Seasons Greetings

This is a painting I did after returning from New Orleans. My lovely wife crafted the words. Our wish is that each and everyone of you enjoy the season!

Pogo said it all..............

"We have seen the enemy and it is us."

Not too long ago, the media was proclaiming that home sales were sizzling. Folks read the paper and joined the buying frenzy. Last fall, the media proclaimed that we were on the verge of popping the real estate bubble and sales activity came to a screeching halt. Now the media is letting us know that interest rates have not been lower in the past year.

Sound bite driven decisions rarely make sense. We have become our own worst enemy. I know that your cousin Ralph told you that you should wait out the price drops before you buy. I know that your aunt Alice said that prices still have room to fall and God forbid you pay too much for your home.

I do this stuff for a living. I don't sit in a cubicle writing articles attempting to sensationalize every wind that blows in the economic market. I don't have to make this glamorous. I live in the real world, where people have been buying and selling homes every day, every week, every month of the year. People have bought and sold when the interest rates were around 20%. People bought and sold when they actually had to have money for a down payment. If we only go back 25 years, there are some interesting facts about real estate in the DC market area that don't grab headlines.

Let me share.

The surge in prices over the last few years was the result of reduced inventory and historically low interest rates coupled with the introduction of interest only loans.
Real estate has always been the king of increasing personal net worth through the use of OPM (that's other peoples money). You don't even need a down payment with some of the programs available.

For example purposes, let us assume that you will put 10% down. If you purchase a $400,000 home, you will only need to put down $40,000. Over the last 25 years in the DC area, homes have appreciated 6.9%. The $400,000 homes value would increase to $564,240 over a period of 5 years. I am not a wizard but that is about a 22% return on the investment.

Can prices remain level or go down? Sure, that could happen. Prices in the past have gone down briefly, but the fact remains that over the last 25 years, they have averaged the 6.9% annual increase I have stated. No glamour, just facts based on verifiable information.

It gets better.

Rates can not remain low. They will have to go up, based on all sorts of fancy formulas that include stuff like M-1, the bond market and the cost of the war. We are at the bottom of this interest cycle. If you take advantage of these rates, you will be pleasantly surprised at the impact that decision will have on you. Prior to this cycle, the lowest they had been in forever was 8.31% back in April of 1997.

Back to the $400,000 house with 10% down.

A $360,000 loan at 6.25% = $2,216 monthly vs. 8.31% = $2,720. That is a savings of $504 per month and $181,440 over life of loan.

If you are in a 30% tax bracket that is a $7,000 tax deduction in year one and a $33,600 tax deduction over five years.

And now there is inventory. Of course, the level of inventory could change quickly. I don't really care how the scribe choose to share the information. I think you have the right to understand, there has never been a better time to buy.

Of course, you could just listen to the media or relatives. This is fair warning. If you fail to act now, you will see Pogo in the mirror with you and the words floating through the air will be............We have seen the enemy and it is us.

The wonderful world of forums

We Realtors are a group like any other. We have our boards where we share information with one another. We also pontificate about the world at large. Sometimes this sharing turns ugly. Toes are stepped on, posts are volleyed back and forth and often someone removes themself from the fray, vowing to never visit that particular forum again.

We Realtors are a group like any other. After some recent acrimony between members of two boards, I thought, there must be others such as this. There are probably folks across this broad interweb that are dipping their toes into the water and reaching out to communicate with other like minded folks.

If you happen to frequent any message boards or forums, I would like you to consider the following.

Everyone has to live within the confines of their own shoes. There are many people that happen to cross our paths on a regular basis and we judge them for the fraction of time they spend in our awareness. It is unfortunate, that often, we base our decisions on the "tip of the iceberg".

There are agents that have very close friends suffering from incurable diseases. As with anyone else, the stress of watching someone you care for deeply die a slow and painful death occasionally causes folks to act out. It is very hard to maintain control of all aspects of your life when you are losing one of the reasons you live that life.

There are agents that have great professional success and go through personal changes that challenge their ability to present a fair and balanced image to others all of the time. Regardless of market, there are agents that are moving through the maturation process that everyone struggles with when they go through the transition from 20 something to early thirties.

