August 2006 Article History

There are 22 articles published in August 2006. Here are the first 20:

Los Angeles Broker Creates New Search Widget Saturday Reading The Vintner's Pick | August 12, 2006 Fairfax County Real Estate Activity July 2006 Loudoun County Real Estate Activity July 2006 Who are you competing with anyway? New in Daily Market Watch [mis] Understanding MLS market data When do you know gas prices are too high? The hardest thing we do in a buyer's market

The Vintners Pick | August 31, 2006 Good Morning Peg! This is a totally awesome chart...and it scares me! Local real estate news...August 30, 2006 Happy Talk No wonder we rank next to used car salesmen... GOOD MORNING LOLLIE! About It... This is the moment... What the insiders are saying about the local market

You will find a complete Index of Articles by Category in the History Archives.

August 31, 2006

BIG BOTTLES FROM SILVER OAK! As you probably know, Silver Oak happens to be one of my favorites and these should not be missed.

Silver Oak in the 1.5 and 6.0 litre Bottles

We just received a limited supply of older vintages of Silver Oak, Alexander Valley Cabernet. Supplies are limited so act quickly if you are interested.

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Silver Oak Cabernet Sauvignon Alexander Valley

1995 Silver Oak Alexander Valley 1.5 litre @ $160/bottle | RP 95 pts
1996 Silver Oak Alexander Valley 1.5 litre @ $160/bottle | RP 92 pts
1997 Silver Oak Alexander Valley 1.5 litre @ $270/bottle | RP 89 pts
2000 Silver Oak Alexander Valley 6.0 litre @ $550/bottle | RP 88 pts

Silver Oak has resolved to create a wine with a style all its own-not another hard, tannic red wine requiring years of aging to enjoy, but a wine of fully developed flavors and a velvety soft texture on the day it is released for sale. At every opportunity Silver Oak reaffirms their commitment to excellence. The elegance and finesse of Silver Oak has attracted as zealous a circle of customers as any winery can boast, however, they believe that they have yet to make their best bottle of wine.


Have a great weekend. Mike, Peter, Claire

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August 30, 2006

Pam (my one and only) and Peg Morris entered the real estate profession at about the same time 7 years ago. Pam refers to her as "the closest thing to a sister I've ever had." Both started their careers with Long and Foster in Leesburg. We sinced moved to RE/MAX Renaissance and Peg joined Mike Dean and moved to the Leesburg office of Keller Williams. We admire them both for their high level of professionalism and dedication to their clients. Mike is the first and only agent that actually emailed us (unsolicited I might add) after a showing one of our properties giving us invaluable feedback on their impressions and those of their clients. Peg and Mike have the kind of stuff that defines "professionalism." We highly recommend them.

Note: This is the second of an occasional article highlighting agents we know and trust to take care of their clients and exhibit the highest of standards in our industry.

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Thanks to Dustin at RCG for pointing this out. Click on the picture. When you have lifted yourself off the floor, ask yourself this question: What the $&^%@# is going on here? The answer: I don't know. But, it appears a big correction is coming to a real estate market near you if history tells us anything about the future.

There is more to this story to put it into 21st century context. I just need to find it.

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The first story isn't really focused on rel estate but is relevant to our economy:

D.C. Suburbs Top List Of Richest Counties

Nationwide Data on Health Coverage Bleak

By Amy Goldstein and Dan Keating
Washington Post Staff Writers
Wednesday, August 30, 2006; Page A01

The three most prosperous large counties in the United States are in the Washington suburbs, according to census figures released yesterday, which show that the region has the second-highest income and the least poverty of any major metropolitan area in the country.

Rapidly growing Loudoun County has emerged as the wealthiest jurisdiction in the nation, with its households last year having a median income of more than $98,000. It is followed by Fairfax and Howard counties, with Montgomery County not far behind.
Read the full article here.

