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.