[SD Realtor]

My read is that the more educated the person is that is being interviewed, the more educated his answer should be. If he really doesn’t know then he should say that. What irks me is that someone of that degree should have the insight to say that the presentation of the data is what is particularly poor. That the data needs to be organized in a manner that is germaine to real estate.

My suggestions for at least a start:

1 – Organize it by zip codes and by sizes of homes.

2 – Segregate condos and SFRs.

3 – Throw out the highs and lows of the sample sets.

4 – If possible try to identify if the sale was of an owner occupied home or not.

5 – If possible try to identify if the buyer is purchasing it as a rental or not.

6 – Report cancelled, expireds and withdrawns for each category above.

As we have all seen, the way that the statistics are presented one can argue any way they want.

Most of us who argue in favor of a declining market do so based on other stats rather then the median.

[SD Realtor]

Hi guys –

Please note there are two San Diego Realtors who post here (or maybe more) with similar handles.

Mine is SD Realtor. The other is sdrealtor (and I enjoy those posts)

My contact information is [email protected] and my brokerage is on line at http://www.1800grrealty.com.

SDLaw – Like you I am not thrilled about renting. However not paying property tax and insurance is not a bad thing. Again if you run the numbers I think you will see that in the long run it will pan out better. Usually the people who do well in this world are the ones who are patient and analyze things.

My wife is ALL OVER me to buy a home even though she acknowledges a downturn in the market. Every myopic article about a soft landing, or a “flattening out of value” gets thrown in my face. Her argument is that even if we buy and there is a depreciation it will come back and we will be better off in the long run.

She is slowly starting to see some light, that if we dont buy we will not “miss out” on a highly appreciating market. Also that we could SUBSTANTIALLY increase our purchasing power if things go as many predict.

The public has been subject to this barrage of real estate news and rhetoric for the past 15 years so it is going to take time for people to realize that it is “okay” to wait and that there are other paths to wealth.

In the meantime keep track of the market, learn about the area you want and just watch it.

[SD Realtor]

Hi PowaySeller –

Actually my wife and I own 4 small businesses. The larger portion of my income comes from system architecture that I do for a technology company in San Jose. I have a design team that I direct down here in the Sorrento Valley.

My real estate foray started off as a personal crusade. I have rental properties and I got tired of paying my sister in law at Coldwell Banker commission every time I bought a new property or sold one. So I got a license and bought a Help U Sell. My plan was to hire a competent staff and simply oversee that business. While that was running I would continue with my engineering work.

Well I always had helped out friends with real estate just because I had some background but was not licensed. Once I became licensed and had a broker in my corporation, lots of those friends started to use me. I got tired of paying Help U Sell corporate fees (by the way Gordon was the broker in my corp when I owned my HUS) and I also had some reservations about HUS so I sold it and started my own brokerage. The goal was to simply have it and do trannies for myself and friends/family… Well things kind of ramped up pretty quick and I found myself with more real estate biz then I predicted. I hired several agents but my main problem is that I work with alot of smart people in my engineering profession so my expectations with the agents was to high I guess.

So the bottom line is I work alot…Most of the engineering work is done at night or in the mornings. The real estate is on the weekends and in the daytime.

Your idea about charging based on time spent or hours worked is not bad… If I had time to think about it I would but I dont. I am not trying to reinvent the wheel, I am just trying to stay 1 step ahead of the market model.

So am I happy with it? I guess…. It is a nice little supplement to my main source of income but if you guys think I make a ton of money you are wrong. WAY WRONG. I am WAY below 6 figures for the real estate business and I have had close to 10 closings this year.

Please do not get me wrong as I am not complaining. I am simply telling it like it is. I cannot speak for other agents. I understand the IRE of people who look at agents and break down hourly wages and say these guys earn 700$ an hour. I cannot argue as some of them do. Some are pompous you know whats that will not even touch your home unless it is in the 7 figure range. They make us all look bad. The majority of them are not though.

