[photopress:THOSEELVISGUYS_01.jpg,full,alignright] You have to go to Marlow’s to see what it’s about.
I couldn’t even BEGIN to explain it. You have to read through several posts to “get it”, so this link is to the blog and then scroll down through a few posts.
[photopress:kit.jpg,thumb,alignright]In the last six months, two of my clients purchased homes that were real bargains in a hot market. That was earlier in the year of course, when the market was stronger than it is now in the last quarter.
To me a bargain is a house where I can be confident that if the new owner calls me to sell the place in a short period of time, I can resell it at a higher price, regardless of market conditions.
I find that my definition of bargain is not a one size fits all definition. Often when someone tells me they got a real bargain on a house, I have to zip my lip (no easy feat for me). Their definition of a bargain is something that sold for way less than other homes in the neighborhood, you know, the bargain that will always be a bargain, both when they buy it AND when they sell it. That’s not a bargain to me, that’s the bottom of the barrel choice that will always be cheaper in any market, and will go down the furthest in a tough market and up the smallest percentage in a good market.
While everyone wants a real bargain and everyone wants some assurances that if the bubble bursts they won’t lose money, I find that most people will not buy a true bargain. Wanting anything you buy to go up in value always and indefinitely, is not realistic. Often agents and flippers end up with the houses with the most profit potential, because people who are buying homes to live in them take a pass on the best values. That’s what makes them bargains, most people won’t buy them.
Take a good hard look at the photo above. Now that’s a real bargain! I look at that and foam at the mouth. A 72 hour do it yourself (mostly) makeover would improve the price overnight!…well, over two nights to be more accurate. A weekend project. Let’s remake just what we can see in that photo together. Let’s make this a real “how to” demonstration.
There are three things there that I would need to hire someone to do. By quickly defining which things I need someone to come and do, and scheduling that work before I begin, they can be finished by the time I am finished the do it yourself part. It needs new flooring (whether it is in good shape or not…it has to go!) It needs a six panel white door over on the right there and it needs a new light fixture. I can’t lay a floor or hang a door or switch out a light fixture. Maybe I could do that last one, but I prefer that owners not touch wiring if they don’t really know how to do that well.
1) The first job is simply going out to buy the new floor, purchase it at the installed price and schedule a date and time for the install. In this place the floor is so busy and awful, just a new one piece floor or lowest cost more neutral alternative is sufficent. The change in appearance will be dramtic at a low cost. Instant increase in potential sale price of home.
2) YOU go out and buy a light fixture and six panel door. This is where people make their biggest mistake. They hire a handyman at the lowest possible price, and then pay him to go to the store! $25.00 an hour is a great price to get someone to change out a light fixture or hang a door. But it is too high a price to pay someone to get stuck in traffic on the way to Home Depot, Lowes or Fred Mayer, or all three looking for just the right light fixture. Buy the two items and anything needed to install them, like new hinges and door knob, and have them ready and waiting for the handyman you hire for the switchout of the two items.
3) Now for your part, which you can do while you are waiting for the floor install appointment and while the handyman is doing his two jobs. Always work with the handyman, doing other things. He’ll be more productive if you are taking down that wall paper while he is changing out the light fixture and hanging the door. Just is…don’t ask why 🙂
Your part is to wet down that wall paper really well with wall paper stripping solution BEFORE you start peeling it, so you don’t damage the drywall. A lot of people start gouging with scrapers and ripping dry strips that pull at the drywall, without wetting it down well. Stripping rule is the same as hanging rule. Wet three strips well, one at a time. When you are done the third, go back to the first and take it off, wet the fourth then go back to the second, etc… (My next door neighbor when I was a kid was Mr. Vitale…the wallpaper hanger.) If you are lucky, that is “strippable paper” and the wall behind it was painted several times with semi gloss or “sized” before the paper was hung, and the wall will be ready to paint when you are done. Wash off all of that glue before you start painting! You don’t want a muddy paint job because some of the paint is mixed with old wallpaper glue.
