July 2008, the Realty world Changes for the worse!

In July of 2008, in the great state of Florida, it will no longer be required of agents to disclose a Transactional relationship with Buyers or Sellers! How did this happen? This could be the greatest boner ever passed! Great job NAR for not taking a harder look at this one.

To the general lay person, it may not seem like a big deal, but let me put this thing into perspective for you: For the sake of this Blog, lets assume you are the seller of a $400,000 house. You list with XYZ Agent who does not disclose that they are acting as a Transaction Broker. You hire them. Two months later, you have another agent from ABC Realty offer $350,000. This Agent from ABC Realty is speaking with the Buyer and tells the Buyer agent (YES, the one that is representing the BUYER, trying to get the best deal they can for their BUYER) that they “will pay full price for the house”, but they want to see if the seller will move off that price. YOUR AGENT THAT YOU HIRED TO SELL YOUR HOME (the Transaction Broker) overhears this conversation. Your Agent gives you the offer. You review it and decide to counter offer $375,000. Your Transaction Broker will watch you sign the contract, knowing that you are leaving $25,000 on the table, and proceed with the sale. Who had your back? You just paid a $21,000 commission to one Agent from XYZ ($10,500) who basically “facilitated the deal” and $10,500 to the Buyers Agent, who did a VERY NICE job representing their Buyer.

Had the Seller listed with a “Single Agent” or an Agent that represented the SELLER, they would be $25,000 ahead of the game. To the common lay person, this is difficult enough to understand, as of July 2008, the Seller has NO CHANCE TO SEE THIS because Agents will no longer be required to disclose this type of representation.

If you think you are safe with larger firms, think again. Some of the most well known names in real estate NO LONGER REPRESENT SELLERS. Ignorant Sellers don’t ask questions and they just assume that they are being represented. Those agents when asked will SPIN, SPIN, SPIN this fact. But there is no hiding the FACT that Sellers, the ones who pay the Realtors, are getting short changed, or should I say, “short dollared” by this misleading change.

Now, more than ever, you need to ask of your Realtor FLAT OUT, “Do you represent me, YES or NO” and take the spin off thank you very much! I don’t know the exact number, but I’m willing to bet that over 75% of the Sellers that have their home or property listed in Florida now are operating under this “Transaction Broker” scenario. The laws need to be changed so that Buyers and Sellers are again working at arms length! As it stands now, Buyers are being represented most of the time, yet Sellers are not. Why? Because they are not asking for the representation!

This is simply put, a way to put a buffer between the Listing Office / Agent and the Seller, in case of a lawsuit later. The Listing Agent can “divorce” the Seller and say “I was a Transaction Broker” thus erasing potential liability!

That’s the way I see it!

Kicking Sand in Faces

O.K, I’m an equal opportunity offender so here I go.

One thing that always gets under my skin since I began selling real estate, or “sell’in that dirt” as local real estate legend Jeff Curtis once said to me, is the designation status Agents bestow on themself. ABR, CRS, CRB, DREI, GRI, CIPS,TRC, TMP to name a few. What does it all translate into? I can’t figure out what those agents do. I bet they spend ½ their life shuffling papers back and fourth between instructors in class.

I can’t find the time to go to lunch, let alone take a class so I can get some sort of designation. I remember being a new agent in 1991. I met an agent in my office and her card said “Million Dollar Club” and remember thinking “WOW, she is a millionaire”. Being a new agent or “rookie” things like that seemed important. This was until I found out that the “Million Dollar Club” in real estate is an agent that has sold a million dollars worth of real estate in one year. This translates into a $30,000 income. Now I figure, back then, 50% went to the Broker you worked for. Translation: That “Million Dollar Club” agent made $15,000 a year. I’m no historian, but even in 1991, I’m reasonably certain $15,000 put you in poverty level of income.

