Real Estate traditional scenario

Recently, I've been reading and discussing a lot about real estate and how different players in the market [especially US] are trying to use Internet as a medium to attract more and more business.
Traditionally, this is space is driven by agents and agents only. Brokers have facilitated growth of these agents and have made it easier to for anyone to become an agent. Over the last 10 years, the number of agents has doubled while the prices of the properties has gone up many folds.

How do agents work?

Today, agents hold the key (literally) to the properties and the transaction. Although, people are starting to use FSBO (for sale by owner), but still it's not even 15% of the properties sold thru agents. Since it's such a big transaction, sometime the biggest in life, people are not scared but hesitant to do it by themselves. Although, I've seen the agents are no better except that they have been doing it for so long and they know the process. This reluctance resulted in always using an agent whether you are buying or selling.
Typically, seller pays 6% of the cost of their house when they are selling it. This 6% is in addition to the cost they might pay for closing and other fees. 3% of this goes to seller's agent and 3% goes to the buyer's agent. You could say that a buying a house is free since a buyer never has to pay anything.

Buyer's Side

Since a buyer doesn't pay anything to his/her broker, they don't really care about the commission their agent is getting. Although, one could question what work is actually done by the agent.

Let's look at the journey of a buyer.
- select an agent
- select a neighborhood (factors like near work, school district, pubs and restaurants, transportation etc)
- city, suburb, lifestyle
- age, type of house
- rooms, floors, yards
- luxury (waterfront, community, acreage, community)
- market research (cost of living, crime)
- channels for research (papers, magazines, hours history, price trends, online, agent)
-- SELECT A HOUSE
- research
- price
- loan
- offer/counter offer
- contingencies
- inspection, title, appraisal
- SIGNING

In this whole list, most of the work is done by the buyer or needs buyer's feedback or decisions from buyer. Once the house is selected, it's more of a formality other than 'offer' stage. Another important aspect is selecting the Agent.

I would argue that when most of the work is done by the buyer, why is their broker getting paid 3%. Same question is asked by lot of other people and there are business models which exploit this inefficiency (more on this in the part 2 of this blog).

Seller's side

Seller and their broker has a lot more work on the other side. That's generally true because things should be easier for someone who's spending the money and slightly competitive for those who are getting that moolah.

A seller needs to do a lot more stuff upfront even before their house is ready to be in the market. Staging/Imaging and just trying to make you house pretty so that it'll attract buyers. Not a lot of agent pay huge attention to this and it impacts the seller in their cost of the house. People generally look for these simple fixer uppers and make a huge premium on it. If you look at "Designed to Sell" on HGTV, you'll see how a $50 paint job with $0 clutter removal makes a huge difference in selling a property.

Once your house is all ready to go, the agent needs to work over-time in marketing and putting the house up on MLS and other channels to market it. Today, it's very difficult to find a good selling agent since there's not much visibility into agents transactions and there's no ranking.

What's coming in the next blog?
- finding good agents
- quantifying agent's work
- exploiting market inefficiencies
- FSBO and Full Service: what's in between?
- new business models which are out there

How I decided to buy another iRiver iFP 799T 1GB Player


After having bought iAudio U2 1GB flash player, and having done extensive research on Flash based player, this is now the best player in my list. You can also refer to iRiver 1GB players review which I wrote with all the analysis.

In Summary, of all the flash players, 1GB is the max which is available other than iAudio 2GB model which has some problems in efficiently utilizing the space.

The only drawback to this player was that it couldn't function as USB storage device and support for OGG format was not available, but with the newer firmware these problems are solved. This is why I purchsed this unit instead of iAudio. Also, iAudio seemed to have limited availability and support.

Size: Max available using Flash technology (which means no moving parts like Hard Disk based) in the market with best utilization. iAudio 2GB has limitation in the number of files you can store as well as it cannot use all the 2GB space.

Formats: supports the newer OGG, WMA and variable MP3 formats also with the latest firmware which is available on the iRiver site (only if your player is not shipped with the latest one and has v1.21).

Sound Quality: The earbuds which come in the package are as good as any other portable player earbuds. Although, I get slightly better quality with Sony EX 71. The sound quality, when connected to the amplifier at home, is also very rich if you have good quality files on the player. Ofcourse, ultimately it depends on the file quality/size.

External: Silver and Black, could have been available in more color combinations. But, the different colors are for different capacity size players.