We in Loudoun complain about a lot of things: transportation, property tax, growth, cost of schools and giving teachers raises to name a few. Based on this census report, why would anyone complain about giving our teachers (most of whom can't afford to live in Loudoun) a meager raise? Helps me put future debates into a little different perspective.

PS: What ever happened to Marin County, California. It was at the top of the list for years. Must be suffering some hardships out west.

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Many people buying new construction were caught in declining prices after signing the build contract. Here's one builder's solution:

Home Builder's New Incentive: A Flexible Price

By Tomoeh Murakami Tse
Washington Post Staff Writer
Wednesday, August 30, 2006; Page D01

And now, in the latest sign of the cooling home sales market, a luxury home builder in Rockville has begun resorting to the kind of tactic usually reserved for screaming electronics discounters -- the Lowest Price Guarantee.

To ease buyers' worries about declining prices, Mid-Atlantic Builders will adjust its sales contract if the price it is charging for one of its houses falls from the time a customer signs an agreement to 45 days before settlement. So, the thinking goes, jittery buyers shelling out $500,000 to more than $1 million for one of the builder's single-family houses can rest assured that they're not sinking money into a depreciating asset.
Read the full article here

Do you think if enough people write contracts they won't have to lower their price? Seems pretty straight forward to me. Savvy marketing approach?

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August 28, 2006

Happy. Happy. Happy. Talk. Talk. Talk. Happy Talk. From local notables in our industry:

• The market is still healthy.
• Prices are holding up.
• Most sellers are still getting 97 to 99% of asking price.
• The market is stabilizing.
• We're in for a "soft" landing

Where have these people been? The market IS healthy for buyers. There's just are not a whole lot of them. Prices are holding up to last years values. The "negotiated price" is running 97% of asking price. But, todays SOLD price is down 6% from the peak last year. Remember, the official statistics show close price as a percentage of the LAST asking price. We don't provide (in the MLS) how much sellers have had to come DOWN in price just to get a contract offer.

Grant it, sellers are probably over asking to begin with based on the astronomical increases in the past and the shocking assessor handy work for 1996 based on 1995 appreciation (average assessments increased a whopping 28%).

Is the current market normal? I don't think so. It is very abnormal. The pendulum has reached the other side of its swing. How long it stays there is the real question. Among the good news, interest rates are falling again. The sluggish housing market may become a drag on the overall economy and the great masters at the federal reserve just might fore go raising short term interest rates. Interestingly, the sluggishness is making Wall Street cheer. I may never understand what is good and what is bad. Because, sometimes bad is good.

Anyway, Happy Talk is more fun. Keeps me up-beat. Optimistic. I just wish I could get offers on my listings. Now that would make my clients happy. And, if they are happy, I am happy. Buyers in this market should be very happy. If I had more buyers, that would also make me very happy. I'd really be happy if I had more time to blog.

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Did you ever have one of those days that YOU JUST WANTED TO SCREAM! I'm having one. Watch out.

Real estate is a service business. We depend on a lot of people to do their jobs right with a focus on client satisfaction. In fact, we in the real estate business DEPEND on other professionals because of the MLS coop philosophy: you sell one of our listing and we will share the commission with you.

The real estate profession lacks professionalism. Why is this? Too many people in this business that don't understand "professionalism?" What is professionalism anyway? Subject of another article. People in our business just don't get it.

Why the used car salesmen? Because we act like one. Fast talking. High pressure. Looking for the quick buck. If I don't sell to you I'll sell to someone else attitude. No follow up. Slick. Clueless. Short term motivated. Get a good deal but you have to buy these other services and products I offer. On and on and on...

So, what has set me off? AGENTS THAT DO NOT RETURN MY PHONE CALLS REQUESTING FEEDBACK ON MY LISTINGS THAT THEY SHOWED TO A CLIENT!!!!! It's a professional courtesy dammit! (8 out of 10 don't return calls).

NOTICE: I want to be your broker so I can fire you!

Alternative business models will succeed because we cannot find our way. Not open, too protective, reluctant to set the bar higher for licenses resulting in marginal people in our business, slow to innovate and prefer to fight legal battles instead of listening to the consumer. Go figure.

