Tuesday, December 28, 2010


If I could give you one piece of advice heading into the new year, it would be this:  align yourself with quality.

If you are a real estate broker, this means that you should align yourself with the strongest company you can find, the most skilled and ethical lender you know and a title company with the resources to be here ten years from now.

If you are a buyer or a seller, you start by hiring someone who can show you proven results, backed by a strong company, with a competent and well-developed network of problem solvers to help you get through your transaction in one piece.

Since 2007, nearly one-quarter of Colorado's real estate agent population has been re-careered.  Over 200 title and closing companies have disappeared since 2005.  And although it's not possible to pinpoint the exact number of mortgage lenders who have left (mostly because Colorado was one of only two states which required NO licensing or registration program of any kind for mortgage originators prior to 2007), estimates are 50% of the loan originators in business five years ago have quit the business since things got rough.

In short, this is a professionals' market.  It is a consolidating market, and it is going to continue to consolidate for the next few years. 

I am working a transaction right now with one of the most convoluded and crazy title issues I have seen in 16 years as a broker, one that involves a glaring error made by a title company eight years ago, and it is only because I have incredible support from a strong, supportive and influential brokerage and excellent resources in the title and lending arenas that we have a chance to save this deal.

You need a strong network right now because if you're going to be a part of this market, you will have to solve problems. 

"Team" is the most important word in real estate right now, and whether you are a buyer, a seller, or an agent, you need a good one on your side. 

In 2011, there is going to be a run on quality.  And if you're doing things the right way, that should be reassuring.

Sunday, December 26, 2010


An old adage you often hear in real estate is "location, location, location."  But perhaps a more contemporary way to look at it is to say "demographics, demographics, demographics."

As 2010 Census data begins to circulate, we always find some interesting trends and developments.  Take, for example, the snapshot of education among the adult population in different Colorado school districts.

Statewide, 35.5% of the state's adult population had a college degree in 2010, which is fantastic on a national level and ranks Colorado among the top ten states for college graduates. 

In Douglas County, however, the number is even more impressive - an amazing 53.4%.  And that sets the stage for one of the most stable and desirable housing markets in the state.

In Aurora, by contrast, only 18.8% of the adult population has a college degree, and here you have seen more value losses and a higher number of foreclosures. 

Denver presents an interesting study, as within the city you have a super-educated affulent class (15.3% with graduate degrees and 39.2% with bachelor's degrees), and a struggling underclass (7.5% of adults with less than a 9th grade education and 16.7% of the population without a high school diploma).

In the new economy (higher unemployment, increased competition), the emphasis on skills and education figures to widen the socio-economic gap between well-educated and under-educated communities. 

The good news is that, in Colorado, nearly 89% of the adult population has a high school diploma.  That puts us on good footing going forward, but it will be critically important to maintain those high numbers and for policymakers to keep higher education accessible and affordable.

Sunday, December 12, 2010


I was contacted this week by someone in my sphere of influence who called to ask my opinion about a rental posting she saw on Craig's List.  "This looks like a really nice place," she said.  "And the price is more than right."

"But the guy wants me to wire him money before I've even seen the place.  Do you think it's a scam?"

My default reaction on these things is one of healthy skepticism, because when something sounds too good to be true, it usually is.  The number of real estate related scams is at an all-time high, and there are more scammers pouring into the arena every day.

I promised to do a little digging, and here's what I found:  the name of the person offering to rent this property appeared nowhere on title.  In fact, I could not find a record of his name anywhere - on Facebook, through a Google Search, via LinkedIn.  It was like the guy didn't exist.

But then I Google Searched the property address and found... the exact same property listed about ten days earlier on Craig's List, offered by the owner on title, for $995 per month. 

The scammer essentially "hijacked" the Craig's List posting and made it his own, telling prospective renters he was active duty military and serving overseas and was therefore unable to facilitate a face-to-face transaction.  What he basically said was, "Wire me the first month's rent and a security deposit, and the place is yours."

I advised my friend to discontinue her communications immediately and move on as quickly as possible. 

I have seen the same game played with foreclosures, where scammers get access to the bank's lockbox code, pull the sign from in front of the house and get to work on renting it out.  They rent it below market with a bogus lease, collect the first month's rent in certified funds, hand over the keys and then disappear. 

As the homeownership rate continues to decline and the number of renters continues to increase, scams like this are not going to go away.  And when there's a lot of money involved, the scams are going to be more sophisticated and more numerous.  Do your homework.  And then double check everything. 

Friday, December 10, 2010


Mortgage rates have risen by almost 75 basis points in the past month, and there is a lot of anxiety in the market over what this means.  I have been expecting rates to bounce for over a year, and while you can hardly call 30-year fixed rates in the high 4's problematic (come on, people!), it is important to understand the effect this has on a buyer's ability to qualify.

The rule of thumb with rates has always been that a one percent increase in rates will decrease your purchase power by about 10%. 

In other words, if you look at the attached graphic, you'll see that a $400,000 loan at 4.50% carries a monthly principal and interest payment of $2,026.

If rates go up one percent, to 5.50% percent, and you still want a payment that's basically the same in the same neighborhood, you can only do that by reducing your loan amount to $360,000. 

In effect, you're borrowing 10% less money for the same monthly payment.

I have felt for a while that rising rates are not necessarily a bad thing, at least in the short term, because there is an army of qualified buyers out there that have simply been biding their time waiting for things to "hit bottom".  

The jump in rates this week was in reaction to the proposed extension of the Bush-era tax cuts, along with another 13-month extension of unemployment benefits.  Bond traders basically took this as evidence that neither political party is serious about tackling the national debt, and if the country is going to continue to be flooded with fresh currency, rates must rise.

Rates in the 4's continue to be a gift, but the clock is ticking.  Affordability may never be higher than it is right now, at least in the lower priced tiers of our market.   

