October 2007

Like clockwork, within 72 hours of the Red Flag warning of strong Santa Ana conditions and almost to the very day of the four year anniversary of the tragic Cedar Fire, we now have another set of wildfires racing across the backcountry landscape of eastern San Diego County. The Cedar Fire engulfed more than 300,000 acres, the largest in California history, including 300 Scripps Ranch homes and thousands more across the County. The current fires, “Harris” now at 12,000 acres close to the border near Tecate and “Witch Creek” now burning and estimated 5,000-8,000 acres just east of Ramona have already grown tremendously from their birth this morning and are currently out of control. We can smell the acrid smoke and ashes are flying around and landing on my yard…and we are about 40 miles away from the Witch Creek Fire. Although much better prepared than back in 2003, strong winds and severe turbulence have effectively prevented the use of San Diego County’s most valuable firefighting assets, the aerial tankers and helicopters.

Now we learn that the evacuation order has been issued for all of the City of Ramona, including San Diego Country Estates, a suburban enclave in a beautiful backcountry setting about 20 miles east of Scripps Ranch, where we have several clients and friends. It’s starting to get personal, again.

Anyone who has lived in southern California is familiar with Santa Ana conditions and the risks it poses. For those unfamiliar, it’s a strong high pressure system (clockwise wind patterns) that reverses the normal cool and moist on-shore flow from the ocean. Instead, air is blown in from the east after having been warmed and super-dried in the desert at the extreme eastern part of the County. Most Santa Ana events consist of wonderful fall days of 80 degree temperatures and super clean and clear air. But when this super low humidity and accompanying strong winds meet up with a campfire or break an electrical line sparking a fire, it can be a recipe for a major disaster.

San Diego is generally blessed with so many fabulous natural features, most of which few other City’s share; desert, mountains, canyons/valleys and, of course the beaches and ocean, all within about an hour or less of each other. The year-round weather is generally unbelievably great. Unlike other areas of the country we have no hurricanes, no tornados, rarely floods and most important to me, no mosquitoes! But nature has not left us completely out of her realm of powerful events. Earthquakes, while infrequent, do occur and can be very scary as well as devastating. The Santa Ana, on the other hand, occurs with regularity, primarily each fall. It’s normally benign nature can make us complacent to the threat it poses. 

Let us hope and pray that the winds subside enough to allow the tankers and choppers to fly in the morning.  Meanwhile, another huge ”thank you” is in order for the hundreds of firefignters currently on the ground and having to deal with these monsters. While I and more than a million more of my neighbors in San Diego are comfortably monitoring the events on TV, these brave men and women will be fighting a wild fire on most difficult terrain and under terrible conditions, trying to save lives and property for many days to come. Bless them all.  

SAN DIEGO - Several unconfirmed reports were received Sunday of an open house visitor posing as a genuine, qualified home buyer. This man, claiming to be “unrepresented”, allegedly approached agents at several homes in one inland neighborhood inquiring about schools, property taxes and jumbo loan interest rates.

While the typical open house attendee is “just looking” or “has a friend”, this individual claimed to have actual interest in making a purchase and in finding an agent to represent him, thereby raising the suspicions of the open house greeters he encountered.

“Sure, he wants to buy a home”, said one agent as she removed her cinnamon rolls from the oven. “And, I am Mary, Queen of Scots. What does he take me for, a chump?”

“He said that he doesn’t have an agent. Naturally, my radar immediately went up”, said another alert Neighborhood Specialist. “Are you telling me that this guy didn’t trip over three licensed relatives on the way out the door this morning? I told him to get lost.”

One subdivision’s Realtor for Life wasn’t fooled. “If he was who he said he was, he wouldn’t have asked a bunch of stupid questions. No serious buyer tries to engage me in a trivial conversation about the process. No serious buyer cares about the price. Ask me how long the home has been on the market, ask me if the seller is motivated, or ask me if the ”faux finnish paint” I wrote about on the flyer was applied by actual Finns. Then, I know you are serious. By the way, I heart referrals!”

“While he stopped short of acknowledging my existence, he was brazen enough to make actual eye contact”, said one Top Producer who is also a member of the Plutonium Exalted Order of the Reverent Divine President’s Legacy Circle Club. “I shoved a free list of homes and a calendar magnet in his clinched fists and sent him on his way.”

The local Rookie of the Year said she felt victimized and utterly defenseless. “When I dutifully executed the body block maneuver at the front stoop as I was taught, knocking him to the ground while simultaneously thrusting a pen and contract into his hands, I could tell I was dealing with a professional. When I asked if he was working with an agent, he said “No”. There are some things your training simply does not prepare you for!”

