Real Estate Information

  COMMENTARY

This metric dropped to 100 days in July, a low not seen since July 2010. months DOM has fluctuated between 90 and 116, with an average of 101 For the last 24

DISTRESSED SALE

Distressed sales are a combination of lender owned and short sales and have dominatedthe total sales since well before STAT began to track them. Distressed sales (5,595) forJuly accounted for 66.7% of total sales, right in line with the previous twelve month averageof 67.13%. July short sales (1,981) dropped 34% from June’s 3,002. The July figure represents 23.6% of total sales. Distressed sales continue to dominate the total sales landscape although with the promise of an end as the foreclosures pending continue to dwindle.

AVERAGE DAYS ON MARKET

A recap of STAT’s good news this month focuses on the six day drop in days on market, continued ebb in the new listing flow, decline in the total inventory pool and the steep, steady downward trajectory of foreclosures pending, all supportive of the coming recovery. Disappointing, yet no surprise, is the state of Valley pricing which remains singularly lackluster. The ARMLS PPI predictions forecast more of the same for the next ninetdays, with average pricing in the $152,800 to $134,900 range and median pricing hovering in the $110,000 to $98,000 range. At the recent REAL ESATE FORWARD event, sponsored by ARMLS and the Phoenix Business Journal, panelist Michael Orr, Founder and President of The Cromford Report, perhaps said it best: "Pricing right now is like driving across Kansas and trying to find the lowest point."

Looking around the country it is not hard to find cities whose median prices actually make theValley’s look good. A recent CNN Money report listed cities with low median prices, such Lancing Michigan ($64,400), Toledo, Ohio ($64,900), South Bend, Indiana ($68,700), Akron, Ohio($74,900), Ocala, Florida ($75,400), Dayton, Ohio ($78,000), Cumberland, Maryland ($80,700),Grand Rapids, Michigan ($81,100) and Decatur, Illinois ($81,300)

1 , reminding us that our pricing dilemma could look worse.

STAT has reported for many months that jobs are the key to recovery. Dr. Ted Jones, Chief Economist for Stewart Title Guaranty Company, provided the national perspective at REAL ESTATE FORWARD. He reported that the label "a jobless recovery" attached to the current economy is an oxymoron. Jones reasoned that without jobs there can be no recovery. The Valley lost 220,000 jobs since July 2007 and gained only 5,000 in May. 2 At this pace, recovery is 4-5 years off, if the population remains at 2011 levels. Jones reported that we need 1.25-1.5 jobs per housing unit to return to normal.

ARMLS is now tracking weekly Valley new job postings on the three major career websites, Career.com, Monster.com, and Jobing.com. A graph of the postings is available each Saturdaymorning in its new publication, ARMLS REWIND, a weekly recap of news and emails from the preceding week. Thi metric will serve as a barometer to anticipate job growth.

Other panelists at REAL ESTATE FORWARD counseled that now is not the time to buy just one house, but rather two or three. The current affordability of the Valley’s housing market is unprecedented, and for those with the cash and the credit to act, the investment is sound and bound to pay off in the future. For now many factors are affecting jobs over which we have no control, e.g., oil prices, acts of God, general business confidence, etc. All panelists predicted2013-2014 when asked when they expected the Valley to recover. We can hardly wait!

1Statisticshttp://money.cnn.com/galleries/2011/real_estate/1105/gallery.cheapest_housing_markets/

2Bureau of Labor 

 Be Prepared...

The Boy Scout motto is ‘Be Prepared’. That’s a great maxim for Realtors, speakers, and Homo Sapiens in general.

When I began my real estate career 34 years ago, my trainer told the class that if it took a half day to prepare for a listing presentation, “Do it”. He smiled and suggested that we had nothing more important to do.

Recently, a friend of mine  gave a speech at Toastmasters. He felt he could ‘wing it’ without proper preparation. The speech bombed. My friend learned the ‘Five P’s: proper preparation prevents poor performance’.