Now let’s look hard at that photo one more time. Doorway on left has no wood, just wall paper, so we’re done with that. Back door is already white, but with a thin dark wood trim like the baseboard. OK, let’s paint the back door trim only (not door), the base trim around the room and the door trim around the brown door on the right. What color? The same color as the back door and new interior six panel door, which is white. The new light fixture is hung and it’s tight to the ceiling now, so you don’t HAVE TO put your table exactly under it like you do with a hanging light.
[photopress:new.jpg,thumb,alignright]You have now transformed the 80s look into a “bright, light and airy” updated and clean look…all in 72 hours! And if you call me and say, we want to move, I can sell the house for more than you just paid for it.
Don’t walk away from the house that looks like the photo at the top. You’ll pay at least $10,000 more for a house where the owner put in 72 hours worth of work and a few quick work projects. Buy the true bargain. Good location. Good floorplan. Ugly floor, ugly wallpaper and dark brown trim.
Buy the really good, well maintained, but really UGLY house. It’s the bargain of the marketplace in any market. Simple definition of this type of house is a “cosmetic” fixer.
[photopress:int_auction.jpg,thumb,alignright]I was reading Greg’s newest article on Buyer Agent Commissions and thought it might add more information to both his readers and ours, to run a “Point Counter Point” kind of discussion. So I have his article up side by side and will touch on some of the points where I either disagree with Greg, or have something to add.
Greg: “Want to foment a revolution in residential real estate?…(buyers just say) these five simple words: ‘How much do you charge?’…Historically, buyers have not understood that they, too, pay for representation”.
Greg, while the concept is indeed “revolutionary” in one sense, I find that most consumers would like we in the industry, to lead the revolution and win that battle for them, rather than being involved in the process of that change in the industry. Of course here in the Seattle area we have Redfin leading the charge, by revealing that there is a Buyer Agent Fee.
Sometimes Greg and I shake our heads at the shenanigans of the industry that pretend there really is no Buyer Agent Fee. Buy how can Greg expect the buyer consumers to lead this needed change in the industry, when most buyers NEVER even see the fee? Does anyone know a public search site that shows the Buyer Agent fee to the consumer? Does anyone’s mls system print the Buyer Agent Fee on the client version of the property printout? Has anyone seen the Buyer Agent fee show on the Buyer’s Closing Statement when the transaction closes?
How is a buyer supposed to even verify that the agreed upon amount, is what the buyer agent in the end collected? The commission paid to both the Seller’s Agent AND the Buyer’s Agent, only shows on the seller’s closing statement and NOT on the buyer’s closing statement. “Oh, yeah…I charged you ten bucks . You want to SEE it? Oh, sorry, that’s a seller privacy issue. You can’t see the actual fee charged. Just trust me on that ”
I’m not going to go into the “chicken or the egg” debate agents like to play with regard to who “actually” pays the commission, because it truely is purely subtrefuge. I often wonder how they’ve gotten away with it for all of these years, but then we really do know how they’ve gotten away with it for all of these years, don’t we? Because buyers really like the idea that it’s free and don’t want to sign an agreement to the lower amount, because they really don’t want to sign an agreement with an agent at all…even if it does save them money. They want the lower amount with no strings attached. Not saying they are wrong, and I actually honor that. But let’s not pretend this isn’t a two way street.
I don’t like Greg’s answer either, because he makes it looks like the buyer pays the seller’s agent fee too, and that’s just a pendulum swing to the subtrefuge, which doesn’t work either. Seller pays his agent and buyer pays his agent, is the only rational answer, regardless, so each knows the cost for their side and negotiates their side and sees their side at the end.
Greg says: “We baby buyers, (by) telling them tender, loving lies: ‘Buyer representations is free.’ ‘I’m paid by the seller.’ ‘My services cost you nothing.'” Truth is, buyers really do like these lies up to a point. They really do like to believe that is is free and the seller is paying it. Buyers like to “receive money from the agent” like the Redfin cashback. It’s a whole lot more fun to believe that they are “getting back” $20,000 than to understand that they are paying $10,000. They are not really getting back anything, they are financing their cash credit, if they take it in cash or cash credits. To truly save something, they have to negotiate a sale price with the seller and AFTER the fact, reduce the purchase price by the negotiated buyer agent fee difference. Otherwise they are including the full fee and they are paying it with interest for 30 years! They are borrowing it from the lender, not “saving” it.
