“No matter how you feel, get up, dress up, and show up.” (Gloria Starr, Business Consultant) from my favorite source for these short quotes – Jack’s Winning Words.
I think I’ve actually used that same quote before or something close to it, but it is always good to reinforce those thoughts.
Last year some time (I don’t exactly remember when), I started wearing a tie everyday to work again. I became know as the “guy in the tie” around the office and several agents asked why I wear it every day, even if I don’t have appointments with clients that day. My retort is that I owe my fellow workers the same level of professional respect as I’m trying to show for my clients. My clients are most often dressed very casually, as is the custom these days, and that’s fine with me. I still choose to project a look of business professionalism, which I hope carries through to how I actually conduct my business.
The “show up” part of that quote above is also important. We have mostly dual-career agents in our office right now, which means that most have other, often full-time jobs. They are doing real estate either as a supplement or with the goal in mind to someday get into it full-time. That’s fine and I wish them well; however, in real estate one must show up, be visible as a Realtor, put in the time as the agent on duty or with clients, in order to be successful. Too many part-timers seem to be of the opinion that putting in a one day a weekend or a few hours here and there will do it for them. It ain’t gonna happen! To pervert an old saying – “If you want to make a dime, you gotta put in the time.”
I would also add to the quote above – “get psyched up”. It’s important to start each day with some little personal motivational exercise that can get you in the right frame of mind for success. Sometimes I forget to do that and I’ll catch myself halfway through the day all down or tired feeling. I need to go back to Go and get myself up for the day. I need to see the challenges of the day as opportunities to excel. I need to see the frustrations for what they are – small blips on the road to success. I need to remind myself of my goals and the goals of my clients and focus upon those, instead of allowing my attention to be diverted by short-term adversities. It’s not always easy to get up and to stay up, but the alternative is a real bummer that I prefer to avoid.
Sportscasters always say about Tiger Woods that one of his biggest advantages on the tour is his ability to get focused and stay focused throughout the round. I try to stay focused upon my real estate business while I have that tie on. There'll be time to relax and enjoy other things when the tie comes off at night. So, if you see the guy in the tie; say hi! You’ll feel better. I’ll feel better. And we’ll both have a great day.
Tuesday, September 22, 2009
Monday, September 21, 2009
Surf’s up dude…
This week as I studied the statistics from last week an interesting thing popped out. It may be just a one week anomaly or evidence of the start of a long awaited second wave of foreclosures – this round based upon job losses and not just bad loans. What I see in the data from last week is that there are more foreclosed houses above the sold median price than below it. These are houses that are in the $160K and up, many well above 200K. The median sold price in the markets that I’m tracking weekly is $154K so far this year.
What I think I’m seeing here is a wave of foreclosures by people who were able to hold on initially and make their payments; likely people who had good jobs or maybe both adults worked at fairly good jobs. Then something happened. One partner may have lost their job or perhaps lost all of their overtime or something. Now they can no longer hold on. In this area a lot of job losses can be attributed to layoffs in the automotive industry. These are upscale houses in neighborhoods that would have been considered to be white-collar communities. So it is a fair bet that the main breadwinner got wacked in one of the recent layoffs. The way that people are leveraged these days most can not hold out more than a month or two before they start missing mortgage payments and it’s a rapid downhill slide from there.
As part of my weekly research I also look at the public record for each house that has sold and for many of the foreclosed houses there are entries that also point to possible divorces that occurred first and then the foreclosure. Unfortunately an increase in divorces is another sad side effect of the hard economic times. Many marriages cannot survive the stress of financial hardship and many breadwinners react badly to the loss of their jobs and slide into bad habits that break up families.
At a minimum, I’m seeing a much higher foreclosure rate in a much higher income bracket (at least it used to be higher). That is also throwing a whole new class of foreclosed home onto the market – last year’s McMansion is this year’s foreclosed home. Homes that were $300-400,000 are now selling down in the high $200K’s as distressed homes. Some are in great shape and are great bargains; however, the very people who would normally be looking in that price range are hunkered down in their own homes, which have lost so much value that many of them are upside-down on them. These would-be “move-up buyers” can’t sell them are stuck where they are and probably afraid at this point to take on more debt.
We’ll get through this, just as we have the other waves of foreclosures, but out on the not to distant horizon is the next wave of ARM-reset foreclosures, which is scheduled for January 2010, and which many predict will be of tsunami strength. Surf’s up, dude!
What I think I’m seeing here is a wave of foreclosures by people who were able to hold on initially and make their payments; likely people who had good jobs or maybe both adults worked at fairly good jobs. Then something happened. One partner may have lost their job or perhaps lost all of their overtime or something. Now they can no longer hold on. In this area a lot of job losses can be attributed to layoffs in the automotive industry. These are upscale houses in neighborhoods that would have been considered to be white-collar communities. So it is a fair bet that the main breadwinner got wacked in one of the recent layoffs. The way that people are leveraged these days most can not hold out more than a month or two before they start missing mortgage payments and it’s a rapid downhill slide from there.
As part of my weekly research I also look at the public record for each house that has sold and for many of the foreclosed houses there are entries that also point to possible divorces that occurred first and then the foreclosure. Unfortunately an increase in divorces is another sad side effect of the hard economic times. Many marriages cannot survive the stress of financial hardship and many breadwinners react badly to the loss of their jobs and slide into bad habits that break up families.
At a minimum, I’m seeing a much higher foreclosure rate in a much higher income bracket (at least it used to be higher). That is also throwing a whole new class of foreclosed home onto the market – last year’s McMansion is this year’s foreclosed home. Homes that were $300-400,000 are now selling down in the high $200K’s as distressed homes. Some are in great shape and are great bargains; however, the very people who would normally be looking in that price range are hunkered down in their own homes, which have lost so much value that many of them are upside-down on them. These would-be “move-up buyers” can’t sell them are stuck where they are and probably afraid at this point to take on more debt.
We’ll get through this, just as we have the other waves of foreclosures, but out on the not to distant horizon is the next wave of ARM-reset foreclosures, which is scheduled for January 2010, and which many predict will be of tsunami strength. Surf’s up, dude!
Saturday, September 19, 2009
Milford Home Tour Weekend
It’s Milford Home Tour Weekend, so there’s lots to do in Milford on Saturday and Sunday. Obviously the Home Tour is the key event with 6 Milford area homes on the tour this year – three in the Village and three in the Township on North Garner Rd.Other events this weekend include an antique tractor show on Sunday out at the corner of Milford Road and GM Road at the Huron Valley Bank parking lot and the Milford
Car Show on Sunday, which takes all of Main Street to stage and features everything from Street Rods to exotic sports cars. On Saturday there’s also a designer jeans show at The Clothing Cove store downtown. In addition the Pettibone Creek Powerhouse will be open for tours as well as the Milford Historical Museum on Commerce Rd in the downtown area. For the kids the will be lots of fun events at the Log Cabin next to the fire station on Huron St. Click here for a full schedule of all of the events associated with the Home Tour.The Home Tour is 11 AM to 5 PM both days and cost $15 for adults or $13 for seniors, with tickets available at any house or at the Museum. The Tractor S
how and Car Show are free and visitors get to vote for their favorite cars in various categories. I’ll be a docent at one of the Home Tour houses on Saturday, so stop by and visit. Click here to see what homes will be on the tour and to read a little of their history. Come on out to Milford this weekend and enjoy a day with us and get a feel for the "Village lifestyle."
Wednesday, September 16, 2009
If the recession is over, how come…
We are getting lots of signs and pronouncements from various officials and economists that the great recession is over. Even Ben Bernacki, the Fed Chairman, has called the end of the recession. At least, they say, it has bottomed out and we have started back. I guess that’s good news, but unemployment is still high, foreclosures are still increasing and property values are still falling, at least in Michigan. So, if the recession is over, how come my house is still losing value? I get that a lot these days.
Like many other answers that we are searching for these days, the reasons for the continuing fall of home values are complex and not easily covered by cheery pronouncements of the end of the recession. The continued high unemployment has given rise to even more foreclosures in the housing market, these not caused by ARMs resetting so much as by one or both earners in the family being out of work. Many homeowners depend upon having two good income streams in order to maintain their lifestyle. The lost or cutback of one of those incomes can be devastating to the family.
In our area the cutback of overtime alone has resulted in many homes being lost. Many of our automotive-oriented families counted on overtime as the means to pay for the house and the toys and the other things that came to symbolize the middle-class lifestyle. Drive through any middle class area and you’ll find the Harley’s and the street rods and the jet skies and other toys with for sale signs. When times are tough the toys must go. But that is just the tip of the iceberg. The real losses are the homes that these same workers can no longer afford and they are adding to the already bloated inventory of foreclosed and short sale homes on the market today.
Another thing that has happened (to use a sentence that sounds like something that Yogi Barra might say) is something that hasn’t happened. The Government program to encourage banks to do loan modification has gained almost no traction with banks and most still are not doing anything to help distressed borrowers refinance their homes into affordable loans. It just hasn’t happened. Most banks seem to prefer foreclosing on their clients than trying to work with them so that they can keep their homes.
So, in our area, foreclosures continue to drag home prices down. Home prices are now down between 35-50% from their peaks just 3-4 years ago and continuing to slide. The pace of the decline has slowed and that’s good news; but, for homeowners who bought 3-4 years ago it’s way to late to save them. They are so far underwater on their homes that they have little choice but to walk away when they get into distress and that just adds to the problem.
Like many other answers that we are searching for these days, the reasons for the continuing fall of home values are complex and not easily covered by cheery pronouncements of the end of the recession. The continued high unemployment has given rise to even more foreclosures in the housing market, these not caused by ARMs resetting so much as by one or both earners in the family being out of work. Many homeowners depend upon having two good income streams in order to maintain their lifestyle. The lost or cutback of one of those incomes can be devastating to the family.
In our area the cutback of overtime alone has resulted in many homes being lost. Many of our automotive-oriented families counted on overtime as the means to pay for the house and the toys and the other things that came to symbolize the middle-class lifestyle. Drive through any middle class area and you’ll find the Harley’s and the street rods and the jet skies and other toys with for sale signs. When times are tough the toys must go. But that is just the tip of the iceberg. The real losses are the homes that these same workers can no longer afford and they are adding to the already bloated inventory of foreclosed and short sale homes on the market today.
Another thing that has happened (to use a sentence that sounds like something that Yogi Barra might say) is something that hasn’t happened. The Government program to encourage banks to do loan modification has gained almost no traction with banks and most still are not doing anything to help distressed borrowers refinance their homes into affordable loans. It just hasn’t happened. Most banks seem to prefer foreclosing on their clients than trying to work with them so that they can keep their homes.
So, in our area, foreclosures continue to drag home prices down. Home prices are now down between 35-50% from their peaks just 3-4 years ago and continuing to slide. The pace of the decline has slowed and that’s good news; but, for homeowners who bought 3-4 years ago it’s way to late to save them. They are so far underwater on their homes that they have little choice but to walk away when they get into distress and that just adds to the problem.
Is all lost, then? Is everything gloom and doom? No. If you are a buyer, it is still a great time to buy and first-time buyers are snapping up bargains all over the place. If you are a seller with 10 or more years of ownership you should still be OK. You won’t be as happy as you had hoped with what you can get, but you can still sell and then maybe you’ll become a happy buyer, too, and make some of it up on that side. And if you were a real long-term owner, the paper loss you are having trouble dealing with was just that – a paper loss. You still made out OK on that house you built or bought in the 60’s or 70’s for $50-100K and are now selling for $200k (instead of the 350K it was worth a few years ago). Give it up and get over that loss. You had a great place to live for a long time and still made out on the deal.
Monday, September 14, 2009
You cannot defeat me....
“If I were asked to give what I consider the single most important advice, it would be this: Expect trouble as an inevitable part of life and when it comes, hold your head high, look it squarely in the eye and say, ‘I will be bigger than you. You cannot defeat me.’” (Ann Landers) from the Jack’s Winning Words Blog.
Now, I admit that I’m not a regular reader of Ann Landers or any of the other daily columns of that ilk; however, this seemed to be particularly applicable to my real estate career, since I get so many opportunities to look trouble (or issues or whatever else you want to call the little glitches in life that occur) in the eye. Real estate transactions tend to riff with opportunities for the various people involved to drop the ball – the mortgage company, the title company, the appraiser, the home inspectors and, yes, the agents involved all have multiple tasks to perform any one of which can hold things up or mess things up. Most of the time everybody does what they are supposed to do and things move along to a smooth closing. Then there are the deals from hell.
If I had to rank the issues that cause frustration and delays in deals it would be a tight race between the home appraisers and the mortgage underwriters. Home inspectors can and do cause problems too, sometimes causing undue concern over easily remedied issues; however those are out there for everyone to see and can be fixed or negotiated. Since the passage of the HVCC (Home Valuation Code of Conduct), appraisals have increasingly become matters of great concern. Appraisers from out of the area are often assigned to do the appraisal and often know little about the local market, so appraisals often come in too low and cause problems.
Then there are the underwriters. Many buyers find what appear to be attractive deals at on-line sites, which represent out of state lenders, such as eloan.com and others. I guess I can’t blame them for being sucked-in to what appears to be a great deal; however, too many of those on-line loan sources don’t provide written Good Faith Estimates and many of them end up unveiling lots of hidden fees when the HUD-1 document is finally produced. I try to encourage my buyers to work with local lenders, so that we can easily stay in touch and make sure that everyone understands everything as the deal progresses.
Of course, the real estate agents involved can also cause problems in deals, often because of trying to go too fast and forgetting something. Not clearly stating everything in writing at the front-end of the deal with a well written Purchase Agreement and Addendums can mean days of scrambling later to try to correct an oversight. Even worse are cases where an agent from either side let’s his client sign something that puts them at a severe disadvantage or cost them money. It happens.
