The new website is finally here. If you’re reading this on the website, you already know that. If you’re reading it via email, then consider taking some time to click through and check out the new site design. You should have already received an email from me on your VIP Subscription, as you’ll need to select a password (I couldn’t transfer those over to the new platform because of security). Let me know if you need me to send you a new password reset link for the new VIP platform.

Notorious TL;DR

There is one massive post that is new, as in I just published in 5 minutes ago so I can get it into this Quick Take update.

What Shutting Down Climb Says About Realogy, Part 2: My Take On Things

Following up on the massive Part 1, I wrote this post looking at what Realogy’s decision might mean for Realogy.

I ended up constructing my own narrative that makes a lot more sense to me versus the narrative that Realogy has been pushing. Fundamentally, I’m worried about Realogy. There’s a lot of similarities here between Realogy circa 2020 and General Motors circa 2000.

And like GM circa 2000, I’m starting to fear that Realogy won’t be able to get out of the hole without some drastic moves, like a strategic bankruptcy.

If you have an interest in Realogy, this post might be worth taking the time to read. Part 3, on what the move says about the state of the industry, will be coming at some point.

Pretty Lies: The Real Estate Edition

I saw a post that triggered this… it’s basically in the same theme as the Tylenol v. Chemotherapy post about pretty lies that brokerages tell themselves, but for the real estate agent.

Fundamentally, there are a lot of voices in the industry who tell agents that they can’t be replaced by machines, computers, algorithms, robots. But that’s a pretty lie since nobody is trying to replace humans with computers. What they are doing is to make humans so much more efficient through technology that they can replace other less-efficient humans.

So I went into it in some depth. Predictably, some of the commenters entirely miss the point… but then again, that’s why you read Notorious ROB: to get insights before they become conventional wisdom.

The Notorious Interview: Nick Taylor, Modus

The first Notorious Interview of 2020 is with Nick Taylor, whom I’ve known for years from when he was working at Zillow. One of the nicest and smartest guys in the industry, he is now at Modus, which is an interesting proptech company even without Nick.

Modus is trying to disrupt the part of the transaction few people talk about or even pay attention to: the closing process. You know, title, escrow, the paperwork? Very few proptech companies or even vendor tech companies focus on that side of things. Most of what we see in real estate are top of funnel, lead generation, marketing technology, CRM, etc.

So it was fascinating to hear about Modus, why they’re doing what they’re doing, and what they see coming ahead. Give a listen if you’re interested in proptech topics.

The Notorious Interview: Jennifer Branchini & Sanjay Wagle, California Assoc. of REALTORS

The second Notorious Interview was made public, because of the topic and its importance to a wide range of people.

I spoke with Jennifer Branchini and Sanjay Wagle of the California Assoc. of REALTORS about SB 50, the California bill that would eliminate single family zoning — kinda, sorta, in very limited circumstances, etc. etc.

The topic became the affordability crisis in California generally and what is going on with local control over housing.

Quick Takes

So what happened this past week these past two weeks worth noting? Let’s see here…

CFPB planning to eliminate DTI requirement from QM lending rules

HousingWire reported that the CFPB is looking at eliminating (or significantly changing) the DTI (debt to income ratio) requirement from Qualified Mortgages (QM):

In a letter sent last week to several prominent members of Congress, CFPB Director Kathy Kraninger said the bureau has decided to propose an amendment to the QM Rule that would “move away” from DTI as a factor in mortgage underwriting.

The reason is that Fannie and Freddie have had an advantage since the beginning due to the “QM Patch” rule, which exempted them from the DTI requirement:

But, Fannie Mae and Freddie Mac are not bound to this requirement, a condition known as the QM Patch. Under the QM Patch, loans sold to Fannie or Freddie are allowed to exceed to the 43% DTI ratio.

I guess we’ll see what happens ultimately, since nothing has even been proposed, but any change to mortgage lending rules could have enormous impact on the housing market as a whole. So this is something to keep an eye on.

Buying a House Without a Mortgage or Down Payment with Fleq

So this isn’t news per se, but it remains one of the most interesting things I’ve read in the past two weeks. The housing startup Fleq essentially explained itself further to HousingWire, since its model seems… well… too good to be true.

Fleq basically forms a joint venture with the homebuyer and buys the home for cash, then charges the buyer rent… a part of which goes towards buying more of the partnership (kind of like paying down the principal of a loan… but it’s not a loan….) It launched in Pittsburgh at the start of the year, and is attracting some attention and controversy.

I’ll try to get Fleq on an Interview at some point, but you should take a look. The thinking is extremely clever, and if it works, it could be a major game changer.

Keller Williams Launches New Website

I’m sorry, did you… catch me in mid-yawn? I didn’t mean to… just couldn’t help it.

I am putting this here, however, as a Quick Take because I can’t think of anything more 1990s than launching a new consumer search portal as a brokerage/franchise company. I think this website — along with all the other things that Keller “Tech Company” Williams will be rolling out — will prove to be the best example of what I’ve been saying for a while: the world has moved on. We are now in the Age of Capital, not the Age of Technology.

I’ll probably write more on this at some point, but it’s not time-sensitive….

Fathom Realty Files S-1 for IPO

I had heard rumors about this coming since last year, so it’s good to see that it’s happening. I’m downloading the S-1 as I type this out, and I hope to dig into things a bit.

I’m particularly excited because Fathom is a 100% shop, a NextGen Brokerage, and a model that I’m sort of bullish on. Now, Fathom is only seeking $14 million which is tiny for an IPO, and its financials should show a river of red, which is not necessarily how these 100% guys actually operate. But it’s public, which means I can analyze it and get into it.

So yeah, I’m excited to see a brokerage go public, just for the data dump such a thing provides.

Housekeeping Notes

As mentioned, the new website is here. The biggest change is to the VIP Membership platform, and it should be much, much easier to use and to manage for you and for me. Hope you’ve had a chance to check it out already.

Once again, if you are attending Inman New York (or in NYC area during the week of January 27th) and you’d like to meet up, drop me a line! Would love to say hello in person. 🙂

Finally, I am working on a project that might be of interest to people in the finance and investment world. If you are such a person (analyst, fund manager, etc.), please drop me a line. I’d love your thoughts on this project I’m working on.

Thank you all!

-rsh