All posts by sdebord

The Real Syndication Battle: SEO. Are Brokers Giving Away Online “Real Estate”?

This article was originally published on Geek Estate Blog:

[Pre-emption of syndication flack:  I syndicate.  Most brokers do.  Many value the additional exposure in the current situation.  This isn’t a blanket condemnation of syndication.  It’s merely an analysis of the SEO byproduct of that action.]

The real estate industry is buzzing about Edina Realty and ARG pulling their listings from syndicators.  The announcementone strong view, and a different response.

Most of the arguments about syndication are ignoring the elephant in the room.

Real estate brokers and syndication sites are battling for SEO.

9 out of 10 home buyers today are online.  The first business to grab a consumer’s attention is likely to get that consumer’s business, or generate revenue through the online traffic.  Buyers and sellers create income for whichever business has the most-accessible presence online.

All real estate companies are in competition.

Brokerages, individual agents, vendors, and syndicators collaborate in many useful and productive ways, but we are all in competition for the consumer’s dollar.  Brokers owe a high level of professional representation to our clients, while maintaining a competitive and sustainable business model at the same time.  When we disregard the competitive nature of our business, we lose focus in our decision making.

When you give away your listing, you give away SEO.

Unique content online is king for SEO.  Own a unique piece of online real estate, and you own the traffic and revenue that come along with it.  The more times you duplicate and syndicate that content, the more diluted it becomes, and the less-valuable your share of it becomes, in terms of SEO.  An individual listing is a unique and valuable piece of online property.

Who is #1 when buyers search for [Your City] real estate or homes for sale?

Is it a national syndication site?  Quite possibly.  When buyers search for your listing, “123 Main St ,City State”, they also probably find the syndicator first.  Why?  Because you gave it to them.  Thousands of real estate brokers give their SEO to that site every day.  Brokers create thousands of links to syndication sites’ listings, and effectively encourage their clients/consumers to do the same.

Is diluting your listing’s SEO good for your client?

Who is best to receive the inquiry from a buyer?  Better yet, who would the buyer want to receive his/her inquiry?  Trulia doesn’t know where Seattle homes are in the neighborhoods of Inverness or Arroyo. can’t find Newport Shores or Surrey Downs, because it doesn’t list homes for sale in Bellevue in those neighborhoods (yes, I am pushing my own SEO right now).  A local agent would know, but they’ve all given their rights to that traffic away through SEO dilution.  It doesn’t matter who is “best”.  All that matters is who is “seen”.

Listings create consumer traffic.  Consumer traffic creates revenue. 

It’s true that these large sites currently have far more national traffic than most brokers’ local sites.  That traffic comes from brokers’ listings. Listings are the holy grail of online real estate.  Consumers certainly like maps and research features, but in the end their #1 goal is to find a home.  Without listings, a website is just an informational resource, without a solution to the home buyer’s ultimate need.  [Zillow has an amazing real estate website.  It used to generated its revenue through beverage advertising.  Until real estate brokers’ listings and corresponding agent ads grew the revenue significantly, this company was not in a position to have the big, successful IPO they they had last year.]

Who should consumers find when they search for homes in your neighborhood?

That’s debatable, and really outside the SEO topic.  Most real estate brokers know dozens of local associates that they respect for their knowledge of the local market.  Unfortunately for them, they all point their web traffic to a national aggregator who may or may not.  Collectively, they’ve told the consumer to ask a syndication site.

Real Estate SEO will determine the direction of our industry in the long-term.

The companies that are successful selling real estate online will continue to gain greater power and influence over consumers, brokers, and even legislation that affects the real estate industry.  As a handful of companies gain larger shares of the market, more brokers are taking notice, but far too few are focusing on the source of that power.

SEO is your real estate online.  It is much like real estate in the physical world. 

Those who own the best real estate have usually worked hard for it, paid well for it, and will protect it fiercely.  The more they acquire, the more powerful they become.  Those who disregard its value and allow their real estate SEO to be acquired by others will see their influence wane and, over time, fail in their efforts.

In the end, brokers will decide on their own what is in the best interest of their clients, and their business.  The answer is not as cut-and-dry as many might assume.  Page views, traffic, experience, local knowledge, and a host of other factors will determine what is best for each individual’s clients.

Bottom Line:  Buyers will search.  They will find listings.  If they’re not at the syndication source, they’ll find them at the broker source.  The key is not in pointing as many people as possible to just any web site.  The key is pointing the right people to the right listing source.

Zombie Titles: When Foreclosures Become Walking Dead Homes

This article was originally published on

Americans learned all kinds of new real estate terms during the housing downturn. Short sales, non-judicial foreclosures, and sub-prime mortgages are just a portion of the real estate bust lexicon that is now a part of everyday conversation. Add “zombie titles” as the latest dark moniker on the list.

