Videos and Reverse Sprawl

I'm tied up in class today but found a couple of interesting things to share with you.

This is the first in a series of stories by the Albany Times Union newspaper exploring the changes occurring in how people live both because of rising energy prices and the increasing numbers of senior baby boomers. While the towns and cities they refer to may be in NY, this is a story that's being repeated around the country.

Saturday's Washington Post's real estate section contained an interesting story about consumers finding real estate agents online through social media sites and things like blogs. How well do you feel you can get to know an agent (or anyone else) through a blog?

And, lastly, I've begun experimenting with the use of true video (as opposed to "virtual tours") on my listings. I've just posted the first one on YouTube and would welcome your feedback, not just on what you think of this video, but whether you see this as significantly better for buyers than a typical slide show.

Apologies

The last two years have been miserable ones in this industry. And, the human toll has been awful. When faced with the overwhelming pain, fear, anger and misery it is human nature to want to pull away.

I was reminded today of how this is impacting both real estate agents and the clients we serve. The story was about a soldier coming back from deployment over seas, living in a hotel room with his family, trying desperately to get a happy ending for all of them. They were buying a foreclosure and, as usual, the process seemed never ending.

People under stress can react with anger and rudeness. Clients under stress often take that stress out on agents. The agents, out of self-preservation often pull back, even hide. Over time, given enough stress, even good agents can find themselves trying to avoid client contact. Who needs more stress, especially when you have so little power sometimes to make things better?

But being there for our clients, really listening, telling them the truth, good or bad and sometimes just telling them we have nothing to tell them is what needs doing right now.

So, for all the clients for whom I haven't been a good enough listener, for those whose pain I avoided in order to spare myself, I apologize. I'm going to take better care of me so I can take better care of you!

Bob and Carol and Ted and Alice

There's a new trend among local real estate agents. It's the sign that says simply:  

JULIE

There is, of course, a company name and phone number on this sign. But only a first name. Clearly, the agents using these signs are either convinced they're so famous that they're a household name or they're hoping to be.

If Cher ever decides to go into real estate, she can get by with putting just "Cher" on the sign. Same with Prince.

For the rest of you...

There are about 770 real estate agents in the local REALTOR association. I'm not the only Julie. You're probably not the only Bob or Carol or Ted or Alice. Get over yourself and put your whole name on the sign!

And, by the way, have you filed that "Doing Business As" form with DPOR allowing you to use just your first name in advertising?

Who's Protecting Who?

I had an interesting incident with another agent recently. I wrote about that in another post. When I wrote it I promised to reflect in a later post on some of the larger industry issues involved.

In many professions there's a tension between the desire to protect the public and the desire to protect the members of that profession. And so, while the Hippocratic oath has doctors promising to "First do no harm" there is also a very strong taboo against criticism of other doctors.

It's really no different in real estate. (Although the stakes are a lot lower!) Part of our code of ethics says that we'll speak no ill of another agent. And, most agents are careful to adhere to that. I have no problem with not indulging in idle gossip about my peers. And, it's certainly much too easy in a very competitive industry to decide it's your job to cast aspersions at those you deem less "professional" than yourself.

But you can carry this too far. It's a thin line you walk and I think we've leaned too far towards protecting our colleagues at the expense of protecting the public. When another agent thinks I have a greater responsibility to protect her and her business than to be honest with the consumer, I think it's a problem.

The thinking in the industry is that my responsibility is to clients who have hired me. The agency relationship with them obligates me to put their interests first. However, even to a customer (otherwise known as the general public) I still owe the duty of honesty.

You can ask whether "honesty" is defined by answering direct questions with honest information or whether it obligates volunteering information for which we weren't directly asked. I'm going to suggest that splitting such hairs is the kind of behavior that makes real estate agents rank very poorly in polls that gauge trust by profession.

As I said, the line is thin. But I think it's time to start leaning the other way!

Passion

I hope this is who I am and what I bring to every real estate transaction.

Tom Peters on Passion! from Tom Peters on Vimeo.

(But I bring the experience with it!)

A rare Saturday post as birthdays put me in a reflective mood! (And, clearly a self-indulgent one!)

Referral Fees

My colleague in Charlottesville, Jim Duncan, has a great post about how referral fees work.

One of my problems with referral fees is that they're almost never disclosed to the buyers and sellers. The person who refers you to another agent doesn't want you to know that they got a referral fee (kickback?) from doing that. The person who gets the referral fee often feels disgruntled about paying it. Service can definitely suffer as a result.

