Industry News June 21, 2012

On Being Included in the Zillow Agent Advisory Board

As anyone who knows me will attest, I have had my struggles with Zillow. I have always tried to be fair, but at times Zillow has frustrated me, and at times I have had to give them credit. In the past year, the world of brokerage has become more polarized about Zillow, with factions of companies ending syndication and decrying their data issues and pay model, and others, if not supportive of Zillow, certainly eyeing the anti-syndication crowd with skepticism.

The debate became more heated around the time that Abbott Realty Group in San Diego released their video explaining why they were ending syndication.  I felt dismay as accusations of dual agency and not looking out for the best interests of clients collided with lamentations about data accuracy and hijacking content. It was ugly, and remains so.

This past May, I decided to reach out to the folks at Zillow whom I know. I sent an email to CEO Spencer Rascoff, whom I first met at Raincamp in 2010, and Jay Thompson, their Director of Industry Outreach. I felt, that as both a paying customer in the Premier Agent program as well as a user of Diverse Solutions IDX, I could make some constructive suggestions about how to make peace. To his credit, Spencer did respond very earnestly, and what followed was a discussion that Mr Rascoff generously shared with other people on the Zillow team.

I’ll summarize some points.

  • The idea that a companies who are at odds with Zillow only want to engage in dual agency is a terrible argument.
  • Data accuracy is something that has to be tackled.
  • There has to be a way to reconcile the Zestimate with the agent community.
  • The complaint that paying Zillow for advertising is somehow coercive fallacious. A few short years ago, some clients would browbeat us into paying for print advertising. Advertising on Zillow is a fraction of those costs.
Earlier this month, Jay Thompson invited me to be a part of a new Agent Advisory Board (ZAAB). I took the invitation very seriously. I am Vice President of my MLS, so I had to ensure there was no confict of interest (there was not). I had to make sure I could uphold the policy of membership on the board, as well as devote the time to it that would be needed. And yesterday, I, along with 18 other professionals from around the country, was announced as part of the board.
My participation does not make me a shill, nor does it give me Jedi-like powers to make changes of my own fiat. But it does give me a voice, and I believe it better to strive to cause constructive change from within an organization than to lob disdain from the peanut gallery.
Recently, in a discussion about Zillow, I said the following:
Zillow is Star-child. It is as amoral as any other entity and pondering what to do with its powers. If Zillow does not yet have all the solutions how can we. To conclude we don’t want Z to exist just because no one-including Z themselves has come up with a way to make the numbers work for everyone is unfair.
Zillow is the biggest kid in the playground, and as such I think it wise to deal with them in as constructive and earnest a manner as possible. I am very honored to be chosen as part of the board. I do intend to make a difference, and I will go in believing that the folks at Zillow-good people you should know like Brad Andersohn, Sara Bonert, and Jay Thompson- want my input as much as I want to share it.
MarketMarket Statistics June 19, 2012

Are Prices Down and Sales up All Over Westchester?

In light of yesterday’s revelation of Ossining’s strange May, where median price dropped almost $60,000 but closings more than tripled compared to the prior May, I did a quick survey of other towns to see if the trend was anywhere else in the county. My thought about Ossining was that sales increased because prices dropped. It was a very “supply and demand” sort of conclusion. Was it the same elsewhere?  I surveyed a few other towns, and here are the results:

Peekskill
May 2011- 5 sales. Median price $340,000
May 2012- 3 sales. Median price $185,000
Peekskill bucked the trend ( Rough month too.) 

Mount Kisco/10549
May 2011- 6 sales. Median price $645,000
May 2012 – 9 sales. Median price $524,350
Mt Kisco followed the trend.  

White Plains
May 2011- 16 sales. Median price $540,000
May 2012- 7  sales. Median price  $600,000
White Plain followed the trend in the wrong direction. Trend Bucked.  

Eastchester
May 2011- 7 sales. Median price $572,000
May 2012- 5 sales. Median price $591,000 
Eastchester bucked the trend.  

