Monthly Archives: August 2012

 Real Estate Thought Bubbles

I’m not an appraiser.  I don’t even play one on TV.   All I know is, I seem to be stumbling across more and more of these kindred real estate souls slogging through the neck-deep, muddy trenches of the same difficult transactions I’m wandering around in these days.

Ships passing in the day.  Comparing notes.  Commiserating on the sad state of comps. Measuring the level of frustration in each other’s voices.  Scratching heads together below a common thought bubble that reads: “How is this supposed to work?  Are we part of a broken system that’s designed to fail rather than succeed?”

Assuming that most on board define success as closing escrows.  But of course there being no lack of conspiracy theories blogging around out there, claiming just the opposite – that the new paradigm of success for banks is fewer loans approved and more escrows not closing.

The daily grind of real estate has settled into a painfully slow peristalsis.  A weirdly protracted form of trench warfare. Bogged down in a place where familiar landmarks have been blown to bits.  No recognizable mileage markers in the flattened landscape.  Almost impossible to tell on a day-to-day basis whether the escrow everyone is working on just took one step forward or two steps backward. Or both.

Simple Translation?  Nothing is easy anymore in real estate.  Easy isn’t even easy.  Not that it ever was.  But there was a time when hard was at least a lot easier than easy is now.

Are there any key players in the process having a harder time than Appraisers?  Any getting more middle fingers of blame pointed at them?  Any thrust more conspicuously onto the front lines of real estate’s no-win ground zero?

There’s always been a lot of confusion around an appraiser’s role in a standard residential purchase.  First: they are not sitting in for God.  Theirs is not meant to be a pronouncement from on high about the enduring value of a home for all eternity.  Second: they are not there to put the Buyer at ease or quell onslaughts of remorse. Third: they are not there to help a Seller salvage a shred of equity.

They are there to protect the lender’s interest. Pure and simple. Since the bank is usually the Buyers majority partner, it wants to know that reasonable collateral for their risk really does exist.

Fast forward to the mortgage meltdown and subsequent fallout that has flipped just about every aspect of the loan process on its head. Or inside out. Or ass forwards. Or (insert your favorite phrase here).

Real estate has fallen down the rabbit hole and it looks radically different from almost every vantage point.  There’s been a huge overhaul of the appraisal system. And ongoing directives from Appraisal’s Central Command are in flux – still shifting daily, weekly, monthly.

Enter the AMCs or Appraisal Management Companies. A perfect example of consumer protection run amuck.  A middle layer inserted into the process to protect borrowers from loan brokers.  But with no way to protect borrowers or loan brokers from those same AMCs grabbing for their own piece of the money pie. AMCs who are successfully breeding an increasingly dysfunctional appraisal system.

Let’s see…appraisals now take longer,  cost more, are subject to far more doubts and delays and often employ less experienced appraisers venturing further afield to communities they don’t have much of a clue about, because they don’t live there.

At the same time: Appraisers actually make less per appraisal, find themselves bidding for jobs farmed out to the lowest bidder, while many of the most experienced appraisers have retired and those that are left are overworked, underpaid and rushing to meet deadlines that aren’t remotely feasible. All under increased scrutiny and threatening review.

All in a market when there are a lot less comps to work from because of less overall sales. Where the few comps that do exist are often suspect because the task of differentiating between organic sales, short sales and bank-owned sales requires the wisdom of Solomon when almost half the sales (distressed) violate the prime directive known as “willing seller, willing buyer.”

Aren’t we asking Appraisers to go out and determine accurate market values in a market that is no longer functioning much like a free market?


Organic Sales

Remember those crazy bull markets of yester-lore?  Late 80’s? 1999? 2004 to 2006’s non-stop, over-the-top, shop-till-you-drop midnight of madness? Homes as cash cows? Free money handed out like Halloween Candy? Equity lines falling into everyone’s laps like manna from heaven?

There was always some new version of the same old same old bad Realtor joke floating around out there. Infinite variations on a theme.  Some little twist on the conventional wisdom that figured Agents had it way too easy and didn’t really have to work for a living.

What were the two requirements for success in real estate?  1) Showing up.  2) Having a pulse. Why did Realtors get the big bucks? Easy. They were smart enough to answer the phone, chew gum and fog a mirror all at the same time.

Those escrows just kinda closed themselves right? Automated-search engines. Automated-underwriting.  A market full of Buyers and Sellers on auto-pilot. Practically landing themselves in all those new houses.

