Friday, May 29, 2009

Would you buy an "award winning" home?

My continuing search for positives and much needed creativity continued as I read the story in the Milwaukee Journal about Mayor Tom Barrett presenting the “Mayor’s Design Awards” for design excellence with categories based on design, environmental concerns, and architecture.

The story went on to name various buildings, some city owned, others historical sites, and others which are commercial that are being named and information about what was done to earn the honor. I came away thinking this is a good idea, and then wondering why I hadn’t heard about this before.

Next, I thought about how local real estate offices are supposed to know their community of service inside and out, and even if for selfish reasons want to see local property values as high as possible. The Design Awards in Milwaukee are for some city and some commercially owned properties. What about residential?

I’m sure there are some new condos and developments somewhere which are making a big deal about how environmentally friendly they are, or have an environmental improvement completed or about to be. There are others which take special pride in a garden or gardening arrangement. And the list of possibilities goes on.

Selling a condo in an “award winning environmentally sound building” would seem to be a plus for the listing agent and for the seller when this unit is put up against hundreds of other condos also available in this buyers’ market.

Various city and community leaders should be aggressively looking for anything which could accelerate local property sales. As we have detailed in past columns, each property sale generates thousands of dollars to people and companies (commissions, taxes, transaction fees, moving expenses, etc.) and brings money directly and indirectly into city coffers.

Before you wonder what difference an “award winning condo” or “award winning single family home” might make, start naming movies you have gone to see AFTER you learned that a film had been nominated or won one of the major awards. Yet, you didn’t go see it when it was playing down the street for weeks.

Let’s see if we can work together and develop a residential property awards program.

Tuesday, May 26, 2009

Home buyers and sellers are customers, too......

Whether real estate related or not I regularly follow various marketing related sources and columns as much as possible. I found the recent story about the Yelp consumer review web site finally beginning to allow business owners to respond to bad reviews most interesting.

In this age of road rage, high unemployment, and consumers who carry a grudge no matter what the circumstances that a business which receives a complaint or critical review had not been able to present its side of the story until now. Speaking as a consumer, this move could “save” Yelp. From time to time I see consumer reviews of products and services, and reviews of matters such as hotel room stays and the like. As a consumer, I find it helpful if I see a possible negative from a customer of a product or service I am considering. But I can’t help but wonder about the other side to the story. The consumer that wrote a negative commentary about a business could have stiffed that same business previously, but we don’t know that without the business having equal time.

What does this have to do with real estate? Little to nothing at this time. The column I read about Yelp got me to thinking. I don’t know of any “review” source specific to real estate transactions. Yet, for the vast majority of us, real estate is the biggest transaction(s) we make in our lifetime.

As a consumer, I have a choice of hundreds of realty firms I could list or buy a property through. I also have the choice of using a “discount” brokerage, an “assisted sale” service, or selling it myself. This is a very important decision. Yet, I don’t have a web site or source to go to for reviews about real estate transactions. Does this make sense? I can read what others in my community think about the local hardware store or about last weekend’s new movies, but I don’t know if they had a good or bad experience with a local realty company when they bought their home?

Personally, I have heard stories from all sides. Over the past 20 years, I have worked with realty companies on radio, TV, newspaper, phone, and internet advertising and marketing. I have presented to entire offices, realty agent expos, and at seminars. But I have also represented FSBO companies and publications, including interaction with the public (buyers and sellers), even though I am not a licensed agent and had no direct involvement in the transaction. So I know there are 2 sides to every story, just as I know there a ton of stories out there that it would benefit all sides to be aware of.

These days, consumers don’t know who to trust when it comes to a real estate transaction. I see where there has been another set of state court rulings about realty companies tacking on an additional “administrative fee” at closing that mysteriously was in addition to the promised commission to that realty office. Not every realty office has been doing this, but I have no way of finding out which ones are. It is enough work for buyers to deal with additional fees and costs associated with getting a mortgage done, let alone having to deal with it still again on the property side. I’m not saying that all realty companies are ripping off sellers, but I am seeing instances of this going to court, and there is a percentage of people who won’t take the time and effort to bring it to court over a few hundred dollars.

My point is that there should be at least one source for consumer reviews of real estate transactions, but the realty offices involved should also have the opportunity to respond.

Almost 3 years ago I was one of the sellers of a multi-unit investment property and was not able to choose the realty agent I would have preferred. This agent did well at a couple of things, but also, in my opinion, screwed up on another which delayed the transaction and cost me an additional legal fee. Even knowing people on the inside, I realized that taking the time to complain to the brokerage or realty association may or may not have accomplished anything. I am 99% sure I wouldn’t have benefitted financially from doing so, and these matters remain internal. Yet, if I had a “public” place to show the documentation I had about the mess-up, I would put my side of the story against anything that agent could show in defense, and let the public make their own intelligent decision about whether or not to use her services.

