Market Turning?

Is the market finally turning up?

After weeks of the phone being relatively dead, today has brought several calls.  Nothing like the levels of two years ago, but a definite increase.

Then, a couple of hours ago, I was working with a buyer showing a house that has been listed for nearly seven months when I received a phone call from the listing agent telling me that the house we were in is no longer available.  The owner had just accepted a contract.

Maybe we have reached a pivot point.  We'll see what happens this weekend.

Passion

What do you get when you call most anyone in business and ask a question?  Usually a dry monotone answer.

That's what you get when you call most real estate agents and ask about a home you see advertised.  Dry, monotone, the house is 3500 sf with 4 bedrooms and 3 baths, a two car garage on a large lot with fruit trees and established landscaping.  All this for only $279,900.

As a seller, is that how you want your house described?  I think not.  I think you want a Realtor who likes what he or she does and is passionate about it!

And the poor buyer prospect who called for the information!  Some thoughts the prospect may have had:  What, does the Realtor think I can't read?  Most of that information was in the ad!  I told him I was looking at the ad.  I want to know something new, something that will help me decide if this is a home I am interested in actually going to see.

I think a Realtor should make your home search or the selling of your home, his or her passion!  Get passionate about advertising.  Get passionate about staging.  Get passionte about getting the price right.  Get passionate about searching the MLS and other listings every day.  Get passionate about the home search!  Get passionate about selling that home!

Don't just sit back and wait for things to happen.  Make getting results for your customers YOUR PASSION!!!

A man goes to the doctor

Sometimes a geek joke is not about geeks.  Some jokes are geek jokes just because they are funny to geeks.

I find this joke to be hilarious!

A man walks in the doctor's office with a carrot hanging out of his ear, green beans hanging out of the other and a banana hanging out of his mouth and say, "Doctor, I don't feel well."

The doctor takes one look at him and says, "I see your problem, you're not eating right!"

Insurance Binder

If you are buying a home in Florida, as soon as you are under contract you should purchase or bind your homeowners insurance policy.

If you don't and a hurricane or even a lesser tropical storm comes into the "box", you will not be able to purchase insurance until it passes.  In the meantime, your closing will be delayed until you can get insurance.  As we all know, sometimes these storms come one after the other and there is the potential that a closing could be delayed for many days or weeks.

I also recommend that sellers inquire with their agent or broker to make sure the buyers are aware of this detail.

 The following map and table shows the area that is designated as the box and the dates for recent years where there was a restriction/moratorium on writing and binding policies.

The "Box"