So there are lots of opportunities to use the words of Ann Landers in the life of a Realtor. The key in her words and in other similar advice is not to let adversity overcome you, not to let it win. There will be a tomorrow and another deal, so deal with what is in front of you as best that you can and move on with life. Early in my blogging here I had another post that is also applicable that advised that one must be able to say “So, what!” and let go of failures or things that one cannot control and move on. That is still good advice.
Now, I admit that I’m not a regular reader of Ann Landers or any of the other daily columns of that ilk; however, this seemed to be particularly applicable to my real estate career, since I get so many opportunities to look trouble (or issues or whatever else you want to call the little glitches in life that occur) in the eye. Real estate transactions tend to riff with opportunities for the various people involved to drop the ball – the mortgage company, the title company, the appraiser, the home inspectors and, yes, the agents involved all have multiple tasks to perform any one of which can hold things up or mess things up. Most of the time everybody does what they are supposed to do and things move along to a smooth closing. Then there are the deals from hell.
If I had to rank the issues that cause frustration and delays in deals it would be a tight race between the home appraisers and the mortgage underwriters. Home inspectors can and do cause problems too, sometimes causing undue concern over easily remedied issues; however those are out there for everyone to see and can be fixed or negotiated. Since the passage of the HVCC (Home Valuation Code of Conduct), appraisals have increasingly become matters of great concern. Appraisers from out of the area are often assigned to do the appraisal and often know little about the local market, so appraisals often come in too low and cause problems.
Then there are the underwriters. Many buyers find what appear to be attractive deals at on-line sites, which represent out of state lenders, such as eloan.com and others. I guess I can’t blame them for being sucked-in to what appears to be a great deal; however, too many of those on-line loan sources don’t provide written Good Faith Estimates and many of them end up unveiling lots of hidden fees when the HUD-1 document is finally produced. I try to encourage my buyers to work with local lenders, so that we can easily stay in touch and make sure that everyone understands everything as the deal progresses.
Of course, the real estate agents involved can also cause problems in deals, often because of trying to go too fast and forgetting something. Not clearly stating everything in writing at the front-end of the deal with a well written Purchase Agreement and Addendums can mean days of scrambling later to try to correct an oversight. Even worse are cases where an agent from either side let’s his client sign something that puts them at a severe disadvantage or cost them money. It happens.
So there are lots of opportunities to use the words of Ann Landers in the life of a Realtor. The key in her words and in other similar advice is not to let adversity overcome you, not to let it win. There will be a tomorrow and another deal, so deal with what is in front of you as best that you can and move on with life. Early in my blogging here I had another post that is also applicable that advised that one must be able to say “So, what!” and let go of failures or things that one cannot control and move on. That is still good advice.
Thursday, September 10, 2009
Looking up from the bottom…
Lots of recent reports from various economists and others who track the economy say the same thing – the recession has bottomed out and the economy is starting back. Some of the economists have called the bottom of the recession to have been in April or May of this year, with things heading back up since then. We have now had 3-4 months of positive indicators, including an increase in the number of home sales. We are still on the downward track, as far as home values go, but we may be stuck in a pattern that will overshot the mark in that category, just because it will take time for lenders and appraisers to adjust to the turnaround. We also still have quite an overhang of foreclosed or short sale homes on the market, with no end in site yet.
So what does this mean for buyers and sellers? Well, many buyers, especially first time buyers, have been in a buying frenzy for a couple of months now, trying to make sure that they get in under the end of November deadline for the first time buyer tax credit. Investors are still going strong, too, with many buying up blocks of houses all at once. There seems to be a lot of ad hoc investor groups that have sprung up lately with lots of money to spend on distressed real estate. There has also been an up tick in move-up buyers out in the market, as they realize that they should buy now, before they miss the best prices in decades in the market. The increase in buyer activity, especially at the low end of the market, has resulted in many homes receiving multiple bids.
What about people who want or need to sell? Certainly the general economic turn around is good news and we are likely near the bottom on the value loss that occurred over the last 2-3 years. If they are planning to buy something else after they sell, at least these sellers will get the benefit of the down market on the buy side. If not, they will have to deal with the loss that they may be taking, be it a paper loss or a real one. It is still necessary to price to a market that is being driven by distressed homes. It’s more important than ever to get and heed the advice of a good Realtor about pricing for this market. With inventories declining and more buyers out looking, now is a good time to get on the market. Trying to wait out the bottom and regain some lost value will likely just result in a long delay in getting on with life, without a lot of added reward on the price.
So that’s the view from the bottom, looking up. Now’s the best time in the last 12-18 months to buy or sell and not acting soon will mean that you’ve missed the opportunity.
So what does this mean for buyers and sellers? Well, many buyers, especially first time buyers, have been in a buying frenzy for a couple of months now, trying to make sure that they get in under the end of November deadline for the first time buyer tax credit. Investors are still going strong, too, with many buying up blocks of houses all at once. There seems to be a lot of ad hoc investor groups that have sprung up lately with lots of money to spend on distressed real estate. There has also been an up tick in move-up buyers out in the market, as they realize that they should buy now, before they miss the best prices in decades in the market. The increase in buyer activity, especially at the low end of the market, has resulted in many homes receiving multiple bids.
What about people who want or need to sell? Certainly the general economic turn around is good news and we are likely near the bottom on the value loss that occurred over the last 2-3 years. If they are planning to buy something else after they sell, at least these sellers will get the benefit of the down market on the buy side. If not, they will have to deal with the loss that they may be taking, be it a paper loss or a real one. It is still necessary to price to a market that is being driven by distressed homes. It’s more important than ever to get and heed the advice of a good Realtor about pricing for this market. With inventories declining and more buyers out looking, now is a good time to get on the market. Trying to wait out the bottom and regain some lost value will likely just result in a long delay in getting on with life, without a lot of added reward on the price.
So that’s the view from the bottom, looking up. Now’s the best time in the last 12-18 months to buy or sell and not acting soon will mean that you’ve missed the opportunity.
Tuesday, September 8, 2009
Another lost weekend...
I created the post below on Monday night, September 7th, after having devoted yet another holiday weekend to the real estate business instead of to family and friends and enjoying the moment. I suppose it was cathartic at the time; but I did not post it then, because I was already down enough about working through the weekend. The real message here is to try harder to achieve some balance in life between work and family, between the reason you think you are working and taking time to actually enjoy those reasons. I need to do better at that.
There was a 1945 film called The Lost Weekend, starring Ray Milland and Jane Wyman and based upon a best selling novel about the travails of an alcoholic who goes on weekend binges. I suppose that if someone wanted to they could write a novel called Another Lost Weekend about a workaholic Realtor spending yet another holiday weekend away from friends and family while trying to sell a house. How sad. I just spent another of those lost weekends trying to cement a deal and I’ve started to regret it. I regret not spending more time with my wife, not getting away somewhere for the last weekend of summer, not taking some time to enjoy the fruits of the labor that seem so all consuming at times. We are in a crazy business and if one doesn’t try awfully hard to avoid it, the business can consume all of the time that we have. You have to step back every now and then and ask yourself what you are working all those hours for, if you never take any time off to enjoy life?
I have a very understanding and very long-suffering wife who puts up with me and my crazy schedule more than she should have to. Not everyone has that level of spousal cooperation and understanding and I suspect that there are many divorces that can be laid at the doorstep of being overwhelmed by the time demands of the business. Like a black hole, the real estate business sucks up whatever time there is with something to do. If you let it, it will literally consume 24 hours in every day, seven days a week, 365 days a year. If traded stories with old, retired (burned out) realtors who reported leaving their families on Christmas day to go show a house. That’s just crazy! Yet it happens.
So I just lost another Labor Day weekend working on a deal. Was it worth it? If it closes I’ll make some money 20-30 days from now, but I won’t ever get the three days that I just lost back. I’ll never get to go on that picnic that I didn’t go on or play with my grandchildren at the park or just sit and relax on my front porch. I’ve lost that and that’s just sad. It’s weekends like this that make me stop and think about whether what I’m doing is really worth it – not just the money aspect, but the quality of life aspect, too. I do enjoy many things in the business, just not lost weekends.
There was a 1945 film called The Lost Weekend, starring Ray Milland and Jane Wyman and based upon a best selling novel about the travails of an alcoholic who goes on weekend binges. I suppose that if someone wanted to they could write a novel called Another Lost Weekend about a workaholic Realtor spending yet another holiday weekend away from friends and family while trying to sell a house. How sad. I just spent another of those lost weekends trying to cement a deal and I’ve started to regret it. I regret not spending more time with my wife, not getting away somewhere for the last weekend of summer, not taking some time to enjoy the fruits of the labor that seem so all consuming at times. We are in a crazy business and if one doesn’t try awfully hard to avoid it, the business can consume all of the time that we have. You have to step back every now and then and ask yourself what you are working all those hours for, if you never take any time off to enjoy life?
I have a very understanding and very long-suffering wife who puts up with me and my crazy schedule more than she should have to. Not everyone has that level of spousal cooperation and understanding and I suspect that there are many divorces that can be laid at the doorstep of being overwhelmed by the time demands of the business. Like a black hole, the real estate business sucks up whatever time there is with something to do. If you let it, it will literally consume 24 hours in every day, seven days a week, 365 days a year. If traded stories with old, retired (burned out) realtors who reported leaving their families on Christmas day to go show a house. That’s just crazy! Yet it happens.
So I just lost another Labor Day weekend working on a deal. Was it worth it? If it closes I’ll make some money 20-30 days from now, but I won’t ever get the three days that I just lost back. I’ll never get to go on that picnic that I didn’t go on or play with my grandchildren at the park or just sit and relax on my front porch. I’ve lost that and that’s just sad. It’s weekends like this that make me stop and think about whether what I’m doing is really worth it – not just the money aspect, but the quality of life aspect, too. I do enjoy many things in the business, just not lost weekends.
Sunday, September 6, 2009
The most dangerous words in real estate…
I believe that the words “I assumed” are probably the most danger-filled words in any contract-based scenario; yet I hear those words all the time in my real estate business. Real estate transactions are based upon the Purchase Agreement CONTRACT. That means that everything that is relevant to the transaction should be spelled out in the contract somewhere or should be verified within the context of the contract. Nothing should be left to assumptions. Yet time after time and law suit after law suit the defense of at least one party to the contract starts with the words “I assumed.”
It really doesn’t matter which side did the assuming. It was a mistake to assume anything. Examples – “I assumed that the house was hooked up to city water, since all houses in that area are.” “I assumed that the seller would leave the utilities on through the day of closing.” “I assumed that the title company would find any unpaid water bills.” “ I assumed that any special assessments would show up in the title search.” “I assumed that the bank had to pay all back taxes and assessments at closing.” “I assumed that I’d be allowed to use the shared driveway that the previous owner has ‘always used’.”I assumed that what my mortgage guy had been telling me would be what showed up on the closing documents.”
These are all statements that I’ve heard used (or heard about) in deals over the years. They also have one other things in common – they all caused problems with the deals – many times causing the deal to fall apart and occasionally resulting in law suits. They wer all bad, some might say stupid, assumptions made by a buyer or seller or even by real estate agents.
Here’s the bottom line. Don’t assume anything. If you don’t know for sure, check it out. Go ask the city, township, village, county, whomever, and be sure. If you don’t understand something ask and keep asking until you do understand the answer. If you don’t have a written good faith estimate from your lender, demand one and under stand what it says or ask questions. Never accept “trust me on this”, as an answer. Get it in writing and then read and work and ask until you understand the answer. NEVER ASSUME!
It really doesn’t matter which side did the assuming. It was a mistake to assume anything. Examples – “I assumed that the house was hooked up to city water, since all houses in that area are.” “I assumed that the seller would leave the utilities on through the day of closing.” “I assumed that the title company would find any unpaid water bills.” “ I assumed that any special assessments would show up in the title search.” “I assumed that the bank had to pay all back taxes and assessments at closing.” “I assumed that I’d be allowed to use the shared driveway that the previous owner has ‘always used’.”I assumed that what my mortgage guy had been telling me would be what showed up on the closing documents.”
These are all statements that I’ve heard used (or heard about) in deals over the years. They also have one other things in common – they all caused problems with the deals – many times causing the deal to fall apart and occasionally resulting in law suits. They wer all bad, some might say stupid, assumptions made by a buyer or seller or even by real estate agents.
Here’s the bottom line. Don’t assume anything. If you don’t know for sure, check it out. Go ask the city, township, village, county, whomever, and be sure. If you don’t understand something ask and keep asking until you do understand the answer. If you don’t have a written good faith estimate from your lender, demand one and under stand what it says or ask questions. Never accept “trust me on this”, as an answer. Get it in writing and then read and work and ask until you understand the answer. NEVER ASSUME!
Thursday, September 3, 2009
Has the dam burst and the pent up demand be loosed?
All of a sudden I’m busier that a one-legged man in a sack race. I have two accepted offers working a third in progress and two that I’m told by buyer agents will be in soon. I’ll also be writing an offer for one set of buyers that I’ve been working with and I have a new listing and two in the works. What the He** happened to cause all of this activity?
I certainly can’t blame it all on the $8,000 tax credit. Only two of these deals even involve anyone who even qualifies for that. I guess a bit of it is pent up demand, at least on the buyer side. On the sell side, I think a lot has to do with reality finally setting in and people needing to get on with life. They are more willing to list at reasonable prices these days.
