The Real Estate Marketing by Cyberspace by lox59860

VIEWS: 22 PAGES: 11

									                          The Real Estate Marketing by Cyberspace
                                       By Mika Harayama
Biography
Real Estate Appraiser
The Member of Japanese Association of Real Estate Appraisal
The President of MR Appraisal Ltd.
MB from Waseda University
Engaged in practicing real estate appraisal for Orix Co., a general financing company, for 14
years
Went into own appraisal business in 1999
Works as a realtor for parent’s real estate business


Synopsis
As The Report of Information and Communication of 2001 emphasizes, the year 2001 was the
first year of the broadband communication.
The successful transactions using the Internet as the way for public relation in real estate
marketing are increasing in great numbers.
The IT and computer software bring more speed and efficiency for real estate appraisal in
practice and response to the client.
The starting of broadband communication also means the starting of restructuring of real estate
marketing. In this situation, it seems that some of the medium and small size real estate
businesses will be eliminated inevitably.
Using IT may bring confusion if you are not able to handle the flooding of information properly.
Considering what is mentioned above, I would like to discuss the merit and the demerit of using
IT in real estate marketing and real estate appraisal in the current situation and in the future.
  The Real Estate Marketing by Cyberspace
  Content
  I.        The Outline of the Real Estate Marketing in Japan
  II.       The Changes in the Real Estate Marketing by Information Technology (IT)
  III.      The Outlook and Limit of Using IT in the Real Estate Marketing
  IV.       Using IT in the Real Estate Appraisal
  V.        The Limit of Using IT in the Real Estate Appraisal


I. The Outline of the Real Estate Marketing in Japan
1. A real estate professional is required to be a specialist of national qualification.
In Japan, such specialists as real estate appraisers, land and building inspectors, surveyors, and
judicial scriveners are required to be qualified by the Japanese government by passing the national
examination. A realtor engaging in real estate marketing also needs to have the qualification
mentioned above. Besides the qualification, a realtor should have a license to go into business
whether it is individual or corporate. (The license is rendered by the Minister of Land,
Infrastructure and Transport or the governor of respective prefectures.)    Those who engage in the
real estate business are required to be the specialists of high national qualification so that people
feel secure in real estate transactions, and they are highly trusted.


2. The structure and restriction for commission
The law restricts the commission amount for a realtor in selling, buying, trading, leasing and
renting properties as an agent or broker for the client. (Note 1.) (by The Law of Building lots and
buildings 46)
Principally, the commission for a realtor is paid when a transaction is successfully completed. In
general, a realtor is not allowed to ask for both commission and expense without the transaction
successfully executed.
(1)The calculation of the commission for selling and buying
The commission paid by the either party of a transaction is calculated as below, based on the
property value or price. The excise tax is not included. (Quick calculation method)


Less than 2 million yen                                5% of the value or price
Over 2 million and less than 4 million yen             4% of the value or price plus ¥20,000
Over 4 million yen                                     3% of the value or price plus ¥60,000

(Note 1.):An agent undertakes selling or buying property for another with the authority or
principal. Commission omitted.
A broker goes between a seller and a buyer , or an owner and a tenant in leasing or renting
property.
(2)The calculation of the commission for leasing or renting
Usually, a realtor is paid up to the equivalent of one- month rent in total from both parties.
The commission for leasing or renting residential property from each party is up to half of one
-month rent except when the client agrees otherwise.
For leasing or renting property other than residential, in the contract that requires the give up
money (paid as an origination fee for the contract in any name), the give up money will be
regarded as the money paid for transaction. A realtor will be paid either the percentage of the give
up money or one month rent whichever is the higher.


