Sunday, December 7, 2008

Christmas spirit headed off by Black Friday

I was appalled by the news that came out of New York on the occassion of Black Friday 2008. Black Friday, as you know is the most prolific shopping day of the year. It is the prime indicator of how retail sales are heading for the year. It is the occassion when the balance sheet takes on a blackish ( bullish ) hue as opposed to a reddish ( bearish ) hue. The headlines and downbeat of all the newscasts and editions was " Will Black Friday save us?" I have always been of the belief that the only thing that is going to save any of us is our faith in the Lord Jesus, whose birth we supposedly hold this Holiday for in the first place.

As you know a WalMart crowd in NYC trampled to death an employee as they charged the gates upon the opening of the store on Black Friday. It is reported that once recognizing the man was down and injured the crowd politely stepped around him in their rush to grab the deals. What a living characterization of what the practice of the Christmas Season has become.

Henry Wadsworth Longfellow said this in his classic I Heard the Bells on Christmas Day. He said "And in despair I bowed my head. There is no peace on earth I said. For hate is strong and mocks the song, of peace on earth good will to men." He penned that somewhere around 1850.

Here we are 158 years later pretty much in the same boat. India threatens Pakistan. Iran calls Israel the Great Satan. The United States is more divided than ever within our own borders. Our greed and stampeding the door of human kindness has cost us our souls. Bail outs abound. Political divide roars in our ears. Here in the Realtor world greed has driven the American dream of home ownership out of existence. Every other commercial you see on TV is for treatment of depression.

Longfellow continues: " Then peeled the bells more loud and deep. God is not dead nor does He sleep. The wrong shall fail, the right prevail, with peace on earth good will to men." He was certainly an optimistic fellow was he not? Since he wrote those words we have had two World Wars, The Korean war, the Vietnam War and now the war on terror. I hope he is right.

I remain optimistic that the right shall prevail. We may not like the format in which it is delivered, but I am confident that right shall prevail. It has to, otherwise what are we bothering to struggle for?

I had a conversation with my son recently. He is a Deputy Sheriff. He says this time of the year is the busiest in his work place. Especially calls for domestic violence seem to ramp up appreciably. I asked him what he thought the reason was. He said it is because the Holidays bring people together to celebrate the season. Those families that are dysfunctional hope to come together and be different people around the dinner table. However, as everyone dips into their 6th round of wine, beer, spirits, the divide that exists between them all the other days of the year becomes pronounced. That is when the fighting begins. Out come the sharp verbal flairs. Then out come the fisticuffs, the knives and, yes, the firearms.

I remember when my son had first become a Deputy my wife and I wanted to see him on Christmas Eve as he worked. I made some of my world famous vegetable soup and we drove south about 25 miles to meet him and share soup with him. He was not able to meet with us as he had to go to a domestic violence call and arrest a lady for stabbing her Father.

That brings me back to NYC and the Black Friday incident. Where have our values gone? Where has common decency flown to? The news just gets worse and worse.

I notice that my neighborhood is lagging far behind in the adornment of Christmas lights this season. Many houses that have previously gleamed with lights of the season are dark. It could be the recession-like depression that we are in. Or perhaps it is just the culmination of a nation that has fought hard to preserve our old fashioned way of life and has failed. We are face to face with what really drives America. What is it? Greed and selfishness ,greed and selfishness and more greed and selfishness. I am struggling hard this year to find some Christmas spirit. Hope you are doing better at it than I am.

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Tuesday, December 2, 2008


I have cut and pasted for your review the recent Gallup polling results for those most respected professions in our Society. For several years in a row nurses have enjoyed the top spot followed by pharmacists, teachers and medical doctors. I have highlighted in green the area where Realtors rank.

Not surprisingly Realtor's professional image is iffy amongst those who were surveyed. Why do you suppose? Well I think we are right in there with the Bankers and Congessmen who are suspect by most of America for the economic meltdown we have experienced in the last year. Front and center is the housing industry.

I think the take home message is this. If you decide to sell a house or buy a house, hook up with the most ethical agent you can find. Ask your friends who they like. Look up their license through the state licensing boards. See if they have any complaints lodged against them. There are many, many honest people in this business. If you don't know real estate, make sure you know your Realtor.

November 24, 2008
Nurses Shine, Bankers Slump in Ethics Ratings
Annual Honesty and Ethics poll rates nurses best of 21 professions
· Ethics
· Moral Issues
· Americas
· Northern America
by Lydia Saad
PRINCETON, NJ -- For the seventh straight year, nurses enjoy top public accolades in Gallup's annual Honesty and Ethics of professions survey. Eighty-four percent of Americans call their honesty and ethical standards either "high" or "very high."
This year's results are based on a Nov. 7-9 USA Today/Gallup poll rating the honesty and ethics of workers in 21 different professions.
Nurses have topped Gallup's Honesty and Ethics ranking every year but one since they were added to the list in 1999. The exception is 2001, when firefighters were included on the list on a one-time basis, shortly after the Sept. 11 terrorist attacks. (Firefighters earned a record-high 90% honesty and ethics rating in that survey.)
Bankers Take a Hit
The standing of most of the professions surveyed in 2008 is similar to that of a year ago. The only significant change is a 12 percentage-point decline in positive ratings for bankers, from 35% to 23% -- not surprising given that the banking industry is at the center of the Wall Street meltdown currently gutting many Americans' investment accounts and destabilizing the U.S. economy. (Earlier this year, Gallup reported a similar decline in public confidence in banking as an institution.)
The 2008 Gallup Honesty and Ethics poll marks the first time since 1996 that the honesty and ethics of bankers has registered below 30%. The last time bankers took a hit of similar magnitude to their image was in 1988, when it fell from 38% to 26% during the savings and loan crisis. However, the 23% recorded today marks a record low for the field.
2008 Integrity Rankings
Nurses have no peer in the Gallup rankings today, but they are followed by pharmacists, high-school teachers, and medical doctors, all with close to two-thirds of Americans rating them highly. Just over half of Americans consider the honesty and ethics of clergy members and the police high or very high.
While fewer than half of Americans consider funeral directors or accountants to be highly ethical, these professions are much more likely to be viewed positively than negatively.

Building contractors, bankers, journalists, and real estate agents each receive relatively neutral ratings. About as many Americans think each of these professions has low honesty and ethics as rate them highly, while the plurality or majority consider these professions of "average" integrity.

While bankers could be faring much worse, a year ago they were in the top-rated category, with 35% rating their ethics high or very high and only 15% rating them low or very low.
Indeed, several professions suffer from a heavily negative tilt in their image ratings. The worst of these are lobbyists, telemarketers, and car salesmen, all of which are considered to have low or very low honesty and ethics by a majority of Americans.
Although several other professions -- congressmen, stockbrokers, advertising practitioners, business executives, lawyers, and labor union leaders -- are not as negatively viewed as the bottom three, the ratings for them skew negative by more than a 2-to-1 ratio. The 12% very high/high honesty and ethics ratings for business executives, although not appreciably different from the 14% recorded in 2007, is a record low for that profession. It had registered as high as 25% in 1990 and 2001.
Survey Methods
Results are based on telephone interviews with 1,010 national adults, aged 18 and older, conducted Nov. 7-9, 2008. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points.
Interviews are conducted with respondents on land-line telephones (for respondents with a land-line telephone) and cellular phones (for respondents who are cell-phone only).
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

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Aretha sings it:

Saturday, November 15, 2008

Business is down. Could it be me?

Some years back I attended a week long seminar in Philadelphia. The topic of the seminar was Customer Focus. I spent a week in a nice convention hotel and looked at various topics day to day on what it took to attract customers and how to hang on to them. I have to admit that it has been so long ago that I have a difficult time pulling up all the topics broached by the various presenters.

