Remember to Take Your Crazy Pills

27 07 2010

Buckle up folks. Check the chin straps on your helmets too.  This is real estate. If you don’t keep taking your crazy pills you aren’t going to be able to keep up.

Real estate is all over the map these days – literally and figuratively. Terra firma here. And terra-a-lot-less-firma  there.  Or, as Groucho Marx said:  “You can get wood. You can get brick. You can get stucco. Boy, can you get stucco.”

Talk to an Agent who just closed a couple of escrows and the world is perfect. The market is back. Everything is coming up roses. Talk to another Agent short sale-ing his own upside-down beach house and the whole dream has suddenly been dragged under by the inexorable undertow of a rude awakening.  Just because we hype it, that doesn’t make it so.   We can kick the can down the road but we’re all still going to have to kick the bucket in one of the great reckonings that lies ahead. Maybe switching over to the Mayan Calendar isn’t such a bad idea after all.

Read about those local folks who thought they were getting an “amazing foreclosure deal” like the one’s late night infomercials have weaned us on and it  lends another perspective.  Amazing indeed. They ended up buying a worthless Wachovia 2nd  on the courthouse steps, putting in another $25,000 worth of worthless improvements, only to find out that parent company, Wells Fargo, was still holding the first.

Methinks the right hand knew exactly what the left hand was doing in this case.  The slight of the hands worked because they weren’t required by law to disclose the rules of the game to unwitting people.  Buyers beware and buyers be aware. A little due diligence is always worth your while.

But then, the great fix is in anyway, right?  The Financial Reform Bill was just signed into law as I write this, a mere 8 minutes ago. Once again, we’ve come to another intersection on the road to recovery or the other one leading to eternal damnation.  That mythical place on the flawed GPS System where Wall Street, Pennsylvania Avenue and Main Street are all supposed to meet in magical confluence.

Forgive me, if I’m not overly-optimistic. We’re already suffering the “new and unimproved” of HAMP, HAFA, HVCC,  HERA-MDIA and a whole hullabaloo of other H-ish acronyms. Lots of sound and fury signifying nothing but hassle. Business as usual made even harder than usual.  Sort of like rooting out the cancer by killing the patient.

Not that we should trust Alan Greenspan anymore – the man who knew too much who became the man who fell to earth by being the man who was the last to see it all coming, even when impending disaster was trick-or-treating through every neighborhood in America,  but… the former sage of finance cryptically says this about the new reform legislation: “There are unintended consequences in every page” of this 2,000 page bill.

And speaking of unintended consequences…how about our own little piece of pending local legislation relating to the regulation of rentals.  What happens if some unhinged landlord gets angry enough to set off a neutron bomb?  It would be easy to drive around town, log the addresses of hundreds of funky, illegal garage conversions and report them for code violations.

Forty years of growth by default rather than appropriate planning  – all coming home to roost in the over-crowded nests of small property owners who need that extra income to make their mortgage payments.  C’mon! Every Mayor and ex-Mayor living on the lower Westside has seen the extra units with the built-up bathroom floors to allow plumbing pipes to get to the sewer mains, electric feeds hanging precariously ten feet above ground waiting for unsuspecting kids to hit ‘em with sticks and gnarly carpet-seconds thrown over bare concrete slabs in the middle of an incredibly high water table?

But take heart.  Santa Cruz was just named one of the 25 best cities for the rich and the single by Money Magazine.  Apparently,  we are the place where “surf culture meets tech geek.”  We’re going on a scavenger hunt next Friday night, to look for some of those rich and single people hiding in our midst.  The winner will receive a free  Keep Santa Cruz Weirdly Rich and Single bumper sticker.

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There Ain’t No Cure?

17 07 2010

Here we are. All Quiet on the Western Front. And just about every other inch of frontage along the Maginot Line of the marketplace too. Way quiet.

In the softening fog of our Mid Summer’s Dream we’re running around like chickens. We don’t know where we’re headed but we’re staying busy, hurrying up and waiting. Waiting for Good Dough to arrive. All addressed up with nowhere to go. We’ve made our lists and checked them twice. At what point do we just Puck the whole thing, a la Shakespeare Santa Cruz, and observe with self-induced irony: “What fools we mortals be”?

What’s next? If more market doesn’t show up soon we’re likely to find ourselves moving in even slower motion, in the middle of the Doggier Days of August. And if that happens, we’ll probably end up migrating towards the fall, tails between our legs, feeling both snake-bit and flea-bit – by the sheer indignity of it all.

