[photopress:tgif_cover.jpg,thumb,alignright]T.G.I.T.F.D.O.T.M.!  Thank God It’s The First Day Of The Month! 

I’ve learned over the years to just say “you too!” when someone says “Have a nice weekend!”  I haven’t had “weekends” since I left the banking industry in 1989.  Today, the first day of the month, is the closest day I have to a “Friday”.

October closings went fairly well.  In fact one of my clients gave me a hand held GPS device as a closing gift yesterday. It’s a Dell Pocket PC with a Global Sat thingie sticking out of the top.  He loaded the King County maps via a Mapopolis program.  We tried it out last night after we received the call from escrow saying the property recorded, and went to the house for the “key exchange”.  Most exciting to me is that it has a setting for “avoid freeways” 🙂

On the first day of the month, I move yesterday’s closings to the “closed drawer”, I pull forward the closings for this month, and I re-organize, and say Thank God It’s the First Day of the Month!

So what did I decide to do with my day off?  Go to Broker’s Opens and try out my new handy-dandy GPS device!  When I wrote this post back in July, I had it all wrong.  I was just too darned busy at that time of year to think it through.  In the old days I had to map out where I was going from beginning to end before I started.  I had to get from here to the first house and then map out the route from house to house before stepping a foot out the door.  So I asked for a program that did that for me.  Correct answer is…I asked the wrong question! 

That is why it is SO important for agents to shake out their heads every November.  Dump everything out that you THOUGHT was the way to proceed in the coming year, and hold it up to the light.  Go back to the first transaction of the year and examine each one thoroughly.  Which clients were the happiest and why?  Where were the snags, and what can you implement into your procedures for the new year to prevent those snags?  Which did YOU enjoy most and why?  Which did YOU feel most uncomfortable with and why? 

This year took me all over the place, due to blogging.  From Queen Anne to Snohomish, from Judkins to Duvall, from Factoria to Juanita and Bellevue to Ballard.  Unlike the old days when we chose our “farm” and worked our back yard, technology takes you to places you wouldn’t have dreamed of going to.  So this year I’m ready with my new handy dandy GPS device!  But today, on my day off, I’m going out to Broker’s Opens in my own “territory”.  I want go out to see what didn’t sell.  I want to examine those properties that didn’t make the cut.  I want to see any vacant houses, that are not sold, that have been on market for way too long. 

Most of the year I have to focus only on those properties that my clients SHOULD buy.  On my day off, this 1st day of the month of November, before I get too busy again, I’m going out to pay attention to that part of the market that missed the boat, that didn’t sell, and discover why they did not.

Not everyone’s idea of how to spend their “day off”, but to make it a little more fun, I invited a tall dark and handsome young guy to go with me 🙂  Have great day!

[photopress:images_1_2.jpg,thumb,alignright]By Thanksgiving, I try to have my next year’s business plan in place.

I find that using the first two weeks of November to brainstorm, and pretty much carve in stone a plan and strategy for implementation, I can begin “setting up” the new year.  Setting up includes adding new technology as needed, beginning the activities that will create business in the first quarter of the year, and getting rid of anything (or anybody) that didn’t work well in the current year. 

I learned that any agent who didn’t have the first quarter set up in the previous last quarter, was losing the first quarter along with the opportunity to grow adequately for the rest of the year.  Taking time from March to September to meet with vendors costs way too much money, as that is what we call “A” time to be spent with clients.  November and December is “C” time, meet with vendors, and “B” time, doing those things that will create the most “A” time come 1/1 through 9/30.  For me, “C” time pretty much shuts down on 1/2/07 and “B” time has to be set on an automated time release basis to keep feeding the “A” time through the season. 

My personal challenges this year include:

1) Finding the means to connect with the internet from anywhere and anytime.  Connecting means connecting to the forms available to write contracts, not just a blackberry thingie.  So I need my laptop to have it’s own, anywhere, internet connection.

