Friday, January 30, 2015

Clients From Hell, A real life look at what Real Estate Agents face with some clients

In my most recent year as a Real Estate Agent (2014) I sold $10.065,420 in gross sales. In dollar sales, and number of completed sales I am one of the top Real Estate Agents in Houston. I spend virtually all my time working since I am always "on" and available to the public for work. I get calls as early as 6:00 am and frequently I get calls as late as midnight. I meet a lot of people in the course of my day. Last year I spoke to hundreds if not thousands of people who were interested in purchasing or selling real estate so I have a pretty good idea of what is going on in the business.

Most people I work with are smart, reasonable and fun to work with, but about 20% of the people are a waste of time. Here is an example: I have worked with a man and his wife for the last couple years on several real estate investment efforts. Overall it was a profitable relationship, but we are parting our ways on good terms for regrettable reasons.

First of all they are real estate investors and have made a huge amount from their efforts - without working or doing anything. They were in the market in 2010 and most everything you purchased in Houston is at least 30% higher in price than it was in 2010. In some areas the price of a home has increased over double what it was in 2010 (i.e., The Heights, Montrose, Norhill, Midtown, downtown, The Galleria).

In 2013 we purchased a condo built in 1978 in a good area (Tanglewilde) for $74,000. They left the condo vacant and did nothing to the condo but put it back on the market in the middle of last year (2014) for $180,000. Even though condos in that area were selling for quite a bit more than they had sold for previously, $180,000 would have been the highest sale price ever per square foot in that Association. They said their condo was better than all the others and that is why it should sell for more.

Well, by Tanglewilde standards  $180,000 is cheap for 1700 square feet of living space, but still you have to satisfy lending and appraisal standards. The listing wasted a lot of time on the market and they lowered it several times finally settling on $145,000.

We finally did get an offer for $145,000 late last summer, but the condo went through appraisal and the appraisal figure was $135,000, which was what the comps indicated would be the maximum value.

Even though my clients accepted the bank appraisal at $135,000 two lenders rejected the loans on other criteria.

After 4 offers had fallen through, finally when we did find a lender who would make a loan on the property and got a good buyer with a 20% down payment, that buyer backed out because they were worried about resale.

After hundreds of showings and 4 unsuccessful offers last week we found a young woman with a good down payment, a nice job and great credit. She offered $135,000, but was turned down. The seller decided to increase their offer to $138,000.

That contract has also fallen through.

Oh and by the way if I had used the usual 3% commission on my gross dollar sales of  $10.065,420, I would have made $301,950 in commissions, but I am a discount broker so my commission take was $74.000. I saved my clients $227,950 last year.

I think my clients got a great deal! I am reassessing the way I do business because honestly, I think it is better to do less business with people who are reasonable, intelligent and who I like to do business with than it is to do a lot of business with so many clients from hell.

Friday, December 26, 2014

Real Estate Incomes Explained

I recently met a young man who worked for a major bank in Houston. He asked me what I did for a living and when I told him I sold real estate for a living, he smiled and said "Oh, that's a job housewives do for a part time income."

I said, I wish everyone had a little better perspective of what I do, but there is some truth to what you say.

Despite what many in the general public think most Realtors do not make a lot of money though there is a huge industry built around making people believe Realtors do make a lot of money. On the National Association of Realtors website you can find the following recommended books:

The Millionaire Real Estate Agent

Success as a Real Estate Agent for Dummies (basically sells the same tired old worn out business model and you really are a dummy to believe it!)

How to become a Power Agent: A top Industry Trainer explains how to double your income in 12 months! (Reminds me of the old saying: "Those that can DO. Those that can't TEACH!")

Super Agent: Real Estate Success at the Highest Level. (And a few do make it to the top, but most will never make it to the Highest Level.)

How to make $100,000 + your first year in Real Estate.

*Source National Association of Realtors website


As recently as today I read that 45% of Real Estate Firms are looking to recruit new agents and it goes on to say that with the cutbacks in the energy sector in Houston that Real Estate would be an option for the newly unemployed.

And really since Real Estate Firms make their money from selling agents services, like desk fees, advertising and "Branding", so it isn't hard to see why a Real Estate Firm would always welcome more agents. They make money from charging agents fees.

But let's take a good look at the reality of the business of becoming an independent contractor selling real estate.

