What Exactly Is Experience?

This seems like a real basic question, huh? I’ve been on record here before that I think it’s real, real important for folks to work with an experienced agent when buying or selling a home. An experienced agent will 1) save you money, 2) sell your home for more money, 3) keep you out of trouble…and these are just to name a few. Here’s a couple of examples of inexperience:

* An agent who just got their license.  OK, I know that lots of these folks have boundless energy and enthusiasm that can help you get an edge. The fact is that most of these folks don’t have a clue. I once had a guy I know who just got his license tell me his plan was to offer deep discounts to folks to work with him. Now there’s a unique marketing approach…”I don’t know what I’m doing, so to compensate for that I’ll either charge you less or give you a big kickback”. Imagine that in another profession…your Dentist for example. Beleive me…I was once there too…it’s hard.

* An agent who’s been around forever but only does a transaction or 2 a year. I think this is more worrisome than the new agent because so many changes happen so fast in this business that it’s very hard to keep up with what works or what’s legal unless you’re doing it everyday. Having a license for along time doesn’t mean your experienced. I’ve asked agents like this questions like “Do you have the disclosures available?” and they haven’t gotten around to doing them yet. In Foster City alone, there must be a dozen changes in individual condo/townhouse projects every year that effect their value  and unless you’re out there you couldn’t possibly know anything about these changes.

Here’s a few other things an experienced agent gives you:

* Access to reliable inspectors, contractors, cleaning people, movers, painters, lenders, Title people and stagers.

* Relationships with other agents that can help you either get the best offer or buy the home.

I guess I write this because I always seem to meet people who tell me about some horrible experience that had working with someone. About 80% of the time that person lacked experience. There are lots of wonderful experienced real estate agents around. Choose wisely.

Working Smart

For a long time it’s appeared to me that large expenditures on renovation or remodeling were kind of unnecessary when getting one’s place ready to sell. It came as no surprise to me then when I saw Forbes Magazine run a segment on the 20 best and worst home improvements for the buck and almost all of the “best” in that story were simple, basic things that make nothing but sense.

Of the 10 best suggestions, according to Forbes, here’s my favorites:

1. Clean up the house. 

Give your home a top-to-bottom cleaning or, better yet, hire a pro to do a deep clean. Do it even before you hiring a real estate agent. If you don’t have a regular cleaner, hire one to keep the place tidy until your house is sold.

2. Simple repairs.

It is well worth the modest cost to fix broken outlets, tiles, light switches, door latches, folding doors and ceiling fans. Buyers view such flaws as signs of deeper problems–and may lower their bids accordingly.

3. Eliminate clutter.

A 10-foot-by-10-foot locker at Public Storage or one of its competitors is likely to cost you less than your phone and cable bills. Move out unneeded dishes, linens, personal items and furniture. Try to empty closets. Your house will appear bigger and more valuable.

4. Paint your house.

This can actually be a do it yourself thing to save money. If the paint on the front of your house is peeling, scrape it and repaint. Indoors, cover up any blemishes and repaint any rooms in loud colors that may be off-putting to others.

5. Clean up the yard.

No need to break the bank here. Mow the lawn, weed the flowerbeds and pull any dying bushes. Plant flowers in bare spots.

6. Replace hardware.

It’s a mistake to replace the kitchen cabinets or closet doors. But you can convince buyers to pay a little more by installing new handles, knobs and drawer pulls where needed.

7. Replace old appliances.

A new stainless steel range will not prompt buyers to pay much more for your home. But a seriously bedraggled stove or refrigerator could scare them off. If you’ve got a junky-looking appliance, swap it out for a budget-minded replacement.

All of this makes total sense to me. Interestingly, Forbes is not gung ho about the idea of large remodeling projects or room additions to maximize value prior to a sale. They think, and I agree, that a wise use of your funds can and will bring you the biggest bang for your buck. I would go slightly further and suggest the use of a good professional stager for preparation of the home as well. Intelligent planning and decorating will really assist you in getting top dollar when the time comes.

Diminished Expectations

It never fails. When someone sells their home they always feel like their place is the absolute best home in town. There really isn’t any competition in their minds. Certainly everyone looking at this place will be overwhelmed by it’s unquestioned greatness and line up to give them offers that will undoubtedly dazzle them. Right?

It happens all the time. These same sellers would be very objective about your house or my house…but not their own. Human nature I guess. Many sellers listen to their agent’s opinions about the state of the current market, read stories in the media, and on blogs like this,  about the state of the current market and even listen to the experiences of friends and family regarding the state of the current market…and conclude that it really doesn’t apply to them.