3. The number and size of realtors
As of March 31, 2001, there are 138,816 real estate agencies (down 472 from 2000) registered in
Japan. (by The White Paper of MLIT) In the real estate business, the average number of workers
per office is 3.0. This number is very small compared with the other kinds of business. (The
Statistic Research of Business Office and Company, by the Statistic Bureau of the Ministry of
Public Management and Home Affairs, 7.1.1999)


II. The Changes in the Real Estate Marketing by IT
1. The rapid increasing of Internet users
In Japan, the number of Internet users is continually and rapidly increasing. By the end of 2000, it
reached 47.08 million. (74.0% increase from 1999 estimate, by The White Paper of Information
and Communication)


2.Searching information on the real estate market by Internet
I would like to introduce some of Japanese Web sites of property information that helps and
supports marketing activities and successful transactions in the real estate business.
(1)Private search nets
These portal sites give access to the information of individual property by clicking “real estate.”
‡@        yahoo! Japan [www.yahoo.co.jp]: This is a general portal site ranked first in Japan by
          [www.alexa.com].
          Through this site, some of the big real estate companies provide SIPS (Strategic Internet
          Professional Service) as well by connecting with various sources. The service includes
          providing the information concerning homes such as moving, home loans, home furnishings,
          relocation, remodeling, home cleaning, and accounting.
          Other typical site: ISIZE, Infoseek, goo, MSN
     ‡A   at home web [online.athome.co.jp]: [www.alexa.com] ranks this site first in specializing in
          real estate in the Japanese market. The site provides information mainly on leasing and
          renting properties. Fifty-five thousand companies provide information in the site. More than
    2,000,000 properties were registered in 2001. The monthly average accessed number reached
    2,000,000 (the estimated number from September to November 2001.) This is operated by
    the largest and well-known real estate information service company in Japan, and it has ties
    with 16 general sites.
(2)The home-site of large marketing businesses
Large real estate marketing companies provide consulting service to individual users in public as
well as information service. To draw more attention from their customers, these sites provide
users with search lists for each customer. By registering his/her requirements, a subscriber
automatically gets a customized search list that is renewed everyday and free of charge.
For example, the site of “Major 7 [www.major7.net]” provide animated visual information similar
to the TV commercial pictures using the latest Internet technologies.
(3)REINS [system.reins.jp]
REINS: REAL ESTATE INFORMATION NETWORK SYSTEM
This is a computer network system. It is independently operated by four real estate marketing
institutions appointed by the MLIT. With this system realtors can exchange their listings and
information. By the law that controls realtor business, a realtor should register the contract of
seller’s agent to the system within a few days.
At present, the registered number is over 600,000. This system has the largest volume of such
information in Japan.


3. The Influence by Using IT in the Real Estate Marketing
(1)A crisis for medium and small size real estate businesses
Since more information is available by IT, transactions will be sped up and marketing will be
more active than ever. Such conditions may work positive for developers and agents of larger size.
However, medium and small size realtors will face less business chances, because buyers can look
for properties by themselves through Web sites without the help of an agent.
(2)The possibility of the deregulation of commission
Currently, the law sets the ceiling amount for commission.
After the financial deregulation in Japan, the commission amount of selling and buying securities
or stocks went down dramatically, almost half as before. As competition among businesses heats
up, the commission naturally drops. The amount might be negotiable according to the service
rendered by agents in the relation to the contract. That is “ Fee For Service. (FFS) ”


4.New business styles and survival measures
(1)The ASP (Application Service Provider)
There are lots of ASPs for the real estate business. By employing ASPs, you can use the latest
system without investing in an initial system development and gain more productivity in practice.
However, most of the applications are limited to “the routine work aid software” such as below.
‡@        Managing real estate leasing and renting.
‡A        Broker support
‡B        Marketing aid system that provides property prices and transaction history by GIS.
(2)The check points for registering public real estate information site
The following points should be considered before registration.
          •    The higher number of registration means the higher number that can be accessed.
          •    The more subscribers, the less charge.
          •    Only user friendly home sites can stay in business.
     (3)The general information sites that promote FSBO (For Sale By Owner) in non-business
     transactions aim to help to reduce commission (FFS)
     The company [www.justhouse.net] aims to help FSBO and to provide more opportunities to
     reduce FFS.
     (4)Buyer’s agent and escrow service
     A buyer’s agent negotiates with a seller or seller’s agent working exclusively for buyer’s interest
and protection. A buyer’s agent is, of course, required to have more experience and expertise on
the properties than his/her client who is now equipped with all the information from the Internet.
In Japan, real estate escrow service has started in order to support the paper work in a transaction
between customers. The demand for this service is expected to increase steadily in the near future,
     because Internet users and its development will possibly eliminate buyer’s agent service. At the
     same time, owner sellers will be able to put their property on the market through the Internet; that
     is “ For Sale By Owner” online.
     There are no rules for commission of the above-mentioned service, for example, who pays, how
     much, or on what conditions.
     This service is similar to a consulting service. There will be business chances regardless of the
     location of the office or the number of listed properties. However, since no realtor license is
     required for this service, other professionals such as lawyers and judicial scriveners have a chance
     to go into this kind of business.


