I’m seldom political-I’m a capitalist, not a ideologue- and while I like President Obama, I have to say that I am incredibly disappointed by the State of the Union speech this evening for one good reason: he barely touched on housing or what he’d do to fix the industry. It is among our biggest problems and he barely went there.  I could also do without the camera on the person Mr Obama was just about to mention, because it made the whole thing seem like a choreographed effort between journalists and politicians, but I guess that’s nothing new. 

It was a grand speech and he’s a marvelous rhetoritician. There were some inspiring things he said. I agree that the American worker is the best in the world. I love the commitment to freedom around the world, and agree that nation building should start in our own back yard. But where I feel let down is the very brief minutes discussing housing that followed his patting himself on the back for the recovery of the auto industry.

What good is importing cars to Korea when you can’t pay off your mortgage with the offer on your home? There was one promise to help people reduce their principle or be able to refinance withour red tape, and that was met with a heartbreakingly tepid response from the chamber. I shook my head. 

GM is the largest auto maker int he world. Swell. I guess we should just have millions of at risk homeowners who have no equity and no straight forward way out live in their cars instead. That might as well have been the solution. It was a 75 minute campaign speech with 90 seconds devoted to our most pressing issue, housing. 

We deserve better. They aren’t listening to us. 

Let me preface my words clearly that I have no beef with franchises and treasure my many colleagues at other firms, large, small, independent and corporate. Everyone should hitch their trailer to the train that they feel best about. 

My choice is that of an independent broker with no franchise or corporate affiliations because that is right for me.  I am approached from time to time about merging with a franchise, but I don’t think that’s a fit for me. Many of the agents with our firm were at one time with a franchise. We were a better match. We also have parted ways with a small number of licensees who sought greener pastures at a franchise. That worked for them. 

The reasons for my choice have always been personal, and I have resisted writing or explaining them because I don’t want anyone to think I am knocking franchises; I would never do so. However, since I have just spent 2 paragraphs disclaiming any bias, I’ll explain why I remain an indie. 

First, I dig building my brand. It is what inspires me. I have always felt that you either build your own dream or work for someone else’s. This is mine. It matters that the name on the sign is mine. I am proud of what I have built over the past 7 years in a tough market period and a competitive area. Everyone who knows me knows what kind of a guy I am to do business with and what kind of an operation I run. When an agent joins our firm, they know they may not be expected to sell a billion dollars a month, but they are expected to be honorable above all else. And I am humbled by the group of people we have now. 

Second, I greatly value my autonomy. I never lose a moment of sleep over what a coporate entity might say about my blog posts, my methodology, or my policies. I never have to ask for permission to explore a new plan or idea. I am completely comfortable with my destiny being in my own hands- as a matter of fact, I prefer it that way. This is my masterpiece, my laboratory, and my legacy to my children. It is mine. After working 17 years for others, I am still jazzed that I work for me. It hasn’t always been easy, but it has been worth it. 

I also believe that independent firms are needed. It would be a loss if every brokerage just sort of graduated into a larger franchise  and all we had was a big-box driven market. Independent firms make a difference for both the consumer and for innovation, because we offer a choice and a fertile ground for the kind of innovation that only competition can create. I love being on the front line of that effort. 

This is highly personal, and I am sure that someone could write a very compelling reason why they are happy to be at their franchise now and forever. That’s cool. It is what makes the world go ’round. To each their own, but that is why J Philip Real Estate remains an independent brokerage. 

With apologies to Bill Clinton. 

My firm sells a wide range of properties: upscale 7 figure estates right over to a $7500 trailer. Among our niches is the area broadly described as the distressed property market. This could vary from short sales to bank owned foreclosures to property that is owned free and clear but in poor shape. The latter category could be an estate home or a house that sustained fire damage. Westchester has tons of pre-war builds, and we never seem to run out of this inventory. It is often a very good opportunity. 

Virtually all distressed property, especially bank owned and short sales, is sold “as is.” Even a neophyte buyer seeking something they can fix up can deduce that if they want the fixing done before they buy that it really isn’t a fixer upper anymore.

With the new year and new freshman class of buyers entering the market, the definition of “as is” appears to be subject to a nuanced interpretation that challenges the meaning of the word “is.” A contributing factor to this trend is a pool of licensees who say they are buyer agents but seldom do more than unlock doors and act as carrier pigeons for uneducated buyer clients they do not have the intestinal fortitude to advise. 

If you seek to buy a distressed home sold “as is” that means that you are buying it subject to much of the following:

• Code violations
• Old open permits
• Non conforming work, such as illegal baths, decks, or additions
• Environmental issues like mold, radon, and submerged oil tanks 
• Shag carpeting

Tonight was the installation party for the Hudson Gateway Association of Realtors. Executives and directors of both HGAR and the Empire Access MLS (EAMLS) were sworn in for 2012, along with drinks, dinner and dancing. This will be my 3rd term as MLS Vice president, and it doubled as date night for me and Ann. 

