The Hardest Decision A Seller Has To Make

by Mike on May 10, 2012

You would think it would be accepting an offer but it’s not. The hardest decision the seller makes is choosing the listing price.

Most seller’s pay attention to their neighborhood, especially as they get closer to listing their home.  So they get a number in their head.  Then they talk to friends and probably a couple of Realtors.  By that point they have several numbers bouncing around their head.  They have their own price which is sprinkled with memories and the work they put in to the home.  The other numbers are from disinterested people who won’t buy the house but give opinions and from Realtors sifting past data to guess future results.  And it is amazing to see how far a part agents can be on pricing.

Every seller goes through this battle with those numbers. They look at the top number and wonder “What if”?   And once they have that number in their head, any drop often feels like a monetary loss.  Unfortunately it can take a while before the seller really grasps whether or not the price is too high even though the Realtor knows pretty quick.  The biggest problem is that homes get the largest amount of views the first week, price drops later may not be viewed by as many.  Sometimes those buyers recognize the home while looking online and think, “I can’t remember why I passed on this home but I did,” and they never look at it again.

There was a study (I should have bookmarked it) that said pricing your home right in the beginning end up selling for more than notching down the price over time.  Each home is unique, I’m not sure how they proved that.  But in a seemingly opposing view, the authors of Freakonomics claim Realtors sell their homes for 3% more because their homes stay on the market 10 days longer than the average.  Supposedly they sit and wait longer.  I don’t know if there are enough Realtors to be able to make that claim.  Plus, our clients don’t always make all of the changes we ask for whereas we are likely to make those changes.

So if you have two studies competing against lowering the price and holding out, you can see why this is the toughest decision.   And one of the scariest things is when we finally get the client down to our price and it sells the first day.  They are adamant they lost money and they are not happy. “I knew I should have started higher!”  I had one seller that tried listing $10,000 above my price in 2003 which was a stable year and I could pinpoint prices.  He got an offer the first week and told me, “I told you so.” Unfortunately only the husband half of the buyers saw the house. When the wife saw it they immediately backed out.  My client said, “No problem, we’ll get another offer.”  We did…three months later. We got 5 offers in a span of 60 hours and they were all around my price, and there was no arguing with that.

It is a hard decision with no easy answer in this soft market.  Back in 2003 it was easy to pinpoint a price but now I give prices in ranges.  The best answer I can give sellers in a tough spot is not to hang on too long.  I’m seeing enough situations with multiple offers that if a good home is underpriced, the market will correct it.

Of course in this new economy it is tougher because people are coming up against a loss which leads to a short sale.  It’s almost a luxury these days for a seller to have room to adjust their price.

 

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How To Pick A Realtor

by Mike on March 29, 2012

It’s so hard to pick a good Realtor because most people don’t buy homes often enough to get a good gauge on the process and know what to look for or what works for them.

Do you pick based on sales?  I know a Realtor that had 60 sales in one year and your best interest is the very last thing on his mind.  I had ten sales in one month and I don’t even remember it because things were so crazy.

Do you pick based on the car they drive?  I know a Realtor who got a listing specifically because of the Lexus she drove because it alluded to success. There is a Realtor with a jaguar who is on my list of three Realtors that I do my best to avoid along with the guy above.  The third is in jail.

Do you pick based on company? Every Realtor is different and the company they work for has little to do with how the Realtor works or treats you.  In one case a Principal Broker at a very large company told me that a Realtor he had was doing bad stuff but that he kept documentation of his reprimands so the Principal Broker would not go down with him.  But the Realtor produced so he kept him.

Do you pick on experience? Sometimes youth has exuberance and will work harder but they don’t know what they don’t know. The aged veterans can get careless or not keep up with the times. It’s a crap shoot as well.

Do you pick on referrals? This is probably the best idea though I know when I started there were some rough deals.  The clients in the end were ecstatic because what they wanted happened and loved me.  They remember the end more than the hiccups. Realtors are like airplane pilots in that there are many things going on that we take care of that you may never know.  So referrals are best when they include a story of how the agent helped through some tough parts of the deal.

So what would I do?

