Let’s face it, if you are in the market to buy or sell a home as we approach 2009, you are either the hunter or the hunted. You are in financial disarray or you are seeking to exploit the struggles of another. I say this without judgment. A transaction which involves the antithetical goals of two or more parties is replete with advantage seeking in the best of times. Amidst unyielding economic turmoil, that truth is only exacerbated.
We all want leverage.
With apologies to Jennifer Allan, you might call it the age of "Selling with Sole." We use the foot of information to kick the other guy's chicklets out.
Buyers who may have already had their noses bloodied as sellers, look to bloody the nose of the next guy to bring a certain “circle of life” equilibrium to their experience. Sellers eschew the fistful of comparable sales of similar properties at considerably lower prices because they are “distress situations.” Rather than acknowledge that buyers do not care whether a bank or an actual person owns the home if the condition is up to par, they would create their own version of value by completely disregarding the vast majority of recent sales. They cling to the one sale down the street from six months ago which has been obsolete for 5 and a half months now.
Doesn’t work.
Real Estate agents leverage their branding to make themselves crucial to the process. Some lean on their experience and past production, while others repackage themselves into the “short sale” or “foreclosure” experts who own the only skill set in town that will produce the desired result.
Banks sit on the offers they receive … on second thought, forget about the banks. These bozos live in a zero gravity bubble. Just when you think they will yield to the laws of science and common sense, they get a direct cash infusion from our depleted pockets. Gee, that should really provide an impetus for speeding up their approval/disapproval process. Cash comes in as the losses pile up. Why do I feel like I have been washing my toes in the prison shower for the past six months?
It’s a jungle out there. It’s dog eat dog. It’s Real Estate.
Nothing really changes in this industry except that the shiny, happy facade of all parties standing around a lukewarm campfire singing Kumbaya has been supplanted by overt motive. What we have always known to be true is exposed in the light.
There are winners and there are losers. The “win-win” scenario may not be an outright fallacy, but one party wins more than the other. Always.
Now that we have that little Utopian misconception out of the way, the question becomes, how does one gain the leverage necessary to produce victory?
Knowledge.
Nothing more, nothing less.
How long has the seller owned the home? Does the seller have multiple liens on the property? What banks hold the notes? Does the listing agent submit one offer at a time to the bank upon seller acceptance or all at once?
Is the home really a good value, or is the buyer getting in over his/her head by the allure of the promised grift to be had in a short sale or foreclosure scenario? Can the buyer reasonably expect to knock 10% off of a list price that already has the bulk of its value built into the price? Is it a great buy to knock 20% off of a home that is priced 25% over market?
Bottom line, folks, is to ingest the stats that we are all force-fed by the papers and market watchers, and then completely disregard these misleading “rules of thumb.” Every single property is unique and is surrounded by unique factors.
The seller gains traction by enlisting the professional service of an agent that is as familiar with the product (the home, community, etc) as with the actual process. It does little good to hire the fast talking “short sale specialist” from the other side of town simply because he hires a third party to actually negotiate with the bank for him.
The buyer gains leverage by enlisting the professional service of an agent who recognizes the difference between price and value. “Cheap” does not always translate to a “good buy.” A buyer’s interest is likewise not served by frittering away valuable time on pie in the sky short sale offerings which don’t have the least modicum of chance at actually closing. Only when the wheat is separated from the chaff should you look to remove more chaff.
The agent gains traction in this market by acquiring the knowledge which will help buyers and sellers reach their goals. Slick new designations and branding/labeling efforts add little, if any, value to the actual service. Become more familiar with the product you wish to sell and with the rocks that need to be turned over to deliver more accurate assessments of value and negotiable strength. Good agents are more necessary, and charlatans more dangerous than ever. With people losing their houses and buyers leery of jumping aboard a sinking ship, this is no time for the prototypical salesman, nor the "happy, happy, joy, joy" delusionist who would harm their client by being too empathetic and amenable to the needs of the other party. We owe the other party fair, ethical dealings, but we owe our clients our undying loyalty.
Protect your clients or leave the business.
*I don't know if this was a mission statement, industry confessional or a rant. Thanks for reading the rambling, disparate thoughts of a market addled mind. ;)
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If you are planning to buy or sell a home in the Scottsdale, Phoenix or Paradise Valley area in the near future, drop me a note or give me a call. We’ll see if my skill set and knowledge are sufficient for your specific needs. If not, I'll be the first to point you in the direction of a better weapon for your impending battle with a post-bubble world.
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Market addled? Ha. You are one of the most thought provoking writers on AR, because you tell it like it is. No bull. No false optimism or unwarranted negativity. Sheer realism. I'll keep reading, that's for sure. Just keep on writing, Paul.
