Commentary January 12, 2013

I Am No Middle Man

 

A recent client's very apros pos token of gratitude.

A recent client’s very apros pos token of gratitude.

AGBeat has an interesting article on how technology has eliminated many “middle men” from their respective industries, but that real estate brokerage has not been among the victims. It is a well done piece, and I agree that technology will never replace agents for many reasons. However, I do take issue with one thing: The term “middle man” does not apply to me. I am no middle man.

“Middle man” implies an intermediary that stands between the consumer and the good or service who adds their fee without bringing lots of value. That isn’t me, and it isn’t any one of my agents. And that goes for the vast majority of my industry.

Real estate is not a point and click transaction. The proliferation of data and access on the Internet may have destroyed travel and brick and mortar book sellers among others, but those exchanges last a few minutes and end with entering a credit card number. However, real estate transactions begin weeks and months before the deposit. They also do not conclude until 60 to 180 days later (as in the case of short sales) at the closing. There is no similarity to any other piece of commerce.

Often, I will not conclude a transaction with a client until 6 months or a year after my first contact with them.

In the case of a seller, I have given them exhaustive research for pricing, the key to my Rolodex for resources in lawyers, title, contractors, stagers, inspectors, and other trades, and many man hours of time and advice. I have been the general contractor overseeing renovations on property to complete repairs, bring homes into compliance, and getting the home ready and presentable for sale before it saw 1 day on the market. I did it all for free, because I don’t get paid unless and until that home closes. And yes, there have been rare cases where I did all that, the people didn’t take my pricing advice, expired unsold, didn’t renew with me, and then listed with another broker at the price I recommended, selling in short order.  Even if I sell a home in a week, I can guarantee that the work started long before that, in some cases years. Middle men don’t do that.

I have communicated with buyers for months before they were ready to actually look for homes. I have helped them repair their credit. I almost always help them with mortgage resources who have gotten them the very best home loan terms available on the market because, after 16 years in this business, my contacts would make the King of Siam envious. I have put walk through videos on Dropbox for out of state prospects so they’ll know if they should fly in or not. And yes, there have been buyers who have ridden in my car for months, seen dozens of homes with me, and not closed either because they had a change in life circumstance or bought through another broker in different conditions. My pay in those cases was always the same: Zero. That  isn’t a complaint. It is also something middle men don’t do.

And when the right place for my clients is found, the work really starts. I have advocated, sleuthed, investigated,  negotiated, and worked on behalf of my clients for months from accepted offer to close to ensure that the mine field of home inspection, title, contact, mortgage, appraisal and hundreds of other things concluded to their best interests. Middle men don’t do that.

With over 340 sets of clients in transactions valued at over  $140 million, I have remained available for free, as a resource, trouble shooter, and friend. Middle men don’t do that.

Oh. And I have a skill set that only comes with that experience. I look millionaires in the eye the same way I do with regular Joes. I have exercised the patience of Job with other agents in many circumstances, many of whom tough counterparts for a variety of reasons. I have gone toe to toe with lenders loss mitigation departments at huge banks in short sales. I have matched wits with attorneys who think that their JD, and not the facts, put them higher on the food chain than I am. 

All too often the outside eyes looking in judge a broker by the amount of labor they do to the naked eye. There are few metrics for knowledge, communication and a thousand other skills that are not rooted in “doing” but “being.” That goes for many things, including calls, emails and texts late at night.

I am a trusted adviser in what is typically the largest transaction of one’s life as an advocate, fiduciary, sounding board and friend. I am no middle man.

Market Statistics January 7, 2013

2012 Westchester Real Estate Market Wrap Up: Strong Finish.

New Construction for $674,914. New Starts are another positive sign.

More homes sold because prices same down.

That would be one clear message in looking at the December sales figures for single family homes on the Hudson Gateway Multiple Listing Service in Westchester County. Transaction totals were their highest in six years with no special stimulus and buyer appear to be returning to the market in stronger numbers. Overall, 2012 was considerably busier than the prior year, and again posted the highest closing tally since 2007. There is reason for optimism looking forward to 2013.

