Monthly Archives: April 2012

Real Estate Koans

The other day someone asked: “How many properties does a person look at before they find a house?” Hmmm. Another one of those interesting zen koans in a market where the only thing that’s certain is uncertainty and the only thing that stays the same is change.

Well Grasshoppers, I could answer the question with another question like: “Does one hand clapping alone in the forest make a sound?” But….I’ll try to translate it into Western-speak.

There are as many answers as there are people. 10? 50? 100 homes? The exact number lies somewhere between one and all of them. People always find “it” sometime between now and then.

I recently worked with folks who found it their 1st trip out, only their 4th property viewed. Fortuitous but not the norm. Of course, they had also done thousands of virtual drive-bys on search engines and spent many hours manifesting this choice in their mind’s eye.

I’ve got another client still looking after two years. Lack of inventory? Fate? Maybe there’s some dysfunction beneath the surface? Maybe he’s just particular?

But then again…why shouldn’t he be particular. It’s home. People haven’t been in much of a mood to settle for something that’s merely “ok” lately. Buyer expectation has been hovering pretty high on the Perfect Index. As things heat up, numbers on the “I’ll Settle” Index will rise accordingly.

If memory serves, my all-time streak for extra inning showing activity was with a couple who looked for seven years (who’s counting?) Every time a house seemed right, they asked one of their ex-spouses, a contractor, to give it thumbs up or thumbs down. The ex always blew the house out of the water. They finally realized the ex didn’t want to see his former other-half happy in a new home. Impediment removed, we closed on a great place shortly thereafter. Go figure.

I also recall another one of my all-time personal bests – the day I showed 19 properties to the same couple! Kids don’t try this at home. Could be hazardous to your health.

Anyone looking knows that after four or five houses, things start to get fuzzy. Eyes glaze over. It all begins to blend together. No one remembers whether the house with the pool had the brown carpet or whether the one that smelled like kitty litter had the pea-green paint. Sensory overload. Too much information.

That particular day felt like a combination of the Iditarod and the Amazing Race. A hundred yard dash that turned into a marathon that turned into a super-marathon.

Silly me. I thought we were starting out on a three hour cruise – only to become Gilligan shipwrecked with a couple of passengers. Thank God for vacant homes and their facilities. Thank God I brought standard real estate survival gear: Epi Pen (sticker shock), Kleenex Tissues (crying jags), Energy Bar (hypoglycemia) Dramamine (car sickness), Dog Biscuits (Rotweillers).

We went down every road, I never knew existed in San Lorenzo Valley. Past all those homesteads packed in them thar hills. Wondered how many streets could be called Summit or Highland without people getting totally lost.

Somewhere we passed the point of no return. We all got the giggles. It took twice as long between homes because I kept making wrong turns.

Then after the 18th house, on a whim, in the waning hours of twilight, they suggested a property that wasn’t on our list. Fried already, I figured sure, why not humor them.

Before they even got up the front stairs, a bolt from the blue hit them. Their body language changed. Without anyone saying anything, I knew this was it. We closed 45 days later.

There you have it buyers. Fate, kismet, synchronicity, divine intervention or just plain luck? Whenever your inner voice asks “Are we there yet?” know you’ll be home before you know it. Sometimes the 19th time is a charm.

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We Won’t Get Punk’d Again?

In the old days, I would have written my annual April Fool’s column a few weeks ago. Made up some patently absurd, playfully deceitful premise. Spent 600 words trying to suspend everyone’s disbelief. Selling the ol’ presumptive close. Not allowing anyone to buy into the notion that they hadn’t already bought in.

In the end, I would have confessed I was kidding. We would have laughed. Then gotten on with the business at hand – serious real estate.

But those were the old days. These days? I’m not sure who’s fooling who anymore. What’s serious. What’s not.

We’re well into April and the rites of spring. Hopefully headed for showers of new activity and a vibrant, blossoming marketplace. But I can’t shake the feeling that there’s still some kind of joke lying in wait out there. Preparing to yank our chains. Trying its darnedest to fool some of the people all of the time and at least all of the people some of the time.

Including me. Recovery? Presto change-o. Now you see it. Now you don’t.