The most recent figures (2013) show that the average Real Estate Agent makes about $38,000 a year ($39,800 is the median). (BLS GOV 2012)

A recent study done in Orange County, CA shows that 90% of agents complete no more than 3 transactions a year (Orange County CA MLS 2012)

65% of licensed agents sell zero homes a year.

Only 1.8% of agents sell a minimum of 1 home per month.

(Jones, Anthony. Business Challenges May 29, 2013)'re-worth.

Quoting MR Anthony:

Assuming an average commission of 2.5% excluding taxes and brokerage splits this means only 11.6% of agents can afford to live off their income.

According to a 2013 study, for a single adult, the least required annual income to survive in Orange CO CA (where the figures come from) before taxes is $27,284.

And that does not include all the Realtor expenses. For example it is estimated that an average real estate agent has an advertising budget for a Real Estate of $2,000 a year. (Mine is certainly several times that!)

For further illustrative purposes, last year I paid E&O insurance of $850 a year, $1077 for my cell phone, Internet $678, new computer equipment $718, Realtor dues of $1,608, Zip forms (a necessity for writing real estate contracts) $288, PDF converter, and other programs $271, Office supplies $855, my car was vandalized in a condo parking lot cost was $400, I had continuing education courses for a total cost of $213, I drove the hell out of my new car, and I spent $67.50 for entertainment and $77.70 for business trip meals. In addition I paid around $750 for web design and I am not going to tell you what I paid out in advertising. But you can see that 3 sales a year don't cut it in the "business" of real estate. Total for these miscellaneous business expenses was $7,135.20. That would of course very for every agent. But every agent has expenses and they aren't nothing.

Anyway in Houston an average two-bedroom apartment runs $1,551 a month or $1,191 for an average one-bedroom apartment.  So your apartment would cost you over $13,000 a year then there is a car payment, ($480 per month) gas, car insurance ($1,200 a year) etc.,

There is over $27,000 in fixed expenses and I have not included gas or food or clothing, medical expenses etc.

Nobody can make it on 3 sales a year. Nobody.

Also from the above article by MR Anthony the average agent worked over 40 hours a week on his or her business.

So in fact most agents could have made more as a Residential Leasing agent who according to current BLS employment statistics as quoted in the NYT for 12/26/2014 makes $41,579. Or they could have been a shoe salesman who makes on average $32,531. Or a day care worker who makes on average $28,475, or a garage parking attendant who makes an annual income of $26,474 according to the BLS report.

For these statistics click on

If the average real estate agent makes the national median income of $39,800, they would be making before taxes about $19.14 an hour.

I found the following graph for Houston agents:


For the top 10% of all agents the income was a little better at $98,090 or an average wage of $47.16. (Occupational Employment and wages May 2014) 41-9022 Real Estate Agent Sales.
So anyone who thinks that agents are overpaid, is just plain ignorant of the facts. And anyone considering a career in Real Estate ought to think twice.
There really are no also ran agents. There are those at the top and the rest, and even the top aren't doing all that great!
I suppose I will include a disclaimer here. The information contained in this report was obtained from sources which this Realtor believes to be accurate. No guarantees as to the accuracy of this report are being made. The repot is for illustrative purposes only and readers are advised to independently verify anything contained in the report.

Thursday, August 7, 2014

A Parochial Idea

In the 1950s I was growing up in a little town in Mary's County Missouri. I went to a Catholic grade school where they taught religion. Not everyone who went to Visitation Catholic could afford tuition, but in those days children who couldn't afford tuition could go free, albeit at some expense to the school.

It wasn't surprising that the Catholic Bishop of Missouri felt that since all Catholics paid school taxes that the state should return some of the tax money to Catholic schools which to be fair were denied tax money because they taught religion.

Well, there came a showdown between the governor and the Bishop of Mary's County and it worked like this. One day in early September, just as the school year began the Bishop  of Mary's County simply told all the Catholic school students to go down and enroll en mass in public school

That was quite a procession! All the Catholic school students leaving their schools at the same time and marching two by two down the street to the public school to enroll there.

I can remember it to this day. It was great fun! It was like a party because public school students didn't have to stand when they addressed the teacher. And they didn't have to kneel next to their desks if they talked in class out of turn. Compared to public school students we knew well we would be entering classes with students who would be quarters if not years behind us in classroom learning. I already know how to spell all the words in the spelling test without studying - and only missed one. (Failed to capitalize February) Or in English where I had learned to decline verbs L O N G ago! I was in the third grade and I enjoyed the chance to really shine.

