Timothy Vasko

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Another One Bites the Dust: The 5 Top Mistakes that Keep Developers from Selling Their Properties Today (Part 5 of 5).

June 18, 2009 06:44

Over the last four days, I've talked about the dangers of developers and sales people "knowing too much" and thus not doing the jobs they should be doing. Yesterday, I spoke about what can happen when a Print Media Expert is hired to do an Online Media Expert's job. Today, I'm going to switch gears a bit, though, and wrap up this week with one of the biggest mistakes I see developers making today.

Mistake #5 - Waiting for the Market to "Come Back". The market is ripe for buyers right now. The main mistake developers make is they are waiting for the "market to come back" while at this very moment discerning buyers are looking hard at where they will buy.

Again, we should return to the previous four I've already described. Developers have been have been trained to believe that "marketing is too expensive to not get results." Â However, they have little experience at incubating the Connected Market to get their project and leads informed and warmed up to one another. Fostering a lead list, incubating the leads, getting people to know their project, is just logical. This doesn't come about by experimenting with PR or taking on every responsibility that a successful project requires. No, it comes about by getting and staying Connected in the new Connected Market.

People aren't panic buying any longer. They are smart, investigative shoppers. They want information - the information they need to make a decision. They are willing to buy if they feel they will get value in what they are investing in, and if they understand that value to be strong, all in a place they want to live. Value is not the same as price. People will pay more to live where they want to live. The Great developers have always understood the importance of making a home a wonderful place to live, before it ever existed.

For buyers, the web and a logical approach have made finding and investing in a home is now a more financially measurable and sound business decision than ever before. For a few hundred or thousand dollars a month a logical, incubation strategy that builds a buyers base is more than possible, and quite simply a better strategy than dumping tens or hundreds of thousands on a print media campaign

These are the top 5 mistakes a developer makes. Stop making the mistake, get into the Connected Market Space and start incubating the future success of your business today - the sales will come at prices that make Developers glad they are in the business.

Another One Bites the Dust: The 5 Top Mistakes that Keep Developers from Selling Their Properties Today (Part 4 of 5).

June 18, 2009 06:43

Yesterday I discussed the mistake developers often make in presuming that they themselves are Media Experts. In that same vein, I will show you today how hiring a Print Media Marketing Expert is a not only an outdated but also wasteful mistake many developers often make.

Mistake #4 - Hiring a Print Media Marketing Expert. Print media is not a dinosaur - it's an albatross. The problem with print media marketing agencies is a two-headed one: First and foremost, they are excessively expensive, with no real proven ROI. At 15% - 30% , why would any well founded print media marketing company mess with the web? The fact of the matter is that they don't really use online marketing beyond instances when they are forced to. Second, on the rare occasion that they do decide to utilize online marketing strategies, their vacuous knowledge of this very different technique forces them to lean heavily on their print media background, thus costing their developer clients tens of thousands of wasted dollars.

A print media group is unlikely to embrace the web. Their experience in both their revenue stream and understanding of outdated marketing strategies has nothing to do with the way the stream of information flows and through the web and thus back into the marketplace. In order to connect on the web, it takes expertise, a cadre of technology geeks and online marketing guru's - who are constantly and simultaneously working the marketing strategies into the technology footprint and presence from Google across the Virtual Earth. The nature of the web is information - this fact needs to rise above the noise. Print media has an automatic filter, limited distribution, high cost, and of course no means of tracking effectiveness of the ad. The best statistic you will ever get will concern sales of the publication itself. While this may tell you your ad was probably seen by X number of people.

Even if you still spend the big bucks on print ads, 85% of the time they will "spill" (that is, move from offline to online browsing and research) on to the internet. All those marketing dollars that have been spilled over can be captured by your competitor. I've seen this first hand: Our firm brought in leads from a major print marketer who was marketing for our client's main competition. We were able to deliver these to our online client for around $10,000, which became $5mm worth of sales for them. The reason I know this is because online marketing is that intelligent - it can tell you what the leads were looking for and how they found your before you ever pick up the phone or email them. If you want to market, market right. Get on the web and go with an expert.

Another One Bites the Dust: The 5 Top Mistakes that Keep Developers from Selling Their Properties Today (Part 3 of 5).