For the thousands of properties which have sold within the past month, there are thousands of good and bad stories about the services rendered to make them happen, with thousands of dollars at stake. I’ll admit it took me seeing the story about a consumer web site not related to or specific to real estate to make me realize the need.

My “to do” list now has another entry. To work on getting a “real estate transaction review” source in place and to do it soon. I’m sure almost every current and past home owner has a story (whether especially good or bad) about a realty agent or company to share. Meanwhile, thousands of realty agents and companies also have a response or defense ready, if only they had the opportunity to defend themselves. I’d like to get “future” home buyers and sellers to that information.

Please share yours at .

Tuesday, May 19, 2009

What high end home sales could mean for you......

The near future of the real estate market is a significant, if not the most important, concern for the majority of us. Yet, there doesn’t seem to be enough being done about it which could have a more immediate impact.

As a sports fan involved with real estate related marketing and advertising every working day, I continue to see how statistics can be used to make practically any point or argument seem valid. A baseball player could be leading the league in hitting, but if he only gets 2 hits in his last 20 at-bats, reporters will write about how much better other players on the team have done in that same stretch. It is another version of the “half empty – half full” concept which now seems to dominate real estate news.

I saw a story with information from The Warren Group stating that in the Greater Boston area, a total 174 luxury homes (priced $1,000,000 and up) were sold during the 1st quarter of 2009 alone. This should have been a much bigger story. I found this amazing and quite a positive. If more than one “million dollar mansion” per day has been closed, loaned upon, and sold, over a 3 month period in this economy, this shows me that some banks are willing to make significant real estate loans, buyers can qualify for them, and that motivated sellers can move a property at ANY price. After all, these are the toughest properties to find buyers for. To me, this information should be splashed across the front page, used in advertising and marketing materials from the leading real estate companies, and anyone within earshot of the local realty associations should be aware of this.

But, as things go in this “half full half empty” era, the Boston Herald story goes on about how this total is about half of what it was compared with a year ago. Boom. The air goes out of the balloon faster than a speeding bullet and more powerful than a locomotive. Here is the story:

I’m not here to attack the reporter. He is not the only one. But the negative publicity and the lack of fighting against it by people in the industry has got to stop for the sake of the economy. Seeing the number of high end homes that have sold in one part of the country this year should be an “OMG” story. Instead, it is shot down before you finish reading it.

This represents at least $175,000,000 into a regional economy. Realty agents, lenders, title company employees, appraisers, attorneys, and others, have been or are about to receive commissions or payments as a result of this business. The municipalities, counties, and state have generated significant tax dollars. It’s the feel good story of the year.

Instead, this story comes off as if it is another example of a terrible real estate market. Say what??

My home is not on the market right now. If it were, unfortunately for me, it would not be anywhere the million dollar range. Probably less than half of that. And if my home was sitting on the market right now at less than half that, I would be doing some research today. I would be finding out how many million dollar homes have sold in my area this year. If I find out it is averaging better than 1 a day (such as in the Boston area), I would actually be upset. Heck, even if it is 1 sold for every 2 days, that is pretty darn impressive.

Who would I be upset with? My realty agent, that’s who. I would ask her how there could be X number of qualified million dollar home sales during the time she hasn’t sold mine for less than half of that.

If your home is on the market, especially if it has been on the market for some time, a little bit of research could provide you with a lot of ammunition.

Wednesday, May 13, 2009

The prize is right? Not so fast............

As much as I encourage creativity in this real estate market, not everything I see quite fits the bill. Even though I applaud the realty agent profiled in this Dallas Morning News article:

I’m not convinced the prize is right. I completely understand the concept of someone buying a high end home being rewarded with another high end gift. However, the gift should fit.

(For those who did not check the link, the story is about an agent who is offering an expensive car valued at more than $30,000, “free” to the buyer of a million dollar mansion.)

The article goes to the extent of quoting the agent as saying that if someone truly does not need the car she is offering, she would replace it with something else. If there is going to be an incentive of this magnitude (which I encourage), then have the incentive fit the purchase in the first place.

Instead, the article reveals how a local car dealer has donated the expensive car in return for the publicity and the agent admits doing this to call attention to the listing. She doesn’t realize how this could backfire on her.

Chances are either the reporter who wrote the story or some other reporter will do a follow up check in a few weeks. What if the house still hasn’t sold? With the way the media publishes negative real estate statistics all the time, one story about “the house that didn’t sell even with a car given away” would cast that agent, and perhaps the property along with it, in a negative light.