I don't know if there is a medical term to describe a condition in which a person falters and flounders when attempting to share on a forum. I have heard of a stroke in which speech and the ability to write is temporarily lost. I do believe there are many that sit before a keyboard and know what they are trying to say and it just doesn't come out that way.

There are many possible reasons that the online personna of agents is nowhere near the person behind the keyboard. Often a phone call and a ten minute conversation will ferret out the truth.

It is only my opinion, but the last thing I believe anyone should do is take it to heart that those on any forum are as good, bad or indifferent as they may appear.

These are just people. Some have internet experience, some don't. Some have the ability to express themselves fluently and some don't. There is value in what is shared by anyone.

I am not without blame. I too have judged and castigated and irritated. I have fallen short of my own standards. I will continue to attempt to become the person I can be. Hopefully I will avoid the piling on that occurs when others stumble in their journey.

Science has explained "buyers market"

I have been just as busy as most Realtors the past few months. New buyers are beginning to show up and appear ready to put there proverbial toe into the water. Rates have held at around 6% and that is about as good as they have been for the last year or so.

These new to the market folks are stunned to see the wide array of homes available to them. It is the housing version of sensory overload. Apparently, the total volumn of homes has reached a point that clients are once again asking for advice regarding the "best home for the money" on the market. This allows me to actually do my job.

Of course, I shouldn't have to mention that as I sift through the multiple listing service, for sale by owner.com, and craigs list for properties that will meet my clients needs and stay within the range of their comfort level regarding price, I am still puzzled by how many homes are still priced above current market levels.

I understand that the market did an incredible 180 degree turn around over the last 9 months. If Katrina were a pregnant woman, we have delivered a brand new, shock to the system, it can't be possible price adjustment to the housing market. Sellers that have not adjusted to the market are not really sellers - they are extra logs in the river of buying and selling houses. They are trying to be part of the market but they are the bottleneck to a smooth market.

And apparently, it is beyond their understanding.

Scientists have done research in the field of neuroeconomics. Neuroeconomics is the study of the psychology of finance. A recent article in the Washington Post shared the following.

Psychology of Money Drives Housing Market
Studies of the psychology of finance indicate that emotions play a huge role in decisions people make about money.

"There's a whole emotional processing system that goes on in the brain that's largely beyond our control," says Kevin McCabe, a professor of economics, law, and neuroscience at George Mason University in Fairfax, Va. "The general view is that our emotions control us, and not vice versa."

The study of neuroeconomics has illuminated a few key concepts: Many people will pass up sure profits for illusory ones. Some will turn down profits if they believe someone else is unfairly profiting more. Some will even refuse to sell if they believe they may come to regret it, because fear of future regret can be as powerful a motivator as money in the pocket today.

While little of this has been applied scientifically to real estate, it is easy to make the leap.

For instance, much research has been done on the concept of "loss aversion," which shows that people tend to deny reality when something they own, such as a house, declines in value. Sellers maintain the asking price even at a level that makes no sense, economists say. Similarly, home sellers become attached to the prices their neighbors received at the top of the market rather than current prices, and they become reluctant to sell unless they get that higher price.

"There seems to be a psychological resistance to taking losses on the sale of a house," says David Laibson, who teaches psychology and economics at Harvard University. "People think they'll make money on it....That logic worked for a long time, and now anyone who bet on that logic is being burned."

Source: The Washington Post, Kirstin Downey (11/04/2006)

My thanks to the many participants that allowed science to identify things that we Realtors have always known. I have to say that I read the report, jumped up and yelled outloud "AFFIRMATION BABY." My wife came in the room to see what the ruckus was about. I showed her the article. I told her that there was a reason that the house in King Farm wouldn't sell for a million. I stammered see, this is why the kids took the buyout and the relo company is stuck trying to sell their townhome in Germantown. It wasn't my fault.

She just gave me that "look" and reminded me it was trash day tomorrow and I had better move the garbage cans out front before it gets too late.