The totals are as follows:

In December, 2012, 376 single family homes closed at a median price of $557,250.
In December, 2011, 278 single family homes closed at a median price of $542,900.

That is a gigantic 35% leap in transactions, and a modest 2.6% rise in median price for the month.

For the overall year of 2012, the totals were 4476 homes closed at a median price of $587,000.
For the year 2011, 3,842 single family homes closed at a median price of $600,000.

That is  a 16.5% increase in closed sales and a 2.2% drop in median price for the year.

Median price is still down six figures from the peaks we saw in 2005 and 2006, and it could be a decade or more before we return to those values. However, that, along with the low rates and pent up demand of a stagnant market for over 5 years, is probably the very reason why more buyers performed in 2012 than so many years prior. With values at this level tens of thousands of homes in the county probably remain underwater. We are, therefore, a long way away from anything resembling a robust seller’s market. The numbers do point to the infancy of a recovery, or a “precovery” as I have written before.

Looking forward in the first quarter of 2013, we seem to be hitting the ground running. Inventory numbers show 2,469 active listings for sale at a median list price of $639,000. Of greater import is that  785 homes are under contract for purchase at a median list price of $585,000. While there is no doubt that the consumers are trending toward lower cost homes when given the choice (and who can blame them for being more cautious?), that is a strong number of pending deals at this point in the year a week removed from the holiday season (or a day, if you count Epiphany).  What we are seeing is the market striking a balance between a decent number of choices for buyers but not enough to give them the leverage they possessed in weaker prior years.

If 2013 continues the pace I will talk of the R(ecovery) word. Until then, I’ll remain cautiously optimistic. The overall economic status is fragile, and as long as the government does not do anything stupid like repeal the mortgage interest deduction or end the debt relief act for short sales, we can go from crawling to walking again.

 

Company News December 31, 2012

State of J. Philip Real Estate 2012 Edition

With 2013 mere hours away I am pleased to close the books on another successful year that saw the company weather the challenges of the changing market and continue on the path of encouraging growth. We eclipsed some goals set in last year’s end of year report, fell short in others, and are set up for a strong new year. At the risk of sounding brazenly self aggrandizing, there is an awful lost of positive to note as we build the brand.

Out of about 900 member brokerage firms in the Hudson Gateway MLS, our company was ranked 53rd in closed transactions, putting us strongly in the top 6% of brokerages for that metric. Last year I was about  two thirds of the company production and my goal was to be less than half in 2012. I reached that goal. For the first time since founding the firm in 2005, I was not the majority of company dollar volume. I still closed well over 30 transactions, but the team’s continued growth and improvement eclipsed my own production for the first time. This was important to me. In building an enterprise, it is crucial that the company, and not just one person, has strong production. My goal in 2013 will be along the same lines: I am committed our rankings improving, and I want to be one third or less of the production personally.

Our team has indeed grown and reached some rewarding benchmarks. First, we have expanded to 34 agents and associate brokers. The growth of the team included the addition of our first ever Vice President, Angela Johnson, who joined us in July to assist in implementing systems to better run the organization and spearhead the hiring and development of new associates. I remain at my teams’ disposal 100% as well. I have the greatest respect for Angela and greatly value her contributions thus far.

2012 also saw the revamping of the company website and my personal blog. The new jphilip.com unveiled in March has averaged about 20,000 page views per month and made a huge impact on developing new clients and customers for the team. My own self hosted blog was also rebooted in March, and the feedback has been rewarding. It remains one of the firms’  best assets. Our web presence has always set us apart, and that will continue with the upgrades.

In July, the firm was awarded membership into Westchester Real Estate, Inc., the area’s most prestigious and highly regarded consortium of independently owned brokerages. This is an achievement that I am incredibly proud of.

I was also among 20 agents selected nationwide to be part of  Zillow’s  Agent Advisory Board. We had our first meeting in September, and I believe that the group is making a difference. It is an incredible team of industry leaders, and I am also impressed with Zillow managements’ desire to do right by their premier agents.