Zombie titles are hanging around the necks of many Americans’ financial futures. Robo-signing and MERS title issues are already top-of-mind for real estate pros, but for more and more consumers who have defaulted on a loan, these issues are coming to the forefront of their personal finances.

What is a zombie title?

Title is a legal document that assigns ownership and responsibility for a piece of real estate to an owner. When a homeowner defaults on a loan, the lender begins the foreclosure process to take back the title to the home. The foreclosure process can take anywhere from a few months to a few years between the first notice of default and the lender’s scheduled auction/foreclosure sale. Often, the homeowners move out of the home during this time period, believing that it will be sold.

It usually is. However, sometimes the lenders get caught up in legal/financial issues that delay their ability to actually conduct the sale of the home. Sometimes they just change their minds and never push foreclosure through to closing.

Enter the zombie title. Homeowners Joe and Jane have suffered the financial consequences of the foreclosure process, their credit is ruined, and they don’t own a home (to their knowledge). They moved out of their home two years ago when their lender scheduled a foreclosure sale date. Out of the blue, their local city government begins sending them fines for not keeping up their property. They thought the bank had sold it off already. The house has been deteriorating for years, and might be boarded up or inhabited by squatters. This half-dead home is still haunting Jane and Joe financially because the zombie title is still in their names.

Zombie neighborhoods

These kinds of homes are a blight on neighborhoods. A single unkempt home on a nice street can be a financial and mental burden on an entire community. The owners won’t pay for improvements, because the lender could come back at any moment and force the foreclosure sale through. The lender, HOA, and city can rarely fix up the home themselves, because it is still legally the private property of the homeowner. When properties sit vacant for long periods of time, they deflate nearby real estate prices and increase the likelihood of crime in, and near, the property.

Stay in the home?

Because of this, many real estate professional are advising homeowners who are in foreclosure to stay in their homes until the sale of the home has closed. Staying in the home is currently the only way to keep it secure and in good condition.

This advice will protect some homeowners from potential liability, but it really doesn’t get to the crux of the issue. The owners will be in an open-ended legal and financial limbo, and there seem to be no repercussions for the lender that began the foreclosure process but never followed through. The zombie title will continue to hang over their heads until the lender, at its own discretion, decides to finish the sale.

Limits on foreclosure timelines?

The foreclosure process is messy, and it’s difficult to put a straightforward timeline on the process. Some types of foreclosures take longer than others.

However, it would make sense to have a set of guidelines so that homeowners know whether or not their home is going to be sold. If a lender schedules an auction, sheriff’s sale, or another kind of foreclosure sale, that lender should be required to finish the process within a set amount of time. Whatever that timeline is, it should be clear to the homeowner that they will not be dragged down into an endless financial mess.

Put the zombies out of their misery

Foreclosure is hard on everyone. It is certainly a time for renewed emphasis on responsible lending and credit behavior. Homeowners who lose a home to foreclosure will spend years re-learning those lessons as they rebuild their credit. In the meantime, they should also get closure from their lender before they start rebuilding. Leaving a homeowner’s title in a zombie state will only serve to drag the homeowner and the community into more needless financial losses.

Open real estate agent data generates vast new liability for ‘pocket listing’ brokers and agents

This article was originally published on Inman News:

A new twist in the expanding market of pocket listings and private listing associations may start to cause real estate brokers to reconsider their positions on the practices. Scrutiny over “whisper listings” has led to questions of potential financial liability for real estate agents, and their brokers, who regularly involve themselves in these transactions.

A panel last week at Inman News’ Real Estate Connect conference in New York discussing pocket listings showed little difference in opinion on the quality of service being delivered by practitioners who pocket-list homes. The forum participants included many executives from the largest MLSs in the country. The featured broker/agent speakers included Shaun Osher of CORE in New York City, and Danai Mattison of the Mattison Group in Washington, D.C.

Their views on pocket listings were refreshing and unequivocal. Osher was particularly frank. The main takeaway: There is no place for “premarketing” or “coming soon” in an MLS-accessible market. If a home is being marketed in any way, it’s for sale. Limiting its exposure puts an agent’s personal financial gain at odds with a client’s financial return.

Possibly more striking was the conversation with Neil Garfinkel, a partner with the law firm AGMB in New York. In his personal opinion, those who engage in pocket listings are opening themselves up to potential litigation. A former client who felt they were led into a practice that didn’t maximize their financial return, and didn’t fulfill the agent’s standards of duty, will at some point be the bellwether for pocket listing litigation in the industry. Real estate licensee duties can be fiduciary or statutory depending on the state, but almost always call for a high standard of care for a client’s well-being.