     III. The Outlook and Limit of Using IT in the Real Estate Marketing
     (1)In the near future
     ‡@   The publication of REINS
          As of April 2000, the publication of REINS is not planned. However, some of the real estate
          institutions have developed the connection with the portal sites of REINS. The MLIT will
          propose to set the “total real estate site” that accommodates the sites of those institutions.
          Now the publication of REINS is in the sight. The REINS will be the largest property
          search-site in Japan.
          Elimination of buyer’s agents.
‡B        Participation by non-real estate business and the deregulation of commission.
‡C        Net auctions and electronic business transactions.
          The law of electronic signing (The Law concerning Electronic Signing and Authentication)
          went into effect on April 1, 2001. At present, few companies employ electronic signing.
          However, there is a possibility that simple paper work concerning property will be
          electronically done in the near future.
(2)The limit of using the Internet
‡@        The limit depends on realtor’s morality and competitiveness.
          The most attractive point in using the Internet is quick access and response time. The Internet
          provides more opportunities to contact customers, but a successful contract depends on each
          realtor’s service and marketing ability.
‡A        The limit of cyberspace auctions
          One of the changes for real estate marketing is an auction through Internet. In 2000, several
          large real estate companies held auctions online, but there are few now.
          At present, real estate companies use net auctions to sell their own inventory or properties, or
          with buy back option. Actually this is not a net auction done between customers.
          There is business that provides advice on bidding in auctions, but no realtors or agents
          operate net auctions.
          The reasons why net auctions are not popular are,
          •   Each property is very individual,
          •   Consumers generally feel insecure to go on auction without sufficient knowledge on
              properties,
          •   Buying property requires careful decision making,
          •   In most cases, a buyer or a seller has his/her own evaluation on the particular real estate,
          •   Buyers do not welcome the bidding style of going higher while sellers do not welcome
              the bidding style of going lower.
          •   There are no rules or laws concerning the cancellation after making a bid.
     ‡B   Face -to -face transactions
          The Internet is a vehicle for advertisement and communication. There are many users who
          are tired of the volume of overflowing information.
          No matter how much IT develops, direct (face-to-face) contact remains important. This is
          also true for real estate transactions. Whether you can trust the words of the other party
          depends on whether you can trust the person himself/herself. This is not only in transaction
          between individuals but also between a customer and a person in the real estate business. For
          a realtor who provides consulting service will be certainly required to be trustworthy. Of
          course, a realtor should have the expertise and ability in conducting business. A realtor
     usually builds up trust and reliability in contact with the client. It should be remembered that
     real estate businesses would not be able to survive just using IT, though IT becomes one of
     the essential elements to survive.


