Selecting a Realtor....acid test #3

One very critical role that a professional Realtor plays is to assist the client in working through their goals and desires. While many clients start out thinking that they know what they want, I have found that when face to face with some possibilities, whether a piece of property for a buyer or an offer for a seller, the client's behavior does not seem consistent with what he or she has been saying. I believe that this discrepancy often comes from the fact that many people are motivated by their hearts and souls, and what we say is just what is in our heads. I have known many Realtors who show properties to buyers for months, if not years, to find that nothing appeals.....then, one day, the Realtor shows a property that he or she thinks is a long shot, and "that's it". Then there are the Realtors who bring an offer to their seller with the idea that the seller will be pleased; the property had been on the market for a long time and there had been no other offers. Contrary to what the Realtor thinks, the seller gets very upset with the offer and refuses to negotiate. What happened?

I suspect in both of these situations, the Realtor really did not understand what the client wanted or needed. The effective and efficient Realtor should start out each client relationship with a long list of questions, the answers to which create a rich picture of what the client really wants. If the Realtor's questions to buyers are limited to a few characteristics of the property, such as bedrooms, baths, kitchen, number of stories, budget, the Realtor is effectively working in the dark when it comes to finding a match. Most buyers have some sense of how the perfect property will make them feel, and that feeling needs to happen when the buyer first sees the property. The successful professional Realtor will have talked with the buyer early on to find out what is in the buyer's heart...and will proceed to find the property with that in mind.

So here are the key questions in this acid test:

1. Does the Realtor seem interested in spending time trying to get to know you and what you really want? How much time has the Realtor spent LISTENING to you before taking you out to see property or taking a listing on your property?

2. How does the Realtor deal with your uncertainties? Does he or she try to talk you out of your concerns or try to help you work through your concerns? Remember that seller who got upset when he got an offer? Well the Realtor did not know or take seriously the seller's concern about not having the property when his son came on weekends. So when confronted with an offer, the seller's concern about his son became overwhelming and he did not want to sell. A professional Realtor should have known about this concern at the outset and helped the client comes to grips with the concern before taking the listing.

3. Do you feel as if you have your Realtor's full attention? Is he or she interested in you a person?

Selecting a Realtor....the acid test #2

Many REALTORS believe that having a lot of signs hanging, will bring business. They believe this because it seems to be true. Apparently, people looking for a REALTOR believe that the more listings a REALTOR has, the better the REALTOR will be....THERE IS NO EVIDENCE THAT THE MORE LISTINGS A REALTOR HAS THE BETTER THE REALTOR WILL BE...PERIOD. In fact, the opposite might well be true. I know that people looking for a REALTOR to list their property are highly swayed by the price opinion given by the REALTOR. So a REALTOR who wants to get a lot of signs out there to look popular and in demand, goes into a potential listing with a high price opinion....The thinking is, after some period of time, I will get the client to lower the price. In the meantime, a couple of months have been lost, the property is not being shown, and the listing is getting stale. There is definitely evidence that the longer a property is on the market, the lower the relationship between sales price and initial listing price. In this case, the higher the REALTOR's initial price opinion, the lower is the probability that the seller will maximize what he or she is going to get for the property.

So the question is, does the REALTOR with all of the signs have the most aggressively priced properties, and more importantly, how well do the REALTOR's listing sell?. Does the REALTOR with a whole bunch of signs have a whole bunch of signs because the properties are not selling? AH-HA!!! In my opinion, sellers looking for a REALTOR should:

1. Be looking most seriously at REALTOR's sales....not the REALTOR's listings. If the REALTOR has 20 listings and no, or very few sales (I know of at least 3 people in that boat), think twice. Wouldnt you be better off with a REALTOR who currently as just a couple of listings who sold five or six listings this year? I can tell you as someone who has sold all her listings this difficult year, that there are a lot of excuses...tough market, etc., but the reality is that a reasonably priced property will sell in any market. Mine do.

2. Consider strongly a REALTOR with some of the lower price opinions, and a well presented rationale for the price. That REALTOR is probably being very realistic and is most concerned with selling your property. He or she knows that you will be talking with other REALTORS, and a realistic price opinion might lose him or her the listing. Furthermore, take seriously a REALTOR willing to walk away from your potential listing....that is a very strong statement for most REALTORS to make.

I honestly believe that if the initial price is too high, the Seller will end up getting less for the property ultimately. The initial pricing and, therefore, speed of sale is the Seller's best friend. Anticipated price reductions are not.

Selecting a Realtor....the acid tests

I have been planning to write this piece for some time, but keep hoping that it will not be necessary.....I think it is not only necessary, it is imperative. Since starting in real estate over 8 years ago now, I have been absolutely amazed at the typical process both buyers and sellers go through in selecting their professional representative. The amazing thing is with the value of real estate today and the importance of real estate holdings to most people's net worth, you would think that people would spend a fair amount of time researching their options and picking the professional most apt to meet their goals. I think here of the way that people select their physician for a serious problem or a lawyer for an important situation or a financial advisor to assist in the creation and management of their hard-earned money.