While the liability discussion on that day centered on a single former client suing their personal agent, there are a number of much larger issues that seem to collide at this one point. As real estate brokers and agents battle over opening large sets of agent production data to the public, the executives of most of the largest real estate companies seem to be signing on to the idea (Realogy’s and Re/Max’s CEOs concurred at Connect). It’s becoming clear that the dissemination of agent sales data is becoming a question of “how” as opposed to “whether.”

This new look into the practices of real estate agents and their brokerages will allow consumers to see everything their professional service providers do in a new light. Individual sales and practices will be boiled down into averages, probability and patterns.

For the agent or brokerage heavily involved in pocket listings, it may be the biggest liability they’ve ever encountered. The sales production they’ve been touting for years will now be scrutinized against the backdrop of nonexistent MLS-recorded sales. Off-MLS sales, known to be attributed to these agents, will be dredged up from public records and contrasted against similar homes that were exposed to the broader market. Class-action lawsuits and fair housing violations are just the start of the new potential threats that will need to be analyzed by a real estate broker entering this new world of “transparent” production data.

We’ve all heard the flimsy elevator speech as to why certain clients are better served with pocket listings. In reality, anonymity, exclusivity and other past concerns have all been overcome by the newest MLS rules and technologies. Even if those arguments held water for a unique few clients, pocket listings are clearly an unsavory practice when serving the vast majority of home sellers. So what happens when it becomes statistically clear that an agent is advising the majority of his or her clients to limit the exposure of their listing? When a publicly visible pattern of repeatedly pocket listing clients’ homes is now available online, the spotlight on the agent, and the brokerage, will begin to get a bit hotter.

Consider a “boutique” brokerage whose agents, across the board, almost exclusively practice pocket listings. The owner or managing broker of this office will inherently be assumed to approve of, or even encourage, limiting the listings’ exposure. This demonstrably repetitive practice will be available for every disgruntled, poorly served or financially troubled ex-client of the firm. There is a very real opportunity for a group of former clients to bring litigation against a broker, without having to prove the details of an individual transaction. The broker — and its agents — will have digitally written their confession in the form of a long-term record of off-market production statistics.

Fair housing violations have always been considered a potential red flag in pocket listing transactions. When an individual agent pocket-lists, he may or may not be limiting a home from any number of protected classes or groups, but it’s difficult to prove in a one-off transaction.

As open production data surfaces, however, the brokerage that repeatedly limits which groups of the buying public have access to their listings will be under an enormous amount of scrutiny. There will be, without a doubt, organizations dedicated to crunching this data and matching past transactions to buyers and sellers, attempting to determine if a certain class of citizens is being excluded in practice. The potential of being labeled as a fair housing violator should be enough for most brokers to immediately re-evaluate their agents’ policies.

As for financial liability from former clients, the potential runs from painful to career-ending. A single client suing for the refund of commissions paid would be a significant strain on the business. An entire class of clients bringing suit could bankrupt a brokerage in short order.

There’s nothing to say that the financial pitfalls couldn’t be heavier. The amount of equity a homeowner lost in a pocket listing could far-and-above outweigh the agent’s commission. If the client was truly wronged, this loss in equity could reasonably be considered as the amount an agent or broker must recoup for the seller. As the open data pool gets larger, analyses based on neighborhood comps will contrast open market sales and pocket listings, unearthing disparate sale prices and projections of losses (or profits) based on one practice versus the other.

It’s likely that a brokerage with a regular pattern of pocket listings will have a record that shows lower final sale prices than those garnered by comparable homes listed on the MLS. It won’t require a “he said/she said” client vs. agent level of proof. There will be a long-term statistical testimony of a brokerage’s approved practices, the industry’s knowledge of that practice’s deficiencies, and a data-driven picture of the clients’ losses.

Of course, this vast picture of liability could be overblown if the data reveals pocket listings to be a boon to home sellers. While the overwhelming industry consensus casts a great amount of doubt on that scenario, it is possible. Still, there’s far more downside potential to taking that position as a broker. Having your company’s pocket listing practices justified by data merely allows you to continue doing business as usual. If the data turns the other direction, the vultures looking for deep pockets will start circling quickly.

In the end, the publication of agent production data, done in a responsible and ethical way, could force some unintended positive changes on industry practices. If more consumers are advised by their agents and brokers to get full exposure in their local markets, home sellers’ personal financial outcomes will be enhanced. At the same time, an increase in public listings will expand and improve the quality of closed sales data used by brokers, appraisers, banks and others. Raising the level of real estate’s professional practices, improving clients’ returns and increasing overall sales data quality are just a few more reasons the industry is leaning toward a more accessible future.

