A friend of mine is a member of the Arizona Real Estate Educators' group - I plan on joining in the near future myself. Yes, my friends, I'll soon be passing my wisdom on to others ... makes you want to move to Delaware, doesn't it?

In any event, one member of the group sent over an article on Tuesday written by Joe Klock, a writer with 50-odd years experience in real estate. Think about what Phoenix was in 1956 and you'll appreciate the longevity. (He's based on the East Coast, but we won't hold this against him.) Mr. Klock put together his observations on the current real estate market as well as those observing the market. Some of it is directed at real estate professionals, especially those who are so busy waiting for the sky to fall on their heads that they've stopped working for their clients. But the bulk of the article applies equally well to those within and without the real-estate industry.

Hope you enjoy it!

CHICKEN LITTLE BECOMING CHICKEN BIG (A JPK Sermonette)

Is the sky of real estate brokerage really falling? You might come to think so if you read the mainstream media and listened to the doom-shouting pundits.

"The housing bubble has burst" wails an "economic advisor" on the front page of the Money Section of USA Today, echoing the gloomy view of many of his colleagues.

It is worth noting that, prior to becoming a modern Nostradamus, the background of that visionary was exclusively in the banking business and he presently structures investment portfolios, which are, one can safely assume, mostly resident on Wall Street.

Elsewhere in the same news item are these undeniable facts:

The median price of single-family detached homes in the USA fell 1.7% in August 2006, compared with the same month last year, the first such year-over-year drop in more than a decade - and the number of sales was down 12.6%.

Such a "bubble burst" in the stock market would have been brushed off as a mere "correction" or pause, but the economic gurus pounce on it like vultures when it occurs in real estate.

Equally factual is that the reported "plunge" in value and activity are from the unprecednted highs reached during our recent feeding frenzy, which might be characterized as an order-taker's market.

Sellers who are "losing" money these days are, for the most part, simply enjoying reduced profits. Not true, of course, of those who bought at the peak and now are forced to sell, but these unfortunates are relatively few.

Most grievously wounded are the recent "flippers" who counted on short-term profits during the heydays just pat. They bet and lost, which is a reality in the gambling game.

Predictably, many buyers who are able to act have chosen to be unready and/or unwilling, but they represent a small minority, leaving acres of diamonds in the prospecting mine.

Major casualties without our industry will occur among the aforementioned order-takers, who will swoon at the siren song of the Chicken Littles and sit on the sidelines until "things get better." Trust to tell, things WILL get better in real estate, as things always have, but in the meanwhile is an opportunity for those willing to seize it.

Sellers who want to sell - or have to sell - can do so by simply matching their prices to the best offers obtainable from the best buyers available in the "now" market. What they could have gotten last year is as irrelevant as a losing lottery ticket. Those unable or unwilling to meet that critical criterion are not really in the market and should save themselves (as well as their agents) a lot of discomfort by getting out.

Buyers who wish to and are able to buy should pay whatever they have to pay - no more AND no less - to get what they want. What they might gain by "bottom fishing" is likely to be offset by limited choices and/or missed opportunities.

Brokers and agents - as opposed to those order-takers and hand-wringers cited above, have an obligation to sell those facts of real estate life to the prospects who will otherwise be signing and "if only" dirge in the future (Why, I remember when I could have....!")

During my 50-pus years of involvement in real estate, there have been many periods when the sky was said to be falling in our world, but no sky - high or low - ever was or ever will be the limit for any but the chickens in real estate marketing.

The KlockWorks, Inc. PO Box 72, Holderness, NH 03245; website: www.joeklock.com

(c) Jonathan Dalton, 2006 / Jonathan Daltons Arizona Homes

Lest you think I'm alone in my opinions, Altos Research posted an article today about home affordability in California. Despite the significantly higher salaries when compared Arizona, specious arguments also are being made about the affordability of real estate versus the state's salary structures.

At the end of the day it comes down to this: either you believe in a real estate bubble or you don't. History tends to take the air of the bubble's balloon, as real estate prices rarely fall as precipitously as they rise. The beautiful part is we won't know who is right or wrong until later. Those who are sitting on the sidelines may be prudent. Or they may find they have missed their opportunity if the market starts to gain momentum again.

Is there a right answer? Absolutely. And we'll know it next year sometime.

(c) Jonathan Dalton, 2006 / Jonathan Daltons Arizona Homes

Marketing and pricing go together in real estate like love and marriage of song, though they haven't been the subject of a song in large part because neither marketing nor pricing rhymes with carriage.

