What makes a house a “tear down”

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[photopress:tear_down.jpg,thumb,alignright] Here in Kirkland, a lot of people complain that the builders are tearing down homes and putting up “McMansions” in their place.

I can walk up and down the streets of Kirkland and “label” each and every house I pass. “Remodel project”, “tear down”, “fixer”, “builder’s dream come true”, will sell “as is”, etc… The number one reason a house becomes a tear down is due to years and years of deferred maintenance. Often these homes are owned by people who inherited them or who purchased them many, many years ago when they were dirt cheap. The increase in taxes over the years suck up any money the owners might have had to make improvements. They have just enough money to get by and the moss overtakes the roof, the wood rot overtakes the fascia boards and siding, the trees get bigger and bigger and crack the foundation, birds make nests in the rotted fascia boards. It’s like a used car that finds its way to the scrap heap, once the cost to repair exceeds the book value.

“Book Value” of a house equals the value of the lot. The value of the lot is based on it’s “highest and best use” and based on its “potential”. If the lot would have a view IF it were a two story house, than the highest and best use of that lot is to put a two story house on it. If that gives the lot a value of $650,000, then that is the value of the dirt. People have a tendency to value a property by what is on the lot and say, “Oh I wouldn’t pay more than $350,0000″ for that house!”. If the lot is worth $650,000, then the house can’t sell for $350,000, no matter how awful it is.

Take the house in the photo above. Would you spend $650,000 to LIVE IN IT? If you would pay $125,000 to live in it, and a builder will pay $650,000 to tear it down…well then I guess everyone has to agree that it is a “tear down”. But they don’t all agree that it is a tear down. People never all agree on anything, do they?

They don’t agree because they like having a little tiny house next to them that doesn’t block their view. They don’t agree because they don’t want the noise of the builders putting up a new home next door from morning until night, day after day, so they can never take a nap in the afternoon again until the new home is finished.

They might all agree that it should be torn down, but they want it to become a new park or playground…as long as no one every comes to play in it and make noise 🙂 They never ALL agree that it should be torn down and become a “McMansion”, especially if they live in the cute little bungalow next door.

Back to Basics

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[photopress:BubbleBurst.jpg,thumb,alignright]Yes, you can prevent the bubble from bursting. Yes, you can prevent home prices from tumbling. The market takes a hit when sellers refuse to see the handwriting on the wall, and are too arrogant and complacent to compensate for market weaknesses.

The Seattle area is almost entirely unigue in its ability to sustain home values. But gone are the days when you can ignore the homes’ weaknesses. Gone are the days when you can put anything on market, in any crappy condition, and have people pouncing on it, regardless of look and smell and overall condition.

You can still get a better price than the comps. But you have to pay very close attention to showing your “product” in its best possible light. You can’t waste your Grand Opening by saying, I’ll lower the price IF it doesn’t sell. You can’t say “I’ll make it look better IF someone doesn’t buy it”. “You never get a second chance to make a first impression, was never truer than it is right now.”

Do not let anyone in your house until it is absolutely READY! Do not hit that button that sends you LIVE into the MLS, while you are still getting the house ready for market. Don’t push your price over the comps, unless you know you are at least as good or better than those comps.

The market tumbles when people are lazy and greedy. When they want to price it higher than any property that has ever sold before, and want to do nothing to make it look its best.

This is one of those “Forewarned is Forearmed” messages, because I am seeing things sitting on market because sellers are digging in their heels and saying I want more money and I want to do nothing to get that more money. Nothing will send the market tumbling faster that a lot of signs out there on stale listing.

If you have had your property on market for more than 45 days and it is not sold…wake up and smell the coffee and make some changes, before the volume of properties not selling sends the market into a tumble. Be reasonable, and make changes as needed. If the market tells you “We’re not buying it” in 30 to 45 days…do something about it. Don’t say “I’m not in a hurry to sell”. You don’t have to be “in a hurry” to notice that no one is making an offer, because your house is not in tip top shape, and so won’t sell at this price.

Don’t just lower the price until it sells. Take it off market, get it looking its best, and then bring it back. When you don’t make your house look its best, you drive down prices, and that hurts your neighbors. Be a good neighbor and sell your house at top dollar by doing anything and everything you can to make it show in its best light.

Google takes real estate seriously

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The people who poke and prod Google in the hopes of finding secrets hit a treasure trove of services in Google’s testing area today and it looks like Google isn’t just dinking around with a crummy Google-base – real estate listings mashup anymore. It shouldn’t be much of a surprise, what with Paul Rademacher (founder of housingmaps.com) on board, a Google base full of listings, and a great mapping service, Google is creating real estate search as a distinct service.