Even in the face of 10%+ unemployment in Michigan, there seems to be some weird form of optimism taking over – thoughts that it can’t get much worse, so it’s time to come out of the foxholes and get on with life. Of course, some portion of this activity, at least on the sell side, is the result of 1-2 years of fighting with sellers to get them to let go of the past and price to the market. It’s amazing how “fast” a property will sell when you get it priced right, even after 2 years on the market.
There have been many articles written about the so-called pent-up demand in the real estate system – people who have been putting off new home purchases until the economy settled down a bit. Maybe we‘re seeing some of that in the current up tick in real estate. Whatever is causing it, I certainly welcome the change.
I certainly can’t blame it all on the $8,000 tax credit. Only two of these deals even involve anyone who even qualifies for that. I guess a bit of it is pent up demand, at least on the buyer side. On the sell side, I think a lot has to do with reality finally setting in and people needing to get on with life. They are more willing to list at reasonable prices these days.
Even in the face of 10%+ unemployment in Michigan, there seems to be some weird form of optimism taking over – thoughts that it can’t get much worse, so it’s time to come out of the foxholes and get on with life. Of course, some portion of this activity, at least on the sell side, is the result of 1-2 years of fighting with sellers to get them to let go of the past and price to the market. It’s amazing how “fast” a property will sell when you get it priced right, even after 2 years on the market.
There have been many articles written about the so-called pent-up demand in the real estate system – people who have been putting off new home purchases until the economy settled down a bit. Maybe we‘re seeing some of that in the current up tick in real estate. Whatever is causing it, I certainly welcome the change.
Tuesday, September 1, 2009
On the road to hell…
My mom used to use a particular phrase a lot when I was growing up. Whenever I used the excuse that I had intended to do something but had not done it, she would say, “The road to hell is paved with good intentions.” I suppose somewhere along that road are the good intentions of the people who came up with the Home Valuation Code of Conduct (HVCC). Per haps it is also just another example of lawmakers rushing to do something about something that is bad and ending up creating something worse – the law of unintended consequences.
HVCC was a well-intentioned try at dealing with the too cozy relationships (or too pressured relationships) that existed between banks and appraisers. The ability of the banks, through those relationships, to influence the appraisers work contributed greatly to the real estate crisis, which precipitated the financial recession that we are in. So, obviously something had to be done to fix that. Enter the politicians; trying to make names for themselves and to appear to be leading the effort to reform these nefarious practices, they rushed through the HVCC as their solution.
The idea behind HVCC had merit – to try to insulate the appraisers from any undue influence by the lenders. The devil in this case was in the details, or maybe the lack thereof. The three-page law is so vague that lending giants Fannie Mae and Freddie Mac have had to publish 5 pages of frequently asked questions to try to clarify it. At it’s core it moved the responsibility for hiring the appraisers away from the lenders and requires a middleman role, with an appraisal management company (AMC) in between the lenders and the appraisers. Ironically enough it was the practices of an AMC in influencing its appraisers that initially kicked off much of the concerned that caused the law to be written.
So now everyone should be happy right? We have solved the problem by creating another level of bureaucracy to protect the consumers’ interests. So, why the furor? Well that new level of bureaucracy was not free. It increased the costs to the consumer. It also required appraisers to work through those AMCs and the AMC owners have used that as a lever to reduce what they pay for appraisals. So both the appraisers and the consumers got the Ziggy on this. The only winners were the AMC owners, many of whom it turns out were the same clowns who were making bad loans a few years back Many appraisers have left the business rather than work for the lower pay that the AMC’s offer. The results have been a disaster in many areas, with AMCs assigning out-of-area appraisers who are unfamiliar with the local market to do many appraisals and the buyers and sellers, the banks and the realtors powerless to do anything about it. Deals have been delayed or lost altogether, due to poor appraisals.
HVCC was a well-intentioned try at dealing with the too cozy relationships (or too pressured relationships) that existed between banks and appraisers. The ability of the banks, through those relationships, to influence the appraisers work contributed greatly to the real estate crisis, which precipitated the financial recession that we are in. So, obviously something had to be done to fix that. Enter the politicians; trying to make names for themselves and to appear to be leading the effort to reform these nefarious practices, they rushed through the HVCC as their solution.
The idea behind HVCC had merit – to try to insulate the appraisers from any undue influence by the lenders. The devil in this case was in the details, or maybe the lack thereof. The three-page law is so vague that lending giants Fannie Mae and Freddie Mac have had to publish 5 pages of frequently asked questions to try to clarify it. At it’s core it moved the responsibility for hiring the appraisers away from the lenders and requires a middleman role, with an appraisal management company (AMC) in between the lenders and the appraisers. Ironically enough it was the practices of an AMC in influencing its appraisers that initially kicked off much of the concerned that caused the law to be written.
So now everyone should be happy right? We have solved the problem by creating another level of bureaucracy to protect the consumers’ interests. So, why the furor? Well that new level of bureaucracy was not free. It increased the costs to the consumer. It also required appraisers to work through those AMCs and the AMC owners have used that as a lever to reduce what they pay for appraisals. So both the appraisers and the consumers got the Ziggy on this. The only winners were the AMC owners, many of whom it turns out were the same clowns who were making bad loans a few years back Many appraisers have left the business rather than work for the lower pay that the AMC’s offer. The results have been a disaster in many areas, with AMCs assigning out-of-area appraisers who are unfamiliar with the local market to do many appraisals and the buyers and sellers, the banks and the realtors powerless to do anything about it. Deals have been delayed or lost altogether, due to poor appraisals.
What’s next on this issue? Nothing motivates a politician more than the opportunity to save us from ourselves. Likely some well-intentioned politician will see an opportunity to make a name for him/herself by fixing this mess and we will undoubtedly progress further down the road to hell.
Friday, August 28, 2009
Don't lose your enthusiasm...
“Success is going from failure to failure without losing enthusiasm.” (Churchill) – from the Jack’s Winning Words Blog that I so frequently find to be inspirational. Boy, do Churchill’s words apply to our lives in real estate today or what? They are especially applicable for those dealing with short sales and foreclosures these days.
I had an agent who had been a bit rude earlier in the day call me back recently to apologize for his behavior. He explained that he is experiencing so many failed deals these days that he was just in a foul mood when I called earlier to cancel a showing on one of his short sale listings. I can understand and relate to his attitude issues. It is sometimes difficult to maintain enthusiasm in the midst of so much gloom and doom in our business.
If it’s not failed inspections, it’s low appraisals or some other glitch in our deals all too often these days. It’s having to deal with impatient buyers demanding to know why you can’t get the bank to get back to them on their low-ball short sale offer that they put in 3-4 days ago. It’s having to watch a widow cry in front of you when you have to tell her that she’s going to lose her house. It’s having to fight and argue with your sellers to get them to reduce their homes so that they have a chance of selling. And, it’s having to look at 30-40-50 homes with every buyer because there are so many well priced homes out there right now. All those things can get to you every now and then.
But, then, you go to that closing with a young couple who have a newborn baby in a carrier on the floor and you see the look of excitement in their eyes as they sign the papers for their first house and you regain some of that lost enthusiasm. And occasionally you get to help some really nice people sell and realize their dreams of moving on to the next phase of their lives. You get another shot of enthusiasm.
Yes, ours is sometimes a frustrating and maddening profession; however, the rewards for what we do go well beyond just picking up a commission check at the end of the deal. Not many other sales professions offer the opportunities that ours does to have a real and very positive impact on he lives of the clients and to be close enough to them during the process to see it first hand. For that we should be thankful; and, from that we should draw lots of enthusiasm. OK, so maybe I don't do cartwheels anymore, bu I still love doing what I do and I get pad to do it. What could be better?
I had an agent who had been a bit rude earlier in the day call me back recently to apologize for his behavior. He explained that he is experiencing so many failed deals these days that he was just in a foul mood when I called earlier to cancel a showing on one of his short sale listings. I can understand and relate to his attitude issues. It is sometimes difficult to maintain enthusiasm in the midst of so much gloom and doom in our business.
If it’s not failed inspections, it’s low appraisals or some other glitch in our deals all too often these days. It’s having to deal with impatient buyers demanding to know why you can’t get the bank to get back to them on their low-ball short sale offer that they put in 3-4 days ago. It’s having to watch a widow cry in front of you when you have to tell her that she’s going to lose her house. It’s having to fight and argue with your sellers to get them to reduce their homes so that they have a chance of selling. And, it’s having to look at 30-40-50 homes with every buyer because there are so many well priced homes out there right now. All those things can get to you every now and then.
But, then, you go to that closing with a young couple who have a newborn baby in a carrier on the floor and you see the look of excitement in their eyes as they sign the papers for their first house and you regain some of that lost enthusiasm. And occasionally you get to help some really nice people sell and realize their dreams of moving on to the next phase of their lives. You get another shot of enthusiasm.
Yes, ours is sometimes a frustrating and maddening profession; however, the rewards for what we do go well beyond just picking up a commission check at the end of the deal. Not many other sales professions offer the opportunities that ours does to have a real and very positive impact on he lives of the clients and to be close enough to them during the process to see it first hand. For that we should be thankful; and, from that we should draw lots of enthusiasm. OK, so maybe I don't do cartwheels anymore, bu I still love doing what I do and I get pad to do it. What could be better?
Wednesday, August 26, 2009
Keep moving...
“We are where we are. If we keep moving, we’ll be someplace else.” (Michael J. Fox) from the Jack’s Winning Words Blog that I often reference and use. According to Jack’s post, this was the answer that Michael J. Fox used with his children when they ask the “Are we there yet?” question. I suppose this is a traveler’s equivalent of the “It is what it is” retort that so many use these days to deal with whatever is in front of them.
The key thought in this little phrase is to keep moving and things will change; which when applied to the current economic situation brings another trite phrase to mind – “Keep on keepin’ on.” That’s what most of us are doing, in hopes that keeping moving in any direction will eventually bring us to a better place.
Now, I suppose that Michael’s phrase would have a different meaning if one were on a merry-go-round. In that case keeping moving would just keep bringing one back to the same place. That brings to mind the old definition of insanity, which is to keep doing the same things over and over and expecting a different outcome each time. I suspect that many Realtors are stuck on that merry-go-round. We keep listing overpriced houses and sitting in out of the way open houses and taking out unqualified buyers in hopes that somehow the outcomes will change and we will make a sale.
The keys to success in business in times like these seem to be the recognition of the need for change, the ability to see the options for making changes, committing to one or more changes that are feasible and executing on that commitment to change. I think lots of us have mastered the first of those four things – we see the need for change and understand that without some changes we can’t make a living selling real estate. The next two steps are the parts that hang most people up – seeing what the options are for change and choosing from those options the changes that we really have a chance to make (those that are feasible for us).
I opined recently about some things that I know I could be doing to increase my business – prospecting activities that would bring in more potential clients, if executed properly. I also noted that many of the activities that I can come up with when I think about it are things that I just can’t bring myself to do – cold calling upon FSBO’s or expired listings for example. So those are things that just aren’t feasible options for me. There are other options that I can commit to in order to change things for me. Perhaps I’m stuck on that next step of choosing 1 or 2 new things to do and committing to execute them; however, I’m committed to keep moving because I need to get somewhere else. What about you?
The key thought in this little phrase is to keep moving and things will change; which when applied to the current economic situation brings another trite phrase to mind – “Keep on keepin’ on.” That’s what most of us are doing, in hopes that keeping moving in any direction will eventually bring us to a better place.
Now, I suppose that Michael’s phrase would have a different meaning if one were on a merry-go-round. In that case keeping moving would just keep bringing one back to the same place. That brings to mind the old definition of insanity, which is to keep doing the same things over and over and expecting a different outcome each time. I suspect that many Realtors are stuck on that merry-go-round. We keep listing overpriced houses and sitting in out of the way open houses and taking out unqualified buyers in hopes that somehow the outcomes will change and we will make a sale.
The keys to success in business in times like these seem to be the recognition of the need for change, the ability to see the options for making changes, committing to one or more changes that are feasible and executing on that commitment to change. I think lots of us have mastered the first of those four things – we see the need for change and understand that without some changes we can’t make a living selling real estate. The next two steps are the parts that hang most people up – seeing what the options are for change and choosing from those options the changes that we really have a chance to make (those that are feasible for us).
I opined recently about some things that I know I could be doing to increase my business – prospecting activities that would bring in more potential clients, if executed properly. I also noted that many of the activities that I can come up with when I think about it are things that I just can’t bring myself to do – cold calling upon FSBO’s or expired listings for example. So those are things that just aren’t feasible options for me. There are other options that I can commit to in order to change things for me. Perhaps I’m stuck on that next step of choosing 1 or 2 new things to do and committing to execute them; however, I’m committed to keep moving because I need to get somewhere else. What about you?
Tuesday, August 25, 2009
Are we there yet? Are we there yet?
Anyone who has traveled with small children is certainly familiar with that impatient refrain - Are we there yet? We are also seeing and hearing it about a recovery from the current recession. There are stories every few days in the papers or on the TV news about hopeful signs of a recovery, ort at least signs that people hope are pointing to the recovery. Those are almost always followed by more reports of increased foreclosures or looming ARM resets or other dreary news that portends a longer down period.
We have certainly seen an up tick in sales of existing homes across the country, as first- time buyer rush to beat the deadline to qualify for the first-time buyer tax credit of up to $8,000. There has also been an increase in the sales of lower end homes, most of them foreclosures or short-sales, as investors and others take advantage of the misfortunes of others. I’ve also noted the increase in sales of owner-occupied homes above $200,000, albeit a small increase. Even that small increase is a welcome sign that things are loosening up a bit. But are these signs enough to say that we are there – that we have reached the bottom of this recession and started back? Not yet.
