The San Diego Home Blog

photo credit: garryknight

First we got the news that the San Diego Union Tribune is on the auction block. Now we hear about the demise of the Los Angeles Times Sunday Real Estate section.

Now, I do not profess to be a marketing genius, but I do have a couple of ideas about what might have gone wrong. I have some ideas because, in many ways, I am the newspaper.

Up until about a year ago, Steve and I were still money-bleeding, staunch supporters of advertising in the Sunday Real Estate section. My logic was that if there was one person out there still reading the paper, then it was incumbent on me as an agent to expose my client’s home to that one person. Further, I argued that our in-line ads could include our web site address, thereby cross-promoting our brand and our homes.

Here’s what went wrong. Because readership was down, the newspaper folks decided it was time to raise our rates. This flies in the face of supply and demand, of course. An analogy is the message we deliver to our selling clients along with our feedback reports. The buyers may be saying that your yard is too small, your kitchen is too dated, or your garage is too “two-car” versus three, but it is amazing how many objections are overcome the minute the price becomes compelling. If your home is not selling, you don’t raise the price; you lower it. The Union Tribune missed the memo.

Then there was the issue of the tail wagging the dog. When it suddenly became apparent that the Internet wasn’t going away, they made it mandatory that every open house ad placed be accompanied by a paid ad in SignOnSanDiego, their on-line companion. I couldn’t run one without the other. Now, I understand the goal. Seeing the writing on the wall, they wanted to populate their on-line site. Since all I really wanted at this point was an ad in SignOnSanDiego, not in the newspaper that no one was reading anymore, wouldn’t it have made infinitely more sense to give one or the other away for free? Then, everyone wins. 

Finally, there was this ostrich mentality. With heads firmly stuck in the rocky, San Diego soil, they thought that they could ignore the Internet groundswell and make it go away. On numerous occasions, we submitted press releases only to see them published absent our web site or blog site addresses. This was presumably done thinking that promoting web presence might diminish the value of the print medium. All the while, ironically, the Real Estate section in particular and the paper in general were being filled with articles with a purposely negative slant; bad real estate news was embellished and, when there was none, seemingly fabricated. While the Real Estate section had arguably been their cash cow, they appeared to do everything they could to bite the hands that were feeding them.

So, I am the newspaper. The only difference is that I am not for sale, and I am doing what our newspaper should have done years ago. We still spend buckets of money on print advertising, but we have also had the foresight over the past couple of years to entertain and embrace new ways of reaching our audience. Our print materials will continue to be an essential as long as there is one person who isn’t comfortable with a computer, but our print efforts partner with our on-line presence (and the other way around). One hand feeds the other, and one doesn’t have to go away. If we can effectively integrate both, we expand our reach, our effectiveness, and our success.

The demise of our old ways of doing business makes me sad on some level, certainly. Steve still trudges to the driveway each morning for his news printed on stock of tree-origin, and he does this because it is familiar and comfortable, while I am at the same time booting my computer for my daily dose of goings on. But much like Steve with his newspaper and me with my laptop, Anderson Cooper with his computer in front of him while we watch him on TV, and the Ikea catalogue in my mailbox and in my inbox, we are at a crossroads. Those who are able to successfully marry the two media will survive. Everyone else will be yesterday’s newspaper.

It’s often called the elevator interview, but this one took place at the top of the escalator. Tomato, tomawto.

While at the Inman Real Estate Connect conference last week, I had the pleasure of meeting real estate agent Ian Watt. Not only is he first in the hearts of Vancouver residents, but we share a web site platform, so it was a thrill to talk to him about his business. Ian is carving out a fun niche with his video blog. His posts, shot using a Flip video camera, are typically accomplished while driving; he simply sits the camera on the dash and goes.

I love technology, of course, and am always on the look out for new applications lest I am rendered irrelevant by noon on Thursday, and while I have said here repeatedly that I know I must incorporate video to a larger extent in our marketing, Steve correctly pointed out that Ian’s driving method of production is not for me. I have visions of twelve car pile-ups and a lot of hand gestures coming my way from passing motorists suggesting I am “Number One,” if you know what I mean. Somehow, though, Ian pulls it off.

I borrowed this from Ian’s site. It is short and somewhat painful (painful in that Ian refused to provide pre-filming hair and make-up), but the man wanted to know about those wacky American value range pricing strategies, so what was I to do?