Then suppose somebody buys a $500,000 property through that agent. Don’t think that buyer won’t be asking for a car valued at $15,000 - $20,000 or another major incentive. Heck, let’s be honest. I know I would. If she is giving an incentive for only one listing, it leaves any other buyers she serves with something they would perceive as a lot less.

In addition, I would think that someone who can afford a million dollar plus mansion probably doesn’t need another car at the moment. A car would be a great incentive for a first-time buyer, but that is not economically feasible. My point is that the incentive needs to fit the property and the agent representing it. This does not.

If I needed to sell that million dollars plus property and use a significant incentive to do so, I would make sure the incentive goes with the house and directly benefits the buyer. For example, I would use that $30,000 of incentives toward things like a one-year gardening contract, one-year pool maintenance, a maid/butler or driver service, or for a contractor to help with room changes for the new owner.

This type of incentive not only makes life easier for the buyer, it serves as a one-year “reminder” about what that realty agent did. Face it. Referrals from million dollars plus home buyers go a long way in any economy. And would be a lot more effective than when that buyer is sitting in the auto repair shop waiting for the latest problem with their new car to be fixed.

In addition, this type of incentive could be used by the agent for any property she sells, even with a time limit. Her “June special” could be that you get a one-year maid or cleaning service with a condo purchase. That just might push the buyer on a tight budget to move a few days more quickly when they can save even a couple thousand dollars over the course of the coming year while enhancing their “new” home.

There are better ways to “drive” home sales!

Sunday, May 10, 2009

How the toddlin' town can do better

The Illinois Association of Realtors released some first quarter 2009 statistics late last week. Like many other local and state realty associations, they released too many. It certainly is not the fault of the realty associations that the real estate market is so challenged, but I again stand by my opinion that their "half empty" approach is not helping matters any.

Borrowing from their just released statistics for the Chicago area, they announced that first quarter home sales dropped more than 26% when compared with a year ago. The median sales price just for the city also dropped more than 26% from last year to this. This information was prominent in the major newspapers and news sources throughout the Chicago area within hours of its being released.

How does this information stimulate activity in the market?

Frankly, it doesn't. Thousands of potential sellers in one of the most important local economies in the USA have just been told the large percentage of a sales reduction compared with a year ago, and could think that those that did manage to sell did so because they sold for a lot less than they had hoped. In most cases, potential sellers also become potential buyers. At least they could be if their motivation wasn't stripped by statistics.

If a news organization or an entity representing another form of large consumer investments (competing for dollars with the real estate market) were to discover and announce this, it would be understandable they would want to discourage people from investing in real estate. But this information, once again, comes from within the industry.

The Illinois Association of Realtors could and should have used their information more strategically than they did. That is their job, rather than pointing out negative statistics just as prominently.

Here is what the Association should have reported, since they have the official statistics to back this up:

"The latest Illinois Association of Realtors statistics, released on Friday, show that 10,306 single family homes and condos were sold in the immediate Chicago area during just the first quarter of 2009. With sales averaging more than 100 homes and condos per day during the January through March period, the median price within the city limits finished the quarter at $216,000. Yet, with suburban homes and condo sales factored in, the area's median price is now at $187,500. The median price is the price at which half of the homes sold for more and half sold for less."

Let me try this again. What the Association actually put out included their statistics about sales and prices dropping more than 26% compared with last year. Not only are those negative and not necessary statistics, but they compare with just over 1 year ago before the economy took its still current turn for the worse.

People looking to buy or sell a home or property don't always care about what happened over a year ago in terms of making decisions today.

Let me add that I am not picking on the Illinois Association of Realtors. Most if not all of the associations have been doing this month after month. Because of the size of the Chicago area, I am merely using this as still another prominent example.

If I were a realty agent, I would be screaming bloody murder to the association(s) I was a member of, demanding to know why negative information keeps getting put out there to a confused public.

Remember the saying - "Good news travels fast". If only the people leading the real estate industry would.

Thursday, May 7, 2009

If you could, would you live near Land Shark Stadium?

Imagine seeing an ad for a home for sale “near Land Shark Stadium”. You might not have to anymore.

Land Shark Stadium??? I heard about this and I thought about the hysterical sketch on the early (and funny) days of Saturday Night Live with Chevy Chase knocking on apartment doors and "eating" the residents who opened the door for his "Land Shark" costume. Then I saw this in print, and thought that maybe a reputable news operation had picked up a story from The Onion.