The best Realtors I know are a mixed breed. Some of them have a few designations, some have none. I have  not found that Agents with designations are better Realtors than those without. It varies from person to person. I was ranked #4 in the world by ERA in 2007, #1 in Florida (for ERA) and I have been the #1 ERA Agent in Tampa Bay since 1995. I have ZERO designations. I let my work (sales) speak for itself. As I have mentioned in previous Blogs, real estate is the single most pretentious business I have ever seen. Many Agents try and give the perception of success, but in truth, some can’t close a door, let alone a real estate deal.

One of the most comical things I see is this scenario that we see over and over:

Here is an agent, walks into a listing (house for sale) and starts to criticize the house openly in front of the Buyer. One negative comment after the other. Many times, I know that the Buyer likes the house, but the Agent shamed them into not making an offer. They repeat this mistake, house after house. Then, they wonder why that buyer never purchased from them. They say “Buyer are liars” and badmouth the client. The reason they did not buy is because Mr. Know It All did not know how to sell. Part of selling is knowing when NOT to talk. Selling real estate is not rocket science! You show the house, point out the positive aspects, keep your mouth shut on the negatives unless the Buyer openly does not like the home.

I’m not talking about structural flaws or a flaw that needs to be disclosed by law. I’m talking “Mr. Know It All IGNORANCE”. What sets Agents apart is there ability to work hard and get the job done. Even in my office, ½ the Agents are at home, watching Opra Winfrey re-runs and wondering why they are nat selling anything.

I demand hard work and I lead by example. I have no room on my Team or my staff for any half assed agents who refuse to take real estate seriously, and I’m not talking being in a class all day trying to learn how to “stage” a home so I can get another designation next to my name. I’m talking WORKING real estate like the JOB it is.

NEVER judge an agent by how many designations are next to that persons name.

Try driving by the office and see how often that person is there. How hard are they to get hold of. How serious are they about their job. This alone will tell you how serious they are about selling your home or finding you a home. Designations don’t get you a better interest rate. Selling thousands of homes over the years and commanding the respect of lenders who want to EARN your business. They will give your clients THE BEST deals because they want repeat business from the Agents. Not because they are an ABC or a GTP, but because of MONEY. They want the repeat referral business that we all thrive on. That is how you can get the BEST price when selling, the BEST price when buying, the BEST insurance rates and the BEST interest rates. Success breeds success. I’ve spent my career learning from other top agents. Those are the education gridlines I followed to get me where I am today. Some of my mentors had plenty of designations, but I’d be telling a lie if I did not state the fact that MOST of the lessons I have learned have been from successful agents without letters next to their name.

What I am about to say is 100% FACT: I KNOW of a “Real Estate Coach” for a well known National Trainer. Some victims (Realtors) from across the country call him. He is their “Coach” or mentor in the business. Thease Agents are paying $1,000 per month for this “Coach” to lead them. The National Trainer gets $500 and his coaches get $500. Know what the “Coach” does? Well, a year ago, he was delivering pizza. He got into real estate, had some success, became a coach for this trainer. Then, he got caught up in the real estate bust and is no longer a Realtor. But he is still a coach, collecting that $500 per month. Can you imagine the Agent paying $1,000 for advise from somebody who left the business and is no longer selling real estate?

When we say the “game of real estate” sometimes we really mean THE GAME OF REAL ESTATE! As I say over and over…… ask questions. Know the right questions to ask! If you don’t know what to ask, go to www.sellwithvince.com and take a look at my videos that are applicable to your situation.

Now I’ll brace myself for all of the complaint e-mails I’m going to receive.

 

A Stay of Execution?

Something happened on the way to “Old Sparky” this week! The Florida real estate market got a stay of execution! For the first time in 2008, real estate prices did not fall from one month to the next! Could this be the slowdown we have been waiting for since 2006? In Tampa Bay, prices inched up almost 1% from March to April. This could be a slowdown in the meltdown! Don’t be so quick to shoot this number down! From March to April 2007, sales went DOWN. This same time period in 2008, the number of homes sold was up almost 17% (but still below 2007 numbers).

 

This is good news and shows the decline is flattening out…… maybe! Once we hit the bottom of the curve, most economists predict a “V” spike to the higher profile areas of Florida. I think we still have a way to go to reach the day to day stability that most Realtors, including myself, like, but this is a sign that we could be closer to that day than previously thought!

With absorption rates still at around 6% (up 2% from January), Buyers and Sellers are still far apart. Lenders need to loosen up their grip on the money, Sellers need to be more reasonable, banks need to make proper adjustments on short sales and MOVE INVENTORY and Buyers need to get some “skin” into the game (as in down payments). But if this big greedy machine, also known as the Untied States of America gets rolling again, there could be some bright days ahead………. baby steps to start mind you, but moving forward!

Now, could somebody put me into a drug induced coma until we are completely out of the woods? (just kidding). Happy Buying and Selling!

And don’t forget to visit my web site at www.sellwithvince.com. And “hey, Florida, keep those property tax reductions coming and hey insurance companies…….. don’t talk trash about the oil companies. you are just as greedy! Can everyone work together here to keep Florida going? If we can’t work together (all of us), then would the last person leaving Florida turn out the lights?

So, You Want To Be A Realtor?

So you want to be a Realtor? It was a funny weekend for me. I listed a house two weeks ago and we have shown the property three times since then. The last couple I showed the home to decided to make a very nice offer. My seller decided that “it was too easy” for me and they did not want to pay me the fee they had originally agreed to less than fifteen days ago.

Many Sellers in this position feel the Agent they hired did not justify the fee they earned because it was “just too easy!”

Well, let me tell you about my last month in this wonderful; business that I truly, truly love and that is the passion of my life (next to God and my family).

 

At almost $4.00 a gallon, I have filled my cars tank 8 times this month (3100 miles) at a cost of about $600. Driving clients all around Tampa Bay, driving to check empty houses to make certain other agents did not leave lights on, doors unlocked etc. I closed on a home that was listed for over one year. I had to pay a contractor $300 out of pocket to make a last second “walk thru repair” because the closing was a mail away and the seller docs were already in Tampa. Do you think I will get a check in the mail from my Seller to pay me back? In almost 20 years in this business, I’d gamble on…………….ahhhhhhh……   NO!

I had a listing that I had asked the Seller to list at $480,000 six months ago, but they listed at $525,000. Now, six months later, they list with another agent at a price of $449,950. I had invested over $2500 in marketing on this home and that money will never be recuperated, it’s the cost of doing business.

I had another client that called, asked me to meet her at Capital Grill, one of Tampa’s best restaurants. She claimed to be in town to buy 4-5 houses. After driving across town to meet her (and buy her lunch), she obviously has a screw loose and was not for real. Another cross town trip for ZERO. The same week, I had a person list with me. I sent the photographer out to shoot the house, take the Virtual Tour, burn CD’s and make full color brochures. Then they decided to not sell in this market!Just a typical day in the world of real estate! It is a great business to be in. To make a living, you have better have some talent! For someone to say this is “too easy” to make money, I say saddle up and give it a try!

 

Tampa X 2

The future looks?……………………….. the media would make you think the sky is falling in on real estate! It’s just a thunderstorm! According to the Tampa Tribune yesterday, the population of Tampa is expected to DOUBLE in the next 30 years! Holly Cow! Builders better get to building! With only a 5% vacancy rate here in the Bay area, they are going to have to double the housing in less than 30 years (build another town the size of Tampa)!

Again, I caution all of those in a panic: Like the early 70’s like the Savings & Loan crisis of the late 80’s and early 90’s, this too shall pass.

A word of caution if you are a buyer in this market: Gauge the curve! In other words, give yourself some flex room! Try and buy below market if you can to offset the decline! I can’t see the market getting below 2004 values so to me, this is a good spot to be in if you can get there.