If Google real estate search uses the same technology as Froogle, you can expect to see a lot of Seattle-area homes listed for $150,000 with $300,000 in shipping costs shown to you after you try to buy it.

In other news, Trulia is now letting you post their listings on your site. They say it’s for agents and brokers, but do agents and brokers really want to steer people away from their web sites? If a visitor clicks on More details… they are whisked to the listing agent’s website. I predict that it will mostly be used by bloggers and non-real estate people.

2nd Day @ Inman

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For many, “Pressing the Flesh” (talking with potential clients/competitors/vendors/media/etc) is the most valuable part of any conference, and for better or worse, the most valuable part of my day yesterday was spent connecting up with others.

I can’t say that any of the presentations I attended yesterday were particularly interesting (i.e. worth blogging about) including the one that I participated on as a panelist. Then again, I was really the wrong person to be speaking on a lead conversion panel as my contribution to the 2-hour discussion was about 5 minutes where I stated my experience was that blogging provides leads that are easier to convert than typical internet leads because you’ve already built up a relationship with the person when the contact you. Beyond that, I couldn’t offer much to the discussion, so the two hours were dominated by the panel’s sponsor discussing their (very cool) product. All things considered, I’ve met tons of people from Top Producer who would have done a much better job than me speaking about the ways that agents are using internet tools to convert leads. It’s too bad none of them were asked to be on the panel (especially since their top marketer product was nominated for an Innovation Award).

I’m always interested in controversy and being relatively new to the industry, I’ve found it interesting the extent to which major industry players boycott these conferences because of the way that Brad Inman has been known to push his own agenda. While pressing the flesh at the conference has been very interesting (and almost definitely a valuable long-term experience), I’m left with the strange feeling that I’m taking part in a massive dance orchestrated by Brad.

1st Day @ SF Connect

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I spent a great day yesterday wanting presentations from people with Google, Yahoo, Microsoft, Zillow, RE/MAX, etc, that are so darn relevant. Very interesting stuff!

A huge congrats goes out to Noah at UrbanDigs for winning Brad’s Most Innovative Blog Award. He does a great job covering the NYC market and agents can learn a ton about how to use the internet to market themselves online by following his example!

We also had a wonderful dinner/bar run last night. Some of the people that showed up included Niki of HomeThinking, Mike of Aptos Research, Robbie of Rain City Guide (I get to say that because he came as “press

Doing Whatever It Takes

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[photopress:woman.jpg,thumb,alignright]I have to admit that it felt a little odd, even to me, for us to be personally painting the kitchen of my newest listing. We, the owner and I, were getting his place ready to go on market. He had his hands full with his own projects that needed to be done before we entered the listing in the mls. The color scheme of the condo was already transcendental. I wanted the kitchen to be a light color, because darker colors minimize space, and the kitchen in an 827 square foot condo is not something you want to minimize.

In my own house, I like to “repeat” a color by adding different amounts of a “smashing” color in one space , to white paint for tone on tone effects. And given this kitchen had a “pass through” to the dining room/living room “flexible” space, I wanted the kitchen to be “a glow” of the color in the eating area. Given there is not much wall space in the kitchen, I decided it would be easier and faster if I just did it myself, rather than try to explain how to mix the color to the right degree of “glow”.

I was thinking of “anonymous Joe” when I was making the bed yesterday before the first showings. It was “kind of” made already 🙂 I went around changing lightbulbs from 60 watt to 100 watt in the entry and hall, scrubbing the grout in the tile floor of the entry and kitchen, taking the “mauve” colored towel the owner had used that morning off the towel bar and ditching it in his hamper, because the mauve towel he had used was clashing badly with the citrus colored wall behind it. Turned his hand towel, the one I had picked out as “the right color” (but he wasn’t supposed to USE!) around so the tag wasn’t showing. Several other truly “anal” things, standing in the doorway of every single space from every single angle, and tweaking until I was “satisfied”.

This morning I was thinking of Russ’ before the fact contract, with a long list of “services and metrics” that all agents will provide to all. Some list of generic things that people think provide value, when really every single person needs “Whatever it takes”, and whatever it takes changes from individual to individual, be they buyer clients or seller clients. In 16 years I’ve never had to paint someone’s kitchen before, and frankly hope I never have to again. But at this time, for this client, that’s what needed to be done. The poor owner was wasted! It was hot, he had been working on “his stuff” until he was ready to slash his wrists, and I just rolled up my sleeves and chipped in from morning until night until we were done. Sometimes doing it with them, helps keep them going and sometimes my crawling around in every space helps me find things that need to be fixed, that the owner truly just never noticed. The more I do, the more I can head the home inspector off at the pass, so the seller knows his true net proceeds better, after repairs, before I hit the button sending him “live” into the MLS.

