Jersey Shore, Pennsylvania
I will share my views and experiences on key real estate industry topics - agency, appraisal, and ethics. I welcome your comments.
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Dec. 22, 2008
Happy families are all alike; every unhappy family is unhappy in its own way.
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.
Nov. 19, 2008
The other day, I was going into the local supermarket when I met Jane, an old friend and client. She
immediately asked me (as so many do!) "How is the real estate market?" There was genuine alarm
in her voice. I said: "Fine." She looked startled, and unsure. I elaborated: "In some parts of the country,
like Florida, and Nevada, and California, the real estate prices went wild." I didn't shock her with statistics,
but the Florida Association of REALTORS(R) pegs the overall inflation for ALL houses in Florida at 172% for
the time period of 2000 to 2005. But, here in North Central PA, where Jane and I live and work, the
inflation for the same period is much, much smaller. And, the higher they went up, the bigger they
are falling. Our market is steady, and would be better yet if we could convince people to quit listening to
the media. It's almost as if a hurricane is predicted for the Florida Keys, and everyone where I live wants
to board up their windows. Get a grip, folks! Let's talk fundamentals: in some markets, we do have
a tremendous over supply. Not so much in the boondocks of Lycoming County PA, where our builders
never went on a tear, building new houses as fast as they could. Our market is A-F-F-O-R-D-A-B-L-E.
Really, really affordable. Our average sales price is still south of $150,000. That's a mortgage payment
of about $700 to $850, depending upon how much the borrower puts down. We have people who
live here who have very stable jobs. Like Jane, who has worked in the local hospital for over 20 years. Or
the teachers we have, or the college employees and professors, or the Penn Dot workers, or the nurses
or the local plants that are doing quite fine (despite the gloom and doom on the news every night). And
all those people have to have houses to live in. From where I sit, I don't see a risk of our values
decreasing; they seem to be somewhat flat, but they are not going down. And like other markets, they
have steadily increased for the 30+ years I have been in the real estate business. I summarized all that
to Jane, and then asked my favorite question: "If you have owned your home 10 years or more, would
you sell it today for what you paid for it?" I never get any takers on that one. Look at the history;
historically, home prices go up. The other thing is that for so many people, their home ends up
being their forced savings plan. They buy it and make payments, and as long as they don't get stupid
about refinancing it every two years, at some point they own it 'free and clear'. That's a good thing.
This economy will recover, because of or in spite of all the government intervention--and when it does, the
happy folks will be the ones who bought real estate now. The ecstatic people will be the ones who bought
investment property now, and let the tenants pay it off for them. Consider that concept, if you
have been opening the envelopes from the brokerage house or the 401K folks with trepidation
and fear. Real estate is the ONLY investment someone else will buy for you. We call those folks tenants.
And, with the market changing as it has, meaning that Freddie and Fannie have found religion again,
and have decided not to loan money to people without (gasp!) a job, credit and some money, more
than ever, some people will have to rent. If you are in a position to invest, do so, and let those folks
pay off YOUR mortgage.
Melanie J. McLane, ABR, CRB, CRS, ePRO, GRI, RAA, SRES, 32 year veteran of the real estate industry. Offering training, speaking and consulting throughout the industry, I teach everything from ABR to USPAP. Certified ePRO Instructor. To contact me, email me at: melanie@TheMelanieGroup.com or visit my website: www.TheMelanieGroup.com
Aug. 21, 2008
It's the height of summer produce season, and my garden is bursting. I walk smugly past the signs in
the supermarket: "Green Beans-Special $1.29 a pound". The roadside stands have them for about
$1.00 a quart, if you are lucky. My garden has them for FREE! And, as I smugly remind my husband as
we enjoy beans and other goodies, all it cost me was $1.29 for a pack of seeds. That, and some work-
roto tilling, mulching with grass clippings from the mower, watering, some Miracle Groâ--some weeding,
but I'm up to my ears in green beans, yellow beans, cucumbers, cherry tomatoes and-my new favorite
regular tomato-"Mortgage Buster"-named, I sure, for how prolific this plant is-if you sell the
tomatoes, they'll help lift your mortgage. I don't sell my produce. I enjoy it (I graze on the cherry tomato
plant, and all I need is a salt shaker for the other tomatoes); I freeze it and I share it with friends and
neighbors. Please don't irritate me, by the way, by asking if my vegetables are 'organic'. All vegetables
are organic! If you don't believe me, see 'organic' and 'inorganic' in the dictionary. But, mine are grown
without pesticides, herbicides and other nasty things. Sandy, our yellow Lab is on constant rabbit patrol
(which is why I have beans, and my friend Barbara doesn't-the rabbits crop hers off at about 2").
