Dec

30

Real Estate Agents: It Takes Guts

Filed Under Sellers | Leave a Comment

In order to walk up to someone’s house, like I normally do, and basically ask for $24,000 is a pretty tall order. You’ve got to have guts in order to do that. Say that the average house for sale on Long Island is $400,000. Six percent of that (or the ideal commission for real estate agents) is $24,000.

So I knock on doors of homeowners all over Long Island and attempt to get to know them. I give them the chance to know me and how I can help them sell their home. I’m forward enough to knock and I’m a professional, so I know what I’m talking about.

Of course I’m not making the entire $24,000. This is split up between all different agents and brokers. Without getting into boring details, just know that in most scenario’s, my portion will generally be about $6000.

Of course out of this amount will be deducted all the advertising costs associated with marketing the property and so on (this is where having a good agent helps because they actually market the property and spend some money to sell it).

For you, the homeowner, at the end of the day, all you know is, it’s going to cost you $24 big ones to have me sell your home. Now there are a million ways I can prove to you that the $24,000 “spent” on real estate commissions will save you 10’s of thousands of dollars, but that’s not the point of this article. This article is about logic. The logic of sales and marketing.

I can talk to you about the totality of the real estate market and why all aspets of it are important and how I, being a real estate professional can really help you, but again, that is outside the scope of this article. So let’s just get right to the main point.

First, a question must be asked. Do you think someone who sits back and sticks a sign on their front lawn is a salesman? Let’s say that same person puts an ad in the paper and places their ad on several online websites as well, with pictures and all. Are they a salesman? Does this make them a professional salesperson?

Sitting back and passively marketing something, anything, does not equal sales. Logic dictates that in order to be a salesman, you’ve got to be out there, meeting people. You’ve got to make phone calls, meet with other people in your field and network…hard. Sales and siting back do not go together…at all.

If you hire someone who is in the business of selling, if they’re good at it, that’s what they’ll do. They will sell in ways you, the homeowner, cannot.

Now let’s change the term “They” meaning real estate agents to “ME” or “I”. If you are my client, while you’re at work, I’m working for you. I’m meeting with other agents. I’m involved in the business of real estate. I’m knocking on doors. I’m handing out flyers. I’m advertising both myself and your property. I’m out there looking to get you top dollar because you’ve gone out of your way to entrust me with the responsibility of selling your home and that’s exactly what I plan to do.

The reason why homeowners who try and sell their homes by themselves do not succeed usually is because sticking a sign on the front lawn and expecting buyers to flock to the home is not selling. Putting it on a website or two with some pictures is not selling. It’s marketing.

Marketing is an essential part of sales. Now here’s the problem with the homeowner and his/her sign and website ad…that’s all they’ve got. Most homeowners will allienate themselves from real estate agents thinking they don’t need them to sell their house. In some cases, this is true. People do actually sell their homes without the services of a professional real estate agent - about 2 in 10. Out of the 2 that manage to sell their homes on their own, they’re usually investors who have a marketing system in place that allows them to successfully sell or rent their properties.

So here I come. I walk up to your house, knock on the door and at the end of the day, I”m asking for…let’s face it - a lot of money. I’ve got guts. I’m armed with the most up-to-date real estate market information and I’m out there either working for you or I’m listing properties around you and make no mistake, I’m your ultimate competitor.

I have a sign on the property. I do direct marketing. I advertise in The Real Estate Book, Pennysaver, Harmon Homes, Google.com, Trulia.com, Craigslist.org, Newsday, The Times, and more. I do personal ads in diners and I might even be on Television. Coldwell Banker, my broker, advertises on a national level, spending millions of dollars to market our company. My personal website, company websites work 24 hours a day and I personally have my cell phone next to my bed, just in case someone overseas calls on one of my listings in the middle of the night. I attend multiple Chamber of Commerce meetings and know builders, developers, contractors, attorneys, inspectors, other business owners and I know most of their families, friends and associates. They know me and know my listings.

