SAN FRANCISCO –OBSNews- The real estate market in the US is in the midst of a historic transformation. Everyone who reads the news about buying and selling a home in the country is aware that prices for homes in many areas across the nation are falling as a result of the bursting of the housing bubble. Real estate industry watchers also know that the migration of real estate data and advertising towards the internet is creating deep unease and falling profit margins among newspaper businesses which are frantically struggling to reinvent themselves in the world of interactive media.

But there is another sea change that is occurring in the world of residential real estate and it portends ill for real estate agents and brokers accustomed to doing business in the old-fashioned way. According to the National Association of Realtors more than 80% of prospective home sellers and buyers use the internet when they look to buy or sell a house. Users of online real estate tools will often then work with an agent they know personally, but they are just as likely to reach out for professional help via the companies they interact with on the web.

What this means for the ordinary real estate agent and the traditional real estate brokerage companies is an era of new marketing alliances. In many cases, what was once a fierce rivalry between online marketers for real estate and the old guard has now become a mutually beneficial relationship with the technologists on the web finding and partnering with agents who have specialized local knowledge and industry experience.

Below are some of the leading internet real estate companies.:

1. www.RealEstate.com – Barry Diller’s Interactive Corp. (IAC.com) via LendingTree.com owns this site and late last year moved to create local real estate offices designed to compete with the Century 21® and RE/MAX® traditional brokerages.

2. www.TheHomeBuyingCenter.com – This company provides home sellers with an opportunity to sell a house directly to a real estate investor. They also help home buyers find low-priced deals on houses in foreclosure and on bank-owned properties. They also refer home sellers to real estate agents and brokers across the nation to help people sell quickly when the houses do not meet their investment criteria.

3. www.HomeGain.com – This site is owned by Classified Ventures, a strategic joint venture of several large media complies (Belo Corporation, Gannett Company, The McClatchy Company, Tribune Company and The Washington Post Company). This site attempts to be an online matchmaker between sellers and buyers and real estate agents.

4. www.Trulia.com – This site is residential real-estate search engine that offers real estate information such as homes for sale, house listing and sale prices and market trends. Trulia is advertising supported.

5. www.Zillow.com – Zillow provides an estimated appraisal value for homes across the United States and provides a forum to homeowners, home buyers, and agents to create discussion groups. This site makes its money from selling ads on it heavily trafficked website.

6. www.Terabitz.com – This company provides yet another free service for real estate consumers. They attempt to aggregate large amounts of information about residential real estate that includes local neighborhood information, market research, schools, restaurants, crime and safety statistics, service providers, financial tools, and more. They make their money from targeted local advertising.

7. www.Redfin.com – Currently serving just seven major real estate markets across the US, Redfin is an online discount real estate broker that they describe as half electronic and half personal. They employ real estate agents directly and claim to rebate commissions to home sellers and buyers thus making their services cheaper than traditional agents and brokers.

8. www.Craigslist.com – Even though the by-now-classic website does not make money via real estate advertising, thousands of houses for sale and apartments for rent are listed in many different cities across the country. Craigslist has been a major reason why newspapers have been forced to re-tool their business models that once depended primarily on real estate and automotive classifieds for revenue.

SAN FRANCISCO, Calif –OBSNews- Despite the historic downturn in the housing market in the United States several real estate websites have seen their operations increase substantially and have received millions of dollars in funding from investors. 

It is estimated that in the past twelve months over $50 million has been poured into online real estate marketing and brokerage businesses by venture capitalists and other investors.  Trulia.com, Zillow.com, Terabitz.com, and Redfin.com are among the companies who have received substantial funding to increase operations.

Newspapers and other traditional forms of advertising for the real estate industry have seen their real estate ad revenues plummet.  In a statement released recently Pat Talamantes, the Chief Financial Officer for the McClatchy Company, which owns a large number of newspapers in market across the US, said, “a majority of the decline continued to come from newspapers in California and Florida, two states severely affected by the real estate downturn, and we are feeling the impact of worsening economic trends.”

McClatchy reported revenue declines of 14 percent in January with a dramatic 35 percent decline in real estate advertising.