Greg says: “If you’re buying a new build, the builder may be paying “your” agent a huge commission. You should negotiate to make sure that you receive any funds over a reasonable rate”.
Well, of course, it does NOT only apply to new build. Here’s my comment on new build though. I just got an email while I was writing this that said “$5,000 bonus on last 5 units!” I deleted the email after mentally translating it to say, “We’ll pay you an extra $5,000 if you will help us get rid of the five last dogs that no one seems to want.”
And last but not least, Greg says: “…you will not get to a more reasonable buyer’s agent commission without mastring those five little words: “How much do you charge?” (That question seller’s have known to ask forever because sellers understand that they are hiring a Realtor and it isn’t free – paraphrased).
But Greg does not give any advice regarding what to respond when the agent replies: “What do I charge? Why nothing! It’s Free! The Seller pays it! Greg, if you want them to ask the question, you have have to give them a little more advice than simply asking the question that will initiate the response of free, that we both know many will get. Let’s have a follow up piece titled, “What do you say to a buyer agent who tells you his services are FREE?”
[photopress:forlorn.jpg,thumb,alignright]I happened upon this story by accident. It is one of the very best stories I have ever seen about a “former realtor” and his experience. We hear from agents all the time…the ones who stayed in the business. We hear that 80% leave and it’s a revolving door of new agents year after year.
But we rarely hear from those who left the business.
Here is a heart wrenching, well written, slice of life piece that will tear you up. It touched me deeply. Hope you enjoy reading it.
John Cook is on vacation and while he is gone asked, ‘What Real Estate Sites Do You Use?‘. It’s kind of a loaded question because he implies that transactions are going to be on the internet in the future, and he’s looking to find out which website is leading the way…
Reading through the comments, the discussion revolves around Redfin, although I’m sure RCG readers could skew the discussion in a different direction.
Google transit is now in 5 cities. It’s a great setup, similar to New York’s hopstop.com. Here is the trip from downtown Seattle to the airport.
[photopress:Ardell_attica.jpg,thumb,alignright]Choosing some lofty goals. You don’t climb a mountain, simply because “it is there”. You climb a mountain to get the strength of conviction needed to move mountains “The Day After”.
Taking the necessary steps to make changes that benefit both consumers and the industry at large, so others have a working model to follow, is my lofty goal. Telling everyone how I really feel is not about telling everyone how I feel. It’s about targeting some of the ways I can improve the system, one step at a time.
Climbing a mountain (See Quote #19) is of no use whatsoever, if you don’t do something differently the day after, and the day after that, and the day after that. When you run out of steam, or feel like you’ve hit a brick wall, or simply lose the courage to proceed…you find another mountain to climb and start the process again and again. C’est la vie for those who choose for it to be so…or not.
1) Every buyer should know the cash amount they need to bring to closing before they make an offer to purchase and not “after the loan docs come in”. We can change that in 5 seconds. I am changing that today.
2) There should be a training class for agents, that is actually a training class for agents. I need 10 agents to volunteer as guinea pigs for the class, so I can structure the curriculum. I’m hoping Seattle Eric will be one of the ten to volunteer, but he is the only “new agent, used to be investor”, that will be permitted in the class of 10, for “balance” purposes. Eric, agents should never be caricatures…too many are.
3) I decided to run for Club President of my Toastmaster’s International Club at next election in 8-10 weeks.
4) I’m giving my second speech on “Three Simple Steps to Effectively Managing Your Life” tomorrow night, and will continue to give that same speech, until I perfect the handouts to the point where everyone in the room “gets it”.
I’d like to have eight “lofty” goals, and add one every time I accomplish one. So if anyone out there has any suggestions for Changing the World one step at a time, I’ll consider picking the next 4 from your suggestions.
I need 4 more by Monday, so your thoughts appreciated.
In a post I’ve been meaning to blog about, Trulia asks Is the MLS Totally Clueless? Why is “the MLS” totally clueless (they mean all 1,000+ MLS systems)? According to Trulia, because they don’t allow For Sale By Owner properties to be shown alongside MLS listings. (Is Trulia right, is this dumb? Probably, but I’ll leave that for another discussion.) What is Trulia’s solution? They don’t allow For Sale By Owner properties to be shown alongside their broker listings (see answer number 1). Sounds like someone shouldn’t be throwing stones.