2013 will begin my 4th term as Vice President of the Hudson Gateway Multiple Listing Service. The New York Association of Realtors has appointed me as the 2013 vice chair for the bi-annual Technology Forum, and I remain a state director on the MLS and Technology committees.

The year was not without setbacks. Not every goal was reached. Deals fell through. New hires didn’t work out. But overall I remain humbled at the incredible men and women who have chosen my firm to their professional home, and I will make sure that in 2013 we exceed their expectations. This much is for sure: as I look over the results of the soon to be closed 4th quarter, it is clear that the first quarter of 2013 is set up to be extremely productive. We will absolutely hit the ground on January 1 running, and I have over 30 incredible people to thank for that.

The takeaway for the consumer is clear to me: companies grow and contract for a reason, and we remain committed to learning, development,  being our best, and getting the best results for our clientele. That is why we grow.

Commentary December 31, 2012

Why the Journal News was Wrong About Publishing Gun Owner Information

In the aftermath of the Journal News’ recent publication of the identity of every handgun license in two counties, their claim that it would be good for starting a dialog on gun ownership is proving to be very wrong. There is discussion, not about guns, but about privacy and what constitutes responsible use of public information. On a personal level, I feel far more vulnerable as a non-gun owner than I did a week ago. It is now easier to find me and target my home and family.

The defense the Journal News offers hinges on the fact that the data was public. But what the editors do not distinguish is the difference between making information available and crossing the line and aggregating that information. The JN is not an almanac. They did not report news. They made it.

Here’s why.

I am a real estate broker. I am also a member of the Multiple Listing Service and have access to that database. The MLS has records of every home in 5 counties via a direct link to public records. Just by knowing your name or address, I can typically tell you what you paid for your home, what mortgages have been recorded on it, and if there are other liens or judgements on the property. It is all in public records, but the non licensed person would only have access to that information by going to the county clerk or paying a website for access, which can be pricey.

If I were to exploit my access to this information and publish on my blog, for example, everyone in Westchester with a mechanics lien or mortgage default, the backlash would be justifiably significant. My job is to use that information to serve clients, not enrich myself by distributing it. Information can be abused. Access does not make it right to aggregate.

I’ll repeat that: access to public data does not make it right to aggregate and mass distribute that information.

In a society where property records and property ownership are transparent, that access to public records is a public good. However, that doesn’t mean that access gives me or anyone else the right to distribute that information to anyone who would not otherwise seek it through the regular channels. All that does is feed the least common denominator who neither went to the clerk’s office nor paid a reputable source for it. The same goes for gun records.

The cynical side of me makes me wonder if this was all just a ploy to be relevant. I haven’t subscribed to the Journal News in years and stopped frequenting their website when they introduced the paywall. Now the publication is discussed coast to coast. Unfortunately, the discussion is not about gun ownership. It is about the paper’s decision to distribute the data.

In an era where we all hope and pray that the 26 lost souls in Newtown did not die in vain, that is a very sad thing indeed. In light of their promise to publish the data on Putnam County, we should also remind them that their job is to report news, not be the news.

Just one last thing: I may not be in the database of handgun licensees (for now), but we do have a 95 pound German Shepherd.

 

Commentary December 23, 2012

Mark Zuckerberg is the John Wilkes Booth of Privacy

As a guy who is required by statute to respect the confidentiality of those who hire me, I can only shake my head at the violence done to online privacy by the current wave of popular Internet platforms. I don’t recall much of a hubub about privacy in the days that widespread use of the web was relatively new in the 90’s;  “netiquette” and admonishments to never give out personal information were the rule of the day, and my biggest headaches were spam and discussion group trolls on the old NY Yankee message board. But as the children of that era grew up and the ads in my sidebar began to eerily reflect the content of my writing, it became clear that privacy was flat-lining.

I place the blame squarely on the shoulders of the Mark Zuckerbergs of the world. I cannot expect a 20-something to share my mid 40’s world view. But they can listen, and I don’t believe that Mr Zuckerberg does. I think he is focused solely on short term figures while he is putting out fires like the Facebook IPO headache and recent Instagram debacle, where the idea of  good faith took a serious body blow. But beyond that he has such a deaf ear to Facebook users that it is sad. I do understand this (but I don’t excuse), because when I was 25 my concept of privacy was little more than making sure the men’s room stall was closed.