I do remember one particular thing from that seminar. Some entity had done a very in depth survey. It pulled data from thousands of people in hundreds of locations. The simple bottom line of the survey was to determine what it was that caused people to leave a business as a customer and not return. I remember the take away message quite clearly. More than 70% of people stopped doing business with the company because they did not feel that they were appreciated as a customer. All it took was an ascerbic response from an employee, a surly look or many countless other interactions that interpreted as, " I really don't give a dead rat's patoot if you shop here or not."

Case in point. I have occassion, often, to recommend a service provider to my clients in the realm of home inspection, appraisal, survey, repair, etc. I referred a client recently in one of those scenarios. This client is a scientist and besides being very busy, wants input quickly and efficiently. To arrange this service was important because we were on the clock within a defined window of time to get the service provided. The client tells me that they called the provider numerous times and got no answer. This was well after the start of a business day. Finally they were able to reach the office. The first words out of the person who answered the phone was something to the effect, " My goodness, you called my office so many times I thought one of my relatives had died." Then this person went on to say, " I was taking a break and away from the phone. You know you can order our service on line at our website." They were taking this break at 8:30 AM. Then to suggest to the client that they really did not need to bother them because they could opt in on the website is way over the top.

This service provider is top drawer. Their name has been the first name out of my mouth when I am called on to recommend a service of that nature. NO LONGER. There are 20-30 other people in our town who also provide this service. I will now go elsewhere. The owner of this business probably will never know why people are opting out of doing business with them. They would be amazed that it is the telephone manners of the people representing them out front. You can be the top dog for awhile but you better appreciate the people who made you top dog, the customer, or you will be behind in a hurry.

I remember a motivational speaker named Zig Zeigler, who used to speak on this subject. In his best Baptist preacher style he would make the point. How do you get to be the top in business? How do you get where you want to be in business? You get what you want by helping others get what they want. He is absolutely right.

I will offer another war story to illustrate my point. I made a 30 year career out of promoting pharmaceuticals. There was a company along the way that introduced a drug to the market that was truly a breakthrough. It totally reformed one arm of medicine that used to cause people to have to undergo a specific surgical intervention. This drug did it's job so well that it almost completely eliminated the need for the surgery. It was the first of the H2 antagonists that treated stomach ulcers. The people who owned this drug were very stingy with samples and would advise the prescribers that they could not provide them with a whole lot of samples. Along came a British pharm company that came to the American market with a very similar drug. In almost no time at all they had taken roughly half of the other company's billion dollar market and replaced the other company as the front runner in that therapy.

How did they do that? Thier drug was superior? No. Thier drug was less expensive. No. They hired another company to co-promote the therapy. They loaded up every prescriber with samples and programs to help them treat thier patients. They simply took the market by deed and actions that suggested to the prescribers that they appreciated and wanted their business very badly. The prescribers responded the same way we all do when we encounter a pleasant sales clerk, repair person, telephone service provider, etc.

Kindness and customer focus pay off every time. Lack of attention to it will cost you your livelihood.

That is why I try to communicate to my clients that Lee Vass Realty is Client Focused. My clients come first with me and I think they know that. When they feel otherwise, I hope they will tell me instead of just leaving.

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To my clients, former, current and future:

Friday, October 24, 2008

Soldier on, soldier.

Amidst all of this week's madness with the financial markets and trying to determine which of the politicians is telling the biggest and most outlandish lies, I had a moment of pure sanity. I attended an event at the VFW post in Crawfordville on Wednesday evening. The event was to welcome home one SSG Stephen Simmons, who was recently discharged from the army after 4 tours of duty in Afghanistan.

I helped Sgt. Simmons purchase a home prior to his deployment on his last tour. He elected to purchase that home in Wakulla County. He then went to Afghanistan to fight the Taliban, (and Al Quaida), watch numerous of his comrades get killed or wounded and, oh, by the way, won himself a Silver Star. He won the Silver Star for commanding a Machine Gun installation that had been abandoned and in so doing saved numerous members of his division's lives.

I have no idea what it must be like to put on the uniform of one of our military divisions and go off to war. I recently read an article written by Ben Stein entitled " Guts, Glory, Honor". It had to do with his addressing a group called the Congressional Medal of Honor Society. He describes this group as mostly occupying eternity as most CMH's are awarded posthumously. There are only 171 of these recipients alive today. He said " These are men who have faced fear on a scale most of us would find unbearable, and have faced it down and defeated it with their lives."

Quoting Stein further, " We all read day and night about the billionaire speculators who have mansions bigger than the White House by virtue of their adroit minipulation of pieces of paper. They are nothing. The society could run forever without any or all of them. We read all day and see on TV all day about the spoiled , bratty movie stars and drug addicted comedians who do not even know the word gratitude, and we are supposed to care about their miserable lives. Their lives are as insignificant as the life of a roach. But tell me the last time you read a story anywhere at all - in the newspapers, in magazines, on your computer - about men who offer up their lives for our country and our freedom under law. This is disgraceful, but it really cannot touch these men."

It is touching to know that there is a community nearby that holds our heroes in high regard. Sgt. Simmons was escorted from the Northern Wakulla County line to the VFW by a police escort with sirens blairing and blue lights flashing. Following them was a cavalcade of motorcyclists who called themselves " Patriot Riders ". They all motored up to the VFW. They all stood at attention as Sgt. Simmons stepped out of the passenger side of the Florida Highway Patrol car, driven by his proud, big brother Mike. As Sgt. Simmons made his way to the hall, people applauded his return. Many went to him and shook his hand, or hugged his neck and said simple thank yous. These were people that held this the place to be. Not in front of the TV for the opening game of the World Series, not glued to FOX or CNN wringing their hands over the erosion of their 401-k's. I was proud to be there with them.

Sometimes we are allowed the opportunity to transcend the silly little worlds that most of us live in and gaze into the eyes of someone representing something good, clean, really worthwhile and singularly purposeful. I thank Sgt. Simmons and his big brother, Mike, who served as well, for giving me that opportunity. It was wonderful to forget about the sticky wicket that the economy has become and focus on something representing country, freedom and patriotism.

Our economy will hold and repair. The housing market will correct and continue on its way. It will do so because we have a lot of smart people running this country of ours. They are able to function because of the willingness of the Sgt. Simmons of this world to stand in a desert far away from home and fight the forces of evil who would destroy the very core of the greatest country ever conceived. While those of us back here watch our reality TV shows, get fatter and some even burn our flag in protest, there are soldiers willing to lay it all on the line to assure us of those freedoms.

Thank you Sgt. Simmons for touching my life this week with a pure infusion of sanity and purpose as to what is really important.

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Saturday, October 4, 2008

Trust is the Issue

I had an interesting experience this morning. My sweet little wife and I made an early morning jaunt to a place that rhymes with Stall-Cart. This place is a branding and advertising anomale to me. You ride by this place's parking lot 24 hours a day and you cannot count the people going in and out of it. Yet it is practically impossible to find two people who will say to you " I love shopping at this place.". You can find a plethora of people who will tell you, "I despise shopping at this place."

We made our purchases, $102.76 to be exact. I was using the Self Check out aisle, which is always an experience. We had 2 or 3 dozen items to scan and bag. As I was concluding my purchases an associate came up to me and said " Sir, I believe you forgot to scan this one item. Sure enough, she was correct. We scanned it and we were on our way out the door.

Some sort of alarm went off. The "greeter", who totally ignored us on the way in was now all over us demanding to see our receipt. We produced the receipt and I told her that I assured her that we were not thieves. My wife, the most timid creature on the planet, looked at me and said "Calm down!". Knowing me as she does she recognized that I was getting a bit put out. So to keep from causing an incident I bit my tongue.

The greeter in her best "sea hag" impression slammed her pen on her little podium that she stands behind and said in some sort of broken english " You are free to go !" , after pouring over our receipt. She seemed genuinely put out and disappointed that she had not found something that she could have us placed in the "Stall-Cart" brig until we could be summarily hung by a rope until we were dead.