Will Trulia ever allow FSBO listings? My guess is the moment that Trulia gets enough traffic for consumers to care if their house is listed on Trulia, the tables will turn on the brokers they are so eagerly courting right now. FSBO: check. Smaller links to broker sites: check. Data added by users: check. I don’t think they’ll do this out of greed, rather they’ll do it because they have to: if they keep the site the way it is, with limited information about properties and links to agent sites, the rest of the industry is going to pass them by.
Note: Trulia is not a member of “the MLS” and does not need to follow any MLS rules. There was some reader confusion about this.
At around 8pm, I woke up from a late afternoon nap to see that Ardell still had over 30 posts to write and I got a worried… So I took a Newcastle out of the fridge and started writing. I figured that should it become necessary, I could pass along a few extra posts to Ardell… (Greg’s not the only one with a competitive streak!) But she obviously didn’t need my help as she has just made it to 100 on her own! Awesome stuff!!!
Congrats to both Greg and Ardell… You’re both amazing.
However, because I hate to see things go to waste, I’ll go ahead publish the mini-blog posts I was going to pass along to Ardell. My intention was only to write a few “filler” posts, but…
1) I believe Greg when he says he could hit 135 in one day… The man in an animal!
2) Speaking of jobs! Give this man the full-time job as the Open House blogger… With articles like this fun one on an whimsical (artist) house and timely articles like this one on the number of NWMLS price reductions. Steve has come a long way in a few weeks since he asked me how to get some traction to his blog.
3) I steal a lot of “Rain City” traffic, so here’s my chance to give back:
4) Greg points out this post on the Trulia Blog… Considering all the work that Sami and Pete have done to bridge the gap with the broker community, I’m surprised they let that post slip through…
5) In search of a snippet…
6) Kris turns a strange day into a great 12-step program for blogging… However, note that most 12-step programs try to ween you of addictions while Kris is trying to give you one. You’ve been warned.
7) Review of the Bloodhound Blog… Nobody, and I mean nobody, feels more comfortable calling real estate B.S. when and where he sees it. With a fluent style, a quick wit, and a massive quantity of writing under his belt, the man has become addicting.
8) How to discuss Marlow’s recent post about Trulia’s expansion without sounding self-serving??? I put together a Excel spreadsheet that examines not only how many listings each service has, but also how many “accurate” listings each service has for one zip-code (98117) in Seattle. The results highlight a bunch of interesting things like (1) Redfin’s zip-code search is broken (i.e. a search on 98117 returns results for other zip codes like 98203 and does not return all the homes that Redfin has with a zip-code of 98117), (2) Realtor.com is missing more than a few Windermere listings (I was surprised when Marlow mentioned this, but the results pan out), and (3) Trulia has a long way to go before they are comprehensive. If someone wanted to take this data and add one more zip code in some other part of the country, I’d love to post the results. Maybe a Bay Area agent can take this on since all the sites in question have operations there!
9) One of the things I most admire about Ardell is that she focuses on the service (and then delivers a rebate). While it Bill’s approach makes for great blog posts, focusing on the “discount” doesn’t work for me.
10) I still haven’t made sense out of what it means to be part of a “Christian Real Estate Network”, but the guy does some great real estate blog posts… I like his latest on ways to learn about your competitor’s website is another doozy… although he does miss out on the most obvious trick, which is to use technorati to see who else is linking to them!
11) Interesting to see the competitiveness of the rental market…
12) I’m not sure who, but someone once said… “It is amazing what you can accomplish if you do not care who gets the credit.” That’s the theme for these blog posts!
13) However, I must give credit to Jim for his excellent post on “why blog?”
14) Jay makes a bunch of valid points when he says it is time to “raising the bar” on becoming a real estate agent… Since stricter requirements would serve to keep out additional competition, I’m assuming that most successful agents would agree.
15) Tom echos this point, andapplauds the Governator’s move to require more education for California agents…
16) Merv continues to deliver with his price trend analysis… If you’re looking for good ways to display real estate data start with Merv!