So what does this have to do with real estate? Plenty! Trick question: "What's easier for a real estate agent-going out every day and reinventing the wheel by convincing total strangers that they should know you, like you, trust you and become your clients OR plucking your clients from the list of people who know you, like you, trust you, and need you again-or have a friend or relative who needs you?" Answer, if you have a pulse: "DUH!" That would be why the word 'farming' in real estate means the process of diligently tending to your past clients, and diligently working either geographical areas, social networks, a group of people who already know you, etc, etc, etc and marketing to them. Telling them you are there. Letting them know you can help with their real estate needs. Stopping by to see how great that house you sold them looks since they deep sixed the Pepto Bismalâ pink in the bathroom. Clipping out stories about their kids, and sending them with a personal note. Yes, farming is work, but the rewards are huge! But what is the state of real estate? Well, two scary things I found out during the past year. First of all, while speaking at the NAR convention, author Seth Godin stated that less than 10% of all REALTORS® contact a client after closing. At all. Ever. Not even sending the Lowe'sâ 10% off card. Some of them, who are surviving somehow, are probably wondering on occasion why those folks never came back to them. Then, while rewriting the REBACâ e-Buyer course with my friend Amy Chorew, we discovered that less than 10% of all REALTORS® have a good, clean, useable data base. We are defining, by the way, a good, clean, useable data base as one in which all the people are still alive; the phone numbers and addresses are current, and they would, if you contacted them, have a clue about who you are. So, this means, in this market, which is tough in many parts of the US, agents are choosing everyday to do things the hard way-not the easy way. I garden, because I love to. I farm, because this is my career. I've been gardening for over 30 years. Same thing for real estate. When you eat your next fresh vegetable or fresh fruit, think about me, and farming.
Melanie J. McLane, ABR, CRB, CRS, ePRO, GRI, RAA, SRES, 32 year veteran of the real estate industry. Offering training, speaking and consulting throughout the industry, I teach everything from ABR to USPAP. Certified ePRO Instructor. To contact me, email me at: melanie@TheMelanieGroup.com or visit my website: www.TheMelanieGroup.com
Mar. 11, 2008
Yesterday was a political junkie’s dream come true. We had massive chatter about what to do about
Michigan and Florida’s mishandled primaries; we had Eliot Spitzer get caught with his pants down
(sorry, I couldn’t resist), and Silda Spitzer singing “Stand By Your Man” (she must have taken lessons
from Hilary Clinton). Of course, we also had the spectacle of what happens when the geeky brainiac
girl thinks the hot jock will actually go to the prom with her, as demonstrated by Barack Obama’s
emphatic statement to the world at large, and particularly, Hilary Clinton: “I am not running for Vice-
President!”
As a Pennsylvania resident, it is both amusing and bemusing to find out that after a 30+ year hiatus, my state will ‘count’ again. And, as I look at the mess in Michigan and Florida, caused by the Democratic National Committee and Howard Dean, I’m reminded of Will Roger’s quote: “I don’t belong to an organized political party; I’m a Democrat.” This is to the backdrop of Al Sharpton singing his theme song of “It’s Not Fair”. The idea that the voters in these two states should shoulder the cost of another primary is absurd. For whatever reason, the Democratic leaders thought Iowa and New Hampshire were sacred cows when it came to early primaries and no other state should mess with that. I guess they missed the day in Civics class when the teacher covered states’ rights. All of these demonstrate the strong need for one national primary day, get it counted, get it over with, and let us move on.
However, as a REALTOR®, many thanks to the Democrats, the primary process and Mr. Spitzer—you have kept the media’s attention away from real estate. This is a true blessing, because when the talking heads start to chatter and bobble, they can talk themselves into just about anything.
I just did an ePRO seminar yesterday in Westchester County, New York. I asked the students: “How’s your market?” Remember, kids, real estate is LOCAL, despite what those folks on TV would have you believe. One student said her company sold more in 2007 than in 2006, and she is ‘very busy’. Another student said it was ‘slow, but not as bad as some times’. Yes, there are pockets of the country that are hurting—the overbuilt places, the ones where they took double digit property inflation as a given, and the pockets where the local economy is bad. And, it isn’t over yet. But—there are some real bargains out there in real estate land, and some buyers are beginning to wake up to that.
In the meantime, I have fervent hopes that politics and sex will continue to distract the media from our business, real estate.
Melanie J. McLane, ABR, CRB, CRS, ePRO, GRI, RAA, SRES, 32 year veteran of the real estate industry. Offering training, speaking and consulting throughout the industry, I teach everything from ABR to USPAP. Certified ePRO Instructor. To contact me, email me at: melanie@TheMelanieGroup.com or visit my website: www.TheMelanieGroup.com
Oct. 9, 2007
I'm a 'road warrior' teaching real estate classes all over the United States. Because of this, I get a very
good view of how hotels, restaurants, airlines and other travel related industries provide customer service. I've seen the
good, the bad, and the ugly. The more travel weary I become, the more I realize that the travel industry, not unlike the
real estate industry, has gotten to the state where minimal customer service is now often considered to be the exception,
and is gratefully accepted. Yet, in this sea of mediocrity, there is an occasional bright spot of true customer
service--someone really trying hard to do their job right--and make the customer (me) happy. Often, my choices are
limited. I live in rural Pennsylvania, so air travel for me is very limited, and I do not have a wide choice of airlines.