Show a few properties. Write a few offers. And then… Sayonara! See you all after the sign-off. Call me when the deed records. And that big Commission Check is ready at the Title Company.

Don’t hear that kind of snarky talk much anymore. Now that buyers remorse has become a matter of course.  Now that so many escrows aren’t over until they’re over.  Now that so many loan processes feel like a not-quite-what-you-bargained-for water-boarding experience at a Guantanamo theme park.

Now that so often, just when the fat lady is clearing her throat getting ready to sing, some totally improbable, completely unexpected, fluke out of the blue happens, causing the whole game to slip into the interminable limbo of extra innings. Leaving players’ jaws open in a state of suspended animation. Throttled with frozen disbelief. Numbed by the sheer absurdity of it all.

In the back of our minds we’ve always known that control is an illusion. But it took a marketplace full of too many short sale transactions and bank owned properties to teach us beyond a shadow of a debt that control is a delusion. The banks’ control of the process is completely out of our control.

In today’s new and unimproved real estate it is difficult to find any kind of closure. Most of the time our clients start out thinking they’re running a 400 meter race. Long but not too long. Tough but not impossible. We get them started. We coach them along. They enter the altered estate of escrow at some point in time.  And then things really get strange.

Suddenly the fates and fortunes and futures of real people are delivered into the vise-like grip of unintelligible corporate processes fubar-ed by the overlay of unintelligible government regulations. The epitome of everything that’s wrong with decision by committee, collective conspiracy and the over-arching confederacy of dunces.

We ride out each day during our clients’ contingency periods ready to tilt at windmills. Do battle against ghosts in the machine. In the end, we are often relegated to the roll of glorified cheerleaders. Handing exhausted buyers and sellers water bottles and platitudes from the sidelines while their short runs turn into marathons that become super marathons before they’re all over.

“The end is in sight. We’re almost there. It’s always darkest before the dawn. The farther away you feel, the closer you really are. We’re heading into the home stretch now.”

Funny how a simple transaction between a real live seller and a real live buyer is now referred to as an “organic” sale in the vernacular of real estate. Sure organic sales, like some organic foods can be a bit messy at times.  They’re not always pretty.   But organic sales sure leave a better taste in your mouth than the overly processed kind.


Real Estate Norms

It doesn’t happen very often.  But when it does,  “it” is often quite touching. Makes me like people even more.

Restores my faith in humanity – which I confess – gets a little shaky from time to time. Specially when I get sucked in too far.  Whap’d upside the head by one too many of the less savory experiences real estate can conjure on a day to day basis.

Like when buyers and sellers square off like rabid mongooses (mongeese?). Prepared to battle to the death over who will retain that rickety old refrigerator, when and if their million dollar escrow ever manages to close.

“It” –  in this case –  refers to other more gracious moments that arise out of the blue. When well-meaning clients offer up sudden, heartfelt apologies for things they think they either should or shouldn’t have done – that really weren’t so terribly wrong in the first place. Usually minor indiscretions or tiny infractions that weren’t anywhere near out of line, out of whack or out of range of the norm of human behavior.

Clients don’t have the same opportunities we Agents do. They don’t get to see hundreds of different buyers and sellers – of all shapes, sizes, dispositions and depths of portfolio – make their way through the stations of the cross dotting the real estate landscape.  They don’t always know how to rate their own behavior – lacking years of experience that could provide a clearer picture of what this human guy that everyone calls “Norm” really looks like.

But God Bless some of them for worrying. For being conscious of their own actions. For caring enough to express concern when they think they’ve crossed the line.

What are some of the charming little apologies that spring from the mouths of our clients?  “Sorry, I must be your worst client ever.” Or:  “Sorry to ruin your weekend and make you come out to show me this property.” Or:  “Sorry to call you at night.” Or: “ Sorry to ask so many stupid questions.” Or:  “Sorry my garage is a mess.”  Or:  “Sorry I didn’t have time to organize my linen closet or arrange my canned goods in alphabetical order on the pantry shelves before you came over to see the house.”

Or… “Sorry that I don’t actually like this otherwise perfect dream home that you went out of your way to pull off the MLS and show me despite your busy schedule jammed full of opportunities to work with other, more important, wealthier, and far more decisive buyers who will probably purchase something way more expensive long before I do and thus reward you handsomely for every single second of sterling effort you expended on their behalf”…

Oops. Back up.  Scratch that last one.  It must have escaped from some alternate Real Estate universe. One where everything revolves around the Agent and his needs – rather than the client’s.