Who knows? Suffice to say, all those cars backed-up, bumper-to-bumper towards Scotts Valley, aren’t waves of weekend buyers streaming into town to search for perfect little beach-blanket bungalows. Most of them are coming to ride the roller coaster. The real one at the Boardwalk – not the real estate one on the Monopoly Board that has gone south for the summer.

Yes, it is true that more homes sell in the summertime. And this summer probably won’t be an exception. But conventional wisdom obscures another unconventional truth residing in darker shadows cast by the sun. That truth is: There are always more homes that don’t sell in the summertime too. Think about it. If 20 more homes go into escrow this month, does that balance out the 120 new ones that come on and jump on top of the mounting pile of un-sold properties sitting idly by, twiddling their thumbs and thumbing their noses at their Sellers’ best laid plans and aspirations.

Looking back over the ups and downs of these past months…March came in looking like it might be a lion. A glimmer was there that was hard to grab hold of – but it felt good. Hope was ready to spring eternal. We set our internal clocks ahead towards a brighter future. It wasn’t exactly multiple-offer mania fueled by steroids and liars’ loans, but it seemed like enough buyers were chugging enough extra cups of caffeine to register a more detectable pulse on the market’s shaky Richter scale.

But not enough fools were rushing into the market by the first of April . Too many were holding back. Fearing to tread. They were taxed. Not by the IRS. Rather, by their own what-ifs and worst-case scenarios. And sure enough towards the end of April the market was already going out like a lamb. Exit stage left.

In May, we all crossed our fingers and shouted MAYBE! As de facto Tauruses, we were bullish. The market would grab itself by the horns, carpe the dinero and find a way to get much better, much faster. We trotted out stats to prove how much better-er it was all getting. Of course, most of the sold data we materialized was already old news – trailing indicators from transactions that had started in and around, oh, say March or so.

Then there was June. About all that rhymes with June as far as the real estate market is concerned is SWOON. We may have been polishing those shiny new listings with hype and filling our open house balloons with helium but the majority of those million dollar listings are glistening like jewels of denial right now and the air is slowly going out of the inflated list prices those balloons can’t seem to hold up.

As for July – I’m just going to ask WHY. Why aren’t buyers beating down doors to get at the huge window of opportunity that has opened, with interest rates about as low as they can go, here in limbo land? This is everyone’s chance to dance. Get in and get under the bar set by their fears. Three or four months ago, there wasn’t a mortgage broker alive who thought we’d see rates under 5% again.

So maybe we’ll be singing the Summertime Blues for awhile. I hope I’m wrong and that all the smiley-faced spinmeisters are right. As the new real estate blues song says: “If it wasn’t for short sales, we wouldn’t have no sales at all.” Just our luck – a market defined by a double oxymoron. Short sales aren’t short. And so far, very few have actually sold. They are simply homes stuck in the pipeline with no sunlight shining at the end of the tunnel.

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The Rochambeau Game

10 07 2010

God Bless Real Estate. Neither rain, nor snow, nor heat of day, nor gloom of lead- based paint, electromagnetic frequencies, radon gas, agricultural spraying, underground storage tanks, black mold or any nearby methamphetamine labs that may be lurking , shall stay us Realtors from our appointed rounds.

Our sacred mission? That most basic of biological imperatives – survival. You know…saving humanity. And since we humans require such a significant amount of idiot-proofing to insulate us from our own strange natures, survival in this case also means: Saving Ourselves from Ourselves.

It’s a scary world out there. Ensuring the safety of mankind and the huge roof lying over its head is a difficult job. But someone’s gotta do it.

So here we are. Hard at work on the Herculean task of protecting everyone from everyone else and their cousins. And from everything and every other possible thing that anyone could conceivably conjure up in their wildest dreams and/or worst nightmares.

Someday we’ll actually have a complete compendium of all the what-if’s that could hurt, damage or otherwise disappoint people in their new homes. Of course, even when we pull that list together, we still aren’t going to guarantee that you won’t get hit by a bus while crossing the street or struck by lightning while watching Jeopardy during the next big storm. You’ll have to consult your local priest, shaman, bartender, attorney or other suitable expert for greater accuracy regarding those specific matters.

But we Realtors can do the next best thing. We can warn you. And warn you again. And then warn you some more. Until eventually you either get scared to death and run away screaming as fast as you can in the opposite direction from buying a home. Or…you proceed forward both forewarned and forearmed with the knowledge that something terrible could happen at any time. Big terrible. Or little terrible. Terrible-ridiculous. Or terrible-sublime. Or…you just become numb and numb-er to the whole process and succumb to the mindless tide of acquiescence that clouds the vision and makes the brain feel dumb and dumber.