Many times, either the people who hired me are putting the class on in the hotel, and that's where they put me up, or they
pick a hotel (usually based on convenience, and price). If I get to pick a hotel, I pick based upon proximity, my
familiarity with the brand, and whether or not I have accumulated enough points in that particular brand's system to get a
free night. I like to think I'm fairly easy to please. Clean sheets & towels; peace and quiet--and good, free
Internet. It's surprising how some fancy hotels are still charging for Internet service. All of these musings about those
industries have gotten me musing about our business--real estate. So here are my thought provoking questions for us all
(me included). If the consumers in your area could pick a real estate agent from anywhere at all, would they
still pick you? Do you offer the bare minimum for the easy to please consumer--clean transactions? Transparent services?
Easy access? Do you charge extra for things the consumer thinks she should get for free? Do you have a brand? What is it?
What does your name, your company name, your franchise name (if you have one) say to a consumer? Do you offer incentives
to your customers to keep coming back? Are you providing the bare, minimal customer service--or are you, on a daily basis,
offering more?
Jul. 23, 2007
Real Estate, like most businesses, focuses on keeping customers and clients happy and making them customers and clients for life. Most agents agree that they are looking for referrals from existing and past clients and are focused on providing satisfactory service. Yet, many times either we fall short, or, the customer or client has exaggerated expectations that we simply cannot meet. What's a Realtor to do? Part of what you do should be carefully selecting who you will work with as a client. Not everyone who comes your way is good client material--it's just like your Mom always told you--all those potential dates out there might or might not be 'husband or wife' material. Someone who expects you to do something illegal should be off your list--"Only sell my home to people who are (are not) in Group A, B or C". Someone who has unrealistic expectations should be off your list: "I know the average price of a home here in Upscale Estates is $1.5 million, but I need you to find me a motivated seller who will take $300,000 down and finance another $300,000 at 1% for a hundred years". Someone who has exaggerated expectations should be off your list: "We think we will need to view at least 400 homes before making a decision, and we expect you to be available 24/7 until we find the right home". The problem is, most unreasonable people are not this blatant. They start off sounding reasonable and then continue to increase their demands. Here's an inescapable truth: You won't make everyone happy. Here's the second truth: As long as you are honest, ethical and consistently work in your client's best interests, you'll still be able to sleep at night. Much of what happens to make clients unhappy is simply beyond their control--or yours. Early in my career, I had to take a female client who had 'lost it' at a closing into the Ladies room to calm her down. She was angry--at me, at the lawyer, at the lender--but, at the end of the tirade, she was really angry at her soon to be ex-husband and the position he had gotten them into. I got her to focus on the fact that selling the house was one more thing 'off the list' of stuff holding her to the ex. I reminded her that she had hired us to sell her house, and we had done that. She calmed down and went ahead with her closing. More recently, I had a seller client known for being a 'hothead'. Our transaction proceeded smoothly--until on the final walk through the buyer observed what looked like a leak on the furnace (it was). When I called the seller to tell him about the problem and suggest solutions, he went ballistic on me, the buyer, the other agent, and everyone involved. Later, we lined up a plumber to go look at it (after he had verbally abused my husband--also a Realtor--and threatened to 'punch him in the nose' for bringing up the problem). We got the plumber there by agreeing that we, the listing agents, would pay the plumber if there was 'no problem'. Well, there was a problem. The seller paid the bill. He didn't attend closing, and I'm sure he is still out there somewhere, angry (he moved out of state). I did write him after the closing reminding him that he had hired us to sell his home, which we had done (we got more than asking Price for it) and that our job was to resolve problems and take it to settlement. We never got an apology from Mr. 'Hothead'--and we probably never will. Was he happy? No. Could I have made him happy? I don't think so. Could he have been more unhappy? Yes, if we had managed to drop the ball entirely, so he had no closing. So what's my point? Do the best you can--every time, even to the people who probably don't deserve it. Understand that sometimes you will get the fallout from other things going on in your clients' lives. Best of all, know that for everyone who is difficult and unreasonable, there are usually 10-15 folks who are wonderful.
Melanie J. McLane, ABR, CRB, CRS, ePRO, GRI, RAA, SRES, 32 year veteran of the real estate industry. Offering training, speaking and consulting throughout the industry, I teach everything from ABR to USPAP. Certified ePRO Instructor. To contact me, email me at: melanie@TheMelanieGroup.com or visit my website: www.TheMelanieGroup.com
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