The thing I tell every single client is that you have to feel comfortable with your agent. You have to know that you can talk to them.  I have heard plenty of people say their Realtor made them feel dumb when they asked a question or that they wouldn’t answer the phone.  That should never happen.

I would also start with referrals.  I think testimonials are good but the agent is only going to ask his best clients for those.  I hate to ask for those so I have very few because I don’t like to bother people.

It’s not easy to pick an agent which is why I tell sellers that my contract can be cancelled anytime if they don’t like me. I’m not forcing you to work with me if you don’t want to work with me, and I have watched as other Realtors force a seller to stick with them because of the 6 month contract.  That sounds like no fun for anyone involved.

So far I have only had one person end the contract to list with someone else.  They met another Realtor in a coffee shop that had “good energy”. I cancelled it immediately and told her there were no hard feelings.  Five months later it sold…..for $100,000 off her list price.  I had told her the price needed to drop but wow.  Even I didn’t think it needed to go that low, and they didn’t even do price drops. That was one single drop.

I also wouldn’t hire a Realtor that did dual agency where they would represent the Seller and Buyer at the same time.  If they have that mindset they are focused on the money, and it’s called double-siding a deal.  I have yet to hear a good argument on how one agent can represent two different sides trying to negotiate their best price.  Some liken it to one lawyer representing both sides in a murder trial.  At some point the Realtor becomes an order taker and can’t have anyone’s interest in mind much less yours.

For Buyers, ask your Realtor if they show all homes regardless of the commission.  I don’t blame Realtors who won’t show a home because the commission is low but I hold them in contempt if they don’t tell their clients that they are hiding listings from them for that reason.

I see Realtors as something like a Presidential Advisor.  You hire us for our expertise but you have the final say.  We should work with you in your best interest not ours. I have told clients that they shouldn’t buy because of their life circumstance. I have told them that a house wasn’t a good fit for them based on everything they told me.  I have said plenty that could or did talk myself out of getting a commission, even when things have been slow and I really would have enjoyed that commission check.

Pick a Realtor that you believe has your best interests in mind and doesn’t hold you to a long contract.  We do exist.  And there are only a handful of agents that I trust to work with in this business.  One of them is Sandra Daniels who I call my partner.

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Holiday Sales Slowdown

by Mike on December 13, 2011

It’s that time of year, so much to do, so little time it seems.  That’s why real estate slows down so much during the holidays.  Few people are motivated enough to buy or sell a home once the middle of October hits with Thanksgiving around the corner.

Once January rolls around the market gets flooded with new listings.  Don’t be discouraged by the lack of homes for sale if you are a buyer, they will come back.  If you area seller, this is a great time because motivated buyers are looking and you will have a jump on the new listings when the New Year rolls around.

If you are following the same  line of thought for selling your home, you will be much better off listing it as soon as you are able.  There will be buyers out there and many homes will be snatched up but then the buyer pool is depleted and it is back to trickling sales.

And, if the holidays are leaving you feeling overwhelmed, my friend Vicki has the solution for you.  Check out her blog at  ow.ly/7WWpU to reclaim the holidays!

Happy Thanksgiving and Merry Christmas everyone!

 

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Buy her the moon or at least some acreage there.

by Mike on October 14, 2011

Dennis Hope, a Nevada entrepreneur, has been selling lunar real estate, priced at $20/acre, for the last 20 years. By exploiting a loophole created during the 1967 United Nations Outer Space Treaty (the Treaty stated that no country or government could lay claim on extraterrestrial land, but did not mention private individuals or corporations), he has basically laid ownership claim not only on earth’s nearest satellite, the moon, but also on seven other planets, and their individual moons.

His business, called Lunar Embassy, is booming.  Hope claims that, so far, former presidents Ronald Reagan and Jimmy Carter have bought acres of moon land from him, as well as the hotel corporations Hilton and Marriot. Over 400 million acres have been sold so far, at a rate of 1,500 lunar properties per day. What’s more, the sale of these lunar acres has brought in profits totaling $9 million.