It paints with too braod a brush to say that the best agents won't work with referrals, especially corporate relocations. But there are reasons that some of them run from this business. You do more work for less money. That's hardly ever a successful business strategy! Relo companies want paperwork and lots of it. If you are a listing agent for a home where the owners are being relocated, you may be responsible for winterizing the house or for lawn maintenance during the summer.

That being said, personally, I love corporate relocation buyers! It's fun to help families learn about their new community! I get to be the "first friend" for a lot of newcomers to our area. I'm honored by that! And, generally speaking, it's a pretty good bet that these buyers will actually buy and will make a quick decision. That's always good for business! (The exception is the couple of families I've worked with who came, saw, got sticker shock and turned down the job offer!)

So, referrals are a mixed bag. Full disclosure is part of making sure referral fees don't get in the way of good customer service. In my opinion, referral fees are one more symptom that the current economic model for real estate is broken. But that's a rant (er, I mean, post) for another time!

Have a great weekend!

Disclaimers and Blogs

I had a chance to catch up on some reading this last week and was reading the March issue of REALTOR magazine published by NAR (National Association of REALTORS).

There was an article on blogging called "Is Your Blog Legal?" Before I bash one piece, let me say there was some good stuff. It was written by an attorney and their inclination is to be cautious and I get that.

But this advice rubbed me the wrong way: "Include a disclaimer that you assume no responsibility for the accuracy of any information."

It's a lawsuit happy world out there and I understand why someone might want to include such a disclaimer. But the truth is, I am responsible for what's on MY blog. Who else, exactly, would you hold responsible for the words I write?

I am a fallible human being and I surely make mistakes. One of the beauties of blogging is that readers will jump in and tell me when that happens!

But the buck does stop here. I hope you'll all continue to point out when I get it wrong. That pushes me to continue to work better at what I do!

The Dilemma

I got a call from a lender yesterday on a deal we're working on together. She's got some potentially bad news for my clients and wanted to let me know the scoop. It's the kind of heads up I very much appreciate!

But she also proceeded to tell me that she wasn't going to call my clients with this information for a couple of days. She wanted to research all the options and have every potential question answered before she called them.

I understand that instinct. It's hard to call someone and know they'll have questions and know you won't instantly be able to answer all of them.

But, I have a basic belief that I shouldn't know something about your transaction that you don't. This is NOT part of the canon of ethics for the National Association of REALTORs. There are plenty of other agents who think this goes a step too far and that in some cases we should be protecting our clients from things they don't really need to know.

But, I don't necessarily appreciate it when other people decide what I should and shouldn't know. I can't believe most of my clients would appreciate that.

In this instance, it's not permanently hiding information from anyone. It's just a couple of days delay in relaying the information. We're not talking about someone doing something immoral or unethical.

Still, it's the kind of thing I struggle with.

So, what do you think? If you're a consumer, do you want to know everything I know as soon as I know it? Would you rather I only told you things when I think you must be informed and that I spare you some of the scary details? If you're an agent or broker,  how do you deal with this question?

Attending a Real Estate Auction

Last night I attended the Tranzon auction in Fairfax. Since most of you will probably never attend one, but many of you are probably interested, I thought I'd give you a report.

There were originally 19 auction lots to be sold. (Auction lots as opposed to parcels of land.) Ten of those 19 lots were from our area. They also had a half dozen DC properties and some land parcels in Clifton and Chantilly. I believe the proportion of local properties is representative of how much tougher the real estate market is as you move further away from DC.

Four of those 19 properties were pre-sold prior to the auction. In addition, one of the lots was three Culpeper townhouses. Two of those were pre-sold as well.

It was interesting that not one of the parcels of land met the reserve price. There were bids. But the seller had set a minimum price at which they'd accept an offer and none of the bids on any land parcel met that reserve. Land prices are always less elastic than residential homes and this confirmed that. And, since many of the bidders on land were builders, it's pretty clear that they're being very cautious right now. (If they weren't they'd be bankrupt, not bidding at auctions!)

I was at the auction with a buyer client so I had that hat on. So, I'll give my impressions from the buyer side first.

While the auction prices on some of these properties were attractive, there were no "steals" here. The ultimate sale prices overall were not far off current market prices. That tells me the people in that room had done their homework and weren't going to overbid. It also tells me that the heat of a bidding competition got some of them to bid a bit more than they really wanted to.

It was a cautious crowd overall. (And a large crowd.) For example, on the first property of the evening, a large colonial in Manassas on a 1.18 acre lot, the auctioneer tried to start the bidding at $700,000. He ultimately had to go down to $400K to get the first bid. The final sale price was $530K.