Yorktown (excluding Lakeland schools)
May 2011- 12 sales. Median price $387,500
May 2012- 10 sales. Median price 342,250

Scarsdale
May 2011- 14 sales. Median price $1,918,831
May 2012- 20 sales. Median price $1,280,000 

Only two of the six random towns had sales increase with prices decreasing. However, 5 of the six places did have a predicable inverse relationship between sales volume and price (higher prices, fewer sales, lower prices, more sales). This was, of course not at all scientific, and both the number of towns and their respective transaction totals can’t be considered a representative sample. 

Don’t think for a minute that it is as bad as the three sales in Peekskill would suggest, nor do I believe for a second that home values in Scarsdale are down 30%. Every locale has its own trends and unique dynamic. All real estate is local. 

This is why you can’t rely on NAR, Case/Schiller or any other national index to inform you of how things are in your neck of the woods. When we read about prices plummeting in the sunbelt 3 years ago, we knew it was never that bad locally. True also, now that we are seeing that there are multiple bids in homes all over southern California we know it is not that good locally. As the numbers show, you can’t even predict what one town will do compared to another. The deeper you drill locally, the more things can vary zip code to zip code. 

I’ll repeat: All real estate is local. 

MarketMarket StatisticsSelling June 18, 2012

Ossining Real Estate Sales Up; Prices Down in May

The New Normal continues to evolve in Westchester real estate, as prices and transaction totals go batty in different directions. Ossining’s May results are fine example. According to the Hudson Gateway MLS data for May 2012, Ossining had a spike in closed transactions, but a steep decline in price compared to the same time period in 2011.

For May 2012, Ossining has 16 single family home closings at a median sale price of $313,500.
For May 2011, Ossining had only 5 single family home closings at a median sale price of $382,500.
There are currently 36 home under contract or pending sale, with a median asking price of $362,111.

The obvious conclusion is that once prices fell to a level that met with the public’s interest, that more buyers would come to the closing table. I cannot argue with that logic. For years, buyers have been sitting on their collective hands waiting for the prices to drop to a level they would be willing to act upon. In May, they acted 16 times. This is not the lowest median price for Ossining, but the 16 transactions is very healthy- you seldom see business triple.

With 36 homes under contract, it is safe to conclude that the trend will continue. The median asking price of $362,111 is certainly higher than May’s median, but that reflects the trend upward as starter homes sell earlier, enabling people to buy their move up home afterward. 137 home remain active and available, so consumers still have plenty of choices in their home search looking forward.

Overall, this is good news. lower prices have seldom been a surprise since the market declined 5 years ago. But a spike in sales is a rare occurrence, and speaks well of the market outlook as summer approaches.

CommentaryUncategorized June 13, 2012

A Retroactive Rebuke of Lower Merion and Radnor, PA Townships

It might seem a tad out of place for a platform centered on Westchester County, NY to even mention municipalities in another state. However, a question about landlord-tenant issues in another forum, and perhaps the early hour of this writing (5:48am, although this won’t be published until later today) have wiped away a few cobwebs and caused me to relive an old pain.

Often, when one becomes an adult and responsible member of society with a family, a business and civic responsibilities, they shed the discontents of their youth. For example, the year I turned 18, the state of New York raised the drinking age to 19. When I turned 19, it was raised to 21. I was incensed about this at the time. I hardly give it another thought today, and if I read that they were raising the age  to 30 tomorrow, I’d pause for a moment, notice something shiny, and then check on last night’s Yankee game box score. I no longer have a horse in that race.

But there are some things that linger.

I turn 45 next month. I run a successful business, have a family and a home, and I am a Vice President of one of New York’s largest Multiple Listing Services today. But at one time I was a pimple faced matriculated student at Villanova University in Radnor Township, Pennsylvania. The record shows that I earned a BA in English in 1989. I was 4 year member of the rowing team, a fraternity brother of Pi Kappa Alpha, a freshman orientation counselor, and overall what you might aptly term “a good kid.” I befriended other like minded “good kids,” and when our junior year arrived, we were summarily bounced from dorm life on campus because the University did not have enough housing for the full student body.