I didn’t get medical privacy because I was healthy.
I didn’t worry about my children’s likeness being in the wrong places because I had no children.
I didn’t worry about online privacy because when I was Mark Zuckerberg’s age a cookie was something you ate.
I didn’t get financial privacy because I was broke.

Interestingly, on that last point, when I was 28 an irate neophyte  landlord crossed the line the day I moved out of my apartment. He boiled over in anger over some minor damage to plaster walls, and, in front of my brother, groused how betrayed he felt that I caused damage in the apartment after giving me a chance with my bad credit and all. The damage was probably $50. But I couldn’t get over his big mouth (especially in light of the fact that my credit was actually about average for my age). He deliberately embarrassed me, and I never forgot the incident. It was one of those life experiences that I seriously doubt Mark Zuckerberg can relate to.

Perhaps the biggest casualty of the Zuckerberg culture is the wave of younger people with a voice who, like Mark himself, just don’t get it, because they have no experience How could they?

Take for example a minor phenomenon from this past summer when recent Iowa grad Cathryn Sloane got criticized when she wrote an article entitled Why Every Social Media Manager Should be Under 25. The article generated over 600 comments, the vast majority of which ranged from critical to enraged, and thousands of shares across the ‘Net. While privacy was not a topic, the myopia that comes with lack of perspective was center stage. In Ms Sloane’s case she has more or less disappeared, which is unfortunate because I think she meant well.

More emblematic of the problem is Sam Biddle of Gizmodo in his rant Stop Whining About Your Personal Data on Instagram You Little Whiny Baby. In it, the 2010 Johns Hopkins grad basically tells us all that our photos suck,  Instagram has to make money, and that’s how capitalism works, so eat it.

I am a capitalist. Sam Biddle is wrong. One of the basic underpinnings of capitalism is good faith, and Instagram’s unilateral terms of service change-since revoked- urinated on that idea. Privacy was another casualty. Instagram tried to annex private content, and were it not for the backlash I could see photos of my children meant only for the eyes of select friends out in the open, with no attribution or compensation. That makes my old landlord look like Santa Claus. And guess who owns Instagram? Mr Zuckerberg’s Facebook. Instagram recanted, not because they listened to users, but to their bottom line when high level accounts like National Geographic went dark.

I would bet my own good faith capitalist money that Mr. Zuckerberg will have a far different attitude about privacy the day he becomes a father. I’d like to know how he’d feel if he saw his child’s likeness in a sidebar ad. We’ll see how he feels when he’s older and sees a pharmaceutical ad above his email for a medical matter he’s dealing with. I’d love to be a fly on the wall when he posts a photo of his family out to dinner and it defaults to geo-locating him and some whack job accosts him.

The crux of the matter is default settings on social media that require elaborate opting out of disclosure rather than opting in. And the culture it has created is philosophically at odds with the prevalent attitudes when the Internet rose to prominence. This is unfortunate, because those of us who are older and wiser are forced to deal with the ignorance and sass of younger users like this comment screenshot on a video where Zuckerberg hems and haws like Ralph Kamden when addressing privacy.

What these people don’t grasp is that it wasn’t always that way. Privacy was valued. It was expected. It was a promise. Were we naive? Perhaps, but we weren’t an exhibitionist generation either, where everything we did or saw found itself on social media from childhood on. As demographics change and Gen-Y becomes more influential, privacy will hurtle toward extinction because those killing it never knew to value it. For this I blame Mark Zuckerberg, because he did more to create a generation that marginalized privacy more than anyone else. And he didn’t listen. 

