Chicken Little Is Crying Again

By your real estate dude

Today's San Diego Union article by Dean Calbreath is another example of doom and gloom. Check out the lead to this story:

"The California real estate market will remain sluggish through at least 2008 and spark widespread layoffs among construction and financial firms, according to the latest UCLA Anderson Forecast."

This article says nothing more than what everyone knows already. What amazes me is that it took all the brainiacs at UCLA to state the obvious. The simple facts are:

• Markets go up and markets go down.
• When markets go up lots of people make money and when markets go down lots of people have to find other ways to make money.

The fact that a slow down in real estate sales may cause a slow down in building of new properties is obvious to the most casual of observers and doesn't require a university study. The question is not if things are slowing down or if jobs will be lost, but what do we do about it?

In general in a buyer's market if you own property and do not have to sell for financial or other reasons, hold. This is particularly true if you are living in the property or if its income property that is generating positive cash flow. If you have to sell the property, price it aggressively so it will sell. There’s nothing more painful that sitting in your house waiting for buyers who never come.

If you are thinking of buying a home remember that it's called a buyer's market for a reason. The buyer's hold all the cards. Remember the keys to investing are time and timing. If you're a buyer, the timing may be right. The question is how long you will be holding the property (time). Historically, southern California property appreciates over time in almost any market. If you are planning on holding the property for enough time buying may be a no-brainer.

If you got into the real estate, mortgage or building profession during the boom you may have to make some changes in the way you do business in order to survive. You may need to explore new approaches to your business marketing and structure. For some it will simply amount to stepping out of the business during the slow down and moving back in when it’s booming again. This has been going on for at least 50 years that I know of.

So, don't let Chicken Little freak you out. The sky is not falling. The real estate market is not bad. It's just different and it requires that we approach it from a different point of view.

Do you need a power of attorney? Let’s see.

By Your Real Estate Dude

There are times when a power of attorney can keep an escrow going that would otherwise come to a halt. But perhaps we should start by explaining what the heck a power of attorney is in the first place. Not being an attorney myself, I will give you the “average joe” description of a power of attorney and maybe we can sweet talk the Lawyer Dude into explaining it more clearly later. For the moment let’s just say that a power of attorney is used to give permission for one person to sign for another. For example: I might sign a power of attorney giving my wife the power to sign my name to documents if it were difficult for me to sign for various reasons. She would then be able to sign documents and make agreements for me. So how is this useful in real estate?

There are many circumstances in which a power of attorney can be very useful. Here are a couple of examples:

Recently, I represented sellers who used a power of attorney to complete the escrow in the sale of their home. During the escrow the wife became quite ill and had to be hospitalized. I made trips to the hospital to go over various documents with them, but it became very clear that this was a tremendous strain on her. During one of my visits I suggested that she sign a power of attorney so that her husband could take care of the paperwork and she could get some rest and concentrate on getting well. Frankly, she was feeling miserable and was overjoyed at the prospect of not having to sign or fill out any more paperwork. She signed a power of attorney that day. Her husband took care of the escrow, the doctors took care of her and I was able to take care of some running around for him so he was able to spend time with her doing something other than signing paperwork.

I have represented military families on many occasions. Quite often one of them is on deployment, out to sea or otherwise unavailable for signatures. In one particular case I showed homes to the husband who took pictures which he emailed to his wife who was out to sea. When we found a home that both of them liked, I drafted an offer which he signed using a power of attorney. The offer was accepted and escrow closed without his wife ever seeing the house in person. When she returned from deployment, I visited the couple. To be honest, I was kind of worried that she might be disappointed having only seen the house in pictures to that point. She was not! She loved the place. Yet another instance in which a power of attorney made things possible that otherwise may not have been.

If you’re in a situation in which one of you is unable to deal with the paperwork, a power of attorney may be the way to go. But, let’s not forget that when you sign a power of attorney you are giving someone else the right to make legal commitments for you. So, before you sign make sure you have talked to a good lawyer and gotten the advice you need.

So Your House Isn’t Selling

By your real estate dude

If you have your house on the market at the moment and it isn’t selling, it’s probably no consolation to know that you have plenty of company. There are a zillion homes for sale around San Diego County and not enough buyers to purchase them. Sellers are getting frustrated, agents are running and hiding from their angry clients and guys like me are writing about the whole thing. I know what you’re thinking “So, smart guy… tell me something I don’t know!”

The other day I received a piece of marketing stuff from a lender friend of mine who asked me what I thought of it. It was a list of the top 20 things a seller should do in order to sell the house quicker. It was kind of like reading David Letterman’s top ten and just about as useful. Everything was listed from cleaning up the house to buttering up the buyers. Even the old “bake some cookies” trick was on the list. Now, don’t get me wrong, making the house presentable is always positive. But making a $500,000 house presentable will not get it to sell for $575,000 no matter how many cookies you bake.

Realtors have known what to do to get your house to sell for as long as people have been selling houses and they’ve been afraid to tell you for just as long. So, as your real estate dude, I’m going to step out on a limb and tell you the hard truth. The best and most effective thing a seller can do to sell the house is price it right. If you price it too high, it will sit. If you price it right at market value in this kind of market, it will sit. Without a competitive edge, your house will look like every other house in the price range. If you want to sell it, you have to get everyone’s attention focused on your house. You have to price it aggressively to get it ahead of the downward price curve. Do this and all of a sudden your house becomes “The Deal” in the minds of buyers and their attention focuses in your direction.

I know this is a hard pill to swallow and you may think its bologna. You may even be thinking I’ve gone bonkers, wacko, round the bend, cuckoo, bats in my belfry, nuts even to suggest that you drop your asking price. But, I sold three homes in August by using this strategy while other homes continue to sit. All three clients are thrilled. I should add that all three homes received multiple offers, we were able to start a bidding war and all three sold for more than the asking price. I can’t guarantee this will happen in your case, but you have a much better chance making it happen pricing your home aggressively than you do by having another open house and preheating the oven for yet another batch of cookies!

If your home isn’t selling, take heart. This market isn’t bad, it’s just different. The good thing is that while every market comes with its own problems, there is a strategy to deal with all of them.

Your Real Estate Dude Interviewed By HouseValues.com

By your real estate dude

This past week I was interviewed by HouseValues.com for their Mastermind Forum. Sounds fancy, but I promise not to get a fat head. There were about 1,000 real estate agents on a conference call that included the United States and Canada. It was very cool. A few days later I was asked to speak at a conference held by the same company at the Sheraton Hotel on Harbor Island.

The focus of the interview and the speaking engagement was to help these agents dial-in their marketing efforts and generate more business. What was interesting to me was how many realtors were having trouble in the first place. This is yet another indicator that the market has changed in more than just the San Diego area. I had agents on the conference call asking me questions as far east as New York and as far north as Ontario. Why do you suppose that is?

Like any other business, folks come out of the woodwork to make some money in real estate when it’s hot and fizzle out when it cools down. After a while they just fade away, leaving the long term professionals to continue the remaining business. That may not seem to be important from the point of view of the average person looking to buy or sell a home, but truthfully it has a lot to teach us. For example: if you had the choice of hiring a short timer who only got in the business to make a quick buck or the long timer with years of experience and a dedication to the profession whom would you choose? I bet I know what the answer would be if you were choosing a brain surgeon! Why, then, should your answer be any different when you’re hiring a realtor to sell your home or help you buy one?

The bottom line is the market has changed, so the part timers are bailing. Take the advice of a long timer and hire someone who has been around a while and will be around later when you need him.