The last I saw of the Post article, it was on the top of my newspapers in the recycle bin. Sometimes you can know reasons for actions, sometimes you can even have scientific reasons for actions............but.......my understanding can only be shared with those wanting to sell.

They have to choose - become another log in the jam or take the smooth route to selling your home and doing what the smart folks are doing. What's that you ask?
Why it's the subject of the next post - buy up in a down market!

Safe neighborhoods

As a Realtor, I have the chance to meet many people seeking a new home. I am fortunate in that they come to me from many sources. Some are referred by clients, some walk in the door of the office, some have read this blog and others come from various lead generation programs that I use.

The size and price of the home they are seeking varies. The ethnicity of the clients vary. The age of the clients spans the spectrum. One thing remains constant. It doesn't vary. Everyone includes the feeling, and I will paraphrase here, I want a safe neighborhood.

As a Realtor, I am bound by a code of ethics. I am old enough to remember a country much more divided than today. As a young man I witnessed the changes in our laws that were brought about by the various legislation created following the work of Robert Kennedy and Martin Luther King. Those changes began almost thirty years ago.

Our code of ethics dictates that we show homes in the price range and style that our clients request. These guidelines are proper and necessary to ensure our country continues in the direction of equality.

If the issue of schools comes up, we are directed to advise clients that they can check with the local school board for any information. If the issue of crime comes up, we are directed to advise clients that they can check with the local police station for that information. If the issue of zoning or changes in the master plan come up, we are directed to advise our clients that they can check the local planning office for that information. Each of these agencies has the facts and a consumer should have the facts when making a decision about where they choose to live.

Many clients respond to the reply "you have to go to ......(fill in the appropriate agency) and check on that" with a quizzical look that reads "what am I paying you for?????". To those that share that look, I am doing my job and making sure that you make one of the biggest financial decisions of your life based on the facts.

I mentioned Robert Kennedy and Martin Luther King. I don't know what else they could have accomplished. No one does. They were both taken from us and our possible future was stolen by men with guns. The Civil Rights bills were passed by Lyndon Johnson with the emotional support of a congress on the heels of the assasination of John Kennedy. In my lifetime, I have lived through the loss of our best and our brightest to guns and violence. They are only the tip of the iceberg.

I have heard both sides of the debate regarding gun control. I am so tired of the propoganda that supports the thought that James Madison wrote the Bill of Rights so that sociopaths, crazy people, angry people and racists could open fire and slaughter innocent men, women and children with handguns, assault rifles, uzi's, mak-10's, etc is one of the most despicable theories ever crammed down the throat of it's potential victims.

The statement that if citizens can no longer own guns then only criminals will have guns is emotionally charged rhetoric. The same paraphrasing can be put on any law. Is this any different, if citizens can no longer kill one another then only criminals will kill. Laws are written to dictate behavior and identify those that do not comply and in the end laws are used to prosecute those that do not conform.

Safe neighborhoods are everywhere and they are nowhere. If the NRA and the rest of the gun lobby is allowed to buy and secure votes on a national level, the change must come locally. It must begin with you.

A change in gun laws will not guarantee all neighborhoods will be safe. Such a law will just remove one of the tools we currently use against one another.


I can still remember a time when children played in neighborhoods and the worst thing a child might face in school was the reprimand following "my dog ate my homework."

A Heartfelt Tribute to Shadow

I am like most men I know. I like to think that I am my wife's best friend. This weekend, I sadly accepted the title by default.

Fourteen years ago, my wife brought a new puppy home. This new bundle of joy was a mix between a golden retriever and an australian shephard. This was long before I entered the scene. She sat up nights with a scared puppy and came home from work every day at lunch to check on her. This love and attention was returned many fold over the next fourteen years.

Shadow was a constant companion. My wife shared the ups and downs of jobs that came and went, a marriage that did not work, a few "how about me" gents that came by and me. Shadow was always there. Looking back with soulful eyes and offering a well timed nuzzle when sorrow turned to tears.

Shadow accepted life for what it was. She loved to play fetch in the spring, sleep in the shade through the summer, chase squirrels in the fall and prance and roll in the winter's snow.