Other Features: FM radio -- excellent reception and quality, mike/radio/line-in recording -- good, customer equalizer - good feature, Voice recording - works pretty good and I'm thinking of taking this to closed concerts, other modes and visualizations.


Battery: 1AA cell which with good for up to 35 hrs (not quite 40hrs as advertised). I think it also leaks battery if you don't it for few weeks. But, I also have a practise of removing batteries from electronic equipment if I'm not using them. Of course, not for torch. AA works out more effective and cheaper as compared to AAA batteries (shorter life) and built-in Li/xxx battery (limited life, have to always carry a charger). 'AA' battery was an important decision in buying this player since they can be bought anywhere in the world.

Display: ok screen, atleast it has one, not like iPOD Shuffle. Backlight is great, but consumes a lot of battery.

Pretty intuitive interface with the joystick and other buttons.

All in all, its a great player, good features and they listen to their customers also as they have added support for OGG files and usage as a USB disk.

-- feedback after couple of weeks usage --

* WMA files ripped from Windows Media Player in VBR (Variable bit rate) don't play on the device. I had to convert those to MP3

* Once you install the latest firmware v1.28 to enable this to be recognized by Windows Explorer, Real Player, and Windows Media player; the player will no longer be recognized by the iRiver Music Manager. This is not a problem for me since I generally use Windows Explorer only. But, if you are tied to Music Manager software from iRiver, you might not want to update the firmware, which will restrict your device to be used as a flash hard disk.

I'm also worried since the device cannot be recognized by the Music Manager, how will I update the firmware to a more newer version which might come later. Hopefully, iRiver will update the Music Manager to recognize it, or come up with another way to update the firmware.

Other than these two factor, I'm totally satisfied with the player and the quality.

Cannot decide between Flash and HDD based MP3 player

This review describes the complete thought/research cycle for deciding a digital player. It includes hdd based, flash based, different flash based capacities, features, battery life etc. The features etc for any player are already available on the detail pages and else where so I'm not including those, instead doing the comparison exercise. I've also written this review for other flash players which I considered in the comparison.

I've been using iRiver SlimX iMP-CD350 CD/MP3 player for quite a while now and decided that its time to move to a smaller player which is more versatile and portable. I'm just not a CD person, and as soon as I buy a CD, I rip it and get the files all over my computers/laptops.

There are lot of smaller digital music players available in the market. My first decision point was to decide between HDD (hard disk drive) or Flash memory based players. HDD based are available from 4GB to 60 GB and since it has a mechanical drive, it's not suited well for my activities (gym/running etc). While flash based don't suffer with this draw back, they come only in 128MB, 256MB, 512MB, 1GB and 2GB. I wasn't buying a player to make it a permanent repository of all my music and having up to 1GB of music (16 hours of CD quality, 32+ hours otherwise) was good enough for me. For this reason, I decided to go with Flash based player. Plus, most flash based players have direct USB connectivity and some of those can also be used as a regular flash disk for document transfer and storage.

Next step was to decide the capacity. I was inclined for a 2GB player since it'll store even more songs, but found some warning in iAudio (Jet Audio) site where a 2gb version can store only up to 450 (files + folders) and the player cannot address the last 260MB memory of the player. I had also used a flash based 2gb usb storage device which had similar storage problems. So, I went with 1GB version and decided to give more time for 2GB+ technology.

Next was feature sets and brands. I had following things in mind in terms of features: formats capable, battery life, firmware upgradability, and FM player. I considered Creative (MuVO Micro N200), iRiver (iFP 799), Apple (iShuffle 1GB), and JetAudio (iAudio 5, G3, U2).

iRiver had drawbacks were not being able to work as USB storage device, limitation on Ogg audio and MP3 VBR files. Apple was not just my thing since it lacked a display, FM tuner etc and accessories like FM player are added cost/size/weight too. Creative was also limited only on WMA amd MP3. It seemed like most of the players but iAudio/Jet Audio have format limitations.
Jet Audio (iAudio) had most of the formats available (MP3, WMA, WAV, Ogg Vorbis, ASF etc), firware upgradable, trendy size, good reviews, USB storage device and good choices. And, I was totally bought on iAudio.