A sign in the front yard, an ad in the paper and maybe a few ads on some internet websites is not selling. It’s marketing and it can be effective. I wish you the best.

When/If you do not sell your home, call me to make an appointment. An appointment with me may “cost you” $24,000. But I get that only after I accomplish your goal, of selling your home! And in most cases, because I’m going to price it right and market it heavily, I’m going to put more money in your pocket than if you continued to try and sell it yourself for the next 9 months and lose another $50,000 in value (you just made $26,000 right there!). And here’s a tip, always remember that a real estate agent’s commission is negotiable. In real estate, as in life, almost everything is negotiable!

Dec

29

Real Estate Agents: Updating Your Listing

Filed Under Sellers | Leave a Comment

As a homeowner, you expect the best from the so-called professional that you hire. Unfortunately, sometimes you will not receive the best service and you may not know the actual lack of service that you’re receiving from your real estate agent. That’s where I come in to shed some light on the situation.

If you hire a real estate agent/broker who is a member of the Long Island Board Of Realtors, your home will appear on the Multiple Listing Service or www.mlsli.com. On this website, real estate agents have access to upload and change/update their listings. This is the “agent side” of the MLS system.

I want to point out some things that you, the homeowner/seller, will not see on your listing that indicates to me, another agent, that you’re real estate agent is not providing you with full-service. I will highlight the following areas:

1. Open Houses
2. Comments
3. Directions
4. Commission Structure

To begin, on your listing in the “agent side” of the MLS system, there is a section entitled “Consumer Open House Date” or “Broker Open House Date”. This section allows agents to see when open houses will be offered to view your home. I chose to cover this area because it is a tell-tale sign that you are receiving quality service or poor service. Obviously, if you’re selling your home and your agent only does one open house in six months, you know about this. You also see how they conduct themselves, if they show up late or leave early, etc. What I want to talk about is this section on your listing specifically.

I constantly come across listings that have expired open house dates. I also come across some whoppers. I recently noticed a listing that was set to expire recently. When I pulled the listing up, I noticed that it had an initial starting date of 6/5/07 with a Broker Open House Date of 6/8/07 and a Consumer Open House Date of 6/10/07. When I reviewed this listing, it was November, 2007. This means that the agent had not updated the listing since he/she uploaded it to the MLS service. That’s terrible service and is very unprofessional in my opinion. And I’m not mentioning the fact that the seller did not receive anymore open houses for 6 months.

In the Comment section of your listing, the agent has the ability to type in some remarks about the property. This usually contains a statement about making offers and provides agents with some general information about the property. In this section recently, I found a listing that was uploaded to MLS in August of this year. In the comment section it said, “Pictures to be uploaded soon.” Well it is now December and there are no pictures in the listing. Additionally, this would mean that the listing has not been updated since it was originally uploaded in August…five months ago. This is not an isolated incident either.

For the Directions, agents have the opportunity to provide other real estate agents with directions to the property. Now as a real estate agent, I like to make things as easy for an agent to find my listing as possible. With the internet, of course using maps online is easy, but I don’t want to give anyone more work then they already have. I like my listings to flow and I want other agents to have as much information about the location as possible. I want to make it easy for them to get to my client’s house! That’s why, in addition to providing in-depth directions in this section, my listings are accompanied by a fax attachment with a map for other agents to use to find my houses!

Unfortunately, many agents will put the following in the Directions Section, “www.mapquest.com”. They are basically too lazy to put in actual directions to the property. Others will type in awful directions like, “Main to Smith Ave”. This tells me absolutely nothing. This is not inviting and again, in my opinion, isn’t providing you, the homeowner/seller with a comprehensive and full-service representation.

Finally, the “Commission Structure” is located at the bottom of the “agent side” listing of MLS. Again to reiterate, the “agent side” is viewable only by real estate agents who pay to be on the MLS system. Without going into too much detail which will only confuse most of us, I will point out the basics. If your agent takes your listing and puts in this section “1.5%” paid to a cooperating agent, this is generally an indication that the agent does not have your best interest at hand. Remember, we as agents, in most cases, put a sign on your lawn. That sign in and of itself generates business for the respective listing agent. Another words, I’m generally going to make money off of your listing whether I sell your home specifically or not.