As Catholic school students we had a more conservative school environment. We were polite, polished and punished for doing anything wrong. It was a formula for success. No?

Oh well, we loved being in public school a lot, but seeing how quickly Catholic students were adopting to public school ways the Bishop relented and called all the Catholic students back to their schools. Parents were also up in arms about all the spare time the Catholic students were taking going to basketball games and hanging out.

Today, 57 years later I am a Realtor and once again I am watching as powerful players like the large banks and the CFPB( Consumer Financial Protection Bureau) engage in a game of brinksmanship. Check this out:

I had three borrowers this month that illustrate what the banks are doing to gum up real estate lending. I first want to say that all the three loan applicants had very high credit scores, great jobs and savings. You would think that getting a home loan approved wouldn't be so hard for any of them, but suddenly that has now changed.

#1) Lenders are prolonging closings weeks even months past the contract close date on purpose.

The first loan was for one of my listings. The problem started just before closing was scheduled and continued for a month after the contract closing date.

Every day lender needed more information. The information would go to underwriting for a couple more days. Then the information was sent back because wasn't in the right form. The lender needed to verify income and job status and they needed multiple sources to verify that. The banker would respond to our daily calls that the loan had gone back to underwriting and that it would take "a couple days" for them to get to it. The lender then found a lawsuit against the Home Owner's Association and had to file an exception with the Investor. Even though the title company did their title search and insured the property as free and clear, the lender refused to complete the loan. That's interesting because if there had of been an encumbrance to the property the title company would be on the hook and the title company said they were insuring title.

But that wasn't enough for the lender. Even though the lawsuit was obviously frivolous and it had nothing at all to do with the buyer who was asking for the loan or the seller who was selling the home, the loan was denied based on that pending lawsuit.

The second loan closed a week ago. In this loan I represented the buyer.  It was scheduled to close on July 6, 2014 but didn't close until 28, 2014, 22 days after contract close date. The reason it closed so late was that the lender waited until a week before closing to find problems then strung us along everyday by telling us that it would just take a week, or another couple days. But then every day something new was discovered.  For example 2 weeks after we were supposed to close the lender contacted my clients for job verification even though they had supplied 3 months of pay stubs, the bank needed further corporate verification. A week after that, the bank required IRA statements to be faxed from Fidelity since the customer statement was not sufficient. That's not the way it used to be.

And the third loan is now 4 days past contract closing date. In this loan I am representing both buyer and seller. It seems at the very last minute, 45 days after we executed the contract the bank needed to verify the wife's employment. Here pay stubs weren't sufficient. She had to send in a written letter from her job stating that she worked full time as a nurse. It will now take a few days more while this goes back to underwriting. There are many more rather unimportant issues that have held the loan up.

To be fair, lending is never a simple thing. But I have a question. How did the entire banking industry lending process so suddenly gum up - in unison?

According to the banks they have no other choice! They are saying the CFPB is stifling them with regulations.

You can believe them if you want to, but I don't because I learned as a child that if you were big enough and you didn't like a law and you wanted to change that law, you could exert pressure to change the law.

Could it be this summer the Banks with all their concentrated power have taken on the new Consumer Financial Protection Bureau? Looks like it to me.

One thing is for sure banks are too big and powerful. They have become monopolies. Some have said they are "too big to fail" and must be rescued when they go bad, but even when times are good, banks are gaming the system. In my opinion capitalism serves us best when we have competition, and right now the banks monopolize the system to their own benefit.


Tuesday, June 24, 2014

How to lose money on the sale of your home in the hottest real estate market in history

Last year on a certain Galleria street you could purchase a fairly old town home for around $200,000. Prices for these homes built in the 1960s had been stable in the area since I started in real estate 10 years ago (Tempus Fugit!) but then came the listing crash and everything changed!

There are many reasons behind the listing crash but I would like to mention only 3.  

The first reason why there aren't enough homes on the market to sell is simply that builders aren't building enough homes to meet the increased demand.

Before the Great Recession builders were building almost twice as many homes as they are today, but after the Great Recession and subsequent Real Estate Crash, which started in 2006 hardly anybody wanted to buy a new home so builders sold off their properties at fire sale prices. Once burned builders are now twice cautious. Additionally, builders foresee a future affordability crisis once interest rates return to normal after the government ends Quantitative Easing. They are afraid of being caught again with an inventory of expensive homes nobody can afford or wants to buy so they aren't building single family homes like they used to.