I was also struck by some of the comments by Tranzon, both the auctioneer and the gentleman providing the descriptions of each property. Comments like "You know this is going to be worth $350K in a year or two" and "The value on this can only go up" were shocking to this REALTOR who has been trained to never misrepresent value. And, the interesting thing is that I think those kind of statements were actually counterproductive. You could hear some of the scoffing after these comments as the potential buyers seemed to be reminded of the current state of the local real estate market and the folly of such predictions.

From a seller's perspective, this is not an unattractive way to sell a home. None of the residential properties failed to meet the reserve price. They all certainly sold faster than they would have under normal circumstances. And, I don't believe there was a significant decrease in the net in the seller's pocket. Remember that all of these properties are sold as-is with no inspections, appraisals, etc. And, settlement must take place within 30 days. I wouldn't hesitate to help a seller use an auction to sell their property. In this market, it's probably a method more sellers and their agents should seriously consider.

It was a very educational evening. If you're interested in more information on either buying or selling at an auction, let me know and I'd be happy to help!

What REALTOR Associations Do For You

REALTORS belong to local, state and national associations of REALTORS. While these groups serve the interests of real estate agents and the industry, they also do an awful lot of good things for homeowners. I don't think most homeowners are even aware these associations exist, much less what benefits they might provide them.

First of all, these associations provide training for real estate agents. This is a critical piece of their mission and it's important to buyers and sellers of real estate. The better educated your agent, the more likely you are to have a smooth transaction. Education doesn't eliminate the problems that can arise in any real estate purchase or sale. But it does help provide the expertise to the agent on how to deal with issues.

The associations also educate lawmakers. Whether it's providing input on how extending the size of the historical district might affect home values, or explaining the impact that new transaction fees will have on the Virginia real estate market or laying out for those in national government what might work to help stem the tide of foreclosures, these associations provide a very useful service.

They also educate homeowners. Whether it's through the information on the VAR (Virginia Association of REALTORS) or NAR (National Association of REALTORS) web sites or through newspaper articles and editorials, they help get the word out about changing real estate laws, how to buy or sell a home and a host of more specific topics.

There are a lot of good things happening behind the scenes with these groups. Don't ignore the help they can provide!

Stealing Copper

There are reports surfacing up and down the east coast of copper thefts in empty houses. Generally these are the homes that are foreclosures or short sales, or sometimes even relocations, where the owners are long gone and the home has sat vacant for an extended period of time.

The price of copper is sky high and so opportunistic thieves are going in and taking copper pipes out of the walls, copper parts from HVAC systems and any other copper or possible copper in the house. The thieves are worried about being fast, not neat, and beyond the cost of replacing what they've stolen is the cost of repairing the other damage they've done.

If you own a home that's vacant, it would be a good idea to make arrangements with a neighbor or your real estate agent to keep an eye on the place. Lights on timers isn't a bad idea.

If you're buying a home that's been vacant for awhile, don't underestimate the importance of that final walk through. Make sure you look at everything closely and test all systems to make sure they're still in working order. If you're buying a home that's sold in "as is" condition, meaning you're stuck if the home is vandalized, think carefully about what you might need to do to protect yourself. This is a good time to have a discussion with your real estate agent. If you don't fully understand the contract provisions relating to the condition of the home, now's the time to get a fuller understanding of that information.

2008 is likely to continue to provide lots of empty homes for thieves to target. Real estate agents are going to have to start thinking about how to protect their clients, both buyers and sellers, and the properties involved in the transaction.

Strange Juxtaposition

I had the good fortune this week to attend a leadership conference sponsored by the Virginia Association of REALTORs. I think VAR is a top notch organization and I'm proud to be a member. The conference itself contained some really excellent content.

I was especially pleased with the presentation by a college psychology professor from California. His field of expertise is influence, a field of study I didn't even realize had it's own experts! His presentation talked about how influence is an outgrowth of credibility. Credibility he defined as being expertise plus trustworthiness. Typically establishing credibility is a very lengthy process. But given the nature of what we do, it's not always possible to wait a few years while you establish credibility with a client. And, so we were treated to a presentation on how to speed up that process. His ideas were good and although the topic sounded like we could possibly talking about manipulation, the bottom line in everything was honesty and integrity. I liked that. Clearly no one ever established credibility by trying to short circuit those essential ingredients.

An important part of the process he discussed was being willing to share hard truths that are not necessarily in your self-interest. So, let's say I tell you, as a seller, that you shouldn't sell your house right now. Theoretically, that's going against my self-interest since I'm unlikely to make any money in the short term if you choose not to sell. But you are more likely to perceive me as credible when I do this because you know I've spoken against my self-interest in order to give you the truth.

This presentation was immediately followed by a public affairs spokesman from the National Association of REALTORs. I'd like to feel as good about NAR as I do VAR. Really I would! But they definitely make that difficult!