Prices are still declining across the board, although not at as precarious a rate as has been the case the last two years or so. We’ve seen drops in value in this area of southeastern Michigan between 12 – 18% for two years running. Last year we actually dropped 18,5% in Milford. We seem to be down somewhere between .5 and .75% per month loss in value right now, which would put us at 6-9% for the year. I hope that is the case. That would indicate that we are approaching the bottom of this thing.
One fear I have is of an overshoot on the part of appraisers, as far as devaluation goes. Appraisers have been very conservative and have baked a few months of continued value decline into most appraisals lately (actually for the last year or so). Depending upon when they believe we have bottomed out and turned back to positive appreciation, they may overshoot on the downside with their appraisals and cause us even more problems. Homes that don’t appraise are one of our biggest problems right now, along side dealing with lenders taking too long on short sales and foreclosures. In a pure, free market a home should be worth whatever the buyer agrees to pay for it that the seller is willing to take. In our market it’s more about what the lender is willing to lend on it and that often has lots of risk baggage baked in.
The whole lender issue is a major contributor to the lackluster owner-occupied market. In many areas it is almost impossible to get a non-FHA loan – a conventional loan – and don’t even try to talk to the lenders about jumbo loans (any loan over $417,000 in our area). It’s as if the mortgage industry just put a “Closed” sign in the window for conventional loans. That will have to change in order for us to get out of this mess and we’re not there yet. The other biggie for us in Michigan is the uncertainty in our job market. We are not yet half way through the fall out from the bankruptcies of GM and Chrysler. We are now seeing the ripple affect through our automotive supplier base and that has to trickle down through the next 2 tiers.
I’m of the opinion that the economists who predicted things would bottom out and turn around in 2010 are probably right. Although the turnaround will take place at different times for different parts of the country, by sometime in 2010 we ought to all be headed in the right direction again. Then we’ll see if there is really pent-up demand for housing, like some have forecast. There should be a positive rebound affect sometime in 2011 to 2012 as the people who lost houses during this recession and have had to rent will finally be able to get back into the mortgage market and buy a home again.
For now, the first-time buyer tax credit is helping at least get something moving, as did the "cash for clunkers" program for automobiles. Both were short-term programs however, so they really had little lasting impact; but they did help clear out some inventory. The car companies had to add shifts to rebuild inventory and homebuilders will likely start building new homes again (that’s already happening in some parts of the country). In both cases what is built will need to be smaller, more efficient and cost less to buy and operate. Are we there yet? No, but we’re on our way.
We have certainly seen an up tick in sales of existing homes across the country, as first- time buyer rush to beat the deadline to qualify for the first-time buyer tax credit of up to $8,000. There has also been an increase in the sales of lower end homes, most of them foreclosures or short-sales, as investors and others take advantage of the misfortunes of others. I’ve also noted the increase in sales of owner-occupied homes above $200,000, albeit a small increase. Even that small increase is a welcome sign that things are loosening up a bit. But are these signs enough to say that we are there – that we have reached the bottom of this recession and started back? Not yet.
Prices are still declining across the board, although not at as precarious a rate as has been the case the last two years or so. We’ve seen drops in value in this area of southeastern Michigan between 12 – 18% for two years running. Last year we actually dropped 18,5% in Milford. We seem to be down somewhere between .5 and .75% per month loss in value right now, which would put us at 6-9% for the year. I hope that is the case. That would indicate that we are approaching the bottom of this thing.
One fear I have is of an overshoot on the part of appraisers, as far as devaluation goes. Appraisers have been very conservative and have baked a few months of continued value decline into most appraisals lately (actually for the last year or so). Depending upon when they believe we have bottomed out and turned back to positive appreciation, they may overshoot on the downside with their appraisals and cause us even more problems. Homes that don’t appraise are one of our biggest problems right now, along side dealing with lenders taking too long on short sales and foreclosures. In a pure, free market a home should be worth whatever the buyer agrees to pay for it that the seller is willing to take. In our market it’s more about what the lender is willing to lend on it and that often has lots of risk baggage baked in.
The whole lender issue is a major contributor to the lackluster owner-occupied market. In many areas it is almost impossible to get a non-FHA loan – a conventional loan – and don’t even try to talk to the lenders about jumbo loans (any loan over $417,000 in our area). It’s as if the mortgage industry just put a “Closed” sign in the window for conventional loans. That will have to change in order for us to get out of this mess and we’re not there yet. The other biggie for us in Michigan is the uncertainty in our job market. We are not yet half way through the fall out from the bankruptcies of GM and Chrysler. We are now seeing the ripple affect through our automotive supplier base and that has to trickle down through the next 2 tiers.
I’m of the opinion that the economists who predicted things would bottom out and turn around in 2010 are probably right. Although the turnaround will take place at different times for different parts of the country, by sometime in 2010 we ought to all be headed in the right direction again. Then we’ll see if there is really pent-up demand for housing, like some have forecast. There should be a positive rebound affect sometime in 2011 to 2012 as the people who lost houses during this recession and have had to rent will finally be able to get back into the mortgage market and buy a home again.
For now, the first-time buyer tax credit is helping at least get something moving, as did the "cash for clunkers" program for automobiles. Both were short-term programs however, so they really had little lasting impact; but they did help clear out some inventory. The car companies had to add shifts to rebuild inventory and homebuilders will likely start building new homes again (that’s already happening in some parts of the country). In both cases what is built will need to be smaller, more efficient and cost less to buy and operate. Are we there yet? No, but we’re on our way.
Sunday, August 23, 2009
Milford's first crit...
I know doodle about bicycle racing and criteriums (or crits as they are called). So when Milford had it first ever crit yesterday I wandered downtown (only about 3 blocks for me) to see what it was all about. I must say that I was disappointed in the spectator turnout that was there to watch the event, but I blame that a bit on a poor promotion job. The organizers did a great job on the logistics of holding the event - setting up the course, providing for temporary bathroom facilities and such - but didn't do as good of a job on the publicity. As late as Thursday's Milford Times there was still no schedule of races published, so I never knew until I got down there then the various races would take place. It's a shame, because they might have drawn a bigger crown with better PR. Maybe next year (if there is a next year) they'll focus more on pu
blicizing the event to the public.Talking to a few of the organizers and participants, they seemed to be happy with the turn out of racers, with almost 400 peddlers participating in the various races, which included a couple of "races" for kids. They got great weather for the event - no rain and it was cool (high 60's to low 70's) most of the day. They also had a celebrity announcer to hand calling the races - Frankie Andreu. Andreu was a pro bicycle racer for 12 years and was on many of the teams that Lance Armstrong was on during his run of victories in the Tour De France. He also competed in two Olympics and many other high-profile international bicycle racing events. He is quite well known and respected by the racers of today. I'm sure that having him announce was quite a big thing for the organizers of the Milford crit.
I'm not sure that I did my crit-watching correctly. I did walk around the course a bit to get different perspectives and see more than one corner. My initial impression is that it's sort of like watching a NASCAR street race from a single vantage point. You sit there for quite a while with nothing happening and then there are about 4-5 seconds of frantic activity as the pack comes by and then nothing again. The Milford course was fairly short, about .92 miles, so one didn't have t0 wait more than 3-4 minutes for the next pass of the pack. The race format was to have the riders ride round and round the track for anywhere from 20 to 60 minutes (depending upon the skill-level category of the race) and then sprint to the finish with 2 to 5 laps at the end. The strategy seemed to be to all stay together in the pack for the bulk of the race and then it was an every-man-for-himself mad scramble to the finish. There were a couple of attempts at early break aways in the races that I watched, but the pack always seemed to be able to reel in the break away riders.I'm not sure that this form of racing is actually going to catch on with uninitiated spectators, because of the long periods of nothing happening and the inability to see anything going on around the rest of the course. It is exciting in extremely tiny and quick doses, but that may not hold enough attraction for people used to seeing all of the action all the
way around the course on TV. Many of the riders where from clubs all over the state and there were lots from out of state, too. A local Milford rider won the second to last race, which was nice to see.We'll have to wait and see how everyone reacts to this year's crit - the participants, spectators and the merchants along Main St. wh0 had to be disappointed with the sparse crowds and the negative impact on business from having Main St. closed off all day on a Saturday. It may work out better as a Sunday event. At least the merchants won't lose their Saturday crowds that way. Wait 'til next year!
Friday, August 21, 2009
Have you stayed too long and the party and not paid for your dance ticket?
I quite often encounter clients these days that have been in their homes for 20-30 years. Now it is time for them to move on, to downsize into something more appropriate for retirement and their declining abilities to keep up a bigger house. What I also encounter are people who have stayed too long at the party and not paid recently for their dance ticket.
What I mean by that are folks who likely bought the house when it was new or had it built. They’ve owned in ever since. It was the top of the line when they bought it back in the 70’s and it has served them well. It hasn’t needed much, if anything, so they haven’t put anything into it. The roof has never leaked, so no need to replace it. The furnace still works fine, so it’s OK. The avocado bathrooms and the Harvest Gold kitchen with the Formica tops are still in good condition, although they did paint the oak cabinets white several years back. Maybe they replaced some windows and a door or two and they did, after all, paint the dark wood paneling a nice light neutral shade a while back. And the wall paper was premium stuff when it was installed and is holding up great. Don’t forget that they replaced the water heater five years ago, so it’s “new”. And they put a dropped ceiling in the basement, with a few florescent lights and put down that indoor-outdoor carpeting, so it is “finished” now. It even has a ping-pong table that they’ll consider leaving.
Sound familiar? It’s really sad and awfully tough to try to get these owners to realize that they just haven’t been doing the things that they needed to do while they owned the house – things that would have been done to the house if it had changed hands every 5-7 years. The roof should have been replaced. All of the windows likely needed replacement too. And those baths and the kitchen – give me a break. No matter what they’ve heard about the retro look coming back, they should have been totally remodeled at least 2 times during those 30 years. Don’t even get me started on the wallpaper and the painted wood paneling.
What has happened with these people happens all the time when homeowners settle in for the long haul and get really comfortable with things as they’ve always been. The house goes badly out of date and the owners don’t even notice. If they are good, meticulous owners they may indeed have taken such good care of things that they all still look good and work fine, just like a well cared for antique car. Except, unlike the antique car, the house is not gaining value due to its age, it has lost a lot of its value and owners don’t even realize it. Potential buyers don’t look at your museum quality preservation of a 1970’s house and appreciate it. Instead they see project after project and cost after cost as they go through. They leave asking, “What were these people thinking? They haven’t done any updating in years, maybe ever.”
I almost always get the “it was good enough for us all those years, it should be good enough for the next owner” argument from the sellers. Well, No! It’s not good enough for anybody else, because you’re the only one who will put up with it as it is. The sad thing is that the house could be worth what the sellers think it is, if they had only been investing in it as they lived in it for those thirty years. Now it is likely worth about ½ of what the sellers think it is, if that much. It has taken me over a year sometime to get the sellers to understand and adjust the price to a marketable level when I list one of these homes. Only time and pain seem to get the message across, eventually.
The shame is that these same people could have afforded to keep their homes updated, had they spent a little every year and maybe done a major update every 5-6 years. They just got comfortable and couldn’t see what was happening, sort of like wearing a favorite old pair of jeans until the fall apart while you’re in them. Now that they are ready to move on they don’t want to put in the money to make up for their lost time and lack of effort. What they eventually have to come to grips with is the value loss that they have caused by not keeping the place updated. Helping them see all of this is my challenge.
So, if you’re a homeowner and you’ve been in your home for 5-10 years, look around and see what you may need to be doing. Go to a few open houses of home that are similar in size and see what the current trends are. What are they doing in the kitchens and baths now and how would that fit into your home. What are window treatments like these days and could they replace your heavy drapes? Could the modern wood floor look replace your wall-to-wall carpets? Should you maybe blow out the wall between the kitchen and the dining room and create a bigger, more open look that fits in today’s designs? Would a modern pedestal sink to replace that big bathroom vanity make the bath look bigger and more inviting? Is it time to lose the big floral print wallpaper in the foyer and hall in favor of a neutral paint look? Now that the kids have move out is it time to redecorate the princess room and the college football themed bedroom?
Hopefully you won’t get to the point where you want to move on and realize that you’ve stayed too long at the dance and not paid for your dance card.
What I mean by that are folks who likely bought the house when it was new or had it built. They’ve owned in ever since. It was the top of the line when they bought it back in the 70’s and it has served them well. It hasn’t needed much, if anything, so they haven’t put anything into it. The roof has never leaked, so no need to replace it. The furnace still works fine, so it’s OK. The avocado bathrooms and the Harvest Gold kitchen with the Formica tops are still in good condition, although they did paint the oak cabinets white several years back. Maybe they replaced some windows and a door or two and they did, after all, paint the dark wood paneling a nice light neutral shade a while back. And the wall paper was premium stuff when it was installed and is holding up great. Don’t forget that they replaced the water heater five years ago, so it’s “new”. And they put a dropped ceiling in the basement, with a few florescent lights and put down that indoor-outdoor carpeting, so it is “finished” now. It even has a ping-pong table that they’ll consider leaving.
Sound familiar? It’s really sad and awfully tough to try to get these owners to realize that they just haven’t been doing the things that they needed to do while they owned the house – things that would have been done to the house if it had changed hands every 5-7 years. The roof should have been replaced. All of the windows likely needed replacement too. And those baths and the kitchen – give me a break. No matter what they’ve heard about the retro look coming back, they should have been totally remodeled at least 2 times during those 30 years. Don’t even get me started on the wallpaper and the painted wood paneling.