2) I need to be able to print contracts AND make copies with signatures from anywhere.  So I guess that is some kind of portable printer that connects to the laptop.  Do I need a “notebook” vs. a laptop?  Do I need one of those huge cases with wheels to carry my technology around with me?  How do I print a contract and make copies of the signatures (scan and print?) from a vacant house, for example.  Is there a laptop that also prints all by itself without a separate printer AND makes hard copies of signed contracts?

3) I have enough to handle my photography needs.  I don’t want to advance beyond my current capabilities in that regard.  I’d rather hire a photographer when needed for advanced efforts.  So simply finding a photographer that meets my needs before 1/1 is my only chore here.

4) I found the perfect GPS device, but the person who has it, built it himself.  It was a GPS that connected in his car via an ipod and played music until it was time to do something.  The GPS interrupted the music and said “You will be making a left turn ahead at x street” and then the music resumed.  Best bet is to get that person to build one for me.

5) This is the first year that blogging will be part of my business plan.  I just had to wing it last year and see where it fit naturally, since I started the day before 1/2/06.  This year I have to place the blogging activities into the business plan, with both a sense of purpose and a timeframe. Since no one else seems to be getting as much business from blogging as I am, I think I’ll consult with myself on that one.

6) I’ve decided not to participate in lead generators.  Never have.  See no reason to start now.  So HouseValues can stop calling me for the $750.00 a month plan.  I have a different idea to target market, in areas I want to cultivate more business.  Paying for leads would cut into my ability to negotiate fees, so $750 x 12 or $9,000 gets added to my client kickback fund.

7) I can’t keep winging my fee negotiation strategy, so I’m going to implement a more transparent commission model for both buyers and sellers.  I am studying the fees I charged and didn’t charge this year to formulate the model.  I’ve run enough experiments with both buyers and sellers, including the unheard of negotiating the other agent’s fee :0 to make up my own innovative schedule.

8) I want to implement podcasts with my own voice (as opposed to the robotic Sellsius type podcast) beginning Jan 1.  I want to record and post tutorials to buyers, sellers and agents.  This way my blog readers can either read or listen or both and I can forward the podcast posts to clients and agents as needed throughout the selling season without the need to repeat myself for every new transaction or every newly hired agent.

9) Since I am a multiple site blogger, my needs are somewhat different from the needs of the average real estate agent blogger.  Setting a plan in place for consistency for all of my blogs is imperative.  Having them dovetail into one another is the goal.  But putting ALL of my eggs into the “blogbasket” is not good either, so I am setting up some hard and fast rules for blogging in 2007. This year I dropped other activities out of my schedule, like reading the King County Jornal every day, in order to fit blogging in.  But I don’t want to continue that through next year.  Doing my own stats consistently will be ultra important, as no one knows where this year is headed, and I don’t trust anyone’s opinion out there better than my own.  So I need to stay on top of the market, on a weekly basis, by doing my own stats and personally visiting the properties that are and are not selling.  By blogging on the topics I need to follow, I can kill two or more birds with one stone.  Multi-tasking is the key to blogging.  Blogging needs to be part of what I do, and not something i do in addition.  So far this year, that strategy has worked well.  In 2007, I need to time manage the blogging, so it stays focused.

10) Hiring and firing, less of the former and more of the latter 🙂  In 2007 the original plan, which was to have 12 agents who contribute $10,000 per to the company, is key.  I may up that to a $12,000 cap.  Agents need to be innovative in their client commission schedules.  Agents need to make more, while at the same time charging the consumer less.  The key is for all agents to have the ultimate authority to negotiate fees with their clients, and to pay their brokers less.  It’s the only way for consumers to win.  More of the commission needs to end up in the consumer’s pocket.  Less of the commission needs to end up in the broker’s pocket and none of the commission should be funneled into a lead generator’s pocket.  If we are heading into the market we all predict we are, or at least that I predict we are, lower commissions will be key to the success of both buyers and sellers in 2007.  If appreciation goes down by 1% or 2%, the consumer has to make that up somewhere to stay moving in an equal upward trend.  Businesses that plan for that change are the ones who will succeed for both themselves and for their clients.