So what’s the big deal? You get an apartment off campus with your buddies and virtually walk to classes anyway, right? Not exactly. Villanova, PA was in the heart of what is known as the Main Line, an affluent row of suburbs on the Paoli Local that is analogous to the Metro North Harlem line that runs through the Westchester County’s sleepy suburban towns. It was not a “college town” like so many schools of higher learning inhabit. Campus was not surrounded by rathskeller dive bars, hoagie shops, apartments and used book stores. We were enveloped by wealthy suburban neighborhoods in Radnor and Lower Merion Townships with mansions walking distance from the quad. As you might imagine, student body and wealthy suburb mixed like oil and water.

The University couldn’t build housing fast enough, and the story was always that Radnor township’s zoning laws prevented the development that was needed. When you have over 2000 students needing housing in and around residential neighborhoods that lack the infrastructure to adequately meet the demand, conflict results. We heard anecdotal stories of drunk students urinating in bushes and other fairly typical incidents which caused tension between the University and the towns. The townships also made things worse by arcane ordinances that prohibited more than two unrelated people living under the same roof. Housing was expensive. Living alone or with one roommate was ridiculously pricey. No matter if you found a 3 bedroom apartment or a 2 bedroom that would easily house and park 3 people. The minute you unpacked you were illegal.

After our first condo didn’t work out toward the end of  junior year, my four housemates and I rented a colonial home in nearby Ardmore, Pa a few miles from campus. 5 people living in a good sized house is no big deal, and housing was not cheap. Three of us were engineering majors perpetually buried in books. All of us behaved. It did us no good. Lower Merion’s ordinance prohibited more than three unrelated people in one home, and so early senior year we were awakened by a Lower Merion town official at 5am and the house was searched. We were evicted by the town in a hearing, and had to move for a 3rd time in less than a year. We split up, and 3 of us ended up in what was known as the Brick House, as ramshackle dump that was once an unofficial fraternity house in an alley behind some businesses. It was a far cry from our first condo in Wayne. But it was a roof over our heads and we didn’t want to be evicted again. So we shut up and endured until graduation.

The incredulous feelings,  going to sleep not knowing where you were going to live, and the sense that the powers that be had it in for us remain with me still. Villanova could do nothing. They couldn’t build what they needed because the town stood in the way, and yet the town wouldn’t let us live off campus with any dignity either. It was a Catch-22 of enormous proportions, and it would be years until Villanova  developed West Campus and provided more housing. I remember standing at the corner of Ithan and Lancaster Avenues watching the locals in their BMWs and Mercedes at the light and wondering what I did to wrong them. I often wondered if the feelings I had at the time would remain when I was an adult with my own home.

They do remain.

Briarcliff Manor is home to one of the campuses of Pace University at what used to be Briarcliff College. There are mansions walking distance from the student union. I own a home in a community that is the socioeconomic clone of Radnor Township. I drive a BMW. I have been quoted in the New York Times and appeared on ABC World News. I have four small children. I am completely on the other side of the social table-in the housing industry at that, and I still feel that Radnor Township and Lower Merion Township were wrong. The lawmakers, town officials and enforcers may all be long gone and there may even be a kinder, gentler leadership in the respective governments now that more students finally live on campus, but I am still angry at how I was treated.

I have never had one problem with a Pace student, perhaps due in large part to the fact that the municipality and university were apparently on the same page about student housing. I have never had a Pace student piss in my bushes because they either live in a dorm or commute from home. Things got managed better here. The story of Danroy Henry, tragic and senseless as it is, could have occurred anywhere and had nothing to do with arcane blue law type housing ordinances.

I don’t know if Lower Merion or Radnor ever changed the laws or reached detente with Villanova once more housing was built on the old Morris Estate (now west campus), but there are hundreds if not thousands of my fellow students who, whether they were evicted or not, lived in some level of fear. Living in fear in these United States. My father won a Bronze Star in Korea after serving with merit in the Second World War, and his son had his rights violated by a vindictive, small minded government that couldn’t get out of its own way and live with a reputable university that has been there since 1842. Were the students and school at fault too? Sure. It wasn’t 100% black and white, but it started with terrible governing.