Monday, December 6, 2010


Check out this amazing graph from economist Tom Lawler, which takes government housing survey data to track the national home ownership rate among 25 to 34 years and compares it to the percentage of 25 to 34 year olds living at home.

Living with ParentsAccording to Lawler, between 1994 and 2005 the home ownership rate among 25 to 34 year olds increased by nearly 30 percent, to an all-time high of 13.5% at the peak of the housing boom.

Conversely, since the housing bubble burst, the number of 25 to 34 year olds who have moved back in with mom and dad has spiked from less than 37% in 2004 to almost 43% today. 

Lawler's study confirms what many of us perceive to be the case, based on conversations and anecdotal stories we hear all the time.  Gen Y is rapidly becoming the "Boomerang Generation", but the real question to be answered is how long this trend will continue.

If you're banking on any kind of economic recovery, you must presume that large numbers of these "Boomerangers" are going to leave home again.  Whether they choose to rent or choose to own, there's going to be added demand in the market, which certainly won't hurt landlords or homeowners. 

Historically, on the other side of every boom there's a bust, and on the other side of every bust there's a boom.  This chart shows where some of the demand will come from just as soon as this economy starts to create jobs again, whenever that may be.

Monday, November 29, 2010


It's a fact:  By the end of this year, nearly one-quarter of the Colorado real estate agents in business three years ago will have quit the business.

What are the reasons for this?

Well, the easy thing to point to is transaction volume, since NAR estimates that this year we'll see a total 4.82 million closed transactions in the United States, down almost one-third from the all-time record of 7.08 million sales in 2005. 

So there's less fruit on the tree, and none of it is low-hanging. 

Selling in this market is difficult.  It's true - for many agents, selling real estate is hardly enjoyable.  It's not fun when a seller has to bring a large check to closing to get out from under a house he or she has faithfully made payments on for five years.  It's not fun to negotiate a short sale for four months only to see the deal fall when the buyer walks away.  It's no fun when buyers want to lowball, sellers won't (or can't) make repairs and fear and loss are the overwhelming emotions in the market.  No, that's not fun.

Prices have also fallen across the board, which means smaller commissions.  In fact, estimates are that total real estate commissions will be down nearly 50% this year compared to the high-water mark in 2005. 
So the work is harder, the checks are smaller, and the clients are fewer.

But what about the agents themselves?  Just as the tide as has gone out on the US economy, so has it gone out on average real estate agents.  And there's the word that makes all the difference - average.

If you have settled for being average, the market for average real estate agents no longer exists.  Buyers and sellers today don't just demand your presence - they demand your expertise and integrity

And so the consolidation taking place in the real estate market comes down to this... if you can create value for your clients, you will survive.  If you can't, you won't.

* Did you educate your buyers about the purchase contract, or did you just ask them to sign it?
* Did you show your seller how you will market his home, or do you just hang a lockbox on the door and hope?
* Did you return that call promptly, or did you ignore it?
* Have you attended classes to learn about the important changes in the 2011 contract, or are you just going to wing it?
* Did you hire a professional photographer?  Did you shoot video?  Will you stage the listing? 
* Did you engage and creatively respond to the buyer who submitted a lowball offer on your listing, or did you simply let a potentially motivated buyer walk away?

There are so many examples of how we can create value for our clients.  If we can do that, we'll get to the other side of this market. 

But it's up to you.  If transactions are down one-third from 2005, you need to be at least 50% better than you were in 2005 to survive this market.  Go get your CRS.  Or GRI.  Or CDPE.  Get educated, get motivated, get inspired.  

This market requires tenacity, creativity, authenticity and action.  Do you spend your energy creating a better you, or do you spend your energy hoping for the return of a market that's not coming back?

It's time for all of us - those of us in real estate and those of us in every other line of work - to rise to the challenge.

Saturday, November 27, 2010


Interest rates, interest rates, interest rates... what's going to happen with interest rates?

We have seen a lot of volatility in November with rates, as they have bounced in a wide range of about 75 basis points.  It's been bumpy, for sure, which leads to the question... how much longer can we have rates in the 4's?

I have been ringing the inflation bell for the past year, and in the name of disclosure, I felt we were headed higher when rates were in the low 5's.  And while commodity prices like those for corn and oil have soared, interest rates haven't followed suit.  So I've been wrong before. 

But the chart above shows why the low rate party of the past two years has to come to an end, sooner or later. 

The bottom line is that today's economy is growing, albeit slowly.  The rates my clients are able to get today are rates from the 1950s... but the decade ahead is likely going to be a decade of higher than normal inflation, increased volatility, higher unemployment and more uncertainty.  In other words, when you can lock in a good deal, you should take it.

GDP in the second quarter increased by just over 3%, after falling 4% in the second quarter of 2009.  If you look at the chart above, it's a bounceback.  Now most of that growth came from government spending, but isn't government spending by its very nature inflationary?

I have said for a while that rates in the low 5's would actually do more to help our market than rates in the low 4's, because when we see rates really start to lift it will cause an army of fence sitters to finally take action.  And there are many, many buyers on the fence these days.

I also think the start of 2011 is going to be better than most pundits think.  Granted, we're not going back to the boom-boom days of the early 2000's any time soon, but we'll certainly see a market better than the one we've been dealing with during the second half of 2010.

People are not necessarily feeling better about the economy, but feelings change only after perceptions change.  I have been saying to my clients for months that "they don't offer rates in the 4's because everything is perfect."  There has to be some step of faith to take advantage of these rates, but I believe that most buyers who take action today are going to be well positioned for years to come.

Monday, November 22, 2010


I recently advised one of my sellers who had been on the market since July to consider pulling his home off the market and renting it out.  This particular seller, whose home had been adversely affected by a number of foreclosures in and around his neighborhood, had taken a job transfer out of state and was essentially making "double payments" while waiting for his home to sell. 

