Monday, June 29, 2009


The nature of sales involves risk, and sometimes rejection.

Sales are 100% commission-based, which means that there is high upside, and deep downside. Every single week, there are highs and lows in the world of sales. You have to get over it, and quickly.

I lost a listing last week… I never really had it, actually. I was simply in competition for it.

And being a (well-studied) student of the market, I came to my listing presentation prepared. I had both facts and compassion, but I did not bring a magic wand.

I lost a listing because I recommended listing the home at a saleable price, which (as it turns out) was about $15,000 below where the seller wanted to price it.

But please understand, a list price means nothing. The only price that matters in real estate is the price a ready, willing and able buyer will pay for a piece of property.

And it won’t be the number this property was listed at this morning.

I love referrals, and I love helping people. I believe the outcome you get is almost always directly tied to the quality of representation you receive.

So if I have listed your home at an artificially high and unrealistic price, am I serving you?

If I know in my heart it will take months to sell your home… that your property will get “stale” in the eyes of the market and it will eventually require multiple price cuts to move it… am I serving you?

If my intention in taking the listing is to know that I am going to have to “wait you out”… work you for multiple price reductions… pick up some sign and Internet calls and perhaps find a buyer for another, more reasonably priced piece of real estate along the way, am I serving you?

My job is not to get every listing I compete for… or to work with every buyer who is referred to me.

My job is to provide the information, service and negotiating skill to get the best possible price for my sellers, and to find the best possible home under the best possible terms for my buyers.

It hurts to lose a listing. That’s part of my job that I do not enjoy.

But if I am operating in the realm of what’s possible, and you are not, then it’s best that we don’t connect.

Saturday, June 20, 2009


I received an insightful, amusing and analytically-correct email this week from a colleague in Southern California, where there's a rush for lower-end foreclosures that rivals what's been going on here in Colorado for the past six months.

And, like here, agents in other parts of the country are having a hard time helping their clients reconcile reality with what they hear in the media, from well-meaning friends and co-workers or "Uncle Vinny in New Jersey", who (allegedly) just bought a $900,000 home for $27 at an auction.


Denial - Buyers are adamant about not overpaying.

“The only house I’m buying is the one I can steal from the bank” is a common theme. Buyers read daily about how bad the economy is, how bad the real estate market is, and figure this might be a good opportunity. They begin their search.

Anger - As buyers beginning searching the Internet, they wonder where all the inventory went.

They surf the web in search of that steal, thinking that there will be plenty laying around. How hard can it be to find a deal? But then they realize that a cursory overview of the inventory produces junkers and over-priced turkeys. Anger begins to set in when they realize it isn’t going to be as easy as they thought.

Bargaining - Early on every buyer wants to make low offers - we’re stealing one, right?

But the good listings always seems to have competing offers, with 95% of the buyers chasing 5-10% of the inventory. The theory goes that the ones buying these homes are simply further along in the five stages of buyers’ grief - and they outbid you. Many buyers will lose out on 1-3 offers before succeeding.

Depression - It’s hard enough just to find a good deal, to then lose out on one or more is depressing.

Many give up for a while, deciding that it’s not meant to be, they’ll wait until the market comes down more, wait until the economy gets worse, banks unleash the shadow inventory, etc. But there’s a haunting feeling that it won’t get easier.

Acceptance - Buyers loosen up on their demand to steal one, and shift to acquisition mode.

By now most just want to get it over with, and accept that the successful search and purchase of a home is more time and energy-consuming than they thought. The next time they find a home that suits their needs, they step up a little sooner, reach a little higher than everyone else, and finally land one. They can handle the payment, there's still equity in the deal, and yes, you can file an amended tax return to get that $8,000 now!

Today’s buyers don’t like these feelings, and many will wait it out, hoping it’ll get easier, later. But with the government backstopping the markets, historic low interest rates, a fat tax credit for first-time buyers and banks being very deliberate about processing their short sales and REOs, it could be a long wait.

Thursday, June 18, 2009


The sun is rising on Colorado.

A year ago, it was hard to sell good news about the Rocky Mountain Region. About the only ones actively working the real estate market were investors, who were "cherry picking" lower-end deals as inventory piled up and many buyers stood on the sidelines.

But toward the end of last summer, there was a shift.