June 16, 2009 06:41

Just as dangerous as assuming a salesperson has an intimate knowledge of media and marketing - as I touched on yesterday - is a developer who assumes that he or she has that same intimate knowledge.

Mistake #3 - Being a Media Expert. Would a developer hire a general contractor to do an architects job? "Hey, here's a piece of property, Joe. Go ahead and build something, we'll get it sold..." I don't think so, either.

This is what developers do when they become media experts. I've seen developers think that they "understand" the way print, web and mass media work. Time and again, they are proven wrong. They go get a PR company to "tell their story" while 85% of people looking for their next home are searching on the web.

PR, Media and especially Online presence have never been more complicated. It takes not only an accurate architecture, but also an intelligent strategy, the right technology and a solid experience base to make it all come together. Yet Developers believe they can simply "figure it out" - just like hiring your General to do architectural and design work. Too often, developers seem to think that they can just "wing it," that a project will sell itself if its name and description are simply mentioned in a magazine or newspaper article. This stuff never hurts, until it becomes the only thing you are relying on. In today's market, PR is nice, but its not what gets you leads and brings in sales. You need an intelligent, connected team of actual marketing experts who know how to implement a strategy that can bring in Quality, Quantity and Qualified leads.

Another One Bites the Dust: The 5 Top Mistakes that Keep Developers from Selling Their Properties Today (Part 2 of 5).

June 15, 2009 06:40

Yesterday, I spoke about the first mistake any developer can make in project marketing and sales. As I said, I've seen a lot of developments stall or self-destruct at the hands of a developer who felt like he or she "knew it all." I told you about my friend the hotelier, who became a developer, then a travel "guru," then a marketing and sales "expert" capping off this illustrious and varied career with a stint as a financial products broker. His development is still just a patch of dirt.

Continuing in the same vein of "knowing it all," today I'll tell you what I've seen happen to developers who entrust their marketing efforts to brokers and sales people. Until recently, I've seen a lot of luxury brokerages trick developers into thinking that they were the total solution - a sales and marketing firm. I'll show you why sales and marketing under one roof make ineffective and wasteful bedfellows.

Mistake #2 - Hiring a Sales Agency and Branded Real Estate Broker to do a Marketers Job. In recent years, marketing real estate projects was more than just a lucrative enterprise for those who were doing the marketing - it was pure profit, plain and simple. There is a good reason for that - the best marketers got the job done.

When a luxury brokerage brand steps in and decides to become a marketing company they begin to over-leverage. Sure, they can leverage off their brand name for what seems like a quick win and surefire success, but this also means that they are leveraging off their core business. When brands experiment and begin to "know it all" (not unlike the hotelier I described yesterday), the Developer takes the hit. With a big name and a willingness to take an even bigger budget, I've watched developers dump literally millions of dollars of untraceable fancy print ads and ineffective web sites - all the while the brokers and agents who should have been motivated by selling the project, were lining their pockets with marketing dollars.

Marketing is a science - and a bit of an art. Marketing drives sales, sure, but as with any science or art (or both), this is something that is best left to experts, not amateurs (think about giving a High School Physics student the keys to the Hadron collider!). In my many years of working with the real estate industry, I've never once seen a brokerage bring in a graphic designer or copywriter to close the deal on a multimillion-dollar home; so why should the opposite make any more sense? The reason commissions exist is to get the sales team to work hard to close the sales, this is what they know and this is what they (should) do. The marketing team brings in the leads and brands the project; this is what they are paid to do. When both teams are working in their core capacity, the result is success. When the incentive model and expertise gets muddled - the result is millions spent, and a project bankrupt due to a wasted budget. I've seen this happen on a number of occasions.

Do yourself a favor. The next time a real estate brokerage says they can market your project, thank them for their enthusiasm, and offer them 2% more on the back end - so long as they carry the marketing load on the front end. Or spend your money wisely and get a marketing group and resources that brings in Quality, Quantity, and Qualified leads. Send the sales guys these leads so they can actually close the sale and earn their commission - the way they were supposed to get paid.

Endangered Species: What GM has in common with the Real Estate Brokerage Industry

June 15, 2009 06:39

An excerpt from a conversation between Michael Tuff, CEO of Racaria Capital Financial Solutions and Myself

MT: Why has it been so difficult for the process of buying real estate to make the jump onto the internet?

