Roman's miles

How to find a buyer's agent?

We're in a process of active preparation for buying a house. So after reading "subject literature", digging the forums, and browsing blogs on the topic I thought my findings can be useful for others too. Recently I published a detail Buy-vs-Rent calculator weighing the two options for your situation and today I want to share with you a questionnaire and some tips on finding a buyer's agent.

First off, a short foundation on the conclusion why you need an agent. Although I agree that for a buyer an agent doesn't come "free" even he doesn't pay for that (the agent's fees are already included in the house price) you hardly can request the buyer's share back if you come alone. The seller's agent  in a contract she signs with the seller usually takes already 5-6% for both agents. This money she either splits with a buyer's agent or leaves for herself. She doesn't have any incentives to give up 50% (or even less) of this money to you if you come alone. The only realistic scenario to get the agent's money is to offer the seller to wait until his contract expires and then to sell the house directly to you without both agents, getting the price automatically down 5-6%. It's a possible, logical, a win-win situation with only one unknown - how much time to wait until the contract ends and what the risks are that somebody else won't buy it before.

Secondly, since we see an agent is already included and pre-paid why not to use it? She has access to "private" information about a house that you can't get publically, knows the area, its statistics, trends, may give additional advice, and stear you through the process. I don't see a reason for solo house hunting taking into account the fact that the agent is practically speaking pre-paid already.

Now, after you decided to find an agent the tips.

• Never sign a locking contract! There are agents trying to oblige you to buy a house only through them for some period. Never agree. The only right thing to sign is to buy a house through the agent which he showed you. But even then the obligation should be limited by 3-6 months.
• You should be able to fire an agent any time without any penalties or advance notification.
• You pay no additional money. The agent gets commission he agrees upon with the seller or his agent. If you change your mind and don't want to buy a house anymore - the agent gets nothing from you.
• You don't pay anything for sell-by-owner houses where the seller is not "agent-friendly". You can compensate the agent as you want but then it's a tip and not a mandatory fee.
• You should work only with one agent at a time. It's fair for the agent and does make sense for you. If you have two agents simulteneously they'll be looking for a house in the same area, the same type of houses, the same price range - so why to expect different results? If you don't like your agent's quality simply change her but don't play a double game.
• Don't stop searching for houses on your own. If you find something let your agent know  about that and make him all necessary checks as he does for houses that he finds. Remember, you hired agent to use him.
• Find a realtor that works with sellers and buyers. I don't see an advantage in exclusive buyer's agents (those that never sell anything but only help buying). It's the same profession, the same market, the same patterns. Finding a good agent is not easy so why to do it twice? You need one pro that you can trust so when you sell your house you know who can help you (when you sell a house you can't fire an agent easy and must sign a locking contract for some period of time).
• Find a good agent. Your agent is your contractor that has to do the job well. Find a pro and don't go with a friend's sister that just got a license, a neighbor, a former classmate, etc. unless they can prove their experience. Spend time finding an agent, interview candidates carefully, ask questions, talk to reference customers, do it seriously.

Here is my questionnaire I use for interviewing agents.

1. Please explain me why I need an agent? What benefits am I supposed to get vs. a case when I represent myself? What agent do I need?
2. How do you get paid?  If you get paid by commission, then I know a higher priced house will result in more  payment to you---how can I be assured you will find the best deal for me regardless of the price?
3. Do you charge a retainer fee? Is it in addition to your commission or is it taken out of the commission at closing? Do I have any out of pocket payments besides the commission?
4. What's the length of an agreement? How do we terminate it if one of us is not satisfied?
5. What are my obligations to you during the agreement period?
6. Will I ever be put into a dual agency situation?
7. Will you try to sell me one of your listed properties before you show me listings from other real estate companies?
8. How do you relate to a buy-by-owner houses? How is it different for me? Should I prefer them or beware of them?
9. How do you provide your availability and what happens if you're not available? What communication means do you prefer? Do you have a backup or a partner?
10. Can you help me know whether I'd be pre-qualified for a loan, and then help me get the best loan? Do you advise on the mortgage-related questions on a general level?
11. How many homes have you bought in my price range in last 6 months?
12. How many customers do you have concurrently?
13. Can you provide me last 10 customers that you helped buying a house in that area?
14. What is your average sales price to listing price ratio for buy transaction?
15. Do you have any specific buyer's agent professional designations and what is your experience?
16. What kind of things/issues do you look out for when evaluating a home?
17. What clauses will you incorporate in our offer, to protect us as buyers?
18. Will there be a written contract between us?
19. How will you help me save money?
20. What are advantages of the buyer market and how we can utilize them for my benefits?
21. Specifically, how will you protect my interests and why should I hire you rather than another agent?