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August 24, 2006

I heard through the grapevine that one of my colleagues has "coffee in the morning with Merv." Morning coffee and the Guide. Nothin' better in my mind. I do most of my blogging between 4:00 and 7:00 am (I know, get a life!). Lollie Shankle is one of my favorites. In fact, she is the only local agent (that I know of) that attracted over 50 of us to a recent Broker's open. Might be a record turnout. Lollie, how do you do it? You can teach me a lot!

Lollie is with Prudential Carruthers in Leesburg, Virginia. Personable, astute, dedicated and simply marvelous! You won't find a better agent (hmmmm...we might be able to compete).

PS: Keep my page views going up! Oh, by the way...want to be a guest author? I would love to have you writing for my Blog!

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August 23, 2006

I have talked about It, RCG has articles about It, Jim Duncan has blogged about It and Inman has articles warning about It. What is It? The real estate AGENT bubble.

Inman has another article posted this morning in their "members only" area:

Too many real estate newbies

Perspective: Excessive supply of real estate salespeople is bad news
Monday, August 21, 2006
By Marcie Geffner

Jane Austin. Algebra II. Hypnotherapy. Jazz. Those are some of the subjects of the newest books in the "for Dummies" series published by John Wiley & Sons.

There's also another new title: Success as a Real Estate Agent for Dummies, being released this summer.

...

The economics of real estate brokerage create incentives for brokers to recruit, recruit and recruit, regardless of the reality that most of the recruits won't survive their first year much less succeed in real estate as a long-term career.

Many issues emerge: lack of proper training, not understanding business in general (this is a business and business experience is a plus if not mandatory to become successful), intense competition may lead to unethical behavior, buyers and sellers suffer because of agent incompetence, unknowing new agents lose their life savings because they had no idea it takes such a long time and expense to build a sustainable business.

This is one of the many problems this industry faces today. It is entirely too easy to get a license and be able to say "now I R 1" and be turned loose on the consumer. I for one advocate significant tightening of the criteria to become licensed. Two weeks in school (teaches how to pass the exams), $269 and then passing the exam (locally, only about 25% pass the first time) is simply not enough.

No wonder so many lead generation companies have sprung up. If you can't generate business organically (fancy word for yourself), pay someone else to do it for you. Ardell at RCG has a good article about "good enough" (how does she keep up her pace of publishing opinion and good advice?).

Anyway, the industry is going to shake out. There is a lot of noise about change everywhere. The MLS, commissions, entry criteria, DOJ, limited service, consumer choice and more. When the noise gets loud enough, something is going to happen to quiet it (hopefully good). If you don't like the current system, make noise!

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August 16, 2006

...every Blogger hopes for. Hitting the nerve that causes readers to become active participants. I guess this is what Web 2.0 (what's this again?) is supposed to be. Lay out the facts and honest opinions and help information hungry people find it and then interact with it. Transparency.

I've created quite a frenzy with the Insiders article. The readers of the housing bubble picked it up this morning and my new visitor count is going off the charts (so far my servers are responding). Like throwing a piece of red meat into the lions den. I guess it was stuff that supported their opinions (that I neither agree or disagree with).

This is not a Bubble Blog. I don't forecast doom and gloom. I do comment on what I see happening around me and what the data we extract is telling me and our clients. Remember, a real estate market slowdown is not the end of the world. There are much more important things to worry about on the global stage.

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More anecdotal evidence from within. Whenever I engage in a conversation with another local agent (especially those with several years in the business), I always get around to the question: What's going on with this market? I had one of these with an agent we are working with on the other side of one of our transactions. Her answer: "I don't know. I've been in this business for 36 years and experienced a lot of ups and downs. I have never seen it like this."