TV: Because the MLS was designed to make it impossible. To buy a house or a car, you need to see it, right?So the MLS system evolved to make real estate agents indispensable. We have traditionally paid tens or hundreds of thousands of dollars to get the key, get in, look around, get the "feel" of the place. However, more and more people are now coming to realize it's not really worth $50,000 to get a key and take a look around.

I was on the phone the other day with the President, EVP, Corporate Counsel and Chief Marketing Officer of a well-known luxury real estate brand. These corporate types were jockeying around the familiar mantra of why real estate could not be bought and sold online - especially not at "auction."

The President of the company went so far as to say that the Realestock Auctions Model "isn't really an Auction - a true auction can only happen off-line." Quite a statement! Watch out e-Bay - it's really not going to work!

This conversation gave me a serious case of deja -vu. It was reminiscent of the now extinct defenders of the traditional way of doing things, for example, the stock market retailer when buying and selling stock required a retail broker (enter e-Trade - retail agents history); or how about travel agency brands and agents (I can't remember one that's not online - can anyone remember having to go through a travel agent to buy an airline ticket?); and who can forget the bank teller (those ATM machines will never stick!)?

I felt like I was listening to the famous quote by Charles Duell who wanted to close the patent office in 1899:

"Everything that can be invented has been invented."

The President of this world-famous brand said something to me that made it very clear that the way things are, are on their way out: "...that is very disruptive to our business model, Tim". Uh, Hello?! That's the point isn't it? How technology and access to information and transactions online changes things - for the better!

Buying books or stocks online, finding a phone number on YellowPages.com, GPS's - technology makes life and commerce in particular more easy and efficient the more sophisticated it gets.

The other day my Son and a group of friends went to a themed benefit party at a local pub - the theme was to come as an Endangered Species. They all wore T-Shirts of GM Brand Automobiles. What a brilliant statement from some university students on the life span of an outdated industry.

The real estate brands of old, think they are in the business of making commissions - when what today's market demands are to bring people back into homes they can afford - and that means cutting out unnecessary commissions and distributing real estate between sellers (a lot of them banks) and buyers - in the most efficient manner possible.

The dinosaur, the "buggy whip manufacturer," the real estate brokerage agency: All extinct or endangered species. A great article from USA Today talks more about how to avoid the pitfalls of running a business that's running into the ground in a changing world "Don't fall into the buggy-whip mentality"

Perhaps our executives missed reading this article? Maybe they'll find it online...

Another One Bites the Dust: The 5 Top Mistakes that Keep Developers from Selling Their Properties Today (Part 1 of 5).

June 14, 2009 06:38

I've recently watched several developments either stall, or implode completely. This is not because of the economy, nor is it because people aren't buying. Rather, it's because the developers "knew too much" - or so they thought. In order to sell a partially completed project, a new development, or a completed project with the balance of inventory, developers need to wake up and get into the Connected Market Space where 85% of buyers are searching or "hiding out".

How can properties that are so beautiful - situated on a magnificent oceanfront, in the perfect untouched mountain valley or in one of the world's many vibrant and lively cities - be doomed to fail? Over the next five days, I'm going to outline the five most common mistakes that I see many developers continuing to make in their efforts to market their project.

Mistake #1 - "Knowing it All." Good developers do one thing better than anyone else: Focus on their project. They build it for the people who will want to live there more than anything else. They build the project and they understand their buyers will be passionate about living there. They find out what people want, and they build to suit. In short, they focus on the job they are supposed to do.

Great developers focus on their own job, and hire experts who can find the people that want to buy. This is exactly what they should do. Great developers hire experts and follow their advice.

Poor developers, many of whom have seen their projects fail, or are on the brink of doing so, "Knew it All." They knew the property. They knew project. Most detrimentally, though, they knew how to market the project. They bought their marketing from anyone who agreed with them about their "vision" to attract the buyers - rather than letting experts find buyers. In a seller's market, these hit-and-miss marketing strategies were ineffective, but (most of the time) went unnoticed. Today, sellers need to find expert marketers that know how to invest their dollars in finding high Quantity, Qualified, and Quality buyers.

