Monthly Archives: January 2019

10,000 People Turn 65 Today…


More on the Downsize-Dilemma

I keep experiencing a sense of déjà vu lately. Four or five times a week, I find myself in the middle of the same conversation with completely different people!

Coincidence? I think not. The scenario goes something like this: A call comes in. The person is thinking about selling their home. They wonder whether I can come over to look at their place and give them some advice about what they may need to do to prepare it for sale.

They aren’t ready to sell yet. They’re just trying to get a better sense of what the big picture of real estate looks like. Where the market is and how much they might be able to sell for. All of this is great of course. It’s what I do. Over the years I’ve had hundreds of these calls.

And yet, when I get there, what’s supposed to be a simple Q&A about real estate, often turns into a much broader discussion about big life questions that are bouncing around in their heads. The existential dilemmas they are feeling. All the what-ifs about the future. The litany of concerns that come with aging. Their natural resistance to change. And just how hard it is to define what quality of life really looks like.

This is the conversation that’s making the rounds out there. It’s a collective expression of a huge, silent dreaming that’s welling up from deep within the culture.

The caller is usually somewhere between 55 and 75 years old. They often have aging parents and/or kids close to graduating college. They are wrestling with their own retirement issues. When to quit working? How to “move-down” and simplify life. Get rid of all the useless stuff in the garage. Maybe have fewer stairs and less property maintenance.

Along with all of the above, come even more complicated questions about things like: financial planning, family trusts, capital gains and property tax transfers, medicare, social security and long-term care insurance.  

Ultimately all of these things relate back to home and the role it plays in our lives. For most of us, home is the single biggest asset we’ll ever own, at the same time it’s the physical, emotional and spiritual centering place for our lives –  our refuge of safety, privacy, comfort and security. Home transitions are almost always a part of larger life transitions.

Sound familiar? Today 10,000 people in the US will turn 65.  More than a few of them live in Santa Cruz. Over the next five years, that number of is going to increase dramatically as the population continues to age  And that means the conversation is going to continue….



We’re talking about Zillow becoming a go-to voice for people who are curious about real estate values. Mostly because it is “free” and easy. And doesn’t require any commitment.  Let’s explore why those Zillow Zestimates aren’t very accurate… but first a few quick observations:

-There are no free lunch on the internet. Websites harvest your contact information to sell it into big data servitude. Think digital Soylent Green.

-The bulk of Zillow’s revenue comes from selling “leads” to the same real estate agents  Zillow users think they’re avoiding.

– Zestimates come from a proprietary algorithm –  a secret sauce formula that tastes a lot like thousand island dressing.  Since over a billion Zestimates have been served they must be right.  Right?

-People believe Zestimates when they confirm what they want to hear.  When Zestimates are high,  Sellers love their accuracy.  When they are low, hopeful Buyers think they are true.

So what’s the real mystery ingredient in Zillow’s secret sauce? As a student of real estate it’s pretty clear to me that it’s Price Per Square Foot (PPFT) – the same factor Realtors have been using for decades to make back-of-the-napkin guesses at home values.

Here’s the thing, a home’s PPSF only kinda sorta works as a predictor for home values in larger subdivisions with places of similar size built around the same time. In Santa Cruz, think Skypark in Scotts Valley or Santa Cruz Gardens in Soquel.  Figure the average place might sell for $450 per sq ft all other things being equal.

When it comes to home values in the majority of eclectic beach neighborhoods in Santa Cruz County, it’s almost never about the size of the ship or PPSF. It’s almost always about the emotion of the ocean – which is the “feeling” a house generates through the combination of all its intangibles. Things Zillow has no way of tracking.

How close is a particular house to the beach?  Is it windy?  Banana belt or fog?  Does it have a view?  Is the yard private? Surf locale? How does the light come in through the window? Can you hear the freeway? How about  the Hwy 1 commute?  Zillow doesn’t have a clue about any of those things.  Their secret algorithm can’t compute.

That’s why a 600 sq ft house in Pleasure Point can easily sell for $1.3 million ($2,166 ppsf) when it’s Zestimate says $900,000.  And why a 4,000 sq ft house in Aptos might sell for $1.5 million ($375ppsf) when it’s Zestimate says $1.9m.  In both instances Zillow is off by $400,000 and you’d do a whole lot better talking to a Realtor with secret some mojo of their own.

Sellers Have Selective Memories


The Market Always Tells the Truth!

Picking up the thread…. Sellers have selective memories. Fluid understandings about how the market works. When things are going well, the machinations of the market seem obvious. When the cycle shifts, the message morphs into a mystery they just can’t seem to fathom.

Do market dynamics function differently in different markets? Is that why Sellers’ abilities to “get it” vacillates between extremes? My own perspective is that the market is always an extremely honest feedback system. It tells the truth and delivers a consistent message in every market cycle.