In the great Rochambeau game of real estate we try to leave no stone unturned or rock uncovered by paper. Paper is the talisman we use to ward off the eventual consequences of all the potential evils that could happen to people living in glass houses. Paper is the most powerful device we can use to demonstrate our desire to save mankind and to actually save ourselves (me) from ourselves (you).

Think I’m kidding? Your honor, I want to draw your attention to Estate’s evidence C.A.R. Form SBSA Revised 4/07, Otherwise known as the Statewide Buyers and Sellers Advisory, Page 4 of 10, Item #18, which reads and I quote:

Errant Golf Balls: Buyer and Seller are advised that if the Property is located adjacent to or near a golf course there is a possibility that golf balls may damage the Property or injure persons or pets on it. Additionally persons playing golf may enter the Property to retrieve errant golf balls or for other purposes. Broker recommends that Buyer investigate this possibility during Buyer’s inspection contingency period. Brokers do not have expertise in this area.

Realty truly is funnier than fiction sometimes. The fatal flaw in all our exacting efforts to disclose and encourage due diligence and real active investigation? Human nature. The more paper that people are presented with, the less they read. The quicker they fall asleep. Thus we keep shooting ourselves in the foot and the number of lawsuits in real estate keeps increasing in direct proportion to the stumbling attempts we make to jam consumer protection down everyone’s throat in lieu of common sense.

There, I’ve finished my written Agent Disclosure for this Saturday. I’ve done my small part to save ourselves from ourselves. Sign Here and Press Hard to acknowledge your receipt.

Meanwhile, I’m off to my appointed round – a 12:30 tee time – while you move forward, forewarned and forearmed, in the purchase of your new home. If it happens to be on a golf course, I promise to yell fore before my next huge slice flies off the fairway and lands in the middle of the guacamole dip resting on your future back patio. Today’s golf game is certainly going to prove once and for all that “brokers do not have expertise in this area.”

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A BAD CASE OF REEFER MADNESS

3 07 2010

There’s the long and the short of it…..but in real estate, sometimes it’s more germane to talk about the big and the small of it.

Many of the things that cause frustration, consternation, perturbation  in real estate often arise from people not being able to distinguish between what’s big and what’s small. Specially when they are in the heat of the moment. What’s worth the time, effort, money and brain-space? And what’s not?

What’s that animal part of your nature saying when it insists that you should: get even, teach the world a lesson, draw an imaginary line in the sand, preserve some  semblance of pride by not succumbing to anything that is galling no matter how much of your own nose you have to cut off in order to save face?

And what’s that cool, more detached, smart part of your brain saying that is able to: let it all go, not sink to anyone’s level, recognize the value of living yet another day without lugging a ton of extra baggage around. And… isn’t so arrogant to think that it can force someone to learn a life lesson that they are not ready to accept.

Cardinal rule in all negotiations? Make sure you win on the big stuff. If you have to lose – lose on the small stuff. If you gotta give the buyer a home warranty for 350 buckaroos and throw in a couple of 1.6 gallon toilets to meet the County’s water-conservation requirements to help leverage another $10,000 on the purchase price – go with the flow.  Ten thousand bucks will buy a lot of Totos and TP. It will flush away all kinds of bad feelings that might either wash over you for a few moments or completely inundate you if you let them.

For quite a while there,  we  didn’t have a lot of normal negotiation in a marketplace dominated by multiple offers, overbids, fewer days on market and a general sense of entitlement on the part of the Sellers.  Many negotiations, circa 1999 through 2005,  pretty much went like this: Sellers said: “Jump!”  Buyers asked:  “How High?” Negotiation concluded. Bite your tongue. Sign here. Press hard.

It’s not that there wasn’t any negotiating going on in those years.  It’s that the bulk of the negotiations were between Buyers worrying about what other Buyers were willing to do, capable of doing or just crazy enough to conjure up. Buyers versus Buyers rather than the usual one Buyer v. one Seller going at it in a tete-a-tete, mano y mano steel cage wrestling chess match.

When the  national economy goes down, invariably, the collective incidence of serious crimes – murder, assault, armed robbery – goes up. Coincidence? I think not.

Whenever the real estate market slips into a transition period and stops running at an exorbitantly accelerated pace, it messes with the collective heads of people out there in real estate land.  It tweaks their ability to maintain perspective between big and small. It acts like some kind of mind-altering drug  that’s been surreptitiously slipped into the tap water. Suddenly instances of people behaving badly about little things increase with alarming frequency. Coincidence? Definitely not!