Responses from other agents include:

• I'm not taking any more listings.
• I can't afford to keep advertising property when the seller is so rigid on price.
• I'm lucky I have buyers.
• I've shown one buyer client over 100 homes and they still can't decide. (I'd be confused too if I looked at even 25% of that number)
• Create two letters to listing clients: The first one to send is "you have to lower your price to sell. If they don't, send the second one asking to terminate the listing."
• Only take a listing if the seller is willing to set their price at least 5% below anything that has recently sold around them. That's what it's going to take to attract buyers in this market.
• My buyer can wait to watch the market come down even more. (I hear this on every low contract offer we get).
• I have sellers that can't take a contract offer because they are upside down on their mortgage.

The Real Estate Bubble is turning out to be a lead balloon. I just hope it doesn't fall on my head. The next 12 to 24 months are going to be interesting indeed as we work through this cycle.

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Thanks to Inman News for tipping us off on this new search service created by Brock Real Estate in Los Angeles. Called Shack Yack, this might be the coolest real estate search services I have seen yet. Developed with Web 2.0 (what's this?) in mind, consumers can not only do map searches by various criteria, the site also lets consumers leave comments on properties they find. Truly data rich, user friendly and "participatory."

If you are looking for SoCal property, check this out. Even if you're not, it's fun to play with. Thanks Inman!

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August 12, 2006

A couple of good and related articles on home selling:

Ardell at the Rain City Guide: Why isn't my house SOLD yet?

If you have a lot of showings and no offers, then it is something AT the property that is causing it not to sell and you are a “bounce point”. If you don’t have enough showings it is something in the mls that is causing it not to sell, unless you HAD a lot of showings at first and dwindled down to not enough.

and...

The Washington Post: Struggling to Get the Price Just Right

By Dan Rafter
Special to The Washington Post
Saturday, August 12, 2006; Page F01

In a perfect world, Dianne McDermott and her clients would never disagree.

Unfortunately, McDermott, a real estate agent with Re/Max Advantage Realty in Howard County, doesn't work in that perfect world. In real life, she and her clients occasionally struggle to compromise on some of the most important decisions involved in selling homes.

One of the most common causes for disagreement? Setting a sale price.

This shouldn't be surprising. Many home sellers remember last year, when the local real estate market was red hot. Houses sold in days, attracting multiple offers. Sellers could pick and choose the best.

That's no longer the case. The Washington area market, like much of the rest of the country, has shifted. Those multiple offers? They're long gone. The days of selling a home for higher than list price? Gone, too.

Read the rest of the article here.

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I haven't published one of these for a few weeks but, this one caught my eye. Silver Oak happens to be one of my favorites and this one looks like a great buy.

WINE OF THE WEEK

We have just received a limited amount of Silver Oak 2002 Alexander Valley Cabernet. We are offering this great wine to our email customers only for 49.99/Bottle. No further discounts are available. We believe this is one of the lowest prices you will find for this wine on the East coast.

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2002 Silver Oak Cabernet Sauvignon Alexander Valley
Silver Oak has resolved to create a wine with a style all its own-not another hard, tannic red wine requiring years of aging to enjoy, but a wine of fully developed flavors and a velvety soft texture on the day it is released for sale. At every opportunity Silver Oak reaffirms their commitment to excellence. The elegance and finesse of Silver Oak has attracted as zealous a circle of customers as any winery can boast, however, they believe that they have yet to make their best bottle of wine. The pursuit continues with 2002 Alexander Valley. . . "The 2002 Cabernet Sauvignon Alexander Valley, recalls some of the winery's top efforts from the mid-nineties. A deep ruby/purple color is accompanied by a sweet nose of chocolate, toasty oak, dried herbs, and a sweet, textured, medium to full-bodied palate. This nicely layered, rich, plump Cabernet will be at its finest between 2004-2012."
Supplies are limited. Call or send us an email asap and we will put some aside. This offer is only good through 8/19/2006.
Have a great weekend. Mike, Peter, Claire

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August 11, 2006

Fairfax Buyer Intensity
Red Bars: Sellers Market | Green Bars: Buyers Market Gray Bars: Balanced Market
[click for more detail]

New report format is here! This is the first of a monthly series of commentary on the housing market in Fairfax County. See Fairfax County Market News and Daily Market Watch graphs.