Oh my goodness it's great to read posts by someone with genuine skill at the craft. You could write about manicures and I'd lap the stuff up.
-Kathleen
Very nice. I'm enjoying a new experience this month, working with buyers looking at resales. How could I resist? They are looking in my neighborhood and when they called, they asked for a "buyer's agent", a request I cannot resist.
So, we looked at foreclosures all day Saturday and short sales all day Sunday.
I'm glad they're looking at bank owned properties or short sales where the bank has the final word on acceptance by the seller. The word "fair" will not come up.
Now, I haven't used the word "fair"in connection with a buyer or seller since the NAR took the word out of the COE. That word always seemed out of place in conjunction with the word "representation". So, now I can represent my buyer client and get them a very good home at a very good price and won't have to listen to the listing agent looking for "fair" when reading the price, terms and conditions included in our offer.
One thing for sure. Home buyers will not be inclined to hamper my negotiation strategy with a bank whereby they just could with a regular listing. We're not even looking at regular listings because they're priced a good 20-30% higher than the foreclosures and short sales.
You are right. Buyer want a deal. They will get one with a foreclosure or short sale property.
God, this is why I love what I do! Was actually at a closing not too long ago where the selling realtor slapped the listing realtor. It really is a jungle out there!
Dingo ate my baby!
Kelly - The part that I like best about your comment was this: "No ... unwarranted negativity." I catch some heat for not brimming with misplaced enthusiasm and false positivity. I don't consider myself a pessimist, though some have called me as much. I don't really look at the glass as half-full or half empty. It's just a glass, with the contents ever changing. I am all for exuding confidence and tackling problems with a can-do spirit, but I also believe in an honest assessment of the forces at play. Can't overcome if you can't discern.
Kathleen - One localism post about manicures coming right up ;)
Lenn - Thank you for clarifying that. I should probably drop the "fair" portion from the post altogether. It's our job to promote our client's best interest while maintaining our honesty and comporting ourselves with integrity. "Fairness" is a luxury. Sad to say that I rarely show the typical resale home much anymore as they are typically priced out. The only sellers in a position to compete with the banks, for the most part, are the ones who own properties outright or with minimal balances left on the mortgage.
Beth - That's no big deal. I slap myself at the closing table all the time. Keeps everyone on their toes ;)
Lenza Mr. Dalooky - Tasted good, too.
I agree! I consider myself to be an optimistic realist. You have to keep your head out of the sand in order to see...both the opportunities, and the challenges.
Put another scungill shrimp on the barbie, mate.
Two things Paul. You know I think you are a wonderful fictional writer, but this is beyond good! I'd love to reblog it. May I have your permission? I guess this makes 3 things. How come Joshua Dalooky never comments on any of my posts? Hi Joshua!! Have a great day.
Love the blogfooter: If you are planning to buy or sell a home in the Scottsdale, Phoenix or Paradise Valley area in the near future, drop me a note or give me a call. We'll see if my skill set and knowledge are sufficient for your specific needs. If not, I'll be the first to point you in the direction of a better weapon for your impending battle with a post-bubble world. Have you gotten business from this? It is so refreshing after the rah! rah! rah! that most of us use.
Its just loike a soap opera out there. Wayyy too much drama.
Paul you continue to amaze me. You would make a great writer for woman's romance novels. The kind where you are on the edge of your seat waiting in suspense but are led there by a touch of humor. Very nice summary of the Real Estate market.
It has definitely become a viscous cycle of kicking each others head in.
Refreshing and affirming to those of us who refuse to acquiesce to happy face management and simply do our jobs serving our clients or customers. I've managed to survive this year thanks to short sales and have been blessed by a couple of "fair market" sales. Althouth,I find that the CYA factor goes up in direct proportion to how "fair" the price is. Thanks for keeping it real.
Kelly - That is succinctly put. Optimistic realist ... sure sounds more appealing to me than delusional daydreamer.
Joshua - Arg, Matey! Pirate Realty at your service! You list 'em, we fist'em!
Susan - Of course you can, Susan. You have standing permission to reblog anything of mine that you'd like. I appreciate you asking. As for our friend, don't feel badly. This is simply a topic that is near and dear to his black hat heart ;)
Pam - This is actually the first time that I have ever used that footer, so time will tell. I get bored and change it every time. I have gotten business from my blog, so I am heartened to know that we don't have to cram ourselves into the same formulaic box as everyone else to successfully use the platform to reach an audience. There is a market for the "all happy, all the time" stuff, but I think there is also a market for a healthy dose of contrary realism. We don't have to look too far in the rearview to realize that promoting a false image and perpetuating the myth of unending property appreciation led many to catastrophe. The pipers played a tune of "get in on Real Estate before you are priced out!" and "Real Estate values always ascend" and the masses lapped it up. A little healthy skepticism might have served they and their clients a little better than wearing pink blinders.