Here's an example of what "Knowing it All" can really do for a developer:

I recently spoke to one "developer" who began his career as the owner of a long-standing, successful family hotel business, and to that effect I should say that he was in fact a relatively successful hotelier. However, as I heard him tell me his story, I realized that his problem wasn't his expertise in the hotel industry, his problem was his "expertise" in five other industries that he had no previous experience in.

After running his once-successful hotel business into the ground (before even having a fully-funded project) the market crashed, and our hotelier became a developer. This hotelier-cum-developer then, in an effort to replace the cash flows he previously enjoyed in the hotel business, thought it would be a wise idea to start a travel club. This (at least in his eyes) instantly turned him into a travel "guru." Our former-hotelier/"emerging" developer and travel "guru" added another fade of expertise, but no experience, to his struggling development.

Next, he (and his wife) became "expert marketers." Assuming they "knew" the precise way to attract and market to buyers, the hotelier, developer, travel guru bestowed himself with yet another prestigious title: on-line and off-line marketing expert. Finally, when all else failed, the hotelier/ developer/ travel "guru"/ marketing expert and sales agency, decided to try his hand at becoming a financial products broker, launching a bond offering to fund the project. Five careers in a period of two years - careers it takes many brilliant people a life time to perfect.

Today, the project is still just dirt on a piece prime oceanfront property, in perhaps what is still one of the best real estate markets in the world. This piece of land has remained just that for going on five years now.

In any business, the smartest people surround themselves with smarter people - through the ages, this is the recipe for success. In real estate today, it is the recipe for survival as well.

"Ground Hog Day": Real Estate Marketing Needs a New Day

June 23, 2008 06:30

I'm speaking at the Luxury Council event in New York at the beautiful Hotel Plaza Athenee along side some very impressive collegues in the industry. Greg". From Halogen.com, Michale" From Protero.com, Susie Ellis from Spafinder.com and Steve Nobel from the Luxury Council.

I'm #4 - ugh! These people are SMART - what should I say? We're talking to executives from luxury brands - I don't want to repeat what the panel members have already discussed - I listen - I'm watching the nods and reactions from the audience.

All of a sudden, Bill Murray pops into my head - that scene where he's trying to kill himself, again, by driving off a cliff in the movie "Ground Hog Day" - that's what this is like, I think - today, in the marketing industry. I've been in this movie before - over and over again - in fact, we all have:

  • 1987 - the S&L crises, Black Monday October 19th, 1987, Graham Rudman, Crashing Real Estate and Financial Institutions
  • 1992 - Desert Storm
  • 1994 - Netscape browser is free - the web; what's that (the first year I bought my first Internet company for $40,000)
  • 1999 - 2000 .Com boom/bust
  • I skipped over the oil prices in the 1970's
  • Web 1.0
  • Web 2.0
  • Web X.0

What ever number you put behind it - it's all about the Technomic revolution - the way technology changes the way we think - we interact - we communicate - we research - we buy.

I then think about the first paper I wrote as a PHD student/University Prof in 1997, "Technomics: The Use of Information in the Distribution Revolution." It was pretty good - access to information, as information grows, and use grows, relevancy becomes more important, etc.

It's my turn to speak - I mention the movie "Ground Hog Day" - the audience chuckles, so I guess the analogy isn't lost on them.

I talk about the how a brand, especially a luxury brand, can't be Connected if you're not in the Connected Market Space - connecting internally inside your organization( B2B) and managing the culture and the mindset of your marketing and sales teams - giving them the tools that make them part of the Connected Market Space process. This is an imperative while you manage your brand and connect in the Connected Market Space B2C. It's what we do with our clients at REalEstock.com - and what we do in our own organization. I like to call it, “eating our own cooking"

I discuss the Q3 Principal - Quantity doesn't mater - it's Quality and Qualiified - without Qualified prospects and buyers who will do business with you - it's all just noise. And, if you're not using the right tools and outreach (e.g. People in China send 5 Billion text messages a day - they're not on the net, they are on their phones - e.g. We just go the iPhone in Canada two days ago!) Know the platforms of your audience if you want to connect.

I share a story about how the numbers we see Print Media was 664% more expense to use to acquire a lead for a new development real estate versus using online media. At the same time only 6% of the marketing budget is spent online.