I close a deal with Coe Lewis last month, she is a DJ on Rock 105.3. Very nice and very professional. It is an ecclectic mix. Anyways when people bang on me for what I do I can understand that because they do not know what I really do.

My best marketing are my present and former clients.

[SD Realtor]

I should pass Alan the phone numbers of my UTC condo owners whose comps are now 40k under thier purchase price. These same people who bought in 2004 are getting squeezed by thier mortgage, have already talked to the lender about a short sale, and have a complex where there are over 20 listings with thier same floorplan on the market.

Yeah nothing to worry about…

[SD Realtor]

Last night nightline had a cool interview with T Boone Pickins who now runs one of the top energy hedge funds. His take is 4$ per gallon within 6 months. He also said that prices will continue to rise after that. It is simply a supply and demand issue. The demand in China and other burgeoning economies has tripled in the past 20 years. He also has invested heavily in the extraction of oil from sands in Canada fields.

While the middle east conflict has shaken Wall Street there has been no dip in the supply chain because of that. The recent price increases are due to increased demand, summer travel and an overall increase in energy demand as the hot summer continues.

T Boones final statement was that oil will continue to skyrocket until there is a normalization of the supply/demand curve. His implication (this is now my speculation) is that it could be 5$ a gallon, it could be 10$ a gallon. Basically he said it will happen when it happens, but that the tolerance of US consumers and businesses to pay the high cost is still present. I believe he did mention 100$ a barrel will not be a great surprise.

I believe he DID say it will never go back down to where is was at a few years ago.

With regards to the possibility of war and the affect, I believe that the only major supplier of oil involved in this mess is Iran. They are a problem regardless of this war.

[SD Realtor]

Powayseller were you down at South Mission beach surfing at the jetty? heheheheh.. just giving you a hard time.

[SD Realtor]

I would agree with Bugs. However, if you want to do a more involved analysis here are the steps I would take…

1 – If you were to sell your home, take a WORST case look at the sale. You said you think it would list for x $. What did you base that on? Have you looked at solds or actives? Have you looked at the number of expired, cancelled and withdrawns? Make sure you are REALISTIC about what you would fetch NOT what you think it would go for.

2 – Calculate your net, [Sales Price – {Commissions + Closing Costs (use 1% as a swag here) + Prorated Property Tax, and loan payoff)}]

3 – Now as Bugs said, what would you do with the money? Say you played it safe and put it in a CD… So calculate your return on that investment for a few years.

4 – Compare that rate of growth to your CD verses your home on the market if the market were to dip and grow.

5 – Don’t forget to factor in the tax advantages as well you get by keeping the home.

I am not advocating one decision or another. I ALWAYS advocate running numbers though just to see if there IS a major disparity of taking one path verses the other.

If you have any trouble running the numbers I am sure people on this forum will be glad to help you.

[SD Realtor]

Hi SDLaw06 –

As a realtor in San Diego here are some of my observations based on experience:

1 – Yes the condo market at least in many areas I have worked in is depreciating more then single family homes.

2 – I have seen depreciation across the board for low and mid level priced condos across the county. For north county I have had listings in complexes in Carlsbad, Oceanside, Encinitas and Solana Beach. I have seen depreciation in all of those spots. Smart money says this will continue.

3 – Don’t sweat renting for a awhile longer. Even if it is up to a few years. Really it is not that bad. Even if you can wait for a year that would be better then buying now.

4 – Think of it like this, if you buy NOW, then the probability of your condo depreciating 7% verses appreciating 7% is much better then 50/50.

5 – A 7% depreciation on a 300k condo is 21K!!

6 – The VA loan program will still be there in a year or even 3 loans. It is a great program and if you are qualified then DEFINITELY use it.

