Theme from the Bottom - Part Two

Lest anyone think I am a “bottom” dweller and focused on the negative, please know that I am not. I was simply interested in the rudimentary economic theory and the opportunity to learn just how the market got to where it is, what we can do to improve it, and what we can do to prevent future demand shortfalls. That said, let’s sink back to the bottom.

The last entry left off with an introduction to Demand Overestimation (DO), Optimism Bias (OB), and Strategic Misrepresentation (SM). I came across these concepts while boning up on supply and demand theory. They were cited as causes of Demand Shortfall, which is what we are experiencing here in Southwest Florida. This entry will define each of the concepts in a bit more detail. I would then like to have open comment and discussion about how each of these concepts might have contributed to our Demand Shortfall.

Here’s a synopsis of what I learned over at Wikipedia. A Demand Shortfall (which, of course, is a lack of equilibrium between supply and demand and which causes a decrease in price) is the result of DO. DO is just what it sounds like – the overestimation of demand for any given product. DO is caused by our two other players, OB and SM. “OB is the demonstrated systematic tendency for people to be over-optimistic about the outcome of planned actions. This includes over-estimating the likelihood of positive events and under-estimating the likelihood of negative events.” Put another way, OB is overconfidence in the face of a starkly contrary reality. “SM is the planned, systematic distortion or misstatement of fact—lying—in response to incentives in the budget process.” Outside of its budgetary context, I think the concept of SM is nonetheless applicable in the real estate business, where many of our professionals are compensated on a commission basis and “in response to incentives.”

So here we are in a Demand Shortfall. Let’s think for a minute about examples of each of the Shortfall’s causes defined above. What do you remember from late 2005 that resembled Demand Overestimation? What about Optimism Bias? And Strategic Misrepresentation?

Theme from the Bottom - Part One

Denny Grimes' and Gary Tasman's recent News Press articles (Grimes' from 12/7; and Tasman's from 12/21) got me thinking about the economics of our market here in Southwest Florida. Now this is not something I, an English and classics and J.D., ordinarily do. Economics and math are not my bag, baby. But the little bit of follow up I did after reading the two articles proved interesting and instructive.

Both articles focused on "the bottom." Or, more precisely, both articles focused on the impossibility of pinpointing "the bottom." On the one hand, Grimes mocked those who predict where the "the bottom" will be and himself predicted that "[w]hen the market will hit bottom is anyone's guess." On the other, Tasman noted that sluggish "demand . . . , especially with more rigorous mortgage qualification standards, declining employment and reduced spending in general" impede our ability to pinpoint "the bottom." When the market achieves balance, or equilibrium, the authors noted, is the only time we should expect to reach "the bottom."

This talk of balance and equilibrium moved me to explore these terms in relation to economics. The balance, of course, is the balance between supply and demand. And, as everyone is well aware, we are awash in supply and thirsty for demand here in Southwest Florida. The result of this imbalance is price/value decline in which, of course, we are also awash. The same Wikipedia search that provided the Economics 101 lesson also introduced me to three terms and theories with which I was not familiar. They are:

1) Demand Overestimation
2) Optimism Bias; and
3) Strategic Misrepresentation.

This will be the first of a series of entries that will explore each of these in more detail. Stay tuned and please feel to comment and add to the discussion.

Winged Foot Title eRecords

Winged Foot Title, LLC is proud to announce its first successful eRecording. In keeping with our commitment to crafting exceptional real estate transactions through the use of the latest technology, Winged Foot Title, LLC this week became one of the first settlement services companies to begin eRecording with the Lee County Clerk of Courts.

“eRecording is the process of submitting, receiving, and processing documents for recording via the Internet that have traditionally been sent to the County for recording by runner, express mail, or courier service.” We simply scan the recordable documents (e.g., deeds, mortgages, powers of attorneys, affidavits, etc.); upload those files to the Clerk; and within very few minutes receive an electronic copy of the already recorded documents.

What does this mean for real estate professionals and their clients? Our investment in eRecording technology means reduced costs, increased efficiencies, and a more memorable closing experience. A process that once took not less than a week (sending the original documents via courier to the Clerk; awaiting their recording and return to us via mail) now takes less than an hour. The cost of sending and receiving recordables is instantly reduced by 75%, a savings that is necessarily passed on to consumers.

The process is so efficient that in most cases your buyers can walk away from our closing table with a copy of their recorded deed and their owner’s policy of title insurance. This gives new meaning to the term “closing.”

If you would like to experience the cutting edge of settlement services, contact Winged Foot Title, LLC today to find out more.

Out and About - Fort Myers Women’s Council of Realtors Turns 50

Winged Foot Title, LLC had the pleasure of sponsoring the 50th anniversary celebration of the Fort Myers Chapter of Women’s Council of Realtors in November. Plantation Golf and Country Club hosted a lovely evening full of formal dresses, tuxedos and a lively dance floor.

Lydia and I had the privilege to sit with past WCR presidents Edna Wade and Jayne Peterson. Also at Table 12 were Lois and Colin Feng. Lois is a terrific agent at Sellstate Premier; and Colin, from my two previous experiences, wins everything whether by skill or by chance. Our table assignment put us right near the photo booth; so we were privy to much of what went down in the booth that evening. Not to worry, what happens in the photo booth stays in the photo booth. At least I hope so!

Kudos to the entertainment for the evening as well. Denise and Gordon Corey’s (VIP Realty) son spun records and did a great job with both selection and execution. Be sure to keep Sean in mind the next time you need entertainment: Sean Corey Entertainment.

It really is our pleasure to be able to give back to the organizations and people who have helped make Winged Foot Title, LLC a success.