Many Questions, Few Answers

For those keeping an eye on the interest rate picture it's not news that rates are moving, or have moved up. Rates now for "A" credit, conventional 30 year fixed rate with a 20% down payment are ranging in the 6.5 to 6.75 area. Still cheap money, but up from recent history. If you watch the 10 year treasury note, its movement will give you a feel for the direction and the probable extent of coming mortgage changes. There are a lot of sites providing this information. One I like is http://www.smartmoney.com/bondmarketup/ Read the interpretations of the experts with your tongue in either cheek. If these people actually knew what was going to happen next the national lotteries would be taking some serious hits. Still fun and informative though.
The questions I referred to in the title have to do with people behavior, and so I'll describe a couple of recent situations and let you ponder with me the appropriate mechanisms we should consider for our reaction. First is a listing we had been competing for. We made our normal presentation, major appearances on web sites, print media, regular reporting on number of hits the property received, and etc...We were pressed by the seller to offer a virtual guarantee of being able to locate a buyer within 30 days. We pointed, realistically we thought, to the average days on market in the entire Sierra North Valley MLS, which naturally includes Chico as the major market. Those statistics YTD are 85 days, and I have indicated in past blogs that those numbers can be fudged, or not entirely accurate. With the knowledge that we would very likely not make the promised date should we agree to the seller demand, we didn't make such a commitment. Another guy did. The seller listed with a conventional percentage fee broker and is on the hook for almost $15,000 in commission, three times our best case offer and about $5,000 higher even if an MLS office should have sold our listing. We know for a fact our advertising which is heavily skewed to take advantage of the shopping habits of modern real estate has no peer. Should we have lied to the man and prayed for a lightning strike? We don't think so.
Second case is an Orland problem. One of our agents has three different potential sellers with homes in an upscale subdivision talking about listing. They all feel their homes are worth in the $400,000 range. They are not, we can't come up with comparable sales to support such a price, and with brand new homes in nearby areas that are 500' larger selling for $365,000 the hopes for an overpriced listing are dismal. The owners are essentially charging our agent with trying to keep the price down to insure a quick sale. I'm particularly proud of our agents and their client focus and integrity, and a quick sale is the last thing on their mind. Protecting the client's interests is foremost. So far nothing unusual here, just the inflated hopes of some sellers. But Wait. Some nut case appraiser appraised a home in the same general vicinity for $410,000. How our agent asked? The appraiser told our agent he couldn't find comps in the area so he used some from an estate subdivision several miles away, all 1 acre or larger estates with homes ranging up from the middle $400's to $800,000. Word of this appraisal "leaked" out and here we are. Owners misled, real estate agents looking bad, yet again. As a mortgage broker I can assure you that if that appraisal was to satisfy a loan application it did not get past GO. It would have been sent back for a revisit, or more likely subjected to a peer review. Meanwhile substantial damage has been done.
Last note. Don't want this to sound like a dreary exercise, or certainly not "poor us". For home buyers and sellers the real estate industry is viewed a some monolithic whole, lots of credibility in the training and ability of the practitioners, and some level of comfort derived from consulting with professionals. Would that it were so. The entrance requirements for licenses in our business are very nearly a joke, and the oversight in most offices has to do with making sure the paperwork is complete so as not to be sued. There are many agents and some offices with high standards and high regard for clients. Seek them out. If you only want someone to tell you what you want to hear, call anybody.. When your body is ailing you can consult with Dr.Feelgood who will smile and send you home with some happy pills, or you can find a real Dr. who will tell you exactly what you need to do to fix whatever it is. The news may not make you feel good, but the treatment will.
As usual,
thanks for visiting.

It's Not Paris Hilton, But Maybe Interesting Anyway

Picture has nothing to do with anything. Just for your amusement. Desparate times call for desparate measures, I guess.


Just another recitation of where we are in the market, and a small peek into the trials and tribulations of a real estate office. Chico sales (MLS records) of single family homes for May; 88. Compare to 2006; 97, and 2005; 102. Inventory stands at 531 currently, in 2005 it was only about 120. Looks like we're going downhill, but for year to date comparisons we're currently 381 sold, 2006 it was 353, for 2005 454. Not really all that dramatic a difference in sales but as a percent of the hopeful sellers it's a dreary picture. A broker friend of mine from Red Bluff tells me that of their 500+ inventory over 200 of them are vacant and that's kind of scary. Our Orland office is getting more than it's proportionate share of business in the resale market, but that's not surprising given our business model and the quality of our agents, but the total market is way down in Glenn county in resale homes. I'll start here with the peek inside our office. We just lost two listings to other offices, one after having one offer submitted, numerous showings by our office and other MLS agents and our ability to demonstrate exactly how many times the property had been viewed on the 20+ web sites it appeared on, plus the heavy traffic on our own site. Shoot the messenger. The other loss did not involve an offer and had fewer showings. The seller resisted our agent's attempts to get a price reduction to increase showing activity and listed with a %fee broker from out of town, (much higher commission obligation) and reduced the price $40,000. This property, as with all of our listings, had web visits numbering in the thousands. We don't even know of anyone doing as much as we do to expose properties to prospective purchasers, but that's all any marketer can do. We can not manufacture a buyer, we can only get property in front of them. To extend this peek inside, just one more example of a client moving on. We had a property listed for 175 days, showed it repeatedly to local and out of town buyers, had it shown by MLS agents (we track these showings by lock box activity and contact the agents for feedback) and tried to get the seller to reduce the price, couldn't even get an agreement to concede $2000 to a prospective buyer for costs. The seller listed at a full 6% with a franchise office, reduced the price by $35,000 and it has now been listed with that office for 113 days and the price has just been reduced an additional $10,000. It goes without saying that the current listing offices in all of the above are not even in the same league with us for exposing properties on the web. You may gather from all of the above that this is not a rational business. The folks with property for sale can be excused perhaps for listening to the blandishments of professional sweet-talkers, because they are at least concerned and maybe even a little frightened by events swirling around them, but the logic of lowering the asking price for a replacement agency rather than dropping it for a known marketing pattern really baffles me. Embarrassed perhaps for not listening earlier. Just thought it might be interesting to view some of our "trial and tribulations". This is not a complaint by any means. What is, is.
We are in the process of being trained and certified by the largest reverse mortgage lender in the nation, and will shortly be able to offer these products. Much of the industry seems to have a pyramid scheme flavor to it, pamphlets on display wherever seniors gather, and referral fees being paid I'm sure. For that reason I've been suspicious that some of the selling of this product, maybe most of it, has been focused on income for the agent and not the benefit to the senior.
Our involvement will be the same as all of our other mortgage activities. If it is in the clear best interests of our client, we'll make it happen at the lowest price possible. If it is not we'll suggest the best alternative.
I've had some nice comments recently about our company, our agents, and our focus. Nothing can be more rewarding to us than a recognition that our efforts are appreciated. Thank you.
As usual,
thanks for visiting.