Another reason for the listing crash is government policies aimed at restoring confidence in home ownership and stemming the tide of foreclosures have distorted the market.

It was necessary for the government to intervene in the market because it had become so irrational that the price deflation in real estate threatened to pull the whole country down into a depression like we saw in the 1930s.

It is truly human nature not to want to go against the crowd. During the Great Recession when people saw the price of real estate properties in free fall, they became hesitant to invest in a home.

People need the reassurance they get from doing what everyone else is doing. If nobody is buying homes because they fear the market will move even lower hardly anybody will buy a home - even if prices are at historic lows like they were just a couple years ago. The fear feeds on itself and produces more price deflation.

Conversely, when people see others buying homes, they feel safe and will buy - they will even pay bubble prices if they think the price is going to go up in the future in order to get in on the rising prices just like they are doing today!

Today homes have become investments, and their price movements mimic every other investment class from stocks to art. Prices of real estate assets go up in response to greed and they fall in response to fear.

So when prices of real estate were falling during the recession, buyers who chose to go against the crowd and purchase a home often got great deals because sellers were afraid prices would fall even further and buyers were afraid if they purchased a home, they were going to lose money on their purchase.

When people withdraw from the market, prices fall and that is called deflation.

To counteract the lack of demand for housing and the resulting deflation of real estate in this country the government took steps to stop the free fall in prices through a process called Quantitative Easing in which the Federal Reserve bought up mortgage bonds. It works like this:

When the demand for bonds increases, bonds rise in value. Conversely when there is less demand for bonds the price of bonds falls. It works like this.

Suppose a bond is selling at par $1000 and pays a fixed coupon interest of $50 a year. I.e.,:

$50/$1000 = 5% (or par value divided into dollar value of interest = the interest rate)

The bond value can fluctuate but the $50 interest will always stay the same. Thus:

If there is more or less demand for the bond the $50 annual interest will stay the same but the price of the bond will decline or rise according to the demand for the bond.

Let's say demand for the bond falls such that the bond which was previously $1000 (par) falls to $900. Now interest rates are higher. Thus:

$50/$900 = approximately 6%

But if the demand for bonds increases as it did when the FED began buying back billions of dollars in bonds every day interest rates decrease because the increased demand will drive up the price of the bond.

Take the same $1000 bond paying $50 a year or 5% and increase the value of the bond by $100 = $100 above par = $1100 new value.

Now take the $50 fixed interest and divide it by $50/$1100 = 4.5%

So you can see that when the FED buys a lot of bonds the price increases and the interest rate falls. That's what Quantitative Easing is. That's what the FED did.

Using Quantitative Easing the FED has basically lowered interest rates to 0% taking into account inflation. As a result mortgage rates fell to historic lows and there was a boom in refinancings which made owning a home more affordable for those who were having a hard time paying their mortgage because the interest rate is a significant part of the house payment you pay.

When rates were lowered, it also made homes more affordable to buyers because buyers could afford to buy more house for less money. (The interest rate is the price of money. When money is cheap there will be an increased demand.)

Cheap money enticed buyers back into the market increasing the demand for real estate and the price of real estate began to rise stemming the free fall in real estate prices. With houses more affordable and money cheap, people rushed back into the market to purchase homes.

In some areas home values sky rocketed, but in all areas prices rose as a result of the artificially lowered interest rate environment. 

On the supply side once so many people had refinanced their homes found that not only were their homes more affordable, but also there were less homes on the market to choose from since people were choosing to stay in their newly affordable homes rather than sell. They took a look at the rising price of homes available for sale along with the declining supply and wondered where would they move if they did sell? We know now that many have decided to stay where they are and not list their home for sale. Thus fewer homes are going on the market today.

A third factor in the crisis is the absence of young buyers in the market. Faced with record levels of college debt, a weak job market, and record price rises in real estate many young people these days prefer to lease an apartment over purchasing a home. Builders have accommodated the market by building more rental units and less single family homes thus reducing the number of single family homes available for purchase.

It is a fundamental rule of Economics that when demand is increasing and the supply is either falling or not keeping up with demand that prices will increase as they have.

So here we are in a market where there is a scarcity of homes to sell and a surplus of buyers wanting to purchase a home. And how do you expect Real Estate Agents to react?