It takes about 30-45 minutes to go over the questionnaire in such a call. Some of the questions need to be asked to make the things clear others - to feel how the agent thinks, answers, clarifies her points, and expresses her vision. You need to feel if there is chemistry between you, if you may trust this person, if she seems to understand what you want. Make this job carefully and professionally.

In addition, I want to thank all the people and communities that helped me to shape my current opinion. Now you, my readers, are welcome to leave your comments here extending the bunch of tips or disagreeing with it and correcting me.

Technorati tags: real+estate, agent, buyer

I'm a "reference customer"

My MBA school recently published an ad in AJC (the biggest newspaper of metro Atlanta) where instead of pitching the school quality, benefits, and merits simply listed all the current students of the program appealing to common sense of the readers and challenging them to join the students:

In the past year, we have welcomed the following individuals into Robinson's widely acclaimed Professional MBA Program.

Shouldn't you join them?

(click on the link to see the scanned ad from the newspaper, I'm in Alpharetta class of 2008).

First time my name appears as a reference customer which warms the ego a bit:-) More can be told though on the approach of the school which instead of publishing yet another boring ad created something grabbing readers' attention and giving another cause to all the students to promote the school (which I'm doing here:-)

Technorati tags: MBA, GSU, PMBA

What am I doing at SAP?

I found myself answering this question many times introducing my group and myself in real life; recently I've been getting many emails asking the same question - so I thought why not to blog about my team and my role at SAP?

I work in Solution Office of the New Product Introduction group. It's a global group presented in North America, Europe, Israel, and Asia Pacific. There are just a couple of dozens folks in the team but all came with a sound background in ABAP, Java, or .NET and brought many years of experience in a variety of technologies.

The mission of the group is told  in its name. When SAP introduces new products (not just new releases of the existing ones) it may take some time until all the major divisions inside the company get up to speed with the products: we need to iterate the products through a series of adjustments accommodating cusotmers' needs and consummating solutions, educate project and sales forces, enable the ecosystem, and gain mind and market share. I don't want to call this phase "crossing the chasm" but it's a very critical period for a new product and while it does its first steps outside of the labs the product needs a team fostering and supporting it. This is a team behaving like a task-force unit. Again bringing a military analogy such a mobile group reacting in an agile and sensitive mode isn't burdened by revenue, utilization, or any other rigid KPI and can do whatever is needed for a product's success (comparing to SAP's armies of consulting, education services, sales forces, etc. using an approach of scalability and targeting revenue generation).

I'm leading a team of architects and experts in the Solution Office driving MDM - Master Data Management. Our mission is to provide customer success on early project implementations, enable internal project forces and the ecosystem of partners with knowledge and experience gained in the projects, roll-in  the feedback to the R&D, assure solution awareness among our customers and partners, develop solutions on top of the product, and do everything is needed to warrant product success. We closely work with other groups of the NPI virtual team (more than 15 different divisions), engage in pre-sales activities, bootstrap projects, assist in evaluating solutions, present the product at different conferences, evangelize the solutions on customer and partner events - so the team knows the product inside-out which helps us to identify the gaps, propose, and carry out solutions.

With only a handful of people in the team we've reached this year lots of things. We've worn a hat of consultant (proposing solutions for customer ), a solution architect (evaluating architectures with project teams), a trainer (preparing and teaching classes), an analyst (brainstorming with customers ways to resolve problems), a bizdev guy (creating  solutions on top of the product and educating partners), a sales man (pitching the solution in front of customers), and many others internally. The only our criterion for a task to be taken by the team is a company-wise impact. Our group doesn't exist to replace any other team although often a task can be dispatched to another team. At the same time usually there is no time, or enough expertise acquired by the the other team, or a shortage of resources, or they have other priorities. So we take the task on our shoulders, build a solution, and later - to achieve scalability and a massive impact - roll it out to an appropriate owner in the company.