Almost 20 years ago, I was involved in a sale between two principals who got their knickers in a twist about an old refrigerator – a lovely harvest gold model.  Much to both Agents’ exasperation the refrigerator became the raison d’etre for the whole transaction. It kept popping up in the negotiations at every turn. It resurfaced during inspection contingencies. The buyer was determined to get it.  And the Seller wasn’t going to part with it, even though it was something he had absolutely no use for, end of story.

Well not quite the end of the story…..The Seller prevailed.  Sorta. The fridge was personal property. And in the end, his after all that squabbling. Arrangements were made for the Salvation Army to pick it up.  While moving the appliance, a bumbling volunteer managed to scratch the hardwood floors throughout the house. The Seller had to spend thousands refinishing the floors at the same time the Salvation Army decided the refrigerator wasn’t worth it and left it sitting at the curb for someone else to haul away!

Worst case of reefer madness I ever saw. But that’s what happens when you stop distinguishing between big and the small and can’t see the floors for the freeze.

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Are We There Yet?

28 06 2010

It’s official.  As of this week, Real Estate of Mind has been rattling around in my head and floating around in the local ether in one paper or another for twenty years now. Are we there yet?

I remember going through the Anthony Schools course. Religiously cramming every factoid I could get, into my brain. I was a true believer.  A supplicant vying for admission into the secret order of all things REAL.

Fittingly, I took my licensing exam in the Scottish Rites Hall in San Francisco surrounded by 500 other eager wannabes. Walking out afterwards, I experienced a huge core dump as all the information I had just memorized, spontaneously fled my body.

I didn’t know it then, but that was my first auspicious real estate sign. I was ready.  I had to empty myself of everything I already thought I knew and just start practicing real estate each day in order to find the hidden grail that it holds.

Along the way I’ve shown property at midnight, written offers on the hood of a car, gotten frantic  buyers remorse calls at two in the morning and once listed and sold a property in less than five hours. Along the way, I’ve met looky-loos, nosey-neighbors and tire-kickers by the score.  Along the way, I’ve represented buyers who just had to grind to the very last penny and others who had a million dollars burning a hole in their pockets.  I even saw a client try to bring cash in a suitcase to close his escrow one time.

Along the way, I started carrying a box of Kleenex tissues in the car for those convinced they would never be able to afford a home in Santa Cruz.  Later, I  upgraded to an EpiPen when anaphylactic sticker shock became the norm.   I earned a masters degree in grief counseling with a minor in hand-holding during the early 90′s at the same time I learned what it meant to chase the market down.

Along the way,  I  also learned how to find lost septic tanks by bending ordinary coat hangers into the shape of dowsing rods.  And along the way, I occasionally employed a psychic house cleaner to clear away some of those dustballs of dirty energy that often accrue in people’s lives.   I also hired Crime Scene Cleaners once, when I sold a house that a compulsive hoarder had completely filled with thirty years worth of rotting possessions.

Along the way,  I’ve seen more Michael Jordan posters and more odd and eerie doll and owl collections than you can possibly imagine.  I’ve shown houses where bongs were sitting out in the open on kitchen tables and naked college students were running around totally oblivious.

Along the way, I’ve run out of gas in the boonies with a clients in the car. I’ve come home with a loose key in my pocket after showing ten properties without a clue as to which house, I forgot to put the key back in the lockbox at.  Somewhere along the way,  I seem to also remember sitting an open house where there was a parrot with a huge vocabulary of swear words,  greeting each visitor.

Along the way,  I’ve worked with Tibetan Lamas and the other kind of llamas. I’ve worked with Fortune 500 execs,   motorcycle club members and middle-aged sex therapists – all in the same day.   I’ve  sold ego homes,  wondering how people could ever stand to wander around in that much space and homes under 500 sq ft,  wondering how people could possibly live in them without strangling each other after the first week.

Along the way,  I’ve been called the Bodhisattva Realtor, a spiritual advisor, a consummate professional and a dirt pimp.  I’ve been accused of breaching the NAR code of ethics for humorously suggesting that Realtors should carry a moral compass with them at all times.

Have I arrived? Nope.  I’m still on the bus with the license plate that reads “Further” and yes, what a long strange trip it’s been.  Strange and endlessly fascinating.

Lots of stories but never enough space for the words to tell them. For those who have been asking for a larger print size that’s  more easygoing on their aging eyes… log on to Real Estate of Mind’s  Facebook  Page: www.facebook.com/brezsnysrealestateofmind

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My Brain on Real Estate

12 06 2010

It’s not even noon yet and my synapses are already misfiring on all cylinders.  The steady stream of data coming in feels like a bunch of square pegs trying to shove themselves into a dart board full of small, round, empty holes.  My right and left hemispheres might as well be ships passing in the night of day because my deepest gut instincts are in direct disconnect with the spin of information  orbiting a world that’s already wobbling woozily around on its own axis in full tilt boogie.

