Monday, June 23, 2008

Is the market picking up?

By Joel Persinger
YourRealEstateDude.com

It seems that the burning question on everyone’s lips this past week has been, “Is the market picking up?” I don’t know if you have been asking that question, but it certainly has been asked of me at least once per day for the last week or so. As a consequence, I started asking other people and here is what I heard.

An agent I spoke to who works at another office told me that he was thrilled that his clients had the opportunity to buy homes at lower prices. But, he was finding that the prices were being “bid up” because every property that his clients expressed an interest in had received multiple offers. Consequently, by the time the properties sold, the discount was gone.

Even non-agents reported similar opinions regarding the current market’s trend. When I stopped by the office and spoke to our Transaction Coordinator, she seemed genuinely excited to report that things were picking up and the number of escrows being closed seemed to be increasing. One fellow at church began telling me that his offers on short sales were not moving foreword as rapidly as he would have liked. So, he and his wife began looking at bank owned properties only to find that a bidding war was underway at any they seemed to find interesting.

Obviously, my poll was not conducted in any scientific way and certainly the sample of people polled was tiny by any measure. Just the same, I found it fascinating that everyone I asked expressed an optimism regarding the real estate market that I have not heard for quite some time. Buyers seemed to feel that the time to buy had arrived and agents expressed a guarded optimism associated with the fact that they actually had clients to work with and properties for their buyers to buy.

All that having been said, available statistics do not appear to agree with the optimism expressed by my sampling. I wouldn’t let that dampen the prospects though. The available statistics are forever and always several months old. Therefore, what is really happening in the marketplace happens before anyone can conclusively prove that it is actually happening. That’s why we have talking heads on the news and guys like me who write columns like this one.

The bottom line is this. No one knows definitively if the market is picking up. But, it sure seems like it and we can all hope that what appears to be happening really is.

Checking Credentials Can Keep You Out of Trouble.

By Joel Persinger
YourRealEstateDude.com

Having eaten in parts of the world where the origin of the food and the cleanliness with which it was prepared were questionable at best, I have gotten into the habit of looking for the big blue and white health department placard whenever I stop at a restaurant to eat. If that placard has anything but an “A” on it, I’m out of there! Something tells me that if you looked up and saw a “C”, you’d be gone too.

Checking credentials, whether you’re looking for that “A” at your favorite eatery or checking the licensing history of a prospective Realtor, is one step you can take to avoid giving yourself and your wallet a bellyache.

Just last week one of my agents asked me to attend a meeting with an agent from another office who had expressed a desire to work with us in our efforts to help people who are financially upside down on their mortgage payments. It was the first time any of us had ever met the agent in question or visited his office and the meeting did not go quite as planned. The agent was pleasant enough, but there was just something about the gentleman that didn’t seem right.

As we walked through the parking lot after the meeting my agents and I went over our concerns. None of us could quite put a finger on what was wrong, but one said, “I just don’t trust that guy.” Later that afternoon I received an email from one of my agents who had attended the meeting. She had followed up on the concerns and checked the fellow’s licensing history. As it turns out, his license had previously been revoked! In the strongest words possible, she suggested that we decline to work with that agent and that brokerage. The emails that followed made me very proud of my agents. It was unanimous. We would not work with that agent or that office.

But, what if we had? What if my agent hadn’t checked the licensing? What if we hadn’t followed up on our concerns when the little voices in our heads were telling us that something wasn’t right? We could have started to work with a potentially unethical or even criminal real estate agent. Worse yet, what if one of our clients was hurt as a result?

This may sound like fear-mongering to you, but let’s be honest, there are bad people out there. Fortunately, for every dishonest real estate person there are thousands of good, honest agents who care about their clients. The trick is making sure you end up with one of them and not with the bad guy. One step you should include in your vetting of Realtors is to check their licensing by visiting www.dre.cahwnet.gov. It’s not a foolproof way of weeding out the stinkers, but it sure helps.

