Archive for August, 2009

Unleashing the power of internet technology on real estate transactions

This from my Arizona Republic real estate column (permanent link):

We’re wired Realtors, and we always have been. The very first thing I did as a Realtor was to set up a web site to attract clients. We made money on the internet from the very beginning.

Since then, we’ve adopted every new idea that’s come around, along with inventing quite a few of our own. We publish a national real estate weblog — BloodhoundBlog.com — to help other wired Realtors come to grips with technology.

Because I’m working with a lot of buyers right now — and because buying a home has become such an ordeal — I’ve been working to make my technogeek status even more robust. Good enough is not good enough any longer. If I want for my clients to get the home of their dreams, my offers have to be first, fastest and best.

To that end, I just bought a new Apple MacBook Pro, and I’ve been outfitting it with the software I need to do contracts from anywhere, in the fastest possible time.

The Arizona Association of Realtors gives us all a program called ZipForms as part of our dues. In the abstract, ZipForms makes filling out forms fast and painless. It falls somewhat short of that ideal in reality, but it will do for now.

But ZipForms integrates with a web-based service called DocuSign, which permits me to capture signatures on-line, in the form of e-signatures.

So I can whip out a purchase contract in ZipForms while standing in the kitchen of the house we’re buying. Mrs. Buyer might be at her mom’s house in Albuquerque, while Mr. Buyer is in New York on business.

No matter. I can set up DocuSign for each buyer to sign the contract in sequence, then have it come back to me for my own signature, then forward the whole package to the listing agent. We can literally do the whole job in a half-hour or less — a big improvement over printing and faxing and running documents around to get signatures.

There are more new technologies we’re playing with. I’ll talk about some others next week.

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Fishing for the details takes the fun out of real estate fish stories

This from my Arizona Republic real estate column (permanent link):

“You won’t believe the deal my buddy got on his house. He paid thirty cents on the dollar!”

“You’re right. I don’t believe that.”

“I’m not fooling with you. The house was worth $300,000, and he picked it up for a hundred grand.”

“It was worth $300,000 when?”

“Huh?”

“He got it for $100,000 in what condition?”

“Huh?”

“The house might have been worth $300,000 four years ago. And it might have been in great condition back then, too. What was the list price when your friend put the house under contract?”

“It was listed at $97,500. But the original listing was for $300,000!”

“I don’t doubt it. A lot of homes have been on the market for years. What kind of shape was it in when your friend saw it for the first time?”

“It was great! I mean, there were some holes in the walls, and some of the doors were missing. But it just needed some touch-ups on the paint. And the carpets were hardly stained at all!”

“What was the kitchen like?”

“Cherry! All it needed was a range, an oven, a dishwasher, a microwave and a fridge.”

“In other words everythng but the kitchen sink.”

“No, that was gone, too. But the counters and cabinets were in great shape, just missing a few knobs.”

“So some nice folks bought more home than they could afford during the housing boom. They couldn’t make their payments, so they put the home on the market for more than it was really worth, even back then. It sat on the market for four years, through a normal listing or two, through a short-sale listing, and then it finally sold to your friend as a lender-owned home. Is that about right?”

“You bet! He got a smokin’ deal!”

“Except he didn’t pay thirty cents on the dollar, he paid $2,500 over list.”

“Oh, whatever. Did I tell you about the trout I caught last week at Lake Pleasant? I swear, it was bigger than my arm!”

“Now that I believe.”

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Why does BloodhoundRealty.com not require registration to use our MLS search? It’s a matter of morality — but the moral is the practical

The issue of whether or not to require registration to gain access to MLS search came up at BloodhoundBlog.com, our national real estate industry weblog. This is a topic about which reasonable people can differ, but we have very strong moral reasons for making MLS search freely available. But, as always, the moral is the practical: Behaving the way we do tends to attract precisely the kinds of clients we want to do business with — and for whom we can achieve the best results. The world runs by itself.