55% of the sales, for my example projects, came from leads we generated on line (the balance came from referrals to the real estate project in the developers tight circle - prospects they already knew - 0% came from print media). That's an expensive $150K thrown away on that real estate deal in today's market - maybe in any market. What don't they know? What cant they track? It's time to use the tools and the net the right way - I'm not saying "print is dead" - it's not. But PR is more important than ever, and 90% of the audience will go online - so online should lead where traditionally print has lead the way to market real estate - I believe this is true for Luxury Brands as well.

And that brings me back to that Bill Murray scene in the movie - why do developers still insist on throwing their money at media that doesn't return on the objective? Sell realestate - generate conversations with buyers, online that lead qualified prospects to become buyers. So many operate just like Bill Murray, driving off that Cliff in the movie, smashing the alarm clock.

The moral of "Ground Hog Day" - acknowledge that the world is different, that you have to wake up to the changes in the industry (inside Bill in the movie) - until then, it's just the same old story - and it's not working - it will be the same day of expensive media, without results. I finish - lots of q & a which is always the best part of these events. That's how I know we connected.

It was only an hour and a half, time to get back to doing what we were talking about "on-line" with our customers in luxury real estate along side the high end luxury brands and with the media that works.

Here's and example of Media that works - go buy the Robb Report Vacation Homes Aug/September Edition - The Robb Report has always been "Connected" - I believe the smart media like The Robb Report "gets it" and always will be.

Analysis: Why a "Down Market" - is really - A "Corrected Value Market" the Time to Buy? Now.

May 8, 2008 06:29

Assume a $400,000 home in California became an $700,000 home in the period of a few years based on no real tangible value - here's how:

Side note for mathematicians: I'm taking the liberty of the J.M. Keynes approach to this economic analysis and the numbers - ' I'd rather be approximately correct, than precisely incorrect...' (I've also heard this "approximate" quote attributed to W. Carr). Thus, if my math is "off" don't get too hung up on the figures - the concept is to identify economic reality, not the ten grand here or there of value ...

Let's take San Diego as an example - think about the television shows on flipping as a basis to understand the inefficiencies in the real estate market given the costs of the transaction in today's markets.

Envision a home five or six years ago, say 2001, in Southern California (or Florida, Colorado, etc. ... pick your "depressed" market). Let's say that home was sold for $400,000 back in 2001. The net amount was $400,000 (the seller actually received $24,000 less, because the real estate agent and brokerage received around 6%). So the original seller had about $375K in their back pocket at sell to pay off their mortgage balance and get their equity out of their home.

Now let's assume the market heats up, which it has done for the last 5 - 10 years in that area. And that the house appreciates $75,000 by 2002. The new owner figures they can sell the house for around $475,000 and pocket around $50,000 (net of another 6% real estate commission, which goes to the broker and agents of $30,000). And so forth and so on - for 4, 5, 6 times over the upward cycle.

If this continues for 5 sales cycles, the real estate commissions, mortgage fees, closing costs add up to around $150,000 to $200,000. This gets added to the price of that original $400,000 real estate - a false economy really, as the house hasn't changed much, probably with the exception of a few coats of paint and maybe some new tile. The home wasn't gaining any more value in real tangible equity - typically, in a traditional market, houses and their costs of buying and selling were amortized over 10 or 20 years, so the market forces added tangible value. But this model was not was had been happening in these ultra fast paced markets.

The people who had lived in Southern Cal for the last couple of decades, who stayed in their homes, are not the ones in trouble! They just saw their market go up and come back down again. It is the people who bought at the end of the cycle that have lost their equity. The distribution of the home in the from of high real estate commissions were making the prices higher on every sale of the property, driving the price up to well over $600,000 or more, and in the mean time, the "market" was hot, so builders and investors jumped in the game adding fuel to the fire.

At the end of the road, someone, a buyer bought that home for $650,000 or $700,000 or more. A bump of 40% - 50% over the market five years ago. The market then "corrects" - basic economics - the financial systems cant support the "churn" or "flipping". Loan defaults begin - the person that paid "too much" , and who was able to qualify for an overvalued home due to loose credit policies during the same time has no equity - and wouldn't have for some time. This is who is left holding the pumped up pricey real estate? Just like the stock market when it booms, the last buyer in looses if their not out before the bust.