One company that is seeing its online real estate activities pick up dramatically is Sacramento, California based http://www.TheHomeBuyingCenter.com.   This company provides homeowners who want to sell their houses quickly an opportunity to speak with a real estate investor about the value of their home and receive a professional investor opinion, or PIO.   The company also helps people who want to buy a foreclosure home find and acquire properties at below-market prices. 

Company president Patrick McGilvray commented, “as you can imagine, with foreclosures being such a hot topic, we have been flooded by interested home sellers and buyers.  We have been in discussions with several groups of angel investors, interactive media companies, and a few venture capitalists.  We have had some very attractive offers to help us finance our growth, and we’re in the process of reviewing several proposals.

SACRAMENTO, Calif –OBSNews- On Thursday March 6, 2008 the Federal Reserve reported that during the final three quarters of 2007 the amount of equity that Americans had in their homes dropped to below 50%.  This is the first time that Americans have owed more on their homes collectively than they have owned since 1945.  This statistic shows that American homeowners borrowed large amounts of money against the value of their homes in recent year..  For homeowners who are trying to sell their properties to avoid foreclosure this statistic indicates a difficult market reality.

Mark Zandi, the head economist for Moody’s http://www.Economy.com, said “Consumers are growing more cautious, first, because they are now worth less, and they know it.  He added, “Secondly, they can’t borrow against their homes as aggressively as they did.

Economists point to falling home equity and link it to lessened consumer spending in other parts of the economy, especially home improvement and construction spending.  When this trend will reverse itself is anybody’s guess, but the consensus among real estate experts is that housing prices will continue to decline until sometime in 2009.

Approximately 10% of American houses, or 8.8 million, are estimated by Economy.com to have ‘negative equity.’  This means that more is owed on a house than the current market value.  Governmental fixes to this problem appear to have driven a wedge between Federal Reserve Chairman Ben Bernanke and the Bush administration’s Treasure Secretary Henry Paulson.  Bernanke recently came out in favor of urging lenders to write down principal amounts owed by homeowners while Paulson has spoken out against such a practice.

“Falling home equity has definitely caused a lot of people to think twice about trying to sell their house now.  Yet, we are still helping hundreds of homeowners a week who want to understand their options when they choose to sell a house,” said foreclosure expert Patrick McGilvray, president of Sacramento, California-based http://www.TheHomeBuyingCenter.com

McGilvray added, “We’re helping hundreds of people every month buy and sell houses, and it’s a great time for prospective home buyers who are looking for a bargain on a foreclosure house.  For people with a good job and a decent credit rating there are incredible deals out there in great neighborhoods.”

Despite the often gloomy news about US real estate, the National Association of Realtors reported that prices for housing actually rose in more than 70 metro regions, including a handful that reported increases of more than 10%.

Sites Redfin, TheHomeBuyingCenter, Zillow, Trulia, all cite good traffic

Talk about an uh-oh moment.

It was late October, and Redfin, an online real estate brokerage in Seattle, had received just three months earlier a $12 million investment led by the marquee venture capital firm Draper Fisher Jurvetson.

In the interim, the mortgage industry melted down, foreclosures soared and housing sales slowed to a crawl. Then one of Redfin’s biggest markets, Los Angeles, was battling a series of wildfires and Redfin’s sales had stopped cold.

Redfin was not the only victim of bad timing. Venture capitalists poured about $50 million into three other real estate Web sites last year - Zillow, Terabitz and Trulia - only to watch the market enter a historic slide.

Now, although most of the real estate industry wishes it could fast-forward through 2008, these online startups are surviving nicely. Each company recently reported strong sales and increases in Web traffic. Trulia jumped to the top by the end of 2007, from sixth place in 2006, according to Nielsen Online.

Although these sites are not growing as quickly as they might have during a bullish market, they are at least growing.

“In September, we thought it was maybe the beginning of a very long downturn,” said Glenn Kelman, Redfin’s chief executive. “But for whatever reason, the last few months have been very strong for us.”

Executives of Trulia, Zillow and Terabitz said they, too, were encouraged by recent results. Online real estate companies, they added, could be today’s version of the online travel agencies that flourished after the Sept. 11 attacks: A cheap alternative for suppliers looking to market a product that is suddenly in low demand.

In this case, brokers and agents have seen their marketing budgets shrink in lockstep with their commissions as they struggle to sell homes.

