Does a home sell itself, or is smart marketing the key?  Or, is it a little of both? 

While most of us realize that targeted marketing is a sound sales strategy, it is tough to sell a lemon in any market.  But most would agree, rarely is a buyer willing to pay more than an item is worth, unless of course, there’s more to the item than meets the eye.  But, that is seldom, if ever the case.  Wouldn’t you agree?

Attempting to accurately price homes requires consideration of various factors including:

1.  Home Inventory

2.  Current Market Conditions

3.  Recent Comparable Property Sales

4.  Condition of the Property

As many who provide valuations of property will tell you, any good Comparative Market Analysis (CMA) will provide a property owner with an accurate price window for his/her property.  If we’re comparing like properties, it is hard to go wrong with a CMA.  But, if you’re expecting an apple to be the same as an orange, you could be in trouble!  So, where do those inflated listing prices come from?  The owner?  Yes, at times.  But, unfortunately, often, the blame lies with the Realtor.

An article in a recent Business Week reviewed William Poundstone’s new book, Priceless: The Myth of Fair Value (and How to Take Advantage of It).   In it, Poundstone examines both the psychology of buyers and sellers, and the logic used when placing a value on a product or service.  The author argues that pricing is anything but an exact science.  In his words, ”In the new psychology of price, values are slippery and contingent….”  According to the article, many “clueless” consumers are vulnerable to the marketing or sales practice of anchoring.  Anchoring, in its purest form, is the act of using of a high priced item that may never sell, in order to make a lesser priced similar item much more attractive.  Often, the same manufacturer may sell two like products, one tagged with a designer name and price, the other, a “great deal” at almost half price.  The “cheap” one sells like gangbusters!

Since it’s hard to ask twice as much for a similar home, overpricing occurs far too frequently.  The good news is, that high price tag makes all the rest of the homes look lots better!  The bad news is, the anchor model is probably going nowhere.  

While pricing or valuing a home isn’t quite as easy as 1-2-3, accuracy is a result of using the proper comparable properties when determining the listing price of a home.  But, if instead, you believe your property to be priceless, and list it accordingly, don’t be disappointed if you find the price you’re offered is only what the educated buyer thinks it is worth.

Did you see the news?  Yesterday’s New York Times carried an article detailing the results of recent federal mandated licensing exams for loan officers around the country.  The results thus far are anything but encouraging.  According the Times article,  ”31 percent of the roughly 10,000 people who took the national test from July 30 to Nov 30 failed it, and about 27 percent did not pass the state-specific component.” 

While there are those (you can trust that the dissenters aren’t those depending on the expertise of their lender) who question the industry’s testing, many others appreciate the attempt at accountability.  Is it odd to expect those who provide you a service, especially one you pay for, to know what they’re doing?  One would hope not.

In the effort to clean up the mortgage industry and answer critics’ claims of of its ”poorly qualified” loans officers, the testing mandate includes both a federal and state national exam that covers federal laws, general mortgage knowledge, the loan-origination process and ethics.  While I have to applaud the “after the fact” efforts to ”fix” a disfunctional mortgage loan process, why did it take a crisis to prompt such measures?

The question that leadership in any industry or profession needs to ask itself, is, what are the minimal acceptable standards required by those licensed to perform or practice?  Would I want them (the practitioner) to provide that service for me?  What if had to pay them for their service?  Would I trust them to provide me, or a relative or friend, advice?  As we’ve all heard, “many people will only do what’s required.”  Let’s hope, when it comes to your trusted advisor, you’re getting at least what you’ve paid for.  And, if not, who will pay for their neglect?

And, as I’ve said previously in this blog, when there’s any show on the ground in Northern Virginia, driving on our roads is akin to bumper cars lite!  While that might be a bit of an exaggeration, it’s not far off.  From what the local weather channel says, yesterday’s snowfall surpassed the record level that occurred in 1932.

Of course, for many of us, being house bound isn’t something we’re used to.  Most Realtors, after all, are out with clients on the weekends.  So, the forced confinement is probably what I needed!  Life’s like that sometimes, don ‘t you think?  Forcing us to do things we otherwise wouldn’t.  Perhaps there is something to an overall design to this life.  Hmmm, I wonder if….on second thought, perhaps we’d better not start down that road.

