Looking Out From the Garage: January 2009

Since when did real estate agents become the official distributors of recipes? 

I get a newsletter from an agent (that has not listed a home in my community in 7+ years) that always features recipes.  No market data.  No area information.  Just a couple of recipes and some thinly disguised promo propaganda. 

Why?  Really... why?

There is another agent that has farmed the area for quite a while as well.  Her newsletter comes out every 5-25 weeks (yes, I meant to say it that way).  In it she lists all of the sales for the last twelve months, the average price and the days on market for the subdivision. She also lets me know that she is number one for integrity and service. 

Better, but I don't recall ever seeing one of her signs here either.  The point there is that there is no interpretation of the data.  Is it up?  Down?  Average?  Accelerating?  No idea. 

These aren't cheap.  They are printed in color.  The market data is obviously short run (it isn't a giant subdivision).  The recipes are on nice paper.  The postage isn't cheap.  But they are both missing a couple of things...  consistancy and relevence. 

Now for my alarming revelation... 

I have never actively farmed my own neighborhood.  I talk to people when we go out walking and stuff... but aside from the business card ad in the newsletter, I have not done much here in my own front yard.  Shameful I know...  But, after talking with some of the people I know around here, they are glad I'm not beating them over the head with my business. If you are one of my neighbors, I'll be happy to help you sell your home.  I'm not going to beat you up or anything if you choose someone else, though. 

So, are you ready for the ultimate broccoli recipe?

Take 1 pound of broccoli, place in 13 gallon plastic bag.  Place plastic bag in a large plastic bin next the the garage.  On the appropriate evening, place plastic bin at the curb for pick-up. 

yum

I am about to say something that is loaded with controversy in the real estate industry.

I do NOT think the $22,500 tax credit put forward by the NAHB and NAR is a good idea!

The National Association of Home Builders (NAHB) and the National Association of Realtors® (NAR) are both solidly behind a plan to give away a $22,500 tax credit to ALL buyers of new or existing homes.  They want to do this in order to spur home buying and "restart" the stalled real estate market.

Currently, there is a $7,500 First Time Home Buyers Tax Credit (FTHB Tax Credit) that requires repayment without interest over a 15 year period.  I would venure a guess that the repayment requirement is going to disappear in the next few weeks...  but that is a different beast.

Both the NAHB and the NAR are pushing for the larger credit, extended to ALL buyers, not just those narrowly defined as FTHBs.  Failing the larger credit, they would like to see the $7500 made available to all buyers.

But, here is the problem...

We are coming off of a housing bubble.  In many markets, there are just too many houses.  In some markets, there are a lot of buyers that are upside-down in mortgages.  In other markets, there are many sellers that are unrealistic about their pricing because they want to sell for more than they paid two years ago.

The $22,500 tax credit could fix much of that... obviously those that are $100,000 under are NOT going to be helped.  But...

When does it end?

If that type of package is put into the market, it is going to push up prices.  Basically, sellers will know that buyers have extra money to play with... and they will price and/or negotiate accordingly.  And buyers will let it happen because there WILL be a rush to market for buyers taking advantage of the plan.

But the increase in prices is false.  It isn't because the market decided real estate was valuable again... it would be because there was free money to play with.  It might not push prices up to the max of the tax credit, but it would certainly lead to false price inflation.

And then... when the tax credit stops... there would be continued downward pressure on prices.  And there would be HUNDREDS OF THOUSANDS of buyers that would want to get the inflated price for their homes... forget that $22,500 was given to them, they would want the price that "they paid."

We would be back in close to the same situation we are now.

Obviously, the passage of that type of "housing stimulus" would be good for me personally/financially.  But I don't think it is right, because in the loang run it wouldn't fix the problem... (people buying homes they can't really afford)... it would be a band-aid and we would have to find a new solution to help the new people that would be damaged by the policy.

Tim did a magnificent job explaining the situation the housing market is in, and why simple interference from the government isn't going to easily fix the problem...

Today was the day I had to pose for picture for the Atlanta Journal Constitution for the profile that will be in the Business section (I don't know the date yet).

Instead of getting a boring picture behind a desk in the office I hardly ever visit, I thought it would be fun to get the picture in a cool garage.  I didn't have anything really appropriate, so I pulled up a listing that I knew about with a cool garage.  I called the agent with the listing, and we cleared it to go...

I had been in the house a long time ago... and it has since been staged.  Coincidentally, I know the stager... I used to work with his daughter, and he used to visit my store frequently.  And he has some cool toys in the garages.