The last step was to decide on the model. I considered iAudio 5, G3, and U2 version. The main differences are 5 is based on 'AAA' batter and lasts only 15-20 hours, G3 is slightly wider but less longer model with 'AA' battery and supports up to 45-50 hours on one cell, and U2 was similar to '5' but had internal Lithium Polymer battery and the same 15-20 hours playback time. U2 model also lacked Ogg Vorbis format capability.
If I was travelling long distance and not able to charge LiPolymer battery, it's a waste. And, 15-20 hours just doesn't turn not ecnomical with 'AAA' battery, so I ended up with iAudio G3 1GB player and I'm very satisfied with the player itself.

Everything about G3 player is great but it has a slightly longer start-up time. It has great radio reception, great sound quality, small enough size, USB sturage device, ok microphone, ok recording.

All in all, a great player.

Choosing Mobile Data Plan in US (part 2 of 2)

After getting the BlackBerry, I've been surfing both WAP and regular HTML sites on it. HTML is definitely a bad experience partly due to form factor with header/footer displays and mainly because of slow connection speed.

So, I decided to checkout EDGE on Cingular which is supposed to be much faster than GPRS, as well as UMTS or Universal Mobile Telecommunication System (Cingular) which is launched in 6 cities in US.First of all, one store in downtown Seattle did not have live phones and they weren't aware of UMTS also. The couple of guys store in Pacific Place store seemed more knowledgeable but they could get me a phone with EDGE and HTML capable browser. There were couple of phones from Sony Ericsson and Motorola Razor which had EDGE Class 10 (240 Kbps download and 120 Kbps upload). I didn't see much difference while browsing WAP sites on EDGE vs. GPRS, but there were no media sites to which I could compare.

I then asked about UMTS network which is available in Dallas, Detroit, Phoenix, San Diego, San Francisco, and Seattle. UMTS (also known as WideCDMA or WCDMA) is an entirely new setup based on CDMA while EDGE was just a software upgrade to GSM network. Whereas GSM networks segregate calls into exclusive time slots, CDMA networks mix a bunch of calls together into a single channel, with each call encoded with a special key. (Think of it as a group of people in a room, each speaking loudly in a different language. Only the decoder with the right key—the one that speaks the right language—can understand each call.)This has a maximum theoretical speed of 384Kbps but while talking to few people, they could only get 299Kbps in Dallas only. While the upload speed stayed at 54 Kbps, similar to that of EDGE. Cingular is also working on a software upgrade to UMTS which will be HSDPA and get average speeds up to 700 Kbps, but this will happen in 2006.Cingular stores only had Merlin U520 PC card on UMTS and couldn't get any phones, while AT&T (now cingular) had a Motorola A845 and another Nokia 6230 phone. I couldn't get my hands on them.

UMTS in Europe uses both the frequency bands 1900 Mhz and 2100 Mhz. 1900 Mhz is sued for outbound transmission while 2100 Mhz is used for all inbound. The problem with UMTS in US is that 2100 Mhz band is not available since its used for US military for satellite communications. Although FCC has agreed to free it up, there's no timeline.This kind of prohibits the usage of non-US UMTS phones in US and UMTS isn't 'U' anymore.

For this reason, Motorola has released a US version of its true UMTS phone 'A835' as 'A845' in US only, which will also operate in 850/1800/1900 frequencies.

I also looked at Verizon's Wireless EV-DO network which was much promising as compared to speeds and availability. This has been released in 32 US metro areas and gives an average speed of 300-500 Kpbs with peaks up to 1.1 Mbps. CDMA 1xRTT EV-DO is a wide channel on existing CDMA network only on data. It's generally offered only on PC card, but there's an Audiovox XV6600 PDA phone which supports pda or laptop browsing. The catch being that the phone can only talk to laptop using bluetooth thus limiting the max speed to 400 Kbps, although there are some trial versions of USB communication also which is not 'supported' at this time.

All in alll the state of affairs in US for mobile data plans is really sad and not a whole lot of options. Everyone has GPRS, EDGE is not a considerable improvement and with limited choices as well as new technology around the corner, it doesn't make much sense to spend on it. UMTS is limited, while EV-DO seems to be the best option. My only problem with Verizon is that they do not use SIM cards, while I love to store everything on SIM and change phones every now and them.