The home, a cute three bed ranch with a full basement built in the 1970s, was clean and neat.  It was well cared for and priced about 6% below what my client paid for it (when he worked with a different agent) three years ago.  And while we got a fair number of showings and generally positive feedback about condition, the bottom line is that there were similar models in the area that sold for less because they were bank-owned. 

It was frustrating, because circumstances beyond my client's control were affecting his ability to sell.

When he made the decision to pull his home off the market and rent it, perceptions almost instantly swung 180 degrees.  Prospective renters swarmed for the property, with multiple rental applications coming in within hours, not weeks. 

My client was able to get almost $200 more per month than he originally thought possible, with a full security deposit and a two year lease.  And by refinancing in the low 4's, he lowered his mortgage payment to where he now has positive cash flow on his former residence. 

Every situation is different, and I'm not universally advocating that sellers should pull their homes off the market and rent them.  Not at all.  Landlording is not for everybody, and there are potential costs and headaches that should cause you to think long and hard before you offer your home for lease.

But the incredible rental market we have today is going to be around for a while, and we will see the number of landlords (both willing and reluctant) continue to increase as the home ownership rate drops. 

If you are an investor, you already know about this market.  But if you are a homeowner with an urgent need to move, landlording may be a viable consideration.

I've got excellent property management referrals in all areas of town.  If you are considering renting your home, let me put you in touch with someone who can help you get educated about the pros and cons.

Saturday, November 20, 2010


Thanks to everyone - nearly 90 of you, in total - who came out this morning for my Megamind Client Appreciation Event at Colony Square.

We had a terrific mix of past clients, business partners and friends on hand for the show, which has been the top-grossing movie in America for the past two weeks.

The story of Megamind was interesting, as well, as the movie explored the themes of good and evil, rights versus responsibilities and love's enduring power to change people - even grimy little blue men with large heads, like Megamind.

Please know the hugs and handshakes today were heartfelt.  I have great gratitude for everyone who has contributed to my business and my life.  Today's movie was just a small token of appreciation for the wonderful tapestry of friendships with which I have been blessed. 

Thanks again for coming out.  As with our previous events, like the Switchfoot concert at the Ogden last spring and the Omni Dessert Buffet last fall, we aim to make these experiences fun and memorable. 

It was great to see you all.

Sunday, November 14, 2010


I attended an outstanding seminar last week featuring Steve Scanlon with Building Champions. Steve is a professional business coach who specializes in working with professionals in the fields of mortgage and real estate. I have attended live events with Steve each of the past two years and the ideas I have taken away (and implemented) have made a tangible difference in my work and my family life. 

I have participated in many personal and professional coaching programs through the years because I believe that investing in yourself is about the most important thing you can do.  Our lives and our workplaces are complex and demanding, and it's easy to lose focus and become distracted.  We need to become world-class problem solvers, at work and at home.  We need to create value for our employers (in my case, the readership of this blog) and lead our children with clarity.  We need to be more productive, more focused, more intentional and more connected. 

Years ago, Jim Rohn said "We all have two choices.  We can face the pain of discipline, which weighs ounces, or we can face the pain of regret, which weighs tons." 

Discipline or regret.  That's often the difference between success and failure, happiness and sorrow, victory and defeat.  We must be disciplined in our actions, our thoughts, our relationships, our ethics... or one day we will bear that heavy weight of regret.

The theme of Steve's message this year was emotional health.  Specifically, how we can keep emotional health in challenging and uncertain times. 

He said, “We all have lots of balls in the air, because it’s the nature of our business. We all get overwhelmed and sometimes become reactive when we want to stay in control. But here’s the important thing: some of those balls you are juggling are made of rubber, and some of those balls... like your health and your family... are made of crystal.”

Steve’s point is this… we all have lots to do, but not all that we do is of equal value in the grand scheme of our lives. Mess up your health, and that’s a crystal ball that will shatter into a thousand pieces. Screw things up with your family, and that’s an explosion of slivers and shrapnel that you might not be able to fix.

Recognize that your life is busy… but recognize that your time is limited and valuable. A mysterious someone you've never met who calls off a yard sign at 4 p.m. on a Sunday afternoon and demands to see a home in 30 minutes may not be more important than attending the school play your daughter has been working on for three months.  (Yes, I have goofed this one up before)

In the end, we have to stand for something more than a commitment to be insanely busy, out of control and hyper-accommodating. Draw some lines and protect some aspects of your life, or the demands of this crazy market will burn you out and leave you empty.

I have shown many homes on Sunday afternoons to people I do not know.  And I have missed events in my family life that I wish I had attended.  Sometimes doing your job well is going to require a price (discipline), but don't mistake working like a dog for being a good husband or father.  You need to have clarity, and you need to recognize which balls are made of rubber and which ones are made of crystal.

Friday, November 12, 2010


On Saturday, November 20, I'm hosting another Client Appreciation Event. This time it's a private screening of the new DreamWorks film MegaMind, starring (the voices of) Will Ferrell, Brad Pitt and Tina Fey.

MegaMind is the story of two alien children sent to earth because their home planet is about to be swallowed by a black hole.  Through crazy circumstances, the two alients land in opposite realms of good and evil.  Eventually, the virtuous, stately Metro Man (Brad Pitt) squares off against the sinister, devious MegaMind (Will Ferrell) and they become archenemies. 

From there, the story takes many unexpected (and comical) twists and turns, but you'll have to join us to see how it all turns out.

We still have tickets available...  but I need to provide a final headcount to the theater by Wednesday, so please email me for showtime and location information.  We would love to add your name to our guest list!

Thank you again for your business, and your referrals.

Hope to see you next Saturday!

Monday, November 8, 2010


Thanksgiving is almost here, which is often a tipping point for sellers looking to move their homes. Because of the seasonality of our market, the period from Thanksgiving until early January can be a real dead spot, and listings that don’t offer superior value or breathtaking condition can be highly challenged.