When I look at the layered vagaries buyers and sellers are experiencing, consider the potential good news that’s welling up in the wings and then juxtapose the whole kit and kaboodle of high weirdness that continues to roil around in the wake of the bust all I can say is: a) Folks, I couldn’t make this stuff up. b) Realty is stranger than fiction. c) My belief that anything definitive can be said about the market is officially suspended.

Just warning you. If real estate wakes up six months from now and the volume is cranked up on “We Won’t Get Fooled Again” and one of the seemingly endless pantheon of two-faced, real estate trickster gods jumps out from behind door number three masquerading as Ashton Kutcher shouting “You’ve been punk’d!” … don’t pretend there wasn’t anything to be slightly suspicious about all along.

Then again…maybe real estate will be safely awash in throngs of Facebook Millionaires by that time! Apple shares will be trading at a thousand! Buying and selling houses will be the talk of the town! We’ll be headed merrily in the direction of another robust run up! Money talking! Bullsh*t walking!

Even if the long boom never lasts as long as promised. And towards the end of every cycle the bull always talks while money takes a hike.

If we’ve just opened escrow on the real estate recovery, we better strap in. Shaky deal ahead with plenty of twists and turns. More ups and downs than Mr Toad’s Wild Ride.

Depending on where you look and what angle you look from, there’s a good news/bad news whammy attached to just about everything the market has to offer.

Buyers? Good news! Incredibly low interest rates! The Case-Shiller Index says prices are down 40% from the peak! It’s spring! More listings coming on!

Bad news? The loan process can still resemble a Guantanamo waterboarding experience. Inventory sucks. Anything decent is getting snapped up with multiple offers in a week.

Sellers? Good news! Multiple offers left and right! Bad news? See above – re: Case-Shiller Index.

First time buyers? Here’s a special introductory conundrum for you. You can probably own for less than you pay in rent. Catch? You’ll be competing with all-cash investors for quite awhile.

All this. And more.

Last week’s TIME Magazine piece was: Recovery for Real? …surprising signs – like underwear sales – that point to yes. Apparently there’s been a 6.6% jump in the Underwear Sales Index, once made famous by Alan Greenspan. Bad news? Per tooth payouts from the tooth fairy fell more than 17% last year. I kid you not.

Given this kind of definitive news, we should probably move forward with cautious optimism. Keep an eye out. Make sure Ashton Kutcher doesn’t jump out dressed like the tooth fairy and pull the underwear over our heads again.

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Working for Free

This might sound like anathema to some colleagues, but I’m going to say it anyway. Nothing better for a Realtor’s soul on occasion than to do a little pro bono work.

I’m not talking about all the charitable things Realtors do. Making donations. Serving on Boards. Putting in volunteer hours. I think the real estate community ranks right up there in terms of its commitment to the larger community we live in.

When I say pro bono… I really do mean donating free time, free advice and perhaps even an occasional free transaction to someone in need of real estate help. No strings attached. No agenda. No moolah.

And this is where we get into the grey area. For some Agents it crosses a line. Spending an afternoon pouring wine at a fundraising event is one thing. Spending an afternoon giving away for free, the same advice that usually earns Agents their livelihood and allows them to buy groceries, pay college tuition and make their own mortgage payments – is quite another.

It can feel like a violation of professional integrity. Something that undercuts the way the average person views Realtors and the value of their work (largely misunderstood concepts in the public domain.) If it’s available for free, why value it at all?

The thought of free work pushes emotional buttons for many Agents. Mostly due to memories like:

That time they drove buyers around for months looking at every new property. Sacrificing weekends and evenings. Then out of the blue the clients stopped into an open house, wrote up an offer with the Agent there because somehow they thought they’d save a few thousand bucks.

Or the last time Sellers of an overpriced listing refused to lower the price while demanding bigger ads and more open houses. Then, after the listing period expired they relisted the property $200,000 lower with another Agent who put it into escrow in a week.

When an Agent gets a few of these crushing experiences under his belt he often locks his boundaries down tighter. Becomes almost unyielding in the way he spends his time or allows his clients to spend his time. And in an ironic way, it reinforces the stereotype of the real estate agent as salesperson. They: “Don’t want to do anything unless they get paid.”

Real estate agents sell time. Time is their currency. They don’t own the homes being sold. It isn’t their money getting exchanged for grant deeds. They receive commissions for time spent – assuming something actually transacts. Realtors broker homes . Realtors market homes. Sellers sell homes.