What has happened with these people happens all the time when homeowners settle in for the long haul and get really comfortable with things as they’ve always been. The house goes badly out of date and the owners don’t even notice. If they are good, meticulous owners they may indeed have taken such good care of things that they all still look good and work fine, just like a well cared for antique car. Except, unlike the antique car, the house is not gaining value due to its age, it has lost a lot of its value and owners don’t even realize it. Potential buyers don’t look at your museum quality preservation of a 1970’s house and appreciate it. Instead they see project after project and cost after cost as they go through. They leave asking, “What were these people thinking? They haven’t done any updating in years, maybe ever.”
I almost always get the “it was good enough for us all those years, it should be good enough for the next owner” argument from the sellers. Well, No! It’s not good enough for anybody else, because you’re the only one who will put up with it as it is. The sad thing is that the house could be worth what the sellers think it is, if they had only been investing in it as they lived in it for those thirty years. Now it is likely worth about ½ of what the sellers think it is, if that much. It has taken me over a year sometime to get the sellers to understand and adjust the price to a marketable level when I list one of these homes. Only time and pain seem to get the message across, eventually.
The shame is that these same people could have afforded to keep their homes updated, had they spent a little every year and maybe done a major update every 5-6 years. They just got comfortable and couldn’t see what was happening, sort of like wearing a favorite old pair of jeans until the fall apart while you’re in them. Now that they are ready to move on they don’t want to put in the money to make up for their lost time and lack of effort. What they eventually have to come to grips with is the value loss that they have caused by not keeping the place updated. Helping them see all of this is my challenge.
So, if you’re a homeowner and you’ve been in your home for 5-10 years, look around and see what you may need to be doing. Go to a few open houses of home that are similar in size and see what the current trends are. What are they doing in the kitchens and baths now and how would that fit into your home. What are window treatments like these days and could they replace your heavy drapes? Could the modern wood floor look replace your wall-to-wall carpets? Should you maybe blow out the wall between the kitchen and the dining room and create a bigger, more open look that fits in today’s designs? Would a modern pedestal sink to replace that big bathroom vanity make the bath look bigger and more inviting? Is it time to lose the big floral print wallpaper in the foyer and hall in favor of a neutral paint look? Now that the kids have move out is it time to redecorate the princess room and the college football themed bedroom?
Hopefully you won’t get to the point where you want to move on and realize that you’ve stayed too long at the dance and not paid for your dance card.
Thursday, August 20, 2009
Making choices to alter ones self...
“There are two ways of meeting difficulties. You alter the difficulties, or you alter yourself to meet the difficulties.” (Phyllis Bottome), from the Jack's Winning Words Blog. The only true way of meeting difficulties is obvious in that quote, since none of us have the power to alter the circumstances (difficulties) that we find ourselves in, especially the real estate market that we are facing right now. So, the question really becomes one of "How can we alter ourselves to meet the current difficulties?" I choose to double up on Jack's Blog quote today by using another - “The trouble with life isn’t that there is no answer; it’s that there are so many answers.” (Ruth Benedict - anthropologist).
I've certainly opined here enough times about things that I should be doing differently; however, I think that I'd add to that last quote a second sentence, "Find the answer that works for you." In my Blog two days ago, I talked about the need for change - to my routine and approach; so this is a follow-on to those thoughts. For me there are just some things that I know I won't do; so, saying that I'm going to change things by doing them is just lying to myself to make myself feel good. Sometimes I do that because others around me will say something like, "Oh, you should be doing this or that." I hear them and I understand that what they are saying is a viable answer that might work, if it were the right thing for me to do. Often it's not. No matter how many times I try to convince myself to do more cold-calling, deep in my heart I know that I'll find some way not to do it. I hate it and I just won't do it.
So, rather than continuing to beat myself up over things that I won't do, I'm spending more time trying to find things that I will do that will work. I like meeting and working with people, so holding open houses is something that I enjoy doing and I'm pretty good at them and at converting visitors to clients. This Blogging and other SN stuff is something else that I enjoy doing, as well as working on my Web sites and some of that is starting to gain some traction with potential clients. I do a bi-monthly newsletter that I mail out to over 500 people and that seems to be something that they enjoy and that they respond to - I get 2-3 listings a year off of just that. I get 1-2 leads a month from my company that come from people visiting the corporate site and requesting help and I do very good with those, although a high percentage end up not doing anything. I'm also starting to get some corporate relocation leads, after 2 years of being on the relo team waiting list.
My sense is that in a more normal market the things that I'm doing to attract clients that I'm good at would likely produce enough results that I'd be OK. But, we are not in a normal market, so I have to add to or supplement that things that I'm doing basically to increase the opportunities that I get to interact with potential clients. If I can just get more opportunities, I know that I can be successful once we start talking. My challenge then becomes picking from those many alternatives that are out there and allocating the time to try new things that might work for me. Stay tuned and I'll let you know what I find and what worked. Just don't expect a cold-call from me.
Tuesday, August 18, 2009
Change is good...
From the Jack’s Winning Words blog recently came this gem - “I don’t fail. I succeed at finding what doesn’t work.” (Christopher Titus – sent by J.L.) Edison said something similar. “I didn’t fail. I just found 2,000 ways how not to create a light bulb.” If a genius like TAE can fail and still be a success, so can we. If at first you don’t succeed….(You know how it goes.) This seems to fit for a lot of different situations.
Every night my wife asks me the same question, “What have you got on for tomorrow?” Too many nights I kiddingly answer, “nothing, I don’t plan to to anything.” She’s lived with me long enough to know that I cannot do nothing, so she knows that I’ll be busy with something – updating one of my Web sites, doing flyers, working on CMA’s, something. The sad truth is that too many nights I go to bed without a real plan for the next day, without appointments and without a clue what I’ll really end up doing. I, too, know that real estate, like nature, hates a vacuum, so there will always be plenty of busy work to occupy whatever time I have. There always is. What’s disturbing to really think about is whether that busy work is actually helping me accomplish any meaningful business goals for the day/week/month or just taking up time? I suspect that the later is all too often the case.
So, at the end of those days I can truly say that I didn’t fail, I just found things to do that didn’t really accomplish anything towards furthering my business goals. I found another dozen or so ways to stay busy while not selling a house. These days, even when I’m out doing things that really seem to be directly a part of the house listing or selling process I can get done and realize that maybe it wasn’t ime wisely spent. Is showing 40-50 houses to buyers who can’t make up their minds and keep switching their criteria really all that successful? Is weasel wording a weak response to a client who wants to list his house at a price that I know it will not sell at really something that I can call success? Is finding a thousand reasons not to pick up the phone and make a few cold calls something that I should feel good about at the end of the day? I don’t think so. Yet they all happen, day after day and week after week.
So am I like the speaker in the opening remark, just very good at doing things that don’t work? Apparently, I’ve mastered that part and like Edison I’ve found thousands of ways not to list or sell a house. So, the challenge becomes one of finding a way to change – how I do things or me or both. Edison when on to invent the light bulb through sheer perseverance and hard work. But along the way he also changed some things – his approach to the problem the materials that he was using and other things. Change is the key. Recognizing that there is a problem with what one has been doing is a start, but without moving on the step of making change there is no different outcome.
Every night my wife asks me the same question, “What have you got on for tomorrow?” Too many nights I kiddingly answer, “nothing, I don’t plan to to anything.” She’s lived with me long enough to know that I cannot do nothing, so she knows that I’ll be busy with something – updating one of my Web sites, doing flyers, working on CMA’s, something. The sad truth is that too many nights I go to bed without a real plan for the next day, without appointments and without a clue what I’ll really end up doing. I, too, know that real estate, like nature, hates a vacuum, so there will always be plenty of busy work to occupy whatever time I have. There always is. What’s disturbing to really think about is whether that busy work is actually helping me accomplish any meaningful business goals for the day/week/month or just taking up time? I suspect that the later is all too often the case.
So, at the end of those days I can truly say that I didn’t fail, I just found things to do that didn’t really accomplish anything towards furthering my business goals. I found another dozen or so ways to stay busy while not selling a house. These days, even when I’m out doing things that really seem to be directly a part of the house listing or selling process I can get done and realize that maybe it wasn’t ime wisely spent. Is showing 40-50 houses to buyers who can’t make up their minds and keep switching their criteria really all that successful? Is weasel wording a weak response to a client who wants to list his house at a price that I know it will not sell at really something that I can call success? Is finding a thousand reasons not to pick up the phone and make a few cold calls something that I should feel good about at the end of the day? I don’t think so. Yet they all happen, day after day and week after week.
So am I like the speaker in the opening remark, just very good at doing things that don’t work? Apparently, I’ve mastered that part and like Edison I’ve found thousands of ways not to list or sell a house. So, the challenge becomes one of finding a way to change – how I do things or me or both. Edison when on to invent the light bulb through sheer perseverance and hard work. But along the way he also changed some things – his approach to the problem the materials that he was using and other things. Change is the key. Recognizing that there is a problem with what one has been doing is a start, but without moving on the step of making change there is no different outcome.
So tonight, when my wife asks me what I’ve got on tap for tomorrow, I’m going to answer – CHANGE! So excuse me, I have to work on my To Do list for tomorrow.
Sunday, August 16, 2009
Help me understand all of this…
Have any of the so-called economic experts thought any of this globalization is good for America stuff through? I don’t think so. As evidence of that, I keep seeing article after article by the supposedly learned men in Washington and on Wall Street pontificating about how the consumer must lead the country out of this recession and expressing disappointment that consumers seem to be holding back. How can these ”experts” not realize that the laissez faire, global capitalism of the Clinton and Bush eras has almost completely destroyed the consumer base that they expect to lead the country out of the recession?
We have shipped most of the high-paying manufacturing jobs overseas under the rallying cry of the global economy. Instead of factory workers making $20-30/hour, we now have lots of retail workers and service industry workers make $10-15/hour. Who among them will lead us out of the recession? The people making the real money these days are in China or India or the Philippines and they’re working in the factories that make the goods that are sent to our retail stores. That’s what the global economists said should happen – move the labor-intensive jobs to the cheap labor countries. And, by the way, get the added benefit of not having to comply with U.S. standards for product or manufacturing safety.
That was all great for the management of those companies. But what of the 6 or 10 or 20 million U.S. factory workers who were displaced by all of this? Well according to the theories of the learned men who espoused this capitalistic transfer of labor-intensive jobs to the cheap countries, they were all going to get retrained and somehow get good paying jobs in the technology or health care or services industries. The fact that there was and still are no funded programs to retrain those workers escaped their notice (or they just don’t care). The fact that the services industries jobs pay about half (or less) than what these workers were making was of no concern, until, UNTIL, they started to realize that there are fewer and fewer consumers for their products. If there are several million people less who are directly involved with making cars or parts for cars, guess what? There are now several million fewer Americans who can’t afford to buy the cars! Well, DUH! The consumers who have rescued the economy in the past are now standing in the unemployment lines and losing their homes to foreclosure. Ship that to China!
Now I’m seeing articles in the papers and magazines about a reset economy, how there will be a new normal after this recession. Excuse me. Long time readers will note that I have been using those terms for over a year and have published several posts using the reset button graphic. Have the so-called experts finally caught on and caught up? I don’t think so. I’m also seeing slick ads on TV that show people who were displaced from good jobs starting up their own businesses – neighborhood shops and even small manufacturing companies. These ads tout this spirit of small business entrepreneurship as the savior of our country and our way of life. None of the ads look at the statistics about how small business start ups fair, especially in a depressed market. None of them talk about the difficultly businesses of any size currently have getting any kind of financing. None of them is realistic; just feel good pabulum being fed to a public that is hungering for any good news.
I would love to have one of these learned men or women, who defend the global economy and what is taking place because of how companies are reacting to it, go on TV and explain to the nation how the loss of our manufacturing base is good for the country and good for the people. Maybe if they take it real slow and use little words, instead of the mumbo jumbo often heard at Congressional hearings, maybe I’ll understand it then. I’m waiting. In the mean time, I’ll be at WalMart talking to an ex-factory worker who has one of those great retail industry jobs as a shelf-stocker about his plans to lead the economy out of this recession by buying a $200,000 house that I have listed. Oops! He just told me that used to be his house, before it was foreclosed.
We have shipped most of the high-paying manufacturing jobs overseas under the rallying cry of the global economy. Instead of factory workers making $20-30/hour, we now have lots of retail workers and service industry workers make $10-15/hour. Who among them will lead us out of the recession? The people making the real money these days are in China or India or the Philippines and they’re working in the factories that make the goods that are sent to our retail stores. That’s what the global economists said should happen – move the labor-intensive jobs to the cheap labor countries. And, by the way, get the added benefit of not having to comply with U.S. standards for product or manufacturing safety.
That was all great for the management of those companies. But what of the 6 or 10 or 20 million U.S. factory workers who were displaced by all of this? Well according to the theories of the learned men who espoused this capitalistic transfer of labor-intensive jobs to the cheap countries, they were all going to get retrained and somehow get good paying jobs in the technology or health care or services industries. The fact that there was and still are no funded programs to retrain those workers escaped their notice (or they just don’t care). The fact that the services industries jobs pay about half (or less) than what these workers were making was of no concern, until, UNTIL, they started to realize that there are fewer and fewer consumers for their products. If there are several million people less who are directly involved with making cars or parts for cars, guess what? There are now several million fewer Americans who can’t afford to buy the cars! Well, DUH! The consumers who have rescued the economy in the past are now standing in the unemployment lines and losing their homes to foreclosure. Ship that to China!
