Archive for May, 2008

Looking for the bottom? Real estate speculators are establishing the bottom-dollar price for lender-owned homes in Phoenix

This is my column for this week from the Arizona Republic (permanent link).

 
Looking for the bottom? Real estate speculators are establishing the bottom-dollar price for lender-owned homes in Phoenix

If you’re looking for the bottom of the real estate market in Phoenix, chances are it’s right up the block. It’s that house with the jungle of overgrown weeds in front.

It used to be for sale. Then it was a short sale. By now it’s lender-owned. A year ago it might have been listed for $250,000. Now the price has been slashed to $120,000 — maybe less.

That’s a sad story, particularly if you knew the owners. And now, as you watch the parade of investors checking it out, you might feel a certain anger toward them.

If so, your anger is misdirected. Between syrupy books and movies and high-strung high-school-teachers, we have been indoctrinated to despise speculators. But the truth is, speculators are the garbage collectors of capitalism. They come in and clean up messes they did not create, returning productive value to underperforming assets.

It you’re looking for a villain in these stories, look to the borrower, to the lender or just to the vicissitudes of life. But it is the speculators who are going to bring the real estate market back to a viable state.

How? By establishing the bottom-dollar price.

What is your home really worth right now? It’s worth as much as the lowest-price lender-owned comparable plus the cost of returning that home to turn-key condition plus a small convenience premium. In other words, if the lender-owned house sells for $120,000, and if it will take $10,000 to make it as nice as your home, then your home is worth $135,000 — $140,000 at most.

And if you’re not willing to sell you home for that price? Get it off the market right now. It will not sell for more, but the surplus of over-priced inventory is a false signal to buyers that the market has not found its bottom.

If you must sell into this market, you’ll sell at the market price. If you can afford to wait, you will almost certainly do better after the market has turned.

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Listing real estate the Bloodhound way: Everything we do to list historic, architecturally-distinctive and luxury homes for sale

“We feel that you and Bloodhound Realty did an excellent job and we are extremely happy that you selected us as one of your clients. Your diligence and hard work were both refreshing and somewhat unexpected given our previous experience with ‘traditional’ real estate marketing.” –Ken Green, formerly of 1322 East Vermont Avene, Phoenix, AZ 85014


This is a detailing of the things we do to list a home for sale. We don’t do every one of these things on every home. For example, we know that if we list in a newer tract-home subdivision, much of the noise we try to make will fall on deaf ears. If I am listing a tenant-occupied investor-owned home, we won’t do much beyond the normal MLS, lockbox and sign kind of listing. But this is what we do when we pull out all the stops for those homes that are likely to excite the most attention among buyers.

