CommentarySelling April 12, 2012

Name Recognition Means Nothing to Home Buyers

If you are searching for homes online, do you care who the listing broker is?

I’ll go out on a limb and say that unless you have had a specific negative experience with an agent or broker, if a house fits your needs you could care less if it were listed by Attila the Hun, Rasputin, Herbie the Love Bug, or Kronos, Ravager of Planets.

This goes for both consumers and buyer agents. Most sellers get this, but a select few make the mortal error of listing with a name rather than the merit of an individual agent. That can cost. If you want to sell real estate in 2012, you have to understand how buyers and buyer agents think. They input their criteria into the search fields and hit “enter.” The results will come out in a list of homes, and they sift through the places to separate the best from the also-rans. Among the highest regarded choices, curb appeal, condition and price rank highest among reasons for a home making the short list.

No one chooses (or eliminates) a home because of who the listing agent or broker is. It is antithetical to the process. Do you care where the peanuts in the peanut butter were picked? No, you just want peanut butter. Do you care who installed your toilet? Probably not, as long as it flushes. Yet there are a few sellers out there that are hung up on the name recognition of the broker as if buyers care. They don’t. Buyers are tuned in to WIFM- What’s in it for me? I never in 16 years ever heard a buyer say “we bought the house because it was listed with ABC Properties” or “we want to see this house because it is listed with Joe Agent.”

Sellers should hire an agent based on that agent’s qualifications whether they work for a prestigious firm with a name that sounds like a high end law practice or if they work for a mom and pop. It isn’t the company. It is the agent. Their track record, their marketing plan, their references.

Track record.
Marketing Plan.
References.

Those are the things that should matter to the seller.  Name recognition is the booby prize. It may sound nice, but it doesn’t sell houses.

Real Estate TipsSelling April 11, 2012

Offering a Credit is Inferior to a Price Reduction

The market in Westchester County is very price sensitive; with a median price above $500,000, that is understandable. The stakes are high, and goofs cost dearly. In some markets, a cash poor buyer may be attracted by a seller incentive of sorts, such as a small credit for closing costs or repairs. However, there is no way to search for such an offering in our marketplace; you can search by price point, square footage, location, school district and even physical amenities like pools or garages, but givebacks are not a criteria.

The same goes for homes listed where the buyer agent is offered a bonus or enhanced commission. Even if we wanted to get paid more than average for selling a house, there really is no plausible way to convince a client to make a place theirs if it doesn’t feel like home. If they love a place, they’ll want it no matter what their agent is paid. If they hate a place, you could offer me the crown jewels; there is no ethical or pragmatic way to make someone buy a home they don’t want. Buyers are, therefore, often leery of what could be perceived as a gimmick.

My experience with sellers who offer a buyer a credit or their agent a bonus is that they have an  attachment to price above net proceeds. Money does talk. And it speaks loudest in the list price. If a sellers wants to throw some money at making their property more attractive, it should be in the form of a price reduction. If a buyer needs help with closing costs, they’ll already know that on the advice of their agent and loan officer and structure that in the offer for the place they want.

The danger with offering a giveback to either buyers or agents is twofold. First, it does not make the place more visible as I explained. But worse, even when a buyer makes their offer and negotiates a seller down  from asking price, they will still want their credit back! For example, consider a home listed for $509,000 and the feedback is that the main bath is outdated, and maybe the carpeting is drab. My advice to the seller would be to lower the price to $499,000 for a higher perceived value and more eyeballs on the property. But instead of reducing the price, the seller instead instructs me to offer a $10,000 remodel credit to the buyers. A buyer comes along and negotiates an accepted offer of $488,500. And sometime prior to contracts they’ll also demand that $10,000 credit. Now we have a problem.

There are those who say that the credit can be taken out of the negotiations to avoid suck a pickle. Not that easy. Once offered, you can’t put the smoke back in the cigar. If the credit is for a full priced offer, the buyer will simply view it as a price reduction from the outset, or money the seller was already willing to part with, and use that as a baseline. If a full priced offer is not a condition of the credit, then its removal is viewed as a bait and switch. In other words, it causes more problems than it solves.