The word “sell” is so charged with baggage that it’s almost impossible to un-tether it from all the veiled assumptions, hidden expectations and loaded suspicions that precede it into an actual relationship between real people.

Sometimes the first month I spend with clients is mostly about convincing them that I‘m not trying to “sell” them something they don’t want to buy.

The stigma attached to “selling” never completely goes away. It’s painful when clients reject your best advice. Not because it isn’t good advice. But because they think you are trying to push your own agenda rather than speaking to theirs.

Agents often become hyper-conscious about how clients perceive their motives. They temper their advice. Sugarcoat it. Spin it with vague, diplomatic reasonings. Worry obsessively about blurting out what they really think before editing it into some pallid version of real estate lite.

So Agents, I’m extolling the virtues of pro bono work. For your sake as much as anyone elses’. Go ahead. Try it. You might like it.

You may find it’s an incredibly liberating experience to sit down with someone and tell them what you really think without worrying that somewhere in the front or the back of their heads they are assuming you are saying what you are saying because you want to make a sale. Like I said. Good for the soul.

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Real Estate’s Own Groundhog Day

What was that tag line we used to see on posters promoting Rasta bands at the Catalyst way back when? All Killer – No Filler?

Wouldn’t it be nice if we could channel a little more of that sentiment (and mojo) into the real estate inventory these days. Seems like no matter how many times a day you and I and I go onto the MLS to check for new listings or download search engine e mails…nothing much new “of value” comes on. Just the same old same old.

Tired inventory. Picked-over inventory. Stale-inventory. A warmed-over re-hash of all the stuff that didn’t sell last year. Including a strange menagerie of distress properties. Dubious short sales you can never be sure of and a smattering of REOs banks are pinching out of their systems…starting with the worst first.

The sum total? An uninspiring catalogue of places. Most of which aren’t qualified enough to move anyone anywhere. As in: Move buyers in. And move sellers out.

(Quick disclaimer: Individual Sellers, don’t get bent out of shape here. I’m talking about everyone else’s listing except yours.)

I guess we could say it’s All Filler…Very Little Killer in real estate land right now. Not many killer views, killer yards, killer locations. Or to lower our expectations just a little… not many plain old, modest, middle of the road killer houses packaged up in nice presentations at reasonable price points. Specially right there in the sweet spot zone between $600k and $800k. I don’t know about you…but it’s killin’ me.

Most Agents understand. They’ve got clients calling too. Buyers ready to buy. Or who think they are. Buyers becoming increasingly frustrated with a market that doesn’t seem to offer anything up that fits their needs or price range. And by extension, Buyers frustrated with their own Agents, who become more suspect each week when they fail to turn over enough rocks or the “right” rocks to uncover that special hidden gem waiting out there. Somewhere.

The same Buyers who don’t understand why it is so hard to buy in (what keeps getting sledge-hammered into our heads as) the Perfect Buyers Market. Is it safe to say this isn’t a Perfect Buyers Market?

There are certainly incredible interest rates. Prices have certainly come down a long way. Those are two of the defining characteristics of a Buyers Market. What’s missing? Great places that people actually want to buy. I think some people call it supply. Or maybe “effective” supply would be a better term.

I keep having the same deja-vu experience. Clients who’ve been looking forever, pouring over the on-line pictures of homes for sale, who keep calling and asking to see places they forgot they already saw a year ago. Houses that didn’t work then and aren’t going to work after another 365 days on market and a minimal price reduction. I call this “Deja Viewing”. Stare at the MLS long enough and homes start repeating themselves over and over.

So when’s this slow tortuous drip of new properties coming on going to end? When do the floodgates open? I feel like a kid staring at the classroom clock. Waiting for recess from a hard lesson. The minute hand isn’t moving. The fabric of time is frozen.

Thursday was Groundhog Day and another shadow appeared again this year. Was it just the shadow of a huge shadow inventory? Or was it also the shadowy logic of would-be sellers planning to hold out putting their places on the market, for as long as they can.

Either way, looks like the winter of our buyers’ discontent is going to last at least another six weeks. If we don’t shoot ourselves in the foot that is – by kicking the groundhog down the road even further…

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