  1. We know from hard experience that if a home is priced wrong, nothing else we do will make a difference, so the very first thing we do for our listings is price them properly. We will work hard from the MLS system, looking at each comparable home physically to see how it really compares. If we have any doubts about the price we arrive at, we acquire a full appraisal at our expense. We want to make sure we get every dollar that we can actually get for the home. By pricing to the current real estate market, we can get the maximum price in the minimum time.
  2. Setting the stage for staging. Cathleen Collins will go though the house with a fine-tooth comb, often taking many photos. She will make lists of repairs, touch-ups and redecorating she wants to do, and she will plan her staging strategy.
  3. Home-warranty pre-inspection. We put a home warranty on our listings covering the listing period and the buyer’s first year in the home. We use American Home Guardian, and they do a fairly rigorous pre-inspection so that any pre-existing conditions can be addressed.
  4. Repairs, painting and cleaning. This can take anywhere from a few days to more than a week. Everything’s a trade-off, and we can’t always do everything we might wish for, but we want for our homes to be as clean, as homey, as livable and as turn-key as we can possibly make them.
  5. Staging. This is Cathleen, and she is a master at it. We own about three houses worth of furniture, and she is always trawling Craigslist to find more — period, modern, eclectic. She has tons of art and decorator items as well, and her modus vivendi is to take everything she thinks she might need to the house, then move back what she doesn’t use.
  6. Professional photography. We have just switched to Obeo for our virtual tours. They send in a local professional photographer to do hi-resolution and panoramic photos. In addition to forming the basis of the virtual tour, the hi-rez photos are also used for Obeo’s Style Designer, virtual remodeling of selected spaces.
  7. Floorplan measurement. We put an interactive floorplan on the web site for every listing. Buyers can interactively place their furniture, plus there is a printable PDF version that they can pass along to movers or decorators. We use Floor Plans First, but this is a service that Obeo offers, as well.
  8. Amateur photography. That would be by us. We like to have dozens of photographs of everything, including photos of the interior and exterior of the home in all the different colors of light of the day. We can end up taking photos of the home over the course of days, just for the sake of a static kind of verisimilitude. For what it’s worth, I think it is incumbent upon Realtors to do the bulk of their own photography. Use a pro for the print stuff, if you lack confidence, but acquire a camera appropriate for real estate work and learn how to take good real estate photos. You should get in the habit of having a good-enough real estate camera with you every time you leave the office. The language of real estate is photography, after all.
  9. Neighborhood photography. We like to have a fairly comprehensive selection of photos of other homes in the neighborhood. We know that buyers want to know for sure that they’re moving into a neighborhood that fits the home we are selling. We show them many of the nearby homes so they can get a feel for the neighborhood.
  10. Videography. We don’t do this for every listing. We only do it when we have a story to tell, because video without a story is anti-marketing — worse than doing nothing. If the sellers or the neighbors have an interesting story to tell, that can work. Often, just using the neighborhood photos with a voiceover can make an interesting film.
  11. Building business-card-sized Open House invitations. I do this, printing them with OvernightPrints.com. We print these in the thousands.
  12. Building custom yard signs and directionals. This is me again. We print these locally, with a company called Signs By Tomorrow. Why do we put a paragraph of small text on our yard signs? To stop traffic. The purpose of the sign is to sell the house, so we do what we can to make sure people stop and take a look. We also add a “rider” to the sign showing the price of the home in six-inch high numerals. It’s the first question anyone is going to have about the home, so why not answer it in no uncertain terms?
  13. Building the custom web site for the home. Generally, we will acquire the domain for the home before we even go on the listing appointment. Using engenu, I can set up the gross anatomy of the single-property web site, then Cathleen or I can go in and finesse it page-by-page. In addition to many, many folders full of photos, which engenu will render as slide shows, we supplement our web sites with all the additional information we can find or create. For example, if we can lay our hands on historic photos of the home or neighborhood, we will scan them in order to provide that background information. The same goes for historic documents or newspaper articles. We will research the builder, the architectural styles or the construction methods and document those. Lately we’ve been building custom maps in Google Maps to help buyers discover local amenities. We try to have all these ancillary items done before the listing hits the MLS, but that’s not always possible. But we live by the idea that, if it looks done, it is done, so we don’t tell people about features that are still to come. That way, the web site always looks and feels finished, even if we don’t yet have the link for the finished virtual tour, for instance. Our sites are built to permit the easy addition of new or changed content, so we keep working on the site before and after the MLS listing goes live.
  14. Starting now, we are building coffee-table books for distinctive homes. We always have dozens of striking photos of the home, so a coffee table book is just one more way we have of getting those images in front of buyers.
  15. Listing the home in the MLS. By now we will have written a ton of text about this home. We use it all and then some in the MLS. We get 680 characters in the remarks and six photos with 250 characters each for captions. If we miss out on using three of the characters available to us, that’s a lot. We can have an unlimited number of “virtual tours,” which are essentially off-site URLs. We use as many of these as we have content for. One of our working precepts is that the listing may be our only chance to make our case for the home to the buyer, so we try to leave nothing to chance. If we can feed the buyer’s agent a good closing argument, we’ll do that, too.
  16. Compose the flyer. We build a full-color flyer using our best photos and our most rhapsodic text, printing it on heavy coated stock. We use flyer boxes that will hold the flyers but also have a pocket at the top for business cards. We put the Open House invitation cards in there, just in case someone doesn’t want to take a full flyer. We normally put flyer boxes facing in both directions on the post, and we will store extra flyers and Open House cards inside the home.
  17. Set the post, hang the signs and flyer boxes, mount the lockbox. For now we use a normal six-foot 4×4″ white post. When we can afford to have it done, we’re going to switch to a custom-made sign structure, framing off the big sign and the riders and attaching everything will small bungee cords to keep things from flapping around in the wind. We’re always looking for better sign-lighting solutions, too.
  18. Promote the listing with online listing bots. We’re using PostLets for the broadcast distribution, but we do Craigslist our way, by hand, and we will go in and hand-finesse other online listings.
  19. Write a weblog entry promoting the listing and linking back to the single-property web site. This has all kinds of benefits, as we’ve discussed, but here’s one we haven’t talked about: Linking to your single-property web site from a trusted weblog can break you out of the Google sandbox.
  20. Distribute the Open House invitation cards. We will do this with nearby employers and in two sorts of neighborhoods: Move-up areas for our listings, and neighborhoods where BloodhoundRealty.com has a lot of fans. We know that people who like us will try to send us buyers, so we always want to let them know when we have a new house for sale.
  21. We hold Open Houses every week until the home is sold. Why? Because there are an awful lot of un- or under-represented buyers out there, and we want for them to be able to see our home. We avoid dual agency, but we have no problem showing the home to buyers who accidentally left their buyer’s agents at home. If a listing is near the commuter traffic flow — and most of ours are — we like to hold after-work Open Houses, too, just to see if we can snag people sick of driving. We hold Open Houses to sell the house — everything we’re talking about here is about selling the house — but we have met a lot of very interesting people at Open House. Sellers come to check us out, of course, and we meet a few buyers. But we also get to become acquainted with fascinating people who love our houses and know a ton about them. I can’t count how many times we have gained access to historic photos of our listings because someone wanted to see what had become of their old home.
  22. We service our listings. For vacant homes, we want to be in the house every other day, at the outside, ideally every day. For one thing, a home needs regular maintenance, and we can’t see to it if we aren’t seeing the home first hand. But very often we will end up taking new photos of the home, which we then incorporate into the web site.

