April 2008

photo credit: Tallent Show

In Part 72 of our 180-part series on “Why Isn’t My House Selling?” we take a look today at one possible factor.

In order for the average buyer to feel compelled to purchase your home, the average buyer will first want to see it.

I was making my appointments yesterday to show the dozen or so homes my client is interested in seeing today. A tour including a dozen homes is not uncommon in today’s market; we have plenty of diverse inventory, and I always encourage our buying clients to hold steadfast to the mind set that they are not buying a pair of shoes. Once, after having shown a family a single home, the young daughter said, “I like this. Are we buying it?” “Maybe, but not yet,” I replied. “If you are shopping for a cool shirt at the mall, do you just try on one, or do you want to try on several to make sure you buy the one that fits you best?”

Now, the client I will be with today is also relocating from another state, so it is especially important that we not only try on many homes, but many areas. Putting together an intergalactic tour is like solving the Rubik’s Cube; one must plan the route and estimate timing. Is the client a fast looker or a deliberate one? What will the traffic be like from Point A to B to Z? Making an appointment to show “sometime this weekend” is poor form, and I owe the sellers the courtesy of a narrower window. But, that narrower window becomes elusive when the sellers would have us, me and someone with the motive, the opportunity and the weapon (the checkbook), serving entirely at their pleasure. Do you want to sell your home?

We can make this hard, or we can make this easy.

Sure, there may be reasons why one agent told me that my window of 10:00 to 11:30 was unacceptable, and that only 4:00 would work. In this case, they had “plans.” So did I. My plans were to show your home, but it won’t be happening. Not today, and not with this buyer. Then there were eleven.

Two other homes, the “by appointment” variety, are also no-gos. In one case, the agent has not called me back, and I can only show after having made arrangements to pick up a key at her office, a key the office won’t release until the agent surfaces and approves the request. In the case of the second, the agent is otherwise indisposed with her own out-of-town clients. Would 5:30 work instead? No. Then there were nine.

Undaunted by the obstacles being thrown in my well-intended path (I am trying to be a cooperating broker here), I continued making calls. For another, nothing before noon is convenient, but if you can make it at 12:30, we can accommodate you. Oh, but just give me a call when you are fifteen minutes away so I can drive over and meet you. Okay, fine. We will rearrange the entire tour, and will now be backtracking at a clip of nearly $4.00 a gallon to fit you in. I am certain the agent will be counting the forks once we have departed.

The Lockbox is Your Friend

Lockboxes are nifty. They are even automated now to provide a complete log of the folks having activated them, so if one were to return home and find that their Spoons of Europe collection had been disturbed, they would know where to come looking. Why, then, would a seller stipulate that their home be shown by appointment only? In some communities which shall remain nameless (La Jolla), the “shown by appointment” home is the rule, and not the exception. Does the seller believe that this practice elevates their home on the exclusivity scale? Does their agent convince them that this practice constitutes an added level of care?

I honestly don’t know, but I do know of at least three homes that my client won’t be making an offer on today.

It’s really a wonder that I haven’t dropped all my ideals, because they seem so absurd and impossible to carry out. Yet I keep them, because in spite of everything I still believe that people are really good at heart.  Anne Frank

The idea of sponsoring a food drive came from the most unlikely of places. It was born from the social network that has been a byproduct, not the goal, of our blogging in particular and our online presence in general.

Through our activities here, we have become a part of a deep and diverse community, like it or not. We have become acquaintances with many and true friends with many more of the people we have met in the virtual space. They are agents, certainly, but they are also vendors, and they are simply buyers and sellers just passing through. When you take the time to look closely, to really break it down, none of us is unlike the other. We are all trying to do the very best we can in an uncertain and dynamic environment.

We all have job-thingies, and we have family obligations, and we have time constraints. Yet, I am reminded daily, through this wider Web that we are weaving, that at the end of the day (I know, Steve, this goes in the Bad Word Bucket), we are more similar than dissimilar, and that we all long for the same things: Security, shelter, friends, happiness, and community. It was during one conversation with someone whose philosophy I admire greatly that I was introduced to another who had participated in a similar event, an event which was loosely related but mostly unrelated to the daily business of our real estate business.