The gentleman from NAR gets up and starts the same old song and dance about how the media isn't fair and doesn't love us. He talked about how they only publish bad news. He used as an example the latest sales numbers that were released to the press in a nice package that even gave them the positive headlines they could use to lead the story.

Talk about no credibility! If journalists had used NAR's proposed headlines for the last two years they'd be out of a job by now! NAR has continued to tell everyone how we've hit the bottom every single quarter! Of course, they've been completely wrong, but it hasn't stopped them from continuing to lose credibility with the public, journalists and economists as they keep trumpeting their positive spin.

Tell the truth, the whole truth, the ugly truth, the painful truth. You can not spin your way into an up market! And, in fact, you hurt every real estate agent's credibility when we sit down in front of a seller and have to tell them how rough the market is after you've been telling them the reverse!

It was a very odd way to follow a piece on gaining credibility through truth telling! I don't know exactly who put the agenda together. And, they may not have known exactly what the full content was for either presentation. But it's surely an odd juxtaposition of messages!

Listings Needed

It's a strange problem to have in this market, but I find myself in need of more listings! I've got very little inventory left after a very active 30 days. I've either sold or rented (where that made more sense for my clients) most of my listings. On a few of them I provided my clients with the information they needed to decide that it was not in their best interest to sell in this market.

One way or another, I'm in need of more listings. And, so I'm making a rare personal appeal here! If you know people who really, really need to sell and either haven't yet listed their homes or have tried and failed to sell their homes, I'd love to help them!

You might want to tell them to take a look at my blog so they have a better idea of who I am, how I work and what I can do for them.

And, thanks for putting up with this brief interruption in useful real estate information! Back to our regularly scheduled programming tomorrow!

Changes

Technology is a constantly changing thing. And it certainly continues to impact how real estate is bought and sold.

Because technology is so important to how I run my business, I'm continually evaluating what's effective and what isn't and how I can best provide information to the public.

Given that, I've made the decision to discontinue my traditional web site and focus purely on this blog. I'm getting better feedback on the usefulness of the information here than on my original web site. And it's become impossible from a time perspective to keep that continually updated and to post high quality blogs on a regular basis.

So, watch for changes here! I'll be adding some categories and moving a lot of the information from my web site here. I'll be adding a category for listings and displaying that information here. If there are some hiccups in switching everything over, I apologize for those now!

Meanwhile, I'm hopeful that these changes will allow me to continually improve what I can offer you here. As always your suggestions are warmly welcomed and eagerly solicited!

County Tax Rates

Real Estate Terms

Real Estate Terms Glossary

• Sole ownership- only one person owns the property
• Tenants in common- two or more persons have an undivided ownership in the property. The percentage of ownership need not be equal; each party has a right to sell his interest, and upon the death of any of the owners that owner´s interest in the property goes to the deceased´s heirs.
• Joint tenants- ownership taken by two or more persons at the same time in equal percentages with an undivided right to possession. If one owner dies, his or her interest automatically goes to the remaining owner(s).
• Tenants by the entireties- owners are husband and wife and together they hold title to the property with a right of survivorship. Upon the death of either; the survivor takes sole ownership to the exclusion of the deceased spouse´s heirs.
• Unreleased trust- a mortgage or lien recorded in the Court records that appears to be outstanding (where no Certificate of Satisfaction/release has been recorded).

Just Say No!

I've spent more time than usual with other agents this week. And one subject jumped out at me again. It started with a comment from an agent who said she'd advertised in Homes & Land magazine faithfully for 7 years and has just gotten her first call as a result. I almost shouldn't have to comment on that it's so obvious. But I just can't resist.

Why, in heaven's name, if you're running a business, would you continue to do something for seven years that cost you enormous amounts of money and produced absolutely no result?!

I swear I'm going to start a 12 step program for agents recovering from an addiction to print advertising!

The answer I hear most often when I ask why someone does this is that it's what their clients want. That's an absurd answer! Our clients are hiring us for our expertise. It is up to us to know what works and what doesn't and to educate them. Why would any sensible seller want you to spend your marketing dollars on something that doesn't work, rather than something that does?

And, marketing dollars are not unlimited. If we choose to run an ad in a publication such as Homes & Land, we are making the choice not to do something else. And that something else almost certainly has a better chance of success than something that hasn't produced results for seven years!

Our local real estate board is working to get us a discount on a print advertising publication produced by the board in Charlottesville. I'm on the board and I made no objection because there's no cost to us. And it's an added service that clearly some agents will want. It's the right thing for the board to do for its members. But I have to wonder why we need another place to spend money on print advertising! It sure sounds like a gambling addiction to me! The next race (print ad) will be the one that makes me rich!