2006 Storm Restrictions
Storm Name	Start of Restriction Date and Time	End of Restriction Date and Time	48 hr. Reinspection Required?
Tropical Storm Ernesto	8/27/2006 5:00 PM EDT	8/31/2006 11:00 AM EDT	No
Tropical Storm Alberto	6/11/2006 5:00PM EDT	6/13/2006 8:00PM EDT	No
2005 Storm Restrictions
Storm Name	Start of Restriction Date and Time	End of Restriction Date and Time	48 hr. Reinspection Required?
Hurricane Wilma	10/22/2005 11:00 AM EDT	10/24/2005 5:00 PM EDT	No
Tropical Storm Tammy	10/5/2005 7:30 AM EDT	10/6/2005 5:00 AM EDT	No
Hurricane Rita	9/18/2005 11:00 AM EDT	9/21/2005 11:00 AM EDT	No
Tropical Storm Ophelia	9/6/2005 11:00 am	9/9/2005 11:00 am	No
Hurricane Katrina	8/23/2005 11:00 PM EDT	8/29/2005 5:00 PM EDT	No
Hurricane Dennis	7/7/2005 11:00 AM EDT	7/10/2005 11:00 PM EDT	No
Tropical Storm Cindy	7/5/2005 7:00 AM EDT	7/6/2005 11:00 AM EDT	No
Tropical Storm Arlene	6/9/2005 11:55 AM EDT	6/11/2005 8:00 PM EDT	No
2004 Storm Restrictions
Storm Name	Start of Restriction Date and Time	End of Restriction Date and Time	48 hr. Reinspection Required?
Hurricane Jeanne	9/24/2004 5:35 AM EDT	9/27/2004 2:00 PM EDT	No
Hurricane Ivan	9/12/2004 11:00 AM EDT	9/16/2004 5:00 PM EDT	No
Hurricane Frances	9/1/2004 11:00 PM EDT	9/6/2004 11:00 PM EDT	No
Tropical Storm Gaston	8/27/2004 5:00 PM EDT	8/29/2004 5:00 AM EDT	No
Hurricane Charley	8/11/2004 5:00 AM EDT	8/14/2004 5:00 AM EDT	No
Tropical Storm Bonnie	8/10/2004 11:00 PM EDT	8/12/2004 5:00 PM EDT	No
2003 Storm Restrictions
Storm Name	Start of Restriction Date and Time	End of Restriction Date and Time	48 hr. Reinspection Required?
Tropical Storm Henri	9/3/2003 5:00PM	9/6/2003 6:00AM	No
2002 Storm Restrictions
Storm Name	Start of Restriction Date and Time	End of Restriction Date and Time	48 hr. Reinspection Required?
Kyle	10/11/2002 5:00am EDT	10/12/2002 11:00 am EDT	No
Lili	9/29/2002 8:00 PM EDT	10/4/2002 5:00 AM EDT	No
Lili	9/29/2002 5:00 AM EDT	9/29/2002 8:00 AM EDT	No
Isidore	9/18/2002 5:00 PM EDT	9/26/2002 5:00pm EDT	Yes
Hanna	9/13/2002 5:00 AM EDT	9/14/2002 2:00 PM EDT	Yes
Gustav	9/8/2002 11:00 PM EDT	9/10/2002 11:00 AM EDT	No
Edouard	9/2/2002 2:00 AM EDT	9/4/2002 11:00 PM EDT	Yes
Cristobal	8/6/2002 7:30 PM EDT	8/8/2002 5:00 PM EDT	No
2001 Storm Restrictions
Storm Name	Start of Restriction Date and Time	End of Restriction Date and Time	48 hr. Reinspection Required?
Michelle	11/1/2001 8:15am EST	11/6/2001 8:15am EST	No
Iris	10/8/2001 8:15am EDT	10/9/2001 11:00am EDT	No
Gabrielle	9/13/2001 11:00am EDT	9/17/2001 8:15am EDT	No
Chantal	8/20/2001 8:15am EDT	8/22/2001 8:15am EDT	No
Barry	8/2/2001 3:00pm EDT	8/6/2001 11:00am EDT	No
Allison	6/5/2001 3:00pm EDT	6/6/2001 8:15am EDT	No
2000 Storm Restrictions
Storm Name	Start of Restriction Date and Time	End of Restriction Date and Time	48 hr. Reinspection Required?
Leslie	10/5/2000 11:00am EDT	10/6/2000 11:00am EDT	No
Keith	10/4/2000 11:00am EDT	10/5/2000 11:00am EDT	No
Keith	10/4/2000 2:00pm EDT	10/5/2000 8:15am EDT	No
Helene	9/21/2000 11:00am EDT	9/22/2000 2:00pm EDT	No

Current Market

We are still in a buyer's market, meaning there are more sellers than there are buyers.

If you are a buyer, there are plenty of good deals out there.

If you are a seller, there are buyers that are buying.  You just need to do something to make your house the one they want.  Unless your house has some outstanding and unique features, the only other item you can change is the price or some form of financing.  This market is tough for sellers and this appears to be the outlook for at least a few more months.  I hate to be the bearer of bad news, but if you want to sell your house, you have to be realistic.

You or your realtor can do all of the advertising in the world, but if there is another house just down the street with the same features and it is priced less, it will be hard to sell yours.  Just look at how many people flock to Wal-Mart everyday to save a few pennies.  They will definitely go down the street to save $10,000!

If you are a seller who wants to sell or a buyer who is ready and able to buy, deals are being made everyday.  Are you ready to make a deal?

Two Geeks

What makes your house special?

What are the top three things that make your house special?

I like to ask home owners this question before listing their home.

First of all, it will help me to maybe see things I did not originally see.  After all, if it is special to them, it might be special to others.  This would give me ideas for marketing.

