The San Diego Home Blog

This is an sample from the National Association of Homebuilders’ (NAHB) new campaign to promote homebuying, as reported in the Inman Blog. I like the message, and I love the title. The only problem is that “It’s Your Move” is our registered service mark in California. See the little “SM” thingy on our website banner?

Now, if you are in Idaho, have at it. It seems some Florida company who provides ancillary services to real estate agents has already snagged the national service mark for “It’s Your Move”. In California, however, we have registered the phrase. We send out almost weekly cease and desist letters to competitors in our area trying to borrow our very catchy (if I do say so myself) logo/tagline. It is not that I am a grump. It’s just that we have spent years not to mention a boatload of money developing our brand. Should this one concern me? Any agents or brokers out there, I would be interested in your opinion. Maybe we will just change our line to “There’s always something to howl about“.

This is my “feel it in my bones” reflection for the day. Buyers are generally ready to buy. We keep talking about how the sideline sitters, sensing impending doom, are waiting for the bottom to drop out of pricing before making their move. What I saw this weekend suggested that, while the tide is certainly not turning, many buyers are ready to take a dip. The one open house we held (only one in respect of the Chargers’ home game) was well attended, and buyer interest was high. Showings across the board picked up slightly, and we even put one listing in escrow. This all belies the pervasive bubble sentiment that our market is headed for the Apocalypse.

Before the sellers out there break out the party hats, however, please keep my upbeat assessment in perspective. We are still in a declining (or “softening”, “adjusting” for the faint of heart) market, and buyers are looking for a deal. I got this funny bone tickler yesterday in response to a showing feedback call made on one of our listings: The buyers thought it was too nice; they are looking for a fixer. I gratuitously offered to go trash the joint to provide the added “value” they desired, but I’m afraid the damage had been done. They had already viewed the home, seen the remodeled kitchen which cost tens of thousands of dollars, and witnessed the results of the seller’s years of attentive maintenance and of our professional staging. Nothing I could say would convince them that this wasn’t a lovely home.

The point is that the buyer, like most buyers in this market, are looking for a “deal”. Many times it is a deal based on the Zestimate that is tucked under their arm, or a deal based on the list price (with no consideration of how the price might relate to true market value). You want “$X”? I will only pay “$X minus 10%”, because the media tells me I can. In this case, the deal was an attitude on the part of the buyer that the ugly, older, neglected house offered opportunity for appreciation that the nicer, well-maintained listing did not. This is not an inherently flawed logic, of course, assuming that all other factors are considered. However, here is how we (approximately) stacked up against their first choice:

Us: 2150 square feet, 4BR/3BA, $40,000 kitchen remodel, hugely expensive free-form pool/spa, immaculate, approximately $700,000.

Them: 1500 square feet, 3BR/2BA, no udating or improvements, in need of fixin’, approximately $600,000.

Now I must assume that affordability was not an issue, as once the fixer is “fixed”, the cost to the buyer would be strikingly similar, nor was location (similar neighborhoods and ages). It was simply their perception of a deal. So, sellers, here is the deal. Buyers are out there, and buyers have as many psychological profiles as they do choices in homes. The common trait is that they will buy when they perceive value, and their perception is their reality - and yours.

(Edited to add a link to the DataQuick numbers for San Diego County, Sept. 05 vs. Sept. 06, since Jack brought it up in his comments).

Saturday (tomorrow) will mark our six month anniversary at the San Diego Home Blog. 96 posts and 415 comments later, we have written on topics ranging from Presale Property Inspections to Termite Inspections, from New Business Models to Agent Licensing, and from Real Estate Fees to Good Escrows to Bad Agents. We’ve talked about Marketing, Technology, Financing and Market Trends. Did all of this silly talk provide value to our clients who follow our blog? I certainly hope so. Providing value through information dissemination is but one way our blogging serves our clients, however.

Smart agents know the value of their professional network to their clients. The network, however, can no longer be limited to the guys at the water cooler, as there is a vast world out there thinking with a different perspective and approaching our business in different ways. Technology is providing access to information like never before, is changing the way we view our world, and is changing our industry by the minute. As agents, a broader perspective makes us more knowledgeable in our profession, and increased knowledge can only translate to improved service and value to our clients. So to mark our impending anniversary, I will offer my linkation love-fest to honor the bloggers in the industry who have most educated me and inspired me to think in larger terms. While this list represents the blogs I count among my favorites, it is by no means inclusive. (In other words, if I didn’t mention you, don’t put pins in the Kris voodoo doll).