It’s the gap between people’s expectations and results that tends to fluctuate wildly in different markets. Since expectations arise in the non-rational regions of the brain and results are usually interpreted through the lens of emotions, both are easy avenues for disconnect.

To help Sellers adjust to the shift that’s going on right now, here’s one fundamental truth about real estate that everyone should hold to be self-evident:   At the right price, everything sells.  (Yes, it really is that simple.)   If you are one of those Sellers who’s struggling to figure out what the market is saying, here are five important ways it is talking directly to you:

Open Houses:  How many people are attending your open houses?  10? 50? 100? If you don’t know, find out. If you aren’t having open houses, you’re blowing it.  The primary audience for Santa Cruz hales from over the hill and weekends is when the buyers come.

Showings: Is your house being shown independently outside of those opens? How many separate showings have you had? Have some Agents brought the same clients through more than once? 

Days on Market:   Has your listing been on the market for a few weeks? Or more than 30 days? If you’ve already reduced your price, how many days have gone by since you dropped it?

Feedback:  What are buyers saying about your house?  What recurring observations are being voiced? If you aren’t hearing the feedback from agents and buyers, your agent isn’t doing their job.

Request for Reports: How many buyers’ agents have actually asked to see the collection of reports and disclosures your agent worked so hard to help you compile? Find out.

Offers: Have you had offers? Even low ones?  Hopefully you know the answer.

These are all the ways the market communicates in every kind of market.  Next week, we’ll discuss how you can interpret the fundamental truth about your price,  after you’ve gathered all the feedback.

We’re Number One!

Is it about Quantity of Sales or Quality of Service?  




A few more thoughts on a recent column….where I suggested it was time to stop giving out silly production awards to Realtors. The ones that flaunt dubious metrics.  And glorify outmoded stereotypes rather than the industry’s highest standards.

In a social media culture where truths are constantly being curated and sold back to people as clickbait, we should declare a moratorium on self-congratulatory ads paid for by Agents and Brokerages.  And accolades proclaiming anyone BEST / MOST / HIGHEST in anything having to do with quantity of sales rather than quality of service. 

An apt analogy might be: Confusing McDonalds for being a great restaurant just because it has surpassed more than a billion burgers sold!  Instead, let’s invent new ways to promote excellence and redefine the transactional relationship between brokerages, agents, buyers and sellers.  If we don’t focus on the actual value(s) we bring to the table, Realtors will eventually fall victim to their own hype at the same time traditional brokerages fall by the digital wayside.

The challenge goes back to the identity problem Realtors have always struggled with.  Are we super-salespeople?  Or are we trusted fiduciaries (dedicated to placing buyers and sellers interests ahead of our own”)?

Are our customers really clients? Or are our clients really customers?  Is this a “trade”? Or is it an actual profession?  Or is it both? Two seemingly incompatible roles married together in a precarious union that requires the Wisdom of Solomon to pull it all off on a daily basis? Depending on who you talk to the answers vary dramatically. And flip-flop back and forth with regularity.

 These days, Buyer-loyalty to their Agents is at an all-time low.  It is common for desperate Buyers to solicit listing agents directly to represent them. Even though it’s hard to imagine anyone would argue that dual-agency is a wise idea. 

Why is it happening? Because Buyers don’t understand the value of Agents,  Or they think they can get a property for less if they cut them out. Or they think all Buyer’s Agents are just trying to make a sale.  So they willingly choose to abdicate their own best interests, by appealing to a listing agent’s greed (because they too, just want to make a sale!). 

This is one of the ways that  “trusted advisor” gets tossed aside by the fear and greed of a heated marketplace.  And just another example of the negative feedback loop that’s been created by our own emphasis on sales. When in doubt, people revert back to the reigning stereotype – it’s all about those sales numbers!


What did we do before Zillow came along? Remember when people had to rely on Realtors to tell them how much their houses were worth? And weren’t able to download values in a matter of seconds?

I’m sure the techie-types who started Zillow thought they were making the real estate process more transparent when they unveiled their elegant platform to crawl the web and tap into troves of public record information. Best of all, their algorithms were designed to analyze all that big data in a heartbeat and deliver instant gratification to anyone who was interested.

In the first crush of social media in the mid 2000s, people somehow took it on faith that information on the internet was free. And because it was free, it was more accurate because it wasn’t coming from people trying to sell things – like real estate agents trying to sell houses. Thus, the ubiquitous meme of the Zillow Zestimate was born. 

Fifteen years later, the age of innocence for social media Is over. Darker truths are becoming more apparent. We are revising notions about what “free” really means and how easily information can be manipulated into “fake news”. Specially when people accept the false promise of random “facts” at face value and don’t bother spending enough time gathering context.

