Thursday, September 12, 2019

A Good Condo Valuation system allows factors that Specifically Impact Condo Pricing

(Click on the image to enlarge)

The above graphics show that a 2,000 SF condo in a downtown high-rise with world class amenities will be significantly pricier than its similar-size counterpart in a mid-rise building in the suburb, with typical amenities. 

Such price differences are more stark in major cities; for example, a condo in Midtown Manhattan (NYC) will be at least 5-to-10 fold pricier than a similar one in Queens (NYC suburb). 

Similarly, a high-rise condo unit with panaromic river or park view in Manhattan could be significantly pricier - often millions - than the comparable ones (in the very same building) without the view. For instance, a condo unit facing the Central Park could fetch millions more than the one without the view. Similarly, an unit with unobstructed view of the East River or Hudson River could make a similar price difference.   

Therefore, a good Condo Valuation System must allow all of these experimentations so the users understand how the location, type of complex, amenities, view, etc. impact condo prices.

I picked the above graphics from Condoyada.com as I own and operate it, to avoid having to deal with any copyright issues. My Condoyada site is a 60-second top-down condo valuation system. It's self-directed (no modeled values), totally free (no strings), and requires no login or registration whatsoever. Moreover, it has a built-in non-linear value curve/scale tied to the condo size. Finally, it is mobile-friendly site so no additional apps are needed (just pick the url from Safari on iPhone). Anyway, please choose the system that works best for you.

Wednesday, September 11, 2019

First-time Homebuyers must Start Research at a "Top-down" Valuation Site

(Click on the image to enlarge)

A Top-down home valuation site is one that allows users to work up the value of a "simulated" home without having to deal with a series of random comps. A good Top-down site generally offers the following features:

1. Sub-markets: All (socio-economically) prominent sub-markets within the market (say, Orlando) are generally supported, allowing users to toggle between sub-markets to evaluate and understand the variations in home values.

2. Home Type and Style: Home types (Detached, Attached, HOA, Townhouse, Condo, etc.) and styles (Ranch, Cape, Colonial, Conventional, Contemporary, Tudor, etc.) are important considerations for home-buyers so a good Top-down site incorporates them.

3. Location: A good school district tends to fetch a higher value than its counterparts with lesser known schools. Good sites therefore allow users to understand how such qualitative factors quantitatively contribute to the home value.

4. land and Building Sizes: Users are allowed to educate themselves how the changes (increase/decrease) in sizes impact values within a given sub-market. Some sites would allow users to further differentiate between total improved area and heated area, corner lot vs. non-corner, etc. Bath count is also an important consideration as it helps understand if the home is optimized or a lifestyle one.

5. Building Age and Condition: Users can quickly learn how age and overall condition (including quality of rehab) impact values in a sub-market. Some sites might combine these two variables into one called effective age. Either way, these are important considerations in pre-owned homes.

6. View: A waterfront home could fetch significantly higher value than a non-waterfront one within the same sub-market. Similarly, a house with other enhancing views (park, bridge, skyline, golf course, etc.) could be pricier.

7. Amenities: Central A/C, In-ground Pool, Upgraded Porch, Tennis/Basketball Court, etc. often add value to homes so a good site would allow users to experiment with such options as well. 

Case Study

Our First-time Homebuyer = John Doe

John must be methodical in his research leading to the home buying. After a pre-qual of $300K, he has decided to focus on two Orlando-area sub-markets: Maitland and Winter Park. 

He finds a Top-down site which allows him to perform his research without having to work up some random comps. He realizes that while Winter Park has beautiful tree-lined streets, he gets more modern and slightly bigger homes in Maitland (a screened-in Pool could be a bonus). He is very happy that the site allows him to evaluate numerous possible combinations including location, type, size, style, amenities and view. He also notices that the site meaningfully curves values as home size increases.

I picked the above graphics from Homeyada.com as I own and operate it, to avoid having to deal with any copyright issues. My Homeyada site is Mobile-friendly (no separate apps are needed), totally self-directed (no modeled values), totally free (no strings), and requires no login or registrations whatsoever. It has a built-in non-linear value curve/scale tied to the home size, as well. Anyway, please use the site/system that works best for you.


http://www.homeyada.com/

http://www.condoyada.com/

homequant@gmail.com

Monday, September 9, 2019

How to Identify an Emerging Bullish Trend in a Housing Market


Formation of Double Bottom often foretells the Beginning of a Bullish Market Trend



The Monthly Median Sale Price chart (Formation - 1) shows a classic double bottom formation, with a bullish 'W.' The second drop (#13 - $213,216) remains in line with the first (#10 - $213,108), meeting the classic requirement that the second leg remaining at or above the first one. 