INVENTORY:
It appears the inventory of homes for sale peaked in June at nearly 9,200 homes on the market. I say peaked because July shows a slight decline to a little less than 9,100 and our Daily Market Watch is showing a further decline to 8,300 homes for sale. Like Loudoun, it is NOT because of more homes being sold because both new contracts and settlements are also declining somewhat. It appears the small reversal in inventory is mainly due to sellers not re-listing when they withdraw or when listing contracts expire. Fairfax County sellers did get a little seasonal bounce through the spring and early summer but sold inventory levels are in the average range below year 2000 levels and down 45% from the 2005 market peak.

HOME PRICE APPRECIATION:
Surprisingly, average home price appreciation is maintaining after a decline early in the year. Fairfax County might see a "softer landing" than the surrounding jurisdictions.

DAYS ON MARKET:
Average time it takes to sell reached a high of 62 days in February, declining to 50 days in June and then a reversal to 59 days in July. This also appears to be headed even higher based on the rolling 30 day accumulation we provide on the Front Page Daily Market Watch (61 days as of this writing).

SOLD TO LIST PRICE RATIO:
This ratio continues to decline and is now 95%. This is the "negotiated" ratio, SOLD PRICE as a percent of the LAST LIST PRICE. Buyers are getting a 5% reduction during negotiations.

NEW CONSTRUCTION (chart not yet available):
As of the end of July, the MLS is reporting 667 homes on the market and we measure only 46 SOLD during the month. A dismal 7%. We see builder incentives being offered everywhere. Reminder: new construction data in the MLS is very unreliable. Many more may have sold but we won't know the real number for several months.

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Loudoun Buyer Intensity
Red Bars: Sellers Market | Green Bars: Buyers Market Gray Bars: Balanced Market
[click for more detail]

Another new look for our commentary on the real estate market. We will use this format consistently on a monthly basis and will always be contained in Market News. Since we added the Daily Market Watch and corresponding graphs, we will no longer provide what we used to call Market Trends at a glance. They were a lot of work to create and are redundant at this point.

INVENTORY:
Are we turning a corner? It appears the inventory of homes for sale is turning downward to a bit above 4,700 from a high last month of nearly 5,000. It is NOT because of more homes being sold because both new contracts and settlements are also declining. It appears the small reversal in inventory is mainly due to sellers not re-listing when they withdraw or when listing contracts expire. For a buyer's market, we see few buyers taking advantage of the good deals that are available.

HOME PRICE APPRECIATION:
Average appreciation declined by 4.3% from last years average. At a little over half way through the year, full year appreciation could easily see a 10% total reduction.

DAYS ON MARKET:
Average time it takes to sell reached a high of 84 days. This appears to be headed even higher based on the rolling 30 day accumulation we provide on the Front Page Daily Market Watch (88 days as of this writing).

SOLD TO LIST PRICE RATIO:
This ratio continues to decline and is approaching 94%. This is the "negotiated" ratio, SOLD PRICE as a percent of the LAST LIST PRICE. Successful sellers are drastically lowering their price and buyers are getting another 6% during negotiations.

NEW CONSTRUCTION:
Although new construction data is the most unreliable for reasons stated many times, the data we do have and what we read in the news indicates builders are struggling to write new contracts on "to be built" and "spec" homes. As of the end of July, the MLS is reporting 778 homes on the market and we measure only 48 SOLD during the month. A dismal 6%. Builder incentives continue to be hot item.