Witnesses describe the man as of medium height and build. He was last seen driving a mini-van sporting a “My Child Was Student of the Month” sticker and is possibly armed with a Zestimate and the Sunday paper. Police are advising homeowners and agents to take routine safety precautions. “If a visitor fails to show utter contempt for the agent or begins to speak positively about a home’s features, it is likely a ruse. Contact authorities immediately”.

Kevin Boer at 3 Oceans Realty penned (clicked?) a fun analogy yesterday likening agent advertising practices to animal instinct, namely, the instincts of Kevin’s dog “Little Bit”. Now, I know what you are thinking. What in the name of Queen and Country was Kevin thinking naming his dog “Little Bit”? Did he believe this would endear the dimuntive one to all of the Champs, Scouts, Maxes, and Tobys out there? Did he not consider that Buster might be inclined to steal Little Bit’s lunch money? I had the same reaction. Once I got past the atrocity, however, I was able to relate to his message.

Yep, Little Bit does his business, and that is instinct. My dog, Simon (back off - He came with the name!) does the same thing. He is particularly fond of one bush. Three times a day (four on pizza night), we are left to ponder just why he likes this particular bush. We have come to the conclusion that one dog at some point in time had identified this bush as the cornerstone of his business plan. Simon and every dog that came later sensed it and felt compelled to make their mark. He will continue to frequent this bush until the day a new dog moves into the neighborhood and has a new plan involving a new bush. That we be the day we all feel the tug of the leash in a new direction.

He intuitively marks his territory. Where he does his business, on the other hand, can be taught. At the risk of killing Kevin’s bit, my dumb-as-a- doorknob best friend wasn’t always keen on the bush. He used to fancy doing his business on our backyard lawn, specifically, the Lawn Formerly Known as Green. This made the grass die, which in turn made Steve very unhappy. I knew he was unhappy because he would say things like “I’m very unhappy”, “This behavior saddens me”, and “I’m going to kill that *&%$ dog if he goes anywhere near my lawn again! Bad dog, bad dog!” Forgetting for a moment that I could sacrifice a gnu on the pristine living room rug and his only remark would be “Have you done something gnu with your hair?”, Steve likes things in his domain neat and tidy. I digress.

So, we were left with a choice. Either one of them had to go, or Simon had to be retrained to learn a new behavior. Since the kids and I have grown sort of fond of Steve, we gave Simon a new business plan. You see, Simon thinks of us as his clients. He is a Top Producing Golden Retriever, and his only wish in life, besides pizza, is to make us happy. He wants to eat, and he wants to make us happy, because this is how he will continue to eat. Kind of like our relationship with our clients, no?

Simon has a new plan. He now takes his business elsewhere, but he only does it because he senses this is what we want.  Now, our dog does not have the capacity for rational, independent thought. Contrary to conventional wisdom, many agents do. Had we not suggested a desire for something different, our dog would still be sitting open houses, advertising in the newspaper and killing our grass. He didn’t know better, but now he does.

Most agents know better. The key for these agents is to educate their paper-trained clients. We need to be leading them in a new direction. Otherwise, our clients will just accept that print advertising, bus bench marketing, and flyer door droppings are unavoidable stupid agent tricks, just what dogs do. Too many of us, in our overeagerness to be liked, do not have the courage to find a different bush, a better business plan, when what we should really be doing is showing our clients better ways of serving them. Their grass will be greener.

Some days, I have so many words that I just can’t get them out fast enough. Other days, I’ve got nothin’. This being one of the “other days”, it seemed like a good time to delve into the Scripps Ranch real estate trends.

Summer of 2005 is an event like the first moon landing (or, for our younger audience, the announcement that Wham! would be disbanding) - You always remember where you were and what you were doing that “day”.

To an agent, mid-2005 marked the peak of our most recent real estate boom. With prices and, more importantly, the number of home sales having steadily declined since that historic summer of love, estimating a home’s value in today’s market is becoming increasingly challenging. Sometimes we find that we must resort to the “you paid X and the market has since done Y ” approach. (Math hint: Y is a negative number.)

So, what is “Y”?  Yes, I know it is negative, but how negative? Thanks to Altos Research, we know what the sellers are up to.  Asking prices are still trending upward which, as I noted recently, is counter-intuitive to our current declining market. However, it is the sold side of the equation that gives us the insight into all-important buyer behavior. 