7 – You could see a double whammy. Prices may depreciate AND you may see a DROP in interest rates. Suppose we come into a recession next year (which is NOT a wild idea). It “could” be possible that prices depreciate AND rates rise a bit more but then drop. How happy would you be if you waited?

Again these are only guesses but when you add them up it may REALLY strengthen your buying power. Conversely NOBODY, not even NAR or other rose tinted glasses pundits are predicting rampant APPRECIATION. So virtually everyone agrees that the market will NOT appreciate and we are all arguing about how much it will depreciate.

So at least to me waiting is the smart move….

**********

More thoughts… Don’t be afraid to talk to several Realtors. Also don’t be afraid to have a realtor send you listings for a few months. I have some people who I have been sending listings to for almost 2 years now! That way they can track the market in thier favorite areas. You can do the same.
**********

Finally SDLaw06, I had posted a few tips for buyers in a previous post. Rather then repeat them if you like shoot me an email and I will send them to you, [email protected].

Be patient and you guys will do well… I think everyone on this site will tell you the same thing.

[SD Realtor]

waiting hawk I checked out that site. Crazy!!! Very cool stuff.

I do agree with this thread that there is no reason to buy right now. Find a nice place, rent it, invest your cash in a wise manner, and hopefully in a couple of years (or maybe sooner?) you can buy the home you really want.

[SD Realtor]

Hi no_such_reality –

My site is http://www.1800grrealty.com. I work for 1% commission. Not 6% commission. I also own the brokerage so all of the operating costs are mine as well.

Please realize that not all agents or brokerages are alike.

No offense taken.

[SD Realtor]

For what it is worth, the most successful RE investors know the market (geographical location where they are investing in) well. Don’t rely on stats, do the work yourself… travel…. If possible choose a place you have been or plan to visit or maybe have a relative. When you create your spreadsheet make sure you allocate all of your costs accordingly. I know this is all basic stuff and you may know all this… yet… ya never know. Check for demographics and find fast growing communities. 4 years ago my wife BEGGED me to by land in the Imperial Valley and I poo pood it… maybe not a good idea on my part. Research fast growing cities, research where Wal-Marts, Home Depots and other signs of infrastructure growth are occurring. Not long ago I saw a posting by Powayseller about Yuma… now I don’t know if it is good or bad there but every year or two I drive through it, including about 2 weeks ago and every year it is bigger and bigger…

You may also want to think of joining investment groups and work with people who have done it before.

[SD Realtor]

Powayseller –

Yes much of my time is spent educating sellers. It is my job though so I actually enjoy it. I can honestly say that I have never left a listing appointment where the seller didn’t learn anything new. I sit down and logon to the MLS with them at thier home with MY login so the get to see the agents view of the MLS.

Anyways to cut to the chase, it is a very frustrating line to walk. I am not the type to badmouth other agents because honestly most of them are good people. While I do not agree with some of thier tactics I try to simply educate the seller to ASK INTELLIGENT QUESTIONS rather then say this agent is blowing smoke up your you know what. If more sellers asked for hard data to back up claims that are made that are more speculative in nature then I would have 3 times the listings I currently have.

So how do I deal with it?

Well not in the greatest way. I do not lie nor do I mislead. When I am at a listing appt I tell the seller what my price RECOMMENDATION is based on the comps AND based on my read of the market FOR THAT LOCAL MAPCODE. More often then not my recommendation is lower then the price the seller wants to list at. I tell the seller I will list at his price if he wants BUT THAT IN MY OPINION, it will be a stretch not only for him to get that price, and he may not get much traffic. Also that it could not appraise if it is to far outside the comp range. So by doing that, I still am in the game to get the business, but I have put my opinion out in the open.