We cherish (or boost?) a new product for about 12-18 months and when it reaches its maturity and simultaneously other teams acquire necessary experience the product departures from our radar giving in its place to the next one.

It's a very interesting group to work in with tons of dynamics and wide exposure to other teams in SAP. It's also a very unique position for touching non technical areas of our industry (such as marketing, business development, sales, consulting, training, etc.) without loosing contact with  our technical background. The only disadvantage one (but not we) may find is intensive travels. Some of us have spent about 100 nights outside of the homes this year and flown more than 100K miles but with the majority of international destinations it's hardly perceived as punishment:-)

Technorati tags: SAP, NPI

MBA. First fruits before starting

I don't know if it's a usual thing for other schools, especially for the top-notch schools but I found yesterday's mixer very special, exciting, impressive, and practical.

One of the professors that will be teaching us in the first semester made a party at her house yesterday and invited all the students of our PMBA program. There were folks from other cohorts (the same program is taugh in Henry County, Downtown, and Alpharetta campus) starting this year with me and others who have passed one year already, colleagues of the professor, and the top management of the program.

We spent about 3-4 hours chatting to each other, building new connections, and finding out from our older battle-tested comrades how challenging the studying will be for us.

I don't know if it's quite typical for other MBA programs but in PMBA I'm reaching one of my targets even before we have started the first semester. I hope the program management has other surprising events for us in their stash.

Technorati tags: MBA, GSU, PMBA

SOA is around us

I've been running recently across a couple of discussions on what SOA is and thought it would make sense to re-post my old corporate blog on the topic here. This time I just change SOA's old name - ESA - to the new one.

A few days ago I went to my DMVS (department of motor vehicle) center to get my driver’s license. I went to the closest exam center, which is in Norcross, to take a written and hopefully a road test. For those who’ve never been there, the visitor’s area is a big hall with 20 counters, 3 big screens with numbers running on them, many seats and hundreds of visitors. I was told it serves between 400 and 700 people a day. Staying in the line hearing almost incessant announcments and looking at visitors and inspectors dashing about I had a firm sensation that all this very much reminded me something. Guess what?! – right, SOA! I was looking at every element of the interaction and more and more was becoming sure that this is quite a strong implementation of SOA, not in software but our real life. Let me explain.

As you get to the center a big guide sign meets you: “ALL visitors to the info desk!”. This is a Dispatcher-Controller pattern. The Dispatcher lady accepts all visitors and after giving basic instructions (“we accept only cash!”) and checking your docs (“where is your address proving bill?”) redirects you to a queue and assigns you a unique (ordinal) number. By the way, there are two-three ladies at the desk so there is scalability and availability in place! After you get your number you’re put in one of about a dozen virtual queues (or workflows) for your needs: passing tests, changing address, getting license back after revoking and so on. Every such purpose has its own workflow with special rules residing to it.

So each visitor becomes an “object” routing between different services according to a specific workflow and notified by proper messages. Such coordination is hidden from visitors but happens "behind the scenes" in a workflow managing system. This is the Dynamic Router pattern – the heart of the system. This Dynamic Router knows where to send you on the next step of your workflow depending on your results of the previous one. You’re advancing from service to service (from counter to counter) when your number is announced and it appears on those big screens I mentioned before. What about services? They’re supplied by brave DMVS employees standing at the 20 counters. They’re grouped by the functionality they supply and serve the next “object” in a service queue. For instance some fill out your form and verify the docs you brought. Others take your signature, fingerprints, and your photo. A third performs vision checks and so forth. Every service knows how to carry out its own operation. It neither cares where you came from nor does it know where you will go after. All it knows is to double check your “input parameters” perform its operation then “return some result” and finally “log” it to the system.

