February 2009

Restoring a Disrupted Eco System

As the current foreclosure epidemic spreads, REALonomics thinks of it as the global warming of the mortgage sector? In other words, for more than a decade we (RE industry) have failed to properly manage the two related systems of mortgage and real estate home ownership, recklessly allowing a degeneration of their delicate eco systems. Increased inventories, slower absorption, higher interest rates and climbing prices further disrupt the delicate balance.

We are now dealing with a punctured ozone, polluted sky and water. It’s opportunity time but we will have to scramble to clean up our self-induced mess. The REALonomics sub-prime poll seems to clearly indicate what our subscribers and users think the impact will be on the industry.

Once the eco system is disrupted, it’s difficult to clean the swamp, ridding it of the toxic waste that has seeped deeply into terra firma. What follows is an example of how one company plans to engage in the clean up of a disrupted eco system.

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The PREZ & the RE Industry – a POLL

Ladies and gentlemen…the President of the United States! In 2008, we will have a new Prez and with him/her will come the all too predictable changing of the guard throughout the Washingon establishment and its vast bureaucracies. Brand new flow charts will be printed, distributed by memoranda and inserted into three ring binders.

What impact will the presidential election have on the real estate industry. Among the following major candidates (sorted aphabetically by last name), whose policies do you think will be most supportive of the real estate industry’s agendas?

This is the final REALonomics poll in the trilogy of polls for April, 2007. Each month REALonomics hopes to run at least one hot poll that will guage the industry with respect to it contemporary issues.

Polls are now a part of REALonomics.net. Watch for the hotest polls on a variety of subjects. Cast your vote…leave a comment…recommend a poll.

SEE ALL THE POLLS.

DOJ -vs- NAR, the Poll

On September 5, 2005, the Department of Justice (DOJ Anti-Trust Division) filed suit in the US District Court of Illinois against the National Association of Realtors (NAR) for restraint of trade under the Sherman Act.

Essentially, the DOJ’s complaint charged that NAR’s policies for use of property information on the Internet were too restrictive and non-competitive in that they force participants into unfair trade practices. The suit states “the aforesaid contract, combination, or conspiracy has had and will continue to have anticompentitive effects in the relevant markets, including:

1. suppressing technology innovation
2. reducing competition on price and quality
3. restricting efficient competition among brokers
4. making express or tacit collusion more likely; and
5. raising barriers to entry

REALonomics is tracking the DOJ -vs- NAR suit and is now polling its readers about this action. Assuming the DOJ is successful in its suit against NAR, what impact will it have on property information access and commission fees? Please post your vote in the follow poll.

Polls are now a part of REALonomics.net. Watch for the hotest polls on a variety of subjects. Cast your vote…leave a comment…recommend a poll.

SEE ALL THE POLLS.

REALonomics Polls Begin

REALonomics has been watching the blogs and the wires. Opinions about the impact of the Sub Prime lending problem run the spectrum. So, we decided to poll readers. Polls will become a new category of REALonomics.net. Watch for the hotest polls on a variety of subjects. Cast you vote…leave a comment…recommend a poll.

What’s your opinion about the impact the sub-prime lending problem will have on real estate sales throughout 2007? Please indicate your vote below.

If you have a suggestion for a REALonomics poll use our contact form.

Tyranny of the Market – No Trespassing

Owners of real estate companies all know they will someday face the tyranny of the market. REALonomics insists that definitions of “market” become issues of owner empowerment or conversely, owner dis-empowerment. All owners know, or they eventually discover, that definitions of their “market” become factors in the profitability equation.

First Order of Business Modeling – Duh!

Business modeling’s first prerequisite is market definition. What is the market? Where is the market? Who is the market? How does my company fit into the market? How does the market fit my company? How does my model extract capital from the market? What makes my market model special? What is the market personality, demographically and psychographically? What are the tyrannies associated with the market that can potentially wreak havoc on my operation and my profitability.

Real estate brokerage firms have traditionally built their business models on a set of very tight market assumptions that no long hold water or, any other liquid for that matter. One will find in almost every city in the United States a group of brokerage firms who ALL (hyperbole) define their markets in terms of a zip code, city name or perhaps even a franchise definition of market known as the “Effective Service Area” or the “Market Service Area.”

What’s wrong with this approach, if anything? And, how does it impact broker/owners?

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