I mused on the way out. Here were two examples, first of the clerk watching the self-checkout lane to make sure we scanned all of our items a minimum of once. ( Scan them twice and you really get a liberal education in getting them to give you a refund.). Then the sea hag doing her best to catch us leaving the store with something we had not paid for. Now I understand that pilfering is a billion dollar issue and merits close scrutiny. But good grief, is there not a little trust in order? Why on earth do I and millions of others patronize this place?

Trust is the issue. Is there not some old fashioned trust on the table any longer? I remember a merchant here in Tallahassee, Shaws Tennis Shop. My son was freezing to death on one of these cold, cold days in January, on a soccer field while at practice. I had run to this store to try and find him some sweats to wear. I could not find his size and as I explained to the owner my circumstance, he handed me a set of sweats and told me to go put them on him just to keep him warm and come by after practice and we would see that we got him fit. "PAY ME WHEN YOU COME BACK.", he said. I went out the door, suited up my son. The sweats were enormous on him. I went back and found him some that fit and paid the $75 for them. I walked out the door with all sorts of warm fuzzies towards this place. Why? Because the owner "trusted" me to come back and pay him. Amazing.

I lost a client this week because of the trust issue. He has his house on the market in the worst Real Estate market in over 50 years. He moved out of town and bought another home. He now has 2 mortgage payments. He called me a couple of weeks back and told me he now wants to rent the house. I explained to him that we were under contract for 6 months to sell the house. He signed a legally binding contract to that effect.

Having compassion for the fellow I told him that I would post up his house in our MLS for rental to see if we could get him a tenant. He then began to inquire as to when I was going to do that. I finally got around to it at half-time of a football game around 10:30 at night. It took an hour of my time to post it up. When you load property into the web-based software you have to satisfy certain required fields. One of the fields was an amount for a referral fee to be paid to the agent who brought us a tenant. I put a number in the blank space, knowing it was required. The fee is really my obligation, as a fee can only be paid Broker to Broker.

This client shot me back an irate e-mail about the fee. The e-mail was very offensive to me. Here I am trying to do him a favor and he obviously doesn't trust me. We had a nice discussion and determined that we would coexist a little better if he went his way and I went mine.

If you are going to employ the services of a Realtor, then get you one that you know and trust above all else. Once you accomplish that goal you can rest easy and move forward with the marketing of your home or the purchase of a home. If you cannot trust one another then you are wasting one another's precious time.

A very wise man, who called himself the Christ, many years ago said, "Trust one another. Ye are my disciples if ye have love one to another." What a world that must have been to live in. Free of " Sea Hags."

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Thursday, September 18, 2008

Homeowners Associations, The Good; The Bad; The Ugly

I live in a community with a well established Home Owners Association (HOA). I also used to be the President of a Youth Baseball League (YBL). All of the antisocial interplay that I saw in the YBL often rears its head in the HOA. This one single truth is endemic to the process, " The danger belying a HOA, the same as a YBL, is in the by-laws that are adopted along with the general guidelines." The danger presents when members of the group digest the by-laws and then set out to enforce them.

I had more than one occassion when a family would choose to falsify their address so that they could play in our League. Once caught, the player was ineligible. Also the games that were won when the player was on the roster were immediatley declared forfeits. So many others were punished when a violator was detected. Who brought the charges? Usually an unoccupied parent with nothing better to do than to pour over the rosters and the League rules adopted and amended by the same League.

I recently had a pre-marketing sign stolen from a property that I was getting to list in my neighborhood. It merely announced that this property was soon to be on the market, a fairly innoccuous declaration. Someone deemed that either the wording or the placement of the sign was in violation of the HOA, Covenants and Restrictions (C&R). They pulled up the sign and took it to the HOA office and left it. This person risked life and limb in so doing. Suppose I was a less enlightened, knuckle-dragging practitioner and happened upon someone pulling up my sign. That is a rarity in this business in that 90% of all realtors are the less aggressive gender. The sign puller risked injury or threat of the same by putting their hands on my personal property. Is that really worth it?

To some it is. There is obviously some sort of endorphin rush associated with successfully flaunting the park rules of the YBL and/or the C&R of the HOA. The architectural design committee of the HOA must be consulted and stroked before you put that rose garden into play in your own front yard. To challenge them can cause penalty and fines. The HOA is a recognized political subdivision of the state. They can assess penalties and fines and if you do not pony up the dough, they can place an enforceable lien on your property.

The HOA is a friendly face when someone tries to put a helicopter landing pad next door to you, in their back yard. They are antisocial, lunatics when they bring action against you for failing to edge the curb in front of your home, which you do not own in the first place.

The classic chair person of the architectural and design committee is Ms. Agnes Skooch, retired state of Florida museum curator. She has no husband, hence no children nor grand children. Her only legacy is time and lots of it. She forms a little posse as her committee. They meet for coffee once a week and speak on the phone incessantly. A conversation goes like this:

"Agnes, this morning I drove by the Shamrock address. You know that family of West Virginia Pygmies that moved in a month ago? "

" Yes, Matilda, I know just who your speaking of."

" They must have taken a road trip over the week end because their autos are covered with the remains of Love Bugs. They have the vehicles backed into their driveway with windshields facing the street."

" Well, I don't know how they handle things like that back in their tar-paper covered shack community in Huntington, W. Va. but here they are in alarmingly flagrant violation of paragraph 12, subsection 4-a of our C&R."

" How shall we proceed?"

" Let's drive by at 2:00 AM and put a note on thier mailbox, telling them to wash their vehicles immediately."

" You do not want to visit them and engage them personally?"

" Oh my, no! One of my sisters from the DAR might see me and think I am calling on them socially. This way is much better."

"Oh yes, I see what you mean. What was I thinking? We will do it your way. Then if they do not comply we will bring charges against them at our meeting of the Board next Tuesday. Mr. Trotsky can then send them a notice on official HOA stationary and bring them into compliance."

HOA's are here to stay. The conflict is here to stay. They are a curse and a blessing. Make sure you read up on everything there is about them before you buy in a particular neighborhood. An attitude of " they are out to get me" is a safe place to be.

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Sunday, September 14, 2008

Predatory Purchasing

In the mid-seventies I was in Long Island, New York on business. It was a week long stay. While I was there an Eastern airlines jet went down. The death toll was nearly 100. I clearly recall that the news reports covered the fact that before authorities could secure the crash site, other human beings were approaching the scene and stealing jewelry, wallets, purses and other personal items off the corpses. That has always loomed very large in my mind as to just how low humankind can sink.

It hardly parallels in an analogy but I have been thinking about that experience here lately as I represent people as Sellers and Buyers in our current real estate market. The mindset in a large number of people is that many sellers are under extreme duress in selling thier homes. This market represents an opportunity to try and obtain an extraodinary purchase. In other words many buyers turn into predators trying to benefit at the crash site of the current real estate downturn.

There is little compassion displayed in many of the offers that I have had to handle within the last few months. The prime victim is the person who has not been able to make a payment for awhile on thier homes. They are heading into foreclosure or short sale. The Buyer armed with a sufficient line of credit or cash moves in for the kill. Never mind that the seller is down on thier luck, financially. The predatory purchaser wants to obtain that property at an extreme discount, hang the circumstances of the poor property owner.

Now, I know that we live in a free market economy. I am all in favor of getting a good deal on just about anything I go to purchase. However, I feel that common decency should drive us in the direction of offering a fair price for property. Low ball offers have always been a part of our business however the current market we are in seems to bring out the predator in some of the more unscrupulous. You see their signs on every street corner, " Will pay cash for houses, quickly."

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Monday, August 25, 2008

Short Sales, Are you sure?

There is a stanza from an old country ballad that goes like this:

" My Uncle Mort, he's sawed off and short,
He stands about 5 foot 2.
But he thinks he's giant,
When he gets him a pint,
Of that good Old Mountain Dew."

