So apparently, a bug in my Mailchimp meant that the last two Quick Takes did not go out. I have the dev fixing it right now, but that still means I have to write it. I apologize for all the technical difficulties; I hope to have all of that addressed soon with a new website. (You’ll get to see it early and give me some thoughts.)

In any event, let’s do this.

Notorious TL;DR

Since we last did a Quick Take, here are the new posts up on Notorious.

First, we had the VIP Notorious Interview with Jack Ryan, Co-Founder & CEO of REX. Unfortunately, as many of you know, the audio was cut off at 32 minutes or so… which mean I have to try and get Jack back on for another one, as he is one of the most interesting and smartest people in the industry who is not afraid of disrupting things. Still, in the half hour or so, there was plenty there for anybody interested in disruptive brokerage models.

Two public posts have gone up.

The first is a fisking of a Forbes article by Peter Smirniotopoulos, which I titled, “Why Wall Street Consistently Gets iBuyer Wrong.” I thought it worth doing as Smirniotopoulos is a very good writer who makes very good arguments, but from a flawed premise. So I thought it a useful example to show how smart people get that whole business wrong.

The second is from last night, when I had all manner of technical difficulties, titled “Musings on Defining Fundamental Problems.” Greg Robertson, a VIP member and a brilliant guy in his own right, called it one of the best things I’ve written… which is either high praise or a reminder that I need to improve my writing. 🙂

The gist of that article is my identifying the fundamental “keystone” problem for five industry segments: agents, brokers, the REALTOR Association, the MLS and technology vendors. It ended up being a bit of a self-diagnostic as I was trying to figure out how I arrived at concluding that each was a fundamental problem vs. a symptom.

Quick Takes

So what happened this past week worth noting?

Interesting Details from Corcoran’s Hack

Back in September, Corcoran was hacked and quite a bit of confidential information including the Holy of Holies (agent splits, compensation information, etc.) was leaked/sent to a whole lot of agents and brokers. I’m not sure I can call it a “leak” when someone email blasts dozens if not hundreds of people.

In any event, earlier this week, The Real Deal actually published a bunch of numbers from those hacked and publicized documents. Corcoran insists they are wrong, misleading, ignore them, etc. and says the publication is irresponsible. But The Real Deal did what they did, and we now have some rather interesting data that tends to corroborate all of my theses about contemporary brokerage. I’ve only had Realogy’s public filing information, and a bit from HomeServices of America before this. So now there’s another data point.

I’ll probably look into the insights from The Real Deal and see if it’s worth writing on. But you should check out the story.

Zillow’s New One-Click Tour Play with New Construction

I thought this was really ho-hum news until Zillow declined to name participating builders. That made it interesting.

Because we know that Opendoor announced partnerships with 19 of the top 25 builders, including 6 of the top 10 in 2018, and that one of its financing rounds was led by Lennar. It recently announced two more large homebuilders in its trade-in program.

Clearly, Zillow is willing to compete against Opendoor in every single arena and I suppose the One-Click Tour thing helps with that. With New Construction now under Errol Samuelson, who has some deep background in that arena as the former President of Realtor.com when the whole BDX deal was done, I suspect that we’ll see some more coming out of Zillow on this front. But the fact that they declined to name any flagship builders suggests that maybe Zillow doesn’t have the scalps it wants to display just yet. The question is whether Opendoor is in so deep with builders (other than Lennar, obviously, who has money riding on Opendoor) that Zillow might not be able to break in.

That’s a crew over there in Seattle who isn’t used to losing, which is what makes this interesting.

FHA Loan Limits Increasing in 2020

I’m not entirely sure if this is good news or bad news. For brokers and agents and those dependent on brokers and agents, I guess it’s good news. But it does make me think of the Ghost of Bubbles Past… just in time for Christmas.

FHA was in real trouble as recently as 2014 and it isn’t clear that the new loan limits of $765,600 is really in line with FHA’s mission to provide housing for lower income Americans.

This is a far more complex topic, but with housing affordability becoming a major issue for most Americans, and a huge political issue beneath the surface… it isn’t clear to me that making loans cheaper and more easily available is a great idea or a horrible one. Guess time will tell.

HomeSmart Makes a Big Acquisition

Well, “big” is relative, I guess. But I normally ignore all brokerage acquisition news, because it’s uninteresting. Two sick companies with broken models getting together does not create one healthy company. But I note this one because it’s the first one I’ve seen in a while where a 100% shop acquired another brokerage. Why is that relevant?

The two brokerage models that avoid the fundamental problem of brokerage — productivity is inversely correlated to profitability — are the 100% shops and W2 brokerages. I think it’s interesting that one of those has made a relatively big acquisition.

Might be the start of a trend in 2020 and beyond.

Housekeeping Notes

The website is undergoing a redesign along with some platform changes. I haven’t been all that happy with the platform I’ve had for over a year now. So watch for some changes in the coming weeks.

Reminder: I do private telephone calls, in which we can get into greater depth about topics and issues, and VIP Subscribers get $250 off my regular hourly rate. So instead of $750, it’ll be only $500 for VIP Subscribers. If we met through an expert network, let’s keep using that, but mention that you’re a VIP member to the representative of said network and I’ll discount my rates accordingly as well.

Also, please join the Notorious VIP Lounge on Mighty Networks if you haven’t done so already. This is an entirely free online community for VIP members, as I wanted to create a place for serious people to have serious conversations about real estate and industry issues.

If you like this, if you like the VIP experience, please recommend it to your friends and colleagues. I’d like to grow this community as much as possible.

-rsh