How?

Simple. When I put a sign on your lawn, generally I get calls from people (buyers). Whether they buy your house or not, I may end up working with them to buy another house. Perhaps your neighbors! Anyhow, when they buy a house, I make money. So getting back to my point, if an agent offers to provide you with real estate brokerage “services”, if they’ll do it for 1.5%, then there’s a very good chance that you will not receive full-service. Mainly because of the costs associated with marketing a home. The cost of time and advertising add up quick and 1.5% of a home will not cover these costs sufficiently in order for the agent/broker to make any money.

Additionally, there is always a chance that when your agent took the listing, he/she wrote a 5% total commission but split the commission like this: 3.5% for themselves and 1.5% to a cooperating broker/agent. Unfortunately, this practice is not uncommon. This is a gross display of underhanded real estate agency practice. I stress to people I speak with to always, always, always, double check your listing, especially where ever the agent writes. Ask to specifically see the forms filled out and ask about the commission split.

If any of this does not make sense, feel free to leave a comment. In closing, while there are many things that agents can and don’t do to sell their listings, I believe that updating the listings frequently is important. The real estate market here on Long Island is flooded with agents. There stands a very good chance that another agent will help sell my listings. In that case, I like to have my listings looking tight and clean. There really is no room for laziness in this business.

(c) copyright 2007, www.tommcgiveron.com

By Thomas McGiveron
Contact me at 631.587.4321, ext. 51

Dec

23

Real Estate Market: Time To Buy

Filed Under Buyers | Leave a Comment

I read an article recently entitled, “Positive news for Realtors in ‘08″ by Bernice Ross, national speaker and CEO of Realestatecoach.com. It was about how great ‘08 will be for Realtors as home prices continue to come down, while interest rates remain low.

Mr. Yun, who is the cheif economist for the National Association of Realtors (NAR), points out several factors that appear to be indicating that 2008 will be a good year as the market settles down after being overcome with “greedy investors” which created the current mortgage crisis. Visit an interesting site here at http://ml-implode.com/. This site points out all the mortgage companies that have closed since 2006.

Rather than just paste the url of the article featuring Mr. Yun’s insights, I wanted to highlight a few things he mentioned that I thought may be of interest to buyers.

While media coverage on the real estate market has been nothing but doom and gloom, Yun consistently has pointed out that looking at national trends in real estate is like having a national weather forecast. It just doesn’t make sense. Real estate has taken a hit and for buyers going into 2008 appear to be in a good position to purchase property at lower prices.

Additionally, buying real estate allows the owner(s) to benefit from the tax advantages of owning real property. And when you can combine buying real estate at a discount with the overall advantages of owning it, this makes for a great combination, not to mention, being able to acquire mortgages with low fixed interest rates.

“…For those agents who represent reluctant first-time buyers, Yun points to some interesting research from the Federal Reserve. Between 1995 and 2004, the average renter accumulated $4,000 in wealth. In contrast, the average homeowner accumulated $184,400. Furthermore, the typical homeowner holds their property for six years. Within this period of time, NAR’s research shows that approximately 97 percent of the homeowners will have a positive equity position after that period of time.”

What this means for buyers is that getting in now, is a great time because we’re certainly not at the top of the market. Prices have come down quite a bit.

Finally, I thought this quote was very interesting:
“…Bottom line: 2008 represents the best window that buyers will have to find excellent deals with excellent financing…If they wait, prices and interest rates will be higher and the reluctant buyer may be forced out of the market.”

I went to a seminar hosted by national speaker, Steve Harney, former owner of National Homefinders. I was one of about only 70 Realtors on Long Island who attended! One of the things he kept saying was, “It’s going to be great in ‘08!” I just want to add, “…It’s going to be great in ‘08…for buyers!” And I would also add that working with the right real estate agent helps!

I look forward to seeing you after the holiday!