Instead, what I see more often than not is the selection of a Realtor on the basis of affiliation....for example, going to the same place of worship, gym, supermarket; kids going to the same schools; neighbors....you get the point. I am here to say this: REALTORS ARE NOT CREATED EQUAL.....AND DEFINITELY DO NOT DO THE SAME WORK. Realtor's backgrounds, skills, knowledge and financial resources are just of the few of the critical factors that distinguish our work.

A real estate salesperson's license in California can be gotten after taking just a few courses and passing a relatively easy licensing exam. This is next to nothing, when you compare it to the preparation and requirements to practice law, accounting, finance, all of which deal with similar professional services......so, the differences among Realtors have more to do education, skills and experience acquired before the individual began practicing real estate and the experience and training the person acquired once in real estate.....both are very important.

Beyond this, most Realtors are independent contractors. While many work for local, regional and national/internation companies, their relationship to these outfits is as an independent contractor, not an employee. Therefore, when it comes to marketing a property..... paying for high-end brochures, having powerful property websites that are optimized, having advertisements in a variety of newspapers and magazines etc., the Realtor is generally the one paying. Therefore, the Realtor's personal finances can be critical to the success of of a listing......there is no company that provides all that is available at no cost to the agent.....you get what you pay for.

With this background, I will provide a number of acid tests for selecting a Realtor....here is #1

#1: Buyers:
When you talk with the Realtor are they asking more questions than supplying answers.....?

This is vital to a Realtor's understanding of your needs. Finding the right property at the right price will only happen if the Realtor has spent the time getting into your head and heart or, if the Realtor is very lucky (crap shoot).

#1 : Sellers:
Is the Realtor available to respond to potential buyers and to you?

This is a vital, period. A timely response to a potential buyer or another Realtor with a potentially interested client is generally critical....Imagine a potential buyer passing your Realtor's sign on your property and putting in a call while parked in front of your property....this happens a lot. Does the Realtor answer? Call back within a few minutes? Do you have any indication that the Realtor will be as responsive to you after he or she has your listing as he or she was while trying to get your listing?

Here's the test: Call the Realtor's cell phone and office phone at various times of the day and evening, mid week and weekends from a variety of different phones (remember your phone number will be identified....you want the call to be blind). Jot down how many times the Realtor/representative answered the phone, or how long it took to get a call back.....
DO NOT IGNOR THE RESULTS OF THIS TEST, REMEMBER, YOU COULD BE THE POTENTIAL BUYER....

Is it time to buy real estate in the Santa Ynez Valley?

While I can say without question that there continues to be a difference in perspective between buyers and sellers, a difference that has killed many potential transactions, there are some very attractively priced properties coming to market now. These include both "short pays" and properties where the sellers are quite serious about wanting to get out. "Short pays" are properties priced below that which is owed on them by the sellers. In many of these cases, the sellers paid substantially more than is being asked now and are having difficulty making the payments. The decision to accept an offer on a short pay is ultimately the lender's. I know of at least a few situations in which the properties are priced at about 20% LOWER then what was paid by the seller within the past two years. THESE ARE BARGAINS. I also know of properties in which the sellers simply want out, and these too, are priced down dramatically from where similar properties sold in the past couple of years. In a few cases, I feel that improved properties are being priced at land value. These include 5-20 acre parcels with homes, and in some cases second homes, horse facilities and other amenities. These are great opportunities for second home buyers and investors.....
So why are these "bargains" not being snapped up? Because the buyers are saying, "I will wait, the prices are coming down". This is where the buyers are not doing themselves a good service. The prices may come down some, then again, they may not. There is no gong set to go off at the bottom of the market. Unlike the stock market, where one can determine at most points in time the value of stocks and market indices, pricing information in the real estate market is very slow in coming.....and the use of median price information is often misleading when it comes to a single property. So how will that buyer know that it is "rock bottom" time? At the same time, interest rates on home loans may well be going up. The decline in the Fed rate has had an adverse effect on home loan rates!
So is it time to buy? The answer is "yes" if you find a property that truly works for you and you can get it at a price that represents some reasonable discount to what it was worth two years ago...perhaps 10-20%. A solid Realtor should be able to provide these data...The second part of the answer should be based on your time horizon....if you are not sure how long you would hold the property, this may not be the best time to buy.....I say this as I see bargains sitting out there for months. If, however, you are planning to hold the property for five to six years, I strongly suspect that you will be very happy with both your purchase and your investment.
The Santa Ynez Valley has proven to be a great investment over the years...it is simply magnificent, an easy commute to LA, and one of the most compelling lifestyles in this country. So, if you are waiting for the bell to ring at the bottom of the market....you might think otherwise....and get the bargains that the holdouts will miss. And in the meantime, you get to enjoy your wonderful property.