Using data from Sandicor, our San Diego Multiple Listing Service, here are the trend lines for Scripps Ranch, 92131. This information represents third-quarter activity from 2003 through 2007.

Average price per square foot and median sale price, at least in Scripps Ranch, have not declined as dramatically as the media would have us believe. The number of homes sold in our little community is another story. For sellers (and agents, I might add), competition is fierce.

So why aren’t the buyers buying in the same numbers? Interest rates have been fairly stable, recent lending “crisis” aside. In any case, you can’t blame the poor performance in the 3rd quarter of 2006 on strict underwriting policies or tight lending practices. Is it affordability? I don’t think so. Prices have come down slightly, but the buyers who are buying are not paying dramatically less on average for the homes they are purchasing.

The average sale price graph above, showing a slightly sharper dip than the median price graph, tipped me off. Remember, larger homes will typically command a lower price per square foot (as the biggest component of value in our market is the dirt). I think this next chart says a lot.

What buyers want today, always want, is value. Those who are committing to a purchase aren’t necessarily spending less, but they are expecting and getting more for their money. Value.

Perceptions, like markets, are cyclical. Today, everything the consumers hear and everything they read suggests that purchasing a home in this market is about as good an idea as having polka music at, well, anywhere. Demand for housing (unlike polka music) of course will continue to exist; the demand will remain latent however until value is widely perceived.

Why is that strange family in my master bedroom?

This quote from Leslie Appleton-Young, CAR’s chief economist, in this morning’s San Diego Union Tribune:

For sellers, because inventory is so much higher than it was a couple of years ago, the advice is don’t list your home for sale unless you are really interested in selling your home.

This is a highly complex economic strategy written in technical economist speak, so let’s summarize in lay-terms. Take this simple test to determine if the time is right for you to list your home for sale.

• I want to sell my home. a)True b)False

If you answered (a), “True”, you should offer your home for sale.

Tomorrow, Ms. Appleton-Young will be addressing the tricky business of the home purchase. “Do not buy a home unless you want to buy a home.”

Real estate forensics

There is more from our paper’s Currents section this morning:

Hair shafts taken from 10 of the giant beasts yielded a surprising amount of undamaged genetic material, even from one specimen that had been sitting in a room-temperature museum exhibit for 200 years.

Those open houses just seem to drag on forever! If the owners were only really interested in selling, the woolly mammoth could have closed up early and caught the end of the Chargers game. Or, maybe it was the buyers who were the problem.

Long in the tusk

Speaking of the open house, while I have flopped like a bad comb-over on this issue, I am now convinced that this timeworn tradition has seen its finest hour. My strongest argument in defense of the prehistoric ritual has been that the Internet has given the home buyer not the tools to render the agent extinct, but certainly the tools to get a jump-start on the process. We know that buyers are doing more research on their own and finding the need to personally view fewer homes before making a purchase as a result. Consequently, I am also seeing buyers wait until they are much further into the process before establishing a relationship with an agent. Therefore, the open house provides access to the uncommitted, but it is often the blind date.

The counter argument is much stronger. If the open house buyer has not committed to representation, how serious are they about making a purchase? At this point in time, not very. The motivated buyer and the buyer with agent representation will see the homes they want to see with or without a Sunday open door policy. Just maybe, by virtue of the buyer taking a few extra, inconvenient steps to secure a viewing (like making a phone call and scheduling an appointment), they will be demonstrating sincerity and commitment.

Extending courtesies

This, from a phone call to one of our buyer’s agents recently:

Buyer: “I would like to see the house.”
Agent: “Are you working with an agent?”
Buyer: “Yes, I have an agent.”
Agent: “Then why don’t you have your agent show you the home?”
Buyer: “I’m not that serious yet. I don’t want to bother her.”

So, my advice (and since Ms. Appleton-Young just may have the makings of a book, I authorize reprint without permission) is this:

If you don’t want to be a museum exhibit for the next 200 years, do not sentence yourself to open houses. If the buyer wants to see your home, it has been exposed to the world on the Internet and through the Multiple Listing Service, you have a yard sign and shiny brochures detailing every feature to attract attention, you have a website linking photos and tours and your floor plan, and you have an agent aggressively promoting to those who want to purchase a home like yours.

That is, unless you hired the giant beast.