Apparently, many agents have decided to toss ethics aside and go for the money. For example, many agents have started using a device which has come to be called "Pocket Listing".

A pocket listing is a way the agent can get both sides of a commission (usually 6%) by not listing your house on MLS. 

Pocket Listings benefit the agent at the expense of the home owner who is trying to get the highest price for their home because a house that is never on MLS will not get the same kind of exposure it would if it was listed on MLS.

For example, many times I have had multiple offers on my listings in the past couple years and always my sellers get a higher price than they would have had they just seen one offer because competition drives the price up.

Competition for listings has increased among agents as agents compete for the scarce supply of desirable homes. There is a saying in the business "you have to list to exist." Without listings a real estate agent is sort of out of the business until they get listings again. But the supply of listings isn't enough to go around so real estate agents have begun to hold listings off the market or worse.

Now back to the Galleria town home I mentioned above that went on sale in the upper $300s just last week (which was similar if not identical to a town home just down the street that went for the low $200s just last year).

My client was a cash buyer and offered in the low $400s the first day after that Galleria town house went on the market. We further sweetened the deal by offering to settle the purchase next week. It was a guaranteed, early sale at a very nice premium over the offering price. What was the result? I was told by the agent last night that the seller had selected another offer. 

Amazingly someone increased the price OVER  our offer (greater than  $200,000 year over year appreciation for the town house that was built in the late 1960s) effectively doubling what the house would have sold for just a year ago.  Maybe the seller got $500,000 if so the market is truly crazy and out of its mind! Such price increases are only seen at the end of bull markets.

If the market is insane, you can only think that this is a great time to sell your house if you can do so and go live with friends or relatives for a year or until prices go down because with investments, they never just level off! NOTHING EVER STAYS THE SAME! Prices will fluctuate either up or down, and it appears to me that when they do go down because of the insane price appreciation we are seeing today, they will go down and go down hard! :-)

So here we are. If you are thinking about listing your home with someone don't waste your time with a "Pocket Listing" agent or agency. You would only be cheating yourself.

The market is going crazy and you need someone you can trust..

And Remember saves you money while providing you with the highest sale in the least time! No gimmicks, no slight of hand, just good brokerage and a plan for you. If you are in the market to sell your home at the highest price in the shortest time, by all means call me. You will be glad you did!

Disclaimer. The information contained in this blog are my opinion and based on the information I have gained through working in this business and reading. No guarantee is made as to its accuracy and you are free to verify this information, in fact you are asked to verify (what you can of it) yourself

Friday, February 14, 2014

Today is a great time to List your home in Houston

I recently listed a house near Houston. The owners had paid in the mid $200s and had owned the house only a short time and were justifiably correct in listing the house above $350,000 - a $100,000 price appreciation! It sold in a couple days.

I am not picking on anyone because even last year homes in Montrose which had been purchased for a mere $300,000 with practically nothing down had more than doubled in price from $300,000 to $650,000 - that's not a bad payment for living in a house three years.

Lots (5000 SF) in Montrose can not now be purchased for anything less than $500,000 and can go for substantially more when it is a really super nice location.

Prices have gone up record levels making potential sellers hesitant to list their homes fearing they will get less than they could have by waiting. Even if they sell, they face a daunting task of finding a new home either to buy, build or rent. Rents are out of sight.

The condo I lived in 4 years ago rented for $850 a month. It was a steal I admit it but it isn't now. Today after installing laminate floors, Stainless Steel Appliances, crown molding, new carpet and new front doors, it lists for $1,850. Renting isn't as nice as it used to be. Look at all the huge and ugly prison like structures covering entire city blocks going up all over Montrose and Midtown! Who is going to want to pay $2,000 + a month to live there? Evidently there are thousands.

The shocking part of it is just three years ago I listed a mansion in Montrose for sale. It was a real gem with a huge lot and 4 car garage. The buyers purchased the property for $300,000 FHA 3.5% down. I doubt today after leveling the foundation, replacing the plumbing and making a few interior modifications that house would sell for less than Two million dollars in today's market.

The proof that sellers are holding back on listing their homes for sale can be found in the months of inventory report for Houston. Last December months of inventory on the Houston MLS reached it's all time low at just 2.6% (Houston Realtor Magazine, February 2014 "Houston Real Estate Market Zooms into Record Territory in 2013" p.9) as opposed to just 3 years ago when we had more than 9 months inventory.