That is too bad because listening would be good for business. The majority of people buying and selling Facebook stock aren’t 25. And I know slews of people in theirs 30’s to 50’s  who eschew Facebook and most social media because they don’t trust it. These people were early adapters of AOL and other earlier platforms. They have discretionary income. They are tech savvy. But they aren’t going to play in Zuckerberg’s sandbox. Perhaps someday Facebook will wake up and learn that good faith, respecting privacy and doing the right thing are the best ways to do business. I get the feeling right now he’s just listening to his own headlines, not realizing that the media loves one thing more than building you up, and that is tearing you down. If I were Mark Zuckerberg I would start to seriously listen

Mark Zuckerberg gets hot under the collar over your privacy issues and sweats

http://www.youtube.com/watch?v=o3hu3iG8B2g
CommentaryMarket December 19, 2012

In Defense of the Mortgage Interest Deduction

The chatter on the Interwebs lately is that a law that has been sacrosanct for generations, the right of a homeowner to deduct their mortgage interest on their income taxes, is now in jeopardy due to the fiscal cliff we collectively face in the wake of the Recession. 

What a shame.

It is a shame for many reasons, not the least of which is that politicians, in their passion to get reelected, will fix anything that isn’t broken to say they did something. It is a shame because many of my own colleagues, a measure of whom are in low cost markets where they would personally be unaffected, are ambivalent about a change in the law.

The mortgage interest deduction (MID) has been in place since 1913. It has enabled generations of Americans to secure their futures. It is a promise in place that has been the incentive for millions of current homeowners to buy. I’ll restate that: The mortgage interest deduction is a presupposition that millions of people counted on to make the 6 and 7 figure decision to buy their current home. It factored onto choosing to own, what price to pay, and what community to choose. Taking it away breaks a significant promise.

What most people do not realize is that when they buy a house with a 30 year mortgage, they pay twice the amount of their loan over that period is just interest. Forget the current rates; they are a blip. If you bought a house 5 years ago at a 5.5% rate and borrowed $300,000, you’d pay back $613,000 back not including your property taxes. That is $313,000 in interest. When rates inevitably raise again from the current anomaly, people could pay back triple, not double, their principal due to interest.

In the above example, a borrower in a 25% tax bracket would pay roughly $16,000 in interest their first year and be able to save $4,000 in taxes (for clarity, speak to a CPA. I don’t advise on taxes. To say the numbers are perfunctory is an understatement). Some politicians see that and salivate. Some holier than thous scream an unfair subsidy. They are mistaken. That deduction is a 100 year old promise, and that homeowner puts that money right back into the economy- they buy lawnmowers, put on new roofs, update the bathroom, and thousands of other things that have made strong home ownership the cornerstone of a stable economy.

That is not my hot air. It is a fact. Don’t take my word for it, take Franklin D Roosevelt’s. One of FDR’s enduring legacies is the Federal Housing Administration, because even the liberal FDR knew that the get out of the Great Depression, housing had to be strengthened. FDR wouldn’t support removing the MID, not did Truman, Eisenhower, JFK, LBJ, or anyone else that followed. And for good reason. It was never part of the problem. The MID didn’t cause the crash, and indeed enabled more people to stay in their homes when times got tough.

Removing the MID not only breaks our word as a society, it destabilizes housing, which is the reason the whole Great Recession started in the first place. Removing the mortgage interest deduction puts millions of people counting on that money thousands of dollars behind, creating more distressed borrowers and cutting off commerce from other sectors because the money that would otherwise circulate is no longer there. And the distress caused for current home owners doesn’t even speak to the repercussions on those who might otherwise buy. Affordability would be lowered. Tax advantages would be undermined. The buyer pool would shrink. Values would decrease. Foreclosures would increase. Sound familiar?

If there is anything we should have learned from the past 5 years it is that a stable housing market is necessary for a stable economy. Disrupt housing and you get a hot mess. Those who are old enough to recall the 3 headed monster of the late 80’s and early 90’s will see a parallel: The Savings and Loan crisis, a Wall Street crash, and then a housing bust lead to a recession from which all too few lessons were learned. The MID was not on the table then; The FDIC absorbed the FSLIC, freely assumable FHA mortgages were converted to requiring approval, and the economy improved incrementally. Ability to buy and keep was never touched. No recovery ever touched it. We should not change that.