I shot a few pictures before the photographer showed up, just so that I could use them here in the blog.

BTW, the 69 Mustang was in the other garage...

from LaneBailey.com

When I was a kid we moved a few times.  The first one doesn't count (I was 1...  didn't care).  But, when I was 6 we moved across town in Jackson, MI.  Since my Dad was a teacher, we moved during the summer, because that was when there was time. 

It almost shouldn't count because the house had a pool.  There were NO issues meeting the kids in the neighborhood, because they wanted to come to the pool.  Also, it was during the first week of school (1st grade).  That was the part that was important.  Because we moved during the school year, I got to go to school and meet kids within a couple of days of changing addresses.  I had to make the "new kid walk" into class, but that was over in a week. 

About five years later, we moved to Hampton, VA.  This began my "single year in a school" streak.  We had a couple of moves, but they seemed almost strategically placed to keep me from being in a school for more than a year:

• Langley Elementary (6th Grade)
• Moved to Newport News
• Sedgefield Elementary (7th Grade)
• Carver Intermediate (8th Grade)
• Parents divorced, moved back to Hampton
• Jones Junior High (9th Grade)

Only Carver was a new school with old friends.  In each of the others, I was a new kid. 

And the move to Hampton the first time and then to Newport News were both into townhouse communities with swimming pools.  The moves were during the summer, but because there was a social hub, it was quite easy to meet people and make new friends. 

On the move back to Hampton from Newport News, no pool... no neighborhood association...  There was the beach, and for a month and a half, I rode my bike down there every day.  I spent a LOT of time at Buckroe Beach.  But, aside from the time that I spent with my friends back in NN, or them coming down to Hampton... or at Busch Gardens (season passes were wonderful), I was on my own.  Without the hub, it was difficult to meet new people.  Ok, that and I have always been a little shy. 

As soon as school started, things normalized. 

Through all of those moves, looking back on it as an adult, I learned something.  Moving during the school year can actually be helpful for kids.  Especially the first part of the year.  Don't worry as much about disrupting their classes as about the instant social interaction.  Even shy kids WILL meet people in class on the first day of school.  It might take a week or two to get comfortable, but unless there is a social hub, like a pool, and a social director (I can remember a few faces from my past) it is tougher to meet people before school starts. 

So, don't worry as much about waiting for summer...  And I think moving to a new city is actually tougher on adults...

Friday morning, and my cell phone rings just as I am getting ready to take my son to school.  Nothing unusual there...  But, it was the caller and the subject that I wasn't really expecting. 

The caller was a reporter from the AJC (Atlanta Journal Constitution) that I have talked with previously.  He had called me last summer to get information about the real estate market in Gwinnett County for their annual wrap up of the county. 

I like talking to reporters...  Ok, I admit that I just like talking with people. 

But, what he was calling about was the second shocker of the day. 

Call it a Meme...

Basically, he sent me a series of questions to answer about me and my business for a business feature... because of the blogging angle. 

I'm not like other real estate agents... 

As soon as it shows up, I will happily link it.

Some think it might be THE most beautiful car ever made... Even if it isn't THE most beautiful car, it is certainly near the top of the list. It is also near the top of the list as one the most valuable cars ever to trade hands.

Actually, it was part of a bubble in collector cars, specifically Ferraris. In 1991, one reportedly changed hands for a little north of $15million. Soon after, the bubble deflated, and it has only been the last couple of years that values have approached $10million again.

Of course, keep in mind that there were only 39 total cars built... and ALL were built as race cars. With only 39 total cars (including the series I - 36 cars, series II - 7... 4 series Is were altered to series II specs by the factory... 4 other series I cars were modified to be 330LMNs, but are still considered part of the 250GTO family), In order to buy one you had to be seriously connected. And have $18,000... in 1962. That was Rolls Royce money... for a small two seat sports car with sliding windows, bare bones interior no speedometer.

Obviously I am talking about the 1962-64 Ferrari 250 GTOs. GTO stood for Gran Turismo Omologata.

One name, two very different cars... Both are impressive, and so I will write a little about both. The older one is newer... and the newer one is actually older. One is real, and the other you can actually buy. They are named Eleanor.

So, why the riddles?

The Original...

In 1974, there was a movie called Gone in 60 Seconds. Hal Halicki used a 1973 Mustang Mach I as the star. She was called Eleanor. If you haven't seen the original movie, it is something to experience. The second half of the movie is a car chase... and one car did all of the stunts. It was wrecked, but drove away... as was the stunt driver... Hal Halicki. Another cool thing was that since it was a LOW budget film, there were a lot of extras that had NO idea they would be extras at the begining of the day. They were where the crew was filming (often without permission) so they were on camera... or even speaking.