“There’s no doubt that a lot of brokers are feeling some pain right now,” said Pete Flint, chief executive of Trulia, a real estate search service in San Francisco. “They’re spending less on advertising than they were, but they’re spending a significantly larger portion online, because it’s cheaper, and it’s where the audience is.”

Flint would not disclose sales figures, but he said traffic was growing more than 10 percent monthly, “and revenues are growing much faster than that.”

Redfin is a slightly different story because it does not accept advertising from brokers and agents. Rather, the site competes with traditional brokerages to offer people a way to buy and sell homes without face-to-face contact with an agent.

Buyers and sellers communicate with Redfin’s agents - in effect, customer service representatives on the Web - by phone and through e-mail to negotiate deals and arrange house visits, among other things. Customers pay far lower fees to Redfin than they would pay to traditional agents.

With home sales slowing, Kelman said that “we had to get very serious about figuring out what works and what doesn’t for sellers.” The company’s analysts pored through sales data and found that, among other things, listings that make their debuts on Fridays draw 7.7 percent more visitors than those introduced on Thursdays. In addition, listings priced at $351,001 receive significantly less attention online than those listed at $350,000, because of how real estate search engines filter their results.

The company began disseminating such tips to clients in December, around the same time Redfin’s results began improving. Since late September, the site’s share of real estate sales in which Redfin represented the buyer rose by 23 percent in Seattle, to nearly 2.5 percent, and jumped by 176 percent in the San Francisco area, to nearly 1 percent.

Zillow, which in September raised $30 million from Legg Mason Capital Management and others, attracted 20 percent more visitors in December 2007 than in December 2006, according to Spencer Rascoff, Zillow’s chief financial officer.

“Our growth actually accelerated in the back half of the year,” he said. “In a down market, buyers, sellers and agents need more tools.”

The advertising revenue that Zillow generates for every 1,000 pages on its site has more than doubled from a year ago, Rascoff said, as the site has added more sales agents and advertising products that allow marketers to reach homeowners at specific addresses. (People wishing to see Zillow’s appraisal of a home type in the address).

Terabitz, which raised $10 million from Tudor Capital in July, builds and maintains online portals for real estate brokers and agents. The business only began selling its services in September, but Ashfaq Munshi, Terabitz’s chief executive, said he was pleased with the progress. The company introduced its first six brokerage sites this month, including that of Century 21 Abrams, Hutchinson and Associates, www.century21ah.com, which serves Middlesex and Mercer counties in New Jersey.

Whether the success of the newcomers will spread to more established sites is an open question, said Kenneth Cassar, an analyst with Nielsen Online. “There’s dichotomy with what’s going on in this category, when it comes to visitors and advertisers,” he said. While the number of visitors is up, the number of ads run on real estate sites dropped 31 percent last year when compared with 2006.

In past years, Cassar said, consumers who visited these sites were usually in the market for a house, a new mortgage or goods to help them complete a remodeling. “Today, they want to understand the impact of the broader market on their local market,” he said. And as consumers find mostly bad news on that front, they are not exactly great targets for marketers who want to sell them new couches, new homes or a new mortgage.

“But people still need to live someplace and move from time to time,” Cassar said. “So there will be a consistent base of activity that’ll keep a number of these players quite happy.”

By Elizabeth Razzi

Maybe the world doesn’t need yet another real estate Web site promising to revolutionize the way we buy homes. But the launches keep coming anyway, and the Washington area just got a new one, Sawbuckrealty.com, earlier this month.

Sawbuck, a real estate brokerage that exists only on the Web, makes all the usual promises: cool and easy home searches, referrals to real estate agents, and the chance for buyers to save thousands of dollars on each deal. It sounds wearingly familiar, but Sawbuck looks as if it could be smarter than the average URL.

It allows you to search all the homes listed on the local multiple-listing service, Metropolitan Regional Information Systems, and includes price data that used to be available only to real estate agents. It’s likely to be the site I use most often to search listings and gather price information.

Sawbuck is the baby of Steve Barnes and Guy Wolcott, who run a District mortgage lender, Flex Funding. Its launch includes only Washington-area homes, at least for now.

Sawbuck’s business model addresses some long-standing problems in how real estate deals are handled on the Web and in the physical world.

