Friends Helping Friends
October 31, 2006 | 4 Comments
I came across a post in my RSS reader from The Real Estate Guide, by Athol Kay. Athol is an agent and blogger in Connecticut, and one of the recent additions to the Zebra’s Blog Roll. The post is a chronicle of Athol’s recent foray into blogging and balancing that time with the time he spends as a agent doing traditional agent stuff. The thing that struck me was the opening passage:
I’ve only been licensed a short time and started this blog as way of “doing something different” to all the other agents that I’ve come across so far. There are just too many agents out there to run with the herd and expect to survive. I look terrible in heels and a push-up bra anyway. It’s been a real education getting into the real estate blogosphere. I’ve made a couple of early friendships, and my Google Reader inbox fills faster than I can read everything. I’ve learned so much in the last month.
The thing that struck me about the passage was that one of the “early friendships” he mentions refers to ME. Truly speaking, I don’t actually know Athol. I certainly subscribe to his blog, and I like his writing, but we have never actually met each other. Nonetheless, I would consider him a friend. If I ever had a client interested in real estate in Connecticut, he would be my first point of contact, and if I am ever visiting his area, I may even stop in.
This is one of the things that I like most about the real estate blogosphere. I can’t speak for other industries, but most of the real estate bloggers I have run across are very nice people who are just trying to make a positive impact. The discussion on real estate blogs is second to none, and it is advancing the practice of real estate all across the country.
Athol is an agent in Connecticut, and I am an agent in Virginia. Although we are physically separated by hundreds of miles, blogging allows us to learn from each other on a daily basis as if we were neighbors. One aspect of the real estate blogosphere is that it is filled with friends helping friends. That is pretty cool, if you ask me.
[tags] real estate, realtor, charlottesville, virginia, connecticut, blog, blogging, [/tags]
The Tomato Takes Top Prize in Carnival
October 30, 2006 | Leave a Comment
This week’s edition of the Carnival of Real Estate is up at Real Central VA. The Real Estate Tomato takes the cake for post of the week. Plenty of good posts, as usual.
[tags] real estate, realtor, charlottesville, carnival of real estate [/tags]
The Zebra Enters The Triangle
October 29, 2006 | 1 Comment
No, not that triangle, this triangle. It would appear that the fine people at Brick and Garden Real Estate share my affection for Dylan Thomas. So much so, that they linked to the Zebra on their blog.
They describe the site as a quasi-blog, which I guess is true, since I can’t send a trackback to their post, or leave a comment of thanks. That’s okay, though. I will just have to do it the old-fashioned(?) way, and send them an email. In the meantime, their blog is the latest addition to my blogroll.
[tags] real estate, realtor, charlottesville, blog, blogging, research triangle, north carolina[/tags]
The Zebra Grows a Brain
October 29, 2006 | Leave a Comment
The Real Estate Zebra made an appearance recently on Grow-a-Brain. Grow-a-Brain is one of the more interesting real estate blogs out there. Proud to have made an appearance, even more proud that The Zebra is the title picture for the post. Now that I have expanded my mind, my blog roll has been expanded accordingly.
[tags] real estate, realtor, blog, blogging, charlottesville, grow a brain[/tags]
REALTORS: Do Not Go Gentle Into That Good Night
October 26, 2006 | 14 Comments
I noticed that an open letter to Minnesota REALTORS has been making its way around the blogosphere recently. I first saw it on the Inman Blog, and then Greg Swann had something to say about it. It has been talked about in the Charlottesville area, and again in Arizona. I think the reason that the letter is noteworthy because it appears that the Minnesota Association of REALTORS is doing something contrary to what people might expect. Namely, they are telling many REALTORS to get out of the business. Of course, they expect us to believe that isn’t what they are saying; but if you read the letter, it is difficult to come to any other conclusion.
Personally, I don’t like it. I fully recognize that the real estate industry has plenty of issues that need to be addressed. One of the issues, brought up in the Minnesota letter, is the issue of more REALTORS working for fewer sales. I also recognize that one of these issues is the actual structure of the industry, and the fact that REALTORS are independent contractors who are, in many cases, indentured servants who exist at the will and whim of their broker/master. What I don’t like about the letter is that it is claiming that the cure for these problems is simply to thin the heard, separate the wheat from the chaff, etc.
