August 2007

It’s the perfect storm. The final weeks of summer are always the slowest for us as real estate agents, yet our most frenzied time as human beings. (Contrary to conventional wisdom, agents are in fact human beings, in a loose sense, in that they mostly stand erect).

I have been accused in the past by my less fervent “fans” of being too pedestrian in my writing, both topically and stylistically, of mixing too much pleasure with business. I remember one comment on a now defunct Bubble-blog along the lines of, “I wish that stoopid agent would shut up about her family trips to Lake Arrowhead already”. I’m guilty as charged.

The fact is that successful agents (and by that, I mean, agents who for two consecutive tax years have had reason to actually file a return) begin to lose the ability to distinguish between their professional and personal lives. More simply stated, Real Estate becomes a lifestyle rather than an occupation. Myself, I spend as much or more time preoccupied with market trends, prevailing loan rates and local home sales activity than I do concerned about sorting the whites and colors in my overstuffed laundry hamper.

My own preoccupation with real estate may separate me from all of the people out there who are not trying to make a living in this business (four, last time I counted), but we have the laundry concerns in common. We are not really so different; we have bills to pay, groceries to buy, children to shuttle between activities, and leaking faucets to attend to. The difference is that by the age of six, my children had a complete grasp of the concept of “contingent in escrow”. While “normal children” (not my, Real Estate Orphan variety) entertain themselves on family road trips by playing the “license plate game”, mine count the Pending riders on yard signs. And, because the lines have become so hopelessly blurred, the difference is, I am almost unable to write about one without talking about the other.

The curious thing is that the smart money can get their market update fix just by reading the alleged off-topic drivel I tend to write, the stuff about my dog, and my cat, and my hamper runneth over. My life is seasonal, and so is the real estate market.

This morning, our local rag had the two requisite articles on real estate: One concerning declining home sales and the other on looming mortgage rate adjustments and increased foreclosures. Some morning in June, I would have been all over these contemporary topics like a hungry man to a cattle auction. In August, I have daughters who need back-to-school clothes and supplies, those final doctor, orthodontist and hair-cut appointments to make, and one more weekend to squeeze in some forced family fun before the games begin.

So do you, and so does the otherwise would-be buyer. At this time of year, when very few among us have time to stop and smell the left-overs, is it any mystery that your home for sale is not being shown? This is an August thing; it always has been and it will always be so.

This August is a little different, however. We entered the month in a downpour of bad news, and, for the media, nothing is more fun  than bad news. What started as merely a bad weather report has turned a collective storm warning calling for all-out market evacuation. By the time we reached the final approach to the end of summertime fun, with all of the attendant personal stuff we had to deal with, the rolling thunder had become deafening. The perfect storm.

As both a real estate agent and someone like you who has a life to deal with, there is another reason I am not inclined to talk about the real estate weather this morning. I’m growing weary of it. It’s been ugly outside for so long, that there’s nothing new to talk about. I suspect many, many buyers are beginning to feel this way as well. I feel it in my bones, and I see it in the faces of the people coming to our open houses.

I am not naive enough to suggest that our market won’t continue in decline mode for the next year or more, nor am I delusional enough to suggest that we have seen the worst of the fallout from past, shameful lending practices. What I do believe, however, is that as we become increasingly numb to the “news” and as we get back to our post-summer personal routines, buyers just may be ready to come in out of the rain.

This morning, for about the 1,500th time, I just heard another pundit on CNBC speaking to mortgage issues. When asked what people should do if they feel they are sinking into a financial abyss, his response was: “The first thing you should do is call your lender and try to work things out.” Sounds reasonable, doesn’t it? Well, here’s a reality check. We have met with several clients who meet the criteria of having mortgage problems (to varying degrees) and we have also advised them to contact their lender and get a reading on their willingness to work things out.

Our admittedly small sample result was…zilch. First problem: Try breaking through the speak-to-a-live-person security barrier lenders have on their phone systems. If Microsoft had this technology they would never need another security patch - ever. One of my clients asked that I try to get through to speak to their lender. Forget it. That doesn’t work either.

Another client, who has known for months they were in financial trouble has repeatedly tried to “work things out” with their lender. In each case they were rejected and instead advised to put their property on the market and bring them an offer, knowing all the while that it is a short sale. Only then will they discuss a workout.

Excuse me? The lender is rejecting their client’s plea for help and instead saying just go for a short sale and THEN they will talk to them. I fail to get this logic. Not only is this putting their borrower at risk, but as an agent, I am now put in a position of risking my time, effort and resources with no guaranty of the outcome.

There has got to be a better way! I would be interested in hearing from any other agents, mortgage brokers, investors and/or consumers to determine if my experiences are the exception or the rule.      

Kris and I had another one of our great debates (actually just a spirited discussion) the other night, this time about the value of all of the information available to the consumer on the internet. This may be, in part, what stimulated her most recent post (below) about “Amazon.com and the MLS”. I am taking a slightly different path. As our resident technology wizard, Kris is always seeking (and finding) new and better ways to expose our listings to the world. She has not only found and uses just about all the real estate websites known to mankind and created this weblog that links to the website, but she is now on to adding “widgets” to our own website and weblog. I digress for a moment - For those of you who may be more at my level, widgets are no longer those old business school examples of anything that’s made or produced. In terms of today, widgets are those little things located in the sidebar of a website or weblog. Ours includes a little widget for statistics and a widget portraying the location of our listings on a little map, the listings shown as little pins. They’re cute. Click on a pin with your cursor and voila, it sends you to the featured home section of our website.