Second, it might give me ideas as to why the current owners seem to have expectations about market value that are unrealistic.  They could be missing some feature that makes their house worth more than they think.  Or, they could be emphasizing items that do not have mass market appeal and in this case they would be pricing their home too high.  Or, worse case scenario, the items may actually detract from the marketability of the home and in this case their expectations are even higher than what the true market price should be.

Third, it helps me help them to find their next home.

Is this a good investment?

How can you tell if a real estate investment is a good investment?

Well, being a geek, I try to quantify everything.  There are a few calculations that can be used to compare two investments to see which is the better of the two.

You would start out by gathering as much information about the properties as possible.  Assume that the properties are going to be used as rental properties.  If either or both are currently being rented, you would want to see copies of their actual income statements for the last few years.  You would not only want to see what the rents have been, but what expenses have been.  You might also be able to see that the current owner may be "deferring" maintenance on items if you notice that little or no money has been spent in areas where experience has taught you that money should be spent.  Also watch for overstatements of rent and other income and understatements of expenses.

The next step would be to prepare a pro-forma income statement.  This is just a projected income statement.  It will include your best estimate of what the rent and other income from the property will be.  Sometimes the rents the current owner is charging are too low for the current market and you will be able to raise them when the leases of the current tenants expire.  Or maybe the occupancy rate is currently lower or higher than the rest of the market and you feel an adjustment is required.  Whatever the case, you will need to come up with realistic estimates of all income and expense items and develop your pro-forma income statement.

Once this is complete for each property, you can calculate several ratios to compare properties.

Debt Service Coverage Ratio = Net Operating Income (NOI) / Annual Debt Service

Operating Expense Ratio = Operating Expenses / Effective Gross Income

Price per square foot = Price / Number of square feet

Rent per square foot = Potential gross income / Number of square feet

Expenses per square foot = Operating expenses / Number of square feet

Net operating income (NOI) per square foot = Net operating income (NOI) / Number of square feet

Cash break even ratio = Operating expenses - reserves + annual debt service / Potential gross income

Margin of safety = 1 - Cash break even ratio

Return on investment (ROI) or Overall capitalization rate (OAR) = Net operating income / Value

Equity dividend rate or Rate of return on equity (ROE) or Cash on cash return = Before tax cash flow / Equity

Loan constant = Annual debt service / Original mortgage balance (If the loan constant is less than the OAR, the result is positive leverage)

Loan to value ratio = Mortgage amount / price (This is at the point of purchase, over time this ratio will change due to appreciation of the property and the declining balance of the mortgage)

The practical application of these ratios is important.  Assume you are comparaing two properties:

Property A requires a down payment of $25,700 and has a before tax cash flow of $3200.

Property B requires a down payment of $35,000 and has a before tax cash flow of $3850.

For property A, the equity dividend rate is .1245 (3200/25700)

For property B, the equity dividend rate is .11 (3850/35000)

So, as far as equity dividend rate is concerned, property A is the better investment.  You would go through this same process with each ratio and compare each property.

You can also use these ratios to calculate the value of a property or the maximum down payment you would be willing to make on a property.  For example, consider a property that has before tax cash flow of $7200 and as an investor, you have determined that your minimum equity dividend rate needs to be .11.  You calculate 7200 / .11 = 65454.  This means the maximum down payment you could make for a $7200 before tax cash flow is $65454.

If you have any questions or want more ways to apply these ratios, just ask!

If you can't count to 31 on one hand

If you can't count to 31 on one hand, you probably did not get my 10 types of people joke!

Transaction Broker vs Single Agent

The duties of a single agent are:

1. Dealing honestly and fairly;
2. Loyalty;
3. Confidentiality;
4. Obedience;
5. Full disclosure;
6. Accounting for all funds;
7. Skill, care, and diligence in the transaction;
8. Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing; and
9. Disclosing all known facts that materially affect the value of residential real property and are not readily observable.

The duties of a Transaction Broker are:

As a transaction broker, Keller Williams Realty and its Associates, provides to you a limited form of representation that includes the following duties:
1. Dealing honestly and fairly;
2. Accounting for all funds;
3. Using skill, care, and diligence in the transaction;
4. Disclosing all known facts that materially affect the value of residential real property and are not readily observable to the buyer;
5. Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing;
6. Limited confidentiality, unless waived in writing by a party. This limited confidentiality will prevent disclosure that the seller will accept a price less than the asking or listed price, that the buyer will pay a price greater than the price submitted in a written offer, of the motivation of any party for selling or buying property, that a seller or buyer will agree to financing terms other than those offered, or of any other information requested by a party to remain confidential; and
7. Any additional duties that are entered into by this or by separate written agreement.