I am willing to bet that the Minnesota Association of REALTORS (MNAR) wasn’t espousing this same opinion two years ago, when every REALTOR was living in the land of milk and honey, real estate prices were soaring, and all was right with the world. Something tells me that back then, their tune was quite different. REALTOR associations all around the country were touting the money to be made in real estate, and imploring people to get their real estate license. I distinctly remember being sent a pin by the National Association of REALTORS that celebrated the association’s one-millionth member. So now we are expected to believe that more members is a bad thing? Look, either it is or it isn’t. The industry cannot be actively recruiting members on one hand, and then telling them to get out of the business on the other. The various associations around the country are partly responsible for the number of REALTORS in the business. The creation of this monster is partly their responsibility. Now, the MNAR is coming to its membership and essentially saying, “Hey, we really wanted your help and your dues payments a few years ago. Now, however, your existence is getting to be a burden on ‘the industry,’ so if you could, it would be better for both of us if you find something else to do.” Which, if you ask me, is pretty messed up.
One of the things that I love most about the real estate industry is that it is a free, open market. In fact, it is one of the truly free-market industries that America still has left. The industry experiences very little government interference, and the barriers to entry are very low. Any market that shares these two characteristics is going to experience high participation and high turnover. This turnover is natural. Believe me, MNAR doesn’t have to tell people to get out of the business, the market is going to force people out of the business, if they simply let the market run its course. If there are those that fear they will be the ones forced out of the business, the solution is simple– compete better. There are no guarantees, but competing will at least give you a chance. It will make you an active participant in your future, which is a good thing. I’m not sure how many times I can say this, but I will say it as many times as is necessary.
It would appear that perhaps the MNAR doesn’t share my view of competition and free markets. The letter from MNAR states the following:
As a “Trade Association” we must defend and look out for the general welfare of the industry. This means helping members understand that it may be time for them to make a career adjustment so as not to harm the structure of the industry for those pursuing it as a career.
The point is reiterated later:
Even if 10 percent of the MLS were non-salespeople, there are still a significant number of members who are not pursuing the business as a business.
My opinion is this– if those people who are “pursuing the business as a business” cannot compete because of those who are pursuing it for some other reason, those are the people that should find a new career. Think about it like this, if Derek Jeter was beaten-out for his starting spot in the Yankees lineup by Joe Schmo who plays church-league softball on the weekends, who would be the one who needs to find a new career?
The MNAR could tell its members that innovation and competition is more important now than ever before, that its members need to work harder to increase their professional aptitude in order to survive and thrive in the current market. Instead, they took the easy way out. It’s always easier to tell people to leave than it is to help them try and stay. Whatever happened to perseverance and adaptation for survival? What ever happened to the idea that it is better to have tried and failed than not to have tried at all? In a way, the letter from MNAR is a sad and pathetic statement on the psyche of real estate professionals.
To make matters worse, MNAR gives its member a list of reasons that people need to get out of the business:
Glenn Dorfman, Chief Operating Officer of the Minnesota Association of REALTORS® put together the following piece to help illustrate the industries current dilemma: Regardless of the agents who are making money, there are four absolutes:
- There are too many agents in the business chasing a declining number of deals which has two implications (a) compensation dilution for many real estate professionals (b) the public face of real estate professionals is not near the best it could be if brokers terminated non-productive agents now – keeping them will have a negative impact on the dollar value the public will put on our services as homes sit on the market longer
- There are no examples in the history of business where productivity went down during times of economic downturn (a) every business that survives economic downturns reduces employment when sales shrink (we have yet to do this).
- As gross compensation to brokers declines, they will be forced to squeeze agents (if they do not shed the dead weight soon).
- Finally and significantly, the wealth effects of housing that REALTORS® help create employed an enormous number of high paid employees (tradesman, cement, lumber, landscaping, furniture, etc., etc….) will, in reverse drag the economy into recession despite the current protestations of the industry and others.
Allow me to address these points one at a time:
- How many is too many? What is the threshold for the acceptable number of agents in the market? Eliminating non-productive agents is the decision of the broker. The broker is at least partially responsible for their lack of productivity, so the consequences are on them. Agents who are not productive, by definition, don’t really have a negative impact on the public face of the industry, since they obviously aren’t out in the public. If they were, they would be productive. These are the aforementioned people who will be forced out by the market.
- This is a pretty bold assertion that seems difficult to prove. That aside, reduction in the workforce isn’t a guarantee of success. Just ask Ford and GM. Both of those corporations are cutting jobs and getting their butts kicked.