Thanks, Ian, and maybe this will inspire me to use one of the two Flip cameras on my desk collecting dust.

photo credit: nerdy girl

A couple of months ago, my resident teen idol idolizer decided that the perfect sixteenth birthday present would be a trip to Irvine to see the Jonas Brothers concert. Being Mother of the Year and all, I signed her up for the Fan Club which came with the bonus prize of pre-sale ticket access. Now, I know these guys are big. I read the hype, and I hear the hype in my own family room on a daily basis. The concert was going to be a swift sell-out. This is when I became a real estate investor.

I only needed two tickets, but I got caught up in the media frenzy. I bought four. Knowing that my real estate was in short-supply, I figured I would sell the other two for a profit. Maybe I could cover the parking. This seemed like a good idea at the time, capitalism at its best, but then with any investment comes an element of risk.

My two extra tickets were listed for sale with an agent, Stubhub. When I made the initial purchase, I paid commissions (”convenience charges” they like to call them) and closing costs (shipping and handling). As a flipper, I now was faced with costs of sale at the other end, so in order to make a tidy profit, I had to list my tickets a little higher. I “needed” to get a certain amount, and this dictated my asking price. Granted, there were a lot of seats on the market when I made my debut, and many were better and even cheaper, but I had time.

How quickly a market can change. Suddenly, two new concert dates were announced, the two consecutive days following the date on my tickets, for a venue in a nearby neighborhood (Anaheim). Overnight, inventory tripled. But, I wasn’t worried. I had time, and I needed to get my price. Oh, faced with this news, I agreed to a price adjustment, but I just lowered the price enough to make it competitive with the hundreds of other offerings, the other offerings that weren’t selling. My new price wasn’t enough to distinguish my property from many of the other comparable properties, and my price was even slightly higher than others yet, but my property was “special.”

Yesterday it suddenly occurred to me that I didn’t have that much time after all. With my need to move (the tickets) in the next three weeks, I became a motivated seller. I was reminded that my property is not worth want I need or what I want, but it is worth what a buyer is willing to pay. I was smelling short sale if I didn’t act swiftly.

So I agreed to another price reduction. This time, I didn’t mess around. My new price didn’t scream “fire,” but it was compelling. I priced my offering not just below comparable properties, but slightly below slightly inferior real estate. Buyers in this market, I realized, want location but they also demand value. In difficult economic times, value will overcome a lot of objections. Value trumps every time.

I am happy to say that I’m in escrow. Within thirty minutes of doing what I should have done thirty days ago, had I heeded the market indicators and responded to the buyer feedback (crickets), I had a sale. I made a whopping $15, and I am a little short of my goal of covering the parking. On the one hand, I might see this as having lost $100, because at the peak of the market, $100 was roughly my imputed equity. However, it was never real. It’s only real when you actually sell. My timing was off, certainly, but a little too much greed and a big lack of objectivity and proper pricing day one ultimately resulted in a lower sale price.

This story sounds eerily familiar, if you know what I mean.

What’s up with those value ranges?

I received an e-mail from a reader yesterday in which I was once again asked to unlock the mysteries of Value Range Pricing. Seller will entertain offers between $535,000 and $595,000. Why would anyone ever offer anything more than the bottom of the range? It’s a good question, and today, people rarely do.

We have talked about value ranges in the past. (”Haven’t we talked about everything in the past?” she asks rhetorically.) And, while I have generally been known to trumpet the virtues of range pricing, changing market dynamics have caused us to reevaluate our position.

The best explanation of value range pricing I have ever seen is still this post written by Broker Bryant. Back in March of last year, I said:

There is not a single market value for any given home, but a range of value, as each would-be buyer is going to perceive value to a varying degree. One person may be willing to pay a premium for your Koi pond or proximity to the neighborhood park while another may consider little personal value in these things. Our responsibility as agents is to find the guy who actually covets most those features which your home has to offer.