Between May and August of 2008, the number of active listings on the market (year-over-year) fell by more than 20%. The Federal Government stepped in and offered a $7,500 "tax credit" (really an interest free loan) to get people off the fence.

And foreclosures began to drop for the first time four years. As 2008 came to a close, we were seeing the first significant momentum at the entry level of our market in at least five years.

Over the first six months of this year, the demand for homes under $200,000 has been ridiculous, at least in comparison to the last few years. There are three key reasons for this:

1) Low intererst rates
2) A federal tax credit upped to $8,000 and made non-repayable for qualified first-time buyers
3) Tacit approval from a "late to the party" media, which finally began reporting some of the strength and value in our real estate market

I expect this trend to continue for the rest of 2009.

Interest rates are rising, however, responding to the positive economic news that has been generated by $1 trillion of federal stimulus money.

The tax credit may go away November 30 (I say "may" because there is already intense lobbying going on in Washington to extend, or even expand, the $8,000 first-time buyer credit next year).

And values are coming back... in the case of homes under $150,000, it's not unreasonable at all to say values have increased 10% or more (in some areas 20% or more) since last summer, when it seemed like investors were the only ones with the courage to step into the market.

In summary, I expect the market below $250,000 to continue to recover... but I see some of the value in this market segment slowly starting to erode as interest rates rise and prices continue to inch up. Buyers in this category, while still able to get great deals, are seeing their purchasing power diminsh by a little bit each month as rates and prices both rise.

From $250,000 to $400,000, there has been improvement only in the past few months... perhaps a "trickle up" effect from the new strength at the entry level. Below $300,000, the market is actually well balanced... above $300,000, it's a bit slower, but certainly better than it was in the winter and early spring.

Above $400,000, the market continues to be soft, and above $600,000, it's dead.

I have said repeatedly since last fall that the psychology in our market has changed. "Small is the new big". "Less is more". And caution has replaced excess as the rule of thumb in buying a new home.

If you're buying at a higher price point, make sure there is value in what you are buying. Don't be tricked into buying the biggest house on a lower-end block. Insist on some equity going in, so if things don't bounce back as quickly as you would like, you're not in a tight spot.

It's a little harder to play by these rules, but it's worth it.

I want to see my clients succeed, both now and for the long haul.

Exercise some discipline on the front end of a deal and your long term prospects will be much brighter.

Tuesday, June 16, 2009


A few years ago, FHA loans were about as common as eleven game winning streaks for the Colorado Rockies (I had to slide that in somewhere - go Rockies!). Today, however, they account for about half of all mortgage loans being originated.

The primary reason that FHA has become so dominant in the marketplace is that these loans are insured by the federal government - if the borrower defaults, the government steps in and pays off the lender who made the loan, provided the underwriting of the loan complied with FHA guidelines. They're the safest loans lenders can make, because Uncle Sam is acting as a backstop.

The other reason is that, as you have heard, banks aren't making loans like they used to. At least, not with their own money.

The underwriting guidelines on conventional loans are tighter today than they have been in 15 years. This is an over-reaction (albeit, an understandable one) to the massive losses the banks have suffered as housing markets have crashed around the country.

So into the gap has stepped FHA.

FHA loans allow borrowers to purchase a home for as little as 3.5% down - and that money can be "gifted" from family members or other sources.

But here's the other key - the hidden value of an FHA loan that will make these loans of today look even better two or three years down the road...


Let's take a look at why this matters.

With the government engaged in unprecedented spending to prop up the economy right now, the big fear on the horizon is inflation - which means higher interest rates.

So let's say you decide to sell your home in three years, and by that time interest rates are (hypothetically) in the 8% range. You paid $175,000 for your home in 2009 and decide to sell it for $190,000 in 2012.

If your interest rate was 5.5% on a 30-year fixed rate FHA loan, after three years your loan balance is appoximately $162,500 (provided you made a 3.5% down payment on the original purchase and have stayed current with your payments).

The payment on your FHA loan (principal and interest) is approximately $971 per month.

In an assumption, the buyer agrees to take over your loan and make the payments going forward, while paying the seller the difference between the agreed upon purchase price and the loan balance at closing.

If a buyer was to make a $27,500 down payment and take out a $162,500 loan at 8% (in our 2012 purchase scenario), their new payment would be $1,192 - or $221 per month more than the payment on your existing FHA loan.

But it gets even better...