Take heart – I am not afraid to market listings during the holidays! Although your showing count will almost certainly go down, sellers need to realize that buyers out in November and December (especially on cold days) are often far more motivated that many of the recreational summer shoppers who tour homes during busier times.

But because the stakes are higher with fewer showings, sellers need to be certain their homes are in absolute tip-top condition. Here are a few seasonal hints that can make your house feel like a home:

1) Brighten things up – with shorter days and less natural light, higher wattage bulbs can be a valuable selling tool. Light and warmth are hot buttons for buyers, so focusing on extra light is a smart staging strategy.

2) Flowers – nothing says you care like flowers. That may be the case in relationships, but it also applies to homes. Flowers convey a sense of care and commitment that can make a difference with buyers, and they’ll add some extra life to any space on those colder, darker winter days. Add some color to your kitchen, bathrooms or master bedroom with some fresh cut flowers.

3) Decorative lighting – be careful with this one, because you can overdo it. But good illumination, both inside and out, can add character and drama to your home. Consider using low voltage lights to highlight branches of an outdoor specimen tree, a front door, or a walkway. Consider backlighting a ornamental tree inside your home, or using a few decorative lights around a banister or railing.

4) Frame a local scene – artwork can have a great impression, especially with buyers from out of town. Look for local scenes, or mountain vistas with a Colorado flavor. Add a picture or two to your bathrooms or place one of John Fielder’s terrific Colorado photo books on your coffee table.

5) Entice them at the entrance – buyers always place extra emphasis on the front door. This is often where they draw their first impressions while waiting for their agent to open the lockbox and pull the house key. Keep this area extra clean (no cobwebs!), paint doors and trim and if your storm door is older, consider upgrading. If the front door doesn’t open and close cleanly, buyers will immediately start looking for other signs of deferred maintenance, and that will cost you in dollars and cents when you finally see an offer.

Selling in the fall and winter months is not impossible, but it does require more preparation. By listing your home when there is far less competition, you’ll have an advantage that could yield a better price and a less stressful experience.

Wednesday, November 3, 2010


Later on this morning, the Federal Reserve will announce that it is going resume purchasing treasuries, a strategy it used in 2009 to drive interest rates lower by essentially creating money to purchase IOUs (notes), which will need to be repaid in the future. 

What does this mean in English?  In simplest terms, the Fed will once again be pushing large quantities of currency into the system with a promise to pull it back later on.

There is legitimate debate among economists about whether flooding the economy with money will create runaway inflation and, ultimately, much higher interest rates.  Right now, with unemployment at 10% (much higher when you consider the number of people who have simply quit looking for work), the Fed simply has to take a stand.

Inflation, at least in the short term, is the goal.  Prop up home prices, encourage banks to lend more, kick start the economy... that's the intention here.

If it works... we will likely see a short term drop in interest rates, we'll see home prices stabilize, we'll see banks start to lend and companies will hire and expand because of the availability of "cheap money".  The stalled economy will get moving again.  Once there's traction, the Fed will then aggressively start pulling money out of the economy, which it will do by raising short-term interest rates.

If it fails... well, this is not a good scenario.  The Fed would likely have no choice but to keep pouring money down a hole until it finally has some effect, at which point runaway inflation will be almost inevitable.

This is a high stakes move and it will impact almost every American household, one way or another.  We had better hope it works.

Monday, October 25, 2010


Having clearly defined goals is like having the picture for a 1,000 piece jigsaw puzzle, according to Lou Tice in “Smart Talk”. Goals help you to figure out where the pieces fit, they heighten your awareness to people and opportunities that can move you forward, and they create the “constructive dissonance” that drives you to make adjustments to move from where you are to where you want to be. Goal setting sets energy in motion toward a desired outcome.

The problem most people have is that they don’t clearly define their goals.

Well thought-out goals create dissonance between what we want and where we are. And it’s that discord between the “better reality” and the “present moment” that inspires action, creativity and new ideas.

For many years, I was not an avid goal setter. During that season of my life, I let things come to me. That was a mistake. You either make things happen, or you let them happen. Guess which approach yields better results?

Great performers FOCUS on the result the want. To use a quarterbacking analogy, they selectively filter out the things they don’t need so they can find the man standing alone in the back of the end zone. That kind of focus pays off, and it’s a learned skill.

In Tice’s words, deliberately taking yourself out of your comfort zone is called "adventure". And to live life to the fullest, to make it an adventure, we must get comfortable being uncomfortable, because that is where discovery is found.

Sunday, October 24, 2010


I recently posted to this site the fact that nearly one-quarter of the agents selling real estate in our market three years ago have quit the business.  NAR membership in Colorado, which peaked near a high of 27,000 in 2007, now stands at just over 21,000, with many more agents on the way out.

Certainly this is a difficult market, and there simply are not enough transactions to support the weight of that many agents.  But there's also a lesson in this... survival is a biproduct of taking active steps.  If something doesn't work, you need to change it.  If something does work, do more of it.  But to simply keep doing what you've been doing while the tides goes further and further out is the recipe for slow and certain professional death.

I recently began holding open houses again, after going over a full year without doing a single one.  Now there's nothing wrong with open houses... in fact, if you want to know the truth, open houses are one of the most dollar-cost productive activities in real estate.  You may read the studies and listen to the talking heads and think that home buyers do all of the shopping on the computer... but you would be wrong.  Lots of people still get out on Saturday or Sunday afternoon and drive neighborhoods, looking for open houses.

Now showing up an open house is a good start, but it isn't enough.  I will normally print flyers one or two days in advance and then knock on doors, inviting neighbors to the open house.  Early on the morning of the open house (not five minutes before the open house), I will post 12 to 15 directional signs in the area, directing people to the property. 