Some agents today research their clients on social media sites such as Facebook and Linkedin prior to their presentation. Imagine how impressed a prospective client would be if you mentioned a few personal tidbits garnered from these sites. Being prepared shows that you care.

Be prepared financially. A Realtor friend of mine has a substantial federal tax lien since he chose to neglect paying his timely taxes. Warren Buffet said, “When the tide goes out, you can tell who is swimming in the nude”.

Be prepared physically. Do you have a little extra time on your hands? Review that New Year’s resolution to drop some weight. Remember people should look more like apples than pears.

Be prepared mentally. Join a brainstorming group. Realize that most market leaders are great readers. Join a Toastmaster club (www.toastmasters.org) to learn how to overcome the fear of public speaking.

Be prepared relationally. Referral business comes from building deeper relationships. Doing more deals is a byproduct of those bonds. Don’t eat lunch alone. Prepare to prospect daily.

Be prepared to refocus on a new niche. There are riches in some niches. Other niches like old oil wells no longer provide sufficient revenues. The only difference between a man and a mouse is a mouse will stop running in a maze if the cheese is removed.

Giving Feedback

Giving feedback that is readily accepted, and then acted upon is a precious life skill. Any fool can build barriers by barking orders and attempting to command and control. Building better behavior takes a few time tested techniques.

Recently, a friend of mine was at a fast food restaurant with his teenage son. The counter person took his order without saying thank you or smiling. They slapped the change on the counter. When my friend got his order a few minutes later he gave the clerk “a few customer service tips”, and ‘a piece of his mind’. The clerk turned their back and walked away silently.

As my friend retold the story, he made a few comments about ‘kids today’. He was surprised that I suggested that it was he that had the communication problem. He asked if I were in that situation, what would I have done differently.

At most fast food establishments, workers have uniforms and name badges. I told my friend I would have used the person’s first name when addressing them. I would have then asked their permission to give them some feedback.

Toastmasters has a great feedback method called the sandwich. An evaluator is encouraged to say something positive, then give a few suggestions or constructive criticisms, and finally conclude with a few more positives. In other words, be lavish with your approbation, and effusive with your praise. It’s a great way to anesthetize any proposed changes.

My friend vented using ‘you’ statements. A more effective feedback strategy is to use an ‘I’ message. For example, “When you don’t smile, or say thank you, and slap the change on the counter, it makes me feel unwelcome, taken for granted, and disrespected.

Giving feedback is an art form. People may forget your message, but they will not forget how you make them feel.

Paul Pastore 7/26/2011

“I want to cancel my listing”

What is your personal policy when a seller says they want to cancel their listing? My listing agreement contains a sizable cancellation fee. Any seller may take the home off the market for free at any time. But, if they want to cancel due to a minor inconvenience, or impatience, the fee is applicable.

The fee is a litmus test to make sure a seller is ‘serious about selling’. It is also a disincentive if a friend or relative suddenly gets their real estate license. Or, if another agent has a conversation that suggests ‘the grass is greener on the other side of the fence’.

Recently, several friends and I drove to Utah to compete in the Bryce Canyon half marathon. We all made hotel reservations prior to arriving at the race location. On the day we arrived we discovered the motel was forty minutes from the 6 A.M. race starting line. We thought about cancelling and finding closer accommodations.

My hotel had no fee to cancel, so I did. My friend’s motel had a minor fee, and he cancelled. Another runner would have to forfeit a nights lodging, so he kept his initial reservation. In my opinion, the third hotel had the best policy. I’m sure if there were an emergency the manager might bend the rule, or offer a credit for another stay.

Some agents use a ‘cancel anytime for no fee’ as a unique selling proposition. In other words, “Fire me at any time if you are unhappy”. These same agents profess that very few sellers cancel. In my opinion, it is difficult to deliver happiness in a distressed market.

“I want to cancel my listing” is a sentence a seasoned agent may hear infrequently. But, it’s a good idea to have a policy in place before the potential problem arises.