So, are you going to be lucky enough to have a white Christmas too?  We’ll, while the snow’s here, I might as well head outside and have some fun!

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This morning’s Boston Globe ran a story of a real estate investment venture gone bad.  Sound familiar?

In this case, a young Virginia Beach couple, among others, were sold “a bill of goods”, left high and dry, broke, and are facing a lengthy legal battle to simply try and reclaim their good name.   If there ever was a real estate swindle that exemplifies the worst aspects of the buying and selling of real estate, for profit or not, it’s this one.  It has all the necessary elements:

1.  The Promise of Easy Money

2.  The Smooth Talker

3.  Fraudulent Loans

4.  Fabricated Appraisal Figures

5.  A Gross Lack of Due Diligence

This is but one of the many tragedies left as a result of the housing market run amok.  Kind of like teenage boy on steriods driving a school bus without a governor (you know, the device that restricts their speed).  Before you invest your time, effort, and your money into any venture – especially one that sounds too good to be true – please take the time to do a risk analysis, and ensure that the road ahead isn’t full of quicksand!  

What about you?  Any snow in your part of the country?  If not, how are the temperatures?  Years ago, while stationed in Tucson, we spent Thanksgiving evening on the community swimming pool.  That was….different, and enjoyable.

There’s certainly the Christmas spirit in the air.  And, the snow helps complete the holiday setting.  In the days leading to this special time of year, enjoy the sights and sounds, and be careful on the roads!

Most of us have realized, usually through trial and error, that success depends a great deal upon building a firm foundation to begin with.  And, in Social Media, it’s no different.  It begins by understanding who you audience is and what they want.   In Social Media “speak”, it starts with the 5 W’s.

1.   WHO

Who is saying things about your products and service?

2.  WHAT

What are they saying about you and the product you provide?  Is it good?  Bad?

3.  WHEN

When are they talking about you?  If your business is cyclical, are you only being mentioned during the busy season?  If you specialize in one area of your profession, does the discussion occur only when your specialty is hot?

4.  WHERE

Where are these conversations taking place?  On blogs related to your business?  On other popular discussion platforms? 

5.  WHY

Why is anyone commenting, discussing, or examining you and what you have to offer.

There are a number of variations of the 5 Ws.  Many, recently, have focused on web sites and blogs.  Earlier this week, Inman News’ featured an article “The 5 W’s and your Web site“, by Robert Hahn.  Other informative articles on the 5 Ws include, “Knowing What’s What and What’s Not the 5 W’s (and 1 H) of Cyberspace“, and The Five W’s of Web Site Evaluation.   

Social Media platforms are useful marketing tools, and today, they’re all the rage.  A careful analysis of any marketing devices and means is is not only useful, but a necessary factor in identifying what works and what doesn’t.  The 5 W’s is another, and value added, method way of determining what we need to pay attention to, by identifying who may be listening, and what they’re interested in.  And, if that’s the case, do you think it might be helpful for Realtors to pay attention?

Robert Louis Stevenson

Is a Federal Housing Administration(FHA) crisis on the horizon?  With FHA’s insurance reserve ratio falling to the lowest level in history, at 0.53 percent, there are some who believe the FHA is the next subprime crisis waiting to happen.  One of those is homebuilder, Toll Brothers Inc., CEO, Robert Toll.   Toll predicts that just like the failed bank bailouts, the FHA will be next in the handout line.  And, with the reserve ratio as low as it is, he may be on to something.  According to a Congressional mandate, the ratio should be no lower than 2.0 

In addition to the alarming FHA news, this week’s Wall Street Journal reported that nearly 25 percent of all homeowners are upside down with their home mortgage.  In other words, they owe more on the mortgage than their home is worth.  Well, considering how values have fallen since ‘05, that isn’t too surprising. 

While the recent encouraging national home sales figures provided us a glimmer of hope amidst the current economic downturn, today’s sobering news concerning the viability of FHA home loans, and the depressed values of properties, bring us back to reality.  So, what are we to believe?  Are things getting better?  Is the First Time Homebuyer’s Tax Credit frenzy skewing sales numbers, or, are increased home sales “genuine”?   Are these numbers more akin to a mirage?  Instead, are we stuck in an economic tailspin for months, or years to come?  