I was quite touched the other day when wonderful clients, smarting from a home inspection that found fault with the house they’d lived in for 20 years, said: “ Sorry we are taking this so personally. We know it’s just business.”

For a moment, I imagined one of those scenes from an old gangster movie where some poor soul gets rubbed out in brutal fashion while the burly hit man intones: “Sorry, nothin’ personal Vinnie. It’s just business.”

Which brings us to today’s take away message.  It’s one thing to say people shouldn’t get personal about a stock. Or some other investment.  But how does someone not get personal about their home? Home is the terra firma sitting at the exact intersection where personal and business meet.  The rock that so much of the rest of life is built on. The biggest asset most of us will ever own. And yet, also the very thing that affords us all those qualities of comfort, refuge, safety and sanctuary that are priceless in the end.

So…just a little tip. You don’t have to apologize for home being personal.  It’s when it isn’t personal that you should be worried.


What’s My Sign?

I hate to complain but sometimes it feels like there’s a big red bulls-eye subliminally etched into those Monterey Bay Properties signs I keep putting up out there.

A flashing neon beacon. Not quite visible to the normal eye but blatantly obvious to the occasional bad neighbor living next door behind the darkened blinds.

Signs are just signs right? Yes – but. They can also become signs of things to come. In the form of strange story lines and unexpected plot twists set into motion by their arrival.

The phenomena goes something like this: I list a property. Prepare it for sale. Put it on the market. Have the sign guy go out. Put the post in the ground(Careful not to clip one of those irrigation lines dude!). The Monterey Bay moniker gets hung up for all to see

On the surface it just looks like the company name, the familiar shell logo and my phone number. A simple announcement of a new home for sale. Prospective buyers can call to inquire. And curious lookey-loos, with a little too much time on their hands, can start licking their lips. Maybe they’ll be a chance for a sneak peak at how the Jones’ have really been living all these years, at an upcoming open house.

But beneath the surface? Other motives may be lurking in the shadows. An odd neighbor out. One with unfinished business. A chip on their shoulder and a gnarly bone to pick.

When that sign goes up, they see a perfect target. A golden opportunity. A long-awaited vehicle for redress. Instant leverage. A chance to settle the score on some past slight that never really got resolved. At least not to their satisfaction.

It’s amazing how often, on the same day the sign goes up, Realtors receive calls out of the blue from “concerned” neighbors, “not wanting to cause trouble”, but “just wanting to let us know” about some past boundary dispute, a fence that’s six inches over the property line, a troublesome tree limb leaning in the wrong direction, a parking spot that has been unceremoniously appropriated or a chicken coop that’s been illegally constructed in the rear set-back.

Nevermind that the caller has lived next door, within easy shouting distance of the offending party, for ten years. Or that their kids went to school together. Or they used to have bbqs in the back yard. Or take care of each others’ dogs when they went on vacation.

Suddenly, it has become the Realtor’s job to find a way to right the wrong that’s been festering for so long. To bring peace to the feuding Hatfields and McCoys.

I once had a neighbor call me “just wanting to let me know” that the Seller of a property had buried too many pets in their back yard. Shades of Stephen King? Another to report their neighbor’s penchant for not folding up their cardboard properly before putting it into the recycling bin. Petty private road disputes throughout the County are of course, the stuff of legends.

Here’s the theory for all you armchair attorneys out there:

Sellers are required to disclose things like neighborhood nuisances, pending litigation, code or permit issues. Anything that might inhibit a Buyer’s ability to utilize and enjoy their new property. If Sellers don’t disclose properly, they could be liable after the fact – i.e. – close of escrow.

So, sometimes unhappy people figure that rather than confronting their neighbors directly, all they have to do is call their neighbor’s Realtor, tell them about some real or alleged infraction/problem/misdeed and then it will have to get taken care of, if they want to sell the house. Of course the real Catch 22 then lies in also having to disclose the fact that there is a difficult neighbor who likes to complain.

Rodney King passed away recently. He wasn’t a Realtor but perhaps he said it best back then: “Can’t we all just get along?” When good fences don’t make good neighbors the task often falls to us Realtors. Perhaps one more reason why we get the big bucks?