Maricopa county Market Headlines June 2011

·         Supply continues to fall, though rather more slowly in the ranges between $200,000 and $800,000.
·         Demand very strong below $200,000 but showing seasonal weakness above $200,000.
·         Average sales price per sq. ft. is stable below $300,000 and increasing above $300,000.
·         A change in the sales mix could adversely affect overall market average prices and medians.
·         Foreclosure activity declining and active REO inventory is at the lowest level for several years.

Homes under $100,000
·         Demand remains strong while supply is still declining. Prices now stable for 7 months.
·         Demand normally falls off during the summer but the demand in this price range is dominated by intense buying by investors who are only slightly affected by the seasons.
·         Active listings are now 7.8% below this time last year.
·         This supply continues to gradually shift away from REOs (down 15.7% in the last month) towards short sales and pre-foreclosures.
 
Homes Between $100,000 and $200,000
·         Supply down and demand fading slightly. Pricing remains very stable.
·         Having peaked in October, supply has fallen another 6.8% in the past month and is down 23.4% when compared with March.
·         Demand has faded a little, but this is in line with normal seasonal patterns.
·         REOs dropped to 38% of monthly sales while normal listings also fell to 38%. Short sales and pre-foreclosures increased from 21% to 24% of sales.
 
Homes Between $200,000 and $400,000
·         Buying interest falters a little although supply continues to decline. Pricing remains very stable.
·         The supply of single family homes dropped by another 4.1% between May 26 and June 26, and is now down 17.0% over the last three months and 29.2% over the last year.
·         Over the last month REO supply actually rose by 2.4% reversing an 8 month trend, while short sales and pre-foreclosures fell by 3.0% and normal listings fell 5.5%.
 
Homes Between $400,000 and $800,000
·         Supply falling but demand continues to weaken. Nevertheless sales prices remain on an upward trend.
·         Single family homes between $400,000 and $800,000 have experienced a 6.4% fall in active listings in the last month.
·         The sales volume strengthened slightly in June, with monthly sales up 7.0%.
·         REO supply didn’t change during June at 84 homes, but this is down 10.6% over the last 3 months.
 
Homes over $800,000
·         Demand weakens for the summer months but supply is down again. Sales prices continue to climb.
·         We see the first sign of the spring season turning to summer as pending sales start to fade.
·         The good news is that the supply of homes above $800,000 fell 8.5% in one month, 18.9% over three months and 29.2% since June 2010.
·         Active REOs rose 18.4% from 38 to 45 over the last month but these represent only 2.9% of total active listings.

Say ‘hi’ to the F.B.I. this summer

This is a great summer to visit the F.B.I. Real estate agents can fly to Washington, D.C. and take a tour at the headquarters located at 935 Pennsylvania Avenue NW.

Another way is to commit loan fraud and have a local agent subpoena you.

In several areas, including Phoenix, there is an F.B.I. task force already in place working on loan fraud. Many of the agents wear gray clothing to symbolize the numerous gray areas that real estate agent should avoid.

One area of concern is called ‘buy & bail’. Your client decides to buy another property to take advantage of the great deals in this market. The problem is they are upside down on their current home. Their agent suggest a bogus lease letter to a fictitious buyer or close relative. Bingo, loan fraud.

Another example is if you are a real estate agent going through a short sale, you will not be allowed to receive a listing fee on your personal residence. But, a ‘creative agent’ may ask a friend to co-list the property & refer a portion of the commission to them after the deal closes.

A slogan for real estate agents should be, “If in doubt, don’t”. Don’t get involved with clients who are considering loan fraud. Don’t provide ideas, forms, ‘off the record’ suggestions, etc. Remember Forest Gump said, “Stupid is as stupid does”.

Some agents might claim they can’t force their client to do things by the book. Others might say they simply plan to ‘look the other way’. If you look up the word subpoena in the dictionary it might say, ‘to waste hours of your time and life answering an endless array of questions you could have avoided’.

Summertime is a great time to visit the seashore and the cool mountain lakes. The F.B.I. has other plans for wayward real estate agents.