And so we discover once again that superior marketing still won't pique public interest in topics the majority simply doesn't care about.

It appears this boy and his dog were not so foolish after all. I'm sure that apology will be coming any minute now ....

Any minute now ...

Any minute now ...

Oh well. 

(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes

There are some mornings when you wake up and just can't believe how good life really is. These mornings usually don't follow 15-hour days spent photographing multiple listings, negotiating buyers' inspection reports and driving children to soccer practice ... but today, it did.

This morning on Voldemort's blog, Russell Shaw discussed "How Much Should an Agent Charge?" An excerpt:

How much commission should an agent charge?  Well, I suppose it depends on the agent.  I charge more than Nu-Way.  I charge more than most agents charge.  Why?  Because I am worth more and I want to.   When the market was so on fire that most of the public thought of us as a commodity - and most Realtors couldn’t wait to agree with them, we had potential home sellers call our office every day and tell us they could get someone to list it for less.  We already knew that and it made no difference what commission percentage they told me they could get an agent to list their home for – I would tell them, “you can get it for even less than that”.

But there were still loads of home sellers who understood that what we did wasn’t the “same as everyone else”.  In that market we factually sold homes for more money.  In this one we actually get them sold.  Anyone who wants to hire one of the limited service companies (who want to insist on marketing themselves as FULL service at a lower price) gets exactly what they deserve.  Those companies track records for selling their inventory really isn’t the same as mine.  It isn’t even as good as the market average.  Those companies do have a wonderful track record with regard to marketing themselves to the public but not for marketing their listings TO the public.

So what he is saying is if you provide superior service, you have justification for demanding a higher fee for doing so. I'm sure I've read something along those lines before ... where was it? Oh, yes. Now I remember.

The irony is the above excerpt was posted the blog of the same person who called me a fool ... no ... twice a fool for making the very same argument. It's an amazing world, folks.

(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes

A few days ago, the gentlemen at sellsius reminded us all that there is no spoon. As this was the last post I've seen out of them, they since may have fallen victim to Agent Smith (follow the white rabbit, Neo) but that's neither here not there. Most interesting about this post was the complete lack of context. All we know is Keanu Reeves is being told the key is understanding there is no spoon.

As I looked at the picture, I realized the concept applies to many of the hot topics in the real estate blogosphere today.

Take, for example, the quest for finding the true valuation of a property. Zillow has its zestimates and eppraisal.com has its range of values. Zillow trumpeted the accuracy of its estimates, at least until they were called on some of the more glaring inaccuracies, while the folks at Realty Thoughts are clear from the get-go that their range is only an estimate and not a replacement for the work of an appraiser or real estate agent.

Having said that, even a full-fledged appraisal is nothing more than an opinion (albeit a reasoned opinion) about the value of a property. It is based on recent sales in a given area and adjusted according to the merits (and challenges) of the subject property. Appraisers bend the numbers like Neo and the children bending the spoon, but the truth of the matter is ... say it with me ... there is no spoon. Three appraisers can look at the same property and assign three different values but which is the true value? All of them? None of them? Is an answer possible?

Now let's say we find three appraisers to all agree on a certain value. Does that mean this is the price the seller can expect to receive should they decide to sell? Absolutely not. Market factors, completely different than the factors used for appraisals, enter into this equation - where currently listed homes are prices, at what prices listings have expired, the amount of traffic through a house at a given price. Oh, and also the size of the house.

The size of the house, you ask? Absolutely. As a home's square footage grows, it's market value on a price per square foot basis falls. There are a number of reasons for this but human nature and market mechanics are the dominant two; demand is stronger for the smaller homes than the larger ones, creating a larger pool of buyers and more competitive prices while human nature is such that buyers get antsy if the list price creeps toward magic numbers (such as a half million, etc.)

Is there one set market value for a home? Well, eventually there will be - only after buyer and seller have agreed on a price. But for the agents trying to calculate what that price may be, we fall back to dealing with one person's opinion. Three different agents easily can lead to three different perceived market values.

(Circling back, once an offer has accepted and the buyer and seller set their market value, it's then up to the appraiser to determine if that figure is reasonable enough for a lender to finance the loan. Most often, the appraisal agrees with buyer and seller which then leads to the appraised value being adjusted to meet the market value even though appraisal and market value most likely were two different figures when the transaction started.)