Bill - I'm not going to ask what research you have performed to conclude that I would make a good romance novelist ;) Thanks for the props, and be sure to check out my latest series, "The Main Street Lothario."
JL - It does require one to have a strong and supple leg, does it not?
FolsomRealtor - That sounds very much like my year. I'm currently sludging through the nefarious world of short sales and bank owned properties with most of my clients to find the treasures at the bottom of a murky sea, with the occasional resale listing and/or purchase thrown in for good measure. It's all about adapting or perishing right now, hence the two additional arms I have sprouted for writing frivolous offers and the third eye for seeing through the BS. Natural selection, baby. Nice to hear that others are disregarding the nonsense and accepting the new realities in our industry.
Absolutely engaging.
Haven't been on AR long... first time reading a post from you.
The content was great but the writing style exceptional...
You could always become a writer if the real estate jungle becomes too much!
Reminds me of the story that Buffini says: 'Buyer gives you a $10,000 haircut so your off to give the next guy a $15,000 haircut. It's the nature of the beast.'
LOL, you forgot to close with 'nows a great time to buy'.
Thank you, Eugenie and welcome to Active Rain. I'll warn you, my content isn't always this good ;)
Lyn - You are absolutely right. I did omit that part. Of course, I happen to think it is, but I am trying to avoid the prognistication business from now on. Lord knows what new laws will be enacted, where interest rates will go, whether the next impending wave of foreclosures will be averted by government urged pleas for loan restructuring ... etc, etc, etc. I'll just say there look to be some great values out there ;)
Paul...I'm waiting for the day when you break through your 'shell' and really tell it like it is. I mean...please don't beat around the bush for our sake. LOL This is AWESOME!! You nailed it, my friend! We, as professionals, have a choice to make. Are we going to be a part of the feeding frenzy....OR....are we gonna guide our clients safely through it? I know where I stand...and I ain't moving. ~GBU~
Thanks Paul, all very true. I understand and agree with your 'ramblings'. Great post.
Paul, I have not been around AR lately. One of the things I miss the most about this place is You with your awesome writing skills and view on the world and our industry.
Excellent "mission statement" and well written as always,I am so glad this was featured!
Well, Paul, I don't know if this is a mission statement or a confession either but, it is surely a realistic point of view! I love your 'ramblings' as they are always very thought provoking. I'm an optimist but, am realistic enough to recognize the change in direction in my business and implement plans to change with the market. It IS a dog-eat-dog world, especially in times such as these. However, my practice is not to relish their failure but, LEARN from it and continue to move forward with the changes necessary for my business NOT to fail!
I will say this, it's definitely more difficult in this market, to keep up with the changes but, being optimistically REAL really does help us achieve our goals and keep us afloat!
Congrats on that little gold star too!
No Paul this is definately not a rant, just good old fashioned common sense to us. You are the rock star of the day, great post.
Excellent post. I love the prison shower/toe washing line... priceless. And we are suiting up to do battle eash time we represent our buyer or seller...
Paul - Perfect commentary and right to the point. No BS, no Pollyanna - just the facts. You're obviously a talented realtor, but beyond that you're an extremely talented writer.
Paul -- well said! I love the footer on your post -- do you get a lot of calls? I'm sure buyer and sellers appreciate your honesty!
It is a jungle out there and if one is not inclined to get a little bloody for their client then get a job flipping burgers. Knowledge is King.
Paul, what an engaging post. I love hate it when I put in an offer and the listing agent says.... "this was priced right - where does this offer come from?" DAH! Look at the market! Nuf said. Great post.
You are a pleasure to read, Paul. But I do have one complaint: I kept getting distracted from the excellent content by your beautiful writing.
My motto? "Reality is our friend." -- Thanks for a great post. I subscribed to your blog......K
Agree, great post,
Paul.... hhhmmmm Knowledge.... you can sell without this? Without having knowledge? lol I loved what you wrote and as several havs said, just put it out there. But I think the key to it all does come down to knowledge. Not only knowing what you are selling, but as you stated, if you decided to get into another type of the market such as foreclosures or bank owned properties, to understand it, to know about the property, the people, etc etc... I am so big on just knowledge alone.... and this part of what you and I do is so misused and misinformed to the borrower. I could tell 3 stories about this one realtor up in CT and how they have passed on incorrect info to the borrower. Knowledge and setting our clients expectations to a certain level.... In any case, good job here.
Paul, I find it hard to be quite so brutal honest. Good blog.
Paul
Good for you! You get it! I like the way you operate. If you lived in my town I'd do business with you.
Colonel Orson Swindle
Paul, applied knowledge is power, and in the jungle out there, each party wants to get their fair share of the pie.