The Real Estate Game is a Team Sport

By Joel Persinger
YourRealEstateDude.com

There is something about human nature which drives many of us to be independent. As a result, the spirit of the “do it yourselfer” is strong in each of us. I ought to know. I spent half of this past weekend working on our house and the other half working on our car. But, while this spirit of independence can be a good thing, it can also hold us back when we apply it to a process that is as complex as buying, selling or investing in real estate. Over the years I have seen many example of this, but one fellow whom I met recently brings the whole idea of independence gone wrong into sharp focus.

This fellow had decided to get into the real estate market when things were booming. So, he went to a seminar, learned enough to be dangerous and proceeded to purchase all or part of thirty homes over the following year. He rented out all thirty of the properties and both he and his wife thought they were on the road to riches. Along the way they told many of their friends about their new found success and enticed several of them to follow in their footsteps. They, in turn told others and so it went until some dozen or so families had joined in the game without any idea of how to play it. By the time I met this gentleman he had lost all thirty properties as well as his family home and the other dozen or so families who had followed his example had lost everything as well.

The list of mistakes he made was lengthy to be sure. Here is a short list: None of the properties had a positive cash flow, the tax dodge he tried to use didn’t work, the “trust” in which he placed the properties did not accomplish its intended goal, the properties were purchased at full market value, he used all of the equity from his personal residence to fund his enterprise, the loan structures he used were extremely risky, etc, etc. In short, his entire approach was a ticking time bomb waiting to go off. At no time did he consult an attorney, CPA, real estate broker or anyone else.

Real estate is no place for the “do it yourselfer.” My grandfather was one of the most successful people I have ever known and his favorite saying was, “You don’t have to be smart, just hang around smart people.” He surrounded himself with those whom he knew would look after his best interest and had the knowledge and expertise with which to do so. So, if you are going to play in real estate you will need a good lawyer, CPA and real estate broker at a minimum. You will also need a deep understanding and acceptance of the fact that the real estate game is a team sport.

Patience is Your Best Tool in a Real Estate Transaction

By Joel Persinger
YourRealEstateDude.com

The one trait which causes more trouble in a real estate transaction than any other human trait is that of impatience. Over the years I have seen many clients, both buyers and sellers, shoot themselves in the feet simply because they could not be patient. Some unforeseen little thing causes escrow to be late in closing and the next thing you know the buyer or the seller gets his knickers in a knot and the entire transaction, on which everyone has worked tirelessly for weeks or even months, starts to fall apart.

Pitching a fit over little things is a common practice among real estate buyers and sellers. In fact, this type of childish behavior is one of the greatest contributors to the failure of real estate professionals to communicate properly with their clients. Most of us don’t like being yelled at. If we know that a client is prone to throwing fits, we naturally tend to avoid sharing bad or even potentially bad news with that client. Of course, this only postpones the inevitable. The news eventually must be shared and the resulting explosion of attitude on the part of the client often has the effect of killing an otherwise healthy transaction.

To make matters worse, some real estate agents are just as guilty of losing their patience. In the almost twenty years since I began my practice of real estate I have seen more real estate “professionals” throw the equivalent of kicking and screaming fits then my wife has seen among children in her almost twenty years as an elementary school teacher. Some agents have actually adopted, “I’m going to scream and yell and throw an obnoxious fit” as their main style of negotiating. This approach is both unprofessional and unproductive.

In today’s market, which is flooded with foreclosure and pre-foreclosure properties, impatience can be even more deadly to a real estate deal than ever before. Because a great many of the properties currently being sold require the approval of the lender involved, buyers are being forced to deal with large institutional bureaucracies rather than with individual sellers. Negotiating with the loss mitigation department of a national or international banking firm can be somewhat like trying to get a quick, favorable and accurate response from your least favorite branch of the government. Such negotiations require herculean efforts, flexibility, a multitude or repeated attempts and yes, plenty of patience.

When a client understands the ups and downs of the process and can exercise patience the transaction goes much more smoothly and the chances of successfully closing escrow are greatly increased. This is in no small part due to the fact that the Realtor is then able to focus on getting the job done rather than acting as arbiter, counselor, psychologist and whipping post while trying at the same time to negotiate a favorable outcome. So remember, patience is not only a virtue it is also the best tool you can employ to increase your chances of success in a real estate transaction. When challenges arise, as they most certainly will, take a deep breath, count to ten, think about what I’ve written here and be patient.