One of my agents took the initiative to attend, and being a newer agent, she took it all in with great interest. It was a chance to be in a social atmosphere, but of course the chat always veers toward business. Barbara, my agent, brought up a deal she is about to have clients sign contracts for on a condo worth over $700,000. Even in Westchester, that is pretty good, and I told her so. 

She kidded me “You blew it by giving me those buyers!” and we had a giggle about that. I explained that I actually didn’t blow it- she made the sale. Had I taken it myself, not only would I parhaps not make the sale, but it would take me away from running the company. 99% of buyers are given to the agents like her, and my efforts have to be more toward listings and overseeing our growing team of 25 agents. That is how we are building the company.

If I were to cherry pick high dollar buyers and throw the scraps to the team, I’d lose. Not only would it sow discontent with the team, it would take my eyes off the ball and the plan which has enabled us to progress these past few years. When I am running around with one buyer, I am being an agent. I have to be a broker and get more buyers to my agents- not keep them for myself. When my team wins, I win. I remember my first boss out of college in another industry telling me “Rich people cash big checks, truly wealthy people write them.” I never  forgot that. 

If she keeps getting accepted offers like this one, I am only too happy to blow it more often. 

Month by month, I have watched the 2011 Westchester Real estate market in comparison to the same month in 2010 to see how we’d stack up. Would values rise? Would transaction totals improve? 2011 started out behind the curve compared to 2010, but my theory was that 2010 started out artificially high due to the housing stimulus which ended at the end of April 2010. Going into November, it looked like we’d at least catch up to 2010 if we could hold serve in the 4th quarter. 

We did not hold serve. As a matter of fact, the 4th quarter of 2011 was behind that of 2010 by over 40 transactions and over $50,000 in median price, which was a very disappointing finish. I have my theory about that, but first the numbers:

In 2010, a total of 4018 single family homes were sold in Westchester at a median price of $630,000.
In 2011, a total of 3839 single family homes were sold in Westchester at a median price of $600,000.

Overall, transaction totals were down 4%.
Overall, median price was down 5%.

While these are not cataclysmic declines, they do speak to the malaise that continues to dominate the housing market. Moreover, they do point to 2010 being somewhat of a dead cat bounce after the nadir of 2009, when only 3358 homes sold at a median price of $580,000. A “dead cat bounce” is a brief bounce up not unlike a “dead cat” bouncing after impact with the terra firma. 

The good news: We are indeed up from the lowest point.
The bad news: The market remains flat. And that will most likely be normal for the foreseeable future. 

So why did we trip over the finish line? What contributed to the poor 4th quarter when so many forces would want to close out the year, and the pipeline was swollen with homes under contract? 

The pipeline was swollen with homes under contract. It still is, with almost 700 homes under contract or pending sale. Here is what I wrote in November:

October sucked. The sad thing isn’t that buyers aren’t buying. They just can’t get to the closing table for a variety of reasons. The data on pending sales shows a ton of deals on the 1-yard line that can’t get into the end zone. 

…

I hate to be right, but we still have 674 deals under contract or pending sale at that same median price of $499,000. 190 of them are pending, meaning they should close in the next week or two. But they won’t. 

And that is exactly what happened. Between short sales that weren’t approved or mortgages that didn’t get commitment or clear to close, the pending deals killed the recovery in vitro. 

Until we see a commitment on the lenders part to part with their delinquent loans via short sale and an equal commitment to loaning money without borrowers having to regain their virtue while standing on their head spitting nickels, the market will sputter. 

Consider this: Two weeks into 2012, we are down 45 sales and almost $100,000 in median price. That’s not a big sample, but it’s not encouraging either. 

I’d rather be a buyer than a seller! 

This home we just listed in Port Chester was appraised a few years ago at over $500,000. It is now on the market for $360,000. 3 bedrooms, 2 baths, fireplace, garage, den, 1st floor laundry, and 2400 square feet. Not bad. Now THAT is a buyer’s market. 

To take advantage of the low prices and rates, get yourself a free Listingbook account and search the MLS like an agent. 

What is market share in real estate? 

Market share could mean percentage of closed transactions in a given area. 
Market share could mean the percent of closed dollar volume in a given area.
Market share could be the amount of inventory for sale in a given area. 

At around 11am today, market share took on a different meaning. Even though I am based in Westchester County, I have three listings in Highland, New York in Ulster County. And as a working real estate broker with a family, there are times when the best way to balance things out is to multitask: we pile the kids in the car and have them come on a business-related trip. It could be to put up a sign, install a lockbox, or open a door for someone. I had a little bit of everything today. And once I was finished with my brief Sunday morning appointment, it was made known to me by my beloved that our children were in need of, um, facilities. 

Our little blessings are 9,8,7 and 4. Taking them to a restaurant is not fun. And we’re a solid hour from home and hearth. Ann suggested perhaps heading back our listing that I was just in, but it was winterized; you never use the bathroom of a winterized house. What to do? 