• Rain City Guide - Seattle’s finest share insights in a consortium format. I still consider RCG the gold standard, and they were my initial inspiration to start blogging. Ardell (also of Seattle Area Real Estate Blog) and Dustin in particular are fabulous, and have been extremely supportive during my start-up months, for which I will always be grateful.
• Bloodhound Blog - Greg Swan is brilliant, so don’t attempt to read this without a full pot of coffee under the belt. If you aren’t in the proper mental-preparedness state, he can make your head hurt.
• NYHouses for Sale - Christine earned one of the Top Ten Female Blogger spots awarded by Sellsius this past year (and I still think she stole my award). By the way, she deserved it. Her style is down to earth and very readable.
• Sellsius - This shows you what a no-hard-feelings kind of guy I am. Although sadly overlooked in the Top Ten acknowledgement, I am woman enough to admit that their site is part of my essential morning reading. Their schtick is real estate marketing, by the way. (Note to Sellsius: A spot on the mantel has been cleared and dusted in anticipation of next year).
• 360 Digest - Marlow Harris in Seattle offers no-nonsense, intelligent commentary.
• Blue Roof Blog - Greg Tracy out of Utah writes a great blog that appeals to both his local and a national audience. Not easy to accomplish, and something I have always aspired to.
• The Phoenix Real Estate Guy - That would be Jay. He has stopped in here from time to time, and I make it a point to stop by his blog every morning. I always pick up something interesting.
• RealCentralVA - Straight from Charlottesville, Jim Duncan sounds off. I always appreciate someone who thinks like I do. To my horror, I just realized that Jim is not on our blogroll, a transgression I will immediately correct.
• The Real Estate Tomato - Another great technology site (and another blogroll omission - eek!).
• Behind the Curtain - Jeff Brown, my local partner in crime, spins some fabulous yarns about real estate investing. If you fancy yourself an investor, this is the blog for you.
• Sacramento Real Estate Blog - This is a stats-heavy site devoted almost entirely to local market updates. I include John Lockwood’s project as a big thank you, as he was the first “include me in your blogroll please” call I made, and he was gracious enough to accommodate me.

So, I will be taking the weekend off (from blogging) to celebrate our first milestone. Actually, my goal is to update our Wordpress software. If you see a big black hole where our blog used to be on Monday, you will know it didn’t go well. Wish me luck.

Marlow of the 360Digest reports that the Northwest Multiple Listing Service (Washington) will not be renewing their contract with Realtor.com, thereby pulling all of their listings from the search engine giant effective this Spring. This is potentially big news as I think it could be the beginning of the end of their dominance in the third-party search engine category. Gregg Swan, in a comment on Galen’s Rain City Guide post feels otherwise, as he reminds us that Central Arizona stopped their Realtor.com feed years ago yet this issue has since been resolved.

For the consumer, first let me make the distinction between the MLS systems and IDX. The MLS systems allow brokers to cooperate with one another. It is intended for member use and allows the sharing of listings and the agreement to compensate brokers who participate in the sale of those listings. IDX, or Internet Data Exchange, is a mechanism which allows MLS Participants (Principal Brokers) to give each other permission to display each others’ listings on their web sites. The search features you see on individual broker and agent websites are the result of IDX agreements. MLS participants, however, may opt out of the IDX agreement. The result is that hundreds of (typically smaller) brokers in San Diego will not have their listings represented. Therefore, the consumer is not getting access to each and every property offered for sale.

In today’s web world, there are many established and many more emerging home search sites, and they populate their sites in different ways. Trulia, and I will trust Galen on this, uses web crawlers to sweep listings from individual sites. In addition, much like Craigslist, Backpage and the myriad of other online classifieds, individual agents or brokerages can subscribe and place their listings on these sites. Realtor.com, on the other hand, has relied on free feeds, from the source if you will: The MLS’s.

The question becomes, why should Realtor.com play by different rules? It seems that there is strong sentiment that the fact that the for-profit giant is laden with advertising banners from competing brokers is not in the best interest of the MLS agent members who “own” the listings. I don’t entirely disagree. In order to allow our contact information, along with enhanced photos and property descriptions, to be displayed on Realtor.com, we are now forced to pay thousands of dollars a year. Will pulling the property feed in Washington have an adverse affect on the clients, however, by limiting their exposure? In the case of the Northwest Multiple Listing Service, I am not so sure, as their website is public and offers full access to all listings to anyone who is interested. In San Diego, however, our MLS is not public, so the consequences could be significant.