There were other events I won’t go into, like when my voter registration record conveniently disappeared when I went to vote in 1988 in Lower Merion. When I think about it, it is no coincidence that a huge part of my practice is short sales and serving people facing foreclosure. Nobody should stay awake at night worrying that they might lose their home.

Lower Merion and Radnor may be different today; I don’t know. And there are two sides to every story. But now that I live on what is the other side from being an undergrad, 24 years later at that, I believe that my classmates and I are owed an apology. I am no longer that student standing on the corner of Ithan and Lancaster. I am the homeowner in the car. I am a housing professional of some stature. And if the municipalities still pull this on any students today who may find themselves off campus today, a pox on their houses.

 

 

CommentaryMarket June 13, 2012

A Sign of Progress with Pepperoni

Today was one of those non-stop days from 9am until I got home at 9pm, and in retrospect I had damn few of these sorts of days in 2009. “Busy” in real estate is “good.” Not busy, as you might imagine, is the precursor to “not in real estate anymore.” I won’t bore you with all the details, but they included 2 accepted offers negotiated remotely from my car on the mobile phone, news of a closing on a tough file, the possible finding of another perfect place for a buyer, and the best part was a $1.75 slice of pizza.

I’ll explain. Around 6pm, prior to meeting some buyer clients I was covering for one of my agents, I got a little peckish and stopped for a bite. As you might imagine by the number of vowels in my last name, I did not get goulash. So there I was, waiting in line to get my slice of pizza and a coke (screw it, I don’t care what Bloomberg says, I wanted SUGAR in my drink). And I waited.

And I waited. It became clear to me that the two guys ahead of me either couldn’t choose what to get or they were holding the place up and I didn’t know it. Finally, a manager came and spoke with them.

“Where did you work before?”
“What days are you available?”

Lordy… if I had a hat I would have taken it off! I was witness to someone getting a job. Someone, before my very eyes in this economy, was getting hired! I hadn’t heard a conversation like that in years. I felt like handing out cigars or sending out announcements. I was the unsuspecting godfather of a new job being born. I returned to my car, food in bag, and half checked my wrist for a maternity ward band.

And then, I met two good folks who eagerly looked at 4 homes with me.

While a pizza joint hiring a dough slinger might be an unconventional economic indicator, in context with all the other things I am seeing lately, I think it was fitting. There is still shadow inventory, banks are still stingy, and we still have a ways to go in this market. There will still be days when three deals fall apart. But I am certain that today proved that we are past the nadir.

And just to prove that the angels agree, there was not so much as a drop of red sauce on my lightly colored shirt at day’s end.

#win.

Buying June 12, 2012

Friday Night at 9pm: Bad Time to Request a Saturday Showing

This past Friday evening, I was having my usual crazy start to the weekend, at my desk, nursing a Diet Coke, and figuring out the median price of homes in Chappaqua for the month of May, when the email came in.

We would like to see the house you have listed at XX Rd Saturday as close to noon as possible. 

I counted backwards from 10, and then the text came, because all email inquiries on our listings have an accompanying text alert so we don’t miss anyone. 2 minutes later, another email came from the same people. And the text. Sometimes that happens- maybe they clicked twice.

10 minutes later, another email to my inbox.

We still haven’t heard from anyone. Should we contact another agency? 

I checked my watch. Friday, 8:53 pm.

There is a temptation to scream into the pillow or fire off an email in response that says something to the effect of

News flash! Did you know agents work weekends and might already have our appointments set? Should we  throw the folks we already have appointments with to the curb just for you?

However, tact is the better way to do business. There are two kinds of people who make inquiries like this: Sincere people who don’t know all the nuances of our industry, and unreasonable types who go to a Yankee-Red Sox game in late September and complain about the crowds. Better to err on the side of the former until you know otherwise.

