Date: Dec. 22, 2008
Tags: Tolstoy, Real Estate, Markets, Investment

Leo Tolstoy, Anna Karenina, Chapter 1, first line
Russian mystic & novelist (1828 - 1910)

To paraphrase, all happy real estate markets are alike; each unhappy real estate market is unhappy in its own way. That may be a stretch, but I've been to the two biggest conventions for REALTORS® that there are in the US during the past two months-NAR in Orlando, FLA, and Triple Play in Atlantic City New Jersey. I was privileged to be a speaker at both conventions; I taught ABR as a pre-convention event at NAR and two of my own courses at Triple Play. At both conventions, attendance was down…way down. And the 'talk in the halls' was worried. On a shuttle bus in Atlantic City, I heard one 'seasoned' REALTOR® say to another: "I've been through bad markets before. I lived through the late '70's, early 80's, when interest rates were so high. This is different." This is different, indeed. To begin with, never have so many duped so many out of so much money. From Madoff (the media's latest bad actor) back to the many perpetrators of the sub-prime debacle, lots of otherwise rational, fairly intelligent people have been cheated.

And now, in an unprecedented way, the government is throwing money at the problem. Big money-and they are throwing it everywhere. Today's Wall Street Journal (12/22/2008) reports that commercial real estate developers are now asking to be part of the bailout. It's like a wonderland out there, and not the 'winter wonderland' they are warbling about on the radio. Call me a simple person, but here's what I don't get: Doesn't anyone see that all this bailout is just going on our tab? We the taxpayers are paying to bail out, let me see: insurance, bankers, automobile manufacturers, and now, maybe a part of the real estate industry. And in the first round, there was no accountability. Zero, zilch, nada. I really don't get that. Whenever I've wanted to borrow money, I had to answer pointed questions, like: "What are you going to do with it?" "How do you plan on repaying it?" "Can you afford this loan?" Instead, we are just, I don't know, heating up the presses over at Treasury and making money to fling around. Well, what's the point of throwing money if we aren't fixing the underlying problems? Yes, I know, Congress is 'reforming' the mortgage industry. And the banking industry. And Wall Street. But real reform, in my opinion, won't happen unless or until there is a return to accountability. If every lender made every loan as if they would never be able to sell it; if every appraiser did every appraisal as if they'd have to buy the property back for the number they appraised it for; if every fund manager made investments as if he'd have to cover any shortfalls out of his own pocket, we'd have accountability. And if Congress would have to get the voters' approval to go into deficit spending-each and every time-- we'd have accountability. Folks, we don't have accountability-we have nothing close to it. One of the things I think we will have shortly is inflation. You can't throw this much money around an economy without getting inflation. What does inflation do to real estate? Do you remember the seventies? It goes nuts!

And this market is different. It's different because people are scared. They are afraid they'll lose their jobs, their houses, their cars, their pensions. They are scared because they have seen this happen to other people-or it has already happened to them. And when the read the Internet news, or watch cable, or pick up a newspaper, there is more doom and gloom there than they can handle. People are scared who shouldn't be scared. Here's an example: I had an interaction with my computer tech guy last week. He fixes computers. He's really busy. People are fixing instead of upgrading (Moi, for example!). His significant other is a nurse anesthetist. She's got job security, because if you need surgery, I'm pretty sure you (and the surgeon) are going to make certain you are out for it, not wide awake and fretting. People don't stop getting sick because of the economy. For people like him, this market is awesome. There's great inventory (in most places) and low interest rates, not to mention, in some market, outstanding buys. Here's what else I did this fall, before the two conventions: I did state conventions, and other courses. And everywhere I went, from New Hampshire to Colorado, I asked the agents the same question: "Do you have outstanding buys in your market?" And everywhere I asked the question, I got the same, resounding, answer: "Yes!" I truly believe that in five years, our clients will be saying to us: "Why didn't you make me buy more real estate?" Now, for naysayers, here's what you are thinking: "Well, the market hasn't bottomed out yet in my area." Or "The national media says real estate won't recover until 2010" or "It's still too early". To which I say: "He who hesitates is lost" and I add the famous Warren Buffet quote: "The time to be fearful is when others are greedy; the time to be greedy is when others are fearful." Don't miss out on this opportunity-it won't last forever.