All the marketing in the world will not help sell a listing under market conditions such as those here in Phoenix, where there are 34,000 single-family homes currently for sale, if the home is overpriced. Price the home correctly, however, and a little marketing will go a long way.

Such was the case for my current listing in Desert Harbor in Peoria -- the home was put on the market Friday at a competitive price for the subdivision and the area. Five days later, we received an offer on the home. My expectation is we'll have a contract by day's end.

The marketing had just begun ... the Just Listed mailers still were a day away from being sent. But a little bit of marketing goes a lot farther when the house is priced on the leading edge of the market.

Of course, such pricing strategy isn't for everyone - if someone has a longer timeframe to move, or is comfortable with the idea of strangers walking (or not walking, if priced too high) through their home for a few months, then by all means join the homes in the middle of the pack.

But for those serious about selling, the leading edge of the trend is the place to be. As they say in the stock market, the trend is your friend. Fighting against the trend and holding out for 2005 prices in 2006 simply won't work.

The key is to read the signs ... if there's plenty of traffic coming through a house, the price likely is correct. If there's no traffic, then pricing is the most likely cause. This is one of the main reasons I don't compete with price on a listing presentation - price isn't up to me to determine. The market will decide what a home may be worth.

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

Samuel Clemens once said there are lies, damn lies and statistics. (Actually, multiple sources are credited with this gem, but that's another story for another time.) And statistics often are the basis of many real-estate professional's listing presentations - days on market, average sales price compared to list price, and percentage of expired listings.

Pardon me while I step to the front of the room ...

"My name is Jonathan Dalton, I'm a real-estate professional, and I have had expired listings."

In truth, I'm neither ashamed nor proud of that fact. My job is to sell homes and these are cases where the homes I was contracted to sell did not sell. As with any endeavor, there were things that could have been differently though I'm not sure the result would have been any different.

In and of themselves, though, expired listings tell very little about the sales skills of the agent who was hired to market the home. True, it's possible the house didn't sell because the agent stuck a sign in the yard and walked away; marketing plays a definite role in home sales.

But at the end of the day, I always look to the three mainstays that have the most impact on whether a home will sell and for how much: condition, location and price.

So I look back at the home in Peoria's Alta Vista Estates. I suggested one price. The owners selected a price $34,000 higher. That was January. Now, with agent number two, they're at my suggested price. And the home is still on the market two months after my listing expired. Would it have sold at the price I had suggested way back when? I think so, but who knows.

There's another home in El Mirage. Here, I suggested the market average and in retrospect I ought to have suggested pricing below the last sale. When that idea was mentioned, though, the seller fell back on the advice of a friend who told her to save the price drops for the negotiations after an offer's been made. This home has yet to return to the market.

In Surprise, I listed a home where the owners started at a price about $10K - $15K what I first had suggested. It's still available, now on its second agent, at a price where we'd received a then-lowball offer months ago. Should I have been more forceful in suggesting price reductions? Probably.

Price reductions are easier said than done, however. One owner accused me of wanting "to put a notch in your belt" by selling the home for less than it was worth. This home, now no longer listed by me, is priced about $18,000 over two similar homes and there are three others less expensive. Markets determine what a home is worth, not real-estate agents. The market was telling these owners something. They choose to believe something else.

Could it be something other than price? Possibly, but I'm not sure what that would be. Unless the second agent in is no more capable to sell than I was. And the third agent, the fourth, etc.

Location, condition and price ... if locations didn't change and the condition is the same ... what else can it be? 

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

Bob had never thought about taking a home equity line of credit (or HELOC) ... until the market increased more than 30% a year ago and the possibilities were too numerous to ignore.  Bob applied for a line of credit and quickly spent almost $50,000 as he paid off higher-interest rate credit cards and took care of some long-delayed home improvements.

Fast forward to this year and Bob wants to sell his home. For him to be able to put enough down on his new home, though, he needs at least $25,000 in profit after closing costs and commissions have been paid. But with the market plateauing shortly after he wrote the last check off the equity line, there isn't $25,000 in equity to be had.

What happened? The name of the loan - home equity line of credit - says it all. And while Bob's a figment of my imagination, this is a story repeating itself over and over again in the Valley. Sellers who took a HELOC last year are forgetting that they already pulled the equity out of their homes and are looking to receive that equity a second time. That's leading to inflated pricing and unhappy homeowners whose plans are being altered by a marketplace where market prices (or lower) dominate.

In short, before putting your home on the market take a second look at the financing involved - this includes the HELOCs. Understanding the true nature of a HELOC - an advance on the equity you've already built in your home, should help set the proper expectations when the time comes to price your home to sell.

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