What I know about Short Sales is about as elusive as that euphoria that comes to Uncle Mort when he pops the cork on that jug of Mountain Dew. There are a lot of people who are chasing foreclosures and short sales in our current market. I suppose it is the nature of all of us to look for a good buy. After all our marching cry is ' Buy low and sell high.' not the other way around.

I remember 5-6 years ago when I actually showed my first foreclosed property. I was aghast. It was on the west side of town and looked decent from the outside, yet the inside was a fixer upper nightmare. The walls had been smashed in. Lighting fixtures had been removed. The drop in stove was gone and the wires formerly connecting it were still exposed. No danger involved because the electricity had been cut off many weeks earlier.

Very recently, I read an article concerning financial institutions, holding mortgages on homes heading to foreclosure, paying the motgagees a significant bonus NOT to trash the property. Now the implication here is that in normal cases the mortgagees do just that. Is it out of frustration, necessity or just down right orneriness? I suppose there is some market somewhere for drop-in ranges and light fixtures that will garner money for purchasing that Mountain Dew. I generally prefer the Diet variety, when I am into Dew slamming.

I listed a property some time back that ended up being financially impaired. That is a nice way of saying that the owner had not made a payment for a few months. It is really not according to Hoyle that a Seller should withhold that information. Yet here I was in the midst. The property had a first and second mortgage on it. I recieved an offer on the property that was not capable of paying off both mortgages. In other words one of the mortgage holders was going to have to accept a short sale.

After checking with the primary mortgage holder I was advised that they were not accepting one dime less than what was owed to them. Thier opinion was that the second lender had no business making a loan to their client. This was in the day of getting 20-30 offers for 110% loan to value loans in your mail box. I called the Wiley B. Coyote Company, the secondary lender. They must have known they were in a losing position because the person I ultimately reached agreed to bring our sale before some committee appointed to that task. I had numerous man hours invested in trying to get to the decision makers on this sale. Amidst my efforts the Wiley B. Coyote company sold the paper on this loan to the Alfred E. Neumann company and I had to start over. I finally got it done, however, and successfully closed the deal. I even got paid a little commission. Amounted to .35 per hour for my effort. On top of all that a few months later this client called me and told me the IRS was after her for taxes on the amount the mortgage company had let her slide on.

For my money, short sales, are a disappointing pursuit. More power to the agents in our community who seem to make their living in this arena. You are usually not going to save all that much money at the end of the process. You then have to ask yourself if you have invested in a property that is going to make you proud and will hold its head in the resale market.

The market in general has shifted in the favor of the Buyer. Dealing straight up with a Seller with your Realtor negotiating for you will yield many good buys. Why waste your time trying to chase a little better deal through a bank. They are rarely accessible when you call them, they never return your call and in due time there are a lot of banks that may not even be able to meet their own financial obligations. I am just not convinced that chasing short sales is worth the time and effort.

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Uncle Oswald sings it:

Monday, August 18, 2008

Only the Lonely

When I am fortunate enough to list a client's home we always end up discussing the relative merits of Open Houses. Now, please understand that I have sat in more than one open house venue, fogging the windows with my breath, watching and waiting for attendees.

I generally tell my folks that there is a little sub-culture of people who go to open houses as a recreational activity. They get up on Sunday morning and get their cup of coffee, tea or hot chocolate and pull out the real estate section of the newspaper and start deciding how they will spend their Sunday afternoon. They run in little packs and attend open houses with no more intention of buying a house than they have of floating to the Bahamas on a Kon Tiki style raft.

When I was a green and newly-licensed agent I was encouraged to hold open houses, by my Broker. Why? Because it was a great way to connect with potential Buyers. I never was successful in that effort. The approach went: "Are you working with an agent?" " Are you aware that it costs you nothing to work with one? The Seller pays our commission." The answer would mostly be, something to the effect, that they already had an agent and were just trying to help her out by looking on their own.

I recently recieved a blanket e-mail from a prominent Tallahassee firm that was soliciting agents from other firms to sit at their open houses. Any Buyer who you write a contract for, you keep the commission. Any Buyer you convince to work with you, you have sole rights to. I can see in my mind's eye the load up on that program at the listing appointment. " Mr. and Mrs. Home Owner, our firm holds open houses weekly. We outwork our competition. We will sell your house." Then they farm out this useless expenditure of time in holding the open house.

I have NEVER written a contract on a home sale from an open house. The effort to hold these things is a bygone tactic that may have worked at one time but is useless here in the 21st century. Why? Because anyone with any cyber-savy at all can look at all the houses they want to in any city in America from the comfort of their home., Mostly anyone licensed to practice real estate has a website. On my website you can get a direct IDX feed from the MLS of any city in Florida. Why would you need to galump around town looking at houses burning your $4.00 per gallon gasoline when you can do it on your laptop?

I recently listed the home of a friend. He is a little older than my 62 yoa and has bought and sold several homes. I asked him about his feelings toward Open Houses. It was pretty positive. I advised them, in my opinion, they were a waste of his time. The only people who will come will be your neighbors who want to see how you decorate your home. I paid the $60 to run the ad, I provided the $100 worth of signs to lead the folks in and............................the only people who came were the neighbors.

I advise folks if they will let me slide on the open houses I will discount my commission. If you let me slide on advertising in our local paper, I will discount my commission. That advertising is expensive as well as useless. That is another post on another day.

Here is hoping that I do not have to spend a lot more of my precious time sitting, all lonely, at an open house while my seller goes out to eat and to a movie to abet the process. There are better ways for me to spend my money and time in your behalf, that will drive far better results.

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Roy Orbisong :

Wednesday, August 6, 2008

Doctor, Doctor, Give me the news!

I had an experience that bears remembering from a couple of years ago. I got a call from an acquaintance who wanted me to drop by his office. That is always bad news. I thought Amway? Some other multi-level, get rich quick scheme? Well, I went because I have this lingering fear that something is going to come along that truly is a get rich, quick scheme and I will be chasing the train after it leaves the depot.

There sitting on top of this guy's desk is a little machine that looks like a blood pressure machine that you see in the pharmacy. He started giving me the hot pitch. Seems this machine was the first of its kind and its function was to measure your level of antioxidants. I have never been a big believer in antioxidants but I stayed mute. He invited me to stick my finger in a little orifice in the machine and wait until the red light went out and then the machine spits out a cash register tape and he tears it off and looks at it. Shaking his head he tells me that I am pitifully low on antioxidants. He shows me the number. It is around 10,000.

At that point I ask him what the number means. He says it means that you are way low on your antioxidants. I tell him " No I mean, if you take my blood pressure the number is a manifestation of millimeters of mercury measured at atmospheric pressure against a specific gradient. If my blood pressure is 140/90 then it means that the pressure is 140 during systole and 90 during diastole. What does this number mean?" He stared at me for a moment, thanked me for coming by and told me he had another appointment. I found out later that he was a NuSkin distributor and he was jockeying to sell me vitamins to build up my antioxidants.

On a visit to my physician later on, who is a respected practitioner of internal medicine, I asked him what he thought about antioxidants. He told me that if it could help me take off about 40 pounds of blubber he was all in favor of it. Otherwise, he was in agreement with the folks at American Heart. It is a nostrum without the benefit of clinical trials nor proven efficacy. It was all in the minds of the people who like to sell you health supplements, containing antioxidants.

Here lately, I have been running into a little creature named Zillow. I had a face to face encounter with a client on a listing appointment. He had his laptop, I pulled out mine. We both jumped on some unsuspecting neighbor's wireless network. He said Zillow had his property valued at X. My comparables, out of the local MLS network, had him priced at Y. We argued for the better part of a half hour and struck a compromise at Z. It was exhausting. He had unflailing confidence in his Zillow. I started to ask the same question about the Zillow formulae as I did the NuSkin salesman. I let it go. It is possible to win a battle and lose the war.

I blogged a few weeks ago about the Wal-Marting of real estate commissions. My bottom line was that if you are going to retain a Realtor then get an experienced, smart one, preferably pretty good-looking, and then listen to the advice they give you. We live in the world of real estate daily. We practice in your back yard. We are the doctors of the real estate scenario.