This is my take on the issue, quoted from the comments at BloodhoundBlog:

We don’t ask visitors to register for IDX search. We are having our second best year ever, and we should finish the year — having started with five months of near-drought — in the top 1% of income-earners — “the rich.” I have zero data to support my position, because I haven’t collected any, but I believe that much of our recent success owes to the FlexMLS IDX system and our deployment of it. But, even so, we have never insisted upon registration and we never will, for the simple reason that I am not going to treat guests in my home as prey, not now, not ever. Your mileage may vary, and I don’t care, but everything in our lives is philosophy first, and we do not change the way we behave until we have become convinced that our past position was morally wrong. That will not happen in this circumstance.

I would have to go and do the math on self-selected Flex registrants (we register a lot of people who come to us by other means on the site — emails, form responses or phone calls, etc.), but my guess is that we’re skinning cats with one out of three, perhaps more than that. The people we work with tend to repeat, to refer or to become full-blown sneezers, so we know that our overall approach to the people we work with is effective. In any case, I have zero desire to have 24 phone conversations to unearth the one motivated buyer or seller in a double-dozen “leads.” I expect I could do better making random phone calls or handing out business cards at the Circle-K.

I spoke about this at the first BloodhoundBlog Unchained. Everything we do for marketing is devised to get our ideal clients to firmly self-select for us before they ever do anything to make contact. I had a relo form like that today. The form came in at 6:18 am — the prospect is in the midwest. I had a walk-through with an investor, so I didn’t call him until noon. He had found us and stopped shopping. He hadn’t talked to anyone else in the six hours I left available to him. And he thanked me several times, first, for not insisting upon registration, and, second, for not dumbing the IDX system down. In fact, we configured our installation of MLS search to be much more robust than ordinary real estate sites, but we love it — and our clients love it — because we can make it so much more rigorous than ordinary IDX sites.

We target-market for high-Ds and high-Cs — thoughtful, prosperous people who don’t intend to be jerked around. Not jerking them around seems to be a very effective marketing strategy. When we finally add a high-C of our own to our team, we can start to make a stats-based argument. But it won’t make any difference to me. We do business the way we do because we believe it is the right way to do business — in every detail. We have never betrayed our principles for money, and we never will.

When you search the Phoenix-area MLS system on our site, you are using exactly the same tools we are using, from exactly the same database. We give you the most robust search we can, because if a central vacuum system or a heated pool matter to you, then they matter.

But if you want to search the MLS here and then work with another Realtor, feel free. We know we deliver better value to our clients, but we also know that that value proposition only appeals to people who are actively seeking better value. If any old Realtor will do, in your view, then we’re probably not the Realtors for you. The world runs by itself.

But if you have not yet played with our MLS search, dig in. In forthcoming posts, I’ll talk about how to use the logic of the system to pull out some amazing results. But the FlexMLS software is amazing right out of the box. If you take the time to play with it, you’ll never search anywhere else — no matter who your Realtor is.

And if you should start to wonder why other Realtors provide a clunky, dumbed-down MLS search — and have the nerve to ask you to register for the privilege of slogging through it — give us a call. We do everything better, not just MLS search.

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How real estate transactions can fall apart — and how Realtors work to keep the parties together

This from my Arizona Republic real estate column (permanent link):

For a Realtor working with home-buyers, there are three times where a transaction has a high likelihood of falling apart.

The first is during the initial contract negotiations, of course. Buyers and sellers can go through a lot of haggling by counter-offers before they reach a meeting of the minds. And with so much competition for low-priced houses right now, it’s very easy for buyers to dicker themselves right out of a deal.

The second opportunity for a deal to fall apart is during the inspection process and the subsequent repair negotiations. My stock argument to sellers is pretty simple: If you don’t fix it before the buyers move in, they will have to fix it before they move out. If we’re paying full price or something close to it, we deserve to buy a property in turn-key condition.

To complicate matters, FHA and VA loans require that homes be in habitable condition. But lender-owned homes are sold “as-is,” as are most short sales. And even sellers with equity may not be able to afford to undertake needed repairs.

Perhaps surprisingly, the third time when a home sale is at risk of falling apart is at the very last minute, when the Realtors, the lender and the title company are all working full-blast to close the transaction.

It is at this final stage of the process that seemingly insuperable obstacles arise: The lender blocks funding over some previously unobjectionable contract language. The seller has turned off the utilities before the final walk-through. One or more parties get cold feet so bad they are frozen stiff.