It is said that prices of Houston Real Estate only increased 10% last year but my experience is prices are increasing quite a bit more as I pointed out above.

People who are holding off on selling should think. You will never know in advance that you are at the top of the market or for that matter at the low point. You will certainly know afterwards but that doesn't help you decide when the time is right to sell. I guess the answer is don't sell just because the market is high. On the other hand you shouldn't be trying to time the market either.

The best times to buy an asset are when everyone is scared off and don't want to buy for fear the price will fall lower - we met so many in 2010! Those were dark days when I could have 24 listings and handle them easily because things moved so much slower. The best time to sell is when everyone thinks the market is going to go up forever. We used to say in the stock market everyone is a genius in an up market.

Now the world we live in has completely changed. Today we inhabit a world of huge real estate price increases and multiple competing offers within days if not hours of a listing being listed on MLS.

So what is the takeaway? It is a good time to sell your real estate in Houston. Everyone is absolutely confident it's going to go up further! I.e., times like right now.

Finally information I took from the Houston Realtor is certainly believed to be true by me, but you need to independently verify everything said here. I make no guarantees as to the accuracy of those facts furthermore.

Sunday, January 19, 2014

On the importance of Photographs in listing real estate

A man recently called me to list his home in Meyerland.

I love Meyerland and love selling homes there so I was so excited when I talked with him.

He asked for a CMA which I sent him but I was sure to tell him that a CMA did not represent my price opinion on his home. I told him that unless I actually saw his home I would not want to put a price on it.

He had listed his home with another agent for a couple months unsuccessfully, but since the house did not sell in 60 days he had decided to terminate the listing. His agent had failed he said. "Nobody came by", he said.

I was curious as to why the listing had failed. After all homes in his area are snapped up in a very short time since the buying frenzy set in in earnest a year or so ago.  Why I asked myself weren't there any appointments to see this desirable home? I let him continue

Then he told me that he really wasn't trying to make the most out of his house. He just wanted a reasonable price. Now that really made me curious because shouldn't everyone want to maximize what they get out of their home sale? What kind of person isn't interested in maximizing his return?

I think everyone needs to maximize what they get out of their home since it really is their biggest investment.

Then he asked me what services I performed.

I told him that I did everything well but I didn't take photographs. I said that the first thing people see are the photographs of his home on HAR. If the photographs of the house are beautiful and look like something out of a magazine, of course, many people will be interested in seeing the house. If, however, the photographs are dark, if there is clutter around or if the photographs are amateur, people are less inclined to want to see the house. Often they will not look at it all. The Internet is definitely about images. People love beautiful images. Ugly amateurish images not so much...

Despite what I said he told me that my photographs would be OK with him.

Today over 90% of home buyers begin their search online and they are not looking for second class. They are looking for the best they can afford. They will be more impressed by nice photographs and they are cheap in addition.

I use Rockbait which generally charges about $150 for a set of Architectural Digest quality photographs. - He said as long as people come to visit my home I am satisfied. Once they get here they will decide.

I didn't hear from him for a month or so but when he called me again and asked me to do another CMA. I answered that the market had not changed in the past 30 days, but once I had seen the house I would follow up with a CMA of what I thought the price should be.

He said bring your contract along and also your camera.

After we spent a couple hours photographing his house, he said, "And we don't want a sign in our yard. We don't want the neighbors to know we have our house up for sale.

I told him that a sign was a good idea since the best salesmen for your home are your neighbors themselves. They may have friends who have expressed an interest in moving into the neighborhood and would love to buy your home, but if they don't know your home is for sale they cannot be expected to call their friends and tell that the home is for sale. Additionally many people drive through the neighborhood they want to live in and they are just looking for "For Sale" signs. If there is no sign there they will never know your home is for sale.

It seemed clear to me that the other agent was just following this seller's orders. Maybe that was why "nobody showed up."

Fact is only 30% of For Sale by Owners sell their house even in a robust market. (google it) - That's not to say that with a little help they will wouldn't be 100% successful i.e., with the help and business knowledge as a full-time discount Realtor® with over 10 years full time experience. That said, I welcome all the seller participation I can get, I am interested in your out of the box thinking.

If you are a person who truly wants the best sales experience at the cheapest price, by all means call me. I would love to hear from you, and you can bet I will deliver on my promises. I give you my unconditional guarantee that I will deliver. - And I am always open to new and even crazy ideas, but I will tell you this if your photographs are ugly, amateurish, dark and badly balanced, you will spend a lot more time on the market waiting for someone to make an appointment to see your home.