There’s an image of Adam Smith’s invisible hand of the marketplace, looming large on a video screen inside my head.  It keeps cracking eggs open into a sizzling frying pan while the voice-over in my inner ear keeps saying …”This is your brain on real estate…Any questions?”

Well…yeah. I’ve got some questions.  A  lot of questions.  That’s probably all I do have at the moment. Thank you very much.

Like…what happens when the bottom of the market is going up and the top of the market is coming down at the same time?  What do we call that? And how do we explain that to our clients? Do more and more people and places just get stuffed into a never-ending zone of price and property compression somewhere north of low and south of high?

How dense can it get in that space before the gravity of the situation gives – in one direction or the other?  Can the stirrings at the bottom of the market push the top back up? Or will the weight of all those pie’s hovering in the sky eventually get so heavy, they’ll force a carefully crafted façade of positive perception to fall to earth?

Is there a second dip coming to top off the cone of silence surrounding the shadow inventory of bank-owned properties getting held off the market? Not to mention the shadowier  inventory of  loan modifications not getting done, notices of default not getting foreclosed on, delinquent payments not getting issued notices of default and the next cycle of 5/1 Arm’s getting set (and reset) to appear right around the corner?

Why has the Mortgage Application Index (google it) fallen so abruptly at the same time interest  rates have dropped so remarkably low?  Money at 4.5%?!!  Weren’t they just warning us that rates were going to go up when the Fed Mortgage Purchase Program ended?

Shouldn’t the ranks of eager purchasers lining up to get their pre-approval letters be growing by leaps and bounds?  Aren’t more buyers out there chomping at the bit as summer inventory begins to expand right in middle of their very own buyer’s market?

And while we are asking the questions…even though it is probably true that the market is seasonal and the sellin’ is easiest in the summer when the catfish are jumpin’ and the cotton is high…isn’t it also true that more homes (as in a larger percentage of properties that are actually listed) don’t sell in the summer too? So which is it? Do more homes sell in the summer? Or do more homes not sell in the summer? Or both?

Is this just all about the end of the tax credit for first time buyers that expired on April 30th?   Would first time buyers  really have waited until the second or third week in April to get their loan applications in? Wouldn’t most of them have started their processes sooner?  Did we just move the time horizon up on purchases that would have otherwise happened later?  Like a cash for clunker homes program?  Was this just another version of all of us collectively kicking the can down the road to see if something else might happen in the meantime to pull our asses out of the fire?

Will the real, real estate market ever stand on it’s own again without huge transfusions coming from the Feds?  Or without interest rates being propped artificially down?  Will the private sector be able to make its own rain again? Without a house of cards built on liars loans and credit default swaps.?  Can it pick up the loose reins of laissez -faire even if it feels  very laissez-unfair in the short term?

Is there some secret escape route on the horizon the helps us get out of the Pavlovian Paradigm where we can’t help robbing Peter to pay Paul with yet one more hail Mary pass that leaves the answers blowing in the wind for future generations to figure out?

Time will tell. But not any time soon.  In the meantime, I’ve signed up to have my brain frozen at the cryogenics lab. Wake me up when we get there.

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Virtual Feng Shui

4 06 2010

I’m not immune.  I’m just as much of a sucker for good staging as the rest of you  impressionable buyers out there. Those who can’t help falling in love with the stuff in the house, rather than with the “stuff” of the house itself.

I’m in the business. I shouldn’t be so easily swayed.  But those who have been clinically hypnotized before probably recognize the feeling.  Part of your mind knows you are being hypnotized  while it is happening.   That part watches like a detached observer and keeps echoing its escape mantra inside your head: ” I am aware this isn’t real and I can choose to stop anytime.”

Meanwhile, the rest of your brain is so thoroughly engaged in the  hypnotic trance leading you on,  that the “you”  claiming control,  never quite gets around to stopping the experience until it is told to do so.

When I am smitten with great staging. I know I’m being led in someone else’s direction. I know I can snap out of it if I want. But part of me is so caught up in the lure of a lifestyle I don’t live, it’s hard to exercise the option to opt out. I just want to go with the flow that feels so delicious and dream-like.

I remember back in the mid 90′s. There were  model homes for a large PUD tract constructed up on Meder Street.  It was a huge project for slow -growth Santa Cruz. Tons of units to push at a time when the momentum of the market was still dicey.

As the apocryphal story goes, the developers hired a Hollywood set designer lolling around, in-between film jobs. He was given the star treatment and a handsome sum to come to Santa Cruz,  dress up the models and  edit the scenes that prospective buyers would wander into, when it was time for the big premier showing.