If you are a seller, and you want to throw more money in the pot to move a property, do it where it speaks the loudest and with the fewest complications: lower the price.

 

 

 

CommentaryCommunity News April 9, 2012

Tappan Zee Greenway: Great in Theory, Bad in Practical Application

This past week I had the privilege of attending a Hudson Gateway Association of Realtors Luncheon with Westchester County Executive Rob Astorino. Among the topics often discussed when Mr Astorino is in the room is the proposed Tappan Zee Bridge Greenway project. The idea is to convert the existing structure from a carrying I-287 over the Hudson to a 3+ mile green park once the bridge is replaced by a new structure. I have to admit, the idea of a unique park over the water like that sounds tantalizing: bike paths, the setting over the water, nature on a cantilever, it all sounds pretty appealing. Mr Astorino explained why he didn’t support it, and after hearing him, I am inclined to agree.

Among Mr Astorino’s concerns about the project were cost to maintain a park, the overall health of the bridge, and other pragmatic concerns. While converting the bridge a park might be a less expensive proposition than the 9 figure estimate to dismantle it, I wonder if the project could truly have any long term efficacy in the Northeast. And a Greenway would not be a low cost proposition by a long shot.  We would then have two bridges to maintain instead of one. You would have to still deal with wind and salt water; cultivate and irrigate the park somehow; provide services, such as plumbing for bathrooms, police, safety and first aid stations; and provide some sort of amenities, like places to eat. And I don’t see how the weight of several feet of earth the length of that thing would be less stress than actual traffic.

Over time, the long term deterioration of a structure well past it’s projected 50 years coupled with the cost of maintaining an artificial, weighty earth surface on top, would probably render the whole thing fiscally unsustainable.

But even if I am wrong, I have another large concern.

My concern is that the Greenway would be a boondoggle that loses popularity when people learn that the middle of the Hudson is not exactly a pleasant place about 9 out of the 12 months of the year.

Be honest: have you ever been out in the middle of the Hudson any month other than July or August? I don’t mean February- how about April? Or October? If you have, ask yourself what it would be like 40-80 feet above the water. The span is at the widest part of the Hudson, and for much of its length it is more of a causeway than a bridge for good reason. Take it from a former coxswain: the middle of the Hudson is windy. And cold. With the exception of a few extreme sport enthusiasts, nobody is going to go out on that span in the winter, in the cold, or in the rain. And if the temperature falls below 80 degrees, there won’t be many moms wheeling their babes in strollers out there on summer days either.

Don’t forget, the new bridge will be right next to the old one. So not only will it be crazy windy and cold most of the time, you’ll be right next to an Interstate with  nothing but the brackish ambiance of the Hudson to act as a buffer. Now imagine all that and our taxes supporting it in perpetuity.

There might be a few days or weeks in July or August when the wind and traffic ebb that it would be spectacular. But from October to April you wouldn’t enjoy it out there. This is the Northeast. If this were the Miami Bridge  or the Tuscon Bridge that would be one thing. But in the Northeast we have cold weather, and the conditions would be pretty much the same out there as they are now. So if the cost isn’t  a winning argument against a Greenway, I would posit that quality of experience -or its absence- is.

We already have a ton of parks on the banks of the Hudson and we’ve done an admirable job in recent years of restoring that land for ourselves up and down the river towns. Let’s not take our eyes of the ball. Rather than create an artificial greenway of dubious quality, let’s do a better job with the green we already have.

 

Company News April 8, 2012

J. Philip Real Estate Welcomes Madeline Gomez

The stories of new members of the team often go back a year or more. In this case, it goes back almost 4 years! I am really pleased to introduce Madeline Gomez as J. Philip Real Estate’s newest associate broker. I met Madeline nearly 4 years ago when she was with Remax, and weighing a change to a different model to adapt to her lifestyle. Life happens, and she took a detour from brokerage but remained in the housing industry. And she became an awesome friend to the company, referring people to us from time to time and taking a big role in introducing us to several colleagues who have been an integral part of our firm’s growth. That is a true friend.