And thus came our Scripps Ranch Food Drive. I admit that I have often watched the telethon with celebrity spokesmen urging us to give, all the while thinking that they could just give (they have wealth I could never imagine, after all) and call it a day. But, it is really about using a platform to inspire others to respond in kind. Call it the power of the collective wherein a million little droplets can become a deluge.

We are not wealthy in the conventional sense, and I am certain that most everyone reading this will say the same about themselves, but if we were to be honest, we are blessed beyond words. So many others, sadly, are not. Steve and I are not in the position to save the world, or even save a village, but as residents of our San Diego village, we saw an opportunity to make a small difference.

We distributed food bags to approximately 4,000 homes (all on recycled paper, of course). We advertised the event locally for two consecutive months in the Scripps Ranch Newsletter (with a circulation of approximately 14,000), on our web site, on our blog, and in our own mailer to these same homes. Through the generosity of local residents and the Rotary-sponsored Scripps Ranch High School Interact Club, not to mention our own unpaid offspring (and we will surely pay in the end), we went on a scavenger hunt of sorts this past weekend to collect donations.

Now for the tally board. Scripps Ranch residents were magnificent in their generosity, and we can not begin to thank them enough for their donations and their support. We collected more than three-quarters of a ton of food for Second Harvest Food Bank for San Diego. We aren’t finished, because we are still getting calls today from neighbors who forgot the date but want to contribute. The morning after, still reeling from our food drive hangover, we found bags stacked at our front door. The front seat of my zippy-red VW Bug is full of canned goods as I write, and I am blown away by the outpouring we saw from our community.

A final thanks to all that gave of their weekend to help us with this effort. From the residents who called us asking if they could help, to John Lowe from our office, to the Scripps Ranch Interact Club brigade who rallied yet again for a worthy cause, we owe you a debt of gratitude. And, to Andrew Loeber from the Interact Club who provided so many awesome pictures, here is your special photo credit! You rock!

photo credit: Pingu1963

 If, like me, you are living in Scripps Ranch, you are living in a gray area. All things considered, that is a good thing.

The San Diego Union Tribune published a heat map this morning showing foreclosure activity by zip code for San Diego County communities. Make no mistake, we are all effected to some degree by distress sales and while this map reflects bank-owned properties, it excludes another, arguably larger component of the distress sale market - the short sale.

Having said that, most of the “gray areas” (areas with the lowest percentage of foreclosures during the first quarter of 2008) are intuitively obvious. Coastal communities always tend to hold their value better than their inland counterparts when the pendulum swings. This has to do with their proximity to that big blue wet thing. It has long been a local mantra that “there’s no life east of I-5.” Admittedly, this is the battle cry of those living to the west, and the poor inland cousins (among which I proudly count myself) will tell you that life is just duckie, thank you, even though we can’t exactly smell the salt air from our driveways.

Or can we? Notable in the graphic is that Scripps Ranch and Tierrasanta stick out like a couple of proud thumbs up, gray areas of relative stability amid a sea of more challenging markets. We are still feeling the pinch of declining prices, and sellers in these communities are not immune to the negative influences of bank-owned and bank-controlled sales, but it could be worse.

And, it just may be before it is all over. From DataQuick’s Marshall Prentice:

The main factor behind this foreclosure surge remains the decline in home values. Additionally, a lot of the ‘loans-gone-wild’ activity happened in late 2005 and 2006 and that’s working its way through the system. The big ‘if’ right now is whether or not the economy is in recession. If it is, the foreclosure problem could spread beyond the current categories of dicey mortgages, and into mainstream home loans.

Recession or no, the big question is whether or not we have in fact worked through the worst of the troubled loans. Most agree that another wave of resetting adjustable rate mortgages is on the summer horizon and, once we get past that undertow, we will be moving toward calmer waters.

photo credit: Mykl Roventine

And I didn’t get you anything.