The house price drops, the home mortgage payments are based on a $650,000 price, but the home is worth only $400,000. The unlucky last owner is left in a position, like sitting on a share of IBM stock that was at $150 per share and is now at $95 and still having to pay the higher price, while the market is only willing to pay $95 bucks. Who wants that? Who can afford that?

So that buyer/owner determines that there is no equity to lose, all the losses have happened, and magic occurs. The market adjusts - the price is back at where it started $400,000 in 2001.

This is a simplified view of the "crisis" that we are seeing today. The profits made and spent by the big finance companies and real estate groups - and the resulting effect of an inefficient distribution system.

The stock market makes adjustments based on real time, information. However, stocks are wildly more liquid than real estate, that is the difference, they are traded moment by moment - while with a "typical" real estate market, the trading is supposed to take place years at a time.

And, Just like the stock market, when e-trade and day traders changed the access to information that transformed retail brokerage, the market began to expand globally, boom and move upward - in fact staba change the distribution of information and the transacitonal elements of real estate.

Would you buy stocks without going on line and looking at a chart? Researching a few articles. Seeing the trends?

Then why would anyone pay hundreds of thousands or millions for a piece of real estate without doing the same type of research?

A Practical View: What is driving an emerging New Real Estate Model? Behind the scenes "Sub-Prime", Housing and Real Estate - Another Distribution Evolution based on the Internet

April 29, 2008 06:28

[NOTE: The market trends we are basing the RealEStock.com model on -RealEstock.com is a new distribution model - beyond just "pretty pictures" ... this blog stream of thought is the beginning of a series on the current real estate market ... ]

First, please excuse the "academic" nature of this article - I realize I am going back to my old "Professor Vasko" days. However, I felt an overwhelming urge to run through a discourse on what's really going on in the financial and real estate markets. Mostly because, right now is a great opportunity for "smart money" looking to buy real estate from around the world and for our RealEstock model - so here I go ...

Mortgage Banking and Real Estate Distribution 401:

In the last month or so, Bear Stearns, the fifth largest investment bank in the world needed to be rescued, by the US Federal Reserve and JP Morgan. What does a $30billion dollar infusion (a support figure that pales in comparison to the controversial federal bailout of Chrysler in 1979-1980 under the reign of Lee Iacocca) indicate about the US economy, real estate and the world financial systems?

What "inspired" the Federal Reserve and US Government to bail out Bear Stearns? What does it indicate for the future of the real estate and related mortgage industry?

Bear Stearns, a firm notorious as a dispassionate “hardliner “… has made a fortune in mortgage-backed securities but faced a possible collapse after those investments soured.†Guaranteed, Bear Sterns never has, nor would have, bailed out anyone - they were one of the hardest nosed dealers on Wall Street - but that's another story.

So was this, (a) "compassion", (b) "rational" or (c) "irrational" action from the Fed (characterize as you would like)?

Answer - we'll not "(a)" above - it wasn't compassion !

Bear Stearns had (or has) over $13 Trillion dollars of obligations and contracts linked to the derivative markets. Derivatives are contracts - contracts to buy and sell financial assets that hedge certain financial obligations. And, in simple terms, if these contracts defaulted, the entire foundation of modern finance could begin to shake globally - but this isn't the first time this has happened, circa 1997 Merton Miller (Nobel Prize Winner in 1985 on Finance), the guru of Derivatives had a similar experience, but much less publicized - just as concerning to the world banking institutions however .

To put todays dollars involved in perspective and scope, the 1989 the US Feds created of the Resolution Trust Corporation involved 747 Savings and Loan institutions and around $394 billion in assets (about 3% of the current exposure of Bear Stearns alone). Another story is how the Fed's actually created this problem with a failed taxation policy ... but, again, that's another long story.Combined with the new merger of JP Morgan and Bear Stearns, the exposure in the world on the finance side reaches a staggering $77 Trillion dollars (that's $77,000,000,000,000) - which is roughly equivalent to the entire world GDP (estimated at $54,311,608,000,000 - I think, I lose track of all those zeros!) So now JP / Bear manage asset portfolios like the entire economic structure of all of the worlds countries gross domestic product (what would happened to the world economy if the US's largest trading partner, Canada disappeared - now multiply that across all of the worlds economic output?) Well you get the picture. The US wasn't just saving Bear Stearns, they were saving the economic equivalent of the entire US GDP economy. Inside US Borders (looks like a lot better bet than the War in Iraq.)

