Ignorance is not an excuse, but… January 26, 2006
The common phrase is that ignorance of the law is no excuse. In this case, I have some clients who just received a $1,000 ticket for renting a home without a business license. If this was their profession and they had 20 or so units, a $1,000 fine probably wouldn’t be a good thing but it could be absorbed. But when you are in your 80’s and retired it is a pretty big impact. Especially when the ticket is the first time you’ve heard of the new regulations.
I’ve talked to 4 property management companies, some with properties in the same area and none of them were familiar with this law. Makes me wonder how much effort the city took to alert property owners of the change.
As of January 1, 2005, the City of Des Moines (Washington, not Iowa) added rental of residential real property to the list of business that require a business license. In addition to a business license, the landlord is now also required to obtain “crime free housing endorsement” at $100 per rental unit. This endorsement has a lot of interesting requirements such as:
- Completion of city of Des Moines police department’s crime-free rental housing program or equivalent program conducted by a Washington State law enforcement agency
- Written certificate from the police department that the rental housing facility has had no police calls during the previous year
- Annual “crime prevention through environmental design” walk-through and inspection of the rental housing facility by the city of Des Moines police department
These are just a few of the requirements. Now I applaud the concept of engaging all parties to reduce the amount of crime but these requirements do seem to put most of the burden on property owners.
It gets better. You can now be held financially responsible for the cost of police response to your rental property. Section 5.4..100 of the municipal code states that “for every police service involving gang, drug or vice related activities or any other serious and significant criminal activity as determined by the chief of police, the owner and tenant shall be assessed, jointly and severally, the actual cost of the police service call or $50.00, whichever amount is greater.”
I’d love to hear from some of our contributing attorneys their view on making a landlord financially responsible for the police costs of their tenant’s criminal activities. Anyone have access to the prior regulations and how they compare? (section 5.04.015) Anyone run into similar codes in other jurisdictions? How about better ideas with same goal of reducing crime without making it all the responsibility of the property owner?
Real Estate Search Article
Search Engine Watch has a real estate search tool write up. It’s mostly links, but some of them haven’t been mentioned here. I like to think that our write ups are a little more coherent.
Not mentioned is the much improved (aesthetically) Redfin (even in the last week or two - take a look!) and the still nascent ShackPrices.
-Galen
ShackPrices.com
Downtown Seattle
While Downtown Seattle is not my normal, day to day bailiwick, I think a few comments are in order, given the recent press regarding the growth in the downtown Seattle area.
We recently sold a fabulous “view” condo in the Newmark and were involved in the “bidding war” over the almost penthouse suite, so I have some limited, first hand knowledge of the goings on in Downtown Seattle.
If you are purchasing a downtown Seattle condo, be a little wary of bargains and do your homework. With all of the new buildings soon to be coming, make sure you check out the direction of the view, as many will be blocked by the soon to come tall buildings. Don’t buy based on view until you check out for yourself if the view is unobstructable, or at least not likely soon to be obstructed.
The trade off of course is that the street level will dramatically improve in the Pike Place Market area, even if the view will be blocked.
Also, if you are looking at comps to support value for your purchase, you need to know about the massive remodeling being done in some downtown condos. The remodels are not your typical-run of the mill, upgraded finishes. Entire reconfigurations of the floor plans have been going on, so that the bedroom is now the living room, etc, to refocus the prime view rooms based on what is to come. Also go outside and study the building and its windows. That one that sold for mega dollars on the 24th floor, had a completely different window configuration than those on the 23rd floor and lower. You can see that there are many more windows on some levels than others, if you study the building exterior. On site research is in order, as you will see things that comps on paper will not readily reveal.
So don’t just assume that the one you are buying is worth the price and calculate the cost of granite counters and the like. Make sure the views will not only be preserved, but will be preserved in that part of the living space that most determines value. Views from the bedroom are great, but views from the living space hold a higher value. Clue is if you have to keep saying “Come into my bedroom and see the view”, that condo is not worth the same as one that has views from the living room. Unobstructable views from both the master bedroom and the living room, of course is best, but hard to come by.
That is not to say that there aren’t some great values down there, because there are. Just be sure the “bargain” price isn’t due to the view being about to disappear and do the homework yourself. Get your info from “the horses” mouth. How you pick your horse to rely on ? In that regard, I don’t have a tip sheet for you 
It’s OK to get caught up in the hoopla regarding Downtown Seattle. Just do your homework carefully, as that will determine the winners from the losers, when the dust settles after the new buildings go up.
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