Category: Business

Why not tiered real estate commissions?

by philg

From this blog in 2005:

People who sell $1 million condos often complain that paying a 6 percent standard (read “fixed by collusion” among realtors) commission is too much ($60,000 for what might only be a few days of work). Economists who have studied the real estate market, however, find that in some ways the commission is too low because realtors don’t work very hard to sell clients’ houses compared to their personal houses. In other words they sell a customer’s house relatively cheap so that it will sell quickly rather than work for many weeks to get the best price and 6% of the extra.

Why haven’t we seen anyone propose a commission structure that says the realtor gets a 25% commission… but only on the amount above the assessed value of the property? Your typical $1 million NY or Boston apartment is assessed at maybe $850,000 and could be sold for that price with almost no effort in a few days so the commission paid on such a sale shouldn’t be more than $1000. If a realtor could sell the place for $1.2 million via clever marketing, however, she should be entitled to a fat commission.

In the intervening 16 years, various Internet services have made it easier for owners to sell their own houses. We can assume that realtors add value, since most people still do hire realtors, but they’re adding value on top of an easy-to-establish base, e.g., 10 percent below the Zillow Zestimate. Presumably a “for sale by owner” (free) listing on Zillow could easily sell a house at 90 percent of its Zestimate. (5 minutes of marketing effort!) If so, the structure that would align sellers’ interests with agents’ interest is a commission that was 0 percent of the first 90 percent of expected value and 15-25 percent of the sales proceeds above that.

How can it still be case that an agent who does a terrible job, selling a house for 95 percent of its value, gets paid almost as much as an agent who does a superb job, selling a house for 115 percent of its value?

This is the kind of question I am pondering as we declutter and pack up for Jupiter, Florida!

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Animated and illuminated BLM yard art? (or Rainbow Flagism displays?)

by philg

Our neighborhood has gone from Bleak Maskachusetts Winter to Yet Bleaker Maskachusetts Winter due to folks having taken down their epic yard displays, e.g.,

What about cashing in on the latest trends in righteousness, and making American suburbs far more beautiful in the process, by offering animated and illuminated BLM yard art analogous to what one can buy for Christmas? The Christmas season is short, but the BLM season can last continuously for decades!

Americans have demonstrated a commitment to BLM yard displays by purchasing signs, but generally these are not illuminated. This should give us some confidence that some containers of night-time BLM yard displays would fly off the shelves.

Readers: What should the illuminated and animated displays depict? Let’s refer to the Wikipedia timeline of BLM for a few starter ideas:

  • animatronic Karen Amy Cooper with camera and image recognition software that can identify Black passersby and harangue them
  • an inflatable burning Minneapolis Target store, commemorating the mostly peaceful protests of 2020

What if we adapt the idea to the religion of Rainbow Flagism? Would would the nighttime lawn scenes look like then?

Related:

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I was proved wrong about Goldman Sachs

by philg

From How to steal $billions (September 2019), regarding the combined exploits of Jho Low and Goldman Sachs as chronicled in Billion Dollar Whale:

Despite connections to the Obama White House, things do begin to unravel for Mr. Low. I don’t want to spoil the suspense, though. The worldwide civil and criminal litigation is ongoing, but it seems safe to say that Goldman gets to keep all of its fees!

Turns out that I am wrong yet again… “Goldman Sachs Malaysia Arm Pleads Guilty in 1MDB Fraud” (NYT):

Goldman employees, the bank said, took part in a scheme to pay $1 billion in bribes to foreign officials. The bank, in turn, arranged the sale of bonds to raise $6.5 billion that was intended to benefit the people of Malaysia but was instead looted by the country’s leaders and their associates.

In the end, the scandal, which netted the bank a relatively paltry $600 million in fees, will cost Goldman and its current and former executives dearly. The bank itself will pay more than $5 billion in penalties to regulators around the world, more than it had to pay for peddling bonds backed by risky mortgages a decade ago. And it has moved to recoup or withhold more than $100 million in executive compensation, a rare move for a Wall Street bank.

(It is fascinating how the NYT characterizes a 10 percent fee for selling bonds (more typical is less than 1 percent, according to the book; the super high fees Goldman was able to get made it obvious that fraud was involved, said the author) as “relatively paltry”)

This is a good time to check in with Malaysia. Like Laos, Cambodia, and Vietnam, the country has enjoyed a low death rate from Covid-19:

“Amid coronavirus surge, Malaysia asks what went wrong as Muhyiddin and other politicians take brunt of criticism” (South China Morning Post, two weeks ago):

Three months after an initial strict lockdown ended, the country faces a sharp uptick in Covid-19 cases

Wikipedia has Malaysia down as 85-percent masked, as of August 9, compared to 90 percent in renewed-plague Spain, 83 in renewed-plague France, 75 percent in the always-plagued U.S., 65 percent in Germany, and 4 percent in Denmark.

Related:

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Is watching sports less popular because we can’t watch other people watching sports?

by philg

“Why Are Pandemic Sports Ratings So Terrible?” (New York Magazine) describes a fall in TV viewership in a country where millions of people are more or less locked into their homes, unemployed, etc. How can Americans possibly have something better to do right now than turn on the TV and watch a game that they used to enjoy watching?