Having said that, with the veritable candy store of search engines available to the consumer, it may just be time to stop treating the independent search engines differently. Is the answer to withhold MLS feeds or provide them to all? I am admittedly somewhat confused as to the direction we are heading, a confusion apparently shared by Jim Duncan at RealCentralVA. Obviously, there will be many in the broker community who shun full cooperation as they fear it will diminish the value of the agent when/if the MLS is no longer a private matter. However, I see privacy and privelege of information as a dinosaur on its way to extinction. The larger brokerages have already hopped on the cluetrain (as Jim put it) and are feeding their listings directly to the more popular sites, case in point Prudential’s recent parterships with Yahoo! and now Google Base. I, for one, am placing my listings on every online search site I can get my hands on, as I continue to feel that maximum exposure is critical to my clients. For the time being, though, fragmentation is the word.

The California Association of Realtors (CAR) issued their September home sales report today. The findings represent nothing surprising. September versus September a year ago showed a median price change of +1.8% statewide and -3% in San Diego County. Meanwhile, the number of homes sold showed an annual decline of 31.7% both state and countywide. The slower market means that the statewide unsold inventory stands at over 7 months compare to 3.2 months one year ago.

We knew this, we have seen it in the local numbers and we have felt it in our bones. Now what about the future? CAR’s housing forecast for 2007 predicts statewide average price declines of 2% and a 7% decline in number of sales, but not all regions are created equal:

“Looking to 2007, we expect that some regions of the state, including the Central Valley, San Diego and Riverside/San Bernardino regions, will experience sales declines greater than the state as a whole,” she said. “That also holds true for several second-home markets, including the desert areas of Southern California and the Wine Country.”

Define greater? They didn’t, but also from CAR:

“Although the 2007 sales decline is not expected to be as steep as what we experienced this year, the psychology of the market — matching the differing expectations of sellers and buyers — will continue to be a factor as REALTORS® help consumers navigate their way through a changing market.

Now that is an understatement!

The October 23rd Carnival of Real Estate results have been announced and among the winning entries is a post by MOI! Woo-hoo! Hotpads.com was this week’s host. For those new to the Carnival, it is a weekly contest (unfortunately, no cash prizes, but lots of potential adulation from the five people who read this) honoring the best blogging posts from the previous week. Hotpads selected six winners, one in each of six categories. Congratulations to all (especially ME :)):

Best of Show: The Mortgage Reports on Freakonomics.
Technology: rsspieces on why you must have a Blog by January 7th.
Marketing: Truliablog on your “other” office.
Humor: The San Diego Home Blog on one home’s growth chart. (Always the funny girl. Next week we shall aspire to serious journalism).
Law: The Zillow Blog on property rights.
Lending: Brian Brady at activerain on lenders and their fiduciary responsibilities.
Economics: Zepad on World Cup Soccer and housing.

In addition, check out the Honorable Mentions.

Next week’s host will be Real Central VA, direct from Charlottesville. The entry deadline is Sunday, October 29th.

Note: Kris and I are taking a 48 hour break this weekend and heading to her “Happy Place” (Las Vegas) to celebrate our 20th Anniversary (time flies when you’re having fun). Since I’m not letting Kris take her laptop, we will not be around to respond and/or defend ourselves. We will check back into the “Blog World” on Monday. Hope everyone has a great weekend!

Ahh, the Open House. Typically the way many agents spend their Sunday (and/or Saturday) afternoons. What is the value of this marketing tactic? How should an open house be promoted? Who benefits the most from an open house? I will attempt to answer these age old questions without a 10,000 word diatribe.

The open house is a tried and true method for exposing a home for sale. But does it sell the home? I don’t know. You say, “Steve, why are you writing this post and are not able to answer your own question?” Well, because I can only speak for me (and, if I’m really careful, for Kris) and my/our own experiences. Which presents our first Conundrum:

Conundrum #1- What are the chances of selling a home through an open house?

