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Inside "Editorial"

There are 17 articles in this category and on this page. Up to the most recent 20 are listed here.

Zillow: FirZt ImpreZZionZ Governor Kaine Comes to Loudoun County Political Shift In Loudoun County? Give Me A Real Estate "Bubble Break" A Real Estate "Me Too" Business Idea Consequences of Bubbling Agent Incentives: Good or Bad?

Bubble? Advantage Government Where is Loudoun Going? Hot Real Estate Commission Debate The Assessor Strikes Virginia's Nutty Gas Tax Proposal All About Property Market Values The Dark Side of Property Appreciation Virginia Republicans Say Tax Me What's All the BuZZ I Hear? Kaine's Growth/Land Use Proposals Die

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

April 04, 2006

Bubble? Advantage Government

Our Loudoun County Board of Supervisors are zeroing in on the 2006 tax rate. It looks like it will be in the neighborhood of $0.90 per $100 of assessed value. The 2005 rate was $1.04. Lets do the numbers:

Average assessed values went up 28%.
$0.90 per $100 of assessed value is a rate reduction of 13.5% from $1.04.
Net: Average property tax will increase 14.5% (28%-13.5%).

So, if your property tax bill was $5,000 last year, then (on average) your tax bill will increase $725 to $5,725. For some a lot more because I have seen assessed values up as high as 50%. For few, if any, a little less than average.

The assessor looked backward into a hot market in 2005 when sales prices were going out of sight. The assessor does not visit homes (unless you appeal your assessment) so every home in a given area sort of looks the same. The market has melted in the last several months and many sellers are having to price homes less than assessed value. I know, because we have a few of those listings. So what about next year? Will assessments decrease? Never. Will government budgets decrease? Never. Now, there is a permanent bubble in the cost of government.

Have our assessments been wrong for several years? We used to be able to estimate assessments at 70 to 80% of market value. Has the new assessor determined that the past was in error? Where are the checks and balances? Who checks the assessor's math, past and present?

Market dynamics are pushing many residents out of Loudoun and other jurisdictions in Northern Virginia. Some of us just can't afford to live here any more. Many residents are outraged! Maybe we all should be. Have the political pendulum swings the last two or three elections caused mismanagement? Probably. Will the silent majority wake up and get involved in finding common sense, center focused people to run for office and elect them? I hope so. This year is the wake up call.

PS: I can't wait to see home value estimates from Zillow and ABC Values™ when they get hold of these assessed values!

Published by Merv on April 4, 2006 07:15 AM | Give us your comments here.
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March 22, 2006

Where is Loudoun Going?

The Washington Post reports this morning that the Loudoun County Planning Commission voted 6 to 3 to relax the rules limiting growth in Western Loudoun. As we all know, the courts threw out the comprehensive plan devised by the previous board and the western two thirds of the county reverted back to roughly one house for every three acres. The Commission voted to recommend that anyone starting a home-building project this spring could do so under the previous relaxed rules. The full Board of Supervisors will have the final say.

Will there be a rush to get projects approved? Probably. Will approvals ruin Western Loudoun County in the short term? Probably not. I always thought it is not how many get built but, how you arrange it and what it looks like with an eye toward the common good. Growth is inevitable because of the regional economic engine and supply and demand. The real trick is to balance growth with quality of life. I don't envy the people we put in charge to make these decisions and judgements.

Here's what I see as contributing factors to our dilemma from a practical standpoint:

1. Developers have flooded the market with $1M mini mansions on 2-5 acre parcels the last few years.
2. The market slowdown has caused developers to give huge incentives to move these homes.
3. It remains to be seen if developers can make money in the current market.
4. The day of the quick buck speculating on real estate may be gone for quite some time
5. Traffic in Western Loudoun is becoming unbearable as families are moving further west to access affordable housing in Berryville, Winchester and Charles Town (WV) and commuting to work in Northern Virginia and Washington DC.
6. It doesn't appear anyone is doing anything of substance about affordable housing in Loudoun County.
7. Our politicians cannot agree on transportation solutions badly needed everywhere in Northern Virginia or how to pay for them.
8. Our Loudoun government announced a need to increase the car tax to cover shortfalls from Richmond.
9. The average 2006 property assessment went up an average 28%.
10. I am always surprised that anyone can afford to live here (including myself).

We are getting frustrated with the politics surrounding these issues and a total lack of compromise and common sense. Politics and special interest groups on all sides seem to be directing our government's inability to find reasonable solutions. Lets hope the next set of elected officials (probably new) will listen to the needs of the majority of us living, working and enjoying life here. We know it will cost us. Inaction will cost us more.

Published by Merv on March 22, 2006 07:04 AM | Give us your comments here.
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March 13, 2006

Hot Real Estate Commission Debate

Evidently Brad Inman of Inman News touched off a hot debate about real estate commissions last week in one of his blog entries. Quite a variety of comments and lots of them (over 200). Brad has another regular news article discussing his remarks and the comments. Very interesting to see the various reactions to what seems to be a very touchy subject.

Here are my top 20 21 responses to the commission debate.

1. Commissions are not sacred.
2. Brokers and agents do not have an inherent right to anything including commissions.
3. The consumer has a right to negotiate.
4. Consumers have a right to understand what they are paying for.
5. Innovators have a right to interject themselves into our business.
6. FSBO's have a right not to pay anyone.
7. Consumers are tired of the old models.
8. The old models are dying.
9. New models will provide enormous competition.
10. Change is good for the consumer.
11. Consumers generally don't want cheap, they want to understand the value delivered for the fee paid.
12. All agents have a right to present themselves to consumers.
13. The agents with the highest quality, professionalism and VALUE driven fee structure will be chosen by consumers.
14. Transparency in fee structure will win.
15. This is still a relationship business.
16. Relationships are built on trust.
17. Trust is attained by being trustworthy.
18. Trustworthy (worthy of trust) is attained by being honest, looking after your clients best interest and not your own, and delivering on commitments.
19. Prospering in this business is dependent on doing the right things and doing things right.
20. Consumers will do business with people that deliver value and people they trust.
21. We should not feel threatened...we need to innovate.

Comments are welcomed and valued!

Published by Merv on March 13, 2006 07:50 PM | Give us your comments here.
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February 26, 2006

The Assessor Strikes

I haven't talked to anyone that isn't in assessment shock. Loudoun County mailed tax assessments to property owners last week and it seems there may be a storm gathering. According to the County Assessor half the county's residential property owners assessments rose more than 28%! That is after double digit increases the last three years. Even our Board of Supervisors are experiencing "shock and awe." The Leesburg Today reported these figures for our nine supervisors:

Supervisor	Jan 2005	Jan 2006	% Increase
Jim Burton (Blue Ridge)	$644,000	$991,900	54%
Jim Clem (Leesburg)	$420,000	$530,500	26%
Eugene Delgaudio (Sterling)	$236,100	$346,700	47%
Sally Kurtz (Catoctin)	$466,380	$619,600	33%
Stephen Snow (Dulles)	$540,700	$683,800	26%
Mick Stanton (Sugarland Run)	$381,400	$510,600	34%
Bruce Tulloch (Potomac)	$541,800	$689,000	27%
Lori Waters (Broad Run)	$483,900	$642,300	33%
Scott York (At Large)	$418,200	$560,400	34%

To keep the average tax bill from increasing, the board would have to lower the tax rate from $1.04 per $100 to $0.81, according to the news article. The County Administrator has proposed $0.97 with many new school and transportation projects.

There are reports of heavy phone traffic to the assessor's office. Surprised? Not me. Appeals may reach a record this year. It will be interesting to see if any of our board members appeal their assessments.

Published by Merv on February 26, 2006 05:39 AM | Give us your comments here.
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February 21, 2006

Virginia's Nutty Gas Tax Proposal

A proposal attached to one of the transportation funding bills being considered is a higher tax on the wholesale price of fuel (gasoline). Now get this: the proposal will allow consumers (who will ultimately pay for the increase) to save their receipts and twice a year redeem these at a DMV office for a refund of the taxes. Estimates are that only half of us will go to the trouble of doing this. Is this the nuttiest proposal you have ever heard?

How in the &%$#* will anyone be able to administer this? Let alone the DMV that has a hard time serving their current customers. How do you prevent me from printing look alike receipts? What kind of procedures will be mandated that the distributors and retailers implement to administer this? Who pays for the administration (a stupid question)?

Whoever came up with this idea needs immediate psychological attention. And, it might include the entire senate finance committee who recently approved it.

Weird politics to the extreme! Give me a stupid tax break.

PS: I opened a new category called Outrage

Published by Merv on February 21, 2006 06:25 PM | Give us your comments here.
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All About Property Market Values

I am going to make some BOLD statements:

• TAX ASSESSMENTS HAVE NOTHING TO DO WITH THE MARKET VALUE OF A HOME
• APPRAISALS HAVE NOTHING TO DO WITH THE MARKET VALUE OF A HOME
• CMA'S HAVE NOTHING TO DO WITH THE MARKET VALUE OF A HOME
• ZILLOW ZESTIMATES HAVE NOTHING TO DO WITH THE MARKET VALUE OF A HOME
• YOUR NEIGHBORS OPINION HAS NOTHING DO TO DO WITH THE MARKET VALUE OF A HOME
• WHAT YOUR NEIGHBORS SOLD FOR 6 MONTHS AGO HAS NOTHING TO DO WITH THE MARKET VALUE OF A HOME
• ALL OF THE ABOVE HAVE SOMETHING TO DO WITH THE MARKET VALUE OF A HOME

SUPPLY AND DEMAND HAS EVERYTHING TO DO WITH THE MARKET VALUE OF A HOME

Property and homes are commodities, pure and simple. High demand and low supply drives prices higher and the asset becomes more liquid (easier to sell). Low demand and high supply drive prices lower and assets become less liquid (harder to sell). Market value is ultimately determined by what a buyer is willing to pay and a seller willing to take. I hear the following statements from consumers: Well, I can't sell for less than my tax assessment! My home is worth at least my appraised value! My neighbor said... My Mom told me... The one down the street sold for...and my home is better... Zillow says...

Let's take a look at my BOLD statements one at a time...

• Assessments: The tax assessor compiles general data about about home sales in specific areas in a jurisdiction looking back the last year. Yes, the last year. County records are incomplete, contain very little detail and is fraught with error. The assessor has no way to evaluate the quality of a property; condition, how well it is maintained, amenities, or any other qualitative measures. When was the last time an assessor visited your home to determine these things? Never! Markets change and can do so rather quickly. Your assessment has everything to do with generating revenue for the jurisdiction and always lags current market conditions. The average Loudoun County home sales price went up 23% last year. The average assessed value went up a bit more than that. Some individuals more, some less. There was strong market demand the first half of the year. Prices rose rapidly. There has been extremely week demand for the latter part of the year. Demand drives market value. The assessor doesn't have it. If anything, if you believe your assessment is too high, appeal it!



• Appraisals: Appraisers have a little better handle on market value. They visit the property, take measurements, take pictures, note features and amenities, have opinions on quality and condition and are out in the market and have a pretty good idea of what's happening. They see lots of homes. They approach residential value from two perspectives, current cost to build (cost models that take into account lot, size of home and amenities) and comparable properties that have sold (usually in the last six months or so). The are also looking backward. Appraisers have algorithms and formulas for adjusting value based on comparisons of location, lot size, square footage, age, condition and amenities. Banks base their loans to buyers on an appraisal. But again, they are looking backward. A market value appraisal performed for a seller 3 to 6 months ago does not reflect current demand. So, we need to be careful on how we use it, if at all.



• Comparable Market Analysis (CMA): This is the method used by most real estate agents. It is not only a comparison of similar properties that have sold (backwards looking in time), but also a comparison of similar properties currently on the market. We also look at location, condition, size, quality and amenities as well as time on market (an indicator of market condition). Knowledgeable, experienced agents will not provide a specific market value. Instead, they will provide an approximate range of potential value. We will also take into account buying patterns of consumers. For example, wood floors, upgraded cabinets and appliances, granite or stone counter tops, finished basements and home theaters are in strong demand. It is expected in certain price ranges. And, in a buyers market homes that have these features will be the first to sell everything else being equal including price. So, if a home does not have these, a much lower price is what will attract a buyer. Adding these amenities will not necessarily allow you to set your price higher than comparable. Adding these may, in fact, simply allow you to compete with other properties on the market that do have them. Bottom line: CMA's do not set market value...they are just estimates.



• Zillow: New, exciting, cool, presents lots of information. Zillow bases their Zestimates on public records. See Assessments above. End of story for Zillow.



• Neighbors, Family, Friends ET Al: These lovely trusted people have opinions. If they are not real estate agents or appraisers that have not done the necessary homework, they don't have the data. Respect their opinion but don't listen.



• All of the above (except #5): All of these are helpful in estimating market value and we use all of them. We show potential clients how we use each of these to "triangulate" determining the most probable range of value. We use our market data studies, in general, to advise clients on what to expect. In a buyers market, sellers would be advised to set their price lower in the range. In a sellers market, higher in the range. Of course, competitiveness of the property plays a big factor as does the market price range sellers are in. Entry level properties have more potential buyers, high end properties have a significantly smaller pool of potential buyers. Of course, there are other personal factors to consider such as how fast a seller needs to sell for whatever reason.

Sellers are not only competing with other sellers, they are competing with new home builders. In our current market, new home builders are offering huge incentives to buyers to move their inventory. These include all the bells and whistles mentioned above and/or CASH.

The conclusion? Pricing and presentation are everything in attracting buyers. Estimating market value is as much an art as it is a science. Be prepared to be logical and realistic above all else. Our job is to apply the art to the science and help sellers get the highest value that the market will provide.

Here is some other interesting and relevant reading:

Balanced market creates new approach to home selling

Previous listing strategies may backfire in 2006
Monday, February 20, 2006

By Dian Hymer | Inman News

There are plenty of home buyers intent on buying while they can still lock in a relatively low mortgage rate. So, the 2006 housing market should present good opportunities for sellers who understand how to maximize profit in this new, more balanced, selling environment...

The first step is to start thinking like a buyer, not a seller. Although buyers are anxious to buy before rates rise further, they know that the appreciation rate is subsiding.

When the market is rising quickly, buyers are less concerned about overpaying because they're sure they'll recoup the excess payment within a few months because of robust appreciation. This was the psychology of last year's buyer. Now, buyers are much more concerned about value...
Read the whole story here.

And from my favorite Massachusetts agent, Mollie Wasserman, this and other insights from her blog about using information:

What the Internet Can and Cannot Do

It is often said that “the only thing new in the world is the history that you don't know". This saying kept going through my brain last week when a new home valuation web site named Zillow was launched to a lot of buzz. The press, as usual, carted out the same tired (and wrong) prediction that it has made for fifteen years: that home valuation sites like these will put Realtors® out of business or at least greatly reduce our fees.

Actually, over the last dozen years, the opposite has transpired: it doesn’t matter whether you are talking about law, medicine, accounting, mortgage or real estate; the more that the public uses the internet to gather information, the more they turn to professionals before they make major decisions. That’s because there is a huge difference between gathering information and interpreting it.

Over ten years ago, I penned a Real Estate Internet Warning that seems even more relevant today than it did then:

REAL ESTATE INTERNET WARNING© Despite advertising claims to the contrary, the internet is NOT an experienced Real Estate Professional. It cannot consult, counsel, advise, have knowledge of local laws and market conditions, make judgments, "own" the result, or most importantly, understand your individual goals and needs and care about you as a Client. Furthermore, while the internet can provide information, it cannot interpret it. To obtain an accurate assessment of any data you're receiving online, please contact us.

Mollie Wasserman

The rest of the article here.

Published by Merv on February 21, 2006 07:48 AM | Give us your comments here.
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February 18, 2006

The Dark Side of Property Appreciation

Just a few days ago we reported that the county assessor stated that property taxes would increase an average of 28% in Loudoun County. The County Executive just released his budget that calls for a reduction in the property tax rate from $1.04 to $0.97 per $1,000 of assessed value, a 6.7% decrease. We will get a lower tax rate and politicians will beat their chests saying "what good supervisors are we!" (Thank you mister assessor)

My tax assessment notice came today and here is how it breaks out:

• Land: up 41%
• Building: up 14%
• Total: up 20%

Should I feel good that 20% is better than 28%?

We all gloat in the fact that our property has appreciated immensely. Until, of course, we get our tax bill. Assessments look backwards at property value increases. We have had the good times. I can't wait until next year when my valuation and assessment goes back down because of the sluggishness of the real estate market predicted for 2006. I also predict that hell will freeze this year too. Wait 'till Zillow gets hold of this!