If you are not looking to sell just yet, this is a wonderful time to do some renovating and updating! You will enjoy the newness of your home for a few years before you sell! Better than adding those granite counters after you move out! Live a little! DON’T renovate your pool! I had one person ask me if they should renovate their pool (how much would it increase value) and in a word NO. You will get almost ZERO for that type of renovation (drastic pool renovations). Pavers yes, outdoor kitchen, yes, re-marcite, yes. Radical alterations, NOPE!

You will get about 80% from kitchen and bathroom renovations. Find a contractor who gives you a 20% discount and you will get 100%! PLUS the renovations will make your home easier to sell! Shop around. Lots of skilled contractors looking for work now that they are not building so many houses!

We are in a soft spot in the market! Now is the time to come up with your game plan for the new three years!

The Best Agents? Ask Questions!

One thing I can’t understand, is Sellers not doing homework when selecting an agent to list their home with. There are so many variables. For example, one of the largest real estate firms in the WORLD, does not represent the clients that hire them. They, at least in Florida, act as “Transaction Brokers.” This is a “spin” name in my opinion for “I’m not representing you Mr. & Mrs. Seller.” The BUYER can have a Buyers Agent, but you, the Seller have hired a neutral sales agent to represent, or should I say, facilitate, the sale of your home. Many agents still represent Sellers when listing, so do your homework. Processing fees: Why do some agents charge processing fees? Is that not why we get a commission? $295, $395 whatever. It is not a justifiable fee in my opinion. How about this: Does the agent own shares in a Title Company? Why is this relevant? Well, some agents “give you a discount”, say 1% off the commission. Shares in a title Company is a great way to recoup some of your money that they just discounted for you. They can jack up the Title Insurance, charge you a few more junk fees (in addition to that $295 processing fee they already clipped you for), they charge the other agent that sells your home inflated MLS Fees (the fees that offices customarily charge one another at closing) and the cha ching keeps racking up! Do yourself a favor, use a real Estate Attorney or reputable title Company that YOU select if the Agent has ownership or shares in the firm they recommend.

Another comical thing is Agent tooting their own horn (unless it’s true of course). We have an agent in Tampa that is in every real estate magazine you can find. “THE Luxury Home King” of Tampa. The funny thing is, they have tons of high end properties, so the luxury home SELLER takes the bait. The problem is, they are not selling anything, at least not the numbers they will make you believe they are. Heck, when you run into them at the watering hole, they are always quick to brag about how much they sell. Too bad Realtors can look up the ACTUAL numbers. Who are they fooling? More than themself! Those Sellers, who are now locked into a long, lengthy listing agreement with no way out! Should all listings be voidable? You bet your sweet donkey they should! What if you owned a car lot and a salesman could not sell cars? Can you fire them? It should be the same for Realtors!

Real estate, especially the state we are in today is not something Sellers or Buyers should take lightly. Take a good look at the agent you are considering. Many Realtors give the impression that they are highly successful, driving new luxury cars, new Rolex, nice jewelry. Now look HARDER! What does their spouse do for a living? Most agent living in those ultra expensive communities would be living in trailer parks if they had to rely on their real estate sales! Dr. Husband or Attorney wife? Make certain all of that fluff can be backed up with legitimate sales activity. Many agents are trying the “Short Sale” game. This is VERY COMPLEX business. They have never successfully completed one, yet they take the listing and “practice” on a person in dire straits? Success breeds success, sales breed sales. As an Agent myself, I know of several agents that I would list or buy through if I were not an Agent myself. They are out there, but they are in the MINORITY and it takes an educated Buyer or Seller to ask the right questions so they hire a capable agent that leaves ZERO of your money on the table at close. Hire the wrong agent in this market, chances are they will not be a closing!

The problem is that real estate is such a pretentious game. Everyone is trying so hard to “look the part” that they forgot to acquire the skills. The market is flat, before you hire an agent, do your homework, look at the FACTS and most important, ask questions, ask questions, ask questions. If the Agent spends 80% of their time telling you how successful they are and not WHAT they ARE going to do to sell your home, move on to the next interview!

Happy Selling!

