THE END OF JULY

I was tempted to add "but not life as we know it" to the title but held back. The news has seemingly been uniformly bad for all things real estate but maybe if we burrow around a bit there may be a bright spot. First the local statistics. Chico MLS reported single family homes sold for July; 54, down from 83 year ago, or 65% of year ago. Not good at all, and especially measured against the 563 homes listed for sale. Paradise/Magalia had 37 sales, same as year ago figures, from an inventory of 417 homes. Glenn County, 10 sales this year, 11 last year, but inventory a whopping 183 for that small population area. So much for local. Nationally home sales are down, inventories are up, and prices are dropping in most markets, not precipitously, but dropping. The stock market was thrashed last week, based on the inability of some major corporate players to place some large/huge bond issues at favorable rates. Or at any rates in some cases. This is a reaction of the money markets to the beatings being taken in the high risk hedge funds, related to the mortgage debacle, which is continuing and not likely to soon go away. Once again let me offer the link which is a pretty good window into the mortgage scene.
http://ml-implode.com/ . Pay some attention to the American Home Mortgage Investment Corp., number 10 lender in the country, and not a sub-prime lender. We used them from time to time, locally they were doing business as American Brokers Conduit, and were OK to deal with. The tragedy of these collapses is not written in headlines anywhere, but picture if you can the number of individuals who were expecting their loans to fund and their purchases to be completed in the approximately $700 million in reneged deals in the last two days. Sellers who may have already moved, buyers who maybe have no place to go. Tragic.
The bright spot. Both of our offices are seeing great phone traffic, writing listings, writing offers, busy, busy agents. Our web site traffic is up and pretty consistent. I hope this is true for other offices as well, but I frankly don't concern myself much with the other guys. We're happy.
A note about our trade that may be amusing. As a group we're commission people, generally gullible and a little naive as sales people can be, so we get a lot of advice from self ordained gurus trying to sell us ways of improving our performance and incomes, and etc. One such email that comes to me regularly from the Broker Agent News had an article written by someone who was offering advice on how an agent could sell more of the agent's listings. It was advised that this guru had come up with a technique for "triangulating" the prospective home listing for value, determining the fair market value, and then listing the property for ten percent below that value. He reports that he was successful in generating many offers with this technique. Wonders will never cease. Selling ten dollar bills for nine bucks should work pretty well in any kind of market. These publications also carry lots of advice on how agents should justify their high commissions to prospective clients. I've heard a lot of the justifications, never one that was satisfying, but the salesman who can sell a 6% fee should have no trouble persuading a client to take a 10% bath on his house.
As usual,
Thanks for visiting.

Local and other news

Before diving into any of the thoughts for the week, let me again suggest a visit to this link, http://ml-implode.com/ and spend a few minutes reading the reprint from the Boston Globe. Succinct and an accurate portrayal of what's real. At the local level, closed sales from the MLS files for Chico are down, and if there is not a significant surge in the last few days of the month, it will be a poor July. We'll see. Still a huge inventory, over 500 single family homes to pick from. We had a call from someone asking what 3 bedroom 2 bath homes were going for in Chico. Kind of a silly question and we tried not to give a silly answer, but really. What's your pleasure?
Our own office activity is up sharply in both Chico and Orland, listing and selling. Good for us and it's about time.
We recently joined the Chico Chamber of Commerce, we're already a member of the Orland Chamber, and I'd like to say it's an altruistic "let's support the community" gesture, but it's not. It's a frank attempt to gain exposure to possible candidates for commercial loans. We have many programs that offer opportunities banks simply can't match, and we also have some bank stuff to go with them. As with all businesses our problem is identifying the people who need our services. Having the best hula hoops in the world is no help if you can't find anyone who wants or needs one. We think our residential home listing program whips the socks off everyone else, but since we don't yet have all the listings, our message has obviously not yet reached everyone. To those who may watch our web site just for entertainment value you may notice slight changes in copy and soon probably a change in format for the listed property page, which is our landing page. We have added some links and will add more if we can determine some utility value to our web visitors. We monitor closely the activity on our own site, and for information, of the search engines directing to our site, Google is over 70%, Yahoo, MSN and AOL way down the line. Possibly a good sign, our web traffic is up substantially. People are looking at homes. The hits recorded on the 20 some national sites carrying our listing are also up, indicating an increasing interest, and that's where the buying process begins. We'll see how it plays out. My feeling, and that's all it is, is that if there is no serious disruption in the economy, we'll begin to see a return to some buying normalcy. Still a lot of foreclosure activity going to happen, still a lot of people going to be hurt, but these are the consequences of some bad past decisions and not necessarily an indicator of future behavior. I could be wrong, and I've been there before too.
As usual,
Thanks for visiting.