Apocryphal or not, this guy had an incredible eye for detail.  An appreciation for nuance.  An innate sense for the imagined moment preserved in amber.  A deft touch for the tiniest vignette of emotion capable of shooting Cupid’s arrow straight into the heart of a buyer.

There was a master bedroom that he painted like a true master.  A fluffy comforter and a warm, earth-tone, bedspread casually tossed and ostensibly turned down like a lazy afterthought, all the while, disguising exacting premeditation and an exquisite flare.  A folding breakfast tray perched nonchalantly on top of the bed. A half-opened Jacqueline Suzanne novel, seemingly suspended in mid-sentence, lying face down next to a ceramic croissant, with a dainty little bite baked out of it and a glass of fresh orange juice standing expectantly nearby (or at least a glass painted half-full to resemble one. )

It was perfect.  It captured the idea of all those luxurious mornings spent lying in bed without a care in the world.  Nowhere to go. Nothing to do. No one to please (as the hypnotist always says). The only requirement inherent in the life portrayed was to indulge oneself in endless days plumping pillows and pampering whatever idle whims might arise.

I laughed out loud when I first walked into the room. I was laughing both at its brilliance and at myself for being so easily sucked in.  It didn’t matter that the notion of long mornings spent dozing happily in a perpetual bed and breakfast, in some parallel universe, was as far away from my real life as I could possibly get.

But here it is. 2010. Ten thousand homes and tens of thousands of stories later. And I still remember that bedroom and what it felt like.  The memory of that false memory is as strong today as it was then.

So, like the character of the Oracle said to the character of Neo in The Matrix:  ” This is really going to bake your noodle.”  Recently,  real estate agents in Southern California have been employing actors to provide “live” staging in some of their homes for sale.  And in this day and age where Redfin and Zillow have become the defacto new “drive-by” experience for most home buyers – content to cruise the internet, rather than actually get in their car  -  virtual home staging has become the new big thing.   Web artists are charging for staging empty houses inside pictures of empty houses!

So, what’s next?  What’s the newest, new big thing? Here’s a tip.  Virtual Feng shui.   Or as I like to call it – Shway to Go.  Sell clip art of crystals,  tiny mirrors, feathers, amulets, Chinese coins  and wind chimes to add to all that virtual staging people are going to be doing in the future.  If you are going to embrace realty, you really have to embrace the illusion and make it feel right.  Right?

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FRACTURING THE FAIRY TALE!

1 06 2010

We toss a lot of words around to describe the real estate market. Words that often come with an encrypted charge and a universe of silent subtext attached to them. Words that carry the weight of metaphor and chains of nuance extending far beyond what the sum of their individual letters are meant to imply.

Which is all to say… I’ve never believed in the fairy tale of a “good” real estate market and a “bad” real estate market. These terms never quite cut it no matter how you slice them. They are way too limited or lopsided in interpretation to do real realty justice. Good for who? Bad for who?

If prices are coming down, is that “bad” for everyone in the marketplace? Or just for some Sellers?  If prices are racing up 2% a month, is that “good” for everyone? What about first time buyers on the lowest rung of affordability watching their point of entry vanish upwards on the horizon?  Its not all so “good” for them.

Is it appropriate for us real estate agents to switch our valences back and forth from side to side, becoming devoted advocates of the buy or the sell depending on whether we perceive it to be a great buyers or sellers market? Just to call it all “good”?

How about  a “move-up” buyer?  One that wants to sell a lower-priced house and purchase a bigger, higher-priced home? There’s an underlying logic that suggests a declining market might be the “best” time for this kind of seller/buyer to make his transition.

The theory is:  The lower the price of the house sold, the more demand there is in that niche of the market.  A lower-priced home should fall less than a higher-priced home in the same declining area. Even though he may sell for less than hoped for, a move-up buyer should make up his “loss” on the other end.  He should pay less for that better, more expensive house. Way less than if the market were going up like crazy.

It is the “relationship” between what move-up buyers sell for and buy for that counts. Not the actual, dollar amounts themselves. Specially, if they can lock-in a portion of their new purchase price at near record low interest rates (like now, with Greece greasing the way).  Nothing like cheap money to help make it all come out nice and tidy in the wash.

So what about this market? This time? How to describe it? Good and bad are particularly inept descriptions for the daily phenomena manifesting itself all around us.

Months ago I mused that there should be two multiple listing systems existing side-by-side. One for corporate-controlled distress properties – REOs and Short Sales. And one for those euphemistic “Organic Listings”  – properties being sold by real human beings going through all the normal life transitions that used to drive regular real estate sales – birth, death, divorce, aging, heath -all the biggies.