Here’s my theory: a big reason that people care about sports is that they see other people caring about sports. In the pre-coronapanic days you’d go into a restaurant and see people in the bar with their eyes glued to a professional sports game. This subconsciously communicated that the game was important. Maybe you’d go over to a friend’s house and the game would be on. Another hint that this game is important.

If you’re by yourself at home, on the other hand, there is nobody else to tell you that a particular sport is important enough to be worth watching.

Readers: What’s your theory? Americans are glued to screens more than ever, right? Why aren’t they watching sports on those screens?

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Blacks and Jews band together to fight the Blondes

by philg

“United Sued for Packing NFL Charters With Young, Blond Crews” (Bloomberg) warms my heart on so many levels, and not simply as a proud former Delta employee.

United Airlines Holdings Inc. packs its charter flights for sports teams with young, blond crews and bars older flight attendants from working the plum routes, according to a new lawsuit.

The attendants — a Black woman who has worked for the airline for 28 years and a Jewish woman with 34 years of tenure — say that they both tried repeatedly and unsuccessfully to get assigned to work the charter flights.

Sharon Tesler and Kim Guillory said they were told by supervisors that they were unable to get work on the charters because they weren’t on “preferred” lists that were based on team preferences, according to the complaint.

They said they later discovered that young, white blond attendants — with less seniority — were given the assignments.

United Airlines “has adopted and continues to implement procedures that are designed to ensure that young, white, blond/blue-eyed, female employees receive positions with the charter program, while more senior, and Black and Jewish employees such as plaintiffs, do not,” they said in the complaint.

Is it fair to say that this repairs all of the damage from the Jesse Jackson Hymietown incident?

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Fewer retail stores in cities due to higher insurance rates going forward?

by philg

“$1 billion-plus riot damage is most expensive in insurance history” (Axios):

The vandalism and looting following the death of George Floyd at the hands of the Minneapolis police will cost the insurance industry more than any other violent demonstrations in recent history, Axios has learned.

Why it matters: The protests that took place in 140 U.S. cities this spring were mostly peaceful, but the arson, vandalism and looting that did occur will result in at least $1 billion to $2 billion of paid insurance claims — eclipsing the record set in Los Angeles in 1992 after the acquittal of the police officers who brutalized Rodney King.

Shops in the suburbs weren’t torched or looted, right? Rational insurance companies will therefore charge higher rates going forward for retail stores in urban areas. Combined with the extra risk of being shut down due to coronapanic, the risk of losing customers as richer city-dwellers flee during coronapanic, and the higher minimum wages that some cities mandate relative to surrounding suburbs, why would rational business owners decide to continue operating a lot of these shops? So the white suburbanites who came into the cities to join the protests, ostensibly to help their Black brothers, sisters, and binary-resisters, will have ended up permanently degrading city life for Blacks of all gender IDs.

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BLM theme meals at fast food restaurants?

by philg

Stopping alongside one of the elegant restaurants that the Maskachusetts License Raj hasn’t managed to shut down, I was offered a gourmet meal:

If there can be a “Travis Scott Meal”, why not a “Jacob Blake Meal” for those who want to demonstrate their commitment to the Black Lives Matter movement? For those who never think about anything other than COVID-19, a “Dr. Fauci Meal” whose contents may change from day to day? For the politically oriented, a “President Harris Meal”?

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Why are we still out of paper towels and spray cleaner?

by philg

It has been six months since coronapanic started. Why is the local Target still out of paper towels, spray cleaners such as Formula 409, cleaning wipes, etc. People are actually using way more of these items? The Chinese can build a hospital for 5,000 patients in 10 days, but American factories can’t expand production in 6 months?

From August 26, 2020, the Target store in Watertown, Maskachusetts:

(shoppers were continuously reminded via the overhead audio system that wearing a mask was required, a bit like being at an airport and hearing warnings about unattended baggage over and over again)

Maybe AOC and Ed Markey are right? Capitalism is a failure?

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U.S. retail will have permanently shorter European-style hours as a result of coronapanic?

by philg

With tens of millions of Americans on the “$600 per week and chill” plan, a lot of retailers shortened their hours. In theory, things should be getting back to normal (it was a brief shutdown to “flatten the curve,” right?), but at least our local supermarkets seem to have kept their new shorter hours.

Are we on track to become more like Europe, where if you don’t want to conform to the standard hours you won’t be able to get meals, food, etc.? (walk around Paris and see if you can find a 24-hour CVS!)

Readers: What have you seen in your regions of the country? Are hours still curtailed?

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Department of Bad Business Timing: Microsoft Flight Simulator released today

by philg

For the first time in 14 years, as of today it is possible to buy a new version of Microsoft Flight Simulator. How’s that for bad timing? If this thing had been released in mid-March, after 13.5 years instead of 14, when governors had locked Americans down into their electronic home bubbles, how much more money would it have made?

The Icon A5 is included! Also the Airbus A320. You need to spring for the Premium edition to get the Cirrus SR22.

Who has tried out this new game? How great is it?

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