Shadow loved to chew sticks. I have no doubt she could have chewed her way through trees from here to California and back again. She was smart, she never chewed shoes or tables or other things.

A new playmate and I arrived on the scene at about the same time. The new playmate was a chow mix named Yuengling, I was the "man". We became fast friends and I understood her relationship with my wife.

I can not share all the joy she brought to us over the last few years. She was our constant companion on road trips and one day journeys. She loved to walk and ride. Like Robin, she had a passion for food, loved cats and dogs and almost every person she met. There were only two things that bothered her, fire crackers and thunder. Either of the two could send her seeking the comfort and safety of the bathtub.

Last week, she came up lame. We took her to the vet. The initial thought was that she had sprained her leg. The phone call four hours later contained much sadder news. She had cancer in the bone in her leg and the leg had broken. The cancer had spread and she had a few days left.

We brought her home and hoped that everyone was wrong and she would rise above the dire predictions. It did not happen. She got worse. We contacted a wonderful vet named Dr. Weiss, who agreed to come to our home Sunday and put her to rest.

Sunday morning came too quickly and her final hours were spent sitting with us in the back yard. It was overcast and gloomy. The Doctor came and gently put her out of her misery. She laid in our lap and as her last breath escaped her lungs, the sun peeked through clouds.

I will always be grateful that she set such a wonderful example of unconditional love. It is something we all need to stop and remember.

Now I have the official title of "my wife's best friend" and I only hope that I will be as good a friend as Shadow has been all these years.

The summer is ending and the Fall Market is here!

Isn't it time that I put an end to the rumour that I have lost my laptop? I can only say that the market conditions here have changed. The increased number of homes for sale has impacted all aspects of our market. I have been busier with activities for my clients. I have more listings and my buyers are taking a little longer to find the perfect home.

More listings increases the amount of time that a Realtor have to spend servicing listings. Yes Virginia, not only is there a Santa Claus, today, more than ever, it takes more than a sign in the yard and fresh cookies during an open house to get the house sold.

The pool of buyers remains constant, but the increase in inventory has ended for now the need to write an offer on the hood of a car in an effort to beat the competing offers. If the house a potential buyer likes goes under contract, there are many more available quite similar to that one.

There are so many available that buyers are doing two things.
• Buyers are looking for houses on their own.
• Buyers are hesitant to act.

I suppose with interest rates up and prices still holding, some folks feel that maybe they can negotiate a better deal on their own and save "commission". I hope that they realize that if they allow the agent selling the house to handle "both sides of the deal" - they have no representation.

The agent selling a home in Maryland CAN NOT represent anyone but the individual selling the house. They may talk fast and gloss over that fact and point out that they can cut their commission to save the buyer money, but the fact is - they are working for the seller and they CAN NOT offer any advice or counsel regarding price or anything else about the home that is not public knowledge.

It would seem that the the hesitancy to act is related to the amount of homes on the market. If we buy this one, we may have missed a better home. Maybe we should look at a few more? The fallicy in that logic is plain to see for a Realtor and is lost in the haze of so many homes seen by the buyer. If you have found a house that you feel can be home, buy it. If you wait, it will be gone. It is far worse to spend the next 10 years in your second choice bemoaning the fact that you could have had your first had you written an offer.

The Fall Market is beginning and we are seeing an increase in activity. Sales in Montgomery County are down 26% but prices have risen around 5%. Those that have waited all Spring and Summer for prices to crash need to reconsider that plan and act before Fall turns into Winter and the home they have been watching is occupied by a new family.

I have to share, my wife and I had our eyes on a home we wanted to purchase. We watched and waited. We watched and waited some more. The other morning, to my horror, the house went under contract. It did not sell for less. The seller got their asking price and I am faced with a long winter of "Honey, why didn't you make an offer? Now some stranger is living in MY house!"

I should have listened to my own advice.

If you wait on the sidelines, you never get in the game

Well friends, we seem to have reached an impasse. It is amazing how one event can trigger a series of events that eventually change to course of a nation. This is a real estate blog, so I will focus on the chain of events that turned the market 180 degrees over the course of just about one year.