So, what has caused this so called "sub-prime" finacial crisis? We'll first understand, it's not just "sub-prime". It is more about the fabric of the entire infrastructure of mortgage banking finance, which is the foundation upon which all modern real estate buying and selling sits upon - considering the fact that "Real estate is the world's biggest single asset class. Typically, property accounts for two-thirds of the tangible capital stock in almost every nation's economy." The picture of why this is such a big deal overall gets obvious pretty quickly - and it's why Governments are more than willing to jump in to support and fix the problem globally. All of this mortgage backed paper that started to crash, these so called "sub-prime" instruments, caused a general tightening and devaluation of this "mortgage paper" on trading desks globally. A phenomenon that drove UBS - the largest Swiss Bank, and one of the world's largest banks, to write off $36 Billion from their financial assets (more than the bail out of Bear Stearns by the US Feds)! And, to be specific, UBS didn't even take on any of the actual purchase of mortgages, they were "paper" traders - UBS was simply stuck holding contracts they couldn't unload at their trading desk as the market fell out " nobody was buying. They couldn't trade their contracts, so the losses just stacked up. That's a big factor that also Bear Stearns and others.So what really has happened, I mean reading between the lines of the media "sub-prime" blitz, and beyond all the analysts notions of "high finance"? The way it really has come down?

It"s based on a decade of prosperity in lending money against inflating values in real estate that really didn't exist " excuse my poor grammar - that is to say, the real estate existed, the "value" on the upside that was being lent against, sub-prime and otherwise, didn't really exist in an economically tangible view.

The value of real estate markets was driven upward, on a false economy of transaction costs and trading. This was true particularly in the US, however, the same factors has recently put Spain's real estate market underwater as well (I've not really identified all of the depressed markets globally - but if anyone else would like to comment on this phenomenon in the world, either on the up-tick or down side, feel free to let me know).

What drove this false foundation of economics was not all that unlike the underpinnings of the .Com boom and bust 1999 - 2001. Then too, the market was driven by rampant enthusiasm, trading and no real financial economics to support the market of the web - of course, those survivors from that era who found an economic base and business revenue model have thrived since then (like my company CMAEON - RealEstock) and much better known companies, like Google, Overstock.com, eBay, etc. to name a few.

(HINT - find fundamentals in a real estate market today - and you've got a base to build upon. BUY! Hint #2: Where do wealthy baby boomers want a second/retirement lifestyle home?)

This real estate market we've just experienced has been driven by an increased volume of real estate buy and sell transactions, an expensive and inefficient way to handle all of this volume that has made the "traditional" transaction makers (brokers, agents, lenders, finance companies, traders, lawyers, title and escrow insurance companies and agent,s buckets of money) - all of which occured just as a result of an ineffecitive system of distribution which added no real tangible economic value added to the properties - in other words, the laws of supply and demand were outstripped by the pure volume of transactions and the values increased simply (ok - mostly) because of transaction costs (Hint: Look at what Wal Mart and Cosco have done in retaling with a better distribuiton model, smaller retailiers can't compete - new and improved distribution of information and selling will emerge in real estate, except it will be online). In the stock market hihg volume trading in the same stocks in a portfolio is called "churn" [Bear Churns]. In the housing market it's recently been called "..flipping" - call it what you will, the last guy standing and holding the paper or the property takes the hit.

Transactions give rise to the 'paper trading' and the home selling and buying market - for a decade this high volume of activity has carved off percentage points, or fractions of percentages making the transaction makers money, in these trillions of dollars of real estate deals. For the firms, and individuals involved in the web of finance and distribution surrounding the buying, selling and financing of real estate it was a boondoggle. And most banking firms and financial institutions, hedge funds, that formed the backbone of the finance industry, were involved, in some way - as were real estate brokerage companies and agents. Which is why Bear Stearns ranks was joined by Citi Bank, Merril Lynch, Country Wide Mortgage / Bank of America, HSBC and hundreds of others in the distribution channel of finance - and now, why the model of buying and selling of real estate will transform forever.