It is easy to get enamoured with an internet entity that is so pretty and has as many little bells and whistles as Zillow. However, would you please explain to me how a software engineer sitting in Zillow headquarters in Pittman, New Jersey can create a formula, from property appraisers databases primarily, that can tell you what a home is worth that they have never walked into? It is mostly Buyers who glom onto Zillow and want to beat you off your price, because it is usually lowball.

This is another tiresome effort to remove the expert from the process. We believe their fees to be too high. They are crooks. They are lazy. They don't spend enough time with us and on our project. "That doctor was in the exam room with me for 45 seconds, looked at my labs and then had his nurse write me a handful of Rx's. His fee was $150. The Rx's cost $200. " My next door neighbor, who graduated from, junior high school, in the summer, sells health supplements that have antioxidants in them. I am going to put my life in her hands." Whoa ! That physician did 8 years of schooling past high school. Then he did another 4 or 5 in a residency program somewhere. He knows his specialized field better than anyone. Realtors do not come close to that level of professionalism, but they are trained and experienced where you are not. Retain one, listen to them and get ready to go to a closing. Remember that Realtor does not make a dime until he or she sells your house.

I have relatives and friends, in whom I place great confidence, who put a lot of stock into health supplements. For that reason I give them some degree of merit. I often consult Web-MD to provide explanations for my numerous bouts of hypochondriasis. I think that Zillow and the other online appraisal engines have some degree of credibility. Just as I would not rely solely on Web-MD to give me conclusive avenues on an illness, I would not rely solely on Zillow for setting a value on my property. The more information we garner the better off we are. In the final analysis you need to consult the expert to come to a well advised path forward. The internet is a wonderful tool for raising the performance of all of us.

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A little ditty:

Saturday, July 26, 2008

Just call me Cleopatra because I am the Queen of Denial

Pam Tillis had a top Country Western hit with the title Call me Cleopatra, Because I am the Queen of Denial. This song was about her unfaithful boyfriend who kept stepping out on her but she refused to accept the fact.

I was diagnosed with Diabetes, Type 2 back in 1996, 12 years ago. I never had unquenchable thirst, frequent urination, etc. That is the hallmark of diabetes. It is a very subtle and stealthy disease. I have been in denial ever since thinking the labs and the physician reading the labs are incorrect. I make that statement as my toes are turning numb under the desk upon which this lap top resides, right now.

What has this got to do with Real Estate? I find that a lot of folks who have decided to sell their homes at this juncture are in denial. You see houses coming onto the market that are priced just as if there has been no correction in the market. A Realtor can only suggest the price at which you should go to market. The Seller is the ultimate authority and boss of the pricing process. The Realtor is only a consultant. Most folks don't want to listen to the expert. After all this is my house. Just as I say, "Diabetes ???? This is my body, it is as sound as ever. Your labs are not correct." The seller says, " This is my house. My babies all came home from the hospital here. Why the Mayor lived just two houses down. That is all worth dollars."

Sorry folks. The news reports are true. We are dead in the middle of a housing downturn. We cannot deny the labs that come to us in quarterly statistics. Do you listen to the 6:00 local news? The 6:30 National news? We do not live in Utopia any longer. I suggest to my Sellers, " Take that number you have been carrying in your head, reduce it by 10% and we will sell your property." Stay with the denial number and we merely list your property. Deep down I know that folks want to SELL their property not just LIST it.

Consider this: In June of 2006 we sold 559 homes. In June of 2007 we sold 483 homes, In June of 2008 we sold 383 homes here in Tallahassee. That is a decline of 32%. In June of 2006 we had an inventory of single family residences 2579. In June of 2008 we have inventory reflected at 3331. That is 23% more inventory. Do the math. Fewer sales, Bigger inventory, Equal lower prices. Supply = Bigger, Demand = Lower, Sales Price = Smaller. 9th grade economics.

The numbers tell us that the appreciation rate we were used to has become flat. No longer do we appreciate at 10-16% per year. We are now much lower than that. Yet our median price is now about 228K vs 238k of a year ago. That is really soft compared to other markets in Florida that are down 28% and more. We are down about 5% compared to last year in median price. That is really fairly good news. It is taking an average of 100 days to sell a property that is priced well. It took 50 days a year ago. Properties that are not priced well sit for a year in some cases.

Pam Tillis and I are here to tell you. Her boyfriend is running around on her. I have diabetes. Your $200,000 house is not going to sell for $500,000. As Lillie Tomlin used to say, " And that's the trooooooooooooooth !"

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Pam Tillis sings: pam tillis-cleopatra queen of denial

Monday, June 23, 2008

Leon County Update Summary

I am going to take a few minutes on today's blog to give a thumbnail summary of where I see the market right now in Tallahassee, Leon County, Florida. Sorry I have to inculcate some numbers but they tell the story most effectively. These numbers are made available through May 2008. They are reported by Tallahassee Real Estate Trends N Data Services Numbers are compiled by Mr. Don Pickett, a veteran Realtor, who is oft quoted in our local press. I have respect for Mr. Pickett and his reporting efficacy. He has served as the chairman of our MLS Statistics committee for many years past.

Closings through May 2008: ..............................................364
Closings through May 2007: ..............................................714
Differential ...................................................................-50%

Closings for year ending May 2008: ..............................3630
Closings for year ending May 2007 ................................4740

New listings for Month of May 2008 ............................... 759
New listings for Month of May 2007 ...............................1161

Days on Market YTD May 2008 ....................................... 75
Days on Market YTD May 2007 ....................................... 75
Differential..................................................................................... -0-

Median Price thru May 2008 .................................. $235,000
Median Price thru May 2007 .................................. 239,000
Differential.................................................................... -2%

We can see that fewer sales are transpiring in Tallahassee. I believe our citizens are reacting to the constant harangue of negative news in the media. Buyers are postponing purchases. We also see that there are fewer new listings, comparing May 2008 to May of 2007, suggesting that our Sellers are postponing putting their houses on the market.

Number of days it takes to sell a property, May '07 vs May '08 is almost the same number. That figure relates to those properties that have been closed. It does not give us a feel for those that have languished on the market for a long period of time, not closing. We can tell as we drive neighborhoods and look around in our own neighborhoods that there are some pretty stale "Homes for Sale" signs standing out there. This is largely the cause of Sellers pricing their homes too high. It is a hard reality to understand that homes are not selling for the same dollar as they did two years ago, during the real estate boom.

Looking at the number for median price we see a relatively flat line. The graph reflects a minimal change in value of median price. In other words the runaway appreciation that was going on during the boom of 15-16%, per year, is behind us. We are lucky in Tallahassee to have held our own during the "bursting of the bubble". You move to Miami, Tampa, Orlando you will see a huge drop in median price. The speculation that occurred in those areas was not as intense here in Leon County. Hence we have had a fairly soft landing here in Tallahassee.

If you are a Buyer you have never been in a better position to buy. Inventory is large and demand is low, driving prices downward. If you are a Seller the news is a tad mellow compared to our robust run of the last 4-5 years. However, you can still sell your house. The approach is more measured and you need to adjust your thinking of a year ago. I advise my Sellers, just off the cuff, to take the number they have been nursing for the last year and drop it by 10%. Make your listing shine and be patient and you will sell your property.

I am not objective but I feel that the services of the professional Realtor in selling your home and or buying a home has never been more important. There are a lot of new circumstances in the market place that have newly planted themselves. Your Realtor is the best source of advice on the new market.