V. Using IT in the Real Estate Appraisal
1. The information that can be collected by Internet
In the real estate appraisal business, with information disclosure and IT, you can access the public
data and written information online such as below.
(1)Identification and Confirmation Material / Data
‡@   The exemplified copies of real estate register at [www1.toukilorljp/gateway.html]
     In September 2000, the registered items (all the description of concerning properties and
     owners) became accessible by Internet. As of June 25, 2002, the number of cadastral offices
     (including branches) that computerize registration totals 392 in Japan.
‡A   Various maps
     Detailed or regional maps, city plans, zoning maps, and school area maps are available by
     CDs. Three dimensional maps of computer graphics by GIS are available at the site such as
     [www.zmap.ne.jp] and [www.mapion.co.jp].
‡B   The information (service lines, fare, transfer time, etc.) of traffic systems (subway, railway,
     bus service) are available online by the following providers.
       Subway                              [ www.tokyometro.go.jp ]
       Railway                             [ www.jreast.co.jp ]
       Bus Service                         [www.kotsu.metro.tokyo.jp]
(2)General statistic data is available online by the following providers.
MLIT Land Information Library             [www.tochi.nla.go.jp]
The Official announcement of land prices, and land price research of urban and rural prefectures.
MLIT Construction Statistics      [ www.mlit.go.jp/toukei/tokeijouhou/chojou/index.html]
Construction deflator
Cabinet Business Statistics    [www.esri.cao.go.jp/jp/stat/menu.html]
Business index, corporate report, consumer report, and GDP report.
Ministry of Public Management and Home Affairs, Statistic Bureau& Statistic Center
[www.sta.go.jp/data/index.htm]
Consumer price index, house keeping book report, and labor report.
Ministry of Economy, Trade and Industry           [www.meti.go.jp/statistics/index.html]
Industry output, shipment, and inventory index
Ministry of Health, Labor and Welfare          [www.mhlw.go.jp/tokei/itiran/roudou/index.html]
Monthly labor report
Ministry of Finance     [www.mof.go.jp/siryou.htm]
The monthly report of government financial loan fund, corporate statistics, and trade statistics
National Tax Administration Agency         [www.rosenka.nta.go.jp/]
ROSENKA:Diagrams of Assessed Land Value along main road
Bank of Japan      [www.boj.or.jp/siryo_f.htm]
Discount rate, money supply, and the corporate report in short term observation.
(3) Transaction history is available online by the following providers.
Tokyo Association of Real Estate Appraisers (for members only, of Tokyo area)
Land transactions, leasing & renting buildings, development, regional (city, town, and village)
description, in and out number at each railway station, and MTBI real estate investment index.
At home (for members only)
Selling and buying offers and executed contracts, leasing and renting offers and executed
contracts, and leasing and renting offers and executed contracts.
Tokyo KANTEI (for members only) [www.kantei.ne.jp]
Approximately 83,000 transactions of condominiums and apartments with reference, original sale
price, plan, features, and the locations and sales of new condos
(4)The real estate investment index is available online.
This index is the data of average income rate on property investment. Presently it is provided and
used to prepare the environment for securitization of real estate. The index can be also used for
reference data to decide the discount rate when DCF method is applied in appraisal.
Japan Real Estate Institution      [www.reinet.or.jp/study/jp10-toukei/10-mokuji.htm]
The index of urban land price, the price of farmland and forest, and the national statistics of rent
Building Cost Research       [www.kensetu-bukka.or.jp]
The index of construction
Ikoma CB Richard Ellis       [www.ikoma-cbrichardellis.co.jp]
MJTB-IKOMA real estate investment index
The Sumitomo Trust & Banking Co., ltd            [www.stbri.co.jp/cafe/index.html]
STIX(Sumitomo Trust Property Index)


2.Using IT in the real estate appraisal
Using IT will make appraisal easy and speedy. However, in order to achieve easy and speedy
appraisal, the high skill and ability for selecting and managing correct information will be
required.
(1)The speedy collection and easy management of the data
More data and information are available without leaving the office, and the acquired data and
information can be processed and managed by a personal computer.
With the development of mobile equipment, you can e-mail pictures from the actual location of
the property to your office or client, which is very efficient.
(2)Using IT for the value by sales comparison approach
By managing appraisal history and prices on the same chart, it will be easy to examine the price
balance and the sales comparison approach.
(3)The price reporting in simple style with speed and less cost
There is increasing demand for a speedy informative report with less cost. This is NOT an
appraisal report. This report is done by using the formerly mentioned Web sites combining home
made software or application systems available in the market.
‡@   A report will be made in several hours to one day, in one or two pages, with a charge of about
     ¥3,000 to ¥10,000.
‡A   This kind of report will omit such items as on site inspection, legal registration, and
     concerned governmental information.
‡B   The reported value of the land will be calculated based on the comparison of the publicized
     land prices, ROSENKA, and the comparable market data in the reporter’s record.
‡C The depreciated replacement cost method is applied for buildings
 Some of the appraiser’s sites provide the results in less than one hour online.