Madeline has now made the choice to get back in the brokerage game, and we are excited to have her join us. Not every agent takes the next step to become a broker; it is more than an educational designation or certification, and it is one of the things that the public gets as being significant. It certainly isn’t lost on me either. Licensees are all salespersons, but only a small percentage take the step Madeline has taken to be a broker. Technically, brokers can start their own firm. Most associate, but the stature is significant.

Madeline specializes in southern Westchester, specifically Yonkers. She has some excellent experience with investors as well. You can reach her at (914) 230-7904 or email her (email will be updated this week!). We are very jazzed to have her with our firm, and I am sure you’ll feel the same.

Company News April 6, 2012

On Being a “Competing” Broker or Manager

The discussion arises in the real estate agent community about the pros and cons of working in an office where the broker or manager is also in the field actively listing and selling real estate themselves. In offices where the manager is in the field they are considered a “competing” manager, and if they are not active in the field and fulfill only a support and administrative role they are considered “non competing.”

I have heard horror stories about competing managers poaching clients from their own team, and I could certainly tell horror stories about non competing managers. For the record, I am in the field actively listing and selling properties. However, I dislike the label of being a “competing” broker because I do not consider myself in competition with my team for reasons I will get into shortly. I prefer to categorize managers as being in the field or not in the field because competition is very subjective.

The advantage of working for a broker or manager in the field is that they have first hand knowledge of exactly what it is like to work in the current environment. They see homes. They sit at kitchen tables. They go to inspections, deal with appraisers, lawyers and loan officers and get the climate we are all in. Their skills out to be sharp because of this, and if they accompany one of their team on an appointment they can be more valuable. Unfortunately, some managers who are in the field DO compete with their team members, and sometimes that causes issues when they get a client and beat out one of the other agents in doing so.

I can’t say much about managers who do not actively list or sell. I am not one of them, I never worked for one, and the bad experiences I have had are, I hope, anecdotal and could just as well have happened with active managers. For example, a manager who plays favorites with client inquiries doesn’t have to be out f the field to do so. The same goes for managers who tolerate misconduct from their agents (a HUGE pet peeve of mine).

About 5 years ago I got a phone call from one of my agents. He congratulated me on “getting” a listing he had been working to procure. Apparently, the people who called me and subsequently listed their home with me were also advertising their home as being for sale by owner, and my agent was trying to get them to list with him. I felt bad that I won and he lost, so I asked him to co-list the property with me. That was a mistake. I should have entrusted the listing to his primary care. He knew the folks, they liked him, and they would still have access to us both anytime they wished.

My philosophy since is that if I am ever competing with one of my agents for a buyer or seller, I will do everything in my power to secure the client to the company- and see to it that my agent gets the deal. As owner of the company, I win when my people win. I don’t need to be a glutton and shut them out. It is counterproductive to the long term goal of growing and strengthening the team, and erodes morale. But if I make sure they win, we all benefit. This role shifts me from being in competition with my agents to being their biggest resource. They never have to hide anything from me, and they never have to worry that their company is not 100% behind them.

This may sound self serving or self promotional in nature; it is not my intention for this to be a mere fluff piece to recruit more agents. But you know what? It is self promotional. We are growing the firm, and I feel it necessary to put my views out there. People get passionate about the discussion. We only want agents who will operate with the highest standards for our clients, and if that is to be so I have to do the best by the agents.

Commentary March 31, 2012

Should Zillow Suspend the Zestimate for an Active Listing?

Imagine that you can put a home for sale on a really stupendous, popular medium that would give it incredible exposure. In putting the home  on the medium (and it could be a website, TV program or print publication- it doesn’t matter), you are told that in addition to your content on the home, the publisher will add something extra: their own opinion of the price.

SO…on your $850,000 listing, they’ll say its estimated value is actually $780,000. And that $400,000 starter? They say it is worth $440,000.  Would we have tolerated that for a hot minute back when the New York Times was the ad platform of choice for Westchester homes for sale? What about paying through the nose to get your home on one of those Sunday morning TV shows with all the homes for sale. What if, after you home were shown, the channel posted their own estimate right under your list price and it didn’t match? This is exactly what happens with homes listed for sale on Zillow.

Earlier this week, I was signing papers with some nice homeowners to put their home on the market. Good, educated people. And they asked me to not list their home on Zillow.