Why You Can’t Find That Home For Sale on Zillow or Trulia

This article was originally published on the Seattle Homes Blog:

I talk with home buyers and sellers every day.  Most are in the initial stages of deciding if the market is right for them.  They’re searching on Google for real estate sites with local home listings and prices.  The first search results they receive are often big, national websites that aggregate listings and look great.

These usually include sites like Zillow and Trulia.  While consumers gravitate to these sites because of the high-end user experience, very few realize that they’re missing a huge portion of the market.  It seems counter-intuitive, but for all of the programming horsepower of the largest nationwide sites, there are actually far more timely and accurate listings on the average real estate agent’s site than there are on these monstrous property portals.

Zillow Trulia Seattle HomesBig Portals Have Fewer Real Listings, More Duplicates and Expireds

To cite just one example, a recent study compared agent websites to portals in the Seattle market.  While agent websites with a regular MLS feed had 100% of the agent-listed homes available, on that same day, Zillow had just 72% available on their website.  Trulia only had 63% of those same homes.  Consumers searching on these sites for homes were literally missing out on 30% or more of the market.

How can this be?  It all comes down to where real estate listings are created and how they’re distributed.

Agent Websites Receive Direct Feeds While Portals Patch Together Secondary Sources

Real estate agents create and enter their “for sale” listings into the local MLS database.  Those listings are available for the public to see, the very same day, on the website of every real estate agent that signs up for the listing feed.  It’s fairly simple.  The day the listing goes live, it shows up on the agents’ websites, and the day it’s sold, it goes away.  There are no outdated listings or duplicates, just the raw list of homes for sale, straight from the MLS.

With a big property portal, on the other hand, there are a multitude of different sources being pulled in to attempt to construct a full market picture.  Some agents send their listings directly to the portal, some brokers do it for them, some indirect feeds are pulled in, and some listings are just never submitted to the portal at all.

The inefficient process creates delays in the display of new home listings, and a backlog of sold and expired listings that remain on the portal websites long after they should be gone.  The inventory of listings on a portal site balloons with outdated listings, while the newest homes often show up days or weeks after they’ve already been on the market.

Serious Home Buyers And Sellers Are Using Their Agents’ Websites For Listings

While it’s clear why a consumer would enjoy browsing homes on a beautifully-designed portal website, it’s also important that real home buyers and sellers are informed about their choices.  If you’re truly looking to buy a home, or to assess your chances of selling, you need to see the entire market picture to make a good decision.  Portal websites’ beautiful graphics and charts notwithstanding, inaccurate data in an attractive format will not overcome missing out on that perfect home, nor will it help you find the right set of comparable homes to make a good decision for your sale.

So, if you enjoy browsing real estate on a national portal’s website, just remember that while the local information and statistics are interesting, the listing portion of the site is merely an advertising platform, not the full picture of homes for sale.  If you’re a serious buyer or seller, use an agent’s website.  Whether it’,, or your favorite local REALTOR®’s site, you’ll feel much more secure knowing you can see that perfect home on the first day it’s available.  In a market where many homes are selling within a week, you’ll never miss out because you were looking in the wrong location.

The Case for a REALTOR® to Lead®

This article was originally published on®’s president, Errol Samuelson, has been hired away by Zillow. I’ve met Errol and he’s a nice guy, very smart, and very successful. Business is business. But, naive as it might be, there’s plenty of disappointment from the REALTOR® community. It comes from a belief that we have a common cause greater than just our businesses. Whether we’re aligned with NAR or®, we believe in unified goals that are good for the country as a whole, and create significant loyalty to our brand.

Like I said, it sounds silly to an outsider. Why wouldn’t a top executive, who clearly received a more lucrative employment offer for a position he saw as a step up, take that proposal? In the world of publicly-traded real estate ventures, you could be selling soda ads one day, and interviewing the president the next. The landscape changes drastically every year, and when your skills are in business management and strategy, you’re always looking for the next challenge.

And still, there’s a bit of an empty feeling from the REALTOR® masses when an exit like this happens. It’s just another day at the office when your insurance company’s CEO changes companies, or your old business partner switches brokerages. But when someone leaves the REALTOR® fold to work for a direct competitor, it ignites much stronger emotions from the membership. A quick scan of discussions online makes it clear that this isn’t just some job change. Reactions range from frustration to outright anger. This is someone who did a good job and likely had no direct contact with most of the commenters, but many take his departure so personally as to feel betrayed.