But now the fragile dynamic between these two markets occupying the same place at the same time is splitting the market apart even further.  The split has become a full-fledged fracture with prices being driven dramatically up on the low end, at the same time the glass bottom is falling out of the market on the higher end.

If you want to feel like Jeckyll and Hyde for a day – start out in the morning looking for properties with a buyer approved up to $500k. By noon you’ll think you’ve mistakenly wandered into a time warp, transported back to 2004-2005. Everything you look at has 4 or 5 offers and is selling for more than list price.

Get some lunch and boost your blood sugar. Shake it off in time to make your 2pm appointment. That’s the one with the Seller who’s $1.6 listing isn’t selling, hasn’t had any offers and is accumulating days on market faster than cobwebs on the sign out front. Be prepared to spend a couple of hours acting as grief counselor and looking for a sensitive window of opportunity to break the news about just how low their price could really go. A different twist in the wormhole has deposited you smack dab in the middle of 1992!

So what happens when energy in the lower chakras is rising too fast at the same time that movement at the top of  the spine is headed for some serious down time? Welcome to the compression zone. That’s the dense little pocket of  the market lodged between the vertebrae of $550,000 and $750,00. The space being pushed together tighter and tighter from both ends. Its the tiny window of choice that more and more sellers, buyers and listings are finding themselves in – with quite a bit of gnashing of teeth and fraying of nerves accompanying the process.

Sound familiar? Get your helmets on and brace yourselves. Next week we venture into the Compression Zone.

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Number Wonking

21 05 2010

I’m never going to be a very good numbers wonk.  Or geeky statistics guy.   It’s not my nature.  I’m much more comfortable wandering off-leash in the obscure realms of tortured introspection, existential angst and abnormal psychology.

I can crunch a dozen zen koans at a time and make sense of them all. I can distill one single universal truth out of the hundreds of universes that populate 2,000 pages of the Urantia Book.  But when it comes to those sales figures the real estate market provides us each month, I’m not sure I can determine anything useful.  My perceptions just don’t seem to jibe with the rest of realty.

This week, I’m throwing caution to the wind. Going against my own grain. Undoubtedly rubbing some of you the wrong way in the process.   I’m foisting my own list of real estate stats on you – those that I personally find most interesting.

I’ll keep my editorial comments to myself and let the numbers speak for themselves. I invite you to log onto the blog. Register your opinions. Contradict my data with your data. Or tell me why I’m full of it.

But first…my all-purpose CYA disclaimer. The following information is not exact. There are many ways that info can be pulled off the MLS System. There are often mistakes Agents make inputting their listings that throw off the results.  Like all aggregate compilations these numbers may be subject to spin, the sins of (c)omission or errors in interpolation or extrapolation. You might not like what you see.  You may find the right side of your brain in vehement disagreement with your left.

I don’t speak for any group or officially represent any organization.  I have no particular allegiance to any thing other than my own thing . Proceed at your own risk. But if you do go forward, be advised that you might want to do so in the company of an experienced real estate attorney, a licensed CPA, a braniac cousin or a well-balanced idiot savant.  Feel free to enlist a priest, shrink, shaman or bartender or, of course, a real estate broker. Moi? I’ve really got no expertise in analyzing numbers. I only know what my gut tells me.

It’s May 22st.  Five more business days till the end of the month.  We’re rooting for you May. Real estate is cheering you on. You’ve got a long way to go in a short period of time if you want to boost our spirits and continue to shore-up our optimism. We draw hope and solace from the fact that a lot of closings often get crammed in right before the end of the month.

As of 11am yesterday, 98 homes had sold in the County during May.  Of those, 3 closed for a million dollars or more, 2 closed between 900 and 1 mill, 10 in the 800′s, 8 in the 700′s, 13 in the 600′s, 17 in the 500′s, 16  in the 400′s, 14 in the 300′s. And the rest…lower. All the way down to a $30,000 shack in the boonies.

Of the 98 properties sold 14 were short sales and 21 were REOs. Eighteen of the properties sold were listed above $800,000 at the time they went into contract. All but one of those 18 sold for less than what they were listed for, at the time of sale.  Most  sold for far less than what they were originally listed for.  Going back to the original listings of all 18 properties, the average property sold for  $316,961 less than what someone was hoping to get, in the beginning. These 18  properties had an average time on market of 254 days.

There are approximately 680 active single family listings (homes not in escrow) on the market – 212 are listed above a million dollars.  Let’s reiterate: 3  properties above a million have sold in May, 9 sold in April,  12  in March, 6 in February, 7 in January.