I was flummoxed. But their point was that when they were looking for homes, they were skeptical of homes where the Zillow Zestimate (Zillow’s value estimate) was less than the list price. They didn’t want people doing that to them. When I told them that would undermine their exposure, they continued that even if they missed eyeballs on their house, they didn’t want people being encouraged to offer less based on a faulty value estimate.

Now, I love offers, and even low ones are better than no offers because they are a start. But I can tell you that agents in the field have absolutely no love for the Zillow Zestimate. It can help in a general sense in some cases but overall it muddies the waters terribly. Sellers can feel they under-priced their home. Buyers get freaked that they overbid. Even after showing clients the actual comparable sales and explaining how a professional, local broker is not a zestimate, but actually a ZACTIMATE, Zillow injects doubt where we are trying to foster trust. I didn’t make that term up- I got it from Brad Andersohn, industry outreach guy at Zillow and a respected colleague.

According to their own statistics, Zillow’s average margin of error for Westchester Zestimates is 8.3%. Only a third of their zestimates are withing 5% of actual value. You have to drill fairly deeply on their website to find this caveat, but they do publish it. Spencer Rascoff, CEO of Zillow, is pretty clear that his company is the business of selling real estate advertising. If so, why put a zestimate on a home listed for sale? If brokers are the zactimate, why not just defer to our list price, since Zillow never saw the house or executed a market analysis? We are, after all, the customers. And as my couple demonstrates, value to the consumer is dubious.

Back to my couple: They weren’t comfortable having a zestimate undermining their asking price. I showed them how an owner could claim a listing and influence the Zestimate by inputting improvements they made to the property and so forth.  It isn’t exactly an exact science, but it was something they could do. They agreed to proceed with syndicating their home to Zillow for the exposure, but their reservations about the Zestimate speak to the growing doubt among consumers about Zillow’ methodologies. It isn’t just agents that have issues. And I hope the issues can be worked out. I think that offering Zestimates just for homes off the market and having only list prices for active homes for sale would be a good start.

Full disclosure: I am a paying Zillow customer and find many of their tools to be of value. I also know plenty of Zillow employees and they have been gracious and decent people. And I hope they’ll consider my thoughts here as worthy of serious consideration.

CommentaryMarket March 30, 2012

My Friend is an Agent and She Says the Market is Great

Some of my colleagues are funny bunch. They decry a Zillow Zestimate for being inaccurate. They shake their heads when an agent licensed in Illinois gives real estate advice in Trulia Voices to a consumer in Florida, where the laws are different. They shake their head disapprovingly if you mistakenly mark a home as having a walkup attic when in fact it is a pull down stair attic.

And then, in a social situation, when asked how the market in Westchester is doing is by a friend or acquaintance, they step in it.

“The market is really heating up!”
“I think things are turning around!”

My personal favorite, advocated by the seminar gurus is “Unbelievable!” because it is ambiguous enough to mean anything. But there is a clear knee jerk reaction in some agents to become fountains of ebullient enthusiasm when asked about market conditions, as if their cheery outlook will snare them an easy deal. It won’t. It may snare a listing or a looker, but overpriced listings and lookers who don’t buy are not deals.

The truth is that every spring the cyclical nature of our industry kicks in. The holiday season is lower in activity for obvious reasons. The spring is busier because more people want to be moved in and settled by the summer. So springtime is, by comparison, busier than it was 90 days prior. But that is like saying we should build an ark every time it rains. When retailers evaluate a Christmas shopping season, they compare it to the previous Christmas, not the July before. If we are evaluating this March of 2012 in the Westchester real estate market, the only valid comparison is with March 2011. That’s just how it works. If you are an agent and you are busier now than you were in December, that isn’t a turnaround in the housing market, it is you showing up for work in the spring.

I could care less what people say when they chit chat. But it undermines our status as a reliable source of information when our eyes glaze over at the site of tin foil. Agents hate bad information online because it makes their job that much harder when Zillow says a $500,000 home is worth $435,00 or $620,000. Our job is challenging enough without having to overcome an agent’s bad advice given online to a consumer in another state. So why do some agents shoot themselves in the foot with syrupy market opinions when asked?