Paul - I love it! It is sad that it has to be so dog-eat-dog, but in this environment and in most cases there has to be a winner and a loser. I think it would make a great "mission" so to speak. Knowledge is power and the more you have of it, the better off you will be and your clients will be. Good luck out there - oh and refrain from hitting yourself at the closing table, might be a bit awkward for everyone.
Hi Paul...What you are advocating is the type of REALTOR we should be at all times whether the market is red hot or ice cold.
I may be in the minority but I will continue to believe that real estate is a service profession. That is the way I approach it. Always have, always will.
Kate
Paul - Did you just get a comment above from "Col. Orson Swindle"?
Paul - that's a real mission statement. You are absolutely right about the agents. Good agents are more necessary, and charlatans more dangerous than ever. - Can I borrow this line from you? (I will refer to the author, I promise)
I need to grow a couple of extra arms to help me write those frivolous offers too. You're so right. Those who adapt will stay and those you can't will go away and blame it on the industry, the banks, the dog ate my homework...
Hi Paul,
You clearly are a good writer with a candid approach. I know that real estate is indeed a tough rackett, but if not for my rose-colored classes (ha--my post today is in review of Jennifer Allan's book), I wouldn't be on my sixth motivational real estate book, nor would I be inspiring RE college students, nor would I be selling any houses...which fortunately I have.
Hmmmm....I'm following your post because I can tell you're a sharp guy, but I'll only take my pink shades off long enough to see what you wrote ;-)
Thanks!
Tamara
Great post ...and very well written. Time are tough I don't see them getting much better anytime soon.
Good post Paul. I like the end of kumbaya section. I imagine you have been cutting your way through the jungle for a couple of years in Arizona. We have just gotten into the woods in Maui over the last 8-10 months. We have an interesting twelve months in front of us and your post rings true.
You are right - knowledge is king right now. The experience and value that a seasoned agents brings to the table is invaluable for any buyer or seller.
laughed while reading your post and howled while reading the comments. Thanks for the post.
Damn, does this mean I now have to eat bugs for dinner like they do on Survivor?? It sure seems like it these days. This market is a disaster....but anyone who has been around long enough saw the perfect storm brewing...although there was no place safe to hide. Thanks for the post and congrats on the feature :-)
Thanks to all who have read and commented. I will do my best to respond to you all individually, but please bear in mind that everything gets typed via dictation by my dog, Azlan. I'm not sure if that means he only responds to every one in seven, but give the mutt a break. You try being a product of the digital age without opposable thumbs. Arf.
Paul, you kill me! Lol! I did reblog this. I love it. Your best, in my opinion. Tell Azlan he doesn't need to reply, I understand. xxoo
Paul,
You'd be a perfect fit in my office. I'm in Spanaway Washington so I know that we're no exactly in your "market", but I can work a deal for you.
Knowledge is King!
(By the way, my saying is not copyrighted, but... "It's a jungle out there.... so be the Tiger."
Best of luck in 09.
Paul, you are so right on and I think it will remain a jungle out there for quite some time.
I want a gun. The ony thing that has kept me from buying one so far is the fact that my husband disagrees. But I might have to be a bit dishonest, so I can get one before I lose my rights.
Hi Paul,
I like this line the best, "With people losing their houses and buyers leery of jumping aboard a sinking ship, this is no time for the prototypical salesman, nor the "happy, happy, joy, joy" delusionist who would harm their client by being too empathetic and amenable to the needs of the other party."
This market and economy is a sh!t storm in every sense of the word and it is going to require some very candid conversations with clients.
Paul, You are so right. What I like best about what you said is that every single property is unique and I would also add that so is every buyer. There are 20% down buyers out there who deserve the best deal too. Protect the client!
Paul,
Thanks for telling it like it is! We need to approach the future with a balanced viewpoint.
Mike in Tucson
Paul - you have written an excellent post here, and you are right. Buyers are looking for the best deal - period! I am with you about protecting the clients.
As I get older I have learned to really appreciate down times than dread them. These are the times where the rich get richer and poor get poorer. So you either decided to go along with the rich or the poor. It is a simple choice as to the direction. Surviving is usually the kicker for most new agents. Thus I teach all to be prepared for the down turn. Don't be over leveraged if you are going to be in this biz. Good post.........
Protect your clients or leave the business.
Hey Paul,
I wish there was a way to enforce your great idea.
Dindo ate my baby Azlan.
Dindo? I think you fat fingered that one, Morky. Only question is which one of two keys were intended.
I'd say it was a serious kick in the pants wake up call! :-))
Paul,
I had bookmarked this so I could come back and read the commentary. Maybe this comment will kick it back to the top of the groups and get it some more comments. All the best in the new year!
Mike in Tucson