Now I’m seeing articles in the papers and magazines about a reset economy, how there will be a new normal after this recession. Excuse me. Long time readers will note that I have been using those terms for over a year and have published several posts using the reset button graphic. Have the so-called experts finally caught on and caught up? I don’t think so. I’m also seeing slick ads on TV that show people who were displaced from good jobs starting up their own businesses – neighborhood shops and even small manufacturing companies. These ads tout this spirit of small business entrepreneurship as the savior of our country and our way of life. None of the ads look at the statistics about how small business start ups fair, especially in a depressed market. None of them talk about the difficultly businesses of any size currently have getting any kind of financing. None of them is realistic; just feel good pabulum being fed to a public that is hungering for any good news.
I would love to have one of these learned men or women, who defend the global economy and what is taking place because of how companies are reacting to it, go on TV and explain to the nation how the loss of our manufacturing base is good for the country and good for the people. Maybe if they take it real slow and use little words, instead of the mumbo jumbo often heard at Congressional hearings, maybe I’ll understand it then. I’m waiting. In the mean time, I’ll be at WalMart talking to an ex-factory worker who has one of those great retail industry jobs as a shelf-stocker about his plans to lead the economy out of this recession by buying a $200,000 house that I have listed. Oops! He just told me that used to be his house, before it was foreclosed.
Friday, August 14, 2009
It's not just about winning...
From the Blog Jack’s Winning Words comes this quote - “It isn’t about winning. It’s about helping others cross the finish line.” (Ann Guzdzial, Special Olympics) It started in Michigan in 1975, when, during a race, a runner fell and two others stopped, went back and helped him cross the finish line. The Special Olympics, founded by Eunice Kennedy Shriver, is built on that spirit. It’s not about winning, it’s about having the opportunity to participate. Congratulations to those who stop, reach out and help. This world needs more caring people.
I know that these thoughts were not meant to be applied necessarily to things like real estate, but I recall an early lesson that I got when I first got into the business. Our little agency had a very senior Realtor who acted as the trainer for the company. He always told newbies to do what’s right to take care of the needs of the customer and the rewards will naturally follow. In other words don’t be focused upon the money involved – the commissions – but focus instead on helping your client achieve their goal – buying or selling – and the compensation will follow. I’ve always tried to follow that advice.
I seldom tune in on any of the real estate shows that are on cable these days, but last night I was clicking through the menu and saw that a show that focused upon successful real estate agents was coming on within a few minutes. Curious, I switch to that channel. The show that night was about a local agent who also does work in his community to restore and preserve historic building – a good show and one that I can relate to. However, the startup montage of snippets from supposedly successful agents was a real turn off. It was series of quick cuts showing supposedly successful agents and a sound track saying things like “Get in and get out quickly or cut your losses”, “It’s all a numbers game”, “Volume is the secret”, “it’s not about winning and losing it only about winning” and others that I missed. What a turn off that was for me and I suspect for any potential customers who might have been watching. It certainly made our profession look like a bunch of insensitive, money-grubbers with little concern for the needs of the customers. I doubt that I would watch this show again.
Now, don’t get me wrong. I am trying to make a living at this business and right now it is very trying. I don’t consider myself to be some sort of bleeding heart liberal, but I do admit to being concerned first about doing the right thing for my clients and then worrying about what I will be paid for doing it. In these days of banks changing the commission rules on the fly and lenders sneaking in addendums that limit or change the commission that was offered in the listing, it’s often me who takes the hit for doing what is right for the client involved. They seldom see or understand the behind-the-scenes shenanigans that go on in deals these days. Nor should they. I’ll not work pro-bono, but I’ll also not hurt the interests of my clients, just to help myself. I may go home at night with a little less money, but I sleep well when I get there. That’s likely more than can be said about some to the characters that are in our business right now (or maybe so I would hope).
I know that these thoughts were not meant to be applied necessarily to things like real estate, but I recall an early lesson that I got when I first got into the business. Our little agency had a very senior Realtor who acted as the trainer for the company. He always told newbies to do what’s right to take care of the needs of the customer and the rewards will naturally follow. In other words don’t be focused upon the money involved – the commissions – but focus instead on helping your client achieve their goal – buying or selling – and the compensation will follow. I’ve always tried to follow that advice.
I seldom tune in on any of the real estate shows that are on cable these days, but last night I was clicking through the menu and saw that a show that focused upon successful real estate agents was coming on within a few minutes. Curious, I switch to that channel. The show that night was about a local agent who also does work in his community to restore and preserve historic building – a good show and one that I can relate to. However, the startup montage of snippets from supposedly successful agents was a real turn off. It was series of quick cuts showing supposedly successful agents and a sound track saying things like “Get in and get out quickly or cut your losses”, “It’s all a numbers game”, “Volume is the secret”, “it’s not about winning and losing it only about winning” and others that I missed. What a turn off that was for me and I suspect for any potential customers who might have been watching. It certainly made our profession look like a bunch of insensitive, money-grubbers with little concern for the needs of the customers. I doubt that I would watch this show again.
Now, don’t get me wrong. I am trying to make a living at this business and right now it is very trying. I don’t consider myself to be some sort of bleeding heart liberal, but I do admit to being concerned first about doing the right thing for my clients and then worrying about what I will be paid for doing it. In these days of banks changing the commission rules on the fly and lenders sneaking in addendums that limit or change the commission that was offered in the listing, it’s often me who takes the hit for doing what is right for the client involved. They seldom see or understand the behind-the-scenes shenanigans that go on in deals these days. Nor should they. I’ll not work pro-bono, but I’ll also not hurt the interests of my clients, just to help myself. I may go home at night with a little less money, but I sleep well when I get there. That’s likely more than can be said about some to the characters that are in our business right now (or maybe so I would hope).
Wednesday, August 12, 2009
Buyers aren’t liars, they’re just overwhelmed and confused by it all…
One of the first insider phrases that I heard when I first got into real estate was the old hack – “Buyers are liars.” This bit of conventional wisdom on buyers in real estate came from the “old pros” in the office. The gist of the phrase was to say that potential buyers will lie to their real estate agent about what it is that they want and then turn around and buy something completely different – that they were lying to the agent all along – or that they will say that they are working with an agent and then go buy from a FSBO.
I haven’t found that to be true at all. What I have found is that buyers often don’t know what they want or at least can’t express what they want to their agent. Sometimes the most honest (and least helpful) comment that a buyer can make is, “I don’t know what I want, but I’ll recognize it when I see it.” The challenge for the agent is then to start restricting the searches based upon what he/she observes that the buyer likes or doesn’t like as they go out together. That’s not a very productive way to search, but then there is no rule requiring that the clients be productive for our benefit. The more observant the agent, the faster he/she will discern what the clients likes and dislikes are and make the necessary adjustments.
Some agents just don’t deal with this buyer confusion well and I have picked up more than one client who tried to work with another agent first, only to be put off by their reaction to their confusion about what they want. A part of the problem is that the current market is so perverted by foreclosures and short sales that would-be buyers are being tempted by homes that would have been easily identified as being out of their reach just a short while back. Another thing that causes problems is the huge inventory, which means that buyers can (and do these days) look at 30-40 houses with similar features in a price band, where they night have only had 10-15 to consider a few years back.
Today’s buyers read the stories in the newspapers and see the TV reports. They see the homes that used to be $200-300,000 now being offered down in their price range (or so they think) and quite naturally they want to grab for that brass ring. When the reality of the needed repairs or the high taxes or whatever else is unseen in the glossy ads sets in, they have to back off or withdraw and they have wasted their time and the time of their agent. Are they then liars? Did they somehow mislead the agent or lie to him/her? No! Perhaps they are innocent victims of both their own misunderstanding and a lack of good real estate advice from their agent and their mortgage rep.
Too many real estate agents and mortgage reps seem all too ready to let the unsuspecting buyer (especially first-time buyers) wander into the mine fields of short-sales and foreclosures, mainly in the name of making a quick buck. It is the agent who counsels those buyers about the risks and slows them down enough to give the decision a good thorough review who earns my respect. Letting buyers lob low-ball offer after low-ball offer in on short-sale properties is not fulfilling one’s obligations to the clients or the profession, in my book; any more than taking overpriced listings in hopes of getting later price reductions or just for the PR benefits of the signage placement. Both speak volumes about the character of the agents involved.
So, I’ve concluded after years of doing this that buyers aren’t liars, they just need help understanding and verbalizing what it is that they want and lots more help understanding and internalizing what it is that they can afford (both monetarily and in terms of their ability to deal with the issues and needs of the new house). Some agents are better equipped than others to provide that help and guidance. The best agents have the patience and the ability to listen and adapt that are required. Others will just walk around complaining about their clients, as if it’s the clients’ obligation to adapt to their needs. Funny how those agents are always losing clients, isn’t it?
I haven’t found that to be true at all. What I have found is that buyers often don’t know what they want or at least can’t express what they want to their agent. Sometimes the most honest (and least helpful) comment that a buyer can make is, “I don’t know what I want, but I’ll recognize it when I see it.” The challenge for the agent is then to start restricting the searches based upon what he/she observes that the buyer likes or doesn’t like as they go out together. That’s not a very productive way to search, but then there is no rule requiring that the clients be productive for our benefit. The more observant the agent, the faster he/she will discern what the clients likes and dislikes are and make the necessary adjustments.
Some agents just don’t deal with this buyer confusion well and I have picked up more than one client who tried to work with another agent first, only to be put off by their reaction to their confusion about what they want. A part of the problem is that the current market is so perverted by foreclosures and short sales that would-be buyers are being tempted by homes that would have been easily identified as being out of their reach just a short while back. Another thing that causes problems is the huge inventory, which means that buyers can (and do these days) look at 30-40 houses with similar features in a price band, where they night have only had 10-15 to consider a few years back.
Today’s buyers read the stories in the newspapers and see the TV reports. They see the homes that used to be $200-300,000 now being offered down in their price range (or so they think) and quite naturally they want to grab for that brass ring. When the reality of the needed repairs or the high taxes or whatever else is unseen in the glossy ads sets in, they have to back off or withdraw and they have wasted their time and the time of their agent. Are they then liars? Did they somehow mislead the agent or lie to him/her? No! Perhaps they are innocent victims of both their own misunderstanding and a lack of good real estate advice from their agent and their mortgage rep.
Too many real estate agents and mortgage reps seem all too ready to let the unsuspecting buyer (especially first-time buyers) wander into the mine fields of short-sales and foreclosures, mainly in the name of making a quick buck. It is the agent who counsels those buyers about the risks and slows them down enough to give the decision a good thorough review who earns my respect. Letting buyers lob low-ball offer after low-ball offer in on short-sale properties is not fulfilling one’s obligations to the clients or the profession, in my book; any more than taking overpriced listings in hopes of getting later price reductions or just for the PR benefits of the signage placement. Both speak volumes about the character of the agents involved.
So, I’ve concluded after years of doing this that buyers aren’t liars, they just need help understanding and verbalizing what it is that they want and lots more help understanding and internalizing what it is that they can afford (both monetarily and in terms of their ability to deal with the issues and needs of the new house). Some agents are better equipped than others to provide that help and guidance. The best agents have the patience and the ability to listen and adapt that are required. Others will just walk around complaining about their clients, as if it’s the clients’ obligation to adapt to their needs. Funny how those agents are always losing clients, isn’t it?
Tuesday, August 11, 2009
Is it worry or just being thorough?
“What’s the use of worrying? It never was worthwhile.” (George Asaf) from the Jack’s Winning Words Blog, of course. Worrying is a lot like applying heat to a pan of water. The heat creates random motion in the water molecules and eventually might even make it boil. Random motion doesn’t really accomplish much and letting things boil over may be destructive. So, worry has little positive going for it.
I will admit to being somewhat a worry-wart. Unfortunately it’s a trait that I apparently passed on to my son, who worries about everything, too. In the real estate business there are certainly enough things to worry about to keep a worrier busy. I try to encourage those that I mentor to worry only enough to make sure that all of the bases are covered.
When I meet new agents I often tell them to go buy a big hand mirror and keep it handy. Then, whenever they hit a situation where something has not happened or has gone wrong in a deal and they are thinking (and maybe saying out loud), “Who was responsible to check on that?” – they can hold up the hand mirror and quickly find the party who should have checked to make sure that things were going right. Sure there are lots of other parties involved in every deal – the other agent, the mortgage person the title company people – but the one person with the responsibility (or fiduciary duty, if you will) to make sure that everything is going OK for the client will be looking back at you from the mirror.
So, is that worry or just taking responsibility? The other folks involved all have critical jobs to do to make the deal happen AND they also have lots of other clients and deals working at the same time. I view my role as one of just keeping tabs on who has done what and what still needs to be down and by whom. I can’t do the work for them, but I can at least try to keep them on track. Do I worry a lot about it? More than I should, I suppose, since there is little that I can do directly; however, it helps me and my client keep track of what’s going on and what things still need to get done.
Lately the biggest worries seem to surround short-sales and foreclosure sales. Will the bank agree to the price and terms that the seller has accepted? Will the place pass inspection and what happens if we find something that needs to be fixed? Who will pay for that? Will the place appraise? When will the underwriter get the file and what additional things might he/she need? Will the buyer do something that disrupts the mortgage process (No, you can’t buy a new car under the cash for clunkers program while your mortgage app is in process)? Will the out-of-state lender understand our Michigan Site Condo category or mess us up with excessive condo rules requirements? Are there any unknown or hidden assessments, liens or encumbrances on the place?
You could worry about all of those things or you could just say that those are things that you have a responsibility to check on or keep track of during the process that takes place between the acceptance and the closing. Or not. I’ve also seen a lot of deals fall through at the closing table because an agent didn’t worry about any of those things and they came back to bite the agent and his/her client at the last minute. Maybe worrying isn’t worthwhile, but being organized and thorough certainly is and that’s what I prefer to think I’m doing with my clients. Do they see and appreciate that? I worry about that sometimes.