It was August 29th, 2005 and most Americans were glued to t.v. sets watching images of a large storm covering what seemed to be the entire gulf of Mexico. The storm was headed for the area between Louisiana and Mississippi. At one point, it was a class 5 hurricane. As it approached land it began to diminish in strength. Officials relaxed and felt that maybe it would not be so bad. Then the storm surge hit and destroyed an area that ran from Florida to Louisiana including areas in Mississippi and Alabama.

We watched in horror as levee's were breached and the crescent city of New Orleans began to disappear under water. Several days of non-ending coverage of the plight of those left behind began to erode our faith in elected officials.

Shortly, another storm was in the gulf and officials began to react to avoid the problems that had just encountered. Oil refineries were shut down. Cities and highways were in chaos. The first storm problems led to the second storm problems.

The problems that began last year, continue to impact the real estate market today.

What happened? The cost of living began to creep up in areas that could not be controlled by government actions. Energy costs shot up. The cost of gas began to move towards and past $3.00 a gallon. Providers of electricity and natural gas and oil all raised their prices. As soon as deregulation hit utilities (in the hope of increasing competition and therefore lowering prices) there was little competition and rates across the country were raised anywhere from 30% to 70%.

The feds began an unprecedented series of rate increases in the prime rate. The cost of money moved beyond the reach of many first time home buyers. This was coupled with the fact that many new home owners had financed all or part of their purchase with loans that were adjustable and tied to the prime rate. Some home owners that viewed the perceived equity increase in their home as a financial boon, took out equity lines that were tied to the prime rate. The rates began to rise and the payments began to rise as well.

Little rebuilding has been accomplished in the Gulf States. We have yet to feel the impact on the demand for building supplies. That will come. We have yet to see the employment picture change dramatically in the Gulf area. That will change.

All of this has happened. Now many of you that thought it was time to buy, have returned to the sidelines to wait out the economy.

The result of that decision is that you are missing the best time to buy a home!

All of these factors have stifled sales. Homes are on the market longer and sellers are now realizing that they will have to make concessions in price and other areas in order to sell their home. Today, you can buy more home for the money than was possible over the last few years. Prices for sold properties have leveled off. When listed, they may seem like they cost more than last year but that is just the hopes of those putting a home on the market. Bidding wars, that occurred over the last few years are all but non-existent today. A good Realtor can guide you through the process and negotiate a better deal for you.

Understand, the cost of living is not going to come down. Major oil companies do not expect gasoline prices to ever return to the levels of last fall. Utility companies are not going to reduce their prices significantly. Even start up competitors will have use the cost of fossil fuels in their price structure. Fuel costs impact every other item we buy.

The only factor that changes over time is the interest rate. Waiting on the rate is never a good game to play. If it goes up, prices go down and that is our current situation. If the rates start to fall, the demand for homes will increase and the prices will begin to rise again. This cycle has been repeated over and over throughout the history of home buying.

Now is the time to purchase. You can buy more home for the money and you will own the property when rates decline in the future. At some point, you will take advantage of a lower rate through refinancing and you will then own the home at a lower cost. Should rates increase a bit, you will be in your home and the rate increase should not impact you.

I encourage anyone that has gone to the sidelines to rethink there position. If you wait on the sidelines, you never get in the game.

The greatest gift............

I was recently asked what is the nicest gift a client has given you. I thought about that one for a moment or two. My reply follows.

This easily could be titled "Why I am a Realtor."

Very early in my career, I was giving business cards to anyone that slowed down long enough to take one. Sales people at registers, waiters, waitresses, gas station attendants were all on the receiving end. One evening, I was standing outside a dressing room while my wife tried on a dress. The sales lady was standing there and I turned to her and asked "Are you or is anyone you know looking to buy or sell a home? If so, here is my card." She told me that they were living in a 2 bedroom rental unit with their 5 children. They had fled Afghanistan with the clothes on their back and they were trying to make it in this country. Her husband had a job as an engineer with the local government water and sewer agency. She invited me to come to her home at 10 the following Sunday morning. Being eager and wanting to make a good impression I figured that showing up at 830 would dazzle them. They answered the door in pajamas. Rather than be upset, they welcomed me heartily. They made tea and cakes and we sat down and discussed how they could purchase a home.