Sound confusing? Convoluted? Just plain insane? You either can follow Jimmy Buffett's recent advice - Breathe In, Breathe Out, Move on - or accept the reality that ... yes ... there is no spoon.

The spoon test also can be applied to compensation for buyers' agents. Some will argue the buyers are paying for their representation because they bring all the money to the table and the compensation is priced into the home. Some will argue that the seller is paying the buyers' agent because the commission paid represents profit that has been surrendered in the name of making a deal. Without delving too deeply into the issue (for that, you can go here or here or even here),  I'm absolutely confident in saying there is no spoon.

There is a physical manifestation - the check the agent ultimately receives - but for the buyers and sellers plugged into the Matrix of Real Estate (not to be confused with the Matrix blog) the commission does not physically exist. Neither will see it. The buyers almost certainly will pay the same price regardless of the commission. The sellers already wrote off the additional money when they signed the listing agreement. We argue over possession of the spoon but there is no spoon.

Next topic: "Do you believe that is air you are breathing?"

(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes

As a journalism major you would think I would know the inventor of the "three-dot" column off the top of my head - Jimmy Breslin, perhaps? I'll have to look it up shortly. But I'd rather not let that detail get in the way of a few random thoughts in three-dot bandit style ...

Read yet another article this week encouraging buyers to negotiate the commissions their agents receive before beginning their working relationship. Two interesting sidelights - one, the agent writing this article suggested offering a $1,000 non-refundable retainer to the buyers' agent at the outset.  "Mr. and Mrs. Buyer, ready to buy? Great, make the check out to me and we'll get started." - a great setup for the agent, maybe not so great for the client. Two, the article said if your agent isn't willing to accept the flat rate suggested, move on to the next because there are many, many underemployed agents in the Valley right now. Absolutely correct ... and for the cost of helping a new agent learn from their mistakes on one of the biggest purchases you'll ever make, you too can sponsor a starving agent.

There are two reasons why agents are underemployed in the Phoenix market - they either are brand new and haven't built the business, or they haven't built the business over time and they deserve their underemployed status. Would I have made this argument when I got my license two-plus years ago? Of course not. But that also was $8MM in sales and three-dozen transactions ago.

Want to support an underemployed agent, many of whom double as friends and family? Take them to Oregano's for a slice and a pop ...

Spent most of yesterday preparing the initial mailing to Westbrook Village, with preparing defined as printing and sorting letters and stuffing envelopes. Today will be spent putting together the bulk of the content for the website. One of the group members, Gail McCarroll, had a great idea (later named by John Vescova in my office) of "Life After Westbrook." I think it's going to turn out pretty well ...

Speaking of the website, here's the world debut of the banner:

If all goes well, the website will be up and running by Halloween ...

There are no numbers to support this contention, but I'm seeing signs of the market picking up. Internet leads are on the rise, Tobey's ears are getting perky, and this week I received two offers on a property that had been on the market unloved since June. And another two calls came on the property after it came off the market. It's anecdotal, but I'll take it ...

Off to Ahwatukee tomorrow where I hope to see the Arizona Fury Boys 97 United's first-ever victory ... think good thoughts.

 

(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes

During my first year of college I enrolled in a class on logic, as I needed an "honors" course as it were as a term of the conditions of my scholarship. In short, the course was a linguistic equivalent to the joyous geometry classes I despised in high school - my thinking being, if Pythagoras says his theorem is correct, why do I need to prove it? I'll take his word.

One item that always stayed with me was the ad hominem argument, the last refuge of those with no other means of defending their point. It's also dear to my heart as my children are experts: "I know you are but what am I?"

I've learned to avoid most bubble blogs, and even a large portion of the bubble debate, because of the prevalence of the ad hominem argument. There's little interest in actual discourse. Rather, this crowd is interested solely in capitulation - confess your sins upon the altar of the Bubble Gods or else! Any attempt to discuss the issue in any rationale manner only proves your status as a heretic.

It was interesting to see the same logic has entered into the buyers' compensation debate. Either agree that flat-rate or fee-for-service compensation or face the withering bluster of an ad hominem attack.

Sadly, capitulation really isn't in our nature. Not this boy's. And certainly not in Tobey's.

(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes