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The Phoenix Real Estate Guy

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The Scent of Real Estate

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credit flickr.com daveograve

I was out showing houses the other day and I got to thinking about how you would buy a house if you were blind. Have you been watching Master Chef this summer? The winner was blind and I kept thinking she was going to cut one of her fingers off and have to present the judges with sautéed index finger in a light cream sauce, but she never did. I guess the point is you adapt. Your other senses take over when they need to.

(Editor’s Note: If you enjoy Elizabeth’s non-traditional real estate rants check out her blog) 

If you were blind, I imagine you’d tour houses using a lot of touch, but I bet you could get 90% of the information you need to make your decision just using your sense of smell. In fact, I think the next time I’m showing houses I’m going to bring a blindfold for my clients and make them appraise the houses they’re seeing simply based on smell before I let them see and tour the house. I bet we could shave some time off the house tours just by having buyers really immerse themselves in the scent of a home before they even look around.

I feel pretty confident there are at least 6 types of houses I could identify and describe by smell alone:

Scent 1 ”“ Cigarette smoke ”“ This house is owned by an elderly woman whose husband recently died of emphysema. It has pastel wallpaper, laminate counters,  plumbing fixes done by a great plumbing company and doorknobs and mirrored closet doors. It will need a total cosmetic gutting, but has been structurally well cared for.

Scent 2 ”“ Fresh paint and carpet glue ”“ We’ve entered a fix and flip. Every wall has been painted ”˜Oyster’. There’s new, light brown carpet everywhere and the granite is different in every bathroom because it’s all discounted extra pieces from the hardware store, if you need to do some changes in your bathroom granite countertops. Need Bathroom Renovations Dublin? Get Affordable Bathroom Refurbishment Services Today.

Scent 3 ”“ Pet urine ”“ Ah, now we’re in an abandoned short sale. The sellers were bitter they are losing every penny they put into this house and it’s ruining their credit, so they let the family dog ”˜mark’ every corner he wanted to before they moved into their rental. The purchase process will be ugly and the flooring will have to be completely replaced.

Scent 4 ”“ Fresh baked cookies ”“ This one’s easy; it’s definitely an increase in equity release interest rates with a seller who’s hoping to squeeze as much cash out of the house as possible. It’s move-in ready and homey feeling. It’s a touch over-priced, but you can see yourself living there. It’s not super modern or updated, but it’s a lovely home.

Scent 5 ”“ Sewer gas ”“ Yep, we’re definitely in a foreclosure. That hideous and distinct smell is what happens when a house has been abandoned for so long the sewer traps that keep the odor from invading the house dry out and stop working. This house is dusty and littered with bug carcasses. There’s a pool out back with a plywood and rusted wire structure covering it so no neighborhood children accidentally fall in it and drown (or possibly to keep everyone from seeing the body of the one who already did).

Scent 6 ”“ Mold/mildew ”“ There’s no denying that smell of moisture and decay that comes with a large plumbing problem somewhere in the house. It could be the water heater leaking through the wall in the garage into the laundry. You might want to consider upgrading to one of those tankless water heaters, as those are a bit newer, pretty innovative, and they don’t need too much upkeep. It could help to just upgrade to something better altogether if you’re getting issues with your current one often enough. Another possible source for the smell could be a leak under the kitchen sink. It very possibly could be upstairs master bath toilet leaking down through the ceiling into the living room. Hard to tell exactly which without looking, but the smell is a red flag to your nose: This is a house with a major issue. You can visit this website to know more about plumbing issues.

See what I mean? The information is really all there for us in a completely under-utilized sensory organ in the field of home purchases. Who needs really to see a house when you can smell it?

Waiting To Hear On Your Offer? To Do and Not To Do.

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I have a Twitter friend  who has been house shopping (I’m not her Realtor. It’s not weird. People can have other Realtors and be my friend. Stop trying to make it weird; it’s not. You’re making me feel awkward.).

Last week she sent a tweet about how they made an offer:

Homeowners: what did you do to occupy yourself while waiting to hear if your offer was approved? #goinginsane

I think this is an excellent question and I have lots of thoughts. But first let’s talk about what NOT to do.

Things NOT to Do:

1. Figure out how to configure your furniture in the house.

2. Pick out paint colors.

3. Decide if you can’t have THIS VERY HOUSE you want no house at all. You’d rather live on the streets and die of exposure than live anywhere but this house.

4. Order a moving truck.

5. Dream about how you will raise the children you have yet to procreate, in this house. Imagine how you’ll bring them home from the hospital, send them off to the first day of kindergarten and take pictures of them at prom in this house.

6. Lament your offer and wish you could have gone in higher because it would have been worth it if you get it.

7. Find other houses on the internet and decide there’s probably a more perfect one out there and you don’t even want this one any more.

Things TO Do:

1. Continue looking at other houses as they come on the market. Just because you’ve gone on a date with one house and you’re considering a commitment, it doesn’t mean you can’t still oogle other inventory. You’re not married yet.

2. Invest in boxed wine. It will become your friend.

3. Know that you made the strongest offer you were comfortable with, so if it goes to someone else, it’s OK because you couldn’t have afforded it anyway.

4. Realize new houses come on the market every day and that builders build the same floorplan 87 billion times, so if you found one that’s ”˜perfect’ it’s likely you’ll find another that’s similar eventually.

5. Know that every house has its faults. So if you don’t get the one with the built-in margarita table in the pool, you’ll probably get one with eight custom shoe racks in the master closet that will perfectly hold your extensive brightly colored athletic shoe collection.

6. Tell yourself “If it was meant to be, it will be.” (I usually hate this one because sometimes people use it as an excuse to make a futile or sub-par offer, but at some point in the process you have to know it’s no longer within your control and be at peace with that.)

7. Have another glass of wine.

I won’t show your listing until your seller justifies the price!

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Check the title again. That is a direct quote from a buyer’s agent that just called on one of our listings.

I won’t show your listing until your seller justifies the price!

Interesting tactic, particularly in what is the current seller’s market in Phoenix.

Here is my take:

1) It’s not the sellers job to justify the price to your buyer. That’s your job as their agent.

2) If you or your client feels the price is too high, you have a couple of options:

  1. Don’t look at the home. There are plenty of other homes out there. Oh, wait. That’s not really true any more. But still, you don’t have to look at the home if you think it’s priced too high.
  2. Take a gander, and if you like the home, submit an offer at what you feel it is worth and what you are willing to pay for it.

Should you decide on option 2.2 and want to submit an offer, just keep in mind that this is an “equity sale” (not a short sale or foreclosure), in a well-regarded area, priced right in the sweet spot of homes that are flying off the shelf, and the home is in perfect condition. Given that, you the buyers agent are surely aware that in the current Phoenix market such a home will quite likely receive multiple offers very quickly.

This particular home has been listed for 24 hours. It has been shown several times, and agents have already indicated that their buyers will likely be submitting offers.

So if you are a buyers agent who thinks calling and making demands of the seller to justify their list price is a good idea, you are in for a whole lot of frustration.

Imagine how your clients are going to feel…

Phoenix home buyers – forget what you read in much of the mainstream media. Many segments of the Phoenix home market are on fire. Take a peek at this chart:

The green line represents the number of current homes listed for sale. It is at half of what it was in November 2010. At this moment in time there are currently 24,251 homes in the Multiple Listing Service (MLS) is a status of either “Active” or “Active with Contingencies” (AWC). “AWC” indicates a home that has had an offer placed on it but something (a “contingency”) needs to be completed before the listing is moved to a “Pending” sale state. Most often the contingency is bank approval on a short sale. Some of those move on to Pending and then Sold status, some do not.

Removing the AWC listings leaves us with 16,534 homes available and actively for sale.

That may sound like a lot of homes, but in a city the size of Phoenix, and given a current monthly sales rate of roughly 7,000 homes sold per month, that is less than a 2.5 month supply of homes. Generally speaking, a market crosses over from a buyers market to a sellers market when there is less than a six month supply of available homes.

We’re at less than half of that.

The bars on the chart represent months of available inventory. As you can see, we have been below that six month mark since this time last year.

It is a sellers market folks.

Of note, the numbers in the chart represent the entire Arizona Regional Multiple Listing service, which includes all of Maricopa County and part of Pinal county. That is a BIG area, and lumping numbers together from a market that large and varied can be problematic. What we really have in Phoenix is a bifurcated market (oooh, fancy word!)

Adj. 1. bifurcated – divided into or made up of two parts; “socially bifurcated populations”

In less fancy words, we have a market that is divided into two parts. We see from the chart that overall Phoenix is in a sellers market condition. But if you were to look at higher end homes (say $500K-ish and up) you would see those homes are not selling nearly as quickly as low and middle range homes. That’s bifurcation. But because there are not nearly as many homes either listed or sold, that high end data tends to get drowned out by the low and mid range homes.

(I could probably make a reasonable argument that we’re actually in a trifurcated market — the low end, medium and high end home markets all behave differently, but you get the idea.)

The lesson here is pretty simple. If you are looking to buy a home in Phoenix priced at under $500K, expect stiff competition from other buyers and investors, and be prepared to pay list price, if not more. No, that’s not the case for every single home in that price range, but there is zero question the mid/low end market is Phoenix is generally speaking hot and getting hotter by the day.

UPDATE: The listing this agent insisted on having the seller justify the price on is now under contract. After less than 24 hours in the MLS. The offer is for over list price. And no, the seller didn’t justify anything. I can only assume the agent in question and their client are still looking for a home…

Data / Chart from ARMLS. Data believed to be accurate but is not guaranteed.