(c) Copyright 2007

by Thomas McGiveron

Dec

19

Real Estate Agents: Full-Time vs Part-Time

Filed Under Sellers & Buyers | Leave a Comment

Real Estate Agents: Full time Vs Part-Time

I work a minimum of 13 hours a day, six days a week. That’s a minimum of 13 hours a day too. I probably average 15 hours a day. I wake up at 5am and by 6 am, I’m working. I am usually in the office by 9:30am and I am in and out all day. I call people, meet homeowners in the neighborhood, and do many things throughout the day that hopefully keep me that much more ahead of my competition.

As a part-time real estate agent, I work (at the most) 40 hours a week. And that’s if I’m a work horse. I know because I did it. To Put in hours like that on top of a full-time job takes a great deal of focus. I would say most part-time real estate agents, put in about 25 hours at the most. In order to provide comprehensive services, an agent must work a minimum of 40 hours a week.

Now if an agent sticks to working a small market area and takes on only two or three listings a month, then 25 hours a week will probably be okay. Why does this matter to a homeowner? Why does this matter to a buyer or investor? Ask yourself this, how can someone, who works less than 40 hours a week, possibly know the market and meet my needs in a comprehensive way? Certainly there are some agents out there that really can see to your needs and work part-time. But out of all the agents who are in this business (there are approximately 27,000 licensed real estate agents on Long Island) how many part-timers will be able to really give you the service you deserve?

Think about it. The average home sale is well over a quarter of a million dollars or $250,000. I wanted to use the phrase “quarter of a million dollars” to drive home a point. Twenty-five hours a week is going to be sufficient to see to it that your interests are fully represented? I mean, we’re talking about a quarter of a million dollars (and most times, much more in the Long Island market).That’s a lot of money when you sit down, take a deep breath and think about it.

Think about this, it’s 6:34pm on a Wednesday. I’m taking 15 minutes to finish this article that I started a week ago at 1am on a monday. I’ve made sure all my phone calls have been made. I’ve contacted my buyers and my sellers to assure them that our appointments have been scheduled. I’ve been in and out of the office several times today, talking with homeowners, meeting with business owners and also managed to attend our team meeting. I’ve sent out 23 emails and printed and mailed over 30 letters.

I am not a part-timer, looking to “supplement” my income. I am a business. It’s 6:42pm and I’m done - 7 minutes before schedule, time to check the local market and prepare for tomorrow’s appointments!

(c) Copyright 2007, www.tommcgiveron.com

by Thomas McGiveron

Dec

11

Long Island Real Estate Market: To Sell Or Hold?

Filed Under Sellers | 1 Comment

Many homeowners are pondering whether or not they should sell their homes now or “wait it out”. I want to discuss a few factors that may aid in this decision. These factors may also shed some light into why it’s so important to choose a competent real estate agent.

During the years between 1999 and 2004/2005, the real estate market, especially on Long Island, realized a tremendous upsurge in appreciative values, as the prices of homes could see as much as 30% appreciation in 12 months. In this article I want to feature the “real estate roller coaster”. This is a graphic that some pretty smart people put together in order to trace the trends of real estate for the past 110 years. You can view the coaster at google.com - http://video.google.com/videoplay?docid=-2757699799528285056.

Now you have to try and stay with me on this. Toward the end of the roller coaster, you’ll notice an incredible incline that never seems to end. It is the steepest incline and the longest of the entire roller coaster. Unfortunately, we’re at the end of the incline and now face the decline. The good news is we’re well on our way slowly down. The simple question to ask a homeowner who is considering selling right now is, “How far down do you want to go?”

However, that’s not what I want to focus on. I don’t want to focus on the downward forecast of the real estate market. Rather, I want to focus on that steep incline and compare it to the other inclines. Throughout recorded history, the real estate market has generally produced a steady 4% to 6% appreciation per annum. Now applying that standard to today’s market is what I want to point out.

Many homeowners are currently in a situation where they are hemming and hawing about whether or not to sell their home. They are also losing valuable time (and money) not putting their home on the market with a top team of agents. However, some are also in a position where they do not have to sell and they’re saying to themselves, “We’ll just wait it out.”