The trend becomes more bullish when the second reversal eclipses the first (#14 > #12). When this trend emerges, the traders (professional traders and flippers) tend to move in. Both trendlines are confirming the strong market fundamentals. 

The normalized Price per SF trend (Formation - 2) is equally bullish as the reversal makes a higher high (#14 > #6), with an up-sloping sideways. More importantly, both trendlines are ignoring the big drop (#13) as an aberration, endorsing the ongoing reversal.

The double bottom analysis with a 'W' formation is often used in the equity market as well. 


 Formation of an Upward Sloping Triangle  often represents a Bullish Market Trend

(Click on the image to enlarge)

The Median Sale Price chart (Triangle - 1) shows the meteoric growth during the first half of the year, followed by healthy sideways within a tight range of $545K to $555K. Even the end of the year (#12) drop –
nothing spectacular – was quickly reversed, pointing to solid market fundamentals. 

The fact that the 2-Month Moving Average trendline follows closely the data line indicates a fairly non-volatile price curve. Both trendlines are however confirming the reversal, including the peak. Any breakout above the prior high of $557K would make the curve even more backward-bending (more bullish).

The normalized Price per SF trend (Triangle - 2) is so bullish that a linear trendline was in order (of course, for the demonstration purpose). The formation of the upward sloping triangle further adds to the bullishness. In an event like this in the equity market, traders would start initiating long positions. 

Again, the moving average trendline proves the lack of month-to-month volatility, though confirming the reversal as well as the fantastic breakout.      

Thank you,

Sid Som, MBA, MIM
President, Homequant, Inc.


Sunday, September 8, 2019

How to Outsource Web Development/IT services to Overseas Vendors

Outsourcing to Overseas Vendors

"We are considering outsourcing our web development and maintenace to an overseas vendor. Any suggestions?"

Okay, here is my take...

Having dealt with several smaller outfits (10-15 engineers and support staff) over the past 10-year period, yes we managed to gain some experience in the area. Nonetheless, please do your own market research (whether/how to get into that market, followed by how to narrow your choices down) and perform proper due diligence (upon selecting the top contenders) before taking the plunge. 

At any rate, working with a smaller foreign outfit is inherently risky so practice prudent risk management. Here are some additional safeguards you might consider (assuming you are targeting a smaller outfit):

1. Look for outfits (10+ years in business as it's a matured industry) where the founding partners (US/Top school educated - not necessarily engineers) are still together.

2. Narrow your choices down to the final three (preferably in the same geographic market so the quotes are comparable). Make sure they respond/agree to your RFP, point by point, which will minimize exposure and enhance protection.

3. If you are in any "Innovation" business, make sure you copyright your concept before circulating the RFP. Let the RFP prominently indicate the US Copyright number and the date.

4. If you are outsourcing an innovative web service (like ours), RFP must specify that the final codes and flow charts are a "requirement," allowing yourself the flexibility to patent the completed version (it's a good choice to have; the completed version could be much better than you envisioned).     

5. Depending on the extent of services being outsourced, paying unannounced visits might not be a bad idea. You can hire a local investigator (or a lawyer) to do it for you. The point is, you want to make sure that these are full-time established entrepreneurs, not moonlighters with full-time day jobs elsewhere. 

6. Make payments in 3 to 4 milestone installments via an US Escrow (Escrow protects both parties; do not let them sweet-talk you out of it after the first project, etc.). Follow this practice perennially, unless you decide to take an equity stake in that company down the road (only exception!). 

7. Insist on weekly updates (email), followed by Skype/Facetime meetings (to make sure they are conducting the meetings from the office, not from cars).

8. Keep conversations strictly at the professional level, avoiding all wasteful chit-chat. Any such indulgence will be construed as weakness, leading to needless exposure.

9. Avoid putting all eggs in one basket. While you may have to stick to the same vendor for upgrades and enhancements (but do not talk about it in advance; instead, play it by the year), evaluate different vendors for unrelated projects. Do not ever give them the impression that you are dependent on them.

Good Luck!

Sid Som, MBA, MIM
President, Homequant, Inc.

Saturday, September 7, 2019

How to Turn LinkedIn into an Effective B2B Marketing Tool

How to Turn LinkedIn into an Effective B2B Marketing Tool

1. Choose contacts very carefully (no family and friends here), zeroing in on the decision-makers. For example, if you offer financial services to banks and other financial institutions, constrain your re/search to the decision-making vertical, i.e., VP-SVP-EVP

    2. Expect 20-30% effectiveness. Could be higher or lower depending on the mutual interest and compatibility. Regardless, try to align with the decision-makers. 