And then when people show up, I have snacks, fruit trays, bottled water, hot coffee and most importantly, LOTS OF MARKET INFORMATION.  I won't chase buyers around a house or hound people who don't want to talk.  But if someone has a question, I'm going to have a full, thorough, complete and documented answer.  Because at that moment, I have the opportunity to start a relationship.

There are lots of examples of things people don't like to do, but which yield proven results in real estate.  Most of them involve talking to strangers, which many agents don't like to do.  Get over it.

If you intend to make it across the river, to 2012 or 2013 or whatever year it is when this market heats up again, you're going to need to be proactive.  You're going to have to get outside of your comfort zone.

So recognize that no one feels sorry for you.  No one cares about your problems.  You have a choice, and it's a simple one.  Will you commit to growing, or will you choose to die?  Because the skills that got you to where you are today will not be enough to see you though tomorrow.  

Thursday, October 21, 2010


In a market where over 50% of the listings entered into the MLS today will ultimately either be withdrawn or expire without selling, it's never a bad idea to go back to the basics.

When I first meet with sellers, I review with them my comprehensive marketing plan... a marketing strategy that actually involves 71 different steps and commitments I pursue to actively market and sell your home.

One of these steps involves "Enhancing" my listings on Realtor.com.  What does that mean?  And why is it relevant?

Let's start with Realtor.com.  Although there are hundreds of sites where your home will receive exposure when you list with me, Realtor.com is the elephant in the room.  Owned and operated under an agreement with the National Association of Realtors, Realtor.com attracts a global audience of over six million unique visitors each month, and more clients start their home search with Realtor.com than any other real estate site. 

Realtor.com is also a "for profit" enterprise, which means the site makes money in two ways:  1) by selling advertising space, and 2) by selling "enhancement packages" to Realtors who want to better promote their listings.

The cost to enhance listings on Realtor.com can be steep.  Using a formula based on the median home price for a region coupled with the number of listings the agent has taken in the past 12 months, the cost for a one year enhancement contract can easily reach $1,000 or more.
So what does enhancing do?  In short, there are three main benefits.

First, the listing is displayed at the top of the search results whenever its parameters are met in a home buyers search.  If a dozen listings fit the search profile based on criteria a visitor has entered, those two or three listings that are enhanced will be displayed first, followed by the generic listings.

Second, the listing information is enhanced, with up to 25 photos (instead of four), the ability to upload virtual tours (which I always utilize) and much more detailed and descriptive property information.

The third relevant aspect of enhancing is simply that the listing agent gets proper exposure with the listing.  In other words, while the listing broker's office information will always be shown with a basic Realtor.com listing, unless that agent has paid for the upgrade package, he or she will not have their phone number, website and personal contact information attached to the listing.

From the seller's perspective, missing out on Realtor.com upgrades is a big deal.  And most seller's don't even know what they're missing.

According to Realtor.com, about 20% of agents subscribe to the upgrade package.  Which means 80% do not.  If you were sellilng a home, wouldn't asking about Realtor.com enhancements be a good question to ask?

Tuesday, October 12, 2010


Bank of America announced last Friday that it was halting foreclosure proceedings in all 50 states so it could perform an internal review of its foreclosure processes.  This follows the announcement that several major lenders in 23 "judicial foreclosure" states (i.e. states that require a court hearing before a foreclosure in finalized) have suspended foreclosures after concerns arose about the legitimacy of those proceedings.

Much has been written about this in the past five days, and it is a complicated and tangled web.  The one thing I am convinced of is that this latest injection of uncertainty is not going to help the housing market, the economy or the public's perceptions of banks.  It will also make some attorneys rich.

There are basically two material concerns at issue here that are being investigated:

1) Right to foreclosedoes B of A (or whomever) actually OWN the loan they are foreclosing upon, and do they have the legal right to foreclose? Attorneys for foreclosed homeowners are asking that, prior to foreclosure, the original note and deed be produced by the lender. Because many of these loans have changed hands so many times (loans originally funded by WaMu, Indy Mac, Countrywide, etc.), in deals that were often brokered under severe duress by the federal government, the banks literally have no idea where thousands of these notes and deeds physically are located.

2) Costs and feesat every stage of the foreclosure process, there are fees and penalties that are piled on to the borrower’s debt list. Attorney fees, publication fees, filing fees etc… in the 23 so called “judicial foreclosure” states, the bank is supposed to submit an affidavit verifying that these fees have been reviewed and are legitimate prior to foreclosing. The truth is that employees at Bank of America have admitted signing up to 300 of these affidavits in a single day, which means that the costs, fees and legal mandates are not being verified prior to foreclosure.

When clients sign a note and the deed of trust, closers often joke that the 15 page deed can be summarized in ten words. “If you pay, you stay. If you don’t, you won’t.”  At the moment, that summation is in doubt.

These cases right now are not going to “save” any homeowners. They are simply going to cause delays and inject more fear and confusion into the housing market, which cannot help the recovery process or the nation's fragile economy.  The sensational headlines may also motivate thousands of underwater or unemployed homeowners to default on their loans, since the once-obvious connection between not paying your mortgage and losing your home seems to be increasingly fuzzy.

The real agenda here, in my opinion, is a shakedown against the banks by trial attorneys, who have spotted a weakness in the system and who know that no one has deeper pockets right now than the banking industry (thank you, taxpayers).

This is a very negative development because really, there are only two things driving the housing market today, and that’s buyers in search of quality and/or value. And foreclosures represent value. Take that out of the equation, and what do you have left?

Let's think one step down the line on this so you can see the kind of chaos we are talking about here... let's say that five years ago, you took out a Visa card with Washington Mutual.  WaMu goes under, the accounts get transferred to Chase, and today you owe $21,000 on that card.  You don't deny that you spent the money, or that you have a legal obligation to pay it back.