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August 7, 2006

Jim Duncan recently alluded to "discretionary sellers" in an article on his Real Central VA blog. Got me to thinking: who are these sellers that make up 1300% of the local buyer population in this season of real estate activity? The answer may be elusive but I am going to give it a shot. Here are my categories:

• I gotta sell
• I can't afford it any more
• I saw others making a killing...
• I'd like to sell (like in discretionary)

Lets look at these in more detail:

• I Gotta Sell: These are people that have a life changing event. New job somewhere else. Need to be close to a needy friend or relative for priority reasons (care of the elderly or sickness), need to change environments for health reasons and a myriad of other absolutes. Also in this category are those that bought their bigger home before selling their current home. Signed that builder new construction contract a year ago and wham! The market tanked and they can't sell. Do you give up 10's of thousands of dollars on deposits or do a fire sale on your current home. Many are taking the fire sale approach after sitting many months with no action. Or, how about those that took bridge loans to buy up? Same story. I'll lump builders into this category based on the incentives I see them offering to move their inventory.



• I can't afford it any more: These are people that sold in the good times and bought BIGGER with low interest rate adjustable mortgages. Or, those that refinanced in the low interest rate times taking equity to fund other stuff (college, trips, home theaters or simply cash to spend or invest other places). Those that bought on "creative financing" more home than they could realistic afford otherwise or simply bought a home on interest only with an adjustment due now or in the near future that they might not be able to afford. These are very closely related to the I GOTTA SELL people but for reasons of poor personal financial management. I suspect there are many.



• I saw others making a killing and I wanted part of the action: Professional investors bought and sold like clockwork. The amateurs followed suit. Guess what? Most of the professionals got out of the rush before the market cooled leaving the amateurs holding the bag. Can't sell, can't rent...lower your price to get out and take losses. It's happening my friends. Estimates are 25 to 30% of the real estate transactions in the last three years were by investors...of all shapes and sizes.



• I'd like to sell (Discretionary Sellers): These are people that don't HAVE TO SELL. Move ups. Move outs. Sell at the top to take equity. Downsizers. These are people that would like to do something different but don't need to. Neighborhoods are nice. Good schools. Good jobs. Non-threatening mortgages. Maybe just want to test the market. Sell ok. Don't sell ok. Not concerned with price competition. If we can sell at my price, ok. If not, that's ok too.

Then there are the corporate layoffs like the one AOL just announced. AOL corporate is in our backyard. No telling how many hundreds are going to be looking for new jobs or, if they can't find one locally will migrate to an area where they do find employment. It's coming...we just can't calculate the impact. If these people start selling...inventories are going higher in the next few months.

And then, Greenvest wants to develop south of the Dulles Airport in excess of 25,000 new homes. Not withstanding the traffic 25,000 new homes will produce with no transportation infrastructure to accommodate that new growth (another topic). Who the %*&#$ is going to buy these? I see it as just adding to the market pressures at this point.

Data does not lie. In Loudoun at this point in time we are writing about 340 contracts a month against an inventory of about 4,500 homes. That gives a seller a 1 in 13 chance (7.7%) of getting a contract. In Fairfax, it is 1 in 7 or a 14% chance of getting a contract.

So what does all this mean? Seems like the perfect real estate storm to me (I used that phrase before). Damn! If you GOTTA SELL, you better be able to compete on condition and price. If you don't have to sell, my advice is just sit on the sidelines for awhile.

Real estate agents don't make the market. Real estate agents don't set market prices. Supply and demand makes markets. We just try very hard to help our clients meet their "realistic" objectives. If you don't need to sell, don't. And, don't try to hire Pam and I. Because we will ask tough questions. We will be brutally honest. If you have unrealistic expectations, we won't take your listing. we can't afford it. We will become unhappy with one another.

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LIST and Sold prices as well as the RATIO are included in the Daily Market Watch. The RATIO is the "negotiated ratio," not the listing price drop to gain a contract as described in our preceding discussion of "Understanding MLS Market Data."

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August 4, 2006

Question: When does 2 + 2 = 3?
Answer: When calculations are done in the MLS.

This article will attempt to dissect the data we present to gain a better understanding of the statistics reported by the MLS we display on the Front Page (Daily Market Watch) and use for all our charts.

Here are some issues that need explanation:

• NEW LISTINGS DOMP:
  If new listings are reported as new in the last 30 days, why is DOMP greater than 30? One would think that it should be 30 or less.
  
  ANSWER:
  After a listing has expired or is withdrawn and then made active again, the list date is reset to the new date AND the MLS saves the total time on the market (DOMP). Hence, the greater the average DOMP is above 30, the greater number of listings that are not really new.



• NEW CONTRACTS DOMP VS. SOLD DOMP:
  If the vast majority of NEW CONTRACTS eventually go to close (SOLD), then why is DOMP for NEW CONTRACTS so much greater than DOMP for SOLD? For example, on August 4th there were 321 NEW CONTRACTS written in the last 30 days with an average DOMP of 100 days. Accumulating SOLD transaction over the same time period shows a DOMP average of 83 days.
  
  ANSWER:
  I have trouble figuring this one out. I thought maybe "comparison only" postings of new construction (LIST DATE equals CONTRACT DATE equals SOLD date) might be the influence but, using August 4th SOLD data (again, accumulating the last 30 days), new construction DOMP only lowered the total by 4 days. If my assumption that the vast majority of contracts go to close is wrong, then this might explain the difference. I can't get to the data easily to verify this one way or the other. Regardless, looking at DOMP for NEW CONTRACTS is a revealing statistic.



• INVENTORY:
  If the change in INVENTORY for a specific period of time is defined as
  Beginning INVENTORY + NEW LISTINGS - NEW CONTRACTS - EXPIRED - WITHDRAWALS, then why isn't inventory being reduced at a more rapid rate?
  
  ANSWER:
  Because some percentage of EXPIREDS and WITHDRAWALS come back on the market as NEW LISTINGS. We would get a much clearer picture of market activity if the MLS retained the original LIST DATE regardless of the number of times a listing EXPIRES or is WITHDRAWN and re-listed. We could probably back into the numbers but it would take some record processing gymnastics. (of note: a listing must be off the market for 180 days before DOMP is reset to zero when re-listed.)



• SALE PRICE TO LIST PRICE RATIO:
  If sellers are having to reduce their price substantially to receive and ratify a contract, why is the published ratio still hovering in the mid to high 90% range?
  
  ANSWER:
  The MLS published ratio (in percent) is calculated from the most recent LIST PRICE (the LIST PRICE when the contract was ratified) as opposed to the ORIGINAL LIST PRICE. The focus on what is reported is on "negotiated price reduction." Wheras I focus on market dynamics.
  
  From a market dynamics standpoint, if the listing was withdrawn and re-listed with a new price, the ORIGINAL LIST PRICE becomes the re-listed LIST PRICE. In my research I have discovered properties being withdrawn and re-listed on every price change. Is this gaming the system? Maybe so; an individual agent's SOLD to PRICE ratio of the sale starts looking pretty good. It becomes much more difficult to get a good read on how prices are dropping from the original ORIGINAL LIST PRICE (sorry for the o O). I tend to believe it is much greater than what we get in the public reports based on our own anecdotal observations.

None of the above is right or wrong (except for the gaming part). It is what it is and probably for valid reasons. It is just not the way I view the market in most cases. Also, the MLS information is only as good as the data we inter (doh!) enter.

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August 1, 2006

When you find this phrase in your search terms: syphoning gas. Go figure. When my father was a kid and did this sort of thing from time to time, he didn't have the Internet to tell him how it was done. Neither did I.

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As a real estate agent suffering through this extreme buyer's market, the hardest thing to do is convince my listing clients to reset price expectations. We provide articles on property presentation, comment on the meaning of market value and even provide great charts to put the current market into perspective. Sometimes all the data and examples in the world does not change the mindset of "gotta have my price!" There is nothing wrong with this mindset. It just won't get you where you want to be.

As a seller, if you are not willing to make your home "competition ready" and "lead" the market with "value pricing," you will become extremely frustrated that your home does not sell, you will get irritated with your agent and ultimately find someone else to take the listing. Consider these four scenarios of sellers and their agents responding to "current market conditions":

Read on...