I will admit to being somewhat a worry-wart. Unfortunately it’s a trait that I apparently passed on to my son, who worries about everything, too. In the real estate business there are certainly enough things to worry about to keep a worrier busy. I try to encourage those that I mentor to worry only enough to make sure that all of the bases are covered.
When I meet new agents I often tell them to go buy a big hand mirror and keep it handy. Then, whenever they hit a situation where something has not happened or has gone wrong in a deal and they are thinking (and maybe saying out loud), “Who was responsible to check on that?” – they can hold up the hand mirror and quickly find the party who should have checked to make sure that things were going right. Sure there are lots of other parties involved in every deal – the other agent, the mortgage person the title company people – but the one person with the responsibility (or fiduciary duty, if you will) to make sure that everything is going OK for the client will be looking back at you from the mirror.
So, is that worry or just taking responsibility? The other folks involved all have critical jobs to do to make the deal happen AND they also have lots of other clients and deals working at the same time. I view my role as one of just keeping tabs on who has done what and what still needs to be down and by whom. I can’t do the work for them, but I can at least try to keep them on track. Do I worry a lot about it? More than I should, I suppose, since there is little that I can do directly; however, it helps me and my client keep track of what’s going on and what things still need to get done.
Lately the biggest worries seem to surround short-sales and foreclosure sales. Will the bank agree to the price and terms that the seller has accepted? Will the place pass inspection and what happens if we find something that needs to be fixed? Who will pay for that? Will the place appraise? When will the underwriter get the file and what additional things might he/she need? Will the buyer do something that disrupts the mortgage process (No, you can’t buy a new car under the cash for clunkers program while your mortgage app is in process)? Will the out-of-state lender understand our Michigan Site Condo category or mess us up with excessive condo rules requirements? Are there any unknown or hidden assessments, liens or encumbrances on the place?
You could worry about all of those things or you could just say that those are things that you have a responsibility to check on or keep track of during the process that takes place between the acceptance and the closing. Or not. I’ve also seen a lot of deals fall through at the closing table because an agent didn’t worry about any of those things and they came back to bite the agent and his/her client at the last minute. Maybe worrying isn’t worthwhile, but being organized and thorough certainly is and that’s what I prefer to think I’m doing with my clients. Do they see and appreciate that? I worry about that sometimes.
Sunday, August 9, 2009
Short-sale frustrations...
Home buyers and Home owners frustrated by slow short-sale process - A recent article at the USA Today Real Estate site documented what many local buyers and sellers have already concluded - the short-sale process is badly broken. Read the article here. Almost everyone who has tried a short-sale in the last year will probably have horror stories to tell you about long waits and the frustration of just not being able to get any answers - from the bank or from the selling agent.
The problems seem to start with overwhelmed banks that just aren’t staffed to keep up with the tremendous workload that has resulted from recent economic events. It is compounded by some Realtors who are unfamiliar with the short-sale process and who haven’t properly advised their sellers or managed the process with the bank(s). The fact that there is more than one lender involved with many loans just works to make things worse.
The bottom line for buyers is that great patience is required when going in with a short-sale offer. They should not expect to get any answer for weeks, maybe months. They shouldn't do it, no matter how attractive the property and price may be, if they need to get into a house within the next few months. They need to ask, up front, if the short-sale has been approved by the bank. If the Selling agent can’t answer that question in a way that makes them feel comfortable, they should move on to another house. A reply of "they are aware of it’" is not sufficient. Make sure that the lender(s) have approved the sellers short-sale request.
If the buyers are satisfied that this is a short sale opportunity with a chance to get through the lender, then they shouldn't blow that chance by low-balling the short-sale price. Remember that the price being offered is already below what is owned on the place. Obviously, buyers and their Realtor need to do their own homework to determine what the market price should be, even if it works out to be lower than the listed price. The place still needs to appraise at or above what will be offered, in order to secure a mortgage.
For sellers, the critical factors are getting the communication with the lender established, completing the short-sale hardship documentation process and getting some form of pre-approval from the bank on a short-sale price. The lenders do not like surprises and they do not react to them well. Get it all out on the table and get the bank behind the effort to make the sale. They won’t be happy partners in this venture, but sellers can’t afford to have them as enemies while they are trying to sell their house for less than is owed on it. The majority of short sales that fall apart do so because the sellers haven't completed the short-sale paperwork process with the lender(s) before getting an offer in hand. A few real estate agents are still advising sellers to list at a low price and get an offer in hand before going to the lender with a short-sale proposal. That is an approach most likely to end in failure.
Short-sales can work for both sellers and buyers, if everybody who is a party to the deal is on board and ready. That includes the Realtors involved.
The problems seem to start with overwhelmed banks that just aren’t staffed to keep up with the tremendous workload that has resulted from recent economic events. It is compounded by some Realtors who are unfamiliar with the short-sale process and who haven’t properly advised their sellers or managed the process with the bank(s). The fact that there is more than one lender involved with many loans just works to make things worse.
The bottom line for buyers is that great patience is required when going in with a short-sale offer. They should not expect to get any answer for weeks, maybe months. They shouldn't do it, no matter how attractive the property and price may be, if they need to get into a house within the next few months. They need to ask, up front, if the short-sale has been approved by the bank. If the Selling agent can’t answer that question in a way that makes them feel comfortable, they should move on to another house. A reply of "they are aware of it’" is not sufficient. Make sure that the lender(s) have approved the sellers short-sale request.
If the buyers are satisfied that this is a short sale opportunity with a chance to get through the lender, then they shouldn't blow that chance by low-balling the short-sale price. Remember that the price being offered is already below what is owned on the place. Obviously, buyers and their Realtor need to do their own homework to determine what the market price should be, even if it works out to be lower than the listed price. The place still needs to appraise at or above what will be offered, in order to secure a mortgage.
For sellers, the critical factors are getting the communication with the lender established, completing the short-sale hardship documentation process and getting some form of pre-approval from the bank on a short-sale price. The lenders do not like surprises and they do not react to them well. Get it all out on the table and get the bank behind the effort to make the sale. They won’t be happy partners in this venture, but sellers can’t afford to have them as enemies while they are trying to sell their house for less than is owed on it. The majority of short sales that fall apart do so because the sellers haven't completed the short-sale paperwork process with the lender(s) before getting an offer in hand. A few real estate agents are still advising sellers to list at a low price and get an offer in hand before going to the lender with a short-sale proposal. That is an approach most likely to end in failure.
Short-sales can work for both sellers and buyers, if everybody who is a party to the deal is on board and ready. That includes the Realtors involved.
Saturday, August 8, 2009
Change with the times….
“Whoever desires constant success must change his/her conduct with the times.” (Machiavelli) from the Jack’s Winning Words blog. That Machiavelli was one smart dude and what he said back in his day certainly applies right now in the very changeable times in which we live. If there was ever a time in real estate that demanded a change with the times by real estate practitioners it is now.
I freely admit that I missed the REO boat. Initially it was because I didn’t want any part of what was then a fairly sleazy bunch of operators. Then it was because I just didn’t get how to make the connections with the asset managers that control who gets the REO listings. Maybe now I have to admit that I just don’t want to do the work required to deal with REO properties; but that is a bogus excuse, since there is work required in any listing. REO listings may be a bit more of a hassle, but likely not much more than a relo listing. I just haven’t made the effort to get in touch with asset managers who control this inventory, partially because I had convinced myself that they already had their agents lined up. That’s not always the case.
So, I need to change, I need to take on REO properties and I need to make the effort to got out an find and solicit business from REO managers. That’s one change that I must make. Another, is dealing better with short-sales, which make up another major category of sales these days. I have been reluctant to take on the work of negotiating with the banks myself and so I have a couple of partners that can do that work. What I need to do is a better jobs of explaining the process and why a dedicated professional is needed, rather than doing it all myself.
Finally, I must change my conduct to get better at calling prospects. I do a very good job of responding to calls and of calling back people who may have called into our Corporate offices and been referred to me. What I do a lousy job of is cold-calling or even warm calling - calling someone whose name and number I may have gotten through an internet referral service, but whom I have never met or with whom I have no real referral contact. I don’t like disturbing people with cold calls, because I don’t like being disturbed with cold calls. So, while some agents are great at calling expired listings or For Sale By Owner people, I just hate doing that, since I have no relationship with those people. I may never get good at that, but I’ve at least got to start trying.
I guess recognizing the need for change is an important first step, but I must admit that I have know these things for some time. Machiavelli didn’t go on with any words of wisdom about how to make the changes, so I’ll have to rely on another great thinker, this one of our modern times, Yogi Berra, who said, “In theory there is no difference between theory and practice. In practice there is.” I understand the theory, now I need to practice the practice. Yogi would be proud to have said that.
I freely admit that I missed the REO boat. Initially it was because I didn’t want any part of what was then a fairly sleazy bunch of operators. Then it was because I just didn’t get how to make the connections with the asset managers that control who gets the REO listings. Maybe now I have to admit that I just don’t want to do the work required to deal with REO properties; but that is a bogus excuse, since there is work required in any listing. REO listings may be a bit more of a hassle, but likely not much more than a relo listing. I just haven’t made the effort to get in touch with asset managers who control this inventory, partially because I had convinced myself that they already had their agents lined up. That’s not always the case.
So, I need to change, I need to take on REO properties and I need to make the effort to got out an find and solicit business from REO managers. That’s one change that I must make. Another, is dealing better with short-sales, which make up another major category of sales these days. I have been reluctant to take on the work of negotiating with the banks myself and so I have a couple of partners that can do that work. What I need to do is a better jobs of explaining the process and why a dedicated professional is needed, rather than doing it all myself.
Finally, I must change my conduct to get better at calling prospects. I do a very good job of responding to calls and of calling back people who may have called into our Corporate offices and been referred to me. What I do a lousy job of is cold-calling or even warm calling - calling someone whose name and number I may have gotten through an internet referral service, but whom I have never met or with whom I have no real referral contact. I don’t like disturbing people with cold calls, because I don’t like being disturbed with cold calls. So, while some agents are great at calling expired listings or For Sale By Owner people, I just hate doing that, since I have no relationship with those people. I may never get good at that, but I’ve at least got to start trying.
I guess recognizing the need for change is an important first step, but I must admit that I have know these things for some time. Machiavelli didn’t go on with any words of wisdom about how to make the changes, so I’ll have to rely on another great thinker, this one of our modern times, Yogi Berra, who said, “In theory there is no difference between theory and practice. In practice there is.” I understand the theory, now I need to practice the practice. Yogi would be proud to have said that.
Thursday, August 6, 2009
Milford Memories…
The annual Milford Memories street festival is this weekend in Milford, Michigan. This event has grown over the few yeas that it has been run into one of the premier Michigan arts and crafts events and was actually ranked at number 75 out of the top 100 art and crafts shows nationwide in the Art and Craft 200 best issue for this years. Not bad for an event that started out as a humble little play that celebrated Milford’s history and which was staged in Central Park on a summer afternoon. The musical play about the history of Milford still exists and has been performed many times since.
Now it is a three-day street event that attracts hundreds of vendors from all over the country and which is expected to draw 250,000 visitors to Milford over the three day period. The traffic rerouting that is required and the congestion that results has caused a few locals to sourly refer to it as Milford Miseries, but they are in the minority. Most Milfordites get into the spirit of it, with many volunteering for various traffic management or other duties during the three days. The event is sponsored by the Huron Valley Chamber of Commerce, so all of the work done to put it on is done by volunteers.
There are plenty of events that are staged in conjunction with the street fair itself – musical events in several venues, a beer tent on Friday and Saturday night and a Civil War re-enactors camp that is set up during the event, complete with a canon that is set off in the morning at dawn and again at dusk. While there are no carnival rides there certainly is every variety of carnival food, from hot dos and brats to elephant ears. Venders sell everything from cheap stuff for the kids to relatively expense works of art.
So come on out to Milford this weekend. You can also stop by the Real Estate One office on the north end of the festival. We’ll have canopy set up in our parking lot, which is just north of the Flatiron Building and agents will be on duty to fill you in on all of the places that you could buy in Milford so that you could begin enjoying the Village lifestyle, too. There’s no better place to enjoy small town America than Milford and this weekend is just one of the many events and parades and concerts and goings-on that we have year around. Look for me in the crowd or at the Real Estate One office.
Now it is a three-day street event that attracts hundreds of vendors from all over the country and which is expected to draw 250,000 visitors to Milford over the three day period. The traffic rerouting that is required and the congestion that results has caused a few locals to sourly refer to it as Milford Miseries, but they are in the minority. Most Milfordites get into the spirit of it, with many volunteering for various traffic management or other duties during the three days. The event is sponsored by the Huron Valley Chamber of Commerce, so all of the work done to put it on is done by volunteers.
There are plenty of events that are staged in conjunction with the street fair itself – musical events in several venues, a beer tent on Friday and Saturday night and a Civil War re-enactors camp that is set up during the event, complete with a canon that is set off in the morning at dawn and again at dusk. While there are no carnival rides there certainly is every variety of carnival food, from hot dos and brats to elephant ears. Venders sell everything from cheap stuff for the kids to relatively expense works of art.
So come on out to Milford this weekend. You can also stop by the Real Estate One office on the north end of the festival. We’ll have canopy set up in our parking lot, which is just north of the Flatiron Building and agents will be on duty to fill you in on all of the places that you could buy in Milford so that you could begin enjoying the Village lifestyle, too. There’s no better place to enjoy small town America than Milford and this weekend is just one of the many events and parades and concerts and goings-on that we have year around. Look for me in the crowd or at the Real Estate One office.