As simple-minded as it sounds, I can’t help but feel a bit of the same disappointment. Real estate agents hop between companies like mercenaries until we find the right fit. We don’t feel remorse for changing our workplaces, because it’s simply a business decision. At the same time, those of us who are advocates for the REALTOR® brand would be incredulous if our associates left the membership. Your career is your business, but your commitment to supporting REALTOR® causes is ours.

It’s in that spirit that I’d strongly advise that the next head of® to be someone with REALTOR® experience. This wouldn’t be a current salesperson, of course, but there are countless REALTOR® practitioners and executives whose past or current careers include law, business management, technology, and marketing. Whether the candidates have been the head of a technology-driven brokerage or a forward-thinking MLS organization, they need to have spent their time, and their money, supporting the organization whose online brand they’ll be charged with leading. A REALTOR® who has volunteered their hours, and invested their own funds into our causes, will be someone who understands the crazy notion we have of a common mission.

Clearly, it’s not up to me, nor is it up to REALTOR® membership in general. The folks making these decisions at Move, Inc., have shareholders to answer to, and probably many worthy candidates within their current ranks. Still, we’ve just begun opening up the relationship between NAR and® in a more significant way this past year than we’ve seen in a decade. It’s been a bit rocky, but strengthening that cooperation will require increasing the trust level that the general REALTOR® population has in the partnership itself. Hiring “one of us” would certainly shrink the mistrust hurdle in a significant way.

Saying it out loud, though, it’s probably just wishful thinking. The portals are in a marketing arms race, open advertising space for agents is increasingly scarce, and the market cap valuations of these companies point to a cutthroat struggle in the next few years to weed out a competitor or two. Most companies would look for the next technology executive with the greatest capacity to generate advertising revenue, while keeping those pesky agents just satisfied enough that they don’t complain too often.

Hopefully, this company isn’t just “most companies.” There’s an army of 1 million REALTORS® looking to spend their money in the most efficient way, but they also have a strong preference for the home team. It’s not impossible to garner that loyalty, and provide a superior product at the same time. REALTORS® love their brand. They want to love®. They just hope that going forward, there’s not just a joint vision but a shared loyalty. When “our people” become their people, the entire organization will find more success, and the loyalty will be a two way street.

The Top 10 Real Estate Tax Deductions

This article was originally published on

As the deadline to file income taxes approaches, it’s time to take a new look at the changing tax landscape for homeowners. The dynamic atmosphere in Washington, D.C. hasa different effect each year on which tax breaks are proposed, rescinded, changed and extended for taxpayers who own a home.

Many of the tax benefits homeowners enjoy have been protected and extended through the 2013 tax season but they will expire next year if Congress doesn’t act.

Disclaimer – This is only an informational summary of current tax issues in the news. If you need tax advice, please contact a tax attorney or CPA

1.  Mortgage Interest Deduction

Homeowners who itemize their deductions can deduct the interest paid on a mortgage with a balance of up to $1 million. While there is some movement to limit the total itemized deductions for taxpayers with higher incomes (more than $400,000), the current deductions hold for all tax brackets. Americans save around $100 million every year by deducting mortgage interest on their tax returns

2.  Home Improvement Loan Interest Deduction

The interest on home equity loans used for capital improvements to your home may be tax deductible. On loans with balances of up to $100,000, the interest is tax-deductible for a homeowner who uses the loan to make improvements such as adding square footage, upgrading the components of the home or repairing damage from a natural disaster. Maintenance tasks, like changing the carpet and painting a home, usually don’t count.

3.  Private Mortgage Insurance (PMI) Deduction

Homeowners who make a down payment of less than 20 percent are usually paying some sort of Private Mortgage Insurance. PMI (sometimes abbreviated as MIP or just MI) can be just a few to hundreds of dollars per month.

If your mortgage was originated after Jan 1, 2007, and you have PMI, it can be a tax deduction. The deduction is phased out, 10 percent per $1,000, for taxpayers who have an adjusted gross income between $100,000 and $109,000 and those above that level do not qualify. This deduction won’t be available next year unless Congress renews it for 2014.

4. Mortgage Points/Origination Deduction

Homeowners who paid points on their home purchase or refinance can often deduct those points on their tax returns. Points, also called origination fees, are usually percentage-based fees a lender charges to originate a loan. A 1 percent fee on a $100,000 loan would be one point, or $1,000.

On a home purchase loan, taxpayers can deduct the entirety of points paid in the same year. On a refinance loan, the points must be deducted as an amortization over the life of the loan. Many taxpayers forget about this amortized benefit over time, so it’s important to keep good records on the deduction of points on a refinance.

5. Energy Efficiency Upgrades/Repairs Deduction

Homeowners can deduct the cost of building materials used for energy efficiency upgrades to their home. This is actually a tax credit applied as a direct reduction of how much tax you owe, not just a reduction in your taxable income.