Lest you think I am being a parade rainer oner, here are some facts courtesy of the Empire Access MLS:

In the first 90 days of 2011, there were 704 single family homes closed in Westchester at a median price of $554,000.
In the first 90 days of 2012, there were, as of this writing, 717 homes closed in Westchester at a median sale price of $505,000.

Which means that volume is up an anemic 2% and median price is down 9%. Prices are now down to to about the median of the second quarter of 2002.

2002.

And in that quarter, there were over 1500 closed sales.

I have an uphill battle when a client wants to list their home at a higher price because someone told them things are looking up. Listings that start out overpriced end up chasing the market-unsold and stale.

Consumers: Don’t ask for opinions. Ask for facts. All real estate is local. And the local market is unique.

Agents: Don’t be afraid to just tell the truth. People want the truth, not spin or the party line. Life is so much easier when you just tell the truth. And it is far harder when you don’t paint an accurate picture.

Selling March 29, 2012

Market Value is Market Value is Market Value

Spring comes but once a year. Once it is gone, wave goodbye. Even in a buyer’s market, a well  priced home will get healthy demand and avoid being an October straggler where the buyer exerts leverage because they know they have no competition. This is why I advise my seller clients to understand the crucial importance of pricing correctly. The biggest mistake I see is ignoring an obvious price point that costs precious exposure and opting to pad the price by a small amount-maybe only 1-2%- to “build in a little negotiation room.” In a price-sensitive market like Westchester County, this is a fatal mistake.

As an example, consider a home that a comparative market analysis indicates as being properly priced at $500,000. Typically, we would price the place at $499,900. On occasion, a seller decides that they’d like to try it out for $509,000 to “get a little negotiation room.” The mistaken belief is that the offers will come in higher because they are asking a little more. The reality is that the offers won’t come in.

  • Many would-be buyers won’t even know the house is for sale because they only looked up to $500,000 (an obvious dividing line for many), and they never saw the house. These people see other homes and buy something else.
  • Lookers and online market watchers see the house, but refrain from doing anything because they will wait for the price to come down.
  • Those left over (who wants leftovers?) may see the house but choose a more competitively priced home.
  • In rare cases, you do get a bold buyer who makes an offer, but not only for what they think it is worth. In other words, the extra “padding” means nothing to them. They’d never offer more just because you asked for more. They might actually bid lower just to speculate.

The argument I get in favor of that extra little padding is that people can just make an offer. But as I have pointed out, by pricing incorrectly, many people either didn’t even see the place or opted to make their offer on a more reasonably priced property. It is human nature. Buyers gravitate toward what they perceive as a better value. Given the huge number of homes in competition with your home, that isn’t a stretch. You cannot manipulate outcomes. Overpricing never gets the seller more money, because buyers will always make offers based on what they want to pay, not what the seller speculatively asks. Market value is market value. 

Often, by the time sellers get wise to the dynamics of pricing and buyer trends, the window of opportunity is lost. We are then “chasing the market,” as more aggressive home sellers reduce their prices to get sold. The spring rush tails off, and it becomes an all out pricing war and beauty contest where competition suppresses prices. All too often, these are the homes that go into the autumn as stale listings facing a price reduction that is lower than the seller’s original bottom line. Buyers are funny like that; if a home is on the market longer than 60 days, they wonder aloud what is wrong with it! In a market like Westchester County with a median price of over $500,000, that is very costly for the seller.

The high bidder always gets the house. In cases where that bid comes from the seller, they unfortunately keep the property. You can overprice, price fairly, or price to sell. We advise to err on the aggressive side, because that actually nets the seller more and cuts down on the wait.

Company News March 27, 2012

Rising Star: Stephanie Solano

There are some things you can’t teach.

One of our newer agents, Stephanie Solano, who is still in her first year with the firm, has closed another home. It is her 4th transaction in the past 6 months and was not without obstacles. This comes on the tail of two successful January closings, and a virtuoso debut in a November closing. Stephanie showed her true colors in the first transaction, choosing to disclose information she heard on the grapevine to her buyer clients and risk losing the sale, which she felt was better than losing her good name if she kept mum. Her clients were impressed with her forthright advocacy, and elected to go forward, appreciative that their agent was committed to watching their back and being completely  transparent. The details are secondary; she put honor above the wallet. We love that around here.