Published by Merv on February 18, 2006 04:12 PM | Give us your comments here.
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Virginia Republicans Say Tax Me

The Virginia Senate (controlled by Republicans) approved a plan Friday to raise $900 million a year for transportation through higher taxes on gasoline and other motor vehicle fees. These include higher sales tax on cars (ouch), higher fines for bad drivers (good!), registration fees based on weight (mmmm...ok) and higher taxes on home sales (outrage!). I admit somebody has to pay but, adding more taxes on home sales is nutty. Guess who will ultimately pay...home buyers. We don't need any more "fees" to pump up home prices any more than what the market dictates. Home prices are already absurdly high. This will hurt those that need affordable housing the most.

The Virginia state government got us into this mess by ignoring the problem for the last 10 years. Now it is a crisis and they turn to our wallets to pay for the fix. How about giving us money back that the Virginia Department of Transportation has wasted the last 10 years! Do we really think Virginia will spend $900 million effectively through a broken bureaucracy?

The REALTOR® associations are lobbying hard against the added tax on home sales. As they should.

The governor, senate and house are headed for a showdown in the weeks to come. I hope they find some common ground and include provisions in any legislation that holds VDOT accountable for wasting any more tax dollars.

Published by Merv on February 18, 2006 07:39 AM | Give us your comments here.
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February 10, 2006

What's All the BuZZ I Hear?

There is Zillow buzz all over the net. Many different reactions. I'd guess equal on both sides of the great/not-so-great evaluation. It just might become the best FSBO site in the universe. But, until they have total MLS access (and even they say it is not practical) I don't think they can reliably get the values right. And, if the FSBO's of the world rely on Zestimates, I think more business is headed our way.

REALTOR.com© may be the closest thing to a national MLS. I would love to help them with valuation models if they would change their mindset away from just "finding homes for sale." There are a Gazillion reasons why this would never happen.

Published by Merv on February 10, 2006 05:09 AM | Give us your comments here.
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Kaine's Growth/Land Use Proposals Die

One of several bills the governor is pushing would give local government the power to control growth based on adequate transportation. The House of delegates quickly killed it in committee.

His 4 year-$4 Billion revenue raising proposal for transportation was also rejected.

Where are the alternative proposals? I don't see any. An efficient government in action!

Published by Merv on February 10, 2006 04:22 AM | Give us your comments here.
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February 09, 2006

Zillow: FirZt ImpreZZionZ

Enough with the Z's already! All I can say is Zowee! (sorry) Can you believe the data gathering and data base building for this? And then the presentation. An amazing effort by Zillow. My first impressions were immensely positive. Here's a screenshot of the search results page:



Very cool!

Now, lets get under the hood.
First, it appears the data base is built from public records. Not bad, just not reliable. Public records are notoriously fraught with error and incomplete. Even in our area (Loudoun County, Virginia) where Zillow rated the data quality 5 stars, properties I searched only showed tax records from 2003. What happened to 2004 and 2005? The best data from tax records (in addition to the address) are the lot size, assessed value and sold price history when the deed transferred. Information about the features of a home (e.g. bedrooms, finished levels and square footage) are often missing. Although Zillow offers a mechanism to adjust, I found their categories lacking and when applied to one of our real listings, the valuation resulted in an absurdly high value.

Next, the current valuation is computed from history and appreciation trends. This might be good if you are looking at cookie cutter homes in a large subdivision with a lot of activity. Unreliable in areas with low turnover and uniqueness. A good example of this is in a neighborhood consisting of primarily custom homes. Zillow consistently valued older (built 5 to 10 years ago) higher than what they recently appraised and ultimately sold. Here's a snapshot of value trends:



Finally, tax records are not always updated in a timely manner. And, using tax records cannot provide any current information about the state of the market or the current condition of the property. An analysis of MLS records exposes current market conditions. An agents experience and first hand knowledge of a property can adjust the potential value that Zillow will not be able to do. Here's a snapshot of the detail:



Initial conclusions: Zillow gets an A+ for the data gathering effort and presentation. The Website is nicely designed and easy to navigate with simple explanations that are consumer friendly. I give it a D for accuracy on the small sample I took (my current listings). Zillow consistently overvalued (sometimes by more than 10%) our homes. I suspect that since Loudoun was such a hot market for the last 24 months with annual assessments rising 25 to 30% a year, Zillow paints an optimistic picture.