Ten percent of the total bill for energy-efficient materials can be used as a tax credit, up to a maximum $500 credit. Insulation, doors, new roofs, water heaters and other items qualify for the energy efficiency credit. There are individual limits for certain items, such as $150 for furnaces, $200 for windows and $300 for air conditioners and heat pumps.

6. Profit on Sale of Real Estate Deduction

If you’ve sold a home in the past year, you’re likely aware individuals can claim up to $250,000 of profit from the sale tax-free and married couples can claim up to $500,000 tax-free. The home must be a primary residence, meaning you must have lived in the home for two of the past five years. A homeowner could potentially claim this tax break on multiple homes within a fairly short time frame, but each tax-free sale must occur at least two years apart from the previous tax-free transaction.

Also new for 2013 isn’t a deduction, but a tax enacted by the Obama administration. Some individuals—those with an AGI more than $200,000—may be subject to a 3.8 percent tax onsome income from interest, dividends, rents and capital gains.

7. Real Estate Selling Cost Deduction

For those lucky folks whose profits on the sale of their home might exceed the $250k/$500k limits, there are still some ways to reduce the tax burden. The costs of selling a home can be claimed as tax deductions.

By adding up all of the fees paid at closing, capital improvements made to the home while you owned it, money spent to make repairs to damaged property and marketing costs necessary to sell the home, you can add a significant figure to the cost basis of your home. This basically raises the original price you paid for the home. Your cost basis begins with the original price of the home, and then adds in the improvement and selling costs.  When the new cost basis price is compared to your selling price, it reduces your potentially taxable profit on the home.

8. Home Office Deduction

Starting for the 2013 tax year, tax filers who work at home can use the IRS’ new simplified option for deducting home office expenses. With this form, you can get a $5 deduction for each sq. foot used as an office, with a maximum of 300 sq. feet. The office must be the primary office location where you get the majority of your work done, and it needs to be used exclusively for business (it can’t be in your bedroom). You should be realistic with its size anduse—start stretching the truth and you could increase your risk of being audited.

9. Property Tax Deduction

While it may sound strange to have a tax-deductible tax, the overall effect is that you don’t pay income tax on money that was spent on property taxes.

Homeowners should only deduct the amount of property tax actually paid to their local municipality for the year. This is not necessarily the amount you paid to your escrow account, and should not include any other city or county fees that might potentially be on the same bill as your property taxes.

10. Loan Forgiveness Deduction

The Mortgage Debt Forgiveness Relief Act of 2007 made forgiven debt on some mortgages not taxable. For example, a homeowner makes a short sale of their primary home at $100,000, but they owe $150,000 on their mortgage. The lender forgives the extra $50,000 owed, but the government views it as $50,000 in taxable income as a gift from the lender to the borrower. The Mortgage Debt Forgiveness Act temporarily relieved the taxpayer of that burden, up to $2 million, or $1 million if filing separately. The act applies to primary home sales made from 2007 through 2013, but it will expire next year if Congress doesn’t act.

IRS-suggested disclaimer: To the extent that this message or any attachment concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  This message was written to support the promotion or marketing of the transactions or matters addressed herein, and the taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax adviser.

Strategic website development: avoiding squeaky-wheel engineering

This article was originally published on Inman News:

Whether you’re building your first website or re-engineering one that’s been live for years, it can be difficult to have a clear vision. The cacophony of advice from consumers, industry associates, and vendors makes for a confusing outlook on the path toward a valuable resource for your company and your customers.

Too often our attention is focused on the loudest voices — the proverbial “squeaky wheels.” Whether they’re pushing shiny new objects, preaching easy profits, or attempting to scare us away from purportedly dangerous avenues, they’re often doing so for their own short-term personal gain or satisfaction. The long-term success of our businesses, in most cases, isn’t a large part of the squeaky wheel’s focus.

To avoid squeaky wheel engineering in the development of a website, business owners need to be open-minded, but also analytical, about every new idea or strategy. Even more so, they need to be highly skeptical about the veracity and merit of the source of any advice they receive.

Unsolicited consumer comments

Consumers who contact your company with problems or suggestions about your website can be highly valuable. Technical problems that users are experiencing and non-intuitive navigation that impedes discovery are just a couple of the many issues that consumers can bring to light. Businesses should encourage their users to report suggestions and problems, as they’re clearly the same issues that many other users are facing.

At the same time, one user’s opinion does not necessarily carry across to the majority of users’ preferences. While a handful of your website’s visitors may really prefer the multi-field, complex search form that they’re comparing on your site and others’, there may be twice as many other users quietly using your simple search and loving it. Changing your website’s look, or functionality, to appease a minority of your users is the quickest way to send the majority off to someone else’s business.