Sometimes it works sometimes it doesn’t. In some cases I get the call back from the seller saying he is going with the other agent who promised a marketing onslaught will do the trick. Other times I get the listing, the home goes on the market, gets little to no traffic, we reprice and then the home sells. Sometimes we reprice and we end up chasing the market and the home never sells. Other times the seller cancels on me after a period of time where no traffic came through. Even though I forewarned of this event! What can you do… My wife tells me I do way to much work for free and in most cases I agree with her. My sister in law who works for Coldwell also says the same thing… Many a time I send out comps and do alot of legwork only to get a call saying thanks for all of your work but we went with someone else. Alot of times I see the same pictures I took used on listings that used to be mine. Last month I did alot of legwork for a lady who wanted to list a place in Luecadia. She came in from Hawaii… I comped it for her, looked for a handyman for her to fix it up, did a fair amount of work over a 4 week period. Then two days before the listing she calls me and says she is gonna have her best friend list the home. So why didn’t she just work with her friend from the beginning. She was very nice about it and told me she has recommended me to alot of her friends. Since this happens alot I always leave it on good terms and I told her hey no worries, I will keep an eye on her listing especially if I have a buyer. So then I noticed when her listing did come out the listing agent took LAME photos. So I sent her an email saying hey, you may want to ask your agent to hire a photographer or get a virtual tour, that stuff is super cheap. So I get a TOTAL NASTYGRAM from the agent after that. All I was trying to do was help the seller…

What the heck… What is funny is I do not consider myself a super agent. I am just a scrub! I have had my license for like 2.5 years but in that time I have done a ton of transactions. Also have my own rental properties for many years and doing alot of real estate helped.

So for what it is worth, yes I try to educate sellers but again, they need to ASK THE RIGHT QUESTIONS. It all may seem like common sense to alot of people posting here, but to the average person it is not.

I try to help…

[SD Realtor]

Hi Steve –

I read your posting and your arguments are thoughtful. While I disagree with your assessment I have to be honest and say we do not have enough hard data yet. I can DEFINITELY say that the amount of traffic I have seen in several areas of town has SEVERELY decreased. Of course some condo complexes have increased in value. However there are more that have not. For instance the original developers at La Jolla Regents sold out to another developer several months ago. That developer is moving forward with the next phase sales at below last summer pricing. Lucera in UTC is well below 2004 pricing. Many complexes in San Carlos have depreciated already. Provencal in Sabre Springs has depreciated. SFR’s in Lemon Grove have depreciated bigtime. What about Otay Ranch? What are your thoughts there?

This is what is frustrating for me. Alot of press likes to stick to the median price, and statistics, and studies.

Meanwhile I am down in the trenches working directly with the sellers seeing it first hand. You are on the appraisal side. So you get to visit homes in escrow! Good times!! Do you look at the cancelled, expireds, and withdrawns?

Why doesn’t anyone ever talk about the numbers of those? Why doesnt Dataquick ever publish the amounts of listings that went into those categories?

Again, I do respect your opinions and I think they are thought out and presented well. I don’t agree but I respect them.

[SD Realtor]

Nosy nosy nosy!!

heheheheh – just kidding powayseller.

As usual I pretty much agree with all of your logic above. I also think that I have said in one of my postings that the propaganda machine that is NAR is REALLY hurting the market in the manner in which they operate. Let me tell you it is not just NAR, CAR and SDAR, many agents I compete against just do the same thing.

At one of my appts last week, I met up with a guy and I was comping his home at about 550k… and this was a VERY GENEROUS COMP. I told him I would be more comfortable at 525k. Anyways I encouraged him to interview with other agents like I do everyone else. So I followed up with him Friday and he said he is going with one of the others. He said that this other agent told him that extensive exposure including brokers tours and magazines will enable him to sell the home at 600k at least.

I asked the guy is he asked the agent the following questions:

1 – How many sales that this agent had this spring resulted from brokers tours and magazine ads.

2 – What raw data did this agent have to back up that price estimate.

3 – How many sales had that agent made and how did they compare against the original starting price.

This guy said he had not thought to ask those questions.

So Powayseller what am I to do? This is routine! It happens all the time. Sometimes people are smart enough to ask the right questions but most of the time they are not.