I never sat in his house with a little marketing flip chart. I never provided some big list of “services and metrics”. I didn’t even have a written contract saying I would be paid, while putting in twenty to thirty hours helping him get the place ready. When he said half jokingly after all the work was done, “maybe I should stay here”, I took his hand and looked him in the eye and said, “Seriously, if that is what you want to do, if you decide not to sell it after all, that’s OK. Don’t feel like you have to sell it now, just because we worked so hard getting it ready. You do whatever makes you happy.

I remember training a few new agents and making a little bag for each of them to put in their trunk with windex and paper towel and toilet cleaner and brushes (for the vacant house toilet rings). I remember a new agent who “got in it for the money” refusing to touch the bag and saying “I don’t want that in the trunk of my car!”. I remember him refusing to go measure the unfinished basement size, because he saw a cobweb and he had his “good suit” on. No, he’s not in the business anymore…actually he never did sell a house and yes, I did fire him and he went to a local big firm before he quit altogether.

Real estate is a business like none other, and their truly IS a reason why “we make the big bucks”. There’s a lot of reasons why we make the “big bucks”. But most importantly it’s because we do “Whatever It Takes” to sell the house “For the HIGHEST Price, In the Least Amount of Time and with the Least Inconvenience to the Seller”. This owner should have an offer within 3-5 days of “going live”, at the highest price achieveable, and be able to go back to watching his TV (which I have moved 🙂 from his living room to his bedroom). To do this job right, we can’t have that House Values goal of having 20 to 30 more “leads” this month!

We can’t, as an industry, keep doing less and less for more and more. And frankly, Joe and other consumers cannot keep hounding me about exactly what I am going to do, before I meet them and see “their product”. Because clearly there are different prices because of the different amounts of effort needed to sell their home at the highest price, in the least amount of time and with the least inconvenience to them (short showing period).

Those who want to trade in one “price fits all” for a lower “price fits all”, well…I thought you wanted a “fair price” for the job at hand and an end to the price being “fixed” at “6%”. If all you want to do is trade in one price fits all for a lower price fits all, with the guy who needs more service STILL getting paid by the guy who needs less service….I truly hope that’s not the case.

Let’s let each client pay for their individual service, some higher and some lower and always a fair price for the service required to achieve the goal. I truly hope THAT change is the one coming down the pike. Let’s end “price fixing” period. Not just trade in one fixed price for a different fixed price.

Because if it’s just about a tug of war on which fixed price to use…then I’ll have to move over to the other side of that rope. Please tell me it ain’t so.

Once in a Blue Moon

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[photopress:blue_moon.jpg,thumb,alignright]Once on a Blue Moon, I need to insist that a buyer, if I am going to work with them, sign a buyer agency agreement.

1) When assisting them in their home search requires that I go inside every property to ascertain if the property has what they need.

Example: must have first floor bedroom that is NOT the master bedroom, but is large enough for two people to be comfortable and have it’s own bath and be on the same floor as the washer and dryer. This is a common request for multigeneraltional families whose parents live with them and do their wash 🙂 I can’t tell all of this from mls data and have to preview lots of homes quickly and all new on market homes to make sure the first floor bedroom is not tiny and to make sure it is in reasonable proximity to the washer and dryer.

2) When I am asked to find property that is not for sale.

Example: Must live on the SE corner of the Newmark Blding on any floor higher than the 12th floor. When someone wants something that is so very specific that it requires that I contact all owners of those properties. Waiting for this to come on market is not in the best interest of the buyer, unless they are willing to wait five years to buy something (which sometimes is the case, and that’s OK). If they won’t buy anything else until they realize they can’t have what they really want, and they need a place within 6 months, then I have to contact every owner of that “commodity” and ascertain if it is a dead end and no one is thinking of moving this year. P.S. I rarely negotiate a lower commission for this type of home search. I need a written Buyer Agency contract to establish for the seller’s benefit, that I do NOT work for them, but the buyer, and so need a written contract saying that.

There are a few other examples, but I think you get the picture.