3. Contribute frequently, preferably daily. Content is king so do not waste time on unrelated issues/themes (stick to your business and competition). Instead of sharing articles from various news agencies, place your own articles and commentaries so your business stands out. Originality is greatly rewarded. 

 4. Unless specifically requested, avoid all direct marketing. Do not spam your contacts with unsolicitated literature. It's a serious turn-off for the busy business people.  

 5. Define the target population you would like to achieve within a specified timeframe. High-water mark is critical. Quality is more important than quantity; for instance, 1,000 vertical-level decision-makers (quality) are more valuable than 2,000 random bankers (just quantity), most of whom are non-decision makers. Set a timeframe, say within 6 months, to achieve this goal. Spend an hour each night – religiously – reviewing candidate profiles and sending out invites.

 6. As liquidity increases, intensify your marketing efforts. At the end of the day, it's a numbers game. 1-2% effectiveness becomes significant when the underlying population is large and impactful. In other words, if you have a contact population of 3,000 decision-makers, 1% response rate (or 30 leads per day) is significant – initially!

 7. Considering it's a "100% targeted" environment, minimize the use of automated or impersonal campaigns. Instead of placing a marketing flyer in front of your contacts, write a meaningful introductory piece, followed by a set of links to your flyers. When leads are self-enticed (after having read your piece), they are already half-sold.     
     
          8. Just the way you would grow your business, keep your LinkedIn base growing as well. The growth pattern must be collinear, meaning they must grow in tandem (as they complement each other). As your base grows, you will receive more requests. Remember, it’s your business so do not unnecessarily relax your acceptance rules. On the contrary, now that your base is liquid, try to tighten it a bit. For example, roll up your original VP-SVP-EVP vertical to SVP-EVP now.

 9. Finally, here is an optional consideration – an exception (to the stringent acceptance rule) I personally follow. Now and then, when I receive requests from certain rule-breaking yet deserving candidates like the mothers trying to return to work, new STEM graduates looking for jobs, etc., I wholeheartedly welcome them into the network.

    Good Luck!

    Sid Som, MBA, MIM
    President, Homequant, Inc.

Thursday, September 5, 2019

Bailing out the Ailing Local Governments

Bailing out the Ailing Local Governments

In order to bail out the ailing ones (and prevent it from snowballing through the system in the future) we need a total re-invention of the Local Government System, in line with the private sector.
1. Replace the existing Pension system with a 403 Matching System (match up to 6%), thereby preventing any unfunded liability. Unfunded liability poses serious financial threats to many state and local governments.
2. ​All Paid Time (Vacation, Sick, Personal days, etc.) must be reset each year (use it or lose it). No carry over! Though sounds trivial, this causes a serious problem to many large municipalities, especially when the exit door gets crowded.
3. All Overtime and Comp Time must also carry the same annual reset, with no cash conversion whatsoever! This adds more fuel to the regulation (#3) fire. At least, the carryover needs to be nipped in the bud. 
4. Introduce Mandatory Retirement at age 67 (when Social Security and Medicare come into effect), with an incentive to retire early at age 62 (as the first SS qualification). Make cheaper forms of healthcare (e.g., HMO) free for the retirees, upping the ante (retiree contributions) for the non-HMO healthcare insurances. Unions must co-share retiree (who contributed to the unions for a period of time) premiums with the government. 
5. Minimize Civil Service hiring. Use "Temps" to fill seasonal requirements and "Leased" employees to cater to the long-term requirements.
6. Outsource! Outsource! Outsource! Start outsourcing all non-essential services including analytics/modeling, research, assessment, appeals review, data collection, etc. (those private vendors face true competition in the marketplace so they are forced to hire the best and the brightest, hence much better value to the taxpayers!).
7. Take away all decision-making powers from the senior Government employees (pertaining to high value projects, outsourcing, etc.) in order to minimize fraud, nepotism and post-retirement revolving door options. Establish and empower public-private committees to vet and award such projects and contracts. 
8. All Civil Service Interviews must be conducted by a duly elected/selected external body (Professors, CEOs, Industry Experts at the EVP/SVP level, Trade Association Chiefs, etc.), with right to reject ALL (needed!).
9. All Civil Service jobs requiring a college degree must have two-part tests: Part-1: College level Math & English, leading to Part-2: Regulation. Even re-qualification exams (say every five years) could be considered (Civil Service must not be a lifetime entitlement). 
Of course, the counter case could be equally compelling. As long as these governments have unrestricted access to the "eternal" cash cow called homeowners, none of this might matter. Yet, the local governments must fight to institute these changes. For too many, it's already a race against time!  