Special Interest and Florida Politics

How does special interest hurt real estate? Here is but one example. NEW CONSTRUCTION! Why has Congress not put a moratorium on speculative building? Why are new homes being built, “spec houses” as they are called in the realty world. Why are new homes being added to the stockpile of available inventory when new construction sales are the worst since 1991? Clearly, it would help if builders were slowing down. This would allow some of this inventory to dissipate and allow the market to stabilize!

Who are major contributors to political campaigns? Builders and developers! If they (political ones) did what was right, they lose re-election funds for the next election. They say “Catch 22″ and I say, “What a mess”. For once, Politicians need to do the right thing! The new sales tax (.01) to replace public school funds (replaces that part of the property tax bill) makes sense and is a fast track to stabilizing the Florida realty market. It needed to be on the ballot. Florida State Politicians almost got it wrong again! It passed (to get on the ballot in November) by ONE VOTE! The economy is walking a fine line! How about raising cigarette tax by .50 per pack? Beer sales by .25 per bottle ($1.25 per six pack). Those taters will still buy beer and cigarettes. Why not? Who do you think are HUGE political contributors to the Politicians of Florida are? Now you are starting to get the picture!

Bad Advice

One of the most frustrating things Realtors have to deal with in real estate when competing against other agents for listings is “bidding up” prices. Many times, the Sellers are not interviewing Agents, the are auctioning Agents. In other words, they simply select the Agent who tells them the highest price to list at. They will ignore the more experienced Agents and go with one who tells them what they want to hear…… and those agents are laughing all the way to the bank! Want to know how? Check out this video at www.sellwithvince.com/pricingVideo.html.

Flat out, if you purchased your home in 2005 or 2006, it is not worth more today than it was back then……..no matter what a wishful thinking, inexperienced Agent tells you. Facts are facts. In a declining market, pricing your home correctly is more critical than in any other market. In 2004, you could overprice for example and simply wait a few months for the market to catch up to your price. Not so today!

In 2008, not only are you making payments and carry (taxes, insurance, maintenance costs), but your value is in decline. A $400,000 home in 2005 is now worth $300,000 for example. Most of the loss or “crash” has happened in the past 12 months. Say this seller listed at $370,000 six months ago when the home was worth $350,000. As they begin to reduce the price, so dropped the market in conjunction. Unless that seller cut the price to get in FRONT of the price curve, he will be in trouble. Six months ago, he should have been at $350,000, today, six months later, this same Seller is at $320,000 when he should be at $300,000. Had he priced right from day one with an experienced Agent, he would be $50,000 ahead of the game, plus the carry.

Bottom line is this: The more reputable, experienced, HONEST Agent that tells you the truth, will net you more money than taking the advise of an ignorant or inexperienced Agent when it comes to pricing your home. Look at each Agents Market Analysis. See HOW the Agent came up with the price. Look at the FACTS. Sometimes the experienced Agent will give you the HIGHER price. What is important is that you look at the material, see how much work and analysis the Agent did to come up with the price. Most important, use your brain and not your heart when pricing!

Happy Selling!

Just Say NO to OPEN HOUSES!

Many consumers are surprised when I tell them that OPEN HOUSES are an ineffective means to selling YOUR house in 2008.  Why would an agent do an OPEN HOUSE if it were ineffective? I did not say it was ineffective for selling houses (as in  not yours)!  Realtors use OPEN HOUSE signs to draw in potential Buyers into a home. They sign them up on the “Welcome Sheet” or “Sign In” sheet. They gather that Buyers criteria and when the house they are looking at is not what they are looking for (and drive by Buyers, statistically can’t afford the house they initially call Agents on), they get drawn into another, more suitable house and BOOM, the agent makes a commission. REPEAT, REPEAT, REPEAT!

AGENT OPEN HOUSES? Same game, different players. Real Estate Brokers go to these events to try and get to know Agents from other offices. As they befriend them, they start the process of trying to recruit them to come work at that office. Agents to Brokers are what listings are to Realtors……. MONEY. It’s all a complex game and many Agents don’t even realize what they are doing. They just do what they have been taught (”Open Houses to attract prospects” new agents are taught by office managers)!