We are all racing to get the next and better widget and we are all seriously anticipating the next revolutionary add-on that will come from Zillow, Trulia, Google, Yahoo or some site we have not even heard of yet. We get so caught up in this race for more and better technology, that we may be losing sight of what our buyer or seller really wants or needs. 

No worries, though. It takes a relatively low-tech guy to bring all of you back to the basics. That would be me. No, I’m not suggesting that technology isn’t great. But I am suggesting that many of us may be placing a bit too much weight on what we like to call the “empowerment” of the consumers. I am personally getting a bit weary of the overuse of this term. Buyers are empowered, sellers are empowered, agents are empowered. Everyone is so darn empowered that I think we all cancel each other out.

Empowerment is simply an opportunity. It only works if it is used and used properly. Not only that, it may be used for good or evil. Through empowerment, one may seek and retrieve information and try to use it to their advantage. It may also be construed in a way to be used against someone.

Here’s the challenge and, by the way, my value (or lack, thereof) proposition:

1. Time - So much of “The Market” is already fairly well teched out now. Most buyers and sellers are very capable of using the internet to empower themselves. We know that millions of people are aware of and peruse the many real esate megasites and weblogs. But based upon our own experiences as well as the many anecdotal references from other agents, the information gleaned by many buyers and sellers results in knowing just enough to be dangerous, but not quite enought to be really empowered. So why don’t they fully exploit the internet?  Because they are busy. They and their families actually have a life (which is orders of magnitude better then Kris and me) . And most are smart enough to know the difference between information and knowledge (see #2, below). 

2. Information versus knowledge -  The other critical factor is that most astute consumers understand that it would take an enourmous amount of time and effort (see #1, above) to be able to filter and tranfer the information they acquire into a meaningful knowledge base. Kris recently wrote an eloquent piece about this here. The difference between information and knowledge is enormous. The internet really only provides the information without the knowledge. Astute consumers understand and respect this. This ability to understand the difference is also what creates value in experienced agents.  

I’m not suggesting that as technology evolves, the knowledge gap won’t close. It probably will. But there will always be gap.

I am almost certain this will relate to real estate in some twisted fashion, but I haven’t quite thought through the big finish. A little low on the caffeine yet, so I’ll just see where it takes me.

This weekend, Steve and I had one of those rare windows of opportunity. We always have lots of things we should be doing, but at this moment, there was nothing that had to be done. This is when Steve suggested that we hit the local book store.

I’ve talked about my Post It approach to organizing my life. The Little Slip of Paper Reminder Method is employed in my personal life as well. At the bottom of my purse this moment, I have a grocery list penned in the ’70’s (Buy More Teddy-Grams), a more contemporary list of songs I really need to download to my iPod (Fergie’s Big Girls Don’t Cry), and a gum wrapper with the note to buy more gum . Steve is no better. He carries a list of the books he has been meaning to buy.

So, we hit the Barnes and Noble. This place was a wall-to-wall Busy Town. Sure, there were the thousands of teenagers rushing to fill their mandatory summer reading shopping cart, but mostly it was a bunch of folks like Steve and me meandering doe-eyed in search of something. We knew exactly what we wanted, well, sort of. We had titles but no authors, and absent a sufficient window of opportunity (the month of August) to employ the popular hunt-and-peck search method, we enlisted the help of the Barnes and Noble Employee to check the Magic Computer. Alas, only two of the three objects of our desire were in stock.

Head slap! Then it dawned on us. We could go home, have a cold one, and order all three, at once, with free shipping, on Amazon.com. It doesn’t matter how many hours a day I spend online (25), I still forget the breadth of the resources at my disposal. We departed Barnes and Noble like two people who just remembered they left their children on the stove, but not before loitering for a few moments at the New Arrivals display. There is, after all, a social element to the bookstore experience.

Many have had a rip-roaring good time comparing the future of real estate and, more specifically, the real estate agent to Amazon.com, and I think it just occurred to me why their arguments are bass-ackwards. Amazon.com is the embodiment of the MLS; their inventory is essentially the inventory. Search by title (number of bedrooms), by author (zip code) or by random words that you think might be in the title if only you weren’t too old and absent minded to remember such things (price). One could argue that Amazon.com isn’t changing our business, but our business has helped shape theirs. The only difference is that the MLS, which has to date been privately held, is on the verge of becoming a public company.

But what about the bookstore? Well, it used to be located in the traditional real estate office storefront. This was the only place yesterday’s consumer could go to find yesterday’s MLS (the magic computer), but the convenience of the Internet is replacing the traditional store. And the employees haven’t been laid off, they are simply working from home now. We still have our window office, but we need a GPS and a note pinned to our collar to find it. Our real work is done to a much greater extent online, with websites and blogs and online ad placement on others’ sites. However, agents themselves are still the bookstore where the Internet is the books.