We never stop thinking of new ways to promote the home. Our future success at selling homes is directly related to our present success at selling homes, but that’s a secondary consideration. The primary goal is simply to sell the home. We are always thinking and talking abut new ways to draw attention to our homes, new ways to make them more appealing to buyers, new ways to get the best results we can attain for our sellers. We’re not shy about talking about the things we do. We’re always delighted when someone picks up on our ideas, but that’s the rare case. But, regardless of what anyone else does, we are always going to be working at getting better at listing and selling homes.

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Phoenix real estate conference teaches Realtors and lenders the brave new world of internet social media marketing

This is my column for this week from the Arizona Republic (permanent link).

 
Phoenix real estate conference teaches Realtors and lenders the brave new world of internet social media marketing

What happens when you bring the brightest Realtors and lenders from all over the country to Phoenix for a social media marketing conference? Great ideas are cross-pollinated, germinated, planted, take root and flower.

We run a national real estate industry-focused weblog called BloodhoundBlog.com. There are 24 contributors — Realtors, lenders and investors from all around the country — and hundreds of daily visitors. We’ve been doing this for nearly two years, and, in that time, we have avidly pushed for excellence among real estate practitioners, especially in the burgeoning internet side of the business.

This past week we hosted the inaugural BloodhoundBlog Unchained event at the Heard Museum in Phoenix. People came from all over — a third from Greater Phoenix, a third from the rest of the Southwest, a third from places where it rains and snows. Together for three days we explored the world of social media marketing in real estate.

What’s that? Social media marketing is the commercial arm of the participatory internet. As more and more people make the internet their primary means of interacting with the world, real estate professionals are learning how to move their own practices online.

The important question: What’s in it for you? The internet is a brave new world of commerce. No one likes sleazy sales people, but sleazy sales tricks cannot work on the internet, where every suspicious claim can be checked in an instant. Transparency rules, and the practitioners who succeed with net-empowered consumers are the ones who are prepared to back up everything they say.

The bonus for people willing to work this way is that consumers will have a much higher degree of trust in their Realtor or lender. Rather than picking a name out of a phone book or off of a yard sign, they will have gotten to know that person — passively and anonymously — online.

BloodhoundBlog Unchained was put on by me and my partner, Brian Brady of MortgageRatesReport.com. If you’d like to sneak a peek at the world of real estate as the professionals see it, feel free to join us at BloodhoundBlog.com.

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The Flip digital video camera makes illustrating real estate ideas fast, convenient and fun

This is my column for this week from the Arizona Republic (permanent link):

 
The Flip digital video camera makes illustrating real estate ideas fast, convenient and fun

I’m becoming a fan of digital video for marketing real estate.

I’ve always hated the video home tour: “This. Is. The. Living. Room. This. Is. The. Dining. Room. The. Family. Dines. In. This. Room.” The images will be small, dark and grainy. The motion will be either jerky, swooping or both. And the tour itself will do nothing that could not be done better with digital photos.

But just lately I got a Flip video camera, and I can’t seem to stop thinking of real estate uses for it.