Consumer warning: Go ahead and use it. It is free and easy. Remember, beta means it is still being tested and tweaked. Zillow warns of that. Will I use it? Probably to get another data point. I use three methods to get to value range now. One of them is assessed value and appreciation rates. I tell our clients it is the roughest of all of our analysis, a rule of thumb. Zillow will not replace an experienced agent. I worry consumers will get enamored with the reports and zestimate and make some wrong decisions about listing price, especially when Zillow provides an optimistic value range.

I like it for its amazing build and presentation (I think these things are cool anyway). I'll continue my data analysis approach using MLS data. Priceless. And, not worry Zillow will replace me anytime soon (or ever).

Published by Merv on February 9, 2006 06:35 AM | Give us your comments here.
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February 03, 2006

Governor Kaine Comes to Loudoun County

The Loudoun County Chamber of Commerce is holding their annual meeting today at Lansdowne and the keynote speaker is newly elected Virginia Governor Tim Kaine. Two of his stated priorities are growth control and transportation. It will be interesting to hear his plans first hand and how they will impact Northern Virginia (Pam and I are attending). Growth and transportation are sticky issues that will require skillful navigation. Stepping on the growth brakes too hard and he might kill the goose laying the golden economic egg. Not doing enough about our transportation problems might have the same effect. Northern Virginia needs careful consideration, a reasoned approach to solving our problems and a centrist, long term set of solutions.

Real estate is a huge contributor to the local economy. I worry when politicians start tinkering with it. The transportation problem simply takes a well thought out plan and lots of money to fix. There is no panacea. The special interest groups will have an influence. The questions are: Where is the money coming from? Who has the greatest influence? (and there is always a link between these two!)

The ultimate question is: Who's special interest will I end up paying for?

Published by Merv on February 3, 2006 05:54 AM | Give us your comments here.
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February 01, 2006

Political Shift In Loudoun County?

We try to stay away from commenting on the politics of the county but recent election results are interesting enough to make a statement. First, our new governor Tim Kaine follows Mark Warner, both democrats. A prominent republican state delegate, Dick Black, lost to a democrat. And now, a special election held yesterday to replace republican state senator Bill Mims went to Mark Herring, also a democrat. The statement being made by county citizens is that we need to put the brakes on accelerating growth, fix our transportation problems and focus on improving education. Turn out was light as 14% of the eligible voters elected Herring with 68% of the votes.

Here is a simple look at the problems our elected officials are facing:

• Adequate transportation is not keeping up with the rapid growth in the county (same is true for all of Northern Virginia). It takes hours at times to get somewhere that should only be minutes.
• New schools are being built at break neck speed because of the population explosion. Loudoun has consistently ranked in the top three counties nationally for growth.
• Average tax assessments have risen by 20 to 25% per year for the past 3 years. County government spending is rising on the order of 17% per year.
• Loudoun County continues a trend of being one of the most affluent and, at the same time, unaffordable to those we need to provide police and fire services and teach our children. Many of these town and county employees live 25 to 50 miles away from the county center in more affordable areas of West Virginia (also experiencing rapid growth and rising home prices because of the demand).
• Growth controls in the western part of the county that is predominately rural has land owners up in arms because government is taking away their appreciation in land values. Their property value may be the only asset remaining in their families.

We are on a collision course with transportation grid lock (already developing) and not enough money to fund badly needed county services and to build new schools for our children. Who got us into this predicament? Our elected officials see sawing to the extremes by special interest groups. I don't know who has the better solutions; democrats or republicans. What this commentator does know is that we need to STOP the extreme views and demand that our elected officials at the state and local level find a central ground that puts us on a corrective course for the next several years. No matter what, I suspect we will be paying higher taxes to pay our way out of it. Government has us by the nose and it is beginning to hurt.