This range of value concept is why Value Range (VR) pricing can be such a powerful tool for maximizing a seller’s chance of success…

• VR pricing establishes a range within the seller is willing to negotiate.
• A proper range will include a low number lower than the market’s perception of value and a high number higher, thus giving both parties an opportunity to negotiate their way to a palatable price.
• VR pricing benefits the seller by providing a wide berth within which to maneuver. The home will be exposed to a larger potential buyer pool, and the likelihood of finding the one buyer who values the home most is increased.
• VR pricing benefits the buyer by exposing them to a property they might not have otherwise seen and by giving them the confidence to submit an offer anywhere within the range knowing that they won’t be thrown to the curb. This is because the seller is obligated to “respond” to any offer written in the range; that response can be an acceptance or a counter offer, but it can not be an outright rejection.

Fast forward to last August where I spoke of how I was rethinking my position in favor of value range pricing:

We used to say, where value range pricing is concerned, sellers see the top, buyers see the bottom and agents see the middle. What I was really interested in this morning was whether or not this tired mantra still holds true in a market of deal-seeking, emboldened, buyers, buyers who are all at once fearful of the market yet fearless when it comes to submitting an offer.

Of the 25 value range-priced sales in the past 30 days, just over 40% of these sold below the low end of the range. Three others sold at the bottom. As an agent who uses value range pricing more often than not, my only surprise was that sold-below-bottom cases were not greater in number, yet I think this is a trend that will continue until our market stabilizes… It seems that now, sellers see the middle, agents see the bottom, and buyers see the bottom as “full price”.

Today, I find that last entry somewhat prophetic. We still find ourselves in situations where value range pricing makes sense, but these situations are far fewer. Sometimes, a truly unique home will beg the use of a value range price. Maybe the home is in fact significantly superior to recently sold homes in the neighborhood. The higher end of the range may, in these cases, be closer to true market value, but you must first be able to get the buyer inside so that you can prove it. Thus, a lower number at the bottom. Now, we often find ourselves using range pricing as a way to settle a bet. If the seller’s perception of market value is dramatically different from our own, a value range helps everyone sleep nights, with the high end appeasing the seller and low end helping to ensure that the home is at least shown.

Ultimately, regardless of pricing structure, the buyers are the market, and they are going to determine value. The primary goal with any pricing structure is to get them in the door.

When it is time to list your home for sale, do you list with the agent who personally knows every expansion joint in your neighborhood sidewalks? They are the neighborhood expert, after all. Or, do you list with the agent you personally know, but one who needs a compass and a thirty-minute head start to find your home?

We have been on both sides of this decision lately, and I will tell you that the answer is unequivocally this: The best agent to list your home is the best agent.

The Out of Area Agent

Your first cousin’s friend from the office knows a guy in the church group. He comes highly recommended. Through either a sense of kinship or obligation, you give him the business. What’s the big deal? If he is the best agent in town, you have made the right decision. But, what if he isn’t the swiftest ship in the fleet?

Yesterday, an agent from our team was holding a home open for us in our neighborhood. During the traditional 4:00 sign removal ritual, he ran into an out of area “friend” who was holding her own open house one block away. “Do you know this neighborhood?” she asked? It seems that during the previous three hours, she had been bombarded with questions about mysterious listings on streets with mysterious names, with inquiries about schools she knew nothing about and local fees, a topic on which she was a little fuzzy. Meanwhile, a brochure box at yet another home was trumpeting the name of the subdivision, only it wasn’t quite the right name nor was it spelled properly.

In these cases, the sellers have made a sacrifice in the name of friendship. True, the buyers do not care if the listing agent flew in from Detroit this morning; they simply want information. But, if your agent is ill-prepared to discuss in depth and at length the topic du jour, your home, then your checkbook toting opportunity for a sale may be moving on.

The Neighborhood Specialist

Your personal trainer’s brother is licensed, and he even sold a home last year. He happens to live in the neighborhood, so you give him the business. Or maybe you hire that woman whose sign you have seen so many times. Each of these agents knows your community. Going with one of them is a no-brainer, no? Unless their level of care and expertise is superior, and unless their marketing plan and willingness to commit resources to your success are superior, then no.

Many, many elements are involved in selling a home, and the first of these involves exposing the home in the broadest and most compelling way to the potential buyer. Marketing is no longer local. It is global, and the fact that we share a trash day is not enough. Have you considered your agent’s marketing strategy, the quality of their ads, and the quality and extent of their web presence? Have you considered their knowledge of market trends and dynamics or their grasp of buyer attitudes and expectations? A good agent can become an expert on neighborhood sales and schools and fees and other particulars in one solid morning of diligent research. A great agent will have spent years developing skills and systems and marketing plans to help you succeed. These things are both essential and transferable.