There are approximately 414 properties currently in one form of escrow or another – euphemistically known in the real estate world as Status 2, 3 or 4 (pending release, pending show, pending no show.) Of the 414 properties under contract, 16 are listed above a million, 11 are in the 900′s, 19 in the 800′s, 33 in the 700′s, 39 in the 600′s, 46 in the 500′s, 72 in the 400′s, 61 in the 300′s.

Of the 414 properties in escrow 216  are short sales and 56 of them are REOs.  Roughly 65% of all properties in escrow are officially – distress sales.

There’s my shorthand synopsis of the stats. What do you make of it all?  Time to roll up our sleeves and apply a little transactional analysis to the marketplace?

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The Shadow Knows…

15 05 2010

Shhh. Sh-sh-shhhh. Oops. Sorry. Shhhhh. No, I’m not shushing you. Honest. This is an Advertorial. We’re here to talk about real estate – not keep it on the QT.

My recurring speech impediment has flared up again. Maybe it’s a mild form of Tourettes. Part of my brain is trying to stop another part of my brain from blurting out bad words that aren’t supposed to be heard in public. My inner Gallant is trying to shut up my inner Goofus before he acts out in front of polite company.

Shh-Sh.-Shhh. See, every time I attempt to get a word in edgewise on myself, I begin stuttering. The last time this happened was in 2005 when my lips started twitching every time I tried to talk real estate. A series of b-b-bu-bu-bubs issued forth involuntarily whenever I opened my mouth. It was like some invisible finger of fate was flicking itself across my lower lip. I sounded like I was b-b-busy making goofy b-b-baby noises while there was a really serious rogue elephant stampeding the marketplace.

What finally came stammering up out of my subconscious in a cathartic moment of release was the one word that no one wanted to hear at the time – bubble. By then, it was too late. And the rest is real estate history. History we are still trying to muck our way through in the present tenseness.

But now, I’ve got this sh-sh-sh thing going on. Thankfully all that therapy I had in the past is helping me get to the bottom of my speech pathology quicker this time. So everybody be quiet for real now, ok? Listen up. Shhhh.

I’ve got two important words to say to you. Actually it’s four words, but bear with me. Ready? Sh-sh-sh-shadow inventory. Sh-sh-sh-short sales. Whatever else I say and whatever else anyone tells you and whatever else you believe, these are two of the most important things you can pay attention to right now.

No one is talking about either of these things in a way that does them justice. Sure the words get tossed around. Casual catch-phrases floating through the open house ether. But truly meaningful conversation and analysis in the context of the big picture is conspicuously absent. The silence surrounding both is deafening. All I know, is that the growing size of the shadow inventory and the growing number of short sales are both exerting a huge gravitational pull on the marketplace, in ways we can’t quite grasp or comprehend yet.

Shadow inventory is the name for that the hidden underground vault full of foreclosed properties the banks are hoarding. For reasons we can only guess at, they aren’t ready to recycle their REOs back through the marketplace. They’ve been dribbling a few out here and there but the vast majority haven’t seen the light of day since they fell off the court house steps into the abyss. In fact, apocryphal stories from local REO Agents suggest that the tiny flow of post-foreclosure listings has grown even more constricted these last few months. The drip of damned-up inventory has stalled below a snails pace. Why? Inquiring minds want to know.

At the same time the number of REOs coming on is decreasing, the number of short sales is increasing exponentially. Short sale has to be the dumbest term anyone ever invented for anything having to do with real estate (other than the word “real” itself.) Short sales aren’t short. And to date, not a lot of what we sorta, kinda, wanna think of as short sales as in actual “sales” – have really turned out to be sales at all.

The whole concept of the short sale is fuzzy at best. A clustered FUBAR at worst. A Seller is nominally the Seller, but in the end, after hiring an Agent and marketing the property and negotiating an offer, it is the bank(s) that decides whether a property sells or not. Once a possible sale disappears into the bowels of short sale negotiation anything can happen – including nothing. How do things get decided? How long is it going to take? Who knows? Everything is open- ended. A hope and a prayer with Jiminy Cricket as escrow officer.

Short sales are really just a shadowier kind of inventory than the other kind of shadow inventory. Add them to the huge supply of homes already residing in the limbo of bank land. Sitting on the sidelines. Twiddling their thumbs. Collecting cobwebs. Waiting to be released and unleashed upon the market someday when something or someone decides it’s the right time to let ‘em rip right through the tender balance between supply and demand.

As conventional wisdom says Sh-t Happens. As these unconventional times also suggest… a lot of ShSh is going to happen too.

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