Real estate licensees do have our busy time on weekends, and we are often done filling our schedules for Saturday and Sunday by the end of the prior Thursday. While there is a small “on call” side to the business, we really do more by appointment, especially in a busy spring season on a weekend. Earlier in the week is better if you can only look on a weekend.

I explained this is a tactful way via email, and then after a brief a phone call, the folks understood graciously and we are all set for next Saturday. If we never sell them a house, we have educated the consumer.

Now if all of us in the industry could do that…

CommentaryMarket June 4, 2012

Wow! May 2012 Was Our Best May Since 2007!!

May continued the strong spring in the Westchester real estate market with the highest total of closings in 5 years. Overall, the data for single family home sales from the Hudson Gateway (formerly Westchester-Putnam) MLS saw not only an improvement in total closings from last year, but also an increase in median price. The improvement did not stop there.

In all, 364 single family homes closed in May 2012 at a median price of $615,000.
In May 2011, 308 single family homes closed at a median price of $591,625.

That is an increase in median price of 4%. It is an increase in closed sales of 18%. It was also the best month in closed transactions since May of 2007, when there were 401 sales before the housing market collapse began later that summer.

Year to date, 2012 is outpacing 2011 with an increase of 8% in closed sales. Median price is down $15,000 overall, but the gap is narrowing. Currently, 1396 homes are under contract or pending sale at a median asking price of $650,000. This is in keeping with the tendency for the market to trend up as those who sold their starter homes purchase their “move up” properties. It also bodes well for the upward tend to continue into June.

4250 homes are active for sale at an asking price of $650,000, which is the identical median price of the homes under contract. We are seeing balance.

While it is hard to find any bad news in the May results, I cannot be completely bullish for the short run. Are we past bottoming out? I think we are. Consider that in May 2009 there were only 217 single family home closings in the county. That part is good. But there remains a shadow inventory of distressed homes not yet on the market, and banks are putting the robo signing scandal behind them. Expect more foreclosures to temper the good news in 2013. A true recovery is measured in years, not months. Consumer confidence remains shaky and money is still tight.

However, for now, buyer have choices and sellers gained back a little leverage. Expect a good June, and also expect the surrounding counties further out to start to heat up later toward summer and autumn as the dominoes fall here in Westchester.

Commentary May 31, 2012

Westchester Homes Should be Assessed at Full Market Value

My home is assessed for $32,000.
Last week, we closed on a listing where the buyer paid $364,000. The home’s assessed value was $11,400.
I have a listing in Croton on the market for $599,000 with an assessed value of $10,350.

All over Westchester County, municipalities have their properties assessed at numbers reflective of market values from decades ago.
$50,000.
$113,000.
$9500.
$25,100.

These numbers are often less than 1/20 the real value. It makes zero sense.

In order to translate that number to market value, you need a conversion formula or you have to call your assessor’s office.  The result is confusing for consumers and can be deceptive for homeowners who don’t know they are over assessed, sometimes grossly so. We often get calls from consumers who see the property taxes are $12,000 on a home but the “assessment” is $18,000. Which do they pay? What does the $18,000 mean? And we have to explain something to these folks that does not really help them get any closer to finding a home.

I am sure I’m not the only one whose time is wasted. I am sure staff at the assessor’s office have to translate these assessed values more times than they care to count.

The answer is simple. The towns and cities should assess homes at full market value and end the practice of using numbers that make no sense. It all speaks to the inertia of the transparent government we deserve but do not get. People should not need a phone call or a scientific calculator to know what their assessed value is. There is nothing remotely forthright or transparent about a $500,000 house being assessed for $25,000.

Would converting to full market value assessment cost money and time? Yes, they say it would. Why? I don’t know. It seems to me that a college sophomore could create a program that would do the job in 3 hours. But a common sense solution like that has never taken hold.
You’d need a committee.
And a task force.
And commission.
And a study.
You’d have to open it up to bidders.

Why? The process has to be transparent.

The mind boggles.

Commentary May 29, 2012

“What is Your Commission Fee?”