A very wise Broker once told me that once you have the meeting of the minds with a client that the relationship is exclusive…you don’t need a written contract. So as soon as someone is WILLING to sign one, you simply shake hands and acknowledge the meeting of the minds and don’t insult the client by requiring a contract.

Until there is a meeting of the minds, the contract is inappropriate, since a contract is putting on paper that meeting of the minds.

So either way, I do not need a written contract by and large, with some exceptions.

My$.02…YMMV

Here’s a question only the Governor can answer

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[photopress:gregoirepicture2.jpg,thumb,alignright] Why does the law say “a licensee who works with a BUYER represents that BUYER unless…”

Aren’t SELLER constituents deemed worthy of “equal protections under the law”? Why doesn’t the law say “consumer” generically, so that unrepresented sellers have the same protections, and not just a consumer when a BUYER? Why doesn’t it cover a little old lady owner when a licensee knocks on the door trying to buy the place, for less than fair market value? Why isn’t she represented at first contact?

Here’s a little FSBO trivia. Did you know that agents who bring For Sale By Owners a contract on an mls form, when representing a buyer, are breaching mls rules? Did you know that there is no place in that contract for an agent NOT to represent a seller in some capacity? Only two options: Agent represents the seller or agent represents both the buyer and the seller (dual agent). There is NO place in the contract for the seller to be NOT reperesented as in No For Sale By Owners allowed. A completely different contract must be drafted by an attorney if an agent wants to write an offer on a For Sale By Owner.

Lots of things need to be changed that are leftover loose ends from the days when every agent represented sellers. I’m hoping all of these new business models are going to force all of the trains that are off the track to finally get so derailed that someone has to fix them. Train 1. State Laws of Agency Train 2. MLS Rules Train 3. NAR and Code of Ethics They all need to fit tomorrow’s reality for the new business models to function properly. Tomorrow’s reality is happening as we speak, as these new business models come up and as For Sale By Owner companies spring up. Someone needs to “get on the stick” pretty fast to catch up, because “the times they are achangin'”.

The Law of Real Estate Agency needs to clearly define all of these new business models, so that the consumers, including the For Sale By Owners, are aware of when they are NOT represented, and when they are being offered “limited reperesentation” and what that means to them. That is part of the DOJ “stuff”, at least with regard to Exclusive Buyer Agency. Hopefully with regard to For Sale By Owner companies as well, though I haven’t read anything yet to suggest that is the case.

Where’s that “Food for Fodder” tag? Lots to chew on today.

Why I do not support the use of Buyer Agency Agreements

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[photopress:buyer.jpg,thumb,alignright] For many years I have been at loggerheads with most of my peers around the country, regarding the use or lack thereof, of Buyer Agency Agreements.

After eight years of “ad nauseum”, insider agent forum discussions on this topic, I continue to feel that buyers are most often, better off without them. Most often I am the only agent, in a forum of 28,000 agents, who does not support the use of buyer agency agreements. So maybe I am the “loggerhead” who refuses to “get it”.

The only time I will use them, and I have used them, is when there is a clear and present reason for the buyer to have one, that is of benefit to the buyer. Everything I do is on a case by case basis…everything…and must pass my smell test for being right for this client at this time, given the objectives of this client. Often I wish I didn’t impose that ethical standard on myself 🙂

I was one of the first agents to use a buyer agency contract in the area I worked in at the time. The buyer had a previous bankruptcy. Under the rules in play in that area at that time, I would need to disclose the previous bankruptcy to the listing agent, even though it had no potential negative impact on the seller, as it did not affect this buyer’s ability to secure a loan. The only way I could get around this, was to explain this to the buyer and have them sign a buyer agency agreement. They agreed, we signed it, and the buyer got both the loan and the house. Some disagree with me on this and feel the seller has a right to know everything about the buyer, regardless of whether or not it will impact the seller. I do not agree.

Today, in this area, I do not need a contract with the buyer to represent the buyer, but at that time and in that place I did, so I used one in that particular case. I used one because the buyer could not attain their objective, buying that house, unless I did use one. It passed my smell test of being better for the buyer client for me to use a written buyer agency agreement.

Some of my peers argue/ask, “Why do you always use a contract with a SELLER client?” as if the issues are one in the same…a “contract is a contract” is their mantra. I always use a contract with a seller, because it is in the best interest of the seller to have all of the members of the mls show the seller’s property. In order for the seller to gain access to the mls, the sellers must sign a written agreement to pay, through me, the agent who shows the property and brings an acceptable and accepted offer. In other words…it passes my smell test for being best for my client for my client to sign it.