November 2006

Woe-is-me. It’s a National Holiday, and I have a boatload of work to do. All week I have taken one step forward and two back. To compound matters, the kidlettes are off school, which means four little eyes will soon be looking up at the camp counselor (me) for things like entertainment and, yes, food. And I’m SICK. My self-diagnosis tells me it is of the Martian Death Flu variety.

It is of course a day when most of the nation gets a work break, but as every working agent out there knows, there is no such thing in Real Estate Nation. With the exception of a brief, 48-hour respit to the Happy Land I call Las Vegas for our recent 20th anniversary, I haven’t had a true day off in, oh, a bizillion years. This of course provides a veritable breeding ground for the Martian Death Flu germ babies.

So in defference to my compromised effectiveness, I am going to delegate the more mundane tasks to Steve today (read: meet the inspector, refill the flyer boxes, and, oh yes, write the offer). I will be spending the day, as my Grandmother calls it, “playing computer”. I am hopeful, even confident, that I can muster the energy to update our online market statistics, upload the six files of contracts that have been taunting me for the past week, and perhaps even set up my showings for tomorrow’s buyer tour. Oh yes, and run the weekend open house ads, prepare the comparative market anaysis my client is waiting on, design a new property brochure, and finalize two “Just Listed” print pieces. Poor Kristi.

Now, I do want to acknowledge that I haven’t forgotten why it is a National Holiday. Today (tomorrow, actually), we are honoring and remembering our veterans. Gosh, forget the preceding pity party. I’m sick - big deal. I haven’t been called to leave my family to protect our citizens in some foreign, dangerous place, nor have I been asked to lay my life on the line for freedom. For men and women serving in Iraq right now, there is likely little interest in the real estate market, my to do list, or my little health crisis. To all of those who have commited their lives and careers to service to our country and to those who have lost loved ones as a result, you have my deepest gratitude.

Now, that’s a perspective check. Thank you to all the men and women who are serving or have served in the Armed Forces, and Happy Veteran’s Day.  I am feeling better already.

What do these diverse words have in common? Nothing actually. Well, almost nothing…

Bubbleheads - They are forever espousing that we have entered the Nuclear Winter of the real estate market. “Don’t buy! Don’t buy!” is their mantra. The San Diego Bubbleheads predict as much as a 30% drop in sale prices and ten years until the market is stabilized. I think their bubble is getting a bit fogged from all of the hot air and they can no longer see clearly. Sorry to burst their bubble (pun intended) but as someone I know used to say, “it ain’t gonna happen”, at least not nearly to the extent they may think. Kris and I and other San Diego real estate agents saw the market shifting to the downside as early as July, 2005. It had not yet shown up in the stats, but the sentiment was clear as day and our instincts were put on alert. Both buyers and sellers were getting jittery, very jittery. As agents, we don’t have the luxury of living in a bubble. We literally see, hear and experience the sentiments of the buyers and sellers who are ”The Market” every day. And, after 15 months of living with the Bubbleheads, I can tell you that we are sensing a shift in the winds. A subtle shift, but a shift nonetheless. We see too many buyers wanting and waiting for the right value. Already, in many cases that point has been reached, and they have happily moved ahead with their purchase. It’s going to start showing up in the stats soon. Not in a big way (it never does), but in the same way we noticed 15 months ago. Subtly.   

Prognosticators - The problem here is multifaceted. Everyone has a prediction. Most people who know me know how I feel about economists and forecasting (the perfect job because you’re never wrong, the assumptions just changed). The problem here is that the big headline numbers (sales and sale prices) are always trailing indicators. Although “pending” indices are helpful, they are not as reliable. Companies providing real estate information and trends like DataQuick are pretty much confined to the “objective past”. We (the agents), on the other hand are dealing in real time and get a large dose of the “subjective present” . Advantage agents! Why? Because buyer sentiment is an extremely valuable leading indicator that stats companies don’t/can’t measure. The monthly University of Michigan Consumer Sentiment Survey just doesn’t reach into real estate or local real estate markets.  