But wait! I have other listings in this town! And one, whose owner I just spoke to on Friday, was close by. The owner was out of town for the weekend, so I gave her a quick call. A teacher and a lovely woman, she laughed heartily and gave her porcelain blessing. The kids were on the their best behavior, I checked on my listing, and the drive home was devoid of panic or bladder-driven drama. 

So that’s not a bad litmus test. If you are in a town and you have a choice of three clients to call for a little help if nature calls, you’ve got yourself a little bit of market share. 

Incidentally, the house we were in was pretty awesome: a pre- war Victorian with amazing charm and woodwork- here is the link to see the photos on Homespotters. 1 Tillson Ave Highland, NY, 12528

No one has asked me to, but I have taken down the post on the Hoax. I think I had a right to be critical of the way they handled this in Seattle, and I do think that we are owed an apology, but I also feel that the passions stirred are not going in a constructive direction. The point has been made. I would ask that all 20+ people who reblogged the post put it into draft. 

We all have our own timetable and criteria on what the right thing to do should look like, and I held the staff to a standard of my own out of a frustration that I was both in the dark and an impression that nothing more would be done. I’ll trust that the right thing will be done and live with the decisions made by AR. 

Little in this world looks exactly as we see it. For example, some have asked me if Melina Tomson’s dissenting comment bothered me, and you should know that Melina and I are friends and like each other quite a bit. Well, I like her. My friends can tell me anything. 

Going forward, what we should do is re commit to being good to each other. We should welcome new members and exchange ideas. We’ve made our point here, and let’s allow the wheel to turn and trust Niki Bob and Kerrie. I would never disable comments but I will delete any meanies. 

To be clear, we have a right to be pissed and we have a right to a straight story. But now we should give the staff the room to do their job unencumbered by any agenda other than the mission of the platform. Back to work. 

As a matter of fact, whoever writes, in the next hour, the most hyper local weltanschauung empowering posts with the nicest pictures wins 50,000 points and an iPad. Ok, 5000 points and a calculator. Hold that thought. 

I remember the conversation like it was yesterday, even though it was 1997 or 1998. The typically sweet, warm and cordial client and I were discussing our next move on a purchase offer, and I was advising them against what struck me as making a rash response. “Well if you don’t agree, Phil,” she said “Maybe we should just call the listing agent and deal with him directly.” It was out of character for this person, over the top, out of the blue, and hostile. And it was also very temporary. Everything worked out fine, but it made me appreciate that the stress of a real estate transaction can bring out some serious passions in people. That’s just how it has always been.

Stress can make a person cross-eyed crazy. 

That was 14 or 15 years ago in a healthy economy at lower prices. 

Now…add the shadow of foreclosure to the mix, a recession, and a terribly depressed housing market and you’ve got yourself a real party. Now we are talking 3-ring circus, half a bottle of vodka won’t calm me down stress. 

My job as a broker is to diffuse the stress and be the voice of reason. That’s not always easy. Take the lady in my example back in the 1990’s. If she were buying a short sale and dealing with stressed out homeowners facing foreclosure and financial crisis, it would be like throwing gas on an already roaring fire. 

The thing that all buyers should understand is that what might, in the fog of stress and emotion, look like manipulation or game playing on the part of a distressed seller is actually just normal people trying to cope. For example: I have had situations where buyers have been eager to get the seller to sign the contract. However, there have been delays on the seller’s part due in large part to their circumstances. A signature might be delayed because a divorced spouse is out of state or working funny hours at a second job to make ends meet. Or a financially distressed seller can’t make a repair until after they squirrel up some extra money. 

And yet the buyers sometimes don’t see that. They see delay. Games being played. Shenanigans. That’s what it seems like to them. 

What the buyer often doesn’t understand is that their sensibilities are innaccurate because they are stressed and on edge in a situation that occurs in life but a handful of times. The seller isn’t playing them. They are just dealing with hardship. It is all in how you interpret through your mental filter. The best thing for the principals to do in a sale- especially a distress sale- is to practice deep breathing and not trust their physical impulses. Suspicion of the unknown may have helped our ancestors survive with sabre-toothed tigers, but it doesn’t help negotiate real estate. 

That’s what brokers are for. 

I have a conference all day in Manhattan tomorrow, so my Sunday was even busier than usual. At 9am I was at a kitchen table, discussing the next move for a new client. I seldom need “extra” motivation to get the job done for folks- I have 4 kids and a company to run. But sometimes, inspiration does find me. This little sweet thing was going to be put in another room, but I asked that she stay with us. I have had two yellow labs in my life, and adored them both. She looks- and acts- just like my Bella, whom we lost in 2008. 

So yes, I am going to help her daddy sell the house and find a new home that is pet friendly. It isn’t just the paycheck; I am about a roof over your head, home and hearth, and yes, a friendly space for the furry family member.