Limited representation means that a buyer or seller is not responsible for the acts of the licensee. Additionally, parties are giving up their rights to the undivided loyalty of the licensee. This aspect of limited representation allows a licensee to facilitate a real estate transaction by assisting both the buyer and the seller, but a licensee will not work to represent one party to the detriment of the other party when acting as a transaction broker to both parties.

In Florida, most agents work as a Transaction Broker.  This allows them to work with both the buyer and seller in a transaction.  If you want loyalty, total confidentiality, obedience, and full disclosure, you will want a single agent.

One of the major downsides to working with a single agent is they are not allowed to sell you one of their listings.  This includes listings held by other agents in the same brokerage.  Or, if you are a seller and your agent is representing you as a single agent, neither he nor any other agent in the brokerage can work with a buyer of your property.  So, the only agents that can show your property will be those that work for another broker.  There is a provision in the law to transition from single agent to transaction broker.  This must happen BEFORE the property is shown.

If you have any questions about this, just ask!

3 Kinds of People

Sarbanes Oxley auditors believe there are 3 kinds of people.

Those that can count and those that cannot!

Why Your Realtor Lost Interest In You

Sometimes a prospective buyer will notice their Realtor seems to have lost interest in them.  I am going to outline a few reasons why this might happen below.

As a Realtor, I naturally like people and want to serve their needs in their quest to buy or sell real estate.  But as a provider and productive member of society, I also need to generate business to put food on the table.

The most logical way to do this is to spend my time wisely.  This means that as soon as I recognize certain signals, I should try to move to greener pastures.

A few signals:

(1) A buyer who seems overly concerned with signing a Transaction Broker Notice.  Wanting to understand it is one thing, but every time I have been asked if it obligates them to anything, I have later found out they were already working with another Realtor, even though they may have told me they were not.

(2) A buyer who is reluctant to pre-qualify for a mortgage or produce the proof of a mortgage they claim to have already qualified for.

(3) A buyer who is looking in several widely dispersed neighborhoods for a home.  This may be a red flag that they are indecisive.  If they insist on using different Realtors for other neighborhoods, even though you offer to show them homes in them, this may be a flag that they have a preferred Realtor.  A friend maybe, and they plan to have this other Realtor step in once they have narrowed their search.  See item (1) above.

Sometimes it is just a gut feeling.  It may be the way the husband looks at his wife when asked a question.  Or an overheard whisper about consulting with "Jim" about some item or feature or question.  If said aloud in front of me, I assume that this is probably dad or an uncle or some other trusted advisor.  But when it is whispered, I am concerned that "Jim" is a Realtor friend who will be the one actually writing the contract.  This has happened to me after a whole weekend of showing properties.

My defense mechanism is to try to do the best job I can upfront to qualify my buyers.  And the majority of the people I deal with are honest and upfront with their intentions.  But, if I see these or any other actions that trip my "suspicion-o-meter", I may become more aggressive in my pursuit of a committment.  If I can't get it, I will find another buyer to work with.  I am someone that will look you in the eye and shake your hand and make you a promise and you will know you have a promise.  I have no hidden agenda and my word is my bond.  I am the kind of person I want to do business with.  I am the kind of person I want my buyers (and sellers) to be.

What kind of person are you?

10 Kinds Of People

There are 10 kinds of people.

Those that know binary...

And those that don't!

Why Should You Want To Do Business With A Geek?

I am a geek!  I have been a geek all of my life.

When I was in school, I was always the kid with his hand up trying to get the teachers to call on me.  I had studied and I knew the answers.

In school, this didn't make me popular.

But, now at age 48, I have a lot of experience at studying and knowing the answers.

In 1981, I started a career in Information Technology (back then it was called Data Processing) as a computer programmer.  In 1984, I started my own consulting company,  which I successfully ran until 2004.

I have a lot of experience with helping many businesses, large and small, grow through the use of technology.

