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.

Market Statistics November 27, 2012

Strong October for Westchester Real Estate Market Continues Improved 2012

The Hudson Gateway MLS statistics for single family home closings for the month of October indicate that the market is markedly better this year than last year, and is the most robust it has been since 2007. Both median price and the volume of closed transactions are up considerably and the number of pending sales is also up as well.

For the month of October, 2012, 348 homes closed at a median price of $561,500.
For the same month in 2011, 268 homes closed at a median price of $515,000.

That is a 10% increase in median price and a whopping 23% increase in transactions. It puts the yearly total well ahead of last years pace as well:

For the first 10 months of 2011, 3312 homes closed at a median price of $620,000.
For the first 10 months of 2012, 3777 homes closed at a median price of $600,000.

Transactions closed for the year overall are 14% ahead of 2011 and the median price is steady, albeit down slightly.

Another good sign is the number of transactions under contract and pending sale. There are 926 homes under contract at a median price of $521,950. Last year at this time there were only 674 homes under contract at a median price of $499,000. That is a 37% increase in homes under contract, and it is perhaps the best indicator of where we are headed than any other metric I know.

Median price is not the perfect barometer for true home values, but it does speak to the trend of price category that buyers are acting on. For example, the $521,950 median price of homes under contract does not mean that values have plummeted from the $600,000 median of the year to date; it does mean that more buyers are buying lower cost homes this time of year.

Perhaps the most significant takeaway from the results is that we are past the low point and entering a period of some stability and-brace yourself-some certainty. I do not expect prices to rise; I foresee flat values for the time being, but the number of sales is growing at a healthy pace. It is hard to argue with the talk of recovery in housing at long last. We were due for some
good news, so we should enjoy it while it lasts.

Recovery might be premature. My label: PREcovery. Write it down.

Ready to dig in? If so, here are some homes still for sale.

[idx-listings community=”Area 3″ minprice=”595000″ maxprice=”620000″ propertytypes=”2467″ orderby=”DateAdded” orderdir=”DESC” count=”20″]

CommentarySelling November 23, 2012

On Open House Thefts: What Can a Real Estate Agent Do?

Last week I read in Agent Genius about a homeowner that was suing their real estate broker after the theft of $162,000 worth of jewelry from their home during an open house. The homeowners claim that they are entitled to damages because the crime basically occurred on the agent’s watch, and that the agent was negligent in not preventing the property from being stolen. This hits close to home for me, because a few years ago I hosted an open house where a theft occurred.

No one should ever have to endure this sort of loss, especially jewelry, which can have meaning that transcends appraised value. That said, I have a question for those debating what role the agent could or should have played in foiling the crime:

What should the agent do once they catch the crime in progress?

We are there to sell the home, so being in “prevent crime” mode strikes me as being rather antithetical to making a deal happen. You can’t exactly sell someone while at the same time being suspicious. Have you ever walked into a retail store and been “watched” by a suspicious shop keeper? It doesn’t exactly make you want to stay very long and buy something. That, coupled with the fact that the odds of a theft occurring in a properly prepared house being remote, mean that all we can do is catch thieves in the act.

Then what?

Tackle them?
Citizen’s arrest?
Subdue them somehow?
Chase them off?

In my own situation, it was two people who stole from a number of open houses in the area, and they were traced to another state. My client’s belongings were never recovered, and I don’t think the two were ever prosecuted. They signed in with fake names and numbers, and worked fast. One asked me some questions while the other cleaned out jewelry in under 2 minutes that was not under lock and key. I don’t know what would have happened if I somehow caught them in the act of committing the crime, and frankly I don’t want to know. People who stumble onto active crime scenes seldom tell happy tales.

Having already been attacked once in a house years ago as a new agent, I have to say as a husband and father of 4 children whom I REALLY want to see grow up, it is not my responsibility to take one in the gut for someone’s unsecured jewelry. It just isn’t. We take enough risk being alone with strangers in our efforts to sell your home.

I am no lawyer and have no interest in discussing the legal nuances or theory. I just value the pragmatic and my well-being. I find it ironic that if the agent slipped down the seller’s stairs that the seller would be liable, yet the agent is somehow supposed to possibly risk their life with a criminal for …things.

If you are selling your home, lock up your jewelry. Install a nanny cam if you want. But don’t add “crime prevention” to your agent’s job. We can’t prevent crime, we certainly cannot stop it, and we shouldn’t be responsible for valuables that should have been locked away.  Lock away your valuables. Everything-and everyone- is safer that way.