But using the same logic that's bottling up the foreclosure process, you demand that Chase supply the actual written agreement you signed when you took out the card so you know they are in fact the correct creditor.  Could they do that?  What if they can't??

That's why this is a mess.  We are all for ensuring that there is "process" and that fairness be a part of this discussion.  But really, in my opinion, this is just a massive shakedown that won't ultimately save any homeowners from wrongful evictions. 

It's about the fact banks have deep pockets (courtesy of taxpayer bailouts and government-arranged mergers) and that certain trial attorneys see an opportunity to make a killing.  A killing which could further delay any recovery in the housing market and in the larger economy.

Sunday, October 10, 2010


The goal here is to educate, not to scare.

Before you have a reaction to this post, keep in mind that there are two sides to every coin.  You want a 30 year fixed rate at 4.25%?  I'm sorry, they don't offer those rates when times are flush.

We are arguably living through the most challenging economic times since World War II.

Check out the job losses associated with the Great Recession as they relate to other periods (chart from Calculated Risk): 

Tracing back 33 months, we see that we have lost more than 5% of the nation's jobs.  The only recession that comes close, by comparison, was when we went through a national recalibration immediately after World War II.

Now the issue we all have to decide upon - anyone who plans to participate in this economy - is whether the graph of this recession is ultimately going to look like a V, some form of a U, or an L. 

If it's a V (and it won't be), we're going to come launching out of this recession any moment and it will all go down as a bad dream.  Too late for that - didn't happen.

If it's a U, and there's evidence to support that's the direction we're headed, we're in for a long, slow period of recovery that may never actually get us back to where we sat 33 months ago.  If you work, improve and focus, you'll come up with the curve.  If you don't, the bottom of the U may be where you stay.

And if it's an L, 10% unemployment is the norm (17% - 20% if you count those who have quit looking altogether), the stock market will continue to deflate and the housing market will stagnate for years.

Would it be worthwhile to spend some time getting educated on what's happening with the economy?  Would it be helpful to know if we're headed for a V, a U or an L? 

Having an informed opinion about where we're headed is the difference between finding amazing opportunities or throwing good money after bad.

I have said for some time that one consequence of the Great Recession is that we're all going to have to improve our skills, our work ethic and our level of commitment if we want to maintain our current standard of living. 

We're also going to have do a better job of educating ourselves about economics, because the recovery that's coming is going to reward those who understand it.

Thursday, September 30, 2010


A simple reminder to my friends in the business... are you ready for 2011?

An old real estate coaching axiom goes like this:  "Whatever actions you take today will determine what your income looks like 90 days from now." 

That means your economic realities for January 2011 are based upon your actions in October of 2010. 

So are you thinking about pumpkin patches, turkey dinners and holiday parties?  Or are you taking listings, showing properties and working on your business plan? 

2011 is not going to be an easy year.  In Colorado, we have lost nearly one-quarter of the agents who were in business just three years ago.  And a bunch more are on the way out.

So who survives?  Those who work.  Those who invent.  Those who create.  And those who do not lose focus.

Enjoy that glass of champagne tonight.  Because tomorrow the New Year begins!

Thursday, September 23, 2010


Over the next few months, I predict we are going to see some absolutely brutal headlines about the real estate market, both nationally and locally.  But will it really be as bad as it sounds?  Or is there a larger picture to consider?

Let's start with the numbers we already know about.  We've all seen reports about the dropoff in year-over-year activity since the tax credits expired in April.  The overall number of Denver area homes under contract in August, for example, was down 22% from a year ago.

Part of this is because so much demand among first-time buyers and move-up buyers was pulled forward into the first four months of this year.  That's a fact.  So some buyers who may have waited until the fall were part of the spring frenzy.

But the other factor that's going to make the headlines look bad is that a year ago at this time, our market was piping hot because buyers were scrambling to beat the original November 30 tax credit deadline.  Last fall was an artifically super-charged market, and this autumn we are seeing an artificially depressed market.

Compare the numbers side by side, and it's going to look bad.

But let's go a little deeper, because the reality is there are most definitely some "green shoots" in the data.

Let's start with a more in depth look at the August numbers.  Last month, just about 2,800 homes went under contract in the Denver MLS.  One year ago, by comparison, nearly 3,800 homes went under contract during the same 31-day period.  That's a 27% drop, which is consistent with the kind of negative headlines we saw.

Drop back to 2008, however, and we see that in August about 2,800 homes went under contract - exactly the same level of activity we are seeing today.  And that occurred with buyers pursuing the original 2008 $7,500 first-time buyer tax credit.

Now it doesn't sound so bad.

I'm firmly convinced that the next four months are going to create some extraordinary opportunites for buyers, because negative (but mostly superficial) headlines will hurt market pyschology.  Fence sitters will stay put, and sellers will have to make additional concessions to compete.  Interest rates will stay low, at least through the end of the year. 

Psychology will start to change quickly at year end as the direct comparisons to the super-charged numbers from last year die out.  The headlines will start to look a lot better, and at that point I expect to see a true shift in attitudes about the housing market.

Wait until then, and you're likely to see higher rates, more competition, and sellers far less eager to negotiate.  This is exactly why so many investors are in the market right now, and why a lot of people are going to do well purchasing real estate in the final quarter of 2010. 

Wednesday, September 22, 2010


The San Francisco Chronicle recently compiled a list of the 15 states with the highest percentage of "underwater" mortgages:

1. Nevada: 69.9% of all mortgages
2. Arizona: 51.3% of all mortgages
3. Floria: 47.8% of all mortgages
4. Michigan: 38.5% of all mortgages
5. California: 35.1% of all mortgages
6. Georgia: 27.8% of all mortgages
7. Virginia: 24.3% of all mortgages
8. South Dakota: 23.8% of all mortgages
9. Maine: 23.8% of all mortgages
10. West Virginia: 23.8% of all mortgages
11. Louisiana: 23.8% of all mortgages
12. Mississippi: 23.8% of all mortgages
13. Wyoming: 23.8% of all mortgages
14. Maryland: 22.9% of all mortgages
15. Idaho: 22.7% of all mortgages

The national average for underwater mortgages is 23%, according to First American Core Logic.  Approximately 20% of Colorado mortgages are underwater, based on First American's automated valuation model.