I know a listing in Foster City that’s, in my opinion, priced $100,000 too high. It’s been on for a couple of months now and has even received a couple of offers. Both offers came in…$100,000 under asking! The sellers said no. The comical thing here is the perception by the seller that they have the leverage to motivate the buyers up to their price. They don’t. In this market with ever renewing inventory, that actually seems to be increasing, a buyer would just as soon wait as pay too much for a house.  The seller’s bravado is actually pretty hallow in the face of that fact.

The truth is that this is a market of diminished seller expectations. What a seller thinks is big and powerful really isn’t so much upon close inspection. It’s humbling actually. For 10 years around here the seller got exactly what they wanted and then some. Their expectations were routinely exceeded and stories about wild overbids were taken as the norm. It’s actually quite fascinating that sellers still cling to that expectation in 2010. It’s also interesting that most sellers, after a couple of months of nothing from a marketing standpoint, finally understand. Seller’s that absolutely, positively won’t take anything less than $1,100,000 for their house when the listing is being signed are the one’s suggesting a price reduction down to $999,000.

I guess experience really is the best teacher.

A Real Relationship

When it comes to selling your home there are a number of relationships that are important to you. It’s obviously pretty important exactly who sells the place for you for one, but ultimately maybe the most important relationship a seller has is the relationship between the asking price of the home and it’s perceived value. If that relationship is out of whack or disfunctional your chances of getting top dollar are lost.

The truth is, it’s a fine art to get this relationship right. Months can be lost attempting to get it right too. Any given house, condo or townhouse has it’s pluses and minuses. Every home has a flaw of some kind. What every home needs when it’s on the market is for the buyer’s to have this experience…”I don’t really care about______________________, I just want this place!” When homes get overpriced the feedback is almost never “The price is too high”. Typically the feedback contains alot of very specific, detailed analysis of the flaws of the home.

“The yard’s too small”

“The windows are original”

“The bathrooms are original”

“The bedrooms are too small”

This type of list can be infinite. Here’s the thing…every home has value. At some price houses with very significant defects will sell with multiple offers. No defect is large enough to frighten anybody. Conversely, when a home is priced too high, every defect is magnified and ultimately blown out of proportion. Buyer’s intuitively understand the relationship between real value and the listed price. A great example of this came up in Foster City this week. Jan Majeski of Alain Pinel has a listing at 717 Widgeon that has 6 bedrooms, 2 baths, is an REO and is listed at $769,900. There’s isn’t really any question in my mind that this place is going to get multiple offers. It doesn’t really matter what issues this place presents either….they’re going to be eliminated by this value price. Of course it’s a different animal pricing a foreclosure over your own house, there’s no emotional connection that would argue against a lower initial price. It’s on the normal sales where this all really becomes an art. Homes that are listed a little lower than the market tend to get alot of attention right now and in many cases are receiving multiple offers. Others that have erred on the high side are sitting.

It’s sort of a strange dance. Recently I saw a house in San Carlos that was in almost original condition list for a price of $1,098,000 and that price represented a discount. They got 5 offers and it ultimately sold for $1,210,000. I really believe that if they had listed for $1,200,000 they would never have stood a chance of getting it. The houses flaws would have been exaggerated and it would have languished. Maybe it would have sold for $1,098,000!

The Great Unspoken Truth

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A long time ago, when I was still fairly new in the real estate business, I was flying back to Memphis to visit some relatives when I struck up a conversation with the guy next to me on the plane. Naturally, the conversation evolved into a discussion about residential real estate. He had bought and sold several homes and actually had more experience than I did at the time. I remember him telling me about some friends that had chosen an agent exclusively because they got a break on the commission and he recounted a horror story about their experience selling their home. That wasn’t the memorable part…the part that I never forgot was the resolution that came to him as a result. He said, “I want an agent that’s been sued a couple of times. I want somebody who has lived through their mistakes and has seen it all, because they won’t be surprised by the unexpected”.

That statement still resonates with me all these years later. Clearly, experience is a great asset to either buyers or sellers but not all of that experience comes from closing lots of houses. I’ve sold hundreds of homes and that’s blessed me with a ton of practical experience when it comes to doing it again right now…but the truth of the matter is that it’s the mistakes I’ve made that have really taught me invaluable lessons that very definitely help my clients now. The great unspoken truth is simply this, you show me an experienced real estate agent and I’ll show you somebody that’s survived some mistakes.