We should learn from history, not tempt fate. If anything, housing should be strengthened and bolstered to ensure stability going forward, and not viewed as a kettle from which money can be dumped into the great vacuum of government. Preserving the mortgage interest deduction will keep housing, and a sustainable recovery, stable.

 

Commentary December 18, 2012

What I Want in an MLS Platform: a Broker’s Perspective

 

Since 1996 I have belonged to Multiple Listing Services from Long Island to Rochester. In full disclosure, I am about to start my 4th term as Vice President of what I believe to now be New York State’s second largest MLS. I have used over a dozen different platforms, and I  know, all too well, the range in functionality. Some software is incredible user friendly, flexible and agile, and other systems are miserable to use and make the simplest of tasks frustrating.

And on mobile it is safe to say that they all leave a lot to be desired.

The software an MLS uses for their platform affects the job we do as agents on behalf of our clients. We don’t simply search for properties; we do comparative market analysis, we tally market statistics, and we need to use the data to advocate for our clients on negotiations. Inflexible, hard to use, or less functional software puts clients at a disadvantage because their agents don’t have the necessary tools to do their job as well as they could. With that in mind, here is what I want in an MLS platform.

  • Ease of use. This falls under 2 categories: smooth operation and user friendliness. Some MLS systems are clunky and overloaded with flash and unneeded memory eating background programs that slow the computer down. That isn’t good. Others make it hard to do simple functions like print or look up an agent or brokerage. All agents should have a hotlink back to their profile. I shouldn’t have to stand on my head to print up a report or add an optional search criterion.
  • Search options. I want to be able to search with almost microscopic granularity. Number of bedrooms, towns, zip codes and square footage are common, but I want to be able to filter for almost anything: fireplaces, in-ground pools, municipal water, full basements, slate roofs, owner name, possible owner or assumable financing, and other very specific property characteristics. Anyone in the public can search bedrooms or square footage. I am a broker. I should have options that add value for my client.
  • Data crunching. Home searching is only part of what MLS data is useful for in the service of my clients. Not long ago, while representing a buyer, a listing agent made a claim that the property sold during a brief value spike several years prior in her efforts to justify their list price. I needed to go back and verify the median price for properties in the locale during that period. I could not. No deal was made because buyers do not act when there is ambiguity. That’s a problem-for both sides. I need to be able to drill very deeply for data to get answers. I need to show how homes offering a higher commission sell for a higher percentage of list price. I need to ascertain whether short sale closings in the past 90 days trend below the overall median price. There are many other permutations needed.
    WHY DO I NEED SUCH THOROUGH, SPECIFIC DATA?
    -Because I need to advise sellers better on how to price their home taking into account more than bedrooms, bathrooms and square footage.
    -I need to advise buyers better on what a smart offer would be on a property they are considering.
    -And I need to be armed with better facts when dealing with the claims made on the other side of a transaction by my counterparts that, under current conditions,  cannot be verified.
  •  Better Mobile. Buyers are out there with iPads and tablets. They have questions and want immediate answers. I have to have agility in the field with my client and I have to provide a better value add than unlocking the door and commenting on the open floor plan. I have to have better tools. I can’t just look up a property we drive past on my phone; I have to do a quick  CMA on in the driveway if my clients are ready to act. I have to get back to clients from my car with answers from the field, not make them wait until I get home. My device has to function like my desktop. 

In short, if it is a fact, I need to be able to find it and sort by it. If it is a collection of facts, I need to be able to demonstrate how that correlates to price, time on market, and percentage of asking price paid by buyers. I have to be better than what is currently available.

The MLS is not simply a home search database any longer. Is is the single most important tool brokers have that allows us to serve our clients better via the interpretation of all existing data. While consumers may view the MLS as a simply the homes for sale, they don’t realize that it is actually a massive database of all activity in archive- including sold homes, unsold homes, pending sales, and what they see available. This should enable me to do extensive research on their behalf.  If we cannot do that, our clients lose and our value is not fully utilized.

And for MLS vendors: You may, after reading this, feel encouraged that your platform fits the bill or that you have some work to do. While some are pretty good, I can tell you that no system I have used does 100% of everything I have described. That is a problem, because the rate of change is staggering, and consumer demands are making last week’s better mousetrap next week’s example of obsolescence. 

