[Curbed] Three Cents Worth: PPSF (My Left Foot edition)

Posted by Jonathan J. Miller -Thursday, May 31, 2007, 4:54 PM
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Its Thursday, so its that time of the week to provide my Three Cents Worth as a post for Curbed. This week I listen to my readers and chart price per square foot based on size. I kicked the tires so much when creating the chart, I hurt my right foot.

To view post: PPSF (My Left Foot edition)

Previous posts can be found here.

Expert Witness: Fade To Black, A Second City Day In Court

Posted by Jonathan J. Miller -Thursday, May 31, 2007, 10:19 AM
1 Comment

This week has been a whirlwind for me personally so my quantity of posts has been less than stellar.

I had been retained as a real estate expert for the prosecution (US Government) in media baron Conrad Black’s federal trial, going on now in Chicago. I testified in Chicago on Tuesday.

I had the pleasure of intereacting with really sharp and energetic DOJ attorneys and FBI agents.

Obviously, I can provide no specific comments about the case, but it was a terrific experience (not even factoring in the US Department of Justice cafeteria food). I have performed court testimony in many different matters over the years but this trial was one of the highlights of my professional career. My testimony was widely covered in the media (see links below).

Normally I wouldn’t even bring this sort of event up, but I was struck by the fact that there has been so little coverage of the trial in New York, that I was surprised by the amount of media presence in the courtroom.

Here’s an excerpt from the Chicago Tribune:

Miller’s testimony bolstered the government’s charge that Black, Hollinger International’s former chairman and chief executive, received a sweetheart deal for the apartment, defrauding shareholders of millions of dollars. The apartment sale, prosecutors allege, was part of a scheme involving Black and four former executives to steal $84 million from Hollinger International, now called Sun-Times Media Group Inc.

Summary of some of the coverage:

Expert says New York apartment worth $8.5 million [Chicago Tribune]
Jury sees Black taking boxes [Chicago Sun-Times]
Prosecution drops one charge against Black [Globe and Mail - Canada]
Lord Black breaks a habit and stays silent in defence [The Times - UK]
Price for apartment low [The Province - Canada]

Ok, back to work.

5-Second Rule Means No Bologna Allowed In The House

Posted by Jonathan J. Miller -Tuesday, May 29, 2007, 12:01 AM
7 Comments

With my four sons in my house, three of whom are 6 feet tall or more (my 4th is only 8 years old so give him time), my wife and I have realized that availability of large quanties of food is always essential. Our family has long been a proponent of the 5-second rule, that says that dropped food is safe to eat as long as its been on the ground for no more than 5 seconds (hat tip to Freakanomics). Of course, on the streets of Manhattan, the rule can be modified to 1-second.

I was thinking back a few years when we bought our current house. We knew that the house was right for us or at least in the running, within 5 seconds after entering the house. We had the same experience in our prior home purchase. There was no hard sell needed once we had that feeling.

I’d argue that buyers make up their mind almost immediately when they walk into a house, as to whether its within the realm of possibility as a future home. First impressions are everything.

It would seem to me that the broker’s skill in selling the house is made on or before that moment and not after. The need to fill the silence during the tour with statements like: “Here is the kitchen” drives me crazy.

According to a survey, Men (41%) more likely to put a premium on decor than women (30%) Here’s a useful list of items to focus on when selling a house that appeals to buyers.

[Curbed] Three Cents Worth: Bridging the Condo-Co-op Size Gap

Posted by Jonathan J. Miller -Friday, May 25, 2007, 1:14 PM
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Its Friday, so its that time of the week to provide my Three Cents Worth as a post for Curbed. This week I make the successful return from tables to charts, only to see two worlds collide: Manhattan co-ops are getting bigger as condos are getting smaller.

To view post: Bridging the Condo-Co-op Size Gap

Previous posts can be found here.

Strong As A Sequoia: Trulia Secures Additional Funding

Posted by Jonathan J. Miller -Thursday, May 24, 2007, 9:15 AM
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Sequoia Capital provided $10M in financing which will allow Trulia to go to the next level of their vision of becoming the “go to” place for real estate listing searches.