Has the agent’s value diminished? No, and here is the big distinction. In the publishing world, you are required to buy the book before you read it. In real estate, you will want to read the complete text before shelling out the bucks. You can find your book all day long on our online Amazon-equivalent, but eventually you are going to need to leave the keyboard to make sure it is truly the perfect read. And more often than not, the picture on the cover will have been deceiving or the summary on the book jacket incomplete. As a consumer, you may think you know which type of book you will enjoy most, buy this one purchase is going to have to thrill you for many years to come, so the process is necessarily more thoughtful, deliberate and time-consuming. You will need to see the New Arrivals section, not just online, and you will want to hear the reviews and consider all other offerings in the genre before committing. “People who purchased this also enjoyed this“. As an agent, I have read them all.

Yes, I know this is a simplistic way of looking at it. To make the argument more involved would argue more for the ongoing role of the agent in the transaction. Last time I checked, Amazon.com’s prices are not negotiable, no one is going to sue Amazon.com if they find that they end up hating the story, and as a consumer, you can’t take it back.  Can you buy or sell a home without me? Of course, and it has always been so. But my value has never been about my ability to print out of list of best selling titles; it has always been about the process that follows. I am certain the majority of consumers will still want and need my representation before taking their place in the checkout line. End of story.

Reprinted by permission. Well, sort of. Jeff Brown sent this to me, and he promised not to sue if I shared it here. Here’s hoping the cartoonist is feeling as generous.

First let me introduce Daughter #2. She has the self-confidence of Patton playing a friendly game of Risk, she has the tenacity of the magazine subscription salesman at my front door at dinner time, and with gams that look like she spent the first 15 years of her life navigating the briar patch of death, her future as a leg model is bleak.

Soon, my youngest will report to the high school gym. As the result of an unfortunate laundry mishap involving poor sorting execution, she will be wearing one white and one slightly blue kneepad, but that’s not the point. She is a volleyball player. At least, this week she is.

Tomorrow marks the start of the Scripps Ranch High School Girls Volleyball tryouts. We have lived through this before, first with Daughter #1, and beginning last year with our second-to-be-spawned. And it is not the sports tryout you might remember. The competitiveness at her school for this particular sport makes the Spanish American war seem like child’s play. These kids are put through the physical and emotional spin cycle.

BUMP

Day one in the gym will look like the line to get wristbands at the American Idol Tryouts. Fifty to sixty girls will be showing up to compete for 12 slots, 4 or 5 if you eliminate the returning shoe-ins. What does one do to prepare for tryouts? In #2’s case, she spent the requisite off-season playing traveling Club ball. (You haven’t lived until you have seen the sun rise over Torrence or Laverne or Anaheim… for the eighth consecutive Saturday morning). She attended a host of summer skills camps, one requiring that she forego the backpacking trip with her sister and Dad. She has conditioned, and she has set balls in the driveway until her arms threatened to flee her body. Sometimes, that just isn’t enough.

#2 is 5-feet-4-and-a-smidge inches tall. This does not bode well in a tall girls’ sport, tall being defined as residing in a different climate zone, above tree-line. She can devote herself to honing her skills from now until the troops come home, but she is still going to be short. And, at her high school, sports are all business, a business with an enormous height bias. Being good or even great is simply not enough. You must be at least this tall to ride this ride.

SET

Can I pull a real estate nexus out of my hat? You betcha. (You had to know it was coming).

As a seller, it’s not enough to show up anymore. Just because you want to sell doesn’t mean it will be so. Competition is fierce, and your home has to measure up. For every one of you there are dozens more who all turned out with the same goal. Proper pricing, preparatory staging, exhaustive and extensive marketing, conceding to showing arrangements that are convenient to the buyer and inconvenient to you, and professional coaching are no longer necessary to ensure you make the cut; these things are expected if you want to be allowed to simply compete.

Much like the volleyball team, there are only a certain number of “sold” slots available this month. The judges want standouts. The good news for you, and the bad news for my daughter, is that her coaches are looking for size while your buyers are looking for value. She can’t grow, no matter how much she wants to, but you as a seller can give the buyer exactly what they want. The question is, are you prepared to commit?

SPIKE

This will be my fourth year at the gym. Each season, I see the competition getting fiercer and the girls getting taller. The Littlest Berg’s tryouts will eventually end, in a cut this week or the next, or in a spot on the team, but the window of opportunity is a finite one.

Your window is infinite, but our real estate market continues to trend downward. For how long and to what extent, no one truly knows. But this season, anyway, for each month your home remains on the market, the game gets more physical, and the buyers expect a little more “value”.

If you missed last month’s tryouts, the good news is that you can come back and try again. Listen to what you heard, and take the necessary steps to better position yourself for the next round. It may be time to make those cosmetic improvements, select an agent who is willing to more aggressively expose your home, abandon the “by appointment only” show instructions, or lower the price. For the foreseeable future, the other kids are just getting taller, so consider biting the bullet now. If all else fails, size (price) is one thing you can control.

That is, if your goal is to really make the cut.