According to Gene Kranz in his book, Failure Is Not an Option, “When reporters asked (astronaut Alan) Shepard what he thought about as he sat atop the Redstone rocket, waiting for liftoff, he had replied, ‘The fact that every part of this ship was built by the low bidder.'”

I received a blank email this morning with the following not so cryptic subject line : what is your commission fee. Nothing was capitalized, no punctuation, just the five words in sequence.

I take absolutely no offense to the question. It has in the past been the opening of a discussion about hiring me on any number of occasions, and I truly believe that many consumers don’t know how else to best start the dialogue. The thing to understand about the question is that, while nobody wants to overpay, 99% of the people who ask the question don’t view commission rates as being the most important reason to hire a broker. They want what they pay for, which is service, results, professionalism, and a successful outcome.

That said, the construction of the email gave me the distinct impression that this person was email canvassing any number of agents and was deliberately seeking the lowest rate. If that is the case, this person has a long road ahead of them. Hiring a professional just because they are the cheapest is the recipe for a disaster.

Imagine your daughter was in an accident and her face was horribly disfigured. You are told of a renowned reconstructive plastic  surgeon right in the city where you live who can make her look like the day she did before the accident. Do you ask how much?

Or imagine returning home from a business trip to an empty house. Your checking account was raided and there are divorce papers on the kitchen counter. Do you go out and get the cheapest lawyer you can find?

Would you jump out of a plane with the cheapest parachute? Would you plan your wedding at a car wash?

While my examples may be incredulous, consider the fact that surgery, legal crisis like a divorce, jumping out of planes and weddings occur very seldom in our lives. Moreover, when they do, the stakes are high. Your health is at stake. Your finances are on the line. Your well being hangs in the balance.

And yet some people, for what is often the largest financial event of their lifetime, decide that they have to be frugal in choosing their agent. It is as if we are all the same, so you might as well get the cheapest for their rubber stamp and save some money. This is of course flawed thinking, and when the inevitable does occur and the low bidder screws up, the consumer feels let down. They should. They let themselves down.

Real estate mistakes are far more expensive than the percentage one theoretically saves when they hire someone who can’t sell their own value except to promise a low rate. Hiring a broker solely because they are the cheapest is the financial equivalent of having a vasectomy performed in the back of a van. And the outcomes are often similar.

Real Estate TipsSelling May 21, 2012

Get Your Westchester Home Inspected Before Listing it For Sale

One of the more stressful parts of the home sale process is the part where the seller and their agent “sweat it out” while the buyer completes their home inspection prior to contract signing. Often, this yields to a the buyer’s revisiting their “meeting of the minds” price and ask for a reduction in price or repairs to address the inspection findings. This causes no small amount of angst. It is also quite preventable.

Westchester County is filled with older homes, as the post-war baby boom yielded almost full development in many towns. We have almost no new construction. Older roofs, termite damage, outdated electric or heating systems and other signs of long term wear and tear are standard issue. Given this fact, the best way to avoid the home inspection blues is to get out ahead of the matter and do your own inspection prior to listing the home for sale.

For a fraction of the cost of addressing many repairs (typically just a few hundred dollars), the homeowner can know exactly what the latent issues are and address the needed repairs before the buyer can use them as bargaining leverage later. It also give the home seller peace of mind that an 11th hours surprise is extremely unlikely.

Whle the market is showing some signs of life this time of year, buyers have not shed their boldness. The most common statement I’ll hear from a buyer after an inspection is a variation of “If the seller has neglected the (roof, heat, driveway etc), how will we know if the rest of the place isn’t neglected?” Worse, some sellers will go the DIY route and do the duct tape thing as a stop gap repair and make matters worse.

The simple solution is to invest a small amount of money and time into your own pre-listing inspection and address the home’s issues on your own terms without the pressure of losing a buyer and quite possibly enhancing the home’s appeal. An inspection can help you find out if the water heater is about to go, if the circuit breaker panel has a double tap, and dozens of other smaller, potentially incendiary matters that are, in actuality, simple to fix. It goes without saying that more serious things can also be discovered and dealt with. The best part of it is that it puts you ahead of potential problems and more in control.