They had not been pre-approved and I thought that my lender would be delighted to chat with them. I called the lender at about 9 or so. She was not as happy to hear from me as they were when I placed the call. I handed the phone to the husband and waited. After a few minutes, she told him that she would call back. We shared tea and cakes and waited.

She called back. I smiled while the voice in my ear said "John, what are you crazy. They have no credit. They have no credit score. They have nothing." I cheerfully replied, "Well then, what can we do to fix that situation?" She outlined a plan for them. I left and decided that maybe it was too early for them to be looking and went about my business.

Eight months later I received a call, "Mr. John, I now have credit. Will you help me find a home in this country for my family?" He was approved. We went out that Saturday in the most frantic time of our recent sellers market. We looked at two well priced townhomes. He chose one. I wrote the offer for list price and included a home inspection. Those offers were dying before the ink was dry at that time.

It was accepted.

We went to closing. His wife turned to me and handed my a piece of candy before the settlement began. She explained in her country this was done for good luck. Throughout the settlement, they turned to me and asked "Is this o.k., before signing the "boiler plate" documents. When the last paper was signed and the sellers handed them the keys, they stood and smiled at one another. They then turned to me and took me in their arms with tears in their eyes. The husband softly said "When I came to this country, I promised my wife and children, one day we would have a home of our own. Today, because of you Mr. John, I have fulfilled that promise."

Perception is reality. I cried and had the understanding of what it is that we do. That understanding and thanks for me just doing my job is the greatest gift I have ever received from a client. Others since then have probably been as grateful, but I will always remember that day.

Father's Day

So, I was already to share my views on the local housing market. I read an article written by Ron Sitrin, an associate of mine at Long and Foster that appeared in the July issue of Montgomery County Insight. It is worth the read.

Then somebody said........"What are your plans for Sunday? It is Father's Day."

I will be holding and open house. Both of my children are grown. My son and his new wife have just opened their second restaurant in Fort Lauderdale and my daughter is great with my first grandchild. Father's day no longer includes bad neckties, hand written cards or things purchased by someone else for me. Those days are long gone. They remain fond memories.

Father's Day is now the one day that I can take a moment to be thankful that I have had the opportunity to be a dad. Every experience from the first burp to walking my daughter down the aisle are memories I cherish. I thought I would not bore you with all the details, but I will share some of them.

Rocking my daughter (colic stricken) throughout her first few months, bouncing her on my knee while I sang the Notre Dame fight song. Crawling through sleep deprived periods at work only to come alive upon arriving home to her gurgling smile.

Watching my 2 year old man-son mimic my professions in our front yard. Tapping my foot impatiently through each day so I could get home and play.

Sitting in the backyard on a cool Autumn night, waiting for meteor showers to rain down upon us. Believing every cry of "I saw one dad, I saw one!".

Spending time observing my little gymnast spin and twirl through routines and swearing afterward that I had turned my head during the performance as promised.

Loosing the feeling in all my toes while my answer to Wayne Gretzky went through his paces at various local outdoor rinks at 6 in the morning in the dead of winter.

Loading an entire team of flag football players in a step van after games and stopping at the closest 7-11 for slurpees and delighting in the fact that no one cared who won or lost the game.

Enjoying a late night hot fudge sundae with my daughter after picking her up from a party she attended. (Years later, I discovered that she had tried beer for the first time and was feeling more than queasy while I told her to "eat up". She is still convinced I knew she had been drinking.) Ah, the beauty of being a dad and being oblivious to the world around you. Hell, I loved hot fudge sundaes.

Then came the dreaded teen years, the divorce and becoming the man that destroyed everything. I won't share the guilt here, but I will share that I don't believe anyone under 40 understands the impact that all of their behavior has on their children. I was the same dad. I had just turned their world upside down.

We got through that period. Both children discovered that life does have ups and downs but overall it is really ok. These little people were becoming young adults and all of the sudden they could share things they liked with me. We enjoyed music and road trips and pizza.