The Flip uses solid state memory rather than tapes to store its video. It’s a tiny little thing, about the size of a digital still camera, and you can operate it with one hand. It’s really only good for certain kinds of work. It would be useless at a wedding or a basketball game. But for capturing interviews, it is the prefect video camera.

Even better, it comes with a built-in USB connection and software for emailing videos or pumping them directly into YouTube or MySpace. Shooting, storing, editing and sharing videos are all painlessly convenient.

The first real estate application I thought of for the Flip was to collect testimonials from clients. That’s kind of self-serving, but the next idea was all about selling houses. In the past we have done video interviews with sellers or neighbors, but the editing process for normal video is onerous. But with the Flip we can just shoot the interview, upload it to YouTube and then link it from the web site for that property.

If I want to make a quick video to show weather conditions or traffic around a house, it’s easily done. I had a home inspector deliver a short video summary of the repair issues on a home for out-of-town buyers.

The breakthrough for me was thinking of video in the same way I think of still photography, as another way of illustrating real estate ideas. Because it’s so small and easy to use, the Flip now rides on my hip with my digital still camera.

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Are you an investor looking for a Phoenix-area rental home that will stay rented? Buy a home worth living in

This is from my Arizona Republic column (permanent link):

I represented tenants for my first two years as a real estate licensee. Working with tenants didn’t pay very well, but it was a good way to get a lot of real estate experience very fast. Gradually I started working with home buyers, and then with home sellers. By now, I only work with tenants as a courtesy. It still doesn’t pay very well.

But in those two years, I saw an awful lot of rental homes. Or, more precisely, a lot of awful rental homes. Again and again, I would find myself wondering why anyone would think a particular house would be appealing to tenants. Not just the condition of the property, often atrocious, but simply the location itself. It’s astounding to me how many vacant rentals are situated nowhere near where tenants might want to live.

In the years since then, I’ve represented a huge number of investors. Market conditions haven’t been kind to them lately, but Phoenix is once again a market ripe for landlords. Prices are low and cash flows are positive. If landlords buy the right properties to use as rentals, the homes should rent quickly and stay rented.

So which homes will work best as rentals?

I’m looking for a home in a built-out suburb. Buckeye is a bargain for owner-occupants, but why would tenants move to a town with no employment base? What I want are jobs, schools, shopping and entertainment, all nearby, with decent freeway and bus access. I want a north-facing home; tenants read their power bills, too.

Am I looking for the cheapest house? No. Price matters, but what matters more is livability. Parents worry about the kids taking a header down the stairs, so I want a single-story home. There has to be at least a little grass in the back yard so toddlers can romp.

Here’s the magic bullet: If you buy a house that will resell well, and you maintain it in a way that communicates that you like and respect your tenants, it should rent well the whole time you own it.

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Do you want to make sure your home will sell? Little things matter

This is my column for this week from the Arizona Republic (permanent link):

 
Do you want to make sure your home will sell? Little things matter

I tend to do a lot of previewing. I will go into houses alone to take photographs. My buyers and I then use those photos to draft a short-list of homes to view when they’re ready to see for themselves.

Because of this, I get to spend a lot of time alone in homes, looking at absolutely everything, with no distractions.

Here’s what I’ve learned from looking at thousands of homes for sale: Little things matter.

Is the home picked up, or are there clothes, toys and magazines scattered everywhere? Are there dirty breakfast dishes on the kitchen table? Dried up orange juice splotches? Toast crumbs? Are last night’s dirty dishes piled up in the sink?

Is the house clean? Does it look and smell like the cleaning crew just left? If I look for dirt, I can find it. But can I find it easily without having to look?

Is every room of the house packed to the walls with furniture? Are there pictures of every member of the family for three generations tacked all over the walls? Do the kids like dark blue, dark purple, dark black paint?

I can probably guess your religion by the stuff you own and the other stuff you don’t own, but my buyers should never, ever see symbols of your religion in the house. Why? Because it can be subtly off-putting to them without their even knowing why at a conscious level.

Likewise, if they can smell your cat — or the fish you fried for dinner last week — you’ve probably already alienated potential buyers before they have even given your house half a chance. Odors kill sales, so kill those odors now.

Fix any obvious defects. Only a specialist can say for sure if the air conditioner is working properly, but no one has to be told when it’s completely broken.

It only takes a few small things to drive buyers on to the next house on their list. If you want for yours to be the one that sells, it simply must be better than others. Little things matter.

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