Please, just say no!

Why Are Real Estate Agents so Upbeat?

Industry associations such as the National Association of REALTORS (NAR) or the National Association of Home Builders (NAHB) frequently put out public statements that appear to be nothing more than self-serving statements full of positive spin about what a great time this is to buy a house. And, let's be honest, that's exactly what a lot of them are. They have every reason to try and persuade people, especially now, that it's a great time to buy.

And, many real estate agents have been heard making similarly upbeat statements. I know that many of you think it's the same sort of self-serving claptrap!

Anybody who has been reading this blog for any length of time knows that I'm certainly no industry apologist. But I do believe that my fellow agents and I are often falsely maligned by such accusations.

Yes, there are agents who would say anything to get someone to buy a home. But I still maintain that they're in a minority.

Real estate agents, like other self-employed individuals, are by nature, optimists. Trust me, no one would go into this type of career, and take the kind of financial risks we take unless they were optimistic by nature. Real estate agents are, by nature, people who will automatically see the glass as half full. I personally, veer towards a three-quarters full view on a regular basis. Extreme optimism helps a lot in markets like this! It keeps people in this business who, if they had any sense at all, would go get a job that pays better, has actual benefits and more regular hours!

And, any savvy business person learns early on it never does your business any good to say things are anything but "great". Announcing to the world that your business is suffering is unlikely to attract more business! And, besides, any decent optimist knows things are turning around tomorrow!

So, give that absurdly optimistic real estate agent a little slack. If you're a seller, isn't it a little reassuring to hear a little optimism when there's so much gloom about the market everywhere you turn?

I've got to go take my happy pills now!

Real Estate is Local

The blog posts have been few and far between this week because I'm on vacation in Manhattan. But real estate does cross my mind, even on vacation! And I thought this might be a good time to reinforce an old real estate adage. You may have heard "all real estate is local." And it's certainly true. That's spectacularly true comparing NYC and Virginia.

Believe it or not, New York City still doesn't use a Multiple Listing Service! You think you have trouble selling your home now?! Try it when only the firm that listed your house is actively trying to sell it! Wow! In our area that would eliminate thousands and thousands of agents that are currently helping to try to sell your home, no matter who lists it!

And if you think it's tough getting a mortgage now in Virginia, try NYC! In Manhattan the lender is the one with the easy requirement. If you're buying a co-op or even many condos or townhouses there's a board that's going to have a say and they often REQUIRE 50% down! Some of them want proof that you have 5 times the purchase price in net worth. At NYC real estate prices that's a big number!

Now I know that many people in this area hate home owners associations. But what if you had to submit hundreds of pages of documents to them proving you were worthy to live there? I'm guessing there are some rude thoughts going through your mind right now!

Even things like how long it takes to close are much different. Typically it's about 90 days in New York City. I see plenty of settlements in our area that happen in less than 30 days. And I've seen them done in a week! 90 days would be highly unusual in our area.

This is a drastic example of differences. But the adages apply locally as well. Real estate can be practiced differently even in different parts of the Commonwealth. And if you move to Virginia from someplace else you're likely to experience lots of things that are different here.

It does make real estate endlessly interesting!

Previewing Homes

I went to preview a listing in Jeffersonton last week. When I got there the owner said she didn't understand the term "previewing". I gathered there hadn't been any yet. That's a little sad since her home had been on the market close to a month.

But I thought she might not be the only seller out there who didn't understand the term as it's used in real estate industry. So I'm going to give a brief explanation.

REALTORS go out to see homes that have been listed for sale, but without actual clients to show it to. So, it's just me coming through the house, or sometimes myself and another colleague.

We do this for several reasons. One is that part of our job is to be familiar with the inventory on the market. If I don't know what's for sale out there and how it's priced it's hard to accurately advise my clients on how to price their listing.

And we do it to help out our colleagues. It is an enormous help to have the opinions of other agents regarding both the price of the house and how well it shows.

And the third reason I do this is that even with all the great photos and virtual tours in the MLS these days, it's still not the same as seeing the home in person. Sometimes, going through a house will spark something in my brain. I'll think of a client who may not have been an obvious fit, but for whom the house could work. Those kind of things happen when you actually go through the rooms and see them for yourself.

I only wish that I, and my colleagues were doing more of this. I will admit that time is at a premium and I don't always get a chance to preview every listing I'd like to. That's especially true now with such a large inventory. Even so, I'm hoping that the owner I talked to last week wasn't typical and that plenty of sellers are seeing plenty of real estate agents roaming through their homes!