Her latest transaction was another challenge. There was a “lightly seasoned” agent on the other side, and in many ways she did the work of two agents on the deal. She had a knack for asking me for help at the right times (not often) and managing things well on her own the rest of the time with excellent judgement.

Judgement and honor are two things I can’t teach. You either have them or you don’t. So what we have in Stephanie is the real estate version of a 5-tool baseball player: she can do it all. She produces results, and she conducts herself as a good professional should, with high standards. That is what everyone in the public should seek when they get representation.

We are very proud of everything Stephanie has accomplished and how she has gone about her work. She’s the kind of agent you want.

You can connect with her at stephanie@jphilip.com or call her cell at (914) 645-2433.

Buying March 25, 2012

Dear Moms and Dads of Homebuyers

This is an open letter to the parents of the world who have grown children looking to buy a home. I have 4 children myself. While they are not grown, I get the parent thing. I laugh when people mention “18 years” as the length of time for active duty parenting, because if I live to be 110, I’ll still worry about my children when they are in their 70’s and 80s. And I truly appreciate the well meaning parents out there who are assisting their grown children in the purchase of real estate, either financially, with advice, or encouragement. But some parents only end up sabotaging their children’s efforts, and even when you love and care for your children and give them money, you still need to remember that they are their own grown people.

The inspiration for this piece came recently when a client emailed me saying that she spoke with her parent, and that she was going to go with an agent referred to her mother. As a last ditch effort, I asked her to have her mother Google me before making the final decision. I applaud her mother for being open minded, doing so and recanting, saving the agreement I made and retaining me as listing agent. It is my opinion that she did right by her daughter, which was her intention from the start anyway.

There are two things parents of prospective home buyers should always avoid.

Your children should be free to choose their own agent (and other professionals). It is a seldom discussed aspect of real estate that it is a massive financial event. Yet I have seen grown parents insist that their children use Aunt Ethel, Cousin Joe, or an equally unqualified person by mere virtue of the relationship. Aunt Ethel sells 2 houses a year and is asleep by 9pm. Cousin Joe just got his license. Are they really the best person to broker the largest financial event of your life? The same goes for lawyers, which are integral to the real estate process in New York. The toughest deals I have closed (or seen die) are the ones where the attorney is a round peg in a square hole because he’s a relative or family friend.

You’d never ask an eye doctor to set a broken bone. Yet I see litigators begrudgingly used as real estate attorneys, and it never works. Use a specialist. The biggest reason for using the wrong agent and attorney is typically the insistence of the parents, who attach that string because they are contributing financially. They don’t realize the importance of specialization. And that is dangerous. Real estate is a business transaction, not an instrument by which you dole out favors to friends and relatives.

Never be an 11th hour veto. The bane of every agent’s existence is showing a young couple 35 houses, finally finding that perfect place and negotiating a good price for their client, and then being told that the buyer’s parents would like to see it “now that we’ve found it.” Some of the time, the folks come in, say they love it, and everyone goes forward. Sometimes the parents get out of the car with a big puss on their face and they could walk into the Taj Mahal and it isn’t good enough for their baby. Often, these folks haven’t bought or sold real estate since the Reagan administration. Sometimes they just can’t let go of their children growing up and buying their own place.

These parents haven’t been out walking through the rain to homes by the dozen with us. They haven’t seen the slanted floors, dirty litter boxes, barking dogs, roller coaster driveways, swamp back yards, and all the other things their grown, employed, children have sifted through to find the right place. They just come from a world where half the money bought twice the home. And we can’t bring them up to speed before they tell the kids that they’ll be making a huge mistake if they proceed, or some variation. If a parent wants to have veto power, they should be involved earlier. I have no problem bringing the folks on a showing- why would I? But coming in after all the work is done and flushing it all away out of sheer nostalgia is tragic. It isn’t just a waste of work, it causes lost opportunities.

It boils down to letting go and respecting the decision of the very people you yourself raised to be smart enough to live in this world when you are not around. Let them go. Be supportive, and cut the strings.