Selling Real Estate is a business.  Some agents don't approach it like it is a business.  They may have had a certain amount of success because they were able to get enough business from the friends and relatives in their first year or two.  Or maybe they work for a broker who is generating buyer and seller leads and giving them to these agents.

But, in the long run, what does it take to be successful?  You have to approach Real Estate as a business.  That means studying the market. Finding out what works and what does not.  Watching for trends that may cause problems down the road.

GEEKS ARE GREAT AT ALL OF THESE THINGS!

I love to measure results.  If I have been advertising in a particular magazine and not tracking how many calls, sales, website hits, etc... developed from that advertising, how do I know if it is money well spent?  But being the geek that I am, every inquiry I received is tracked and then on a monthly basis I can tell where I should reduce advertising, where I should increase it and maybe even where I should stop it all together.  For you, as a client, this means I will be able to sell your home as quickly as possible and for the most money, without having to raise my commission rates.

I love technology.  Websites, micro websites, Talking House, blogs, etc...  If I can justify the cost by showing that a technology produces results, I will use it.  At the same time, if a technology is not proving itself, then I am able to reject it quickly without wasting more money on it.  Again, this is because I am measuring results.

If you agree and would like a GEEK to help you sell or buy Real Estate, I am waiting for your call.  Please be prepared to identify how you found me so that I can track the effectiveness of this blog.

Commission

Many agents hate questions about their commissions.

Not me, I love them!  I suppose that if you felt like you were not worth what you are being paid, you would not relish justifying them to your clients.

Commissions are driven by two main factors.  Competition and cost of doing business.

To be successful, every agent has to realize that their business is not operating in a vacuum.  If they charge a commission that is significantly higher than the competition, getting business will be difficult.  If they charge a rate that is too low, they will lose money.  No matter how hard you try, if you are losing money on every deal, you can't make up for it with volume.

Every customer should ask the agent about the commission and what the agent is doing to earn it. 

On the listing side, there are many obvious expenses associated with listing and marketing a house.  Things like signs, advertisements, open houses, flyers, direct mail, etc...  If the list price of the home is competitive with the market and the commission rate is high enough that I can make a profit, I will take the listing and market the heck out of it.  Otherwise, I don't want the listing.

Buyers should question the commission too.  The agent is likely to reply that the seller is paying the commission.  This is false.  The transaction is paying the commission.  If it were not for the commission, it is likely that the seller would have accepted less for the property.  If I were the agent representing a buyer who came to me knowing exactly what they wanted and my effort expended was less than normal, I would be inclined to make a concession on the commission, as long as I could do it without violating any lending laws.  But, if I have been driving the buyers all over town for three months, I would feel justified in accepting the entire commission.  You never know if you don't ask!

At the end of the day, the buyer, the seller, the listing agent and the selling agent all have to get what they want and need or the deal is not a success.  Agents who realize this fact prosper while those who do not, do not.

Perfect time to buy a house

Everyday I receive several (maybe dozens) of email flyers from builders offering truly wonderful deals.

One recent example offered a 1827 SF 4/3 with 2 car garage for $217,990 with 8% being paid towards buyers closing costs.

Another offered a 1632 SF 3/2 wih 2 car garage for $197,990 with 8% paid towards buyers closing costs.

These are just the tip of the iceberg.  There are literally hundreds of homes for sale by builders with these kinds of deals.  Some are offering no payments until 2008.  Deals are being made and homes are being bought!

It is the perfect time to buy a new home.  If you are a buyer and you would like more information, just give me a call at (813) 494-2640.  It will cost you nothing, my commission is paid by the builder.

What buyers want

As a Realtor I hear what buyers say almost every day.  Sometimes what they say makes sense and sometimes not.

But, whether it makes sense to me or not, to the buyer, it definitely will influence their buying decision.

For example, you would not believe how many buyers will rule out a home because they don't like the color of a wall,  the style of curtains, a bedspread in the master bedroom, etc...

None of these items should cause a buyer to rule out a particular home, but many times, these are the kind of objectiions they raise when asked about a home.  As a Realtor and trusted advisor I have to tactfully point out that most of these items will not even be left with the house and the others can be easily changed.  Sometimes they volunteer these comments during the showing and other times, these objections only come out at a post showing discussion.

What does this mean to a home seller?