So, how do you find the right advice, or at least the right starting point for making website development decisions?


If you’ve got your own website, there is no greater truth about its effectiveness than analytics. How users get to your site, what they do on the site, and how long they stay will tell you almost everything you need to know about what is currently working, and what is not.

Whether you’re using Google, Moz, Bing, or some other webmaster/analytics tool, you need to take the time to study your analytics. Which on-page buttons get clicked, which links get selected, and which get ignored? Which pages are consumers landing on from search results? How quickly do they leave, or do they continue to other pages? Which is the most popular landing page, link, or piece of content that drives consumers to actually sign up/register/purchase?

Watching what consumers actually do on your website, as opposed to what they say they do, is the fastest shortcut to aligning your product with their preferences. Tracking 1,000 consumers’ actions anonymously yields far more valuable resources than listening to one of them rant.

Industry associates with analytics

If you’re starting a new website, you don’t have past analytics to review. There are certainly others in your industry doing the same things you are, however. While in most industries, competitors hide their analytics away from others, real estate is a rare breed where there are associated companies around the country who will lay out exactly what they are doing online. These are the people you can trust–they’re not pitching you a line, they’re showing you the proof.

Find the discussions online about successful companies that have analytics backing up their success, and you can learn from their experiences. See which vendors, strategies, navigation, content, etc. work for them. These are not people selling a product or asking for you to fix something to fit their preferences. They’re the crazy kind of people who believe that by laying their business blueprint out online for everyone to see, they’ll benefit in the long run. Take them up on the offer.

Surveys and focus groups can broaden input

If direct consumer feedback is your ultimate goal, make sure you’re receiving it from a statistically significant portion of your current or potential customers. There’s a lot to be gained from a broad sector of your customer base giving feedback and suggestions for your online direction.

Focus groups and surveys can allow you to hear from more than just the customers who send you unsolicited comments. They provide a more diverse group of consumers who you might not ever hear from without directly asking them for input.

Just be very careful that you keep the results of these kinds of programs in a separate bucket from your analytics. The results are purely qualitative, not quantitative, and the two don’t mix well. Surveys and focus groups are more useful in the idea generation stage of business planning, because of their skewed representation.

Every method has flaws, and some of your consumers are wrong

Surveys have plenty of flaws. Users have to opt-in to the process. The responses you receive will overwhelmingly come from customers who are unusually upset, happy, or bored. The consumers who are satisfied with your website, but busy, will likely not respond, and those are a very important segment of your base. Those who didn’t respond may, as an overall group, have very different opinions and habits.

The questions you pose in a survey will often lead consumers to answers they wouldn’t have supplied on their own. If you suggest potential changes to your website, a user will often decide that they are good ideas, even if they hadn’t previously felt the need for these changes. This can create the false sense of desire for a product or function from the overall customer base and create unnecessary development work for you.

Focus groups often exacerbate surveys’ problems. Your opt-in respondents are now not only a skewed sample based on their emotional pull to be involved, they’re also the kind of people who want to speak in public. The feedback received from a focus group can often be influenced by consumers’ need to make a point, to agree/disagree with others within the group, and to applaud or indict the business or services being discussed. In short, the results can include some great ideas, but can also create a wildly exaggerated picture of what your consumer population feels.

Don’t be a slave to analytics, either. While the truth buried in that data might be the most powerful tool in your arsenal, success isn’t purely traffic flow and conversion rates. You may find that a particular piece of content is wildly popular for brand recognition, but doesn’t drive a lot of customer sign-ups. Other parts of your website might be driving a higher conversion rate, but turning off a very high rate of the consumers who don’t sign up or register.

You’ll have to decide on your own what your business strategy is for these kinds of analytics questions. Short-term conversion might be the one and only goal. Driving long-term relationships at the expense of some short-term sales may be a more palatable direction for your business. Keeping an engaged, smaller core of users could be preferable to driving a wide range of traffic with less focus.

Choose a direction, find reliable comparison points, and verify your results

Developing your website requires you to have a strategy. Changing direction based on a comment from a colleague, a complaint by a customer, or a story about a new product is squeaky wheel engineering, and it will get you nowhere quickly. When you know the direction you’d like to go, find verifiable examples of others who are doing what you’d like to do. Plan your development to use tools that have a verified track record of success, and then monitor your own progress with analytics.

When you know exactly what you’re trying to achieve, your path is much clearer. Working toward that goal with confidence makes it easier to avoid distractions and the squeaky wheels.

Property Tax Swap or Levy Duty Upshift: Solving WA’s McCleary Decision on School Funding

This article was originally published on the Seattle Homes Blog.