Monday, August 3, 2009
How’d I miss it…
There are now several noted economists who are calling the bottom of this recession, including ex-Fed Chairman Alan Greenspan, who must be taken with a grain of salt since he was a contributor to getting us into this economic mess. Most are still weasel-wording their claims, as economists are want to do, but they are saying that the recent upturn in housing sales and leveling off of price declines are indications that the worse is behind us. I sure hope that they are right about that and that we are indeed at or near the bottom – maybe even already on the up slope.
That brings us to the dilemma of many would-be buyers, who may have already missed the bottom. Do they look back on these days and say, “You know, I coulda bought that great house that I was looking at for a great price and I shoulda. Now I wish I woulda.” Things can change relatively quickly in real estate and many times they change in small increments that leave one looking back and seeing missed opportunities. There is not going to be a big “IT”S OVER” sign that suddenly crops up along side the road when this recession ends. There will likely be news reports and articles written, but those will happen weeks or months after the turn and after you have missed the bottom and the great deals.
Believe me, no one on the sell-side is going to hold back on any opportunity to start raising prices. The banks aren’t going to say, you know let’s just continue to sell these assets off and fire sale prices. And owners aren’t going to say, let’s continue to price as if we have to compete against depressed foreclosure prices. Once this thing starts back up the positive appreciation curve you will have missed the boat. A couple of things will happen fairly rapidly – the inventory will decline back down to a normal 6-9 month inventory level and prices will go up and become more stable and firm.
So, have you already missed the bottom? Maybe, but we are still fairly close to it. Inventory is going down and has been for about three months now. The drop in prices has slowed, if not turned to appreciation already. In Michigan we are through most of the mortgage-related foreclosure mess and are now working our way out of the job layoff foreclosures and uncertainly that froze the market for 2-3 months while GM and Chrysler and their suppliers worked their way through their bankruptcies. The dust hasn’t completely settled on that yet, but a clearer picture is emerging and people can start planning for the future again.
Foreclosure sales still dominate the market but they have fallen as a percentage of overall sales for three straight months and owner-occupied sales above $300,000 (the traditional move-up market) have picked up a bit. If you are a buyer or would-be buyer, this is the time to get in or end up with a bad case of the coulda, woulda, shouldas. If you are thinking of selling, you still need to come to grips with what happened to house values during this recession because it isn’t all going to come rushing back. It’
S going to take a decade or more to recoup the value lost on most homes; however, they are at least not going to continue to lose value like they have been. You need to price to the market and maybe a little ahead of he market, but you don’t necessarily need to bake in another 12-15% loss in value for the coming year.
So, you can stand on the dock and watch the boat sail over the horizon or you can jump on it now.
Buying or selling the tag line that is most applicable right now is from the Nike ad – Just do it!
That brings us to the dilemma of many would-be buyers, who may have already missed the bottom. Do they look back on these days and say, “You know, I coulda bought that great house that I was looking at for a great price and I shoulda. Now I wish I woulda.” Things can change relatively quickly in real estate and many times they change in small increments that leave one looking back and seeing missed opportunities. There is not going to be a big “IT”S OVER” sign that suddenly crops up along side the road when this recession ends. There will likely be news reports and articles written, but those will happen weeks or months after the turn and after you have missed the bottom and the great deals.
Believe me, no one on the sell-side is going to hold back on any opportunity to start raising prices. The banks aren’t going to say, you know let’s just continue to sell these assets off and fire sale prices. And owners aren’t going to say, let’s continue to price as if we have to compete against depressed foreclosure prices. Once this thing starts back up the positive appreciation curve you will have missed the boat. A couple of things will happen fairly rapidly – the inventory will decline back down to a normal 6-9 month inventory level and prices will go up and become more stable and firm.
So, have you already missed the bottom? Maybe, but we are still fairly close to it. Inventory is going down and has been for about three months now. The drop in prices has slowed, if not turned to appreciation already. In Michigan we are through most of the mortgage-related foreclosure mess and are now working our way out of the job layoff foreclosures and uncertainly that froze the market for 2-3 months while GM and Chrysler and their suppliers worked their way through their bankruptcies. The dust hasn’t completely settled on that yet, but a clearer picture is emerging and people can start planning for the future again.
Foreclosure sales still dominate the market but they have fallen as a percentage of overall sales for three straight months and owner-occupied sales above $300,000 (the traditional move-up market) have picked up a bit. If you are a buyer or would-be buyer, this is the time to get in or end up with a bad case of the coulda, woulda, shouldas. If you are thinking of selling, you still need to come to grips with what happened to house values during this recession because it isn’t all going to come rushing back. It’
S going to take a decade or more to recoup the value lost on most homes; however, they are at least not going to continue to lose value like they have been. You need to price to the market and maybe a little ahead of he market, but you don’t necessarily need to bake in another 12-15% loss in value for the coming year.
So, you can stand on the dock and watch the boat sail over the horizon or you can jump on it now.
Buying or selling the tag line that is most applicable right now is from the Nike ad – Just do it!
Sunday, August 2, 2009
I don’t know what I’d write about…
I’m an evangelist for blogging and I’m always amazed when I get the response from a person who is claiming to be a Realtor that they have nothing to write about …nothing to say. How can one be a Realtor in the midst of one of the greatest upheavals in real estate in modern times and claim not have something to say, something to write about?
Home values are down 30-50% in most areas and you have nothing to say about that? Mortgage fraud is up across the country and you can’t think of a single thing to say about it in your area? First-time home buyers need help understanding the $8,000 tax credit and you can’t say a word? Buyers don’t understand what they’ll face going into a short-sale situation and you have no idea either? Seller’s need help with ideas to better stage their homes for sale and you haven’t a clue? If you answered no to all of those questions; then, I would ask you why you are in real estate? What value do you add if you don’t have any idea about any of those topics? If you do have ideas or knowledge or opinions about those questions, then you have the fodder of blog postings.
That’s all it takes people. Read something in the newspaper about real estate or from NAR or your state or local real estate board and react to it, comment upon it or extend the thoughts that are there to your local market. This is not rocket science. This is taking the same approach that you might take in a cocktail party conversation and putting your thoughts down in the form of a blog post. If you don’t understand something, ask about it in your blog. If you don’t agree with something, express your opinion and ask for the opinion of others. If you think you can explain something in more simple or easier to understand terms for consumers, do so in your blog.
The point is to read and react. There are hundreds of potential sources for news or articles or other postings about real estate related topics out on the Internet. I probably have 30-40 on my Web site http://www.themilfordteam.com/ under the Real Estate News page. If nothing else, go there and bookmark a few. Then start visiting them on a regular basis so that you see what is happening in real estate around the country. Why should you care what is happening in real estate in California or Florida or Baltimore? Well sometimes things that start somewhere else become trends or set precedence or influence laws. You need to know and you can then relate what is happening there to your own market – a blog post.
I have little patience for those who continue to whine that they have nothing to write about in a blog . Why not just put a big “I’m Lazy” sign around your necks and be done with it. There is more to write about in real estate right now than you will ever have time to get to…you just don’t care enough to read, to understand and to inform your clients. If you can’t find topics to report and comment upon it’s because you are not trying. DO yourself and your clients a favor and refer them to someone who is.
Home values are down 30-50% in most areas and you have nothing to say about that? Mortgage fraud is up across the country and you can’t think of a single thing to say about it in your area? First-time home buyers need help understanding the $8,000 tax credit and you can’t say a word? Buyers don’t understand what they’ll face going into a short-sale situation and you have no idea either? Seller’s need help with ideas to better stage their homes for sale and you haven’t a clue? If you answered no to all of those questions; then, I would ask you why you are in real estate? What value do you add if you don’t have any idea about any of those topics? If you do have ideas or knowledge or opinions about those questions, then you have the fodder of blog postings.
That’s all it takes people. Read something in the newspaper about real estate or from NAR or your state or local real estate board and react to it, comment upon it or extend the thoughts that are there to your local market. This is not rocket science. This is taking the same approach that you might take in a cocktail party conversation and putting your thoughts down in the form of a blog post. If you don’t understand something, ask about it in your blog. If you don’t agree with something, express your opinion and ask for the opinion of others. If you think you can explain something in more simple or easier to understand terms for consumers, do so in your blog.
The point is to read and react. There are hundreds of potential sources for news or articles or other postings about real estate related topics out on the Internet. I probably have 30-40 on my Web site http://www.themilfordteam.com/ under the Real Estate News page. If nothing else, go there and bookmark a few. Then start visiting them on a regular basis so that you see what is happening in real estate around the country. Why should you care what is happening in real estate in California or Florida or Baltimore? Well sometimes things that start somewhere else become trends or set precedence or influence laws. You need to know and you can then relate what is happening there to your own market – a blog post.
I have little patience for those who continue to whine that they have nothing to write about in a blog . Why not just put a big “I’m Lazy” sign around your necks and be done with it. There is more to write about in real estate right now than you will ever have time to get to…you just don’t care enough to read, to understand and to inform your clients. If you can’t find topics to report and comment upon it’s because you are not trying. DO yourself and your clients a favor and refer them to someone who is.
Saturday, August 1, 2009
Are low-income buyers being hurt by investors?
I’ve been working with a number of potential buyers who might be classified as low-income buyers. They are trying to buy homes that are under $50,000, because that’s what they can afford. Many, if not most,of the houses that fall into that price range are bank-owned these days. What’s happening with these houses is indicative of the market but it’s a shame, too. When I finally find a home that is in the price range that my low-income clients can afford AND which is habitable (sometimes not easy to find done in that price range), we keep getting beat out by “investors.”
Now, don’t misunderstand me on this. I have nothing against investors and they are making a major contribution towards getting the flood of foreclosed homes off the market. I’m working with a couple of investment groups that are out buying up houses 5-10-20 at a time, so I can’t complaint too loudly about investors buying houses. What is a shame is that they are tending towards buying up the same houses that the truly low-income families are looking for as a primary residence. To be sure, the investors are in most cases flipping the houses, but usually after they have put some improvements in and have raised the price, many times pricing them back out of reach for the low-income buyers.
One of the things that I’ve noticed is the preference for cash offers, often stated right in the Multi-list advertising. This is true even for Fannie Mae and Freddie Mac houses, at least in my area. I think HUD still states some preference for buyer occupancy for their houses, but lots of them go to investors, too. The other thing that I run into is that investors will many times take the house without an inspection - they expect things to be bad and put that in their plans. Buyers who intend to occupy are always encouraged to get inspections and sometimes will discover things that will impact what they will bid (missing furnaces and plumbing come to mind for some of the houses that I've seen) and the sellers don't like that, either. Buyers who will occupy the house are also likely to need to get a mortgage of some sort, generally an FHA or USDA-backed mortgage, which many of these sellers consider to be another pain in the rear. So that further puts the low-income buyer at a disadvantage with the selling banks.
I guess all of this isn’t necessarily a bad thing, since the investor groups often pour money into these homes to bring them back from the abused states that they are often in; however, a new owner who was going to live there would likely do the same. Many of the investors are turning these homes into rental units until the market comes back and home values go up again. There’s nothing wrong with that either, but it does potentially make for less stable neighborhoods than places where the homes are owner-occupied.
As a Realtor it is frustrating to try to help these low-income people find a new home only to beaten out time after time. I don’t suppose that there is a whole lot that can be done about this, but one would think that a minor change in Federal “guidance” for the banks and Fannie and Freddie that might gently suggest giving preference to bids from buyers who plan to live in the home. FHA has that built in to its purchase agreement documents, but something may need to be done on the sell side, too, in order to encourage more sales to actual occupants. That's just my 2-cents worth.
Now, don’t misunderstand me on this. I have nothing against investors and they are making a major contribution towards getting the flood of foreclosed homes off the market. I’m working with a couple of investment groups that are out buying up houses 5-10-20 at a time, so I can’t complaint too loudly about investors buying houses. What is a shame is that they are tending towards buying up the same houses that the truly low-income families are looking for as a primary residence. To be sure, the investors are in most cases flipping the houses, but usually after they have put some improvements in and have raised the price, many times pricing them back out of reach for the low-income buyers.
One of the things that I’ve noticed is the preference for cash offers, often stated right in the Multi-list advertising. This is true even for Fannie Mae and Freddie Mac houses, at least in my area. I think HUD still states some preference for buyer occupancy for their houses, but lots of them go to investors, too. The other thing that I run into is that investors will many times take the house without an inspection - they expect things to be bad and put that in their plans. Buyers who intend to occupy are always encouraged to get inspections and sometimes will discover things that will impact what they will bid (missing furnaces and plumbing come to mind for some of the houses that I've seen) and the sellers don't like that, either. Buyers who will occupy the house are also likely to need to get a mortgage of some sort, generally an FHA or USDA-backed mortgage, which many of these sellers consider to be another pain in the rear. So that further puts the low-income buyer at a disadvantage with the selling banks.
I guess all of this isn’t necessarily a bad thing, since the investor groups often pour money into these homes to bring them back from the abused states that they are often in; however, a new owner who was going to live there would likely do the same. Many of the investors are turning these homes into rental units until the market comes back and home values go up again. There’s nothing wrong with that either, but it does potentially make for less stable neighborhoods than places where the homes are owner-occupied.
As a Realtor it is frustrating to try to help these low-income people find a new home only to beaten out time after time. I don’t suppose that there is a whole lot that can be done about this, but one would think that a minor change in Federal “guidance” for the banks and Fannie and Freddie that might gently suggest giving preference to bids from buyers who plan to live in the home. FHA has that built in to its purchase agreement documents, but something may need to be done on the sell side, too, in order to encourage more sales to actual occupants. That's just my 2-cents worth.
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