But, silly me. This could happen within hours of writing this. It seems that name is now the name of a beer. This could be the name of the same stadium the Miami Dolphins have played in for years. The stadium I still refer to as Joe Robbie Stadium, since that's how it was introduced and Joe Robbie was the Dolphins' owner who got it built.The same stadium that right now technically isn't named for the team that plays in it (Dolphin Stadium and NOT Dolphins Stadium). The former Underwear Stadium (whatever). The same facility that cuts off beer sales at half-time and had to implement a "family section" so that kids attending a pro football game would have a safe harbor. Let alone that it is not and has never been in Miami.

Next, I thought about how this stadium name will make property and home owners in the area feel. Will it present an added challenge to sell a home or commercial property near Land Shark Stadium?

Think about it. This publicity also begins less than a year after more shark attacks near Florida beaches. While it is hard to name a percentage, it is safe to say a portion of potential home buyers in the Miami – Ft. Lauderdale corridor come from the northern cities as second homes or homes to retire at. The Southeast Florida market has had its share of challenges in today’s real estate market as it is. I have recently spoken with several regional mortgage lenders who tell me they continue to stay away from advertising in and pursuing the Miami area.

Sports fans are the ones who will react in whatever way (humor, sarcasm, etc.) to Land Shark Stadium any minute now. I just don’t see it being a favorable reaction toward the area. Granted, this stadium is actually so isolated from civilization in South Florida it really won’t make that much of a difference, but unless people have actually been there, they don’t realize this. The local government will point out that they receive the tax portion of the millions of dollars paid for the stadium naming rights, and that it will add to the economy. While that may be true, I happen to think this name could take away from the local economy long term as it could negatively impact the local real estate market.

Meanwhile, there is something to be said for picking up a piece of an historical building as the highest bidder. But this is a highly unusual story. It seems that several items from the original Chicago Stock Exchange Building, including a cast and wrought iron elevator enclosure panel and leaded glass ceiling panels with values estimated to be in 5 figures. The Louis Sullivan designed building was completed in 1894.

What makes this unusual? The building was demolished in 1972 in Chicago, yet this auction takes place (on June 2) at The Rockefeller Center in New York City. The Associated Press story quotes an official of Christie’s as saying they could not reveal how the auction house got these items.
Seems to me there is a very interesting news or investigative story in the making. How do in tact parts of a building demolished 37 years earlier suddenly appear for auction? What happens to expensive parts of demolished buildings?

Speaking of demolished buildings, did you see the NBC News report on Tuesday about the demolition of a group of homes in Victorville, CA?

It seems that the city determined it was more economically feasible to bulldoze a group of homes that were not completed rather than spend the money to complete them. The video showed pile after pile of debris. Once everything is cleared (and at who’s expense?), the space could remain a series of empty lots for months if not years.

My first reaction is that city officials didn’t see the story about the Florida investor who purchased several unfinished homes for under half price, and spent a portion of his savings to finish construction, leaving him with a huge profit margin whether he rented or sold the brand new houses.

In other words, the Victorville demolition is another example of the lack of creative thinking about today’s real estate market. You can’t tell me that no one would have shown up if the city officials and others associated with the project held an auction. An investor or investment group could have done the same thing. But start from scratch on a series of vacant lots? It could take several years of waiting, and that is a lot of lost potential revenue for the city – and for those still employed in the real estate community.

Friday, May 1, 2009

From a billboard to a new home??

Did you ever hear a news story or learn something which catches your attention, only to have a reaction that is totally different from everyone else’s? Well, it happens to me a lot, actually.
I read the recent A P story about an out-of-work professional that spent several thousand dollars for a billboard along a busy Connecticut expressway to promote her “hire me” website, .

The story went on to detail how she got the idea from someone else who had done a similar thing in the Midwest. I found it a natural that her background has a sales and marketing slant. More importantly from the standpoint of my work in real estate advertising and marketing, the next fact in the story got my attention even more.

This woman went on to reveal that she used the thousands of dollars for the billboard from money she was saving to buy a home. It was as if to say “There goes my chance to buy a home”.

If I was a realty agent in that area, I would have jumped all over that billboard. Why? Because with all of the inventory available in this buyers’ market, I have to believe I could have found her a “rent to buy” situation within a matter of hours. Without needing the big down payment she was saving up for, I could have gotten her into a home, and made one of my sellers (or a colleague’s) very happy.

Next, I would have interviewed her about putting her sales and marketing expertise to work for me. Let consumers respond to her billboard and find out that she has been hired by (name of) Real Estate and already has moved into a new house because of (name of agent)’s expertise.
I would then put her to work generating referral fees for me. Next, I would issue a Press Release that I have hired her to do marketing and generate revenue for my real estate business, and let the community know that she is available to do the same for non-competing businesses. She could work from an office space in her brand new home. And live happily ever after.

It seems as though I am seeing more of these “What he/she is doing to get hired” stories in the media. Those are more inspiring than the negative home sales statistics being released by realty associations.