The recent decision by Washington’s Supreme Court on school funding is a complex topic. When it’s broken down to its basics, however, there may be a straightforward solution to a large portion of the financial demands created by the decision.

In a nutshell, the state constitution says that Washington has a paramount duty to fund basic education. The court decided that, currently, the state is not funding basic education adequately.

To be clear: the court said that the state itself is not meeting its obligation in funding basic education. This means that the overall budget for education needs to come from the state, not other sources. While the state property tax and sales tax fund around 70 percent of the education budget, municipalities across the state pick up around 20 percent of the education tab through local levies on property taxes (the federal government covers the rest). There may be some need to increase the total funding for the state, but making sure all funds come through the state will also be a priority.

This is the focal point of the so-called “Property Tax Swap”. If all of the money that local homeowners are paying in levies to their cities was instead being paid to the state and earmarked for schools, the education budget could be funded with those same dollars, but it would be the state supplying the funds it is constitutionally required to provide. It’s essentially a levy duty upshift–putting the responsibility of schools back to the state venue where it was meant to be.

It sounds a bit simplistic, but sometimes that’s the way accounting works. The state can make up a large portion of its lacking education budget by simply taking in a larger state school levy (increasing the current rate on the school levy portion of the property tax), while reducing local school levies by limiting the local rates charged. Statewide, the plan is revenue neutral. There is no additional tax revenue coming from taxpayers statewide as a group, or going to schools–there’s just a larger amount of the money coming from the state to the schools.

There are some side effects that could create dissension. Projections show property owners in wealthier counties or school districts paying more in property taxes than they had before, and vice-versa for lower-income districts. While there is some resistance to that idea, it answers another part of the court’s concern, which is the current uneven distribution of state education funds. The idea has bi-partisan support, as it was first posited by Democrat Ross Hunter, and championed by former Attorney General Rob McKenna, a Republican, during his campaign for Governor. The widespread support is due to the more reliable long-term funding mechanism for education that doesn’t rely on individual districts renewing their local levies every few years.

Just as importantly, it minimizes the funding gap that now exists in the state’s education budget. While there are many other tough decisions to be made in funding the rest of the education budget and satisfying the Supreme Court based on the McCleary decision, this is one fairly painless fix with a big payoff. Taxpayers, on the whole, pay nothing more, and that’s preferable to across-the-board tax hikes to nearly any voter.

REALTOR® groups generally approve of the idea. While we oppose most property tax increases, we support sensible property tax rates that build quality schools and infrastructure. Good schools make for good communities, which is why a predictable long-term source of funding is in the best interest of the real estate industry as well as every individual in the state. Maintaining the current funding source for schools, while reducing the need for state government to increase other taxes, is good for Washington schools and for Washington businesses.

Is There A Real Estate Bubble in Seattle? Inflation and 11% of our Home Equity Says No.

This article was originally published on the Seattle Homes Blog:

Home prices are on the rise in Seattle, and home buyers who remember the last real estate downturn well are mindful of the possibility of another drop in real estate prices in the future.  So, are we building up to another Seattle real estate bubble?

The most recent data say “No.”  While home prices have certainly appreciated in the area for the past few years, much of those gains were simply due to the long-term necessity of reversing that extended real estate downturn of the late 2000s.  Price appreciation, according to historical data, is the unequivocal course of real estate for the long-term, due in large part to inflation.

Seattle Home Prices and Active Real Estate Listings, 2004-2014

No Seattle Real Estate Bubble

Home prices in Seattle are still almost 11 percent lower than they were at the real estate peak in 2007.  August 2007’s median home price for the city of Seattle was $498,000.  As of last month, our current median was at $444,000.  There’s no rush to get back to those peak levels immediately, but idea that we’re nearing a bubble similar to what we saw in 2007 just doesn’t pan out yet.

There’s a bigger reason for this, when we look at the long-term effects of the economy.  Inflation makes general consumer prices rise, no matter if the market is hot or cold (we rarely see price deflation in the overall U.S. economy).  In 2007 we saw 2.8 percent inflation.  In 2008, as the downturn really got rolling, we hit 3.8 percent.   The worst economic year we’ve seen in decades saw just a 0.4 percent deflation rate, which was immediately wiped out by 1.6, 3.2, 2.1, and 1.5 percent inflation rates through 2013.

The big picture here?  We’ve probably seen price inflation across the country of around 15 percent since 2007.  Of course, this doesn’t translate directly to home prices, but the overall takeaway should be fairly clear–home prices today are nowhere near what they were during the last real estate bubble.  The situation is vastly different, and while that in no way guarantees a healthy real estate market going forward, it certainly makes the comparisons to 2007 unwise.