One of those problems is that too many sales tools, from low-tech yard signs to high-tech Web sites, direct buyers to the agent who listed the home, even though the listing agent already represents the seller. Smart buyers find their own agent who can negotiate for a lower price and better terms.

Another problem is that too many brokerages promote their own mortgage and title services to buyers without offering substantial discounts for keeping all that extra business under one roof.

That’s not the way it should work. When you buy the burger, fries and Coke, McDonald’s gives you a cheaper price than if you buy the pieces separately. It’s the same thing with homeowners and auto insurance; if you buy them together you get a discount. But real estate brokers rarely offer a substantial price break when you buy their combo package.

Sawbuck tackles both issues. The system does not funnel buyers to the listing agent. Instead it offers to match buyers with an experienced local agent who can represent them. And it promises significant discounts if you use it for brokerage, mortgage and title services.

I’ll get to the details on those discounts shortly. First let’s look at the fun part of the site, the search function. All worthwhile real estate Web sites offer a good search function; it’s the carrot that lures potential buyers.

Sawbuck is not the first Web site to offer full multiple listing service access in the area. Redfin.com, for one, offers it. But Sawbuck makes the information easier to find and provides more price data for recently sold homes.

Redfin recently boosted its price-comparison content, but its pages are statistic-heavy and harder to interpret than Sawbuck’s. The latter’s approach is easier: Click on the map, look at the house picture, and see the sellers’ original asking price and their current price. You can click from house to house and get the history of recent sales through the whole neighborhood.

Map-based searches, such as the one on Sawbuck and other sites, are a fun, efficient way to explore neighborhoods. Sawbuck’s version offers more information than most. Click on a for-sale house to get the full addresses, original listing price, subsequent price markdowns and the length of time on market. That’s critical information for estimating how much a property is worth.

Sawbuck makes it easy to track where you’ve visited already. You can rank each home on a scale of one to four stars. On repeat visits, just skip those you’ve already given a low rank. (Rankings are just a memory aid and are not published on the site.)

Unlike other sites, Sawbuck allows you to use the same map flyover method to gather price information for recently sold homes. It includes the original list price and the actual sales price, which can help you figure out the direction in which prices are trending.

After you’ve finished searching, should you stick with Sawbuck for the purchase? It’s at least worth getting a referral to one of its participating agents. Interview the agent and ask for references before you commit to working with him.

When I’ve tested other Web sites, I have all too often been referred to an inexperienced agent who knows nothing about the specific neighborhoods in which I’m interested.

Wolcott said the company plans to refer buyers only to screened real estate agents who have significant experience working with buyers. I was able to speak with two longtime, top-selling agents, one in Virginia and one in the District, who confirmed that they are working with Sawbuck, although both asked not to be named for fear of undermining their traditional brokerage business.

We can hope agents will take the paper bags off their heads once the Web site becomes more established.

In exchange for referring buyers to agents, Sawbuck earns a referral fee of about 30 percent of that agent’s share of the commission. Wolcott said the company uses part of that fee to buy down the buyer’s mortgage interest rate with its participating lender. That lender also agrees not to charge prepaid interest — in other words, points — or other fees related to the mortgage, not even for the appraisal or credit report.

Like the incognito real estate agents, that lender doesn’t want to publicize its involvement with Sawbuck so other customers don’t push for similar discounts.

The title company doing business with Sawbuck, District-based Federal Title & Escrow, will waive fees amounting to about $300 for Sawbuck customers. Title companies earn most of their income from hefty commissions on the title insurance they sell. For example, Todd Ewing, president of Federal Title, said his company retains 85 percent of the premium as its commission. That’s how a title company can afford to discount or eliminate its other fees.

If you use a Sawbuck real estate agent, you are not required to also use its mortgage or title partner. But to get the discounts, you must use the Sawbuck agent.

I hope the Sawbuck system develops as promised. So far it looks like a good, low-risk deal that puts more power in the mouse-clicking hands of buyers. At a minimum, it’s already a great search tool.

SAN FRANCISCO (Reuters) - “The golden dream by the sea” is how Gov. Arnold Schwarzenegger has fancifully described California. Yet for thousands who bought homes during the Golden State’s latest housing boom, foreclosures have turned recent months into a nightmare.

Economists disagree whether soaring foreclosures in California suggest the world’s eighth-largest economy is poised to slump or if it is just seeing its share of disarray from the subprime segment of the mortgage lending industry.

