There have been several thought provoking articles written recently on open houses and why some agents really do them. The point that agents would offer to hold a listing open while surreptitiously using them to just prospect for buyer clients is actually a rather old modus operandi; however, my experience has been different.

I have run into sellers who complained to me that they found out that their last agent was using their home as “buyer bait” to be sure, but more often than not their complaint was that their last agent did NOT hold their house open. In my neck of the woods, many sellers still believe that open houses are effective marketing. I disagree. Open houses for me have been by and large a chance to catch up on emails and wish I was home with my kids. 

While they are very effective in markets like Manhattan, I view open houses in Westchester as a relic of a bygone era. Years ago, there were no published photos of homes for sale. The only way for a consumer to see the interior was to walk through. Today, with 30 photos on our local MLS, virtual tours, Youtube and other media, they are virtually obsolete. 

Think about it. We as listing agents promise that only pre-approved buyers will come look at the listing. Then, for 2 hours on a weekend afternoon, we allow anyone who can walk on their hind legs and sign what we hope is their real name to walk through. It’s inconsistent. And in my experience, it is ineffective. The chance that a person is not a nozy neighbor and truly qualified for a house is low. We’re just swinging blindly. And that’s no way to do business. 

I do, upon occasion, hold a listing open. But I prefer that it be under the umbrella of a proactive marketing plan as opposed to a reactive plan. In a reactive markeing plan (which is about 95% of the market), a seller in my area would call the listing agent and demand an open house because nothing is happening. The listing agent, guilty that there are no offers and eager to please, holds the open house. The plan? They hope someone walks in and they get lucky. In cases  like this, a seller will only agree to reduce their price after an open house- if it doesn’t sell. That’s no way to do business. 

In a proactive marketing plan, an open house isn’t held to pacify a nervous seller. It is done to attract lurkers, which is to say silent consumers who watch homes online but seldom inquire, to come and look without having to make an appointment or engage an agent that they may not want to commit to using. In proactive marketing, an open house is not only heavily publicized and well planned, it will be used to announce a price improvement and add some sizzle to the steak. In proactive marketing, you aren’t pacifying a nervous seller. And even then, you might not (and probably won’t) sell it, but you can own the outcome. 

By far, the Internet has changed the game of how real estate is sold. In Westchester, open houses are, in my view, mostly relics that some sellers cling to as a means of doing something because a property has not sold. In some of those cases, an open may indicate a reactive marketing plan. As for picking up buyers? I’d rather pick up my daughter. 

I am posting this in response to a blog that suggests that the NAR misrepresented the truth when they lobbied against QRM initiatives. No apologist for the NAR am I, but I disagree that the NAR was wrong here. I am re-posting a PDF of the email the NAR sent all brokers in support of their view in a May 18 call to action to lobby lawmakers to protect lower downpayent mortgage programs. 

It is a little long, but I believe in transparency. This is too important to assert opinions without the facts. I do not believe the representations made in this email are fraudulent in the least, and I further believe that government fixes of the housing industry thus far have been by and large awful, with the exception of the expansion of FHA, which has saved the bacon of many, including Yours Truly. 

The PDF of the email can be seen here. 

Ossining/Croton on Hudson Patch just started here June 1 and I have been asked to contribute to the blogs. I was happy to oblige. I am gratified that two of the top 5 posts are my own contributions and I hope to continue the trend. 

Ossining and Croton are two communities that are near and dear to my heart. Having grown up in Ossining, I spent a ton of my youth in Croton, between friends, scouts, and church youth group. Just this morning I had breakfast with a client at the famed Croton Colonial diner, a haunt I (and thousand of others) have known since high school. 

Both communities are rivertowns, right on the beautiful Hudson, and as such they have some common traits- they are popular MTA Hudson Line commuting points, they have tons of charming pre-war homes, and both communities are tight knit, civic -minded and proud. 

If I have one weakness in my blogging focus it is the hyperlocal. I indulge in lots of commentary on real estate, my experiences and insights, but I could do a better job of selling my area. I hope that with this new project that it will be the impetus for expanding my repertoire. 

If you are unfamiliar with Patch, it is an AOL-owned local online community, and it solicits the opinions and voices of the local. I think of it as like the evolution of the old community newspaper retrofitted for the online platform. If you have it in your area, check it out. 

I worked the deli counter at a small market a block from Sing Sing Prison for much of my youth. The place was open from 5:30am until after midnight, specifically to serve the 3 shifts of prison guards from the Big House. They came in tired and burned after 8-12 hours or more with inmates, and we had them leave happy. I worked the night shift, and after a huge rush of dozens of sandwiches and hot dinners, I had to completely break down and clean the counter & steam table and close up shop before leaving at 1am. I seldom stayed more than 15 minutes past closing. My best friend’s father owned the place, and it was one of the best working experiences I ever had. 