I have not been able to find statistics on the success rate of the Open House method. I have researched this on Google and the National Association of Realtors website. There are numerous articles, but none that I have found (yet) that actually quantifies the rate of successful sales as a direct result of an open house. Through my endless research (about a half hour), I did find some interesting stat’s that I will share with you now:

1. 20% of attendees at an open house are neighbors (Realtor Magazine, June, ‘03);

2. 87% of those attending an open house find them to be “useful” (NAR’s 2004 Profile of Home Buyers and Sellers);

3. 75% of buyers drove by or viewed the open home, but actually first FOUND the home on an internet site (NAR’s 2005 Profile of Home Buyers and Sellers);

4. 7% of buyers found an agent at an open house (NAR’s 2005 Profile of Home Buyers and Sellers).

So, the question remains, “What are the chances of selling your home through an open house?”. With all of the ANALysts out there, I have got to believe someone has the answer. I just don’t know who, or what, it is. 

Since Kris and I have held a few hundred (okay, many hundreds) of open houses over our career (and actually sold a few homes as a result),  I will give you our unofficial estimate: About 1-2%. Yes, about one (or two) chances-in-a-hundred. Maybe we just suck at open houses. I don’t know. But in discussing this with many other agents over the years, we get the sense that they have about the same success rate. Now, if you ask the question, “How many other transactions have we generated as a result of holding open house?”, the answer is many. Which brings us to:

Conundrum #2 - Who benefits most from an open house?

This one is easy. The agent, of course. While you may be doing everything you can to sell that home, the reality is that your chances (if you believe our unofficial estimate) are 1-2%. The agent gets to put their signs all over the neighborhood, meet the neighbors and schmooze with potential unrepresented buyers. This is not a poor reflection of the agent, just the reality because of the nature of the people coming in to your open house. Which brings us to:

Conundrum #3 - The open house shopper!

We always try to qualify whom we are speaking to in the context of whether or not the visitor is represented by another agent. If so, we want to respect that relationship. There are buyers who have an agent that like to visit open houses, but they are in the minority (obviously, if they have an agent they can see the home at any time). Most visitors who are not looky-loo neighbors and who do not have an agent, by their very nature, may be non-committal. No agent, just looking. So, your chances are already further reduced. Add to that the fact that this ”potential buyer” likely just happened to see your ”Open House” directional signs from 4 miles away and has been following them for the past half hour and you may wonder, what are the chances that this is the perfect home for them? The answer is ”zilch”, at least 99% of the time. Which brings us to;

Conundrum #4 - Should agents advertise their open house?

Based upon what Kris and I see from other agents the answer is a big NO! We disagree, of course, but it really irritates us when we see about 14 open houses with signs all over the neighborhood, none of which were advertised. Many agents who do not want to or cannot afford to advertise their open house just throw their direction signs out next to all the other open house signs and hope for a “Hail Mary” because that is just about the chance they have of selling the home. But that’s not the point for these agents. The dirty little secret is that they just reduced the 1-2% chance of selling your home to something less. But they have their names all over the neighborhood every weekend so they look big. They will spend all day schmoozing visitors in hopes of gaining a client for another home. Unfortunately, this does not serve your seller client well. When advertised properly (identifying the number of BR/BA, price, etc.) you at least have a chance of getting a visitor that actually wants/needs to buy the home the you are holding open. The “others” who wander in have no clue how many bedrooms or how the home is priced. 

Then there are the listing agents who not only don’t advertise the open house but ask another agent to sit it open and then require them to use the listing agents directional signs. Now that’s bold! Sometimes we cannot cover all the homes we have open so we enlist help. However, we do NOT require the agent assisting us to use our signs. How ridiculous! Too many agents have forgotten that the primary mission of an open house is to try to sell THAT house, not another one. You are doing a disservice to your client if you are too cheap to advertise it and only use the open house as an opportunity to get your signs out in the neighborhood.

Conundrum #5- Based on all of the information above, why should you use the open house if you are trying to sell?

Because it’s a tough market right now and you want to give yourself every opportunity. New buyers are entering the market every week. Now I’m not suggesting that a home for sale should be open every weekend. It can get stale that way. Also, we stongly believe that the “for sale” process is stressful enough. If vacating the home on a Saturday or Sunday afternoon is a hassle for you after a hard week at work, don’t do it. You can’t and should not make your life miserable. But, if acceptable, an open house once or twice a month is probably not a bad idea.  You never know when Mr. or Ms. 1% will walk in.