If I were to build an MLS from the ground up, these would be my design parameters.

 

 

Real Estate TipsSelling December 16, 2012

Ditch the Creepy Stuff When Selling Your Home

True story: about 2 years ago, while looking at homes in Lower Westchester, my clients and I entered a place that must have had a collection of 200 vases on the shelves of the living room. While over the top, we considered it benign until we walked into the home office upstairs and a coffee mug that said the following:

“World’s Greatest Mortician”

Eeww.

That home was not purchased by my clients. Much like the house that had 20 deer heads being sold by the avid hunter, the distraction was too much. Was the home really filled with the ashes of non-paying customers? I rather doubt it. But was the damage done? You bet it was.

I’ll add another one for the books that occurred today: While looking at a turn of the 20th century home, we noticed a number of hand crafted, creepy masks and dolls that made my clients start immediately referring to the place as “the voodoo house.” Yes, buyers label homes with the most memorable characteristic: the artsy house, the pool house, the patio house, the spaceship house, and yes, less positive descriptors.

The “voodoo house” had another fun trait, which was that some of the rooms, and the cellar, had no obvious or easy way to find a light switch. In the cellar, we saw in the dim lights of our cell phones a workshop with what appeared to be an assortment of teeth where they made these creepy dolls. Not far toward the back at the edge of the crawlspace were two masks that looked like props in a Vincent Price movie. I am sure those weren’t really teeth and that it was all innocent, but nothing about the place said “home” to my clients, who wrote the place off immediately.

This is not so much about staging as it is about common sense. People want to switch on a light. People notice it when a shrunken head is staring at them in every room they enter. You don’t have to hire a renowned home stager (although it will sure help), but at least dispense with the creepy stuff and mark where the lights switches are. Better yet, leave some lights on; it is worth the extra few dollars on the utility bill. If these folks were my client I’d have them put all the dolls and masks in a box marked for their next house.

Dark and creepy don’t mix, and they certainly don’t help sell the house.

Commentary December 13, 2012

The Protocol of Home Inspections

We do things a little different in New York from the rest of the country, so a Westchester real estate  transaction will have the home inspection prior to contract  as opposed to being a contingency of the contract in most other markets. But the basics of what I am about to share probably apply to 99% of all real estate markets.

First, when buying residential property every buyer should get get the house inspected by a local, established inspector.

Every Buyer.
Every House.
Always.

Not Uncle Hank the contractor, but a licensed home inspector.

OK,  now that we’ve got that out of the way, let’s suppose that the inspection yielded some discoveries that have to be addressed before going forward. The inspector found what may be evidence of termites in the basement, the water heater is on its last legs, and the roof is at the end of its useful life. And, just for fun, let’s also say that there are some double tapped breakers in the circuit panel.

First, here’s what the buyer agent should never do:

_______________________

TO: Phil@jphilip.com
FROM: Wanda.Schmidlap@xyzrealty.net

Phil:
The inspector said the house needs a new roof, has termites, needs a new water heater, and  there is a problem with the circuit panel. The inspector gave us a $15,000 estimate for a new roof, and with all the other repairs my buyer got nervous and is asking for a $25,000 reduction in price and a $15,000 repair credit at closing. 

Thanks and have a nice day. Please let me know. 

Wanda Schmidlap
1982 Agent of the Year 

_______________________

Communicating the above in a phone call is a no-no as well.

As 2013 nears, we have things known as “Digital Cameras.” Inspectors issue “reports” which can be “emailed” to the other side; as a matter of fact, that is the purpose of the inspection report, to document the findings. Our friend Wanda should get her client’s consent and send the listing agent the excerpts of the report, with photographic proof, of all issues the inspector found.

Moreover, in Westchester, and I daresay every other place, NO INSPECTOR should ever quote a price for repairs. Roofing estimates should come from roofers. Electrical estimates should come from electricians. Water heater estimates should come from Plumbers. I am sure you get the picture.