Scores of cars were destroyed... that was where the budget went. I saw the movie soon after it was released... LOVED it.

And then came the remake...

In 2000, it was remade... with a budget. And one of the PRETTIEST Mustangs EVER. The new movie featured an older car, a 1967 Shelby. Of course, with a full on Hollywood production, there were scores of Eleanors built for different tasks and stunts. Production value is better... And did I mention the car was seriously cool?

So, are you thinking what I am thinking?

Yes, you can buy your VERY own Eleanor. Up to 750hp... Seriously. I really want one of those in my stocking.

Those are words I hear from my son on an almost daily basis.  He breaks stuff.  He isn't doing it on purpose, but he is also just 4 years old, and he doesn't know how to take care of his stuff as much as he should.

Honestly, most of the time... I can fix it.  I have soldered, welded, glued and snapped pieces back into place as required.  But, sometimes that just isn't the case.  Despite a garage full of tools, and the (sometimes I think innate) ability to complete a lot of different types of repairs, I just can't do it.

Today it was the antenna for a radio controlled car.  He broke it off inside the controller.  He previously broke the mast further up, and that was also unrepairable, but this time he broke it so that the old one couldn't be pulled out and a new one installed.  It was a cheap car... he's 4, and I don't expect it to have a long life... but it still annoyed me.

I keep telling him to watch where he swings the thing...  And he keeps saying he has it under control.  Clearly not...

So...

As I was standing by the grill cokking dinner tonight, I got to thinking about real estate deals.  I've had a few go south.  I've had sellers dig in and refuse to talk with buyers.  I've had buyers that were less than reasonable about things that came up.

Frankly, I understand.  I have been less that reasonable on WAY more than one occasion.  I have not wanted to move after "picking my hill to die on."

As an agent, I always have to work to fix it.  Find that common ground.  Glue it back together... and if it isn't going to work anymore, get everyone to Plan B.

See...  Parenting DOES teach one about business...  ;^ )

from LaneBailey.com

This is one that really chaps my hide.  I understand it from the consumer perspective, but at the same time, it is still a giant misconception.

As a consumer, it is always a good idea to talk with a couple of agents before selecting the one to list with.  But the purpose of the talk isn't to see who promises the highest price... unless they are buying it themselves.  The purpose is to find out about their marketing ability and how they are going to best present your home to get it sold.

But the burning question is...

How much is my house worth?

That is the big question.  But, let's think about this for a minute.  If I told you that your house was worth $100,000,000, would that make it so?  If you know your house is worth $425,000, does it make sense to try to market it for $750,000.  What about $500,000?  $450,000?  Are you starting to get the idea?

Maybe you don't know what your house is really worth... maybe that is why you even contacted a real estate agent to help you out.  It makes sense.  How should you know if you are being fed a line to "buy your listing?"

There are some tell-tale signs.

• The agent utilizes pre-scheduled price reductions
• The comps aren't really comparable
• The price just doesn't seem right

The agent utilizes pre-scheduled price reductions. The question is... if the price is right, why should you agree to scheduled price reductions?  I know the answer, but the fact remains that most agents using this ploy are running a specific plan.  Get the listing.  Work the price down to something realistic.  THEN start marketing the property. The property needs to be marketed right away, and it needs to be marketed right.

The comps aren't really comparable. If you have a 4 bedroom, 3 bath home with no basement and the agent is trotting out homes with 5 bedrooms and basements, obviously they need to tweak the numbers to get a value.  The more adjusting that has to be done, the more room there is for interpretation... and fudging.  The comps should be from your neighborhood.  They should be recent, and they should be similar.  That can be pretty tough to find...

The price just doesn't seem right. Obviously you have SOME idea of the value of your home.  If the agent is giving you a number that just seems high, it probably is high.  If it seems low, ask them about it.  Find out what the comps are that they are using.  Look for their logic.  They might be right...

I spend a lot of time and money getting a listing to market.  The purpose is to get it sold.  I have no desire to buy a listing and spend my time angering a client, wasting both of our time and energies.  I would rather concentrate on fewer listings that are likely to actually sell.

In my last market report, I noted that there were 4 times as many listings coming on the market each month as were selling.  That means that on average, your home is 3 times as likely to expire of be withdrawn than to actuallt sell.  My average is that a home is twice as likely to be sold or leased than it is to expire or be withdrawn.

from LilburnDwellings.com