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Enjoy the beautiful music of Ms. Ann Murray:

Thursday, May 29, 2008

Wal-Mart and Real Estate commissions

I am biting off a hard subject here today. Realtors and their commissions. I read an editorial this morning in USA Today. It had to do with a recent agreement, under pressure from court action, between National Association of Realtors (NAR) and so called internet real estate brokers. One such broker is Redfin which is an online brokerage that supposedly gives its users a big break on real estate commissions. The meat on the table is access to the 800 something Multiple listing services (MLS) around the country. Redfin insists that they should be able to access that information just like all other brokerages. NAR decided that they would share the information. Let it be said that they sure don't share that knowledge with me, a licensed real estate broker, unless I pony up about $1200 a year. The big, all knowing, USA Today Editor accuses the real estate industry of collusion, antitrust violations and downright meanness. He is as uninformed as he is opinionated.

First off, I am positive that this editor does not donate his time to USA Today. I will bet that he makes a pretty decent salary and probably some incentives. Why? Because he knows how to run a newspaper, or at least a department within a newspaper. So we can assume that the nasty old profit motive runs deep to his core beliefs.

The belief that the commissions realtors earn is out of line is not a new concept. When I first got into this business I had no clue how a Realtor made a living. I was advised that the average Realtor makes about $36,000 per year. I would be willing to bet that Mr. USA Today makes a lot more than that in a year. You must then take into consideration that a Realtor pays all, and I mean ALL of their own expenses. No company car, gasoline credit card, health benefits, etc. Add a 15% self employment tax on top of that and you will find that most Realtors make less than minimum wage. That does not take into consideration the costs for membership to the MLS, Licensing fees, Education costs, Lock box dues, cell phone, PDA, laptop computer,ISP costs, errors and ommissions insurance, etc. Then a salesperson has to split their commissions with their broker. My first broker splits were 50%. The negotiated 8,7,6,5% commissions are split between the Listing agent and the Selling agent, one representing the Buyer and the other the Seller.

I was fortunate to enter the business 6 years ago when the boom was on. I attained several listings from people who knew me and thought me to be a pretty savvy business man and wanted me to sell their houses. I had this "friend" who was a Broker who went around behind my back telling the people I had listed that he would have charged them 1/2 of what I was charging them to sell thier home. I confronted him and he told me that we Realtors make too much money in commissions. He spent his career in the Public sector so I laughed him off as just not quite understanding the good old American profit motive.

I told him this story that was told to me by an economics professor when I was in college back in Alabama. Seems that there was this manufacturer of widgets located up around Sylacauga, Alabama. He turned out 10,000 widgets a day which he sold for $1 each. He had several employees and business was good and life was rewarding to all involved. One day his assembly line came to a sudden and alarming halt. Over the next couple of days he called his engineers together to address the problem. Nothing, 4 days passed without a single widget rolling off the assembly line. They finally had no other choice but to ask for the Tech rep of the manufacturer of the assemblage machinery to come have a look. Into Sylacauga on a private plane comes the Tech rep. He comes to the factory with an attache' case in hand and walked up and down the frozen assembly line. He finally stopped at one particular place and opened the atache' case. He pulled out a hammer and gave a mighty whack to the line and it came to life rolling along without a hitch. Business was back on track and the widgets rolled off the line as before. A couple of days later the CEO recieved an invoice from the manufacturer for $10,000. The old man was livid. He told his Secretary to call the company and demand an itemization on the invoice. The itemization arrived a few days later. It said: $1 for hitting with a hammer. $9,999 for knowing where to hit. He paid the bill.

I remember back around 1988 putting my home on the market by myself as a For Sale by Owner. Interest rates were 18% on mortgages. Mine was 13.5%. No one was selling houses. My little FSBO sat there for two years. All the while I wondered what in the world I would do if someone came along and wanted to buy it. I had no clue what the next step would have been. I finally woke up and gave it to a Realtor and about 3 months later I attended the closing and got a check. I had little clue as to what happened in between.

You pay a Realtor for what they have between their ears. I have sold a little more than $10 million dollars since I first entered into the business. I have handled over 100 transactions, not all successfully. One thing I have learned along the way is that if you have seen one real estate transaction then you have seen one real estate transaction. They are all unique one to another. You need the professional by your side. Please see my last post.

In our modern world we have, including myself, developed a Wal-Mart mentality. We are all about saving the dollar, getting the best deal. Can we find it at Wal-Mart? You know they ALWAYS have the best price. What about Craigs List, E-Bay, etc. ? Let's take the Realtor out of it and then we can really shuck some corn and save a boat load of money.

I cannot for one minute imagine some faceless person on the internet in front of a keyboard on a computer caring about me in a real estate transaction. I mean really caring about me and my best interests first. You need someone you know well. A person who you trust and believe will put your best interests first and foremost. Most people only buy or sell a house 1-2 times in a lifetime. Wal-mart, E-Bay, Craigs List, Amazon discounting just does not apply in that scenario.

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Enjoy this bottom line philosophy of Marvin Gaye and Tammy Terrell:

Saturday, May 24, 2008

The Golden Rule and Realtor Ethics

I just completed a 3 hour continuing education (CE) class on Ethics. Realtors are required to acquire 14 hours of CE with every license renewal, approximately every 2 years. National Association of Realtors (NAR) requires that every 4 years Realtors must have 3 hours of Ethics training.

Why this emphasis? I suppose that the most common thread running through the practice of selling Real Estate is distrust. Distrust amongst the folks who practice and certainly amongst the consuming public. I remember as a small child when a family member would make a far reaching comment on something requiring trust, the comment fired back would be something like,
" Right, next you will want to sell me some swampland in Florida." This distrust runs beyond the spirit of Caveat Emptor, Buyer Beware. We are all naturally on edge in buying. The bigger the purchase the keener the edginess. In Real Estate, dating back to when Adam and Eve were evicted from the garden, because of their dealings with the snake, the distrust of Realtors has been a prominent reality.

I have now been in this business going on 6 years through numerous transactions. I am more aware of the necessity of being on edge, now more than ever. Trust me. There are numerous snakes still active in the garden of home ownership. This stretches to all involved, unfortunately, including the Buyer and the Seller. You need to be on your toes. You need to tread carefully.

I took a canoe trip through the Okefenokee swamp once. Did I go alone? Absolutely not ! I went on a guided trip. I did not know the guide, but I assumed that someone would get him if I ended up like Amos Moses, alligator bait. All ended well. You need a guide in the business of acquiring real estate, especially if you are inexperienced. Even if you have experience buying in Milwaukee, you do not have experience in buying in Tallahassee. Real estate is a regional business. What goes on across state lines does not have uniformity everywhere. If you are a buyer it costs you nothing to employ a Realtor. Get a good one. Someone you know personally or a referral from a friend that you have high confidence in.

The instructor in my class was a Broker from a competing firm. I have done business with that firm. Just like me, they bear watching and holding to standards of performance. We all make little mistakes. Then there are those who want to throw you under the bus to profit from your sacrifice. You need to have your advocate, guide and friend with you along the way, no matter who you are dealing with.

This instructor started the class by searching for a definition of "ethics". Someone offered the Golden Rule as definition. I attended Vacation Bible School at the Hillsdale Presbyterian Church, in West ( By Goodness ) Virginia in the summer of 1955. I was 9 and the thing I had on my mind mostly was the softball game and the ice cream. Yet I do recall the dissertation on the Golden Rule. " Do unto others as you would have done unto you." Zowie ! What a concept ! I pretty much lived my life from then on assuming that all others were practicing the same precept. I had a few bumps along the way and I remember getting beaten out for various things and then finding out afterwards that I had been "had". Not all God's creatures are dealing from the top. Many are dealing from the bottom. Many are quite comfortable living in the bottom land of reptiles and sliminess.

That was made crsytal clear to me during the segment of my life that involved lobbying legislatures in various states. I represented a Fortune 500 company with deep pockets. I remember running across another definition of the Golden Rule. It was simply. " He who has the gold...........................RULES !" What a concept ! As we seek truth and sanity through the upcoming election we will see a vivid representation of this aspect of the Golden Rule. The emerging victor for whatever office will most likely be the victor because of huge amounts of money to convince the public that he/she is the best candidate. Such is the case in the world of real estate.