Here's my final consideration, and it is directed at you and me-the real estate professionals in the room. Sub prime money has gotten tight, and non-existent in some places. Do you remember selling houses to people during 2000-2005, and you were amazed that they were able to get a loan? Guess what? They lost that house, and they are tenants again. Tenants are those wonderful people who buy a property for the investor. Remember, real estate is the only investment someone else will buy for you. If you are in our industry, and you possibly can do so, I urge you to buy real estate yourself. Do your homework, check it out, but invest. My view is that real estate will lead us out of this recession, and in a big way. We are looking at a long view, but we will, I think, have inflation coupled with fundamental appreciation that will begin as the markets level out. We will also then have pent-up demand, which is a wonderful thing. I truly believe the people who invest in real estate in the next two years will be very glad they did in the next ten years.

Date: Dec. 6, 2008
Tags: Holidays, Being Prepared, Turkey, Food, Real Estate Agents

Ready….or Not

The holidays are a time of preparation, and this year is no different. And, most of us see the end of one calendar year and the beginning of another as a time to take stock, make resolutions, look to the future, and hopefully do better next year. An incident on Thanksgiving got me thinking about preparation. Success is described as the intersection of luck and preparation, so here's my tale about Thanksgiving-which I promise I will relate to real estate.

My mother was Greek, so holidays are about FOOD at my house. It is my unabashed goal to put those at my table on Thanksgiving into a turkey coma just in time for kickoff of their favorite games. Preparations begin the week before, with ordering the fresh turkey from my local butcher, Erv, getting in the yeast to bake Greek bread, buying cranberries and vegetables, figuring out what kind of pies and salads, etc. On Monday, I picked up the turkey; on Tuesday I made pie crust (from scratch, of course-do I want to hear my mother spinning in her grave?); on Wednesday I baked the bread and pies, cooked the cranberries, made a frozen salad, made the stuffing; on Thursday I stuffed the turkey and put it in the oven and started in on peeling potatoes and the vegetable casseroles. I needed milk for the baked corn, so my always helpful daughter ran out to the supermarket to get it. Here's what she encountered at our local store: a woman wandering the aisles, with a cart which had: a large frozen turkey, fresh cranberries, pie crust mix, pumpkin in a can, and various other items. The woman was in search of the evaporated milk (for the pumpkin pie, for my novice cooks). Lauren gave her directions, and the woman asked: "Do you by any chance know how long it takes to cook a turkey?" Lauren replied: "Well, it's 20 to 25 minutes per pound, more if you stuff it….but your turkey is frozen." Woman: "I can't cook it frozen?" Lauren: "Um, well, no." Note to novice cooks: there are lots of reasons you can't do this, not the least of which is that certain innards of the turkey are inside the turkey, in clever little paper sacks, waiting for you to pull them out. Defrosting a turkey takes at least one full day using the cold water in the kitchen sink method; 3-4 days using the refrigerator method. And that's just the turkey-pies cook at 425; turkeys at 325, so they can't inhabit the same oven at the same time. Lauren asked: "So, when are you planning to have dinner?" Woman: "I told people to come at 1:00." Folks, it was 10:00 a.m! I'm betting they ate pizza, or ending up going out.

Well, what does this have to do with real estate? Being prepared! Agents constantly get themselves into bad situations which get worse quickly because they are not prepared. They don't have the correct paperwork; they don't have marketing materials; they didn't remember to do something, etc. Now part of preparation is planning. Thanksgiving comes every year. Ditto for Christmas and New Year's-and Halloween and St. Patrick's Day, for that matter. It doesn't matter-it's a sure thing. And every year, I think, we want to do better as agents. We want to close more sales, make more money, take more vacations, etc. But we don't get there, because we're not prepared. We're down to the waning weeks of 2008. Take a break from what you are doing (and most of you have mentally stepped away from real estate to immerse yourselves in holidays, or worse yet, self-pity over the market), and figure out what you are going to do in 2009. Be prepared for next year-remember we set our own tables-is yours going to have the full turkey dinner, ready on time-or are you going out for pizza?

To read some of Melanie McLane's specific ideas about being prepared, visit www.OnlineAgentResource.com;, where she is a constant contributor. This members-only web site is full of everything you need to succeed in real estate. If you like it, and want to subscribe, use the code Melanie to get substantial reductions.