To grasp this OPEN HOUSE thing, we need to visit the past.  About 20+ years ago, there were virtually no computers in real estate (unless you worked for ERA-Electronic Realty Associates). We had the MLS BOOK. This was a MONTHLY print that had all the properties in MLS listed with an abbreviated description of the home and sometimes a very small black and white picture of that listing. This small picture, about the size of your two thumbnails put together and an abbreviation like this “3br, 2 ba, CHA, pool, 2000sq/ft on 1AC, $148K”. Well as you can imagine, the book came out once a month, so if you listed on the 2^nd day of the month, you were not going to be in this book for 4-5 weeks. HELLO BROKER OPEN HOUSE! The listing agent throws a party for Real Estate Agents, invites all the area offices and agents to visit! This is how agents found out about available houses BEFORE the book came out! Need to know the latest inventory in an area? Tuesdays from 10:30 until 2:00 as an OPEN HOUSE! On Saturday or Sunday, the listing agent held an OPEN HOUSE for the same reason!

Hello modern era! Today, we can instantly list a home and put 20, high resolution pictures in MLS along with a Virtual Tour while we are at the home. Your home is listed and in the MLS before the agent leaves your home (if they did their homework and have a digital camera on hand). Potential Buyers can look at available homes on their PC at 3:00 A.M. in the comfort of their own home. They know if they have a liking to a home before they even get to the house! Further, the descriptive area is almost unlimited! Now we can describe the home in ENGLISH and in vivid detail! In 2008, we sell houses and the Buyer has never seen the home in person until the walk into it AFTER they close it! Technology is wonderful…. if you hire an agent that knows how to use it!

Bottom line is this: OPEN HOUSE is a grasp at straws, looking for a needle in a haystack in my opinion. It is the Agent trying to stick a pacifier in the Sellers mouth because they lack the necessary skills to sell houses in today’s complex market. Either you can use modern up to date marketing, or you fall into yesterday’s antiquated way of doing business! To learn more, go to www.sellwithvince.com and click the links that apply to your individual situation! If your Rolex is missing after an OPEN HOUSE, you can say Vince Arcuri warned you!

Builder Beware!

To the exit doors they go! All those real estate agents that got into the business for the easy money are gone, or heading for the exits! Same goes for lenders! Only the reputable few remain! Some of those cocky sales reps for the builders, the ones who were asking veteran agents to “leave” the model centers because we were working with “investors” in 2005 are now working where? The few that remain? In 2005, they were very cocky, not wanting the investor business. Flash forward to 2008. If I brought Osama Bin Laden into the model center, not only would they sell to him, they would ask if any other Al Qaida members were looking in the area.

Those builders I hope learned a lesson. Don’t shut down the veteran agents. When you need the sale (like in 2008), we can’t keep your reps out of our office! If I want to go to a football game or a concert, I can get myself tickets. I don’t need a builder to entertain me to obtain my loyalty. All we needed was to be treated with the respect we deserve, not the disrespect and cocky attitude that you told your reps to dump on us in 2005.

Many agents have long memories, I know I do. As the market slowly recovers, Veteran Agents will remember who took care of them in good and bad times, and who had the attitude. Nice job guys, I guess you thought those good times would never end. As your model centers close and as you lay off yours reps, always remember that you have to pass those agents you stepped on as you go down the ladder that you went up.

To the ones that treated us right, we have and will continue to do business with you, like we always have. Funny how fast time flies from 2005 to 2008!

Message to the consumer: When you hire and agent, make certain you go with a veteran. Over the years we have established relationships with all vendors. If you purchased a home in 2005 or 2006…… the good times, those builders that I mentioned above are not going to be very happy about fixing your cracked tile or leaky roof in 2008. Rest assured, the reputable builders will still honor their work. Funny, how in this unstable market, how the ones who were steady the past 10-20 years are still steady. Realtor, Builder, Lender, Bank. Experience the difference.