Your original FHA loan originally had 360 scheduled payments - of which you made 36, under our scenario.

So the loan your buyer assumes has only 324 remaining payments... instead of 360 payments as would be the case under a new loan.

Can you see why FHA assumptions can be powerful?

This is something very few people are recognizing right now, for whatever reason, but I'm telling you... in a few years the buyers of today using FHA financing are going to come out smelling like a rose.

This truly is the best buying opportunity at the entry level of our market in 15 years or more.

Sunday, June 14, 2009


Just a quick note to highlight a new listing of mine along the 13th fairway of Heather Ridge Golf Course in Aurora.

2431 South Xanadu Way #A is a two bedroom, 1,091 square foot townhome that has been completely remodeled from top to bottom with new carpet, new tile, new cabinets, new fixtures and brand new appliances - all at an entry level price!

Offered at just $107,900, this sparkling townhome with golf course and water views is an amazing value. This home has been pre-inspected, the AC unit has been cleaned and serviced and the furance is certified.

Perfect for all four seasons, there is a wood-burning fireplace in the family room for those colder winter nights and a great, south-facing patio area adjacent to the kitchen that's ideal for summer barbecues. Plant flowers in the spring and watch leaves turn and flutter in the fall. And remember that all exterior maintenance is handled by the HOA.

Check out some fantastic virtual tour scenes by clicking below, or call me at (303) 416-0087 to set up a private showing.

Click Here to view the Virtual Tour!

Wednesday, June 10, 2009


Each year there are numerous regional and national surveys that reveal the latest trends in what buyers and sellers want and expect in a real estate transaction. The latest of these surveys has just been released by CAR - the findings are summarized below:


- Who use the Internet want agents to respond faster (31% expect instant responses).
- Want to preview more homes before writing an offer (12.7% in 2008 compared to 9.3% in 2007).
- Are taking longer to make a decision (8.3 weeks in 2008 compared to 5.2 weeks in 2007).

And what does this net the agent? Significant declines in satisfaction ratings.

Buyers who said their agent "surpassed expectations" was a huge drop: from 91% in 2007 to only 39% in 2008. While buyers may not be as satisfied, this hasn't altered the fact that 88% of buyers still used an agent last year - exactly the same percentage as 2007.

However, satisfaction levels seems to be less about the agent and more with factors outside the agent's control. The economy has slowed, and this has made the process of looking for a home one filled with caution and delibertion for many buyers.

The two biggest factors motivating people to buy right now are:

- declining home prices
- low
mortgage rates

Buyers are online...

Not only are buyers actually working with an agent longer, they are taking more time online to research homes before contacting an agent. Buyers averaged 8.2 weeks of researching homes before contacting an agent in 2008, versus 7.6 weeks in 2007.

Buyers are looking for the right agent...

Along with viewing more homes, buyers are also interviewing more agents. This is actually good news for the good agents. It means that buyers recognize that agents bring more value than ever to the table and they are taking more time to find the right agent. The survey shows 64% interviewed two or more agents in 2008, compared to 53% in 2007.

What are they looking for in an agent?

- 44% hire the most responsive agent
- 22% hire the most qualified agent
- 19% hire the most aggressive agent
- 9% hire the most knowledgeable agent
- 5% hire the quickest or first agent

Agent satisfaction...

There were two things that made the biggest impact on whether a buyer was satisfied with his agent:

- how quick they were to respond
- how aggressively they felt the agent negotiated on their behalf

Kinds of info buyers want...

We all know that the bulk of people are using the Internet in the real estate process, but what features/functionality do they want?

87% - multiple photos and virtual tours. One again, these two top the list among Internet shoppers, listing them both as "very or extremely important"
80% - maps/directions
74% - agent contact options

One thing buyers would change...

In closing, here are things buyers said they wish they could change about their online home buying experience:

- 53% want a better understanding of where the market is heading
- 19% want their transaction to close on time
- 17% wanted better negotiation skills from their agent
- 8% hoped for a better response time from the selling agent
- 2% said less paperwork
- 1% said a better understanding of interest rate trends

It is no surprise that buyers want more from their agents and want them to respond faster, be more knowledgeable, more accessible, and negotiate harder than ever on their behalf.

The days of the "part-time agent" are fading fast.

Consumers expect (and demand) professionalism from their agents like never before, which is good news for those who are committed to real estate as a 100% full-time vocation.