17) Then go check out Mike’s Altos Research blog because he makes price trend analysis easy…
18) While just about anything is possible, tracking my net worth based on my home’s zestimate and MyYahoo stock tracking performance is going to far for me… and then making a button for the whole wide world to see? No thanks!
[photopress:realty_blogging_book.jpg,full,alignright]19) The real estate blog marketing book is available for pre-purchase on amazon… I spoke to these guys while they were writing the book and will be curious to read it!
20) Thinking of amazon wish lists… This four bedroom home in Malibu is currently on the market…
21) They are easy enough to find, but Hanan alerted me to this ironic clip of Bush…
22) “Seller will pay 6 months of mortgage payments“… (I’m all for good incentives, but is this loan fraud?)
23) The Inman Blog follows up on Trulia’s post where they asked a few real estate professionals to predict the August numbers… It seems no one really knows what’s going on, and if they do, they sure aren’t letting you know in a blog post! 😉
24) As usual, if you want the real scoop on the numbers, turn to Jonathan.
25) The group at Inman also wonder if the people over at Freddie Mac have their pulse on the Latino culture… I’m not holding my breath.
26) Jonathan is also wondering where are all the foreclosures… interesting stuff. I think there are a lot of bubble bloggers that are ampted up and ready to pounce should these trends ever change. I wonder how long they can keep up their intensity before their bubbles deflate… 🙂
27) Speaking of numbers… Peter over at the Business Week blog does an excellent job explaining one example where housing numbers have been so obviously manipulated…
28) I always like reading a blog posts from Sandy, but I just wish that she kept her posts short-and-sweet as oppose to long-and-infrequent.
29) Joel points out an unorthodox use of Zillow’s data… I haven’t looked through their API documentation, but do they insist that you add their name/logo when you use their data? How about refelcting them in a good light? Interesting stuff.
30) Now that they clog up our inboxes, real estate leads are a legitimate business [link removed]… On any given day, I literally get 100s of spam and my guess is that over 3/4 or them are real estate related. Thank you google for putting together such a good spam filter. I wouldn’t be able to handle the email I get to my blog email account with the filters on Outlook… I think I would just give up on email!
31) Elizabeth Razzi says that we should get to know the neighborhood before we buy a place. Not exactly brilliance, but it serves as a good reminder that there really are some intangibles that require more than an aerial view of a property!
32) Cherokee is looking for information on the Snoqualmie area… Pak gave one answer, but I’m sure there are others who could help! 🙂
33) The Seattlest gives hogwash a rave review as a fun for the whole family.
Hogwash – An Improvised Tall Tale For Small Children
Runs Saturdays at 2 p.m. until October 28, 2006
Historic University Theater, 5510 University Way NE (University District)
$10, Reservations – 206-297-1767
34) I like Rory’s approach: “I assert that a Real Estate Agent’s expertise and professionalism should be visible in their service and knowledge of the housing market and inventory. Their expertise should never be based on a carrot and stick ploy to drip feed clients MLS information.
35) Do you get comfort knowing that the home of the NAR president is lingering on the market? 🙂
36) If you’re curious, I’m going by the code name “tyr” in the Inkling Market set up by Keven Boer. At this point, I’m down… It seems more and more people are voting for Greg… Will a last minute spurt of posts from me help out???
37) The title may be a mouthful, Creative agreement may enable advantageous use of otherwise unavailable homesite, but Marlow points out a great example of the benefits of getting creative!
38) Welcome to the neighborhood…
39) When Shaquille O’Neal makes a $1B real estate investment, that’s a great story!
40) Claudia lets us know about the renevotations that hurt!
41) David organizes another fascinating (and colorful) post on the connection between home life and healthy aging…
Waking up this morning, I was pretty impressed to find that Ardell is already at 22 posts in the 101 Challenge… At that rate, she’ll make about 60 posts today if she doesn’t slow down!
And then I noticed Greg is at 50. Wow! Someone needs to spike his coffee with some sleeping pills! 🙂
Ardell: If I may… it is time to pump up the quantity and not worry about quality! You’re at the perfect stage to write about 50 filler posts: simple, short, one link-type posts. And then end the day, finish up with some high quality Ardell classics! 🙂