Whatever experts call it, Dorothy Hicks, 74, a retired federal employee in Oakland, California, is seeing her American dream of owning a home teetering on the edge of collapse. After refinancing into an adjustable-rate mortgage last year, she faces possible foreclosure on her home of nearly 40 years.

Hicks says she was told the mortgage was a fixed-rate loan, but was soon overwhelmed by soaring payments when its interest rates rose. “By the time you pay (utility) PG&E, the telephone and the mortgage, you don’t have any money,” she said.

Christopher Thornberg of Beacon Economics in Los Angeles says California’s economic outlook will darken as a growing number of households slash consumer spending to meet rising mortgage payments, especially on adjustable-rate and subprime loans that became popular for those with weak credit.

“We have a lot more of these shady mortgages out here, so that doesn’t bode well,” he said. “We’re due for a very traditional consumer-led downturn.”

RECESSION OR RESILIENCY?

Analysts had expected California’s economy to cool because its housing market has slowed from the torrid pace of recent years. Prices, long far above the national average, are flat or slipping as sales decline.

A report last week by DataQuick Information Systems pointed to additional trouble. The real estate trend tracking service tallied a record 17,408 homes in the state falling to foreclosure in the second quarter.

While a fraction of California’s 8.4 million residential properties, the foreclosures marked a jump of nearly 800 percent from a year earlier, propelled by markets awash in subprime loans.

Countrywide Financial Corp., the largest U.S. mortgage lender, last week slashed its 2007 forecast, suggesting that rising delinquencies and defaults may spread beyond subprime borrowers to borrowers with stronger credit.

“Business is picking up and I think it’s going to continue,” said Patrick McGilvray, president of TheHomeBuyingCenter.com, a Sacramento firm that matches distressed homeowners with investors and home buyers.

Other experts say California’s mortgage troubles will be largely contained to risky borrowers who bought houses more expensive than they could afford, as well as their lenders. But they see no signs of a slowdown in consumer spending or recession.

Howard Roth, chief economist for the state Department of Finance, said the economy of California, the most populous U.S. state, is fundamentally solid. Its current housing troubles pale compared with the beating the housing market suffered in the early 1990s from gutted aerospace payrolls, he said.

The state’s unemployment rate was 5.2 percent in June, compared with nearly 10 percent in late 1992 and early 1993, when Californians desperate to leave the state were parting with their homes at fire-sale prices.

“In the early 1990s we were losing a major industry and losing it for good. Now we’re paying the price for a housing bubble, but housing will come back,” Roth said. “We really haven’t lost jobs yet. That may happen. But in the early 1990s we lost over 500,000 jobs.”

Owning a home to call your own is still the American dream. Many first-time home buyers find themselves in the frustrating situation of discovering that the amount of home they can afford may not be all that they had hoped for. There’s nothing more depressing than calling a real estate agent, telling them your budget and what type of home you’d like to buy for that price, and then having them laugh at you and then explain what you can really afford. While some home buyers accept defeat and settle for less, many others have found a market that allows them to purchase homes below market value, getting them much more home for their money than the traditional methods of finding a home. Many first time home buyers are discovering the foreclosure home market.

As with any high-dollar market, the real estate market has its bargains as. It’s just a matter of knowing where to look. Foreclosure properties offer first-time home buyers (and seasoned home buyers, as well) a way to acquire their homes at incredible prices, sometimes saving as much as 30% to 50% on the price of their home. Some properties can be purchased for half of their market value. Up until recently, the hard part of purchasing these homes was finding foreclosures that were available for sale.

Before the Internet explosion, finding foreclosure homes meant buying expensive lists or knowing someone with inside information. Today that’s all been changed. Websites like www.TheHomeBuyingCenter.com maintain databases of thousands of foreclosure homes and allow home buyers to search by state and zip code, zeroing in on their target area. The search results provide potential home buyers with details about the foreclosure homes that meet their criteria, such as how many bedrooms and bathrooms the home has, what the price of the home is, who to contact for information about the home, and sometimes the address and a photo are provided as well.