Reputations are mostly earned but many are bought through the reality of money spent on advertising. Choose carefully. There are 1.2 million members of the National Association of Realtors. Let's do some simple math. There are 300 million Americans. Let's say they live in families of 4. That gives us 75 million households. Not all people own homes. Let's say that 50% do and 50% do not. Half of 75 million is 37.5 million. Now, if there are 1.2 million Realtors, then we can assume, roughly, that there is one realtor for every 38 households. It is not that hard to get a license. It is a little harder to keep a license. We had a gentleman here in Tallahassee who sold jewelry. His name was Lester Moon. He always ended his commercials with the statement
" If you do not know jewelry, then know your jeweler." To the same point if you do not know real estate then make an attempt to know your Realtor. Get a referral from a friend. Make calls to former clients. You know the drill. Everyone is not grinding the pencil of the Golden Rule from the same end.

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Wednesday, May 14, 2008

In the eye of the beholder

Back when I was in college I took an art appreciation class one semester. Thought was that I could skate through it and earn 3 credit hours that would not tax me too terribly. I have to say that it was a major struggle. I worked long and hard to get a passing grade. I looked at stuff that was supposed to be art that I swear my 5 year old grand daughter could now produce.

I think of Pablo Picasso, particularly. I remember looking at his works and thinking what the heck. This guy has been doing some serious hallucinogens. The instructor would ask our opinion of the artists expressions in his paintings. Where I saw a woman with a giraffe neck with halibut eyes on one side of her head someone else saw an expression of life's struggle within and frustration spilled out all around until it painted her personality in a surrealistic tone. The latter comment would get the A+. I was asked to stay after class and put in some extra study. To top it all off this painting hung in the Louvre and was worth millions of dollars. I still am not seeing it.

Since I have gotten into real estate I struggle with another artistic expression. The appraisal. I was taught in the University of Real Estate that appraising was not an exact science , it was more of an art. That is the understatement of the century. Now, please don't think that this is an attack on appraisers. I have great respect for the path they trod to become certified in appraising. They put in enormous classroom hours and pass some really hard tests to make the grade. They then are not allowed to be the head appraiser until they have been someone's apprentice for two years. So it is a distinctive role.

I read a little blurb in the USA Today just this morning that real estate fraud was rampant and being put under the microscope and the hammer was coming down on those who committed it. One area they sited was over-evaluation of property by appraisers.

That works like this: A Realtor writes a contract for a certain amount of money on a property. There is built into the contract that an appraisal must be performed. The buyer's lender usually orders the appraisal. The appraisal ALWAYS comes back at the price or slightly above the price. In my experience I have not ever been involved in a property transaction where the property did not meet appraisal. I worried about a few of them as I thought that the price was pretty aggressive compared to the market comparables that I had looked at. Time wasted. The appraisal would always hold water.

Imagine, please, that you are in the business of loaning money. You finance lots of properties and you need appraisals quickly and reliably. The appraisal company is in the business of valuing property and you have solicited several lenders to send their appraisal business to you. Now what is going to happen if you bring back low appraisals to that lender? Well, the buyer has a right to opt out of the deal leaving you, the lender, holding the bag. That is why the price of the property is communicated up front to the appraiser. The appraiser figures a way to hit that number. You are not going to get repeat appraisal business if you come low too often.

It is sort of like the only accountant joke I know. A Fortune 500 company has need of hiring a CFO for thier company. They want a CPA with some experience. They arrange to interview several people over the course of one day. The candidates are lined up outside of Mr. Big's hotel suite to be interviewed. He asks each candidate the same question " What is one plus one ?" to which everyone answers the obvious, " Why, that would be two, Mr. Big." This continues until one fellow comes in and Mr Big poses the question, " What is one plus one ?" This candidate goes and draws the blinds and then locks the door. He then leans in close to the corporate bigshot and says, " What would you like it to be, sir?" He gets the job.

I recently had a transaction wherein an appraisal was performed about 9 months prior to the sale of a property. The appraisal at that time was around $200k. A contract was written and sent over to the Title company. The lender ordered the appraisal and lo and behold it came back $3K over the contract price, about $25k south of the earlier appraisal. Same house, same neighborhood, etc. Hallucinogenic expression? No the bubble bursting on the real estate market.

You can take your home and figure what it is worth in your head and what you will take for it. In our current market you will need to take about 10% off of it just to get it in line with where home values are currently.

Market value and Appraised value have not always seen eye to eye in real estate. You see, appraising is not an exact science it is more of an art. The value comes down to what the seller wants for the house and what the buyer is willing to pay. In this market adjustment the equation has only gotten more complicated. The lady with the giraffe neck has now added a third eye and some warts on her neck. It still confuses and mystifies.

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Monday, May 5, 2008

How do you like my hat?

I just got a cool hat. I ordered it from It is red and has Callaway advertised on it. To top it all off, it has my name, Lee Vass, stitched in white thread on the right side. Now what is so big about a hat? Search me, but I have always loved hats. Ask my wife. I have the entire top shelf of my clothes closet covered with hats. Some are so sweat stained that they look like something from the 40's. However, I cannot bring myself to part with them.

I suppose that the enamourment with hats is because it tops off your ensemble for the day. I like to match my shirts color to that of the hat. I go back into the 60's when shirts had to match the color of socks. I suppose that carries over to my hat fetish.

I recently lost a sale to a home inspection. The home was built in the 60's and no one was around who could tell us when it last had its hat changed. This buyer drove the seller off the price by $35, 000. I paid $32,000 for a brand new house in 1972. The home inspector declared that the roof was at the end of its useful life. Never mind that they loved the location of the house, the friendly neighborhood and they had to have loved the price. They could not move past the old hat. I guess they are a lot like me and just obsessive compulsive about what sits on the top of the
edifice. Some folks are like that. They could have had 5 new roofs put on the house with the $35k they saved.

I read a very scholarly article, sometime back, by an FSU Real Estate professor about the various elements of a home and how they independently affect overall price. He, straining my memory, said that the various components affected the price in incrementally different manners. He said that the house was like a bag of groceries. Encapsulated in the overall house was a kitchen, some bathrooms, some counter tops, some flooring, some windows, a roof, a garage, perhaps a pool. The question on the table was where could you best put your money in updating the house? The final answer, as I remember, was the kitchen. I don't think the roof was in the top 3

Now back to the roof people. They are not all that unique. I sold another house, sometime back, that was also built in the 60's. We did not get a lot of showings initially. I suggested to the owner that since he needed a roof anyway, then why not go ahead and put one on. These sellers had treated this home with extreme care and it was in great shape. He did replace the roof and in short order we had a contract that we successfully closed.

Different strokes for different folks. Some pass on a nice home because they don't like the wallpaper in the family room. The WALLPAPER for crying out loud. How much does it cost to replace wall paper? A real estate transaction is an emotional experience at both ends of the spectrum, whether buyer or seller.

I lived in an old farmhouse when I was a child. It had a tin roof on top of it. As I recall, it had some badly rusted areas that probably signalled a new roof was needed. I, being 10 years old, could have cared less. However, I was keenly aware of that roof. It played music to me when it rained. Nothing soothed my soul more than the "rhythm of the falling rain." It put me to sleep as predictably as Ambien does today. Why the Cascades even made a top 10 hit about my roof. I suppose that roofs are important as are hats. The appeal is along a broad span of reasons. All of which could be made painfully obvious after a few sessions with our favorite psychoanalyst.

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Tuesday, April 29, 2008

It's all Perspective, after all.

As I listen and read about the real estate "crisis" my mind goes back to my earlier life in the pharmaceuticals business. I was working on the launch of a new HIV/AIDS drug, Sustiva. My company was invited to have a presence in South Africa, the epicenter of the epidemic ( then and now), at the World Congress of HIV/AIDS meeting.