I’m thinking about a text I got a few weeks ago from a buyer interested in a place I had just put on for $849,000 four days earlier.  It said:  “Your new listing looks great!  Let me know when it gets down to the price that Zillow says it’s worth and I would really be interested in seeing it.”

Really? When I looked up the Zestimate it was $747,000, even though it had just received 7 offers in those first four days and was already in escrow for $900,000!  He didn’t believe me of course, and I confess I didn’t try overly hard to convince him.

So much for Zillow.  And chalk up another bad case of Buyer Disconnect.  Fascinating that people would trust an algorithm more than a person. But that seems to be the state of the world these days. Has anyone seen the recent spate of commercials Facebook is running? Thirty second mea culpas acknowledging the wrong turn they took along the way.

Zillow is a huge corporation that’s publicly traded on NASDAQ.  It was sued not long ago by a disgruntled homeowner who said that a Zestimate had torpedoed his home’s value.  Zillow also just announced that it will start buying and selling homes through a new program called “Instant Offer”.   Somehow, that just doesn’t sound like a good idea to me.

Next:  Why Zillow isn’t accurate.

Turn-Off, Tune-Out and Drop Back-In



“ There are some searches google just can’t help you with.”

  • Recent message in front of a Sunnyvale church

Continuing the conversation…  is it possible that maybe, just maybe we’ve reached an inflection point where enough people have become disenchanted with the cumulative effects tech is having on their lives?

Someday we may all look back and be able to see that the all-encompassing embrace of the digital age started to wane in 2019.  As more people began to resist the temptation to integrate one more device, one more password, one more set of insidiously-engineered algorithms into their daily routines.  Opting instead to turn off, tune out and drop back-in to life in ways that allowed them to be more present.

One of the things tech likes to brag about is the meaningful opportunity social interaction affords everyone on the planet.  Hyper-connectivity, hyper-local, hyper-personal are all part of that hype. Most Realtors struggle with a daily avalanche of solicitations that encourage them to spend huge amounts of time cultivating their online real estate personas. Without a strong digital presence the message goes,  they won’t have the kind of “social proof” that’s necessary to be successful.

Similar to personal Facebook feeds where people’s carefully curated lives often seem too good to be true,  the current generation of real estate hopefuls is busy crafting shiny new avatars that don’t resemble who they are in the real world. Instead of simply venturing out into their own local communities to connect with people on a more experiential level. Not understanding that deeper connection with fewer actual buyers and sellers will make them far more successful than generating lots of shallower “clicks”.

Everyone has heard the meme: “Getting information from the internet is like trying to get a drink of water from a fire hose.”  These days, homebuyers and sellers don’t need more information. They need more context to help them think about all the information they already have. So that the flood of data and details makes more sense when they suddenly find themselves in the heat of the moment.  Specially when the choices they make have such a profound effect on the big life transitions they are going through. The ones that involve the largest assets they’ll ever own.


Pushing the Reset Button



Pushing the reset button for 2019.  This is my first attempt at sticking to my New Year’s Resolution:  Reducing the number of words I write, so your aging eyes will have an easier time reading this.  Let’s see how I do…

I was looking back at some of the recurring themes that took up space in these columns over the past year. While trying to gather insight into which topics and trends are most likely to dominate the real estate conversation in the months ahead.

Here are a few likely suspects :

How Low Does it Go? What’s been more impactful than the historic low inventory we’ve experienced? Nothing! Virtually every aspect of the marketplace –  appreciation, record prices, decline in sales, fewer days on market can be traced to the dearth of listings.  There’s no magic bullet on the horizon so it’ll be an ongoing topic of conversation.

Housing and Traffic  Might as well get used to it. This woeful mantra of suburban existence isn’t going away.  Real solutions will require wholesale changes in the way we work and define “quality of life.” Anything less just kicks the can down the road. This isn’t simply part of a big economic cycle. It’s a huge demographic shift that will reverberate well past 2050.

Need for Speed  The breakneck speed of real estate transactions will continue to gain momentum, given the lack of inventory, the heightened competition among buyers and the rabid appetite the technium has for digitizing everything.  Real estate sales represent big dollars,  so techies looking to monetize their efforts will continue seeing the real estate industry as desirable clickbait fodder.

Taxing Questions  Property taxes,  capital gains, second home deductions, mortgage interest limitations (and a host of others) were all on the table this year.  Effects of the new tax law will play out over 2019 and be part of the discussion.  Watch for a State Proposition broadening property tax transfers later this year.

Stuff and Downsizing  Sorry, this one isn’t going away either.  How could I abandon all you procrastinators out there who’ve been talking about Downsizing more than doing something about it? More to come but I’ll end with two essential facts: 1) We’re all getting older. 2) And we can’t take it with us.  It’s not a question of if. It’s a question of when.  See: The Gentle Art of Swedish Death Cleaning for more inspiration.