By partnering with the real estate industry, Trulia helps consumers find information on homes for sale using custom search criteria such as price and number of bedrooms to market trends and neighborhood data at the hyper-local level.

This is already well underway with 1.5 million monthly visitors to Trulia.com and a growing suite of tools for consumers to use. They have remained steadfast in their focus on the quality of the data coming in to enrich the consumer’s experience on the site. They will be able to expand staffing for technology, sales and marketing to further their efforts in a big way.

Incidentally, Sequoia Captial, as an associated brand, says a lot about their belief in Trulia’s success. A who’s who of Silicon Valley success stories come from Sequoia. From the press release:

Sequoia Capital provides startup venture capital for very smart people who want to turn ideas into companies. As the “Entrepreneurs Behind the Entrepreneurs”, Sequoia Capital’s Partners have worked with innovators such as Steve Jobs of Apple Computer, Larry Ellison of Oracle, Bob Swanson of Linear Technology, Sandy Lerner and Len Bozack of Cisco Systems, Dan Warmenhoven of Network Appliance, Jerry Yang and David Filo of Yahoo!, Jen-Hsun Huang of nVIDIA, Michael Marks of Flextronics, Larry Page and Sergey Brin of Google, Chad Hurley and Steve Chen of YouTube, Steve Goldman and Sujal Patel of Isilon Systems and Dominic Orr and Keerti Melkote of Aruba Wireless Networks.

Pete Flint and Sami Inkinen, co-founders of Trulia, invited me to join their industry advisory board in 2006 when the endeavor was less than a year old. It was an easy decision because I was a big fan before they approached me. I remain in awe of Trulia’s rapid growth and continue to be impressed with the clarity of their vision, their reliance on teamwork (yes, “Internet” provides the “I” in teamwork) and the talent of the people that work for them.

Here is the official Trulia announcement in their blog.

More fun to come.

Good Appraisers, If Speed Is Only What You Need

Posted by Jonathan J. Miller -Wednesday, May 23, 2007, 8:20 PM
2 Comments

Here’s something you might have heard at some point:

Ok, that compliment means different things to different people. I am going to try to rank them by what I perceive to be the majority thinking on it. Although my rankings may be biased or completely wrong, the concepts are not:

1. Speed — This is the number one priority of many consumers of appraisal services. The appraisal is often the last item to be completed on a mortgage approval. It can make or break the deal if it is done too slowly. The proliferation of appraisal management companies, who essentially are only able to rate appraisers by their turnaround time, have created a legion of form-fillers, who can’t afford, nor do they have time, to do a credible job.

2. Cost – Keeping appraisal costs low, is perceived as a way to make the lender or mortgage broker more competitive. Of course, the assessment of collateral of a $1M mortgage can be decided by a $100 difference in fee and a world of difference in quality. Actual payment of fees to the appraiser are often used as leverage for making the number. If the fees are require in advance, less leverage is available. In the current environment, the appraiser has been relegated to a form-filler and the process is really seen as a “have to do” with little relevance to the overall objective, hence downward pressure on fees continues.

3. Service – Overlaps speed and cost. Making appointments with sensitivity, handling the applicants professionally, client has easy access to appropriate appraisal staff to get the report turned around in a reasonable period of time. Moral flexibility (aka having business savvy) is very important. Being able to reach out to the appraiser or their superior to negotiate the value is key.

4. Miscellaneous. Anything can be inserted here. You name it.

5. Miscellaneous. Anything can be inserted here. You name it.

6. Miscellaneous. Anything can be inserted here. You name it.

7. Miscellaneous. Anything can be inserted here. You name it.

8. Miscellaneous. Anything can be inserted here. You name it.

9. Miscellaneous. Anything can be inserted here. You name it.

10. Competence in a specific market – This is a distant placement in the rankings because the person who typically orders an appraisal for mortgage purposes has a financial incentive to get a desired result in a predetermined time frame. Clients rarely ask an appraiser what their experience is in a specific market because the perception is that the process is formulaic and its simply a matter of gathering data, inserting it into a form and the result is automatically determined.