Monday, September 20, 2010


Market statistics for August are now out, and as I do every month, I've culled through the numbers to provide this latest snapshot of what things look like in the Denver housing market.

From a raw data standpoint, it's not pretty.  Overall inventory is now up 14.4% from a year ago, the fifth straight month where we've had more homes for sale on a year-over-year basis after nearly three years of steadily declining inventory.

The absorption rate held steady at 9.03 months, up 80% from when the tax credits expired in April but well below the 12 months of inventory we see on a national level. 

And there are just over five active listings for each home under contract, which means in the most basic sense sellers are competing with five other sellers for each buyer writing a contract. 

Of course, there is some good news, too, although you have to go a little deeper to find it.  The overall number of homes that went under contract in August - about 2,800 - is right in line with sales activity from August of 2008.  The numbers only look soft because this year's data is being compared to last year's data, and at this time last year the tax credit was driving a red-hot market, especially at the entry level.

We also saw a new report showing the overall number of completed short sales is up 48% from one year earlier, a clear sign that banks are finally looking for ways to liquidate inventory without the full tab brought on by a foreclosure. 

30-year fixed rates remain in the 4's and unemployment is mostly holding steady in Colorado.

Overall, it's not a great market, but it's not as horrible as the headlines are making it out to be.  If you are a seller, the negativity in the headlines is going to affect you.  Nothing good is going to be reported for the next few months, and so buyers are likely to remain in ultra-cautious mode.

For buyers, however, there is some opportunity.  The combination of low rates, ample inventory and negative headlines should be empowering and put you in a better negotiating position.  And if you believe that things are going to get better at some point economically, you've got about a 90 day window to play the very negative headlines to your advantage.  

By year end, when we stop comparing our sales numbers to the artificially charged data from a year ago, the data will look better (even if the market is the same) and  the headlines will start to get more optimistic.  Of course, in reality, the market is not much different than it was in 2008, except that interest rates are lower.  It's the perception that's different, and perceptions make all the difference.

Sunday, September 19, 2010


The National Association of Realtors reported this week that its membership in Colorado has fallen more than 21% in the past three years, from 27,000 dues-paying Realtors in 2007 to fewer than 22,000 today.  In a related item, the Colorado Association of Realtors has announced that after 90 consecutive years of holding its annual convention at The Broadmoor Hotel in Colorado Springs, CAR is terminating its contract with The Broadmoor after this year.

These are hard times for Realtors, as they are for all of us.  This market is not an easy one, and I've heard more than one agent this year say "It's just not worth it anymore."  Reluctant buyers, underwater sellers, underwriters who are terrified of making a mistake, appraisers who appraise too conservatively... it all adds up and takes a toll. 

Putting deals together is hard.  Holding them together is even harder. 

When I was a broker in California (1994-2005), everyone felt like a winner.  Sellers were pocketing huge equity gains.  Buyers felt like they were acquiring an asset that would appreciate 8 to 10% per year.  Agents were making excellent money.  It was a party.

Today, the reality is 180 degrees different.  Buyers are afraid of making mistakes and often grind hard on sellers every step of the way.  Many sellers have lost money, or worse yet, owe more on their home than it is worth.  They don't want to negotiate and they don't want to fix things.  Agents are stuck in the middle, with the chasm between buyer expectations and seller perceptions farther apart than ever before. 

Then there's bank-owned inventory, which is usually priced attractively but often full of deferred maintenance.  Appraisers call out condition items that need to fixed.  Banks don't fix anything.  Buyers don't have money for repairs.  Agents are stuck in the middle, again, having to find solutions. 

There is not a drop of glamour in real estate these days.

Having said that, there is a clear silver lining for the committed among us.  The consolidation going on right now is clearing part-timers out of the business, and it's driving marginally qualified agents to the sidelines.  Never in my 16 years as a broker have I seen a market which called for more persistence, creativity, innovation and skill. 

The GOOD agents, the ones who work 50-plus hours a week and look out for their clients, are going to ultimately benefit from this thinning of the herd.  Consumers are going to do better, as well.

Like you, we in the business are having to do more with less.  Those agents intent on making it to the other side are working harder, longer and with profit margins that are paper thin (if there's any profit at all).

As for me, I'm busy planning my next client appreciation party and working hard to close the deals in my pipeline today.  I'm making phone calls and holding open houses.  I'm communicating with my sellers and coaching and counseling my buyers.

Because experience has taught me that there is always business if you are excellent at what you do and that satisfied clients are like gold (because of the referrals they send), especially in tough times.

Again, I'm not complaining.  I'm just telling you how the market is affecting the brokerage community.  And I'm explaining why that agent who sold you your house three years ago may not be returning your call.

Wednesday, September 15, 2010


Great business have a point of view, not just a product or service. 

That's one of the key themes in "Rework", by Jason Fried and David Heinemeier Hansson, founders of the nationally-known consulting firm 37 Signals.

By standing for something and living your values, the authors assert, you can create "superfans" who will be intensely loyal to your brand, whether you are a web designer, a shoe company or a real estate broker.

In a fun, fast-paced read, Fried and Hansson illustrate how rapidly the professional world is changing due to the influences of technology, social media, home-based businesses and global supply chains. 

In a chapter entitled "Meetings are Toxic", the authors discuss how ideas are the new currency of the 21st Century, and how wasteful and counterproductive staff meetings can be.  Direct accountability, corporate efficiency and personal and professional inspiriation drive progress and new ideas.  Attainable short-term goals are good... nebulous big picture business plans that aren't specific, concise and action-oriented are often misdirected or a complete waste of time in a marketplace that is dynamic and everchanging.