Recently, dutiful husband that I am, I called my wife en route home to ask if she wanted me to pick anything up before returning home. “YES,” came the reply. “I’ve had a day. Luke has tons of homework, Catherine is being difficult, Gregory…wa wa wa …” You get the picture. Dinner, if I wanted it, would not come from the skilled hands of my bride. 

LICENSE TO SPEND MONEY! I could get anything I wanted, but the trick is waiting. The answer: a deli. Substantial, quick, relatively inexpensive. And off to the main drag went I, where there was a sidewalk fair to mark the summer season. Live music, tables with goods outside, and a festive atmosphere. I love his town. 

I walked in at 6:40pm, and gave my order: A nice Italian combo. 

No. 

The cold cuts were closed. 

I checked my watch and glanced back at the cold cuts. Twenty minutes until closing, and the cold cuts were open in the meat case. 

“I already cleaned the meat cutter.”

Stunned silence. 

Seriously? 

The cold cuts were closed TWENTY MINUTES before closing in a delicatessen? In New York? 

I flashed back to large, hulking prison guards from Sing Sing knocking on the glass door at Southside Market and asking me to open up after locking the door and sheepishly asking me to get them something before their 40 minute commute home after working a double shift with felons and murderers. I opened the doors and cleaned my counter a second time. It was my job, and I was making $3.50 and hour (it was 1985). Wedge, coffee, chips, napkin, soda, straw. 

I came back to my counter friend in 2011, and paused for a moment, and decided that I’d prefer not to argue. I couldn’t explain my thoughts to this guy and still eat before putting my kids to bed. So I said “OK,” and turned to find another place where they wanted to feed me. 

Seeing I was leaving, he said “wait” and offered me something which wouldn’t require the meat slicer. And I went home with a chicken cutlet. After which I went on Yelp and posted the following two-star review:

Great food. Well prepared. Huge selection. 

Unbelievable.

In this counter worker’s mind he may have saved a customer, but he didn’t. He saved a $6 sale because I was hungry and food was 3 feet away. I have worked in hospitality and food services plenty in my life and that may be why real estate does not seem as hurculean as it does to some. I understand that kitchens close at a certain hour and I know that if you don’t run a business like a business you won’t remain in business. This is not one of those times. If you really want to give good service in any industry, you may have to clean your metaphorical meat slicer twice. 

On Friday morning I checked my email and found an online inquiry from about 11pm the prior evening asking to see one of my listings in what amounted to a few short hours. There are two offers on that property, contracts are out, and the homeowner could not possibly confirm the showing on such short notice, so I asked one of my better buyer agents to reach out to the person and offer to show the property at another time as a backup. 

Today, I got an email from the person. It wasn’t terribly happy in tone, and told me to straighten out my office politics. The guy only wanted to speak with the listing agent, not a showing agent, because the listing agent would know more about the property. 

My response was as follows:

Hi,

Phil Faranda

The person wrote back and insisted that the “agent never saw the property.” Obviously, he wants me only or no go. So be it.

I have a few thoughts on this. 

• I have never seen most of the properties I show buyers. We seldom preview in this market. 
• If the person does have questions, the agent can get answers from the listing agent (who, in this case, is me). We do this all the time. 
• If the buyer insists on dealing directly with the listing agent, he will be unrepresented. He will have no advocate. I work for the seller. 
• If the buyer is not interested in the property, they’ll just move onto the next property and the next listing agent. We won’t acquire him as a client unless he loves our bubbly charm or good looks.
• The person seems cut from the cloth of thought that thinks that dealing with a listing agent directly is the best way to get a good deal. This is a huge fallacy. It is hard to get a true bargain without an advocate.  

May 2011 marks the anniversary of the first month after the stimulus ended. That’s right, it has been a solid year since the mad rush to get a house purchase under contract by April 30. And as many of us in the industry remember, the market stalled after that. Closings in May 2010 were stimulus closings (the deadline for closing was eventually extended to September), so the comparison to May 2011 is skewed some, but the year look back gives useful perspective. 

For the period of May 1, 2011 through May 31, 2011, Ossining had 5 single family homes close at a median sale price of $382,000. 

In the same period, May of 2010, 12 homes closed at a median price of $445,000. 

Clearly, volume and values are down, but the further we go out from the stimulus period of 2010 the more organic and less stimulus-influenced the results become. Interpreting the results is not straight forward- was 2011 that bad? Actually, no, nor was May 2010 that “good.” One would wonder aloud why, if the median price fell $63,000 why more homes didn’t sell in 2011, but think this way: in 2010, sellers had leverage on the buyers. If the buyer wanted to get the seller to sign the contract by the tax deadline, they had to accommodate the seller. And many did. 