“Waiting it out” is a relative term that I want to build this entire article around. House prices have dropped on Long Island. See the links that follow to get a good look how they’ve come down during the past year.

These graphs aren’t really even that good, but I’m using them to show how the market has certainly cooled to say the least. So let’s just take one homeowner as an example. We’ll call him Joe. Joe owns a home in Smithtown and bought it for $245,000 in 2000. He put it on the market in January of this year for $689,000 (wow, that’s over 150% appreciation in less than 10 years). In 2005, had he chose to put it on the market then, he probably could have sold it for a reasonable price of $589,000 given the appreciation values (remember the roller coaster).

The only problem is, Joe didn’t put it on the market in 2005. He put it on the market in 2007 but assumed the same upward appreciation. Joe thought the roller coaster was still going up when in fact, just before fall of 2005, that roller coaster started to level off and by winter of 2006, began to dip down slightly. Since that time, Joe’s home, like many other Long Island homeowners, has lost “value” in his home. That “value” we call equity (the difference between what is owed on the property and the true market value).

So now assuming that by this time in 2007 (December), Joe has taken his lumps (and so has his realtor who overpriced his home in January) and he has realized that his home actually lost value since 2005, what do you think Joe is going to do? What do you think he should do?

Aside from hiring me to sell his home, we can’t answer this question. We need more details. Okay, Joe and his family want to move to North Carolina. In fact, they “have to” because they’ve already purchased a new construction home in Lake Norman (not physically in the lake, but the area - wink). Here’s where it’s very important we all pay attention.

It’s not the market that causes our troubles; It’s the circumstances we create in our own lives that create most of our troubles. Joe has created his own trouble, not the market. His previous agent didn’t help him by over pricing the home in January when he put it on the market for $689,000, but that’s life (lesson: choose your agent wisely). So Joe “needs” to sell.

For those of you homeowners who don’t “need” to sell, don’t. Unless of course you want to and in that case, call me (631)587-1700, ext. 51. Okay, so Joe has to sell. Here’s what he must consider. His home was worth $589,000 in 2005 (that’s what the buying public would have actually paid for his house - market value). All the houses are on the market right now in his area are “listed” for around $549,000. The homeowners who are actually “selling” their properties are accepting somewhere around $519,000 and less. These sold houses on the market for about 195 days (over 6 months) and all started around $569,000 asking price originally.

Pause. Okay, we went from $689,000 to $519,0000. Is this a loss of $170,000 in market value for Joe’s home? Of course not. And here’s the kicker. Joe’s home was never worth $689,000. It was worth, at it’s best day, $590,000 in 2005. After 2005, the 30% appreciation stopped. It vanished. And we were left with about a 10% loss in value from January 2006 to March 2007. And here’s where it gets really bad for Joe…poor Joe.

Since March of 2007, Joe has lost another 3% to 5% in “value”. So, his home was actually worth, at the height of the market, in his given area in Smithtown, $590,000. We’re going to assume a 14% reduction in value, again what the buying public will pay for homes in his area NOW. This leaves Joe at around $508,000. So Joe, in reality has lost $82,000 in value since 2005.

Let’s leave Joe alone for a moment (he needs a break). If you own a home right now and you’re reading this, take what you think your home was worth in 2005 and subtract 14%. Now for all homeowners who don’t “need” to sell their home and are planning on “waiting it out”, let’s look at that roller coaster again. You’ll see that the average incline is steady. Since we just saw the most significant incline in the history of real estate, do you think the roller coaster is going to go right back up?

The answer is no. It will eventually start to go back up and we’ll assume the normal ride on the roller coaster. So assuming 5% appreciation, it will take about 3 years to recoup the lost 14% market value of homes throughout Long Island. But wait. And here’s where it gets bad (sorry for the doom ‘n’ gloom)…the market is not leveling off just yet. Long Island homeowners are still losing market values in their homes because buyers are not buying. Not only are they not buying but many can’t buy due to the mortgage difficulties and overall lack of liquidity in the market place (banks just don’t have the money to lend at the same rate they did in 2005 due to investors pulling out large (gigantic) sums of money from the mortgage lending business).