Add to all this the outrageous emotional stress that goes along with such a huge, life-altering change. The smallest disruption can set people off when they’re this tightly strung.

But as crazy as things might get, the buyers still want to buy and the sellers still want to sell. It is the job of the Realtors to hold the transaction together when it seems as if every force of nature is conspiring to tear things apart.

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The perfect in-town location? How about 2 blocks from the light rail?

Whether you buy this home as a residence or a rental property, you could not ask for a better location. You’re just two short blocks from the light rail station on 19th Avenue. And just beyond that is The Phoenix Spectrum Mall.

This house, 2040 West Missouri Avenue in Phoenix, is a rock-solid Phoenix ranch home, block construction. But it needs love — which is why it is priced so aggressively.

This home is offered at $104,995, a smokin’ deal. Call your agent to find out how to make it your own.

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Have you been looking for a “pay-dirt” fix-and-flip candidate? You’ll find a rich vein of ore on Cinnabar Avenue

A full-scale remodeling job on an older home consists of two steps: First rip out everything that needs to be replaced. Then install all the new stuff — fixtures, flooring, paint.

This house, 4830 West Cinnabar Avenue in Glendale, is halfway through that process — and, in consequence, it’s selling for half-price.

We all know what makes a good flip: Upside. This is a rock-solid block home in a stable west-side neighborhood. The floorplan is ingenious — but you’ll need to exercise your imagination to see it. But if you’re looking for a fix-and-flip — or a fix-and-rent — or a fix-and-move-in home, you’ve got good bones to start with — and a price to die for.

This home is offered at $84,995 — and turn-key homes in the neighborhood are selling for twice that. Call your agent to find out how to make this home your own. But don’t dally. The property is showing several times a day. This opportunity won’t last long.

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The buyer’s agent is the unsung hero of the home-buying process

This from my Arizona Republic real estate column (permanent link):

When we list a home for sale, two-thirds of everything we will do for the seller will have been done before we hit the MLS.

There is a similar disparity of effort on the buying side: Of all the work your buyer’s agent undertakes in your behalf, two-thirds of it will happen after you have put a home under contract.

That seems counter-intuitive. After all, you depend on your buyer’s agent to shop listings for you, and then to take you around to see them. When the showing is done, the work is done, too, isn’t it?

Far from it. You’ve found the home of your dreams and it’s all you can think about. But your buyer’s agent is busy figuring out how to write exactly the right offer, to make sure you get that home. And once you’re under contract, your agent will start to chip away at a long checklist of tasks that need to be taken care of to successfully close escrow.

There are so many things that can go wrong in the purchase of a home, it’s a wonder anyone ever gets to move. But, more than anyone else in the process, it’s the buyer’s agent who keeps things moving, who organizes all paperwork and gets it where it needs to go, who coordinates the inspectors, who keeps everyone informed and keeps the documents flowing.

And it’s the buyer’s agent who tends to keep the escrow process civil — and civilized. The seller may not want to do repairs or to bring the price down to reflect a low appraisal or to move out in time to permit a thorough final walk-through. It’s the buyer’s agent’s job to smile and sweet-talk the seller and the listing agent, to keep the transaction in motion when it seems always to want to grind to a halt.

You found a home you love, and that’s great. But if you make it all the way to close of escrow, it’s because your buyer’s agent was plugging away behind the scenes, day after day, to make it happen.

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What’s the best rental home to buy? One with the tenant already in.

Picture a charming home in a shady corner of Phoenix. Good bones, reliable block construction, mature landscaping. Now give it the best feature of all, for a real estate investor: A performing tenant already living in the property.

That’s what you’ll find at 2425 West Cheery Lynn Road in Phoenix.

The house itself is sweet, and the location could not be more perfect: Minutes from downtown Phoenix, seconds from the I-17 Freeway. But the presence of the tenant means that this home will be cash-flow positive from the day you buy it. No months of frustration waiting for a lease-up. No angry glares from your spouse as an alligator eats up your savings.

This home is offered at $109,995. Call your agent to find out how quickly you can add it to your investment portfolio.

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