In addition to cost savings, first-time home buyers can benefit from the financing perks that are sometimes offered by governmental agencies and banks that have repossessed properties that need to be sold. Oftentimes, these buyers can finance their purchases with little money out of pocket and at reduced interest rates. When a bank forecloses on a property, they call it “real estate owned” or REO. These REO homes are often offered substantially below market value. It is not uncommon for banks to offer financing with no points, low loan costs and no prepayment penalties on their REO homes when they finance them.

While the traditional methods of purchasing real estate do serve certain purposes, many home buyers, especially first-time home buyers, can be better served utilizing the resources of a site like www.TheHomeBuyingCenter.com. Buying a home for thousands less than market value can help these home buyers into the type of homes that they could not otherwise afford.

SACRAMENTO — According to the Federal Home Loan Mortgage Corporation and other real estate companies such as The Home Buying Center.com more than $1 trillion in adjustable rate mortgages (ARMs) will reset this year bringing higher monthly payments and a corresponding increased risk of foreclosure to thousands of homeowners.Analysts are divided on what this change will mean for the American and global economies, but many families and commentators are worried. Many Californians, and their counterparts in the rest of the country, live paycheck-to-paycheck and, because of unrestrained credit card spending, actually spend more than they make every year.

According to DataQuick Information Systems in 2000 only 18.9% of homebuyers in the Sacramento region purchased properties using ARMs. This number dropped in 2001 to 12.1%, but spiked to 65.1% in 2004, and 72.8% in 2005. The number for 2006 was 62.5%. ARMs were created for sophisticated buyers who planned to live in a given house for a few years, but their use has mushroomed dangerously.

“Offering people long-term credit secured by a mortgage on a single family home has been one of the tools that helped fuel the American dream of home ownership,” opined Patrick McGilvray, J.D., President of http://www.TheHomeBuyingCenter.com. He continued, “In recent years though, this tool has become perverted and only a very few will ultimately profit. In years past people could not buy a home until they showed that they had the discipline, or luck, to be able to provide a 20% deposit on the home they wanted. I believe that 100% financing arrangements and the proliferation of ARMs will ultimately hurt the American consumer and our economy as a whole.”

The deterioration in fiscal responsibility of average Americans has been a trend for a long time, but in recent years the skyrocketing value of homes in the West, especially the central valley of California, has provided homeowners an easy way out. Mortgage lenders, banks in particular, have reaped large revenues from fees, points, and interest charges by selling home equity lines of credit (HELOCs) and refinancing schemes to homeowners.

Many homeowners were seduced by solicitations like, “pay off your high interest credit card debt.” But, debt refinancing often creates a house of cards for ordinary working people. The stability of these houses will be tested in the months to come.

SACRAMENTO, Calif.-As the new year begins thousands of local homeowners will find it difficult to shape up their finances because they will see their adjustable rate mortgage payments increase dramatically. “Imagine what people living paycheck-to-paycheck or on a fixed income are going to do when their mortgage payments jump by hundreds of dollars,” said Patrick McGilvray, J.D., President of www.TheHomeBuyingCenter.com, Sacramento’s #1 Home Buyer. “We are a network of local real estate investors and short sale experts who help people who need to sell their homes faster than the traditional way of using a real estate agent. We help them avoid the risk of letting of their houses sit on the market for months.”

www.TheHomeBuyingCenter.com predicts that thousands of Sacramento homeowners will be facing foreclosure in 2007 because of higher mortgage payments, declining home sale prices and longer times on the market due to a large inventory of homes for sale. This combination can make it difficult for sellers to sell their house if they are behind on their payments.

“We have a unique business model,” says McGilvray. “There is no publicly available information to track homeowners who fall behind in payments when no foreclosure proceeding has started on their home. The Home Buying Center team is known for having a finger on the pulse of the pre-foreclosure market because hundreds of people are calling us at 916-920-FAST when they’re about to miss a payment on their home.”

The forecast of declining home values is supported by many national and local experts such as Sacramento broker Mike Lyon, of Lyon Real Estate, who, in response to a question about area home values, said recently, “We still think there’s so many homes that prices are going to decline in most areas by 10%.”

William Longbrake, a senior policy adviser to the Financial Services Roundtable, an industry group, said he is among those who believe “the worst is still ahead in the housing market” and home prices will continue to fall. Homeowners are not the only ones feeling the pain as builders scale back their plans to construct new homes, and many people in the mortgage and title industries are joining real estate agents in looking for new lines of work.