- How nice of MNAR to tell broker members what they are going to do before they have even done it. Perhaps brokers will instead try to help their agents innovate and compete in the marketplace and . . .oh never mind, I already covered that.
- The grammar in this one is so convoluted that I’m not really sure how to approach it. I think what they mean is that the real estate boom expanded the job market and now that the boom is over, many people in industries ancillary to real estate will find themselves out of a job. This may or may not come to fruition, but either way, I fail to see how reducing the number of agents is going to help construction workers keep their jobs.
All four of these points are dubious, and far from being “absolutes.” If I were on the fence, I hardly think that they would convince me to leave the industry. I know that the letter explicitly states that MNAR is not telling REALTORS to quit the industry, but the rest of the letter seems to be to the contrary.
If I were a REALTOR in Minnesota, then my attitude would be to tell MNAR to stick it. If they think they are going to scare me out of the business, they are wrong. If they think they are going to guilt me out of the business, they are wrong. And if they think they are going to fool me out of the business, the joke is on them.
As for me, I use as my inspiration the words of one of my favorite poets, Dylan Thomas.
But hey, that’s just me– and I don’t live in Minnesota.
[tags] real estate, realtor, charlottesville, real estate agent, minnesota, dylan thomas, NAR [/tags]
A Valuable Lesson From NASCAR
October 24, 2006 | Leave a Comment
I spent this past Sunday afternoon at Martinsville Speedway attending the NASCAR Subway 500. I am a big fan of NASCAR. I started following the sport about 4 years ago, when all my beloved New York teams (Mets, Jets, Rangers, Knicks) were pretty much in the toilet. I have been hooked ever since. For those of you who ever get the chance, you should really go to a race. The Commonwealth of Virginia is blessed to play host to 4 NASCAR races every year, 2 at Richmond, and 2 at Martinsville. All of these are short-track races, so the racing is great, and the entertainment can’t be beat.
While I was sitting in the stands, and on the long ride home, I had some time to contemplate how the lessons of short-track stock car racing learned at Martinsville can be helpful in real estate. One of the most important lessons is that patience is key– The most successful short-track drivers know well the old maxim of racing– to finish first, you must first finish.
The same is true in real estate. I have worked with clients who felt that they must buy a home right away. Except in rare cases, this usually isn’t true. It may be true that buyers may want to move right away, but rarely must they move right away. Oftentimes, a little bit of patience can go a long way in real estate. This is truer now than it has been in the last few years, as the market in most places (including the Charlottesville area) has become quite the buyer’s market.
An artificial sense of urgency can also be very detrimental when it comes to negotiating a contract. If you, as a buyer, feel the need to buy the home right away, you are less likely to negotiate on items such as price. Sometimes, failure to negotiate on these items just because you want to buy the home as quickly as possible means that you give up thousands of dollars, or lose out on other terms that could have been to your advantage. I am not saying that patience will guarantee a more favorable result, but impatience will never give you a chance.
Sellers can also benefit from patience. Homes are going to take a little longer to sell than they did a year or two ago. As buyers exercise more patience in making offers, sellers are going to have to exercise similar patience in awaiting offers. I am not saying that sellers should be complacent. That is never true, as aggressive marketing and accurate pricing are also of paramount importance. What sellers need to be aware of, however, is the fact that selling a home over a weekend isn’t a reasonable expectation. Pick a good agent, price the home well, market the home aggressively, and it will sell. A little patience in this regard will go a long way to avoiding frustration.
Impatience can be just as dangerous for a seller during negotations as it can be for a buyer. Buyers are well aware that the current market conditions are to their advantage. That does not mean, however, that sellers have to give everything away. Remember that a real estate transaction is a negotiation, not an all-or-nothing proposition. If the buyer wants a lower price, perhaps you can negotiate a more suitable closing date. Entering into the negotiating process with a patient mind-set can help relieve some of the frustration and tedium that can occur when two parties and two agents are trying to work everything out.
Patience is perhaps most important for buyers and sellers when the process doesn’t work out. Sometimes, everyone involved spends lots of time and effort going through a negotiation only to realize that it just won’t work out. That’s okay. Failure is part of the negotiating process. If the result were a forgone conclusion, the process wouldn’t matter. Every failed negotiation can teach you lessons that make the next negotiation a success. The negotiation of a home contract is really a culmination of a lot of little negotiations about price, home inspection, closing date, financing, etc. I have met and heard stories from too many people who gave up on one phase of the negotiation out of frustration or impatience, and it caused the whole thing to fall apart needlessly.