Commentary November 20, 2012

What I Learned From a Week Without Power

Note: It has been a solid month since I last wrote a blog entry. We endured 8 days with no power after hurricane Sandy, then another week with no phone or Internet. The disconnection and subsequent mad rush to catch up on lost work forced me to put many of my writing efforts on hold. I hope that this will be the start of more frequent offerings. 

If you are one of the lucky ones who quickly regained or never lost their power during Hurricane Sandy, good for you. We endured 8 consecutive days with no electricity, easily making it the longest blackout of my lifetime. As tempting as it was to complain, the knowledge of more catastrophic loss in nearby communities, not just of property but of lives, made me bite my tongue. Our family made the best of it, and as much as it was a teachable week for our 4 children, I have gotten some new insights as well.

For one thing, I now know more about candles than I ever knew as a boy scout. Take it from me, the long skinny ones give the best light. The fat candles may last longer, but once the flame sinks into the middle, forget it.

Gas fueled utilities are flat out superior. Crazy as it sounds, we never lost use of the kitchen stove or even hot water because our stove and hot water heater did not have electric pilot lights. I found out the hot water thing quite by accident; most people never run their water long enough to know it, or mistakenly assume that hot water is just some fortunate leftover that will run out and must be rationed. Not true. A gas fired mechanical hot water heater will allow you to have hot showers a week into a blackout. Drying off is chillier, but few things are as miserable as a cold shower.

That said, the simpler life dumbed me down terribly. Focusing so much energy on compensating for lack of creature comforts and enduring more knocked me down a notch or two on Maslowe’s Hierarchy. I found myself less on the ball, less decisive, and almost behind in regular conversation. It is just tough to be on my mental A-game when so many distractions, incoveniences, and unfamiliar efforts weigh me down.

I am not too dull to notice how adversity seems to bring out extremes in behavior. I observed both the best and worst in people when I saw neighbors helping each other and strangers get into shouting matches on gas station lines. Society is a fragile ecosystem. Take away a few components and some of us are primitive and barbaric. And a few of us ought not patronize self serve gas stations either (it isn’t rocket science!!).

Perhaps most of all, I’ll never take some basics for granted. Running water is a blessing. A hot cup of anything means more when you boil it in a kettle. A recharged mobile phone and a half tank of gas can make you feel invincible. And if you want to talk style, the new suburban status symbol isn’t a sports car in the garage- it is a generator.

Selling October 23, 2012

Why Price Points Matter

It is no secret that anyone selling their home in Westchester County, or Iowa for that matter, wants to get as much money as they possibly can for their property. There are a variety of things a seller can do to maximize their price, such as staging the home, having the broker do a good video, professional photography, keeping the place tidy, and making sure all showing requests are accommodated. Pricing strategy is among the components of a strong plan, and part of that strategy is understanding price points as they relate to consumers.

The most frequent myth in my experience is the belief that, all things being equal, asking for more money will attract a higher offer. That is seldom the case. The current market, while no longer in a crash, is still incredibly price sensitive, and the typical buyer proceeds with great caution.They often do not even look at a property that is over their price point.

If a property is priced higher than comparable properties, the buyers will not make a higher offer. They will, as a matter of fact, engage in a war of attrition with the seller, watching on the Internet and waiting for the price to come down before they even take a look. Over priced homes tend to remain on the market longer, become “stale,” and, once the seller become hip to the need for a reduction, often “chase the market” where a reduction still has the property behind the value curve of the competing homes.

Here is a typical scenario:

A home owner, seeing comparable sales to their own property of $475,000, $465,000 and $480,000, is advised that the best price for their home would be $499,900. Instead, they elect to price the home at $509,000 to “building more negotiation room.” However, instead of selling in the first 60 days, they have a dearth of showings and experience frustration.

When they finally do lower their price to $499,000, they have missed their mark and get a low offer of $450,000, which does not result in a contract. Eventually, the house does sell, but after several more months on the market than expected and for $20,000 lower than originally thought.

How does this happen?

One of the big reasons is missing the mark on price point. A home priced at $509,000 may not even be seen by buyers who are looking no higher than $500,000. Part of the reason is the drop down menus on real estate sites where price increments are typically $25,000; the other part is psychological. Even if a consumer can type in their own numbers, they still use round numbers like $x00,000, $x25,000 and $x50,000. That is strike 1. Then in any market, there is a finite number of buyers for that locale. If the competing homes sell to that finite number of buyers, then the only way to compensate and attract a newer buyer to the area is via a price reduction. That is strike 2. Starting at $499,000 in the above scenario would get more eyeballs on the house, more showings, and more opportunities to attract an offer.

Starting out with 2 strikes is inadvisable. It is not an exact science because no one can predict the future or what will happen in the economy, but understanding how best to price the home can avoid these headaches and get the seller packing sooner, and for more money.