Well, first of all, paying attention to staging and cleanliness is of prime importance.  Obviously, you cannot stage a home so that everyone will like the colors or the drapes or floors or whatever.  But you can certainly try to make the home as appealing as possible to the largest audience possible.  This is where I can help.  My exposure to many homes on a daily basis has given me a kind of "eye" for what works and what doesn't.  I can give you many tips on things to do to make the house appeal to as many people as possible.  In fact, whether you are listing with me or not, you can email and ask for my "Geek Staging Tips" and I will send them right out to you.

The second thing this shows to potential sellers is the value of having an experienced agent showing their home to potential buyers.  If these buyers were looking at your home and they objected to your choice of drapes, do you think they would tell you this is the reason they are ruling out your home?  Probably not, that would be rude.  So they just make some excuse about needing to think about it and then they never call again.  You are never given the opportunity to point out that the drapes are not staying anyway, or maybe even offering a drapery allowance to them to sweeten the deal.  An experienced and creative agent would be able to hear the objections and come up with many different ways to handle them, depending on the situation.

I mentioned above that I have an "eye" for staging.  As an after thought, I want to add that sometimes a "nose" for staging is what is needed.  Offensive and/or unidentifiable odors will turn a buyer off as quickly as anything else.  The lesson here is to scrub and clean the home to a state I like to call white glove and toothbrush clean.  If possible, move pets somewhere else during the selling phase.  Definitely remove them for the showing.  Smoking, same thing.  Get rid of the odor and stop smoing in the house to keep from reintroducing the odor.  If you have pets and/or smoke in your home and you feel like there is no odor, find someone you trust who has no pets and does not smoke to come into your home and give you their opinions.  This could make the difference between another showing with no result and an offer leading to a contract and ultimately the sale!

Development

It's a little after 7:30 am and I have arrived about an hour early at the local IBM office for a class on SOA, JSF, Web Services, etc...  I was up at 4:15 this morning to get to the YMCA to workout, trying to get back into that routine.

But I digress.  I am sitting in front of IBM, using my Sprint EVDO modem to type this in from a spot that I used to spend a lot of time at.  When I was a kid, my grandprents used to bring me and my brother and sister to Rocky Point to go "crabbin".  Back then there were just a couple of restaurants out here.  Not very fancy places.  I remember the Mullet Inn.  They had the best smoked mullet and smoked shrimp.

My grandmother and my brother and sister and I would stick about 20 - 30 broomsticks into the ground along the shore.  Each one had a long string with a piece of chicken neck tied to the end attached to it.  We would watch for a broomstick that was moving and then very slowly pull the string in until the crab was above the net we would have extended and laying on the bottom.  Onc they were above it, we would scoop them up.  Meanwhile, my grandfather had a bunch of traps that he would drop over the side of one of the bridges, that he would be working.  We were not allowed on the bridge because of the traffic.

Looking around out here now, you would not believe how it has changed.  Everywhere you look, condos, office buildings and hotels.

WOW, times have changed.  Back then, this was all like  marshy area between the bay and the bayhead.  Kinda like a swamp between the water that stnks and the water kinda stinks.  It's amazing they were able to find enough dry land to build all of this on.

Anybody else remember what this area used to be like?

Latest Home Sales Statistics

Today, the National Association of Realtors and the local board of Realtors published the latest numbers for the area.

An example of what was published is shown below:

Zip Code:33558

Average Price:$423,700

Price Change:-5.49%

Total # Homes Sold (Quarter):43

% Change in # homes sold:-34.85%

Average Days on Market:67

% of Asking Price:96.2%

If you would like to know the statistics for your zip code, call or email me and I will look it up for you.

In the same report, they have declared that the market for Hillsborough County is a Buyer's Market.  No surprise there!

On a scale of 1 to 5, with 1 being a buyer's market and a 5 being a seller's market, they have placed the Hillsborough County market at a 1.  My interpretation is that this means we are in a full fledged buyer's market!  What do you think?

Today's statistics 3/12/2007

New Listings	31
Price Changes	58
Transferred-Status Changes	162
Back-on-Market	13
Expired Listings	73
Extended Listings	26
Pending Listings	32
Sold Listings	14
Withdrawn Listings	22
Rented Listings	5
Leased Listings	1
Temporary Off-Market	2

My comments will follow later today.