So on top of what has already been lost, where do we go from here. Let’s go back to Joe. Right now he could put his home on the market for $520,000 and be $29,000 less than his competition (remember the “listed” homes in the area are on the market now for $549,000). Most realtors, including myself, might think that’s an acceptable asking price to start at with room to come down. In reality, Joe’s optimal price is exactly $508,000 and not a penny more. This price would grab market attention.

Homes are sitting on the market now (as of December, 2007) and have been sitting for quite some time. The average listing period for a home in Suffolk County is over 6 months. Does Joe want to sit on the market? No, he wants to sell and be out of his home in 3 months. This is where a good agent comes in and gives Joe nothing but the facts. Joe thought his home was worth $689,000 in January of 2007, only to find out in June of 2007, that his home wasn’t worth anywhere near that amount. And while he spent the last 6 months (July through December) trying to get 2005 prices (he had a $590,000 list price on some for sale by owner website), he has finally realized that he needs two things; A good price and a good agent to market his property.

So now for the people who are going to hold on until the market “picks back up”. Five years. That’s it. You’ll have to wait 5 years before you will be able to get a 2005 price for your home. Let me repeat that: 5 years to get 2005 prices. Why? Here’s my personal speculative view: Assuming 12 more months of current declining market conditions, most homeowners will realize another 5% to 8% loss of market values in their homes (a conservative outlook). Again, market value is what the buying public is willing to spend on something - anything, whether it’s a hamburger, a shirt, a purse or a house. Everything that’s for sale has a “market value” (and I’m not even talking about the factors of supply and demand in this article as it pertains to the real estate market conditions).

So now remember that 14%. Add…let’s say 6.5% (the blended rate of declining market value - I added 5 + 8 and divided by 2 = 6.5).

So 20.5% is the projected total loss of market values for homes on Long Island. Again this is just my personal speculative view. It could be much worse, or it could be much better. That’s why it’s called speculation. But I will prove my point right now.

Is it safe to say that a home, where ever it is located, that was selling for $480,000 in January of 2006, is now (December 2007) selling for around $420,000?

The answer is yes.

So, now minus 6.5% from $420,000. We’re at $390,000. That’s a loss of $90,000 or 19.5%. So I’m one percent off. My point is that this is the reality of home values on Long Island. So in December 2008, we can safely say that all homes throughout Long Island will be about 20% less in price.

Assuming a 5% appreciation beginning in winter of 2009, in winter of 2010, homes will be at a 15% loss in market value in comparison to 2005 home values. In winter of 2011, homes will be at a 10% loss in market value in comparison to 2005 home values. In winter 2012, homes will be at a 5% loss in market value in comparison to 2005 home values. And in 2013, homes will be at breakeven from where they were valued at in 2005.

This is of course, all speculative. But let’s look at some quotes and statistics that are going to back it up:

So where does all this leave you, the seller? This depends a great deal on your circumstances. In the world of business, financial transactions are engaged in for expected profits, based on market research and numbers. The residential real estate market is based on people making decisions for their families more so than the almighty dollar. So my suggestion to you is to contact me in order to discuss your options as they pertain to the real estate market. With this information you can decide what is best for your financial situation and more importantly, your family’s future. I can be reached at (631)587-1700, ext. 51.

If you take anything from this article, please note that the real estate market has trends. In order to “wait out the market”, you’re looking at a long-term waiting period of at least four years. Please understand this and if you have any questions at all, call me. And please remember that no matter what the circumstances may be, you always have options. Consult a good attorney if you are in financial trouble and please do not make decisions based largely on emotions. Remain calm, call professionals in, get second and third opinions and after getting as much information as possible, then and only then make the most rational decision you can based on information.

(c) copyright 2007 www.tommcgiveron.com

Written by Thomas McGiveron