 Admittedly, I’m still a little wiped out from the Earth Hour which we celebrated just a few weeks ago. My daughter, only recently of voting age and going through that period I call the “Mother Jones Stage,” decided we should embrace this sixty-minute prime time slot as a family. So our little tribute to the environment involved a 20-minute preparation period wherein we turned on virtually every light in the house in order to find the 28 random candles which would allow us to live comfortably during our time of sacrifice. Then, we huddled around the computer and squealed with delight at Google’s front page, which had gone “dark” for the event. In this case, “dark” meant they were temporarily employing a black background with white lettering. One quick search for “Earth Hour,” and I had the whole screen lighting up like a runway.

I must say that Earth Hour was a phenomenal success. It was a little eerie watching television in the dark, and navigating our way to the microwave to make popcorn presented its own challenges, but at least no one got hurt. Isn’t it ironic.

The point is that radical change is not an event; we need to first take our baby steps. And before attempting to walk, we need to raise awareness that there is in fact a reason to get up off the floor.

On the personal front, we are trying to do better with our consumption and, yes, our waste, but we are taking baby steps. We still buy disposable water bottles, but we refill them more often. I drive a VW Beetle; it’s not a hybrid, but it’s not a Hummer. Steve is a one-man army which leaves the female contingent in our house feeling like they are being followed by the Verizon Wireless network, only they are moving from room to room turning out lights behind us.

Being more responsible in the way we conduct our business, more respectful of our environment, is something with which Steve and I have personally been struggling. It’s a struggle because we are just two people, and we can not change the world or even our profession by ourselves. We can not quit printing brochures overnight, because the majority of consumers still want to touch and feel a glossy property description as they pass through a neighborhood or through a home, and the sellers want to see their homes promoted in this way. And, with virtually every other agent with a marketing budget relying to some extent on mailings for listing and personal exposure, print marketing for ourselves and our listings will continue to have a place. If Ralph Nader was a licensed agent, he would still have to eat.

More agents are embracing online transaction management and electronic signings, yet still these things are not the rules but the exceptions. We tried the “shame you into it approach” with our alternatives to the paper brochure. Unfortunately, our Web Cards are not being entirely embraced… yet. We will keep trying. In the meantime, we will continue to spend more to at least ensure that our paper consumption is on recycled stock. Are other agents even paying attention?

So, it’s Earth Day. My washing machine is working overtime, and every computer in the house is engaged. We don’t have solar panels, and I use far too many paper plates. But, my awareness has been raised. If we can start creating a little social stigma where our familiar and traditional ways of doing business and living life are concerned, if we can get to the point were it is widely considered uncool to buy a bottle of water or an inkjet cartridge or to print a brochure, then we will start seeing real change.

Can you hear me now?

Here I go, mixing my metaphors again!

We were discussing average market times with a seller yesterday. In any market, setting reasonable expectations is key when preparing a client for the process of listing and selling a home. And in any market, this is always a challenge. 

Our message these days is that the real estate market is one of extremes. Homes will sell fairly quickly if priced and staged properly, or they will take a very long time to sell and ultimately at a lower price; there is not a big market for average. “Sure, average times are 75 days, but my home is not average,” we often hear. The flip side to this argument was the one we heard yesterday. “Sure, anyone can sell their home quickly if they want to give it away!”

This has always been our cue to chime in with the latent demand speech. In business speak, latent demand is an environment where the demand for a particular product can not be met by existing suppliers. In my traffic engineering engineering days, latent demand was always a consideration. There may be a plethora (yes, we used that word a lot) of motorists wanting to go directly from Point A to Point B, but no road exists. Build it and they will come. In real estate, there are still many, many people who would like to purchase a home, but the home which is right for them is not currently among those offered for sale.

Latent demand as it relates to the home buyer can be thought of as the fence sitter. These buyers are far greater in number than the buyers who will come later. They have accumulated like water at the dam, and the water upstream and on its way is not nearly so deep. Fail to catch a fish from this pool, and your chances later on are significantly diminished.

Or, think about latent demand this way. If you have ever braved the shopping mall on Black Friday, you know that the consuming throngs line up twelve deep at 6:00 AM, anxiously braced for the big opening. Each Gold Card-toting shopper is eagerly awaiting their opportunity to compete for the offerings, to be the first to find the perfect apricot chenille robe and at a bargain. Once Nordstom unbolts the front doors, the waiting mob will stream in, and they will swiftly either make their purchases or decide to come back another weekend, because the robes were too expensive or just flat-out ugly.