• Seller A: Beautiful home. Nicely decorated. Installed new carpet. DIY interior paint. Vacant soon after the listing went live (purchased and moved to new home). It was listed the end of 2005 in the spring/summer 2005 market price range regardless of the data presented that the market was quickly changing. Over the course of 6 months, the seller's agreed to lower their price in small steps totalling about 7%. Frustration set in and Agent #1 was dismissed, Agent #2 was hired and the home re-listed for 4% lower than the last price. The property has not sold. Agent #1 mistake: taking the listing with unrealistic expectations by the sellers. No amount of logic or evidence seemed to make a difference to these nice people.



• Seller B: Nice home on 1+ acres in desirable community. Not a lot of upgrades surrounded by homes that have it all. Equity emotion gets in the way of listing at a "value price" based on comps and amenities. Starting price: $800,000, at least $50,000 too high. After 4 1/2 months with lots of showings but no offers, sellers lower the price 4%. Still no offers and consistent feedback that the home does not have the "bells and whistles" that others do in this price range. Thirty days later, they are convinced to make a dramatic move: "you have to make it a bargain to sell it!" The price was dropped another 6% and they received a contract offer the very next day. The good news: they finally listened. It is always emotionally hard to have to tell sellers that they can't get the equity that they once thought they had.



• Seller C: Absolutely gorgeous home with nice upgrades on a cul-de-sac in a new neighborhood. Comps show price range to be in the $635,000 to $655,000 range. Sellers authorize $669,000 leaving room to negotiate. The agent takes them on a competition tour to get first hand knowledge of "for sale" in their neighborhood. They also keep up to date on market dynamics and are savvy about "market value." Three weeks into the listing they lower their price 6%. Moderate level of showings, good feedback but lots of competition on the market. Five weeks later they lower the price again to another 5%. Traffic picks up significantly but still no offers. Another month passes, prices are still dropping and the sellers lowered the price another $10,000. Traffic increases and they receive an offer. The Cs understood the market dynamics and chose to take the lead instead of following the market down.



• Seller D: This one is the hardest of all. Mr. and Mrs. D wrote a contract on a dream property in the country contingent on a home sale. Their current home is a located inside the beltway and across the street from convenient public transportation making it ideal for commuters. Nice home that shows well. The Ds want to list higher than comps in the subdivision with advance plans for the equity. The problem: high inventory and an asking price 7% higher than what the average home sold for. They get a fair amount of traffic with good feedback. Within three weeks they get an offer from an unrepresented buyer 2.5% lower than the asking price. The Ds reject the offer. After four months of substantial marketing, email campaigns and the Ds holding weekend opens, traffic wanes. They mutually agree with their agent to cancel the listing to allow them to try another agent or to attempt to sell it on their own. Great clients who enthusiastically supported the agent's effort but, to the agents disappointment he/she could not help the clients realize their dream in the current market.

So what? In the housing market of 2003 to mid-2005 buyers had to be aggressive with "higher offers" and "better terms." In this market, sellers have to be aggressive with "show quality," "amenities" AND "price." Sellers must listen to the advice of their trusted agents. If you don't trust your agent's advice, get one you can trust. Listen to what Mr. Market is screaming at us! Buyers are writing contracts on bargains: the best home at the best price. Sellers had their way with buyers during the housing rush. The tables have turned. Take a leadership position in the market to avoid frustration and disappointment...and substantially increase chances of a contract offer.

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Our August Realty Times newsletter is availble here. I don't normally announce these but this month there is an excellent article on the dilemma sellers face with buyer contingent contracts (specifically the home sale contingency). The article is writtten by M. Anthony Carr.

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The readers of the Guide viewed 52,505 pages in July, a significant milestone for us. See all the web stats here.

The Guide will continue to deliver what consumers want...up to date Northern Virginia real estate market data and trends. More views coming soon.

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