There was a huge area set up in an exposition style to feature various Pharm companies and their products. The companies go to great lengths to fashion glitzy display booths that will catch the attention of the prescribers and other allied health professionals to the booth. These booths cost 100's of 1000's of dollars and compete with one another to be grander than the next.

One reporter for a world-wide publication made the comment that all around the convention center are people infected with HIV. They live in cardboard box shanties that are inadequate in protecting them from the elements. The average income of these people might be $200 per year. The cost of various antiretrovirals, protease inhibitors and other drugs that literally have the capacity to interfere with and stop the disease cold, is in the 10's of thousands of dollars per year. The writer went on to say that the people living in the shanty towns with HIV would love to "live" in the display booths used by the pharmaceutical companies to display thier varied medicines. However, that dream was as unattainable as their hope of receiving the life-giving drugs. Their lives were subject to abject hopelessness and death when it came to consuming just a little part of the western lifestyle. The article made quite a ripple across the world and served to highlight the greed of the industry.

Here in Tallahassee and the rest of the USA we feel deprived if we are not able to move up to the 3600 square foot home with the 3 baths, hardwood flooring, decorative alcoves, book shelves, pool, granite counter tops, etc. When and where did it become the norm for us Americans to live like that? We have a standard of living, even in the sub-middle class, that is incomparable to the deprivation known across a huge part of the world. We chase the American Dream in waves. We buy a first home and then after a bit we move up and then up, and up, and up.

We lose the perspective of where we stand as compared to the rest of the world. The media is fanning the current housing crisis as if it is the end of the world. Here in Tallahassee it is pretty soft as compared to other areas. It is a wonderful time for buyers to attain the American Dream of home ownership. People can still sell their houses if they are able to relax their profit motivation a bit. It is all perspective.

People still need housing. It is a basic need. Real estate has gone through a correction and will return to some norm in the not too distant future. I know I will not have to sleep in a cardboard shanty house tonight and I do not know anyone in my family that will. It is all perspective.

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Sunday, April 27, 2008

Non prime Boll Weevil

Early in the 20th century in Enterprise, Alabama, life was good. Cotton was king and had made a lot of folks in Coffee County wealthy. They shipped more cotton around the world than most other locales. Then one harvest season the farmers went out to pick their cotton. They found that the Mexican boll weevil had made its way into Alabama and had stopped off in Enterprise. The weevil took about 1/4th of the cotton crop that year. The people rallied and dusted and sprayed over the next year and by the next harvest the weevil had taken 1/2 of the crop.

Folks began to be concerned. They held a meeting and decided that they would turn their attention elsewhere. They experimented with various new crops. Some planted corn, others soy beans, wheat, rye and so forth. It became clear that one particular crop seemed to flourish. That was the peanut. Simultaneously, a young chemist at Tuskegee Institute named George Washington Carver began to experiment with the peanut. He developed 26 industrial applications for the peanut and its by-products. Some few years later the farmers in Enterprise shipped more peanuts than anywhere else. They became wealthier than they had been before. The region is the largest supplier of peanuts in the world to this day. They hold a peanut festival in Dothan and elect a peanut queen every year.

In the town square of Enterprise there resides a one of a kind of monument. A large and majestic statue of a lady holding a plate. On the plate, in a prominent display, is a replica of the boll weevil. Written on the plaque are words to this effect: " We, the citizens, of Coffee County, Enterprise, Alabama erect this statue in great appreciation to the boll weevil, harbinger of opportunity."

What an interesting story. We find ourselves in a bit of a pickle in the world of real estate currently. Our boll weevil is, or was, the non-prime lenders who precipitated the end of a boom period in the business. It had to happen. We did not anticipate when or how it would play out but those of us in the business knew it had to happen.

Real estate seems to be the center piece in the overall slowing down of the economy. The 6:00 news has feature after feature on how bad it is all over. Admittedly, spring time has not brought about the sales numbers of the last few years here in Tallahassee.

So what happens next? People still need housing. There are still buyers and sellers who are a little more cautious than they used to be. Not in recent years has the professional in this business been more important to the process. To go it alone in this new economy is to put yourself at risk.

There will be those in this business who will adapt a new way of going forward. They will be successful and make more money than they ever have. There will be those who will fall by the wayside as they cling to their old habits and regimens. Mankind comprises the impetus that drives this planet for a reason. Better put, mankind is in charge because of the ability to reason, adapt and innovate.

Thursday, April 24, 2008

A nice home PRN

Hello. I am a new Blogger and this is my first Blog.

I would like to address a comment that my son in law, Galen made to me yesterday. He told me that he had a neighbor who was re-locating out of Tallahassee. They were opting to rent out their home " rather than take a loss on what they deem its value to be." Their hope is that the market will come back and they will recoup the investment that they have in the home.

We live in the midst of a market that is starting to settle after a major correction. We have seen property values in Tallahassee appreciate an amazing 10 to 15 % per year for the last 5-7 years. I have been a Realtor for 5 years starting my 6th year. My previous career was as an executive in the pharmaceutical industry. I came into this industry as it was climbing in the realm of the most robust "bull" run in its history. I overheard a lot of other realtors speaking about how long would they conjecture this to last. Most were of the opinion that the real estate bubble was a real phenomenon and the rupture would occur sooner than later. It has now transpired.

Where are we now? Amidst a relatively soft landing here in Tallahassee. Recent statistics put out by our Florida Association of Realtors suggests that Tallahassee homes in 2008 compared to 2007 have actually held their value and gained another 1-2%, on average. It is true that we are sitting on the top of a record inventory of homes, especially townhomes.

That is GREAT NEWS for people who have delayed purchasing a home until now. If you are at all credit worthy you ought to eschew paying rent for purchasing. Interest rates are right at 6% on a 30 year, fixed mortgage. Fact of the matter is because the inventory is fat and interest rates are relatively lean you can successfully make a good buy and escape paying rent right now. What does that advantage you? If for nothing else it would be smart to buy just so you can enjoy the benefits of your real estate mortgage interest as a tax deduction. Just how much of your rental payment is tax deductible. If you said NONE then you are absolutely correct. Think about it. If you are paying $1000 per month in rent, almost all of that on a relatively new loan is deductible as mortgage interest on your tax return. What does that mean in real dollars? If you were in a 10% tax bracket that would mean that you would save 10% of $12,000. Who could not stand to put an extra $100 per month back into their pocket? Do you like golf? How many green fees would $100 a month pay? Movie tickets? Meals in a Restaurant?

Now back to Galen's friend. He is all depressed because his home is no longer worth $200k. It is instead, more likely, worth $175-180k. I would be willing to bet that he paid, applying our 10-15% appreciation, per year math, somewhere around $115k for the home, 5 years ago. That is a mitigated SWAG application. Think about that for a moment. You have gathered about $60-65k in equity becuase you had the foresight to buy 5 years ago. Now you are hesitant to sell because you want to maximize your profits like your cousin, friend, ex-wife did. So you are going to rent it out? Ever drive a rental car? Notice how well people care for rental cars? The same applies to your home that you are going to rent out. It will be beaten up. Unless you are extraordinarily lucky or careful.

That home has provided you shelter for 5 years. It has provided you a tax shelter as well. Why not go ahead and sell it and get your equity out of it and move on. In your mind you have lost $20-25k on the house. Guess what. Now you are a buyer. You are moving to perhaps a part of the state or country where the bubble has done more damage than here in Tallahassee. You have cash in your pocket to buy another home. I would be willing to bet that you are going to make out like a bandit on your next purchase. You are going to be able to buy a bigger and better house than you had.

We read too much stuff in the printed media about the real estate crisis. We see all sorts of horrifying scenarios on the boob tube re: the housing melt down. It is all true. However, the steady head will make out, OK. If you hold property then you are still in the drivers seat. It is just costing us a little more to drive on down the road. $4.00 per gallon very soon. That is another subject.

It is going to all work out. Maybe not exactly as you would choose, but certainly in some fashion. It is never going to turn out as badly as you now think it is.