I have two weeks to revise my list of ten as needed and then start ticking them off the list before 1/2/07.  If anyone has any info to help me with items #1 and #2 up there, I would much appreciate it.  The rest I pretty much have down already.

[photopress:tdf.jpg,thumb,alignright]When we were talking about Popcorn Ceilings, Redmondjp asked, “if new houses two blocks away are selling for $1M, at what point does my 28-year-old rambler 2 mi from MS become a teardown? Somebody could buy my property,build a McMansion and put it on the market for $1M….[photopress:td.jpg,thumb,alignleft]

at what point do you decide just to keep the roof from leaking and nothing else? This would be an excellent topic for a separate post, and I’d be really interested in your thoughts on this. There are hundreds if not thousands of older houses just on the Eastside where this same issue comes to bear…”

Excellent question Redmondjp.  The simple answer is: When the price a buyer will pay for the house to live in it, is less than the price a builder will pay for the lot to build something new on it, it reaches “tear down” value.

Take the Redmond house shown here. It went on market in November of 2002 for $467,000 and sold in June of 2003 for $380,000.  Today it is on market for $650,000, Zillow values it at $820,652 and the tax assessor puts it at $557,000.  When it sells, we will know the rate of appreciation for land cost in Redmond :-).  If the cost of $380,000 represented the value of the lot back in June of 2003, the land will have appreciated at a rate of 18% consistently since that time, to be worth $650,000 today.

The question isn’t, how does the value of the house decrease to the same degree that the value of the lot increases, until the two meet and we tear them all down.  The question is, if all of the splits and ramblers reached lot value and builders did put them all “on the market for $1M”, at what point do you saturate the market with too many houses that cost $1M or more?  Contrary to poplular belief, not everyone who works for Microsoft can easily afford to run out and buy houses close to work if they all, all of a sudden, became new houses priced at over a million dollars.

From the minute I hit this crazy town, besides wondering why everyone was giving full price per square foot value to finished below grade basements,  I started tracking the high end.  This market is not going to fall because of the $390,000 ramblers or the $475,000 median priced homes.  This market is going to fall from the top down.  It is my premise, that the market will topple based on an oversupply of $1M+ premises.

As of last night”

1) There were 28 homes for sale in King County priced at $6M or more, NONE in escrow and only 10 sold in the last 12 months.  That equals a 2.8 year supply on market IF no others come on market in the next 2.8 years.

2) There were 49 homes priced at $3.5 to $6M, 7 in escrow and 34 sold in the last 12 months, a little over a one year supply.

3) $3M to $3.5M – 40 for sale, 2 in escrow, 27 sold in the last 12 months, a 1.38 year supply.

4) In the $1M to $2M and the $2M to $3M, over a year’s supply on market.

Hundreds and hundreds of homes on the market priced at over $1M.  At what point do we have more houses priced there than we have people to buy them?  And when do the builders stop building them?

Some people say, “Who cares what is happening at the top?  Why is ARDELL always running stats in the million plus range?”  Because lots of these properties are new or vacant, which means they MUST sell at a lower price some day.  And when you can get a $2M house for $1.5 and a $1M house for $900, the $900 houses drop because who is going to pay $900,000 for the house now that they can get a house that used to be $1.1 for $900?  No one.  The pressure will come from the top down, so stop talking about the bottom up crowd.  When you have a glut of homes priced at $1M and up, and the builders keep building them…something’s got to give and the effects will trickle down. 

Until then, I’m not going to “get my head out of the clouds”.  It’s the nosebleed section way up there that will determine where this market is utimately headed.   Ms. $1.4 who should have priced and sold her house for $1.1 a long time ago, may just pull up her for sale sign and decide to stay.  But the builders can’t run away from their finished products.  The vacant houses can’t cash flow by renting them out.  The high end has to move OUT or DOWN, and if down is the answer, the rest of the market will get pushed down by them and with them.