The rest of the day will see a steady stream of shoppers arriving late. Each new person through the door will be a new opportunity to unload that hideous housecoat, but it’s a numbers game, and having failed to capitalize on the first wave of opportunity, chances that someone will suddenly breeze through the door wanting exactly what you are offering are significantly diminished. You might move the inventory, or you might have to move it to the sales rack. Now the next trickle of shoppers sees your mark-down, yet the sense of urgency has passed. Why hasn’t anyone bought it? Is it really that ugly? Will it be offered for less next week if I’m just patient? This is where, in San Diego, they all decide to go to the beach.

Now, let’s assume that next year you still have a population of consumers wanting their bargain intimate apparel, but most of them no longer have Gold Cards; it’s something about a mortgage crisis. And a recession. They can’t afford the inventory any longer, but they would still really like to buy something. Even the people who can afford the offerings are being a little more thoughtful about their purchase. No one wants to see their new duds on the discount rounder next week.

When the store opens, a crowd is still at the door, but it is a little thinner. They don’t rush in and out with their purchases anymore, but they linger. And they have been waiting longer. They are “just looking,” looking for an opportunity and waiting for the perfect product. Why settle for ugly apricot when a new delivery of candy apple red might be on the next truck? The store gets crowded, a log-jam of sorts, but the flow of new customers arriving throughout the day is more of a trickle. Too many purchased last year when they were able and when they were caught up in the buying frenzy. They are all at the beach.

The bottom line is that there is still demand for the product, but the demand is latent, and most existing suppliers are not yet in a position to meet this demand. There is still a market for our hypothetical bathrobe; the consumers are the market, and several things have to happen before they check out at the register. First and foremost, the product has to be affordable. With fewer options for payment, Nordstrom is starting to look a lot like Neiman Marcus to the buyer on a budget. Second, there has to be a perception of value. Value can be a discounted price, superior quality, or a combination of the two. Finally, there has to be a shift in the attitudes of the shoppers, and this will come with time. It is understandable to question the quality of the dining experience at an empty restaurant, and people will be more inclined to whip out their checkbooks when others moving toward the check-out line.

Our real estate market has effectively been Closed for Inventory. We have been closed while we take stock, restructure our pricing, and reconsider our merchandising. We have an accumulation of latent demand knocking at the door. “Sure, anyone can sell their home quickly if they want to give it away.” And, anyone can sell their home quickly if they position it properly, with proper pricing and presentation. Yet, if you fail to appeal to the latent demand quickly, you may find your home on the discount rack.

Once in a while we need to step back from real estate and perceive the larger world around us. In San Diego County, there are tens of thousands of people living below the poverty level. Many thousands are lacking food every day. In the past, Kris and I have spent time helping to serve food to some of these less fortunate people. It was heartbreaking to see people of all ages, including families with small children, needing assistance. We don’t do enough.

So when Kris suggested that we tap into one of our greatest resources, our Scripps Ranch community, to help, my first thought was, how? Hence, the 1st Annual Scripps Ranch Food Drive was born. We have teamed up with a great organization, Second Harvest San Diego Food Bank which is headed up by Gary McDonald, one of our own Scripps Ranch neighbors. Last Saturday, we arranged for the delivery of 4,000 food drive bags to homes in Scripps Ranch Villages. We know that there are more than 11,000 homes and condos here, but this is a start. 

(Kris showing off the hottest fashion accessory of the season for Scripps Ranch residents, made from recycled paper, of course.)

Instructions on the bags simply ask that you fill them up with non-perishable canned foods and place the bags curbside by 9:00 AM next Saturday, April 19th. Along with our own team (including Daughter Emily and friends), we have enlisted volunteers from Scripps Ranch High School to help us with the collection effort. Hopefully, we will be retrieving many, many bags filled to the brim. Second Harvest San Diego Food Bank will be picking up the donations from our Prudential California Realty Scripps Ranch office later in the day and transporting them to their warehouse for distribution.

This effort will certainly not save the world. It’s just one little thing we can do as a community to help be part of the solution.