Shrinkage - No, not the shrinkage made famous by the Seinfeld episode, but shrinkage as in Inventory. For example, in my little part of the world in San Diego (Scripps Ranch), the inventory of detached homes for sale has been steadily dropping for three months from a high of 158 in July to the current 114 today (11/7). Now here is a stat for our Bubbleheads - a 28% drop in inventory in the three months. Blasphemy! Yes, a portion of this shrinkage may be attributed to listings that expired or cancelled, but many/most of those sellers were discretionary - “I’m only selling if I can get my price”. Most of these have just about disappeared now. And yes, it is still a buyer’s market, but as we have predicted on many occasions, more and more homes are now priced correctly for TODAY’S market and are starting to sell. Also interesting are the year-to-date sales/sale price stats from SANDICOR for 92131 (Yikes! I’ve become one of THEM, an economist!”). Although total sales are down 30%, the average sale price (per square foot) is actually up 1.8%. Take that, Bubbleheads!!

Note to DataQuick - Please start using sale prices expressed as “per square foot” instead of the median sale price. It provides a much more accurate picture of the market. 

The moral of this story is that trying to anticipate the future market and precisely when may be the perfect time to buy or sell is a losing proposition. We, as agents, do have an advantage over all those who are writing the doom and gloom newspaper articles and preparing economic forecasts with only the objective historical data (think Zillow). Our advantage is embodied in the instincts we derive from the everyday “in the trenches” experiences we have simply by listening to buyers and sellers. It might be a mistake to ignore the benefits of these experiences.

Greg at Blue Roof pointed out awhile back some differences between good agents and bad. The statement I love most is:

Flexibility in marketing homes= BAD. Making sure every home has a full marketing package= GOOD.

I totally agree. I see agent ads all the time promoting “a unique marketing program designed specifically for your home.” What in the heck does this mean? Are some homes worthy of a visual tour while others are not? Maybe some of the more special homes will get print and online placement while the lesser properties just get a yard sign. It simply makes no sense, but makes a lot of cents to the agent promoting this approach. What it tells me is that the agent is value engineering at the expense of providing a full range of services to their client. I can’t imagine suggesting to anyone that their small condo deserves less exposure than the million dollar listing. Admittedly, Dream Homes magazine may not be appropriate for the one-bedroom loft, but the agents I see suggesting a tailored marketing strategy are not the agents spending money in Dream Homes. In fact, they are generally the agents not spending any money at all.

Expansive and expensive (I’m afraid) marketing does make a difference. My conclusion comes in part as the result of a “scientific” experiment I conducted this past week wherein I observed a buyer’s reaction to the property flyers at two different listings. Both homes were in the same development, with the same view, general location, condition, and price. One home had a single page property flyer while the other had a multi-page, glossy property brochure. Both homes, I’m afraid, were my listings. The buyer accepted the single-sheet flyer in a most perfunctory manner and gave it only a glance. At the second home, they responded to the full, picture-packed brochure with a “wow, this is a nice home”. They stayed longer and asked more questions. Now, I am going to take the leap that the same difference in reaction would have resulted had the information been presented in a print or on-line ad. The more exposure, and the higher the quality of the writing, photos and presentation, the more the buyer’s interest and even perceived value will be.

We have always applied our full marketing arsenal to every home for sale, be it small, large, unattractive, or the Taj Mahal. Our visual tours will always include more than 30 photos regardless of the home; even the one-bedroom condo has enough photo opportunities (neighborhood schools, parks, amenities) to fill a tour and pack a punch. We most recently have made it a policy to provide every home with a large, impressive brochure of the type typically reserved for the million-dollar babies. Does it make a difference? Maybe not, but I think so. Regardless, our clients all deserve the same level of marketing effort, and anything less smacks of not only poor representation but (dare I say) ignorance and even discrimination. The buyer for a small starter home is just as interested and excited about their purchase as the outragiously wealthy buyer. Broad, attractive marketing will be no less effective in capturing their interest and may, in fact, be more effective.