"Here's another fine mess you've gotten me into!" [Oliver Hardy]

Published by Merv on February 1, 2006 07:34 AM | Give us your comments here.
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January 20, 2006

Give Me A Real Estate "Bubble Break"

Here are some excerpts from an Inman News article from yesterday (1/19/2006):

S.F. Bay Area real estate sales dive

Median home price falls $16K from previous month

The median price paid for a Bay Area home was $609,000 last month. That was down 2.6 percent from November's record high of $625,000, and up 14.3 percent from $533,000 for December a year ago.

The annual price increase was the lowest since prices rose 13.1 percent to $474,000 in March 2004...

...A total of 9,347 new and resale houses and condos were sold in the region last month, down 3.8 percent from 9,717 for November and down 15.5 percent from 11,068 for December last year, DataQuick reported.

Let's put this into perspective:

• Interest rates are going up (but still at historical lows),
• Appreciation has been nothing short of fantastic the last few years,
• Real estate gains are outpacing wage gains,
• Affordability is at an all time low and
• Headlines such as these: "Prices Dive" and "The Bubble is Breaking" are causing buyers to have second thoughts.

A $16,000 decline in aveage price in one of the wealthiest and high priced cities in the nation is hardly what I would call a DIVE! What does one expect? Double digit appreciation forever? Markets adjust. It is about time.

Give me a break and lift the fog on market perspectives!

Published by Merv on January 20, 2006 06:32 AM | Give us your comments here.
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January 12, 2006

A Real Estate "Me Too" Business Idea

Have you seen the $1,000,000 home page? If not, view it here. A bright idea that has earned a British college student over $1,000,000.

Then, guess what? Knockoffs. Another bright person is offering pixel real estate with a $1,000,000 real estate home page. What is this all about? Buying pixel real estate for advertising our business. Take someone Else's successful idea and apply it to a different or targeted audience. Will it succeed? Maybe. Not with this real estate agent. I prefer to get my business from past clients, people that are referred to us from past clients, people that get to know us through our website or blog and/or people that understand we have a different, value focused business model.

We get several emails a day from people marketing their next big, successful real estate marketing tool. Everyone seems to be marketing how they can teach us how to make a million. It may work...it probably won't. We believe that delivering honest, straight forward personal perspectives on the business of real estate is the most powerful tool to attract clients. Our service delivery and candid advice keeps them.

Looking for an agent? Check out the next big "me too" marketing ploy. Or, you can select one based on what you might know about them and their real value proposition.

I won't be buying pixels anytime soon.

Published by Merv on January 12, 2006 08:07 PM | Give us your comments here.
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December 24, 2005

Consequences of Bubbling

The Washington Post published a huge article in last Sunday's Business section titled "Agents Aplenty." The last few years of real estate easy money attracted all sorts of people into the real estate business. We used to have more agents than listings. Now we have more agents than buyers. What will happen? Many, many of these relatively new to the business will drop out. There's just not enough business to go around. The established agents will still thrive on their experience and reputation. Those with a differentiating value proposition will be OK and probably grow. Those that lack real business experience and don't understand marketing will not be able to make it.

In my opinion, this is a good thing. There are way to many in this business that shouldn't be in it! We've rambled before about our experiences with clueless and/or unethical agents that we have come into contact with.

We wish no one ill will. But, a shakeout will be good for our industry. The consequences of market dynamics and bubbling.

Published by Merv on December 24, 2005 06:56 AM | Give us your comments here.
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October 07, 2005

Agent Incentives: Good or Bad?

As mentioned in my last Market Update article, more sellers and new home builders are offering incentives or "bonuses" over and above stated commissions to agents who bring buyers and write contracts. "What's wrong with this picture?" I ask.

First, it seems to me that my duty to a buyer is to help them find the right home that fits their needs, wants and desires in a price range they can afford. Should I be trying to SELL them something because I can make more money? The answer is "I won't do it"!

Second, sellers or new home builders would attract more buyers by putting that money towards sprucing up the property, lowering the price or reducing closing costs to buyers. My humble opinion.

Finally, all things being equal, if I have a buyer that is interested in equivalent properties and one was offering agent incentives, I would fully disclose that fact and offer to rebate that incentive to the buyer at closing.

The real estate business is a hard business for a high percentage of agents to make a decent living. The question: Are agent incentives good or bad for the buyer and the real estate industry in general?

Published by Merv on October 7, 2005 12:06 PM | Give us your comments here.
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