Photographs that WOW sell. You can't make a silk purse out of a sow's ear and that goes for your photographs. Good photographs are inexpensive. I can't believe someone would want list without professional photographs just because it costs $150 when the photographs are the very thing people want to see first before they make an appointment to see a listing.

The information contained in this blog is believed to be true by this agent and was taken from reliable sources but no guarantee is made as to its accuracy. Readers are invited to verify on their own.

Tuesday, January 7, 2014

Crystal Ball Gazing for 2014

A client who is listing with me recently received a letter from a well known broker in Houston mentioning that he had "prospects" who were interested in his home and asking if my client to give him a call to discuss it.

There is no doubt that the broker who wrote the letter to my client knew that I had the listing and that it is unethical to contact another agent's client in an attempt to get them to fire their broker and list with them.

Aside from the ethics of the letter I believe the letter brings to light some things about the present state of the Real Estate market in Houston and indeed around the country.

#1 The listing pie is shrinking causing agents to resort to more desperate efforts to obtain listings.

Active listings have declined steadily since the Fed Stimulus began in 2010 when the Fed started to  artificially lower interest rates by open market operations. Basically, the Fed purchases Mortgage backed securities in the open market and by doing so lowers the rate of interest. Lower interest rates lower the cost of home ownership.

The Fed Stimulus predictably has caused a decline in the supply of homes on the market as people rushed to purchase homes at the lower rates.

It used to be that a 6 month supply of homes on the market was normal, but since the buying frenzy, listings of homes on MLS have steadily declined to just 2.9 months inventory in November of 2013. (In November of 2013 active listings in Houston declined to just 30,341.)

Last year homes sold so fast in the hottest neighborhoods of Houston the average time on the market began to decline precipitously. Whereas before homes on the market for 3 months were kind of standard, last year my listings often were on the market for less than 3 weeks before we had a full price offer.

It does not come as a surprise that people are anxious to see their homes sell quickly in Houston and some agents like the one above are catering to that impatience.

#2 Coupled with the fast market in Houston real estate sales, is the fact that the above listing had listed late in the year and 45 days of the listing had come during the Holiday period when traditionally people are not so interested in looking for homes. The holiday season of 2013 was more in line with the traditional holiday slow down seen in more normal times.

I can tell you that as of January 2 things resumed their frantic pace in Houston Real Estate. In the first week of January 2014 I have already received offers on 3 of my listings!

#3 The Fed is slowing it's open market purchases of Mortgage Backed Securities and interest rates are rising forcing some buyers to have to recalculate the amount of home they are able to purchase. The recalculation is most evident in the $150,000-$500,000 price range of homes.

#4 The pace of home buying slowed in November. November sales of single family homes totaled just 5,108 the lowest rate of sales since February of 2013. Active listings declined 17%. 

#5 I believe sellers have also discovered that you don't always get what you pay for at 6% commission rates. can do as good a job or better than it's  much more expensive big agency rivals and I believe people have become conscious of the fact.

Many people who are listing their homes today have sold more than one home and have a good idea of what agents do and do not do. They make commission comparisons and some of the smart ones are choosing my brokerage plan to sell their homes because they can save a lot of money on the listing commission without any loss in service or time on the market. I.e., market for homes is the same wherever you list.

#6 The competition for listings will only heat up as the year 2014 wears on. There are so many new agents who want to cash in on the new bull market in real estate. There are also many older more seasoned agents who know the ropes well.  They will sharpen their focus on listings. The listing war will definitely heat up.

In essence, everyone in 2014 will be competing for a piece of the ever smaller pie of listings in the Houston Real Estate area.

One thing is for sure as Callvolley goes into it's 8th year of operation, I have proved that I can compete. I have proved that I can sell homes at all levels in price or location and in all market conditions. And that is exactly what I will continue to do in 2014. I will offer the best of service at the lowest possible cost and I will get the job done!

The trouble in my opinion isn't the supply of listings. Competition is the way capitalism works! Competition brings out the best in everyone.

BTW I just received an offer on the above mentioned listing.

I look forward to a challenging and successful 2014!

I obtained the statistics from reading from many different sources and from my own first hand experience. I believe the statistics to be true but I would invite all to verify the statistics on their own. I make no representation as to their accuracy .