Later this week, I'll provide the calculations on how a home in Southern California or Florida, valued at $400,000 in 2001, easily became a $700,000 or $800,000 home, just based on flipping and transaction fees. Rule #1 in today's market - Do the research and get ready to buy the real estate of your dream second or vacation condo, resort or estate home -the time is now.Real estate is still about location, location, but throw out the last "location" (referring to the old statement about the three factors in buying real estate, "location, location, location."), and replace that verb with 'lifestyle'.

With RealEstock.com we've replaced the model with our own version "location, location, lifestyle" Globally, there are still a lot of buyers out there - they are called Baby- Boomers . We are more critical and discerning about our location, lifestyle and how we will invest our money in the properties we want, where we want to live and build the last half of our lives. The market's not over, it has just corrected for good reason - it's actually good news for us Boomers. So start looking now for your next investment, dream second or retirement vacation home, luxury residence. That market will drive back strong and fast driven by a number of positive economic factors that we Baby-Boomers have going for us .. more to come - stay tuned and visit RealEstock.com

RealEstock: Transforming the way we think about buying and selling real estate

April 28, 2008 06:27

After nearly half a decade of research and development, and a couple of decades in experience, RealEstock is born.

On March 25th, 2008 we announced the launch of RealEstock.com - I encourage you to visit, if you haven't already, and begin to understand the meaning and significance of what RealEstock.com is today for the real estate, and considering the current global financial scene, for the related sectors of finance and mortgages.

If you're in the market for a second home, a retirement home, or a luxury condo in a resort - then the more than $80 Billion of new development real estate and the search engine we've launched is a must for you. If you're not in the current market for a luxury second home, report property or retirement home - regardless of your station or position in live, I would encourage anyone who owns real estate, who has a thought they may retire someday to a new location, to visit, watch and realize the representation of what RealEstock - in its current form, represents as the world begins a massive transformation in how and where real estate is being developed, bought and sold - and for how much.

At inception, in the name "RealEstock", is a transformational technology and distribution model taking real estate to the globe in a way, much the same, as the financial markets have evolved globally. What this means is, www.RealEstock.com is, for lack of a better term, an evolving Connected Market Space of open information market for real estate. RealEstock.com is a search engine, coupled with an evolving conversation community that drives the real estate market to a globally able buyer and seller base - where investors, buyers and developers can discover and transact with each other - and have the information they need to make intelligent decisions.

The significance of what is happening now, today, in the world of real estate and financial markets, provides the underpinning logic of RealEstock. The world is ready for a global real estate market, a true, efficient and logical economic model, that overcomes the shortcomings of the traditional real estate buy, sell and finance model - this reality has never been more obvious.

The dramatic shortfall of the traditional way of distributing and financing real estate has caught up to the world, especially to Wall Street and the US Banking sector - enough so as to threaten "the American Dream..." of owning your own home. The current "depression" in housing has hit the US with a crushing blow. The current situation in housing at all levels, from building, selling and financing of a home, stem from the inefficiencies of the market - a lack of distribution of information about real estate and finance.

RealEstock, is a new model of the global real estate market focused on the Luxury real estate and new development sectors. It is the natural way that wealth and real estate will combine on a logical level - an efficient global playing field. www.RealEstock.com is the logical evolution - the way Real estate should be viewed, sorted, valued - with RealEstock, luxury real estate,estates,resort properties can finally be discovered, property options can be compared, conversations between buyers,sellers and the vital communities in geographic "real - real estate markets" and according to what people actually know, find and discover in their research - comparative community 'lifestyles' and choices, can be discussed. No sales person or pitch necessary - the facts about what is available & who is building, who is buying, and why.

Real estate should be researched, purchased and financed with an open set of criteria. Unlike the traditional restricted access to systems like MLS, geographic specific advertising, the market for real estate buyers and sellers is now global, and needs to be an open book and global conversation between buyers, sellers and potential future neighbors. The current crises in the US housing and finance sectors makes this fact more than apparent. If ever a new model needed to emerge in any industry, it is clearly today in real estate and mortgage banking. Why?

I plan to make several blog entries directly to this point over the next several months as we continue to evolve www.RealEstock.com and the luxury real estate market. While our focus is high end and luxury markets, the fundamentals of the global real estate market are broadly applicable. So I'll be talking in broad economic terms as well as addressing the uniqueness of the second home and baby boomer markets in future blog entries.