I’ll start with the Top 12 Female Bloggers announcement by Sellsius. I have joked and shamed and groveled my way into this acknowledgement over the past year. They had to include my name in their list so I would finally leave them alone. I am honored, no question, but the reality is that the really great industry bloggers, female or otherwise, will never get the recognition they deserve, because they are quietly going about their business with purpose and focus. They are reaching their audience, the consumer and their future client, with little regard for how other’s might perceive them or might see fit to throw accolades in their general direction. Sure, I know people, but until the Joe and Rudy are ready to buy or sell a home in San Diego, I am not worthy of distinction. Nonetheless, I thank them, and I am proud to know them. (Don’t think this get’s you off the hook for next year, guys.)

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Real estate is a rough and tumble business these days, particularly in my San Diego market. By all accounts, I again cut off my nose to spite my mortgage bill this afternoon. Responding to what agents refer to as the “come list me” call, I had to just say no. With the average first-month marketing cost to us for carrying a home for sale neighboring $$$$$ (you do the math), not to mention recurring costs, time and business expenses, we are finding ourselves more often in the value-engineering role. As much as I want to try to achieve everyone’s goals, I recognize that it is not always possible in this market. Every bone in my body wanted to tell this wonderful couple with this magnificent home that I could deliver on their expectations, but this wouldn’t have been genuine. It’s a bummer-maximus all the way around.

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I took another one of those query calls from an agent this morning. “I have clients who have expressed interest in your listing. Is it still available? (Yes.) Have you had any offers? (No.) Do you have any offers? (No.) Are the sellers motivated? (Their home is on the market, isn’t it?) Will they accept an offer well below the asking price?”

“Have your clients seen the home?”, I asked. “No”, the agent replied.

Call me silly, but why are we even having this conversation? If I hadn’t interjected, the next question would likely have been,”How much will the sellers pay my clients to move in, feed their hamsters, and take over title?” Good grief.

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By far, my favorite read these days is the The Davison Files at Inman News. I can’t link to the article, because you need to subscribe, but trust me when I say that Marc Davison is a writer-extraordinaire. Most recently, he wrote about technology and argued both sides of the “Are agents worth their fee?” debate - Technology has both diminished the agent’s perceived value and increased it. While I appreciated the “in defense” remarks, I was at the same time offended.

It’s amazing the things agents can do today. They snap their fingers and millions of dollars worth of amazing technologies service our every need.

Mr. Davison, I am not snapping my fingers. I was on the Internet at 5:00 AM yesterday and again this morning, as I will be tomorrow morning. I spend a measurable amount of each day investigating and testing and applying every new technology that might (or might not) enhance my business and my value. I have a front office, which looks fun and simple and lucrative, and I have a back office, which the consumer does not see and will likely never appreciate, that occupies my energies and my days and my dreams. I sacrifice time and money and a “normal” lifestyle to make it look easy while servicing your every need. In my spare time, I remain studied in my market and in the contractual nuances of my business in an increasingly complex and litigious environment. This is how I earn my compensation. Snap!

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And, speaking of compensation, whether we blog loudly or we quietly go about our business, we agents are not unlike everyone else, except that the measure of our value and our paychecks is publically debated every minute of every day. We, like others who work to engineer or build or service or sell, enjoy the recognition and appreciation of others, because this validates our efforts, inspiring us to do more and be better. We also enjoy the knowledge that we are making a difference, even if this knowledge is ours alone. The news from the seller of the million-dollar home who, after my six months of tireless work and personal financial investment, informed me this week that they will now be offering the property for rent was more than offset by the reaction of the couple buying the entry-level home who found every switch plate and baseboard to be worthy of tears and hugs at the walk-through. It is during these moments that I am most proud of what I do. Allow me the tired adage, “Work like you don’t have to; the rest will follow.”  Sometimes, the “rest” isn’t about money.

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I am thrilled with the Sellsius recognition, but I am much more elated that my daughter seems to be getting over the flu, that the cat, too, seems to be feeling better (I know this because she is again eating the dog’s food), that the dry cleaning was picked up on time (thanks, Steve!), and that my car stopped making that funny noise (even if the “fix” involved turning up the radio). More than blogging recognition, I am excited that my clients, through some serious due diligence, discovered just today that their home under contract is not in a landslide-prone area and are once again excited about the move.

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My father used to get irritated when people would ask, “What do you do?” He argued that what we do shouldn’t define us. I argue that, if you do it well and with passion, the lines become blurred, and what you do is who you are. My youngest daughter presented me with a handmade birthday card this week. Among her top ten “why you are the best mom in the world” examples, number seven was, “You are funny, even when you blog.” Now, that is recognition of which I am proud.