Here’s the silver lining, and reason for optimism for Ossining’s market looking forward to June: a whopping 33 homes are currently under contract, and if only half of them close by the 30th, that is one very strong month. 

If you’d like to find a nice home in Ossining, get yourself a free Listingbook account and search Ossining listings like a pro. 

Prior posts on Ossining can be found here. 

All information is from the Empire Access MLS and reflects all reported data by participating companies. 

A client forwarded me the link on Inman News to this broker in Nevada who blames short sale agents and sellers for the mess. 

Prices keep falling because the short-sale agents are listing at 5 to 10 percent below comps in order to try to get an offer, and often are accepting offers at even less. The banks come back at a higher price, and then the buyer walks. The downward momentum has been coming from the short sales, not from the REO listings.

All real estate is local, and perhaps there are many under-priced short sales in Nevada, but isn’t Nevada also one of the highest foreclosure states in the USA? It most certainly is. As a matter of fact, it is the NUMBER ONE ranked state for foreclosures, with 1 out of 97 households with filings, a staggering number when you consider that 2nd-ranked Arizona is at 1 out of 205. 

I commented as follows:

I can only speak for my local market and not the author’s marketplace, but if the claim is true, then all those bank owned REO listings that have undercut the market have taken their queue from short sales.

I find that hard to believe.

Since lenders render a decision based on market activity, I wonder what sort of agent would ever responsibly list a short sale at such a fantasy price as 10-15 % below comparable sales.

What may be closer to the truth is that the author sees short sales selling 10-15% below unrealistic asking prices, which sit and rot while losing the war of attrition with buyers who won’t bite, while short sales are listed and sold at a number in line with actual sales.

“Market value” is what buyers are willing to pay, not what some sellers wish they could get.

Short sales reflect the market. They do not set it.   

I know of no empirical data that suggests that the problem started with short sales. Banks only approve short sales based on market sales. Not asking prices. A short sale could very well be listed 10-15% below the competition. But the competing listings are probably overpriced, because guess what? They aren’t selling! To price a home to sell, you have to look at the sales, not the asking prices. Some of these unsold homes are on their 4th brokerage and are still chasing the market (and not running very fast either). 

I do agree that banks often counter at higher prices, and that is because the historical comparables are from the last 6 months, and when the market is falling, historical look-backs are at a time when prices are higher. Short sales reflect falling prices. They don’t cause it. You can’t sell a house for “below” market value, because guess what? If it were underpriced, the buying public would bid it up. Where do we see that most often? Yup, you guessed it- bank owned foreclosures. Not short sales. 

Market value is only what people are willing to pay. NOT what sellers or their brokers wish they could get. 

With apologies for the political and foreboding overtones of a silent majority lurking, the term applied to the real estate market is quite accurate. Having read Richard Willard’s excellent post on the reaction of people to the “disappearance” of a listing when he and his client strategically allowed to liasting to “expire and air out,” I am moved to share my thoughts and expriences. To understand why people would call only after a listing disappears from the open market, one first has to understand the players involved. 

Lurking is an Internet term for people who read and observe online articles and various media such as blogs and social networks, but do not submit comments or participate. They just read. There is nothing sinister about it, as the term is rather ironic, because the vast majority of any blog post’s readers (like this one) are lurking, as in reading without commenting. 

Real Estate Lurking occurs too. I have clients who do it, and there are legions of others who aren’t even with an agent yet, but just watching. Essentially, they find a house or two that they like and they watch it, almost daily. They are watching for price dops, new photos, and, um, price drops. If a price goes low enough, they may act. They are, essenitally, in a war of attrition with home sellers, because they won’t go forward until prices reduce more. 

Upon occasion, I get a call from a consumer when a house goes under contract or sells, because it disappears from the active listings. This is when the lurker reveals themself. 

The chart below shows the number of unique hits a sample listing get in a week on Realtor.com. Over the course of 2 months, about 200 unique clicks are recorded on the property each week. That is 200 people that actually view the property, not just have it show up in the search results. It might not actually be 200 different people, it could be 65 people viewing it four times each week. But either way, over the same period we averaged about a showing per week. The rest watch and wait. And they represent the majority of people looking at the real estate market online these days. 

The moral of the story is that the lion’s share of would-be home buyers are patiently-and quietly- waiting and watching on the sidelines, waiting for prices to go down even further. They are even willing to risk losing a nice house if it mitgates the risk of overpaying for one. The degree to which they stop lurking and start buying is the metric by which we’ll measure a true recovery.