As a loosely related aside, a past client shared a good story with me yesterday. She was visiting another agent’s open house over the weekend. This particular home was priced well above $1 million. My client admitted that she was not exactly dressed to the nines at the time. The listing agent apparently dismissed her entirely, and (in her words) was rude and arrogant. She felt that the agent had the impression that she could not afford the home and was therefore not worth her time. The irony, of course (there always is one), is that my client is indeed in the market for a home in this price range. Not only did the agent’s behavior irreparably damage her reputation with this buyer, but she left the buyer with a negative impression of the very home she was hired to sell.

So, in real estate, there should be no class system. If done right, marketing costs should not be a percentage of your anticipated paycheck, but a fixed cost of doing business; the same for each and every home you undertake selling. Sure the profit margin is greater for the Whoppers, but the French Fries are an essential side dish … and they pay the bills.

(Note: Actually, I believe the french fries are the large margin items in fast food land, but that didn’t work for my methaphor.:))

A couple of weeks ago, the National Community Reinvestment Coalition (NCRC) filed a complaint against Zillow.com, a home valuation website, charging that the valuation estimates provided on their site mislead consumers. NCRC’s president said, “Zillow is placing the American dream of homeownership at risk for countless working families”. “If the estimate is too high, home buyers may overpay… Low estimates can depress prices in entire communities if both buyers and sellers rely on the site when pricing or shopping for homes”. Of course, we have talked about the value of Zillow’s values, here and here, for instance. In our opinion, although Zestimates have very limited practical application, Zillow is no more dangerous than the carnival fortune teller. We all know it’s just a fun exercise, right? Think again.

Now, we offer the following breaking news.

STUPID PEOPLE ZUE ZILLOW

By Kris and Steve Berg, Staff Writers

SAN DIEGO - On the heels of NCRC’s complaint against Zillow.com claiming misleading and discriminatory practices related to their home valuations or Zestimates, NCRC attorneys have filed a separate class action lawZuit against Zillow on behalf of Stupid People everywhere. Also named were the makers of the Magic 8 Ball, the Ouija Board and the little paper things found in fortune cookies.

The plaintiffs’ attorney, Mr. Chase Bucks, cited a need to protect the clueless segment of the population from themselves. He suggests that many people will logically assume the results returned from the completely impersonal, computer generated algorithm to be 100% accurate in establishing value for a personal, emotional purchase without bold disclaimers. Mr. Bucks pointed out that the government has required other big corporations to include responsible product warnings on their labels for years, and Zillow should have to play by the same rules. “Windex glass cleaner bottles, for instance, state ‘Keep out of reach of children and pets’. Clearly, a cleaning attempt on the part of the family hampster could only result in disaster”. Other examples (Editor’s note: All true) of corporate responsibility include: Heinz Ketchup (Instructions: Put on food); Rowenta Iron (Warning: Never iron clothes on the body); Sears Hairdryer (Warning: Do not use while sleeping); RCA Television Remote Control (Not Dishwasher Safe); Bic Lighter (Ignite away from face); and, Silly Putty (Do not use as earplugs) to name a few.

None of the plaintiffs were available for comment, as they were running with scissors, blowdrying their hair in the bathtub and microwaving metal utensils at the time.