11 years ago I represented a buyer who bought a house on the bluff just above the Ocean over on the coast. The place had a 180 degree panoramic ocean view, a fairly well know pub was a block down the hill and a really gorgeous state park was just beyond that. We were so excited! What a location! I envisioned seeing my friend whenever we went to the coast for years to come. The area had some funny geological anomalies that were disclosed on some reports but nothing specific to this house. We had heard about problems in this area but we did inspections and everything seemed OK. A year and a half after she moved in a fracture in the earth opened up under the front right corner of that house. Turns out it was a fairly common thing in this neighborhood. Some houses got effected, some didn’t. You just didn’t know if or when it would effect your place. Every few years she needs to pour concrete into this opening fissure to stabilize the house. The foundation has cracked in that corner and she’s had problems with rodent infestation as a result of the hole that was created by this confluence of fault and foundation. I’m honestly not sure if the house can ever be sold…when the earth opens up under your house that doesn’t look real good on the disclosure.

In retrospect, I think both my client and I were way too emotional about the opportunity to get this house in this amazing location. We got blinded by that and didn’t see the negative possibilities. There’s many, many other houses nearby that don’t have any kind of issue like this…houses sell there all the time. What do you suppose I say when clients ask me about houses they saw online in that area now? That was the last transaction I ever did where I allowed my feelings about a house to override my caution about possible negative implications. What a great lesson.

When I think about the current trend of discount brokers offering rebates to buyers and simply showing up to write offers I cringe! Many of these “agents” don’t even actually see the home in question, much less have any clue about how to interpret what’s in the disclosures or know nuances of particular neighborhoods. Like wise, the Internet is never going to answer all of these questions either. Experienced agents, who have learned from their mistakes, are really a valuable commodity

Getting Local

Local

I had the good fortune in the last few weeks to have a couple of very popular listings here in Foster City, 1121 Catamaran and 18 Dory Ln, and one thing became very clear to me while chatting with folks at each of the open houses…there’s a whole lot of buyers out there either not working with local real estate agents, or not working with agents at all. Dory had about 90 people at it’s open house, Catamaran at least 200. I’m sure of that on Catamaran because I printed 90 flyers and I had 4 left at the end of the day…people mostly come in groups and, almost always, one person takes a flyer.

In the case of Dory, I handed out 14 disclosure packets to interested parties prior to looking at offers…and I received 7 of them. On Catamaran I handed out 11 disclosure packets and received 3 offers. Of those 25 packets only 9 of them were given to local agents and 5 of the 10 offers came from local agents. Interestingly…of the 10 offers 6 of them were truly outstanding (price and terms) and 5 out of 6 were from local agents. Both winning bids came from local agents.

Why, you ask? It seems so obvious to me. These local agents know the Foster City market inside and out. They know what constitutes a good offer in a multiple offer environment and they know what will be important to a seller. One of the big reasons they know that is because they have sold listings here too. They also routinely see good offers from bad ones and thus they know what they’re doing.

Just so were clear, when I say a local agent I mean an agent who actually does a fair amount of business in Foster City. There’s real good agents in San Francisco, San Jose, Fremont…etc that would be lost in the Mid Peninsula and have no clue about Foster City. Honestly, I have no clue about San Francisco as a residential market. I’ve been a realtor for 20 years, sold hundreds of homes, but I’ve never sold a property in San Francisco. I would not provide a client the kind of service they deserve working with them in San Francisco.

Especially if you’re out there trying to do this thing on your own, consider working with a local agent…it will be more than worth it to you. That also applies to sellers.

Relationships

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About a week ago I showed a house in Foster City to some folks who expressed some interest in the place. I called the listing agent, who I’ve known for a long time, and asked some questions. I found out two important things…1) the home was getting plenty of interest and there was a possibility of multiple offers, and 2) the listing agent was willing to look at an offer that I would write immediately. No waiting…and no competition for the buyer. Why, you ask, would that happen? Because the relationship that’s been established with that agent insures her/him that our potential transaction will be smooth.

This isn’t all about me of course, this is the story of the value to the consumer of working with an experienced agent. It’s become sort of common in the last few years for buyers to ask me if I’m willing to kick back commission the way rebating online real estate companies or other discount brokers do. These brokers have created a fantasy world where they’re selling the notion that a real estate agent’s job is a commodity. That we’re simply interchangeable parts, order takers and secretaries who merely know how to fill out forms and present them. Sometimes it works out and it’s true too! Lot’s of the rest of the time it’s not true. I think most of the time it’s not true.

There’s probably 100 reasons why experience is beneficial to a buyer or seller, yet I know that the Internet allows people to study and gain knowledge that wasn’t available to them just a few years ago. There’s certainly one way that the Internet or the rebaters can never touch and that’s in the area mentioned above…relationships. I can’t tell you how many times a client of mine has landed on a home in a multiple offer environment because of the relationship I’ve had with a listing agent. It’s also been enormously important for me as a listing agent to be able to identify an experienced agent that my seller can trust to close escrow on time. Relationships are also important in connection to lenders, title people, and inspectors as well.