SHARED THOUGHTS

Since it's mid-month let's look at the sales track. If your home isn't listed for sale and you don't intend listing it, these figures are only for entertainment value. Remember these are only single family homes listed on the Sierra North Valley MLS. Greater Chico, total listed homes, 564, sales month to date (MTD), 19, last year 34. Paradise/Magalia total listed, 414, sales MTD, 12, last year 17. Glenn County total listed, 171, sales MTD, 2, last year 5. Our offices have seen an uptick in sales activity which won't be reflected until next month, but a good thing just the same. Some criticism comes my way for reciting figures which don't provide a rosy glow, as if by not mentioning less than flattering data it will somehow morph into good news. There are enough official real estate organizations feeding puff pieces into the media already, so with the belief that knowledge empowers, I'll give you the local news unfiltered. There is an old sales mantra that says, "Every Day in Every Way, Things Are Getting Better and Better and Better". I think there are better ways to develop the mind set necessary to making them better. One of my advertising reps told me that when he asks his real estate clients how things are going they first tell him how tough things are, then provide some of that upbeat nonsense, at which point he asks them if it would be possible for them to pay their bill. On advertising. A man named John Wanamaker, regarded as the first to open a department store in this country in the late 1800's has the attribution for the following, "Half the money I spend on advertising is wasted; the trouble is I don't know which half". Wanamaker is actually a pioneer in marketing. Before his momentous decision to put price tags, (fixed prices) on merchandise, customers and clerks engaged in bartering and haggling in a flexible pricing market. Customers were unhappy to discover that someone else bought identical goods for a lower price, time was wasted, so he figured a fair mark-up, priced the goods, and advertised honestly. He became famous and we are beneficiaries today, as we go shopping with the knowledge that we will be treated fairly without haggling. If you suspect I'm creeping up on a comparison to our real estate business, you're right. Nothing justifies a % fee for selling a home in the first place, and surely there is no reason for the client to feel the need to 'negotiate" whether the fee will be 3%, 4%, 5%, or higher. We don't have any money invested in the inventory to mark it up, we're simply providing a service, and it's fairly simple to calculate the costs of providing that service and charging accordingly. We charge $4995 to list and sell a home. For that fee you get the same peace of mind and assurance of value as with any other office, franchise or otherwise, and get to keep a whole lot more of your equity when your escrow closes. My apologies for the sales pitch, but I like the Wanamakers of the world, and the Schwabs and the Costcos. We certainly don't equal them in stature, but our motivation is the same; high quality, great service, fair prices.
As usual,
thanks for visiting.

MISCELLANY

Had a phone call today from an old friend, a broker from Red Bluff that I first met in the 1970's when I opened an office in that fair city. She was then the chair of the ethics committee for the MLS, a position she treated very seriously. We used to spend hours talking about the business and our shared concern for the greed driving so much of the business, rather than a concern for clients. Her call today reflected her feelings for some of her consulting clients that indicate not much has changed in our business, except for the worse, as demonstrated by the foreclosure and mortgage difficulties affecting so many. I am flattered that she thinks I have an explanation for what has happened, or that some solution is at hand, governmental or otherwise. What happened is easy enough, the solution less so. Simple greed, beginning with lenders and programs with ridiculously relaxed standards funded by greedy investors seeking the higher return of high risk mortgages, fed cheerfully by the real estate community selling homes at ever increasing prices and commissions, arranged or aided by appraisers anxious to please their real estate referral base, and let's not forget the eager buyers hoping to turn what should have been a home purchase into an investment opportunity. Why is anyone surprised by the result?
We are getting listing inquiries from people that have burdened their property beyond the market value, and they ask us how that works, and we have to be very careful how we answer. Because they wake up in the morning in "their" house it is difficult to grasp the concept that what what they "own" is the equitable interest in the house. So long as payments are made on time, the house is theirs, in a possessionary sense, but to sell it without spending some money, they first have to develop an equity interest. In some cases the value of the home has gone down and left them in an untenable position, but in most cases that we run into, the people have tapped into their equity and used the money for other purposes. Most of us learn early on that having and eating cake are mutually exclusive. Without doubt the rampant greed in our industry is the underlying cause of our current problems and my pointing to the participation of the home buyers is not intended to excuse that. We are the people with the licenses after all.
June statistics for the market watchers. All figures are for MLS reported sales of single family residences. Greater Chico, 83, last year, 98, total listings, 542. Paradise/Magalia 39, last year, 46, listings, 409 Glenn County, 10 each year, listings, 169. The significance, if any, is the ratio of sales to listings, 15% for Chico, 9.5% for Paradise/Magalia, for Glenn, 6%, and a whopping (to me) 1120 listed properties in that small market area. If you are considering listing you should fine tune these figures for the listings and sales in your price range to provide meaningful guidance.
We have just finished production on our new TV spot. Pointed to the loan market chiefly and should be on Fox channels beginning right about now.
All of our agents just completed a training session for reverse mortgage lending and all are now certified with the largest reverse mortgage company in the nation. These are critical loans for senior citizens and it very important that we offer proper guidance. They are a good solution for many, but not everyone.
Our commercial lenders offer ongoing training in which we are quick to participate, and a new to us lender will shortly be visiting our offices to bring us up to speed on some pretty exciting products for small businesses.
I want our people to be fast on their feet and able to provide professional help across the whole spectrum of real estate sales and mortgage lending. Single source responsibility we used to call it in institutional selling. We owe it to you .
As usual
Thanks for visiting.