Music is the web that catches one mid-day and takes them back to a place or time. Music is a thing we shared and more than a few artists bring a tear to my eye today. We had such good times. It was great being the dad.

Then, like little birds, they had wings and were gone much quicker than I expected. One to California and the other to Florida. I was alone. They were starting the grownup phase of their lives and I had the occasional phone call (only if I placed it).

One day, I did receive the call - "Dad, I want to come home. Will you come get me?" I flew to Los Angeles met my daughter, loaded up her car and began the 53 hour journey home. Another wonderful memory. I was dad to the rescue.

Then last year, I sat in the front row and cried when my boy married his bride. We shared a brief embrace that I will hold forever. Later in the year, I walked my daughter down the aisle. We shared the father daughter dance and shared an embrace I will hold forever.

Happy Fathers Day? Thank you for the opportunity. I am the luckiest guy I know.

Something I just never understand...

The spring market seems to be caught up in the ice cold winter market. There does not appear to be a thaw on the horizon. It seems that everyday more people decide to list their home. You can drive down some streets and see three, four or five for sale signs. At the rate we are going, open houses will be replaced with block party's.

Speaking of open houses, I had the opportunity to host one this past weekend. I like to have copies of the listings for comparable properties available for any guest with a small map that shows where the other properties are located. This weekend's map looked more like a walking tour of the neighborhood than a poor man's version of mapquest.

I did notice one thing about the visitors that seems to be more prevalent than in years past. The guests that replied to the question "Are you represented by a Realtor?" in the affirmative, had no Realtor in tow. They were either just out looking on their own or their Realtor gave them a list of "open houses" and told them to report back if there was anything that interested them. This is a rather disturbing trend in our industry.

I first noticed buyers coming by "open houses" without their Realtor a few years back. They were usually represented by an agent that offered a cut rate service. The deal was something like - you go out and find a home that you like and I will then write an offer for you. These poor folks would faithfully take newspaper ads, a full tank of gas and go off spending their Sunday's visiting as many "open houses" as they could fit into the one o'clock to four o'clock schedule. If they came across the home of their dreams, they would call the agent and start the ball rolling.

Those agents set a precedent that is horrific to those of us that understand the importance of true representation. Their cost saving business plan has begun a trend that does nothing for the poor consumer and lines the agents pockets with commissions paid but not honestly earned. Homebuyers are supposed to be excited when they find their dream home. The prospect of possibly paying less for full service and getting the home they want seems like a great deal.

All that appears on the surface is not the total picture. When a buyer enters an contractual agreement with a buyer's agent, the agent's responsibilities are much more than just writing an offer. Agents are trained in every aspect of the transaction. An agent sees more in a house than any buyer will see in a potential home. A Realtor begins using their knowledge when they first review a listing in the multiple listing service. Who is the agent representing the seller and what is the reputation of that broker regarding how smoothly the transaction will unfold? Does that broker have a reputation that indicates the transaction may not close on time if at all? How long has the house been on the market and why has it been on the market that long? What are similar homes in that area selling for? After compiling a reasonable list of homes that meet their current buyer's needs, a Realtor goes over this information and PLANS TO VISIT the homes with their clients. Realtors know that the listing agents will give directions that take you through the best and enticing route. The agent representing a buyer should make sure that their client is aware of everything in the area surrounding the home.

Buyers love the feel of homes. Their Realtor is supposed to review the disclosures and condition of the home. Many first time homebuyers don't know the difference between a furnace and a hot water heater. If they know that, they usually don't know the tell tale signs of trouble on the horizon. Most buyers can not decipher the condition of a roof. A Realtor can judge the wear and tear with a glance. The list of potential pitfalls is quite long. It is much bettor to have these potential problems pointed out in the beginning. It is a disgrace that the "stay in the office and let them look agents" fall back on the "we can do a home inspection" route. Information gathered at a home inspection comes well after the buyers have fallen in love with the home. A hot water heater with little life left may not seem as important after a home has already been emotionally purchased. If that information had been shared at the initial viewing - it may have knocked the house out of the dream home category.