Dennis Hope is one of many individuals, as well as corporations, cashing in on the U.S. government’s renewed interest in the moon. This renewed interest started when President George W. Bush announced, back in January of 2004, that he wished for the U.S. to make another trip to the Moon by 2017, and to establish a lunar base by 2020. In response to this request, the U.S. space contractor Lockheed Martin is already developing technologies that will allow future moon residents to take advantage of the moon’s natural resources, such as by converting moon dust into oxygen and water.

Prior Apollo moon landings showed that lunar soil contains large deposits of a rare gas called helium 3. Scientists think that helium 3 could be used to create a new energy source, one that would be virtually inexhaustible, and pollution-free to boot. This has resulted in the U.S., as well as Russia, laying plans on how to strip-mine the helium 3 and transport it back to Earth.

As for Lunar Embassy, it has set up sale of lunar land not only in the U.S., but also in the countries of Germany, Britain, Ireland, Australia, New Zealand, Japan, and China. Ownership of the land also includes the right to harvest its resources, up to 1.8 miles underground. Despite the rise of “moon fever”, no government has, as of yet, recognized the sales as legally binding. Furthermore, lawyers for the United Nations state that Lunar Embassy’s ownership claim on the moon is without merit.

For anyone still interested in buying lunar property, though, there are 8 billion acres left for sale.

Photo via http://www.flickr.com/photos/mar1lyn84/2722712047/

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Eminent Domain Or How Government Takes Land

by Mike on October 14, 2011

The city of Beaverton and the Biggi family have been arguing/negotiating over some land in Beaverton that the city would like to use to build a stadium for the Portland(will they change the name to Beaverton) Beavers.  Negotiations broke down and the Mayor started talking about eminent domain.  Once he agreed to back off that idea the Biggi family went back to negotiations.

What is eminent domain?

The Fifth Amendment grants the federal government the right to exercise its power of eminent domain, and the due process clause of the Fourteenth Amendment makes the federal guarantee of just compensation applicable to the states. State governments derive the power to initiate condemnation proceedings from their state constitutions, except North Carolina, which gains its power through statute. The constitutional and statutory provisions require federal, state, and local governments and subdivisions of government to pay an owner for property taken for public use at the time the property is taken.

The power of eminent domain was created to authorize the government or the condemning authority, called the condemnor, to conduct a compulsory sale of property for the common welfare, such as health or safety. Just compensation is required, in order to ease the financial burden incurred by the property owner for the benefit of the public.

Most often you hear about eminent domain when it involves expanding roads and freeways.  Portland has some history with that when they added Tom McCall Waterfront and removed Harbor Drive downtown.  Revolutionary and progressive at the time, what makes it even better is that it worked.

So should they use eminent domain to take the land from the Biggi family?  As many as 19 properties were codemned for the new Cowboy’s Stadium. I hope there are other events happening besides the 8 regular seasons NFL games.  New York is a developer’s paradise if the government likes their proposal.

I don’t think the government should be able to strong arm someone into selling.  I don’t think a stadium is a public necessity especially for a team that averages 5,000 ticket holders each game.  What do you think?

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HOA’s and Siding Litigation

by Mike on September 9, 2011

Last year the Vice President of a major title company was in town to talk about the state of our local housing market. He started off by asking, why is there so much litigation with siding in the Northwest.

If you live anywhere in the Portland area you have likely seen whole housing developments with their siding removed in the last few years. Apparently homes built in the last 12 years or so weren’t done according the siding manufacturer’s instructions.

I don’t know if it is because builder’s foremans got lazy or what but it seems like the majority of developments have gone through or are about to go through some litigation due to construction defects or improper installation. Why it isn’t all over the country I don’t know.

Almost every time I have a client interested in a newer home I ask about any litigation and really hope it’s over. If not then there is a good chance it is coming, and it is near impossible these days to get a loan while litigaton is pending.
While the HOA may win the lawsuit agains the builder’s insurance there is often an out of pocket retainer for the lawyers. If they don’t have that in reserves then they have to give an assessment to the homeonwners hoping they have the money.

What can also happen is that the lawyers win and then they have to get paid and there might not be enough money left over. This creates another assessment. I have had two clients successfully flee those situations.

So you can’t buy one and you can’t sell one and if you’re lucky they have already gone through it. Here’s to hoping you don’t have to go through it.

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