By focusing on the basics, Fried and Hansson have built a progressive software, consulting and contact management company with over 5 million clients and users worldwide.  Their book encourages us to rethink work, to focus on reshaping our business with intention and design instead of merely working ourselves to death.      

Sunday, September 12, 2010


On Wednesday, a story in the New York Times asked an interesting question:  Is housing a luxury or a staple?

The answer, whichever it is, will have a pronounced effect on if, when and how the housing market will see a recovery.

In the article, author David Leonhardt studied price fluctuations among luxury items (like boats, Mercedes and gold watches) and compared them to "staples" (like food and clothing) over the past 100 years.  His findings:  the prices of luxury items tend to rise and fall with great volatility, closely tied to increases in personal income.  Staples, on the other hand, tend to track the inflation rate, with less fluctation and less drama. 

From 1995 to 2005, according to the author, low unemployment and the availability of free and easy credit turned houses from staples to luxuries, and people began collecting homes like pieces of jewelry.  As the very nature of homes and home ownership turned from staple to luxury, prices rose accordingly, and millions of Americans who bought homes between 2000 and 2005 ended up paying luxury prices.

Five years later, most would agree that the prevailing psychology among home buyers has turned 180 degrees.  Underbuying is in, overbuying is out.  Conservation is in, excess is out.  Cash on hand is good, debt is bad.  This most definitely impacts prices.

We have always known that people make decisions based on how they feel, and if today's buyers feel that homes are merely staples, places to go to store your things and keep the cold out, then prices will be very slow to recover. 

A larger recovery in values will only happen when personal income rises, accompanied by the corresponding feeling of goodwill which comes with prosperity, which cannot happen when the unemployment rate is tracking above 10%. 

In short, the rules of homeownership have changed because the way we feel about housing has changed.  If you paid a luxury price during the boom years for something that has been redefined as a commodity (which I certainly can see firsthand in my own neighborhood), the premium you paid is gone.

In short, people gladly overpaid when they felt times were good.  Now, in a different economy, buyers stubbornly seek value above all else. 

Buyers and sellers have big choices to make in today's economy about whether buying or selling a home is the right move for them.  Everyone's situation is different, but it is important to understand how the rules of the game have changed and how people's perceptions from a few years ago have little connection to today's market.

In the big picture, there are reasons why buying a home today makes sense.  Interest rates are absurdly low,  builders are bringing next to nothing online, the populations continues to grow and we almost certainly will see better economic times ahead.  But as long as people feel uncertain, uncertainty will prevail in our market. 

The key takeaway from this article is that psychology affects prices, and the psychology that caused people to willingly pay retail for anything a few years ago has changed.  But just as things have changed in the past, surely they will change again.  And both home buyers and sellers should keep in mind that five years from now, we'll be talking about a whole new set of changes. 

Tuesday, September 7, 2010


One national real estate figure calls it "extend and pretend."  Others refer to it as "kicking the can down the road."  I sometimes simply think the banks are holding onto their worthless chips because at some point, the government will redeem them once again.

What we are all referring to is the increasingly common tendency for banks to stop short of foreclosing on homeowners who have fallen delinquent on their loans.  Let's face it - the banks (at least the big ones, who survived) did very well with their 2008 and 2009 government bailouts, moving worthless loans off of their balance sheets and on to the ledger of the federal government.  Many smaller banks were swept away, but for the likes of Chase, Citi, B of A and Wells Fargo, being a survivor is profitable.

With the government agreeing to take so much bad debt (at taxpayer expense), it was important to keep things looking as manageable as possible.  Pulling this off required one simple ruse - getting everyone to believe that those losses ultimately wouldn't be very big.

To do this, the government changed the rules. The FDIC, which previously forced banks to get bad assets off their books, became a leading proponent of saving homeowners with loan modifications that likely just delay the inevitable.

With a little government pressure, the supposedly independent Federal Accounting Standards Board allowed banks to account for loans at theoretical values that were based on computer models rather than current market value.

An acronym soup of programs followed, which were promoted as providing help for America's homeowners: HAMP, HAFA, HARP, 2MP and more. But the reality is that, to date, these programs have resulted in little more than delays.

But delays can be profitable, if they allow banks to extract at least some payments (or partial payments) from homeowners who are ultimately not going to keep their homes.  By keeping the bad loans alive, the banks have a leveraging chip for future government aid while looking more compassionate in the interim.

The problem facing both lenders and the government is that they can neither kick homeowners out or bail them out, because either scenario forces the losses onto the books, which affects earnings, reserve requirements and investor relations.  The easier model is to delay confronting the problem, which works so well for the federal government that the banks are eager to give it a try.

Because I track foreclosure activity very closely (including pulling NED lists on a weekly basis in several of the neighborhoods where I work), I've seen this increasing reluctance to pull the trigger on homeowners who are clearly in default. 

I'm also seeing homeowners in foreclosure become increasingly adept at gaming the system, even renting out their homes on their way out of the neighborhood to create positive cashflow while they fail to make payments month after month.  This is one byproduct of a "soft enforcement" policy on defaulters.

To combat the spread of this mentality, lenders have to foreclose on a certain percentage of homeowners each month, or else the system will simply break down.  Call it foreclosure roulette.  Maybe it's your time to go... but maybe they'll give you six more months.

Trillions of dollars in negative equity is a serious problem, and I'm not advocating the "crash landing" approach to letting the markets reset.  But more creativity is called for here, whether it's creating a federal property management agency (renting back to foreclosed homeowners) or writing tougher legislation to limit the growing number of "strategic" defaults from owners who just decide to walk away. 

Letting the big banks set the rules, knowing the federal government views them as "too big to fail", is grossly unfair.  Taxpayers (and voters) deserve better.