Online "Bait and Switch"

Searching for "MLS," Getting "TheMLSonline.com"

One might think that BobMenendez.com would be the Web site of Senator Robert Menendez of New Jersey, chairman of the Democratic Senatorial Campaign Committee. But no. Sharron Angle, the Republican candidate for the Senate in Nevada, has the site, which her campaign uses to bash Democrats.

--Marc Lacey, "Clicking Candidate.com, Landing at Opponent.com"; The New York Times(9/15/2010)

The phenomenon referred to above, called "cybersquatting," is hardly limited to politics; it's rife in real estate, too.

Locally (in the Twin Cities), the best known example of that would be TheMLSonline.com, which, unbeknownst initially to the visitors it attracts, has nothing to do with the local MLS ("Multiple Listing Service").

The MLS is the mother lode of Twin Cities listings, paid for (and only accessible) to Twin Cities brokers and their dues-paying agents.

TheMLSonline.com is just one of hundreds (thousands?) of Twin Cities real estate brokers.

Somebody who's practiced law more recently than I have (not since 1992) has to explain to me why that doesn't constitute a deceptive trade practice -- which, last time I checked, was illegal.

P.S.: if you don't like the practice, vote with your feet and don't use TheMLSonline.com (there --that's my protected free speech!).

Foreclosure "Bait & Switch"

One-Item "Bait & Switch"

Bait and switch (noun): 1 : a sales tactic in which a customer is attracted by the advertisement of a low-priced item but is then encouraged to buy a higher-priced one.

--Webster's dictionary

Can "bait and switch" ever involve just one item?

I'd argue that it can.

Normally, of course, there's the low-priced "bait." When that's unavailable -- and it's always unavailable -- the customer is presented with the much more expensive "substitute."

With many foreclosures lately, it certainly would appear that the "bait" instead consists of the artificially low list price dangled in front of the public.

The "switch"?

The real -- and dramatically higher --price.

How much higher?

That all depends: on how many bids come in; how motivated -- and flush -- the bidders are; and on how many rounds of manipulative bid-raising they'll tolerate before they storm off.

If you want to auction off the property, fine, but then do it in public, and don't call for "highest and best" offers.

Bank Shareholders Cum Taxpayers

So what's so bad about all this? Two things.

One. Listing a $100k home for $50k (or $25k) is deceptive advertising. (See, "Sold Price: Almost 5x Over Ask").

We don't let automakers, pharmaceuticals, or cigarette makers (er, scratch that one) engage in such practices -- and we shouldn't let banks selling foreclosures do it, either.

Two. The banks own the foreclosures, but who owns the banks?

If it's a busted, toxic lender like Washington Mutual, Countrywide, or IndyMac, the answer is: us. That's because the government brokered their sale -- or what was left of their carcasses -- to mega-banks kept alive by taxpayer bailouts. Of course, that was after the FDIC -- taxpayers again -- made depositors whole.

Bank shareholders cum taxpayers have an interest in seeing that foreclosures are expeditiously sold off in a manner that is fair, transparent, and serves to maximize each home's selling price.

Instead, in many cases the process appears to be opaque, rigged, and designed to repel any Buyer unwilling to play the required games.

Has the Internet Peaked?

Old-Fashioned Technology
Makes Real Estate Comeback

"Nobody goes to that restaurant anymore. It's too crowded."
--Yogi Berra

Yogi Berra could easily say the same things about the Internet today, especially with respect to real estate. Consider:

--Online photos are now routinely so overly-flattering, you literally don't recognize the home when you're standing in it.

--Facebook and MySpace are crawling with Realtors, job seekers, and people selling . .. something.

--Sites like Zillow -- never very accurate at pricing homes -- are actually getting worse (their business model isn't to displace Realtors, but to attract eyeballs and advertising dollars).

--Interest rates quoted online are virtually meaningless because they don't take into account the borrowers' unique circumstances. Or, they're loss leaders that 1% of the borrowing public qualifies for (in retail, this is called "bait and switch").

Given all the clutter, distortion, and sheer noise on the Internet today, it seems fair to ask, "Has the Internet's utility peaked?"

For many people, the answer is "yes." That's true even as an estimated 80% percentage of all prospective home Buyers now begin their home search online.

Underwhelming -- and Overwhelming

Unfortunately, once they get there, they're likely to be both underwhelmed -- and overwhelmed.

Overwhelmed by the sheer number of real estate sites and information out there. Underwhelmed by how little of it is actually useful, if not outright misleading.

What's taking the Internet's place? "Low tech," and in some cases, "no tech" (John Naisbitt anticipated this phenomenon years ago with a 1999 book titled, "High Tech, High Touch"):

--Old-fashioned shoe leather and tire-kicking: if you really want to know what a property's like, go look.
--For Realtors marketing a home: personal networking, word-of-mouth, and an especially low tech tool: the phone.
--For prospective Buyers looking for a Realtor: referrals and personal interviews. Plenty of newbie Realtors are great at technology, including Facebook, but don't have a clue about selling real estate (how would they? They've never done it).
--For borrowers looking for a loan: one-on-one contact with a lender.

So is the Internet going away?

Hardly. Once I'm working with a client, the Internet's various productivity tools (email, online forms, government Web sites) greatly expedite communication, work flow, and access to information.

However, purely as a marketing medium, the Internet's value arguably has peaked.

Just like junk mail, the more ubiquitous it becomes, the less it seems to register with people (this blog notwithstanding, of course!).