What is cool is you don’t worry about where to go next, either! The Dynamic Router service takes care about you. In practice you wait for your number to appear on the screens showing you the next counter to attend and announced by an electronic voice (“number A485 at counter 17”). You’re sitting and waiting. Now what about collision resolving? What if you lost your number? What if you missed your queue? In such a case you come to the Dispatcher lady which enqueues you again to the workflow hopefully to the point right after the last stage you successfully have passed. Big hint: messages can expire. A friend of mine, after successful passing her driving test, couldn’t wait to get the license and took all the documents home. When she came back a day after, the Dispatcher lady didn’t allow her to enter the queue on the last stage. Sorry, Sarit:-( So she had to start her workflow from scratch and thankfully she passed it again (now to the end of the workflow:-)

What about scalability availability and performance, you’ll ask? As I said every service is scalable over several counters. And hence available. Performance at Norcross was quite impressive (I came there at 10.30am successfully passed my both tests and at 1.30pm went out with my license in hands). Everything was functioning fine and fast. I like our projects implemented in a similar way:-) Not that I wish you to attend a DMVS center. But if you have to, pay attention to this brilliant SOA implementation and good luck with your tests!

Technorati tags: SOA, ESA, enterprise, software

Book review: Lightning in a Bottle: The Proven System to Create New Ideas and Products That Work

"The proven system to create new ideas and products that work" - is the subtitle of a book by David Minter and Michael Ried "Lighting in a bottle". I work in a new product introduction group and my duties make me automatically interested in the theme - how to generate new ideas for successful products and services. Although there are a ton of books and articles on the topic I still hope to get a seed of wisdom when take such books to read. This book is "for large organizations that must have big ideas to survive". My expectations were clear - find new ideas, patterns, and methods that can beget and  foster new ideas, especially when the authors talk about a proven system.

The book consists of about 200 pages split in 15 chapters organized in two logical parts. The first one (about 60% of the book) teaches us why the existing methods of hunting for new ideas fail. The rest explains the new proven system. The authors bring examples mostly from the entertainment industry although they claim that the system is generic and works everywhere.

The anti-pattern part of the book starts off by posing Blookbuster as a success story, describes how today in the corporate America new ideas are generated and then goes why the current methods of idea generating fail. The authors state that only 10% of new ideas survive and 90% fail and wonder why an idea generation process should be different from any other business activities:
- What if only one in ten products manufactured was good enough to sell?
- What if only one in ten people hired were good hires?
- What if only one in ten of our accounting reports was accurate?

Here was my first "how come?" question to the authors. Why do we compare an idea-generating process to anything else clearly predictable and precisely defined? Idea generation is firstly an act of creativity rather than a predefined flow of operations. Should we maybe establish the 6-sigma standards for new idea generation? And what's wrong with the 10% level of success as soon as it's real success (of course, 11% or 12% is better but 10% of real success is seriously good enough).

Then the authors bring quite vague and amorphous reasons why the new idea generation process doesn't work in the corporate America - nothing new, very obvious suggestions, and short and primitive examples.

The next chapter in the de-briefing of crashed idea generation projects lists the 10 reasons of failure:
1. Trying to sell things people don't want to buy
2. The ideas don't make financial sense
3. Giving up too soon on good ideas
4. Pushing bad ideas too long
5. No separation of good ideas from bad
6. Thinking small
7. Delegating idea development to junior people
8. No specialized talent for developing ideas
9. No process, or a poor process to develop ideas
10. No real, important difference versus competition

Each of the statements comes along with examples supposedly brought to convince the readers that the 10 reasons fully explain the challenges of the new idea generation process. Although the anti-patterns obviously can be found in every failure of a new idea generation they don't teach us anything new. Why a bad project fail? Because it was bad and one was pushing it for too long! A big waste of time and paper - the feeling I got from this chapter.

The apogee of the "worst practices" of the corporate America is the anti-thesis of market segmentation. Chapter 9 teaches that "computer-driven market segmentation is a figment of your imagination". Don't look for a sector of the market or an unused niche - go instead for all and seek for one big idea. "Most largest companies or brands do not need more ideas - they need a few ideas that really make the tires burn" - the gist of the book.

No doubt, big money comes from wide and deep markets. But isn't it a self-killing practice to start only ideas that can be proved to bring huge revenues? Instead of identifying and focusing on a market's sector tryin instead to make a product "one size fit all"? Even the examples brought to strengthen the thesis don't make it sound confident: Starbucks, Wal-Mart, Disney. These companies clearly do have their targets sector today, let alone the time when they just were starting their business.