So I pay my dues and stay a member of NAR, CAR and SDAR and be a good soldier. No I absolutely don’t agree with the way things are. If the data was presented in a more rational manner then I think that would be the best thing in the world. I think taking our bad medicine now would reduce the duration and the extent of the impending tough times. Believe me I am as tired of soft landing and platueing prices as much as everyone and all of that rhetoric REALLY makes my job harder.

Do I think I can keep up my volume? No chance. My wife will atest to me being a TOTAL pessimist. To those ends let’s just say I am prepared for what I envision to be a long couple of years.

I do think that the results of the downturn will eventually affect enough people that everyone will deal with it correctly. What is that term? The 7 stages of grieving? Anger, denial, etc etc… I think eventually that is what we will encounter.

What is interesting is, what will the public do or how will they feel about NAR. Recall after most of us, not all of us, but dummies like me lost lots of bucks in the market there was alot of blame. Why weren’t we protected. I am an idiot but at least not dumb enough to blame anyone but myself. So will the same thing happen a few years from now? “Why weren’t we informed of the downturn earlier?”

[SD Realtor]

Farls –

You are in Thailand and I am roasting here in Mira Mesa while my 18 month old throws pieces of tomatoes at me. Needless to say I am jealous.

Powayseller –

Good post above. When I take a listing one of the very first questions I get is what should we offer the buyers agent. My standard answer is to offer what the majority of your competitors are offering. Before you guys jump all over me, I know that is not a great answer. So I get on the MLS and show the client what all the comps in his neighborhood are offering. In most all of the cases the norm has been 2.5%. Now I have had a few clients that asked me to list 2.0% and I did that. Now one thing I do for all listings is tell the seller that if I represent the buyer I will do so for only 1%. ANYONE selling thier home should make sure the listing agent does this.

When I do represent a buyer I would be a liar if I said that I wasn’t happy bigtime when that cbb is a 3.0 verses a 2.0 but I never discourage or don’t show the listing. Like you said, the consumer is SO EMPOWERED now by access to information. More often then not my buyers are sending me MLS numbers they pull up rather then the other way around.

Now my life is so busy that no I never show a buyer a place that he didn’t seek out even if they are paying 10% commission. Nor would I talk a buyer out of buying a home that is only paying a very low commission. So many of my leads come from referrals that I really try to focus on what the buyer wants, not what is best for me. Now when I rebate a buyer I do have a baseline of what I need to make on the commission. For instance I like to make sure I at least get 1.5% commission. So if someone is offering only 2% commission then I will only rebate that buyer .5%. If they are offering 2.5% then that buyer will get a full point.

Now this is just me, and unfortunately many people in my industry feel I devalue the profession overall by acting in that manner. If the median home was 250k I would agree.

I will tell you though while being a listing agent I have had many clients who want to offer a low cbb like 1% and I will decline the listing. My bread and butter does rely on the traditional large brokerages and it is not in my best interest to alienate them. For people who don’t want to pay out a competitive CBB I advise to call Jeff Karchin or even do a FSBO.

There have been ugly cases as well. I have on more then one occassion received calls from buyers agents saying, we really like your listing but we are looking for a bit more CBB. That is just lame. I politely tell them that I will forward that request to the seller and I do.

So to summarize, I do in general agree with your statement. I do not feel there is any hard data that shows the higher commission yielded better results or faster sales. Yet I do feel that the most competitive way for me to market the listing is to offer a CBB in line with everyone else. I just don’t have the hard data to back it up. So far I have never recommended anything over a 2.5. I have done a few 2.25 and a few 2’s.

I will say this… 2 years ago you would go to brokers tours and there would be 20 or 30 people pitching the home and a hundred buyers agents. Now it totally reversed. The pitch sessions now take 90 minutes and there are TONs of listing agents all pitching to each other. More evidence of a saturated market.

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