In the competition to provide us the latest and greatest updates on where the economy is heading, we see indications that are both promising and discouraging.  Where the housing market may be going, we don’t exactly know.  But, fortunately, one thing is for sure, there will be homes both bought and sold.  So, perhaps we’d best stick to the present, and as they say, the future will take care of itself.  After all, as someone once said, “Predicting the future is easy.  It’s trying to figure out what’s going on now that’s hard.”  

“The first man gets the oyster, the second man gets the shell”

Andrew Carnegie 

Fortunately, during last weekend’s 52nd Urbanna Oyster Festival, there were plenty of oysters to be had, even for those in the back of the line.  Everyone had loads.  And, most of us, way too many!  If you’ve not had the chance to venture to Urbanna, Virginia, for the annual oyster celebration, you’re not only missing great food, but also a special glimpse of small town America. 

Urbanna is located in Virginia’s Northern Neck, which is situated North of Williamsburg, and Southeast of Fredericksburg, hugging the Chesapeake Bay. 

It’s been called a “historic town”, and, in many ways, it is.  It’s among the places you’ll see on the National Register of Historic Places.  But, each year, on November 6th & 7th, you’ll find some 75,ooo folks headed to this “sleepy” coastal town for oysters, fritters and other assorted dishes, and loads more fun.  I can tell you, it’s likely on the “must see” list for those who enjoy touring the country in their RV’s, because there were plenty of those big boys parked in and around the festival. 

The two day festival has an assortment of activities, from an oyster shucking contest to the crowning of the festival’s Oyster Queen, among others. 

Any number of booths selling food, jewelry, art work, intricate wood design (well, you get the picture, like you’d see at the County Fair), and assorted items dot the town’s landscape.  Parking is available, but plan on paying a minumum of $10 or Friday, and $20 on Saturday to park. 

And, for those visiting for the first time, it doesn’t matter where you park, the prices are the same.  So, for convenience sake upon leaving, use the lots before you come into town.  

Enjoying the sights and sounds of Urbanna, and the Oyster Festival, the kids having fun, the adults enjoying each other’s company, the interaction with the booth workers, reminded me of the abundance our Commonwealth has to offer.  While most of us relish the time away from work on the weekends, and the relaxation it provides, you might mark the calendar and set aside this early November date next year.  It is a piece of Americana that you don’t want to miss.

You’ll meet some very nice people, view a beautiful part of the state, and enjoy some appetizing food dishes.  But you might do yourself a favor.  In case your eyes are too big for your stomach, don’t forget to bring the Tums!  

But, for real estate professionals, where does ”leadership” come into practice?  Do we lead anything?  Are we led by anyone?  The obvious answer is, of course leadership is practiced.  And, yes, there are indivduals leading us in our profession.  But, if that’s the case, what kinds of leadership do we see?  Are they leading us in the right direction?  And, who is leading who, to do what? 

What Does Leadership Look Like In the Practice of Real Estate?

As real estate agents, our job is advise, counsel, and, among other things, educate our clients.  At the end of the day, we are paid to influence or persuade.  Is that leading?  Of course it is.  As most of us would agree, leadership is the practice or art of persuasion.  The ability to lead is based upon the faith or thrust that those being led have in their leader.  Aren’t our clients trusting us when we advise them on market conditions or price?  How about when we make recommendations to sellers on staging their home or preparation needed before placing it on the market? 

What is their faith in our capabilities based upon?  A positive history with us as a previous client?  In the case of a new client, what leads them to place their trust in you as an agent?  Was it your amazing marketing presentation?  And, what about buyers with their new agent, what is the basis for the selection of agent?  A recommendation from a friend?  The agent’s track record?  Good interpersonal skills?  Does it really matter?  When all is said and done, isn’t it the result that’s most important?  While the result is certainly very important to the buyer or seller, how the agent leads is sometimes more important than what the result is. 

Agents are considered to be ”independent contractors“.  One of the benefits that comes with that capacity is freedom.  Since independent contractors aren’t “employed” per se, but instead, work for themsleves, they are free to operate under their own set of rules.  Within limits, of course.  They are bound by the professional code or operating guidelines of their profession.  For Realtors, these guidelines are the Realtor Code of Ethics and Standards of Practice.  And while Realtors are well aware of what they should or shouldn’t do, most of their clients aren’t.  In other words, in  most cases, they wouldn’t be aware of misconduct by their agents unless it hit them in the face.  And to be honest, while Realtors take pride in what the Code stands for, sometimes their practice of it leaves something to be desired.