"The way companies got big in the first place was by having one good idea that appealed to a lot of people" - continue the authors. How about Porsche or SAP? How about generating new ideas in non-existent yet markets? The ideas of disruptive innovations, expanding the core business, and crossing the chasm? How about the ideas of starting focused and small and then going to expand carefully? How about the idea of failing cheep? Much more successful examples prove the last theories are more pragmatic and fruitful than the practice of seeking one magic bullet idea.

The how-to-do-it-right part of the book has the seven steps of successful idea engineering:
1.Learn
2.Develop working theories
3.Develop ideas and concepts from the working theories
4.Conduct financial due diligence
5.Talk to consumers one at a time
6.Iterate the concepts by listening to consumers
7.Take the best concepts coming out of the interviews and monetize them.

Wow! Now if you just follow the 7 steps you'll get the next killer application! Obvious? Quite a bit. Stunningly new? Not really. Doesn't the corporate America learn or develop working theories? Anybody starts a project without projecting its financial due diligence? I probably agree with the importance of talking to the customers and doing it one at a time but am very frustrated by the 7 revolutionary steps of the idea engineering process.

In general, I'm disappointed by the book in all its aspects: structure and organization, design, examples, the manner of getting to the point, repeating and mixed ideas. It seems that the authors have a sound experience in the entertainment industry and some ideas that helped them to advise their customers. The book as it's written, though, suits for one long article (at best) or a series of few blogs.

I could have skimmed the book through but it was Lisa's request for making a review and I honestly did read every word.

If you heard the opposite about the book or want to give it a try let me know and I'll mail it to you.

Technorati tags: book, review, new+idea

Buy vs. Rent.

We've been living in the States for almost two years and periodically the question whether to stop"wasting money (renting) and buy our own nest arises. Since my current lease is approaching its scheduled finish day I had to answer this question seriously and weighed all the aspects for at least next year.

There are many great sites and forums discussing the matter and bearing various points for both options. Yet I was sinking in the ocean of arguments, long posts, inconsistent considerations, and location-specific data. After finding myself unlucky seeking a detail calculator for such a comparison in the net I created in Excel a calculator with all (I hope) parameters influencing the decision.  

I admit, that a buy or rent decision is not ensued from pure arithmetical conclusions and is shaped heavily by other psychological factors but if the latter outweighs then one, at least, should know the price she's ready to pay for the piece of mind.

So in the sheet there are only financial parameters and a few formulas summing up the picture. I'm not an real estate agent and haven't had a house in US so the data are probably incomplete. Not to a less degree I feel uncomfortable in pouting the "default" values you'll find in the calculator. Of course, "your mileage may vary", the cost can be different, so go ahead and change it appropriately. There is no "one case fits all" set of values.

At the same time, I hope my approach is quite fair in its algorithmic foundations. The calculator compares two options. In the first we buy a house paying some down payment and taking a mortgage for the rest (all the parameters are adjustable), then we sum up our monthly payment for utilities and maintenance (which are different from the option when we merely rent), subtract tax deductible money, and get the final number. The second option leaves us just renting, no tax deduction, no maintenance. Obviously enough, owning is more expensive in terms of the payments but as time goes the house becomes more and more yours. At the end of the day(s) you'll acquire it completely as opposite to the renting option when the money is thrown away.

So to compare the two options I take the difference in the monthly payments, take the down payment, and invest it all (regularly the former and one time the latter) to the market (CD, funds, whatever - the rate is an adjustable parameter too).

We compare finally two options along the time. When does it make sense to sell the house and to win comparing to renting and saving. As I said, all the numbers are adjustable; calculated ones are in italic so you don't need to change them. Inflation is not taken into account and tax deductible money is constant. I believe it's still accurate enough to get the idea.

In my case with the current projection for my area it doesn't make sense to buy a house if you're not planning to live there at least 4-5 years.

I hope it may be useful for you; if you find mistakes in the calculations, wrong assumptions,  forgotten parameters, or simply values too far from reality please let me know.

Useful sites on the topic:

bankrate.com (various calculators, tons of articles, mortgage quotes)
clarkhoward.com (Clark Howard's site with a very friendly and active forum)
gardenweb (many articles and forums on house issues)
patric.net (#1 site on housing crash)

Update: a very good analysis of the same question from Tim

Technorati tags: house, rent, buy, calculator