In NASCAR, impatience can lead to wrecked cars and the loss of thousands of dollars and hours of preparation. In real estate, impatience can lead to a similarly wrecked transaction and the possible loss of thousands of dollars and hours of preparation. In either case, patience will pay off. Remember that old maxim– to finish first, you must first finish.
[tags] real estate, realtor, charlottesville, NASCAR, negotiation, buying real estate, selling real estate [/tags]
Carnival for 10/23
October 24, 2006 | Leave a Comment
The Carnival of Real Estate is up today at Hotpads. They did a nice job, creating two separate posts and sorting by topic. Check it out!
[tags] real estate, realtor, charlottesville, carnival of real estate [/tags]
CAAR Isn’t Pravda, but Accuracy and Truth Should Rank Higher
October 23, 2006 | 5 Comments
Jeff Brown of “Behind the Curtain” recently posted a very interesting article on truth and accuracy in reporting . His example from Pravda, the official newspaper of the former Soviet Union, was sublime. My opinion is that there should not be a choice between truth and accuracy. Of course, I realize that both truth and accuracy can be subjective at times, but I think that we should always demand both.
The Charlottesville Area Association of REALTORS recently released the “2006 Third Quarter Market Report.” It bears the headline– “On Pace for Second Best Year for Local Real Estate.” Obviously, this caught my attention. One of the reasons it caught my attention was because I wanted to compare their analysis of 3Q06 to my analysis of 3Q06. Plus, this is my associaiton, and I thought that perhaps they had access to better statistics.What I found was woefully disappointing.
A few months back, after I started posting my own market statistics, I decided that I needed to wait a week or so after the end of a month in order to get more complete statistics. I usually wait about a week or so. I could wait longer, but I know that people want information as quickly as possible. From the statistics that CAAR reported regarding the third quarter of 2006, it would appear that they do not share my methodology. All of the numbers that they reported for total sales in 3Q06 were lower than the same statistics that I found. This had the effect of making the percentage changes that they reported actually look worse than what I reported. In the grand scheme of things, the difference in methodology isn’t exactly a big deal. The difference falls within a reasonable margin of error. The only reason that I do it the way I do it is to try and have the most accurate and complete statistics that I can reasonable have.
My biggest complaint with the CAAR market report is the way in which they reported the market inventory. For the first time, I shared the market inventory statistic with you. This statistic shows how long it would take to sell off the entire current inventory. What I reported to you previously was that, according to the MLS, the Charlottesville area currently has just over 12 months of inventory. Compare that with this quote, from the CAAR market report:
One of the major factors that affect the DOM statistic is inventory. If the inventory of homes for sale is low, then there are fewer properties for buyers to consider and properties sell more quickly. CAAR tracks the number of new listings that come on the market each quarter to help us monitor the inventory of available homes. There has been significant growth in the inventory over the last 12 months. As of early October, 2006, our database has 2,992 homes actively listed for sale. That is almost two times the 1,681 homes on the market this time last year. This is a rather amazing turnaround since inventory has been very low for the past five years or more.
Inventory levels have been increasing since late last year, but seem to be leveling off. The rule of thumb is that a healthy, balanced real estate market has a 5 month supply of homes available for sale. Less than that and it is a seller’s market, more than that and it is considered a buyer’s market. For the past several years, we have experienced a strong seller’s market and prices have gone up rapidly. Now, we have about 6.5 months of supply in inventory which indicates we are solidly in a buyer’s market. (emphasis added)
Obviously, this statistic caught my attention. It caught my attention so much that I sent an email to Dave Phillips, CEO of CAAR asking him about the statistic. I explained that I couldn’t find any such statistic in the MLS, and I wanted to know where this one was coming from. Obviously, if 6.5 months is more accurate, I don’t want to tell people that the number is 12 months.
He responded to me very promptly and let me know that he acheived this number by rounding the current inventory to 3000 homes, and dividing it by what he called a “typical October” of 450 sales. Ahhh, there’s the rub.