I suppose the major problem I have with buyers left to their own devices is that it represents a total disregard of what our profession used to stand for. People became Realtors because they enjoyed helping people buy and sell homes. Sending clients out on their own is a total abdication of responsible behavior. The agent is still liable for problems that arise out of their action or lack of action. Those that cut costs and fail to fully do their job may be rolling the proverbial dice and hoping nothing bad will happen, but I dare say they have failed miserably when it comes to doing the job they should be doing.

I am not soliciting anyone, I am just sharing a fact. If your agent is sending you out on your own, you may save a dollar now, but you are not getting the representation you deserve and are paying for.

Why are listings priced like grapefruit?

Real estate agents price homes like produce in a super market. They go into a listing presentation and they close the deal. Everyone agrees the home is worth $300,000 so the agent suggests that they put it on the market for $299,900. Everyone knows the psychological advantage of slipping under a price point by a penny or a dollar or a hundred dollars or even one thousand dollars. It just makes the price look like a bargin.

Why?

You are not selling grapefruit. You don't put a big sign in the yard "For Sale, ABC Realty, $299,900."

You put the home into the multiple listing service. I have never met an agent that pulled up listings and highlighted all of the "almost" numbers. Agents representing buyers, usually do a search based on what the buyer is qualified to spend. Does anyone ever get an approval letter that states the buyer is approved for $299,900? Does anyone ever get an approval letter that is not in round numbers that always end in 000? I don't think so.

I think you have someone in your office that can spend up to $325,000 and you enter a search with the list price range $300,000 to $325,000. And I know (even with my limited understanding of search engines and bells and whistles in computers), the home that is listed at $299,900 will never appear in that search.

What does this mean JMac?

It means that by listing the home at $299,900 you have precluded a large segment of the buying population from ever seeing your listing. It means that the buyers that would find your property a true bargin (remember $300,000 is at the bottom of their search) will never see your listing. Anyone looking between X and $300,000 will find your listing but it will be at the top rung of their search, and your listing will be competing with what they may deem more affordable homes.

They are not buying grapefruit and their purchase will not initially be swayed by the difference you create using the 999 or 900 in your price. You are just using yesterday's produce pricing mentality and losing traffic to an archaic way of marketing.

Maybe it is time we understood the tools we use and dropped the 9's.

Just a thought.

jmac

Bricks, mortar, fear mixed up in a new real estate chess match and stalemate means no check.


O.K., I think I have figured out our current market. Everyday I check the multiple listings to see what is new on the market, what has been marked down and who has given up trying to sell. It is important. Someone may actually call hoping to buy or sell a home and I like to have enough knowledge to guide them in the right direction.

Today there are twice as many listings as there were this time last year. I checked public records and we have not seen a double in population in the last year. Babies are being born, people are dying and folks continue to be transferred into and out of the area. Hmmmm.

Prices are leveling off and even dropping below sales figures of a year ago. Fear is taking hold of the market. Those that are attempting to sell are discovering that unless they price their home correctly, they will not get any offers. Those that do price their home correctly are finding out that buyers are still coming in with an offer that is a bit lower than hoped for and the buyers want to actually be able to have the home inspected. Some people are even realizing that they will have to make needed repairs to sell the home.

Buyers are sitting on the couch. Nobody wants to buy at the top of the market. Nobody wants to buy at the top of a market that may see values go down a bit. Interest rates are rising. Some buyers are paralyzed by the notion that last year they could have gotten more money for the monthly payment they can afford.

It is an emotional stalemate and no checks are being passed from buyers to sellers.

There is hope.

At some point, sellers will become educated about the shift in the market and they will sit with a Realtor that understands the market and they will price their home to sell. They may not realize the same gain as folks did last year, but they will sell their home and they will move into a nicer home. They will be able to buy more home for the dollar this year than they could have last year! If they price their home favorably, they may even receive multiple offers. It is still occuring everyday on homes that are priced for the current market.

At some point, buyers will realize that there has not been a better market for them in a long time. While interest rates are going up, they are still well below what we have seen in the past 20 years. As a matter of fact, they are half of what they have