How are Realtors held accountable for the practice of their profession?  Do owner/brokers hold their agents accountable for their lack of professionalism or malpractice?  If so, how?  Do these brokers consider it more important for those new agents to get out and sell houses as quickly as they can, or to be well grounded in their Code of  Ethics? 

More importantly, if the Code is the cornerstone or building block of the practice real estate, how familiar does an agent have to be with their Code of Ethics before they are given a license to practice?   In other words, what are those in leadership positions in the real estate profession requiring of their community of agents?  What example are they setting and what standard are they accepting from those they are leading?  

In real estate, like other professions, there are those sitting in leadership roles that are simply placeholders.  Normally they’re in the position for affirmation and little else.  Certainly not to seek change, and God forbid, to make waves!  I’m reminded of a former classmate of mine from a recent leadership program, who, when asked why he was there, responded, “To check the block”!  

There are those who believe that our leadership challenges aren’t much different than those of other professions.  But, instead of minimizing the difficulties we face, perhaps we need to be asking instead, how we can transform our profession to one that is second to none when it comes to the public’s trust, instead of one that’s on par with Used Car Salesmen, according to Donald Trump.  

But, let’s not get the cart before the horse.  Before we take a look at some sugggested avenues of improvement, let’s take a look at some anecdotal evidence on where the real estate ethical compass rests today.  We’ll begin that examination in our next blog entry. 

What’s the best way to market a home?  While making sure your visuals (pictures, virtual tours/videos) are exhaustive and don’t leave anything to the imagination, the details of the listing are just as important in attracting prospective buyers.

PROPERTY DETAILS

Properly listing a home requires much more than good visuals.  While they are important, providing the specifics of the home is a valuable aspect of marketing as well.  How many times has a client wondered about room sizes, while sorting through the homes they actually want to drop by to see, only to find that data is missing from the listing?  Is it in the best interest of the seller to include those room sizes in the listing?   Yes, it is.   What about a description that highlights the home’s best features? 

PAINTING A PICTURE

Providing a brief “highlight reel” of what the property has to offer is what the “REMARKS” narrative section of the Multiple Listing Service (MLS) is all about.  But, how well is it being used?   Is the agent painting a picture of the property’s best features?   Given the limited amount of available characters the MLS allows to describe the property, is the narrative accurate as well as compelling in describing the home?   Or, is the listing agent’s property description more fiction than fact?  When searching for prospective properties, since buyer’s agents do their best to match what their clients are looking for in a home with what’s indicated on the MLS, providing an accurate and complete depiction of the property, benefits the seller as well as the buyer.

Yard Signs & Lockboxes

Yard signs and lock boxes are tools of the trade that have long been staples of listing hardware.  While yard signs “mark the spot” of the home for sale, they also provide a visual alert to those who drive or walk by that the property is on the market.  Traditional signage emphasizes the name and number of the listing agency, and, oftentimes, the listing agent. 

But, some have taken advantage of the sign to provide more information of what the house has to offer through pictures.  This simple yet effective method of providing a glimpse inside the home may be the beginning of a more effective use of an old marketing method.    Jim Duncan, an agent from Charlottsville’s Nest Realty, uses signs to provide the property’s address, price, a website address for more property information, as well as the listing company’s contact information.  Oh, and there are property pictures as well.  A more effective way of making the most of the yard sign, don’t you agree?

A lock box is a lockbox is a lock box, right?  Well, not in Northern Virginia, right now.  Our ongoing controversy over which lock box is the best one is to use is currently very heated, often with more misinformation involved in the discussion, than accuracy.  The bottom line for a property listing is this;  make sure, whatever lock box is being used on a property, that fact is accurately included in the listing.  There are few things as frustrating for a Realtor, or a prospective buyer, than arriving at a property only to find it secured by a different lock box than that indicated on the MLS.

Getting the most out of the marketing avenues available when listing a home depends on knowing what tools are available, but more importantly, using those resources properly.  Every seller wants the widest exposure for their product.  As the Realtor’s Code of Ethics instructs them, it is a listing agent’s duty to act in the best interests of a client in fulfilling their marketing responsibilities.   Is your agent using the marketing tools available to properly showcase your home?  Let’s hope so.