VI. The Limit of Using IT in the Real Estate Appraisal
I conclude that we cannot be too dependent on using IT for practicing real estate appraisal,
because of the following reasons.
1.In the first place, collecting information on site used in the real estate appraisal is very
labor intensive.
At present, more detailed maps are available. In the near future, the terrain, the shape of buildings,
and the surroundings of the property will be available in a three dimensional map by combining
GIS and aerial photographs. However, things may change in a moment before you yourself visit
the site, and the information you have at your hand might not be correct any more. Therefore, you
should go and look the site yourself to know the actual situation and the surroundings of the
concerned property. You need to be there to know such elements as noise and smell. With your
five senses, you may find something that cannot be obtained at the desk. You might get the idea if
the local area is growing or running down, and if the neighborhood is friendly.
“The depreciation by observed-condition method” can be decided only by on site observation of
the concerned property.
There are many appraisers who experienced a weird feeling at the site and found that the
concerned property used to be a swamp or cemetery, after having a talk with neighbors. This kind
of information can only be obtained by actual on site inspection, not by working at the desk or
clicking computers.


2.The appraisal of complex real estate ( land and buildings )
In Japan where land is the main concern, traditionally, “the complex real estate value equals the
land value plus the estimated building value.” Recently, the value, based on profit, became more
focused because of the valuation for securitization of real estate. The revised Real Estate
Appraisal Standard in 2002 introduced the appraisal method for estimating future income and risk
more closely in order to value the profitability of complex property. It also emphasizes the
importance of close inspection and analysis of the concerned property in both physical and legal.
The property value estimated with profitability is greatly influenced by property management. In
some cases, to estimate this profitability value, it is necessary to use the report or information
from other specialists or the client as well.
Generally, the price research currently carried out is not based on the inspection of the site.


3. Conclusion
                        (1)The bipolarization of real estate appraisal ( Two Stream )
                        (2)What you see is “data”
(1)The Bipolarization of real estate appraisal (Two Stream )
‡@        The value report with speed, volume, and less cost.
          Owing to IT development, we could carry out our practice more efficiently and speedy, using
          and managing the information that was collected easily and rapidly. As a result, we can
          match the demand of request in volume and short term. However, the following elements
          should be considered.
          •   value is mainly based on the land value.
          •   No sufficient inspection of the concerned property is performed.
          •   The calculation of income value is difficult or not refined.
     ‡A   Long term, refined, and costly real estate appraisal
          On the other hand, there is the demand for refined real estate appraisal such as for
          securitization of real estate. In this case, a real estate appraiser needs to be a quality
          consultant who provides analysis of the market as well as the estimate of the economic value
          of the property.
          •   It takes several months to make a report on the property of a large size project or seeking
              a settlement in the court.
          •   The detailed inspection of the concerned property. Especially, the following points are
              some of the key points for the new Real Estate Appraisal Standard.
                   a) The details of the structure and specifications for complex property valuation,
                   b) The environmental elements including soil pollution,
                   c) The information concerning buried materials.


     As the bipolarization in the practice of real estate appraisal develops, real estate appraisers will be
     separated into two categories.
The visible information that is available through Internet and books are the data that you can
“use”. However, the essential “information” you really need should be obtained through face-
to-face communication. This is true not only in the real estate appraisal practice but also in other
areas. Therefore, you should always include direct communication in real estate appraisal
practice.
Today, too much information is available, and flowing information will continue to increase. You
will get lost in the flood of information unless you learn how to select and manage the
information and data. The information you obtain is just material to help in your decision making.
We should remember that we ourselves are the ones to make the last decision.


Reference home-site other than mentioned above:
[www.alexaresearch.com] provides site ranking in respective countries, be free of charge, by USA
Alexa
[nsk-network.co.jp]: Japan System Valuation Institution, Co.
[www.sakurajimusyo.com/index.html]
Major real estate companies in Japan
www.daikyo.co.jp, www.gallery.mec.co.jp, www.goodnews.ne.jp, www.mitsuifudousan.co.jp,
www.nomura-re.co.jp, www.sumitomo-rd.co.jp, www.tokyu-land.co.jp

								
To top