MLSs around the country are missing out on an amazing opportunity to maintain relevance as online companies continue to build up a marketplace without them.
Public-facing Web sites are what could’ve saved the MLS — and have in some markets — but many either can’t build them because of broker pressure or simply don’t have the resources to do it.
Bob Hale, CEO of the Houston Association of Realtors, which stands as the poster child for an MLS Web site done right, provides a reminder of this. HAR.com delivers 600,000 leads every year to its members. That’s a benefit no agent or broker can afford to ignore.
HAR’s surveys show that the more consumers use the Internet to conduct their own research, the more they will use a Realtor. The more information consumers get on their own, the more they turn to agents to help wade through it.
While the debate elsewhere over the value of public real estate search sites continues to drag on, brokers and MLSs are missing a grand opportunity to work together toward a common goal.
It makes no sense.
In the past year, brokers have feverishly moved to form listings partnerships with online companies, sending millions of listings to consumer portals and search engines to gain exposure in a troubled market. Many argue the MLS was never meant to be a consumer tool, but if the same efforts were put into creating a killer MLS experience and marketing that to consumers in local markets, brokers would get the same end result — greater exposure, more educated consumers, and, with any luck, more sales.
Rather than prop up the MLS the industry worked so hard to build, it has slowly caused its own demise by building up other online properties that now threaten the relevance of this walled garden.
Brokers built this amazing marketplace known as MLS about 100 years ago as a system of cooperation. But when it came to the Internet, this cooperative system suddenly was viewed as the enemy if leaked to the public in a venue outside brokers’ own Web sandboxes.
MLSs need to take a seat and study public sites like HAR.com and make a move before it’s too late. As Hale himself has said, if not for this grip on MLS information from within, sites like Zillow might never have been born. Consumers wouldn’t crave this information if the industry gave it to them first.
A public site does not compete with broker sites as long as the MLS is not in the business of brokering real estate. A public site is the key to improving the Realtor image. Consumers want reliable, transparent information in an environment where they don’t feel they are simply part of an agenda.
In the age of Google and Wikipedia, when nearly any bit of information can be surfaced within a few clicks, MLSs that keep listings and market data under lock and key have it backwards.
There’s no telling how long the housing crisis will drag on. Here’s what you need to know before you start shopping in a rocky market.
Rule 1: You can’t time the bottom
Face it: The house you buy today will more than likely be worth less next year. That could get you thinking about trying to time the bottom. Resist. It’s harder to do than you think, and this is the best buyers have had it in two decades, with inventories up and mortgage rates low.
Pace yourself, find the perfect place and drive a hard bargain: Ignore the seller’s asking price and bid 10% below what comparable homes are selling for. If the seller balks, move on. Remember that if you’re trading up, your home could sit. So sell before you buy.
Rule 2: One reason to buy now - mortgage rates
Homes are plentiful and will remain so, but financing will be getting more expensive. True, the Federal Reserve has slashed interest rates, but fixed mortgages don’t directly follow the Fed. They reflect the bond market’s expectations about inflation, which remains a concern. The 30-year, now at 6.1%, will likely reach mid-6% by December and 7% in 2009, says Celia Chen of Moody’s Economy.com.
That means there could be a penalty for waiting to buy even if prices fall more. Today a $250,000 loan would set you back $1,500 a month. At 7%, a $1,500 payment gets you only a $225,000 mortgage. As for variable-rate loans, the spread between conforming ARMs and fixed loans is too narrow to do you much good.
Rule 3: Another reason to buy - rates on big mortgages
Mortgages in amounts greater than $417,000 - the limit for buying by federally sponsored mortgage agencies - usually run a fifth of a percentage point above conventional products. But investors are shunning jumbos, which now average 7.2% and are unlikely to drop much this year, according to HSH Associates.
Certain jumbo borrowers could get relief, however. A new law allows Freddie Mac and Fannie Mae to buy loans as large as $729,750 in 71 high-priced areas. So far “jumbo conforming” loans average 6.6%. The program has gotten off to a slow start; you’ll need to shop around. And unless Congress acts, this bargain will disappear at year-end.
Rule 4: Don’t buy cheap; buy good schools
By now you’ve heard from somebody who knows somebody who got a great deal on a foreclosed property. But when you buy a house, you’re also buying into a neighborhood. And foreclosures tend to be bunched in areas where residents and speculators alike took out exotic mortgages to get into homes they subsequently found they couldn’t afford. That’s not a recipe for stability. Prices and quality of life could both decline further.
Similarly, avoid developments that popped up in the past few years. They too likely have a lot of owners with risky loans and little equity, says Mike Larson of Weiss Research. Instead, go for areas with highly rated schools. They generally fare better during downturns, and that pattern is holding today, according to a recent study by real estate site Trulia.com.
Rule 5: Make sure your agent has your interest at heart
The real estate game has a built-in conflict of interest, since the listing agent and your agent both get paid by the seller. And these days more sellers are offering extra cash to buyer’s agents.
So make sure you’re not being steered to a house that’s better for your agent than for you. Agree up front on his commission (typically 3%) and that any extra payments will go to you, says Jon Boyd, past president of a buyer’s agent trade group.