450 sales in October isn’t anything close to typical. I found this out by looking at the MLS statistical chart that accompanies the “months of inventory” statistic. According to the MLS, the most sales that have closed in any October is 347 sales in 2005 (the MLS only goes back as far as 2003). This number also covers every geographical area in the MLS. I coun’t tell if CAAR was doing the same thing in their report or if they were taking the inventory only from selected areas. Using Dave’s math, using 347 would yield 8.65 months of inventory. Much higher than 6.5 months. The statistic that I used only covered the inventory of specific areas (Albemarle, Charlottesville, Fluvanna, Greene, Nelson), and the MLS divides that inventory by the number of sales in the most recent month (September) in order to arrive at just over 12 months of inventory.
I went ahead and ran the same statistic for the entire MLS, and it said our current months of inventory is 12.19. That is nearly twice as long as the number reported by CAAR. While the CAAR statistic is neither truthful nor accurate, I am not saying that it was done intentionally to mislead anyone. I know that market reports from CAAR aren’t exactly comparable to what was published in Pravda during the Cold War. What happened here was obviously a mistake. Because it was a mistake, that means that it can be corrected both now and in the future.
My problem with the entire situation is that this type of statistical error is completely preventable. In order to publish the other statistics in the report, the MLS must have been used. Why wasn’t it used to publish the “months of inventory” statistic as well? Now, this erroneous statistic has gone out to all the REALTORS in the area, it is published on the CAAR website, and it has appeared in the local Real Estate Weekly. This is not a good thing.
I’m not sure exactly what CAAR can do about the error right now. Perhaps they can publish some sort of retraction and explanation, but I think that it needs to be addressed in this most recent report. In the future, I can only hope that those compiling the report will do so with the dilligence and commitment to accuracy and truth that such reporting demands.
[tags] real estate, realtor, charlottesville, albemarle, real estate market, real estate statistics, housing statistics, pravda, charlottesville real estate market [/tags]
Oh To Be a Virtuoso. . .
October 20, 2006 | Leave a Comment
I mentioned briefly that I attended the Itzhak Perlaman concert last night at the Paramount. It was pretty amazing, and well worth it. I noticed that the program for the performance described Perlman as a “virtuoso.” After watching Perlman perform, I certainly agree with the moniker, but why? This lead me to think about what it really means to be called a “virtuoso.”
I know that the dictionary has a definition of virtuoso; but if it didn’t, how would we know it? One thing is for sure, we all know a virtuoso performance when we see one, but what makes this true? Usually, when the term is used, it is used in reference to artistic endeavors. Isn’t it possible, however, for the term to have an even broader meaning? For me, to be a virtuoso means that you are able to make something very difficult seem effortless and easy. To be a virtuoso means that you can take the most difficult and arduous of tasks, and by simply doing it make others believe they can do the same.
That is how I felt last night at the concert. Perlman plays the violin with such ease and grace that, even though I know what he is doing is exceedingly difficult, it seems easy. For an instant, no matter how brief, the audience forgets about the difficulty of the task and the talent and hard work required for its performance. We are able to enjoy his work without ever even considering how hard it is. I know that I can’t play the violin like Perlman, I can’t play the violin at all, but for a moment, I wanted to. I wanted to believe that I could. That is the power of the virtuoso.
Is there such a thing as being a virtuoso of real estate? I don’t know, but its always good to set goals. . .
[tags] real estate, realtor, charlottesville, itzhak perlman, perlman, paramount, virtuoso [/tags]
Not Such a Sleepy Little Town
October 20, 2006 | 1 Comment
Consider this:
Yesterday was Thursday, October 19, 2006. It was not a holiday, or any day of any signifcance that I can fathom. On Thursday, Charlottesville played host to all of the following events:
1) University of Virginia football game
2) Itzhak Perlman concert at the Paramount (I went. It was amazing.)
3) Disney on Ice at the John Paul Jones Arena
I know that Charlottesville isn’t exactly top of mind when one thinks of the cultural or entertainment meccas of America; but you have to admit, that is a pretty impressive lineup for a Thursday in October. Charlottesville certainly is not a sleepy little Central Virginia town any longer.
[tags] real estate, realtor, charlottesville, UVA, virginia football, disney, Itzhak Perlman [/tags]
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Disclaimer
My name is Daniel Rothamel. I am a licensed real estate agent in the Commonwealth of Virginia and a member of the National Association of REALTORS. As such, I adhere to a strict code of ethics and all laws with regard to equal housing, which is reflected in the content of this blog. My broker is Strong Team REALTORS, 86 Joshua Lane, Palmyra, VA 22963; (434) 589-5800. My VA Real Estate License number is 0225 077325. All of the opinions in this blog are mine, unless otherwise noted.