Of course, in lieu of documentation of the issues, the seller is likely to see this as a lame attempt to renegotiate a price arrived upon in good faith.

This is what Wanda should do:

_______________________

TO: Phil@jphilip.com
FROM: Wanda.Schmidlap@xyzrealty.net

Phil:
 Please find attached to this email the portions of the report that document the issues found in our inspection of your listings. You will note what appears to be termite damage, evidence of three layers on a roof at the end of its life, an installation date of April 12, 1997 for the water heater and lots of rust, and a picture of 4 double tapped circuits. 

I am attaching an estimate from Miller Roofing for a $7500 tear off, an $1100 estimate from Royal Flush Pest Control, a $300 estimate from Galcor Electric, and a $500 estimate from Ace Plumbing to replace the water tank. My buyer is therefore asking for a $9,500 reduction in price to address these issues so that we may proceed.

Kindly present this information to your client and assure them that if we can make this arrangement my clients will sign the contract tomorrow. 

Thanks and have a nice day. Please let me know. 

Wanda Schmidlap
1982 Agent of the Year 

_______________________

Wanda has now done things right. She has

  • Provided documentation instead of making an arbitrary demand
  • Gotten estimates from legitimate contractors
  • Not allowed panic to influence her client and advised them professionally
  • Covered her rear end so as not to appear silly, amateurish, or unprofessional.

She has also put us in the position that, if we don’t do business with her, we are compelled by law to disclose these findings to every prospective buyer going forward. In short, she has followed protocol, which is becoming all too rare. Now, I can respond accordingly.

_______________________

TO: Wanda.Schmidlap@xyzrealty.net
FROM: Phil@jphilip.com

Wanda:
 Thanks for the information. As you recall, the roof was already a negotiating point in the arrival at the current price. I am attaching paperwork provided to my client from the previous owner showing the termites predated their ownership and treatment was already made with a warranty in effect. My client has arranged for their electrician to repair the double tapped breakers. Thank you for bringing that to our attention. The water heater will be replaced Tuesday. 

We can proceed at the current price with the repairs promised, as my client can engage a backup offer waiting in the wings if you choose not to proceed.

Please advise your client that they can be in their new home before the football playoffs start and celebrate Festivus in their new home if they sign the contract. 

Best regards

Phil

_______________________

The above has all happened many times in many forms, but the takeaway for buyers and their agents is that inspection results cannot be treated like classified state secrets. Pictures are worth 1000 words. The buyer need not give the whole report over, but the better the documentation, the better informed both buyer and seller are, and best chance the transaction has of proceeding with integrity.

 

MarketMarket StatisticsUncategorized December 3, 2012

Stronger November Confirms Westchester’s 2012 Market “PREcovery”

You cannot call a market with so many homes underwater, flat to mildly declining prices and a swollen shadow inventory of distress a recovery. However, with prices no longer falling, transaction totals surging, and inventory declining, we are no longer in the downward spiral that punctuated the crash from 2007-2011. The strong November numbers from the Hudson Gateway MLS for Westchester single family homes certainly point to what I would call a “precovery”, where the worst is behind us, as the results continue our strongest year since 2007.

For the month of November, 2012, 311 single family homes closed at a median sale price of $527,000.
For the same period in 2011, 252 single family homes closed at a median price of $520,250.

It is hard to find bad news here. Median price for the month is up slightly.  The 24% increase in sales points to a resurgence at the most robust pace we have seen since before the crisis. Inventory is also shrinking (which happens when more homes sell), and, most importantly, the number of pending sales remains high at 880.

For the year to date,  4,088 homes have closed at a median price of $590,000.
For the same period in 2011, 3,564 homes closed at a median price of $610,000.

Transactions are up year to date 14.7%, which is the highest total since 2007. Median price for the year is down slightly, indicating more first time home buyers entering the market. I do not believe for a minute that real values are down in any substantive way. When we do get what those smarter than myself call a recovery it will be punctuated more by stability than crazy appreciation in values. That said, values will creep up eventually as the market gains strength from the higher sales pace. So we are in that time after the crash, prior to a recovery.

Think PREcovery.