So, which is it? Should you select the Neighborhood Specialist or the more familiar agent from across town? It’s simple, really. The best agent for the job is always the best agent.

You can see the ocean from Scripps Ranch. Well, sort of.

It has been an agonizingly long week trying to get photos taken for one of our new listings. The weather hasn’t been cooperating. The addresses on my latest onslaught of bills and Pottery Barn catalogues tell me I still live in San Diego, but the gray skies would suggest otherwise.

This new offering is a view home. As such, it becomes particularly important that the photos tell the story. You may call them clouds, but we call them a marine layer and, by any name, they wreak havoc on our otherwise good intentions. “It has an ocean view - I promise!” is not the compelling ad campaign we are after.

So, beating the rain (yes, rain!) by one day, we bit the bullet and went forward with the shoot. Had we done so midday, the exterior shots would have been disastrous. By twilight, however, we were able to capture at least some of the glory of a magnificent San Diego sunset. Clouds, in fact, make it better.

Cloudy days are also better for interior photography. Absent natural outdoor back lighting, the result is a two-for-one deal of sorts, with warm views of the inside set against of backdrop of glowing outside spaces.

Very pretty-ful! Now I’m ready for some sun.

Video. It’s a tough dragon to slay. My most recent attempts have done little more than wound the poor beast.

We know people like pictures, and we know that pictures sell homes. Over the years, our stills first morphed into the 360 degree fish-eye lens tour. Then, when it became clear that the consumer found these cumbersome, the photo slide show came along. Finally, the photo-rich visual tour of the pan and zoom variety set to music was born. It’s where we go from here that has me in a bit of a conundrum.

Our current visual tours are “sort of” video in the sense that there is movement and sound. It could be argued that this format gives a more complete picture of the home being showcased than could any traditional video footage complete with my chipper voice-over. So what’s missing? Entertainment value.

The perfect video home presentation, I believe, is going to include the following:

• First and foremost, it must give a complete picture. The buyer needs to feel as if they know the floor plan, the flow, and feel, not to mention the details, of the home once they have finished, that they have been virtually delivered to the space. Our current tours do well in this sense.
• There needs to be a hook. Online shoppers are speed browsers, their remote is their mouse, and you only have seconds to capture and hold their attention before they click through. We are currently missing the hook.
• Both the agent-as-host video and the voice over video counterpart need to provide something of value to the buyer which the traditional visual tour does not. This is a tougher one to get your arms around, particularly if you are dealing (as we most often are) with tract homes distinguishable only by their unique upgrades and appointments. Why do you think we are able to provide a link to Scripps Ranch floor plans on our website? Because housing in our community is fairly predictable. Look! They put the TV on the other wall!
• From the agent’s perspective, video is an opportunity to showcase the agent. While this may mean little to the seller of the home, the reality is that listing agents market themselves in large part through the homes they market. Unless you have the voice of James Earl Jones or the acting skills of Meryl Streep, true video can backfire. I fall more into the category of Alvin the Chipmunk and the Olsen twins.
• Practically speaking, unless your  agent lists one home a year on average, the video needs to be something producible on short notice and with minimal time investment. Given enough time, I am confident I could produce a compelling short that would send any serious buyer scurrying for his checkbook. The problem is what we call value-engineering. While I am out channeling Francis Ford Coppola, I’ve got six buyers, two property inspectors and one ticked-off termite guy camped out on the front lawns of various homes throughout San Diego County. Alternatively, someone needs to offer a cost effective service for not only producing the video but for ”designing” a unique and creative presentation for each home I need to feature. The trick here is keeping it fresh. As soon as a formula is developed, it is destined to be perceived as tired and canned. Click. 

Here is an example of a video which hit on three of the five cylinders beautifully. The problem I see is two-fold. It is so good, it is destined to be a one-hit wonder. (Admittedly, Mike produced this video as part of a contest.) Secondly, while it sells the agent beautifully, does it really get the seller one step closer to that Sold sign in the front yard?

Ultimately, our marketing decisions must consider cost, time, and return on investment, and it is forever a balancing act. If any of our five readers are trolling, I would love to hear both the consumer reaction and the agent solution. And, if you are a vendor who has a cost-effective way to tame this beast, do tell!