A wise appraiser I know once told me:

Everyone in a sales transaction knows the value before the appraiser does. The buyer, seller, listing agent, selling agent, seller’s attorney, buyers attorney, bank, bank’s attorney, mortgage broker, and title company already know the value. The appraiser is simply late to the party.

Here’s a sample of appraisal firms who market themselves as fast. No real discussion of quality/competance other than brochure-speak.

• 24HourAppraisal.com Note the frequent mention of religious background for added proof of integrity. I am not questioning a religious conviction here, but does this make up for the loss of quality that a guaranteed appraisal turn time “or your money back” could result in? I don’t see how. The clients are nearly all real estate brokers and mortgage brokers. I wonder how many have received a “low” appraisal? Its also a very large coverage area.

• 48 Hour Appraisal More of the same but less personal and more brochure-speak. Large coverage area.

• Next Day Appraisal Covering all of Rhode Island and parts of Massachusetts. Discounts to loan officers (why would they be speaking with them directly?) Same day service on request.

• Aggressive Appraisals Offers 24 hour turn time. Covers most of the New York region. I have linked to them before on Matrix. I still can’t believe they use that name…Aggressive = High. So you get the best of both worlds, a high, fast appraisal.

Good grief.

Outstanding On Our Soapbox This Week: Managing To Give The Industry The Eye

Posted by Jonathan J. Miller -Wednesday, May 23, 2007, 5:13 PM
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In this week’s Sounding Bored in our other blog Soapbox post Managing To Give The Industry The Eye I muse about the latest receiver of a subpoena from New York Attorney General Cuomo and some first hand experience with a variety of appraisal management companies.

Renting the CPI Silver Lining

Posted by Jonathan J. Miller -Tuesday, May 22, 2007, 12:01 AM
7 Comments

One of the things we have discussed on Matrix before is the fact that housing sales are translated into “home renters equivalent” which is a significant portion of CPI (40%).

Our AXA advisors passed along the AllianceBernstein Investments Q1 2007 Capital Markets Outlook and it provided an interesting outlook on rising housing vacancy and its downward influence on inflation and mortgage rates.

In short, AB is saying that rising vacancies will drive down rental rates and since housing rentals comprises 40% of core inflation, CPI is expected to drop to 1.5% later this year forcing the fed to lower rates, leading to lower mortgage rates.

In other words, the slow down in housing has not fully impacted the economy.

Crains New York Business Economic Spotlight Chart – May 2007

Posted by Jonathan J. Miller -Monday, May 21, 2007, 12:01 AM
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Since 2003 I have provided a chart that appears once a month in the Economic Spotlight section of Crain’s New York Business magazine. Here is this month’s chart appearing in the current issue of Crain’s New York Business.

Go here for a complete archive of all my Crains’s New York Economic Spotlight charts. They are organized by year.

White Paper: Real Estate and the Media

Posted by Jonathan J. Miller -Monday, May 21, 2007, 12:01 AM
2 Comments

A friend of mine, Ron Roel, who was a reporter and editor at New York Newsday for more than 20 years, including real estate coverage, recently wrote a piece about the media coverage of real estate. As the co-founder of Real Estate Next, an educational service for the real estate community, he has often pondered the following questions, as have many others in the real estate community (self-included):

• Why do so many people complain that the news media focuses too much on negative stories, when most editors and reporters believe they’re just trying to cover what happens day to day?
  
• Does the news media really spend more time focusing on the housing bust than it did on the “boom” of the last few years?
  
• And what impact does the news media have in affecting news trends and shaping public opinion, beyond simply reporting events?
  

Ron’s white paper is titled Real Estate and the Media: Understanding news coverage and its impact on the housing market and is worth a read.

White Paper: Real Estate and the Media: Understanding news coverage and its impact on the housing market [PDF]