Our oldest daughter, a high school junior, is in the throes of evaluating career options. Real Estate Agent is not at the top of her list, go figure. Gosh, Becky, consider the glamour of my profession! It is Sunday morning, and here is a summary of how my work day is shaping up:

1. Check email and delete two undeliverable messages to person who signed up for automatic property updates. (Apparently ”Ben Dover” is not a real person, nor is his email address legitimate). 
2. Get dressed in big-girl, work clothes (involving heels capable of aerating any lawn).
3. Present offer to seller and, presumably, prepare and present counter offer.
4. Visit client’s vacant home for sale to sweep rat doodies from patio and spot clean carpet (while wearing big-girl, work clothes).
5. Erect approximately ten Open House signs in various locations involving soil bearing a striking resemblance to the Mars landscape.
6. Hold open house (at which I have arrived attractively beaded in sweat after successfully executing #4 above).
7. Schedule destructive testing at home for sale to assure would-be-buyer that cracked tile is a poor install and not the result of a slab issue (file under “Save Sale”).
8. Install Firefox and write long-overdue Zillow lawZuit blog, as I have been scooped again by our Johnny-On-The-Spot local newspaper who finally ran the article a week after it happened.
9. Start business plan for 2007 (another long-overdue item), with “Buy New Heels to Replace Shoes Destroyed in Erecting Open House Signs” among the short-term goals.
10. Restock flyers at empty flyer box of “agressively priced” home for sale.
11. Update market statistics so that I have something of value to blog about tomorrow.
12. At 6:00 pm, tell children that dinner is overrated, and Mommy still has work to do. Remind them to wear their ID badges in the future so I may refer to them by name. (Pour glass of wine).

TGIS!

I’ll admit that I am guilty of the occassional typo or other MLS input transgression, but I am constantly amazed at the agent property descriptions I see. So, I offer this short list of actual stupid write-ups from among the 112 active listings in Scripps Ranch this morning. Let’s call it: ALL I WANT FOR CHRISTMAS THE HOLIDAYS IS…

A LAWYER

• “his and her’s (sic) walkin closet” - What about his & his or hers and hers?
• “family oriented home”, “great family neighborhood”, “the perfect family home” and others - A repeat offender, I’m afraid, and a fair-housing no-no. By the way, the word “perfect” should go in (as Steve likes to call it) the bad word bucket. Nothing is perfect.
• “good school district, especially elementary school”, “children attend (name of school)” - You had better hope so, or you will be buying the house back.
• “walking distance to…” - Another fair-housing bad boy. Sorry, but not everyone walks, and it is common knowledge that this language is discriminatory.
• “no traffic noise” - Gotta love those electric cars.
• “safe neighborhood” - Until the first incident. Tell it to the judge.

A DICTIONARY

• “on a quiest culdesac” - Either quiet or the quietest, not sure which.
• “compklete with patio trellis” - Obviously of German descent.
• “seller is anixous to see offers” - Not sure I want to present an offer to an anixous seller.
• “new kithcen, new title, truely turnkey, terms to be negociated, MOTIVED seller!” - I wonder what, exactly, are their motives?

A CLUE

•  ”seller is motivated”, “seller says sell”, “seller wants it sold” - I started to count the number of times one of these little revelations was presented, but stopped at 22 when I was only one-third of the way through the listings. I suppose this is intended to distinguish a listing from the home that the seller does not want sold.
• “bring all offers” - A truckload of these statements, as well. Glad they told me. I was going to write the offer and then put it in my desk drawer for another time.
• “seller will look at all offers” - That’s a relief. I knew that the listing agent was obligated to present all offers, but I guess there is nothing to keep the seller from plugging his ears and shutting his eyes upon presentation. By the way, these and the “seller motivated” statements most often appear in the confidential remarks section which only other agents see. I interpret this as an “ignore the price, my sellers aren’t realistic, give me something before I lose the listing” plea.
• “water purification system does not convey” - At first glance, there is nothing inherently wrong with this statement, EXCEPT that the home is listed for $1,245,000. Unless the water purification system was a wedding present from your departed maternal grandmother, I would suggest that it can be replaced.
• “owner is motivated…seller to have suitable housing prior to close of escrow…no sign on property…dogs may bite” - Now, that is what I call motivation!
• “dog be careful” - And to all of the cats out there, you can proceed with confidence.

Sellers, it is a competitive environment. You owe it to yourselves to review your advertising copy. To the agents, don’t be sloppy or stupid. Your clients deserve better.