Lots of this is simple human nature. You spend 20 years in one community and you get to know your coworkers and other agents. Naturally, you’re going to feel comfortable working with them. Working with somebody like this sure beats having an offer faxed by an “agent” who wasn’t in real estate just a year ago.

Intervention

Have you ever watched the HGTV show “Real Estate Intervention”? Here’s an episode above…I find this show to be really interesting and true to life. The show uses an agent, by the name of Mike Aubrey, who “intervenes” with sellers that are seemingly in denial about either the value of their home or what it’s going to take to get that home sold.

The clip above is a classic scenario. The sellers here need to move a family member in with them…and hope to sell their existing place and buy a bigger one. They have an offer on another house contingent upon the  sale of their own…and their house is overpriced. HGTV has a nifty advantage that the rest of us don’t. They call up the new owners of recently sold homes and take the subject sellers over to these homes so that everyone can see the comparison/contrasts. As you can guess, the sold comp is bigger, nicer, better than the seller’s place…and sold for significantly less than the seller’s place is listed for. These small facts leave the seller unmoved. The psychology of it all is fascinating…and very true to life!

Rule number 1 for sellers…you have to be objective!! Great show!!

Falling Into The Abyss

nophoto

Does this wonderful and descriptive picture look familiar to anyone? I’ll bet plenty of you have seen it alot! This is what happens when a real estate agent neglects to take any photos of his or her listing…the MLS puts this charming image there. Right now in Foster City there are 5 active listings with this picture on them, or in other words, no pictures at all. In San Mateo there are 15 single family homes alone that have no photo. One of them also has no public comments at all either. I’ve seen other listings currently in the MLS that have verbage like “no showing until first tour” or “disclosures coming soon” on listings that have been on the market for 60 days or more.

(Here comes a rant!) This is…oh, how shall I put it? Unconsionable? The MLS is without question the number 1 way to advertise a property for sale. Not only that, multiple feeds pick up MLS data for their sites (Realtor.com, Trulia, Movoto…ad nauseum). A seller is paying to have their listing marketed around the world on the internet and the listing has this? What’s particularly amazing to me is the fact that it’s really not hard at all to do. What’s more…this market is totally unforgiving of this stuff.

I honestly believe that much of this goes back to that post from last week “How Important Is Experience?” ,when SO many agents are doing so little business I’ve got to believe that many of them are just bummed out and are just going through the motions. It’s sure not very hard to go buy a digital camera and take some shots of your listing, is it? Many sellers are having a hard enough time of it as it is. Take a small additional step, please!

It’s Always Something…

oh-no-global-warming

Coming fast on the heals of Tuesday’s post…I started thinking of some real life stories that I’ve either heard or experienced in the last month or so. Would anyone argue that an experienced real estate agent would have a distinct advantage when negotiating for a buyer or seller in these situations?

* An agent I know told me a story about  a deal she was involved with on an REO property in Redwood City where the lender required the buyer be approved by them prior to ratifying. The buyers decided to use this lender for their loan and right before closing this same lender required that an illegal element of the house be removed prior to funding. Since it took some time for the buyers to comply, the deal closed a week late…and the lender charged a $350.00 a day fine to these buyers for closing late! If the buyers backed out the lender threatened to keep their deposit. Remember, this lender was on both sides of this transaction…they own the house and they’re doing the buyers loan! They made all of the rules the whole time.

* I have a client who has an interest in a property in South San Francisco that’s sort of the Winchester Mystery House. It’s garage was converted into a family room and an addition was placed on the back that features an illegal second kitchen and a second story that includes 2 bedrooms and a bath. The additions were all done with permits(except the second kitchen). A large trellis and awning covers a concrete patio in the back of the house and behind that are 3 small storage buildings and a driveway that opens onto an alley. Turns out the back yard, including the patio, the storage and the driveway actually don’t belong to the seller! It’s property owned by the City of South City. In spite of that all these permits were approved 30 some years ago by the City. Imagine buying a house and discovering that the back yard isn’t really yours. I’m actually not sure how this will eventually play out but I have no doubt we’ll be spending plenty of time with building and planning should this client decide to move forward.

What does all of this say about real estate? It’s always something!! I’m really serious about that…there is always something that seems to present itself in transactions that come out of left field.  The truth is that nobody has all of the answers in every situation. A good agent will have the awareness of how to find the answers, or at the very least, be able to ask the right questions. Many of the waters we find ourselves are treacherous right now and finding the right navigator is critical…maybe more now than it’s ever been.