 

 

Chapter Closed: The last transaction I’ll have with a home buyer

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Einstein no more buyers2

Al is correct. I’ve worked with my last home buyer.

It’s not like I’m retiring or anything. While there is probably nothing I would enjoy more than sitting on a beach or a boat, fishing rod in one hand, chilled adult beverage in the other hand; the simple fact is I’m not in the financial position to quit my job and relax for a living.

At least not yet.

But I am going to stop working directly with home buyers.

Those that know me well are probably saying, “Huh? You worked with home buyers?” Sure, my individual work with home buyers has dropped off significantly since we opened Thompson’s Realty, but yeah, I do (or did) still work with buyers on occasion. I’ve got a lock box key and I even know how to use it without asking Francy to train me.

Being brutally honest though, working with buyers is something I’ve never been terribly enthralled with since Day 1 in real estate. I can admit it, I’m just not that good with buyers. Perhaps I don’t have the patience. Maybe it’s just that the idea of driving about town when it’s 115 degrees outside, looking at homes with no air conditioning that smell like cat urine or baby poo isn’t all that appealing. The fact that I am directionally challenged and get lost even with a GPS doesn’t help. Heck, I almost killed a buyer once. I can’t “read” buyers. My wife, a world-class buyer’s agent, can visit a couple of homes with a client and peg exactly what they like in a home. I’m talking down to the point of knowing what floor coverings and cabinet colors they both like, and abhor. I’ve never been able to do that. My man-brain is too simplistic. You don’t like the carpet? Buy new carpet. And who really cares what color the kitchen cabinets are?

Granted, there are few things more satisfying than handing the keys to a new home owner or getting an email like this (from the last buyers I had):

Heya,

We just wanted to say a big thank you to you both for everything you both did to help us find a new home. We moved in over July 4th weekend and are still working on getting settled, but it’s so nice to have the certainty of where we’re going to be living and all.

Thanks a ton!

I will miss that feeling of accomplishment that comes from helping someone buy a home. I will still list homes for sale on occasion. That aspect of the real estate business I have always enjoyed, and it helps keep my client-side skills sharp. But buyers? No more. I just don’t have time to serve them at the level they deserve.

You’re a real estate agent and you don’t help home buyers. So what exactly do you do?

I run a real estate brokerage. A damn fine real estate brokerage if I do say so myself. At Thompson’s Realty we have 30 agents that are a whole lot better at working with buyers than I ever have been or could be. My job is to help them increase their business, to keep our brokerage humming along, to grow and expand (or potentially contract) the brokerage when needed.

One of a real estate broker’s primary duties is to monitor and supervise their agents activities. I’m fortunate to work with some of the best in the business and as such, it doesn’t take a whole lot of effort to supervise them (though if some of them were a little better at turning in their damn paperwork on time, I would not complain”¦).

So, what exactly is it that you do?

I am, and I have never liked this word, the “rainmaker” in the operation. (See, it really is kind of a stupid word in this context.) Webster defines “rainmaker” as, “a person who brings in new business; also : a person whose influence can initiate progress or ensure success”.

That’s my job. I am a “contact generator” (if you think I don’t like the word rainmaker, ask me how I feel about the word “leads”. A “sales lead” has always sounded so impersonal to me. I want to generate contacts from prospective clients. You know, real people who may be interested in buying or selling a home at some point. Almost every day some sales guy calls me and attempts to “sell me leads”. I don’t want leads, I want contacts. Maybe it’s just semantics, but I know there are people out there that feel the same way I do here. But I digress.

“Rainmaking”””generating contacts, which we distribute to our agents, is a full-time job. Working with buyers is a full-time job. Listing a home is a full time job. Keeping the brokerage running and growing is a full time job. There is only so much time in the day for full time jobs.

Something had to give.

Doesn’t it make sense to give up the parts of the business that you aren’t as good at, that you enjoy the least, in order to focus more time and effort on those parts that you do enjoy and that you can excel at?

You’re a quitter! You don’t like working with buyers and you suck at it so you’re just giving up!

Sure, I could get better at working with buyers. I could suck it up, maybe even learn to like it more. I am no quitter. Personally I think it is smart to evaluate your business model, your wants, needs and desires and to apply that tired business cliché of “laser focus” and do what you do best and what is best for your business overall.

There is not one potential client of Thompson’s Realty that will suffer from my decision to stop working with home buyers. Quite the contrary. I can direct someone to a stellar buyer’s agent that will serve them far better than I can. That helps the client, and it helps my agents. And that oh avid reader is ultimately what I do. Help our clients and help our agents.

And I love that part of my job.

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The Phoenix Real Estate Guy was started by Jay Thompson, and I have a little blogging problem... he liked to say...

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