-- Sid Som, MBA, MIM
President, Homequant, Inc.
homequant@gmail.com

Wednesday, September 4, 2019

How to Pre-launch a B2B Start-up

How to Pre-launch a B2B Start-up

"I have been toying with a B2B concept for a while. I think it has great potential. How do I take it forward?"

As an entrepreneur, I often get this question from the budding entrepreneurs.

First off, B2B Service (where we operate) is one of the hardest segments to penetrate. Consider these steps (necessary but aren't sufficient) to pre-launch a B2B start-up:

1. If you have a good job, do not jump ship. Instead, take some time off and try out a pilot "live." If your concept/invention pertains to the same industry where you are currently employed, have an Attorney review your employment contract for “conflict of interest” and “no compete” clauses. Since start-ups do not qualify for SBA loans, hire a qualified consultant to review your financials (both business and household), type of business formation (S, LLC, C, etc.), liability insurance, etc., etc.   

2. Make sure you implement your own marketing plan (from the actual business plan) to promote the pilot (as if it were the real launch!). I would rather have an average concept backed by a super-duper marketing plan (recipe for success) than a super-duper concept backed by an average marketing plan.

3. If it is a local service, start networking. Run several live campaigns (with your real money) to get a good feel/reaction from the future clients.

4. If it is a national service, mobilize your marketing rolodex (LinkedIn, FB, etc.), with an announcement that you are open for business.

5. Simultaneously, implement your marketing campaigns on Twitter. Fine-tune campaigns based on Twitter Analytics. Re-implement the plan.

6. Seek advice from the like-minded B2B entrepreneurs - both successful and struggling - to avoid having to reinvent the wheel. It will save you many trips to the ER, so to say.

7. If you have written a book highlighting your concept/invention, join the Amazon Marketing Service to beef up its sale, bolstering “indirect” marketing. The Kindle version alone is not enough - the Paperback is equally important.

8. If it is a Business IT concept (like ours), copyright it, leading to patenting; otherwise, you will have zero protection (read my prior posts for details).

9. Analyze the results as they come in. If you think (preferably in collaboration with a marketing consultant) the results far exceed your (and your consultant's) expectations, initiate a much larger pilot with the updated service coupled with an upgraded marketing plan - i.e., adequately factoring in the inputs (+/-) from the initial pilot. If the follow-up growth curve is exponential (at this point, linear growth is not good enough!), you are "on to something."  

Good Luck!

-Sid Som, MBA, MIM
President, Homequant, Inc.

Sunday, September 1, 2019

To Analyze a Sales Population, Consider the Expanded Percentile Curve

     -- Intended for New Analysts and Researchers --

(Click on the image to enlarge)

Analysis of Sales Population

1. Instead of just one parameter (like average) consider the expanded Percentile curve, preferably 1st percentile to 99th percentile. Avoid Minimum and Maximum as they may skew the picture.

2. Normally, 5th percentile to 95th percentile is the most meaningful inlier range, extending out to the outliers on both ends. If the sample is excessively large, 1st to 99th could be used as well.

3. So, while studying outliers, consider below the 5th percentile and above the 95th percentile. In case of a large sample, below 1st and above 99th could be experimented.

4. When the time series is extended (e.g., sales between 1/2017 and 3/2018 are used here), sales must be time-adjusted. If the sample comprises 3-4 years' of sales, quarterly adjustments will be in order.

5. Since the growth rates vary by the market, time adjustment factors (coefficients) must be derived at the market level (e.g., 6% in this example). Applying national or even regional factors could result in flawed results.

6. If you have to choose one parameter, it must be the Median, as it is less prone to outliers (Average is heavily influenced by outliers, distorting the analysis).

7. In this example, Median ASP and Median Bldg SF are mutually exclusive (may be connected to get a general idea of the ASP/SF, but not for any serious analysis).

8. In order to analyze ASP/SF, create the organic variable (row-wise) and run percentile stats on it (auto-regressive).

9. Ideally, ASP should be modeled (regression) and the resulting output variable (smoother and statistically more significant) used in all analyses, including defining and removal of outliers.

I picked the above table from TownAnalyst.com as I own and operate it, to avoid having to deal with any copyright issues. My TownAnalyst site is totally free (no strings) and requires no login or registrations whatsoever. Please use the site/system that works best for you.

Thank you,

Sid Som, MBA, MIM

Homequant, Inc.
homequant@gmail.com