This is part 1 of 2 posts in "Choosing a Mobile Data Plan in US"

Service Provider

I've been thinking of getting a data plan for a cell phone which I could use for surfing, trying out new apps, voice calls as well as the new developments in 3G space. I asked a few people and did a lot of research to finally have things clear in my mind with respect to offerings, products, technology, geography etc. The different technologies available are 2G (GSM), 2.5G (GPRS), 2.75G (EDGE) and 3G (WCDMA). Their data rates are typically 9.6 kbps, 20-40 kbps, 144 kbps, and 144 kbps respectively. In terms of service providers, T-Mobile in US supports only GPRS while Cingular/AT&T has EDGE available.I considered Verizon and Sprint also but both of them are cdma and I was looking for GSM based which uses a SIM card and the phone can be used anywhere.

After deciding on GSM, choices were T-Mobile and Cingular only. I didn't get any first hand feedback from people and most of the references were from the presentations of other people. Cingular seemed slightly better from T-Mobile from the plans as well as from my experience also. I tried same phone on these different technologies (GPRS from T-Mobile and EDGE from Cingular) and found slightly better performance from EDGE while browsing my.yahoo.com pages. I compared only the HTML pages thru HTML enabled browser and didn't try WML. The biggest problem while surfing is that HTML pages are not designed for phone screen and there are 10s of screens of HTML display only for header and footer and you have to scroll really down before reaching the real content. Given the above experience and other advancements and features in Europe/Asia over EDGE technology, I was tempted to settle with Cingular.

Cingular has a two year contract while T-Mobile has one year, and Cingular also sometime gives troubles while unlocking a tri/quad band phone after few months. Plus, I had heard some bad CS experiences with Cingular also. T-Mobile on the other hand always unlocks the new phone after 3 months of usage, plus I've been a T-Mobile customer for last 3 years or so. So, I signed a T-Mobile unlimited data plan.

If you plan to browse, write applications, download stuff etc, make sure that you have unlimited data plan. And, if you choose Blackberry integration, it takes another $10 per month with the plan.

Selecting a Phone

Motorola Razor is a cool phone and I was quite tempted, but I wanted to get something which would let me download and keep data from the internet, as well have an HTML browser since not all sites are yet in WML. These requirements pretty much eliminate all the phone except for PDA phones and Blackberry phones.

I considered BlackBerry SureType keyboard with two characters on one key, BlackBerry fulll keyboard, HP iPAQ, PalmOne. Basically, PalmOS, WindowsMobile and Blackberry OS. iPAQ was too expensive although had camera/flash with it. Palm was ok and nothing outstanding. Blackberry was cheaper and only acceptable solution with corporate integration also.

So, I opted for that and also downloaded BB's development environment to write the applications.

thinking of buying/selling a house

Choosing residential real state

Why do we rely so much on Real State agents (RSAs for now) for everything related to buying or selling a house? OK, some people are trying "For Sale by owner only", but how much does it help? You still need agents to complete the paperwork, cross your T's and dot your I's. Wouldn't it be nice if you knew exactly what your agents are doing and you pay accordingly, just like when you go to H&R Block to file your taxes and they show each and every line they bill you for. Maybe you wouldn't need them for most of the work and cut their share from traditional 3 percent of the sale to 2 percent or less.When I bought my condo for the first time, I did most of the research about the places, neighborhoods, and to find just the right house. Before selecting the house all I got from the RSA was automated search results from his company and his KEY to open the lock so I could see the place from inside. I agree that he did answer most of questions and did help in offer/counter offer process. But this is something which could be put out there on the internet so people can refer to it and build a knowledge base.

Another aspect of buying a house is price comparison for neighborhoods, previous sales, appreciation for areas etc. This is something which is available with the agent, but its only when you ask for it. If you don’t know what other property sales to compare your house to, you don't know what to ask. So, you don’t get the right answer. Most of this information is already available from the county's assessors department, but it's not their interest to make it known to everyone. What if someone worked on exposing this data from the county office to general public or make it a service which any other application developers can use. That would be interesting and I bet different statistics and usage of such data will come up, just like Google maps.

One such attempt is made by a Seattle company Redfin.Com. Although, they ultimately link you back to a broker and claim that it does save on RSA's commission.

Zillow.Com is another such company with good experienced management and a great team. They haven't yet exposed what they plan to do, but claiming something big. Bigger than NWMLS. Bigger than MLS. Making it a phenomenon to change they way real state transactions happen. Since it includes management of Expedia.Com, they plan to change the housing industry just like they changed the Airline Ticketing. But think about it, how many plane tickets you buy in your life time and how many houses do you buy?

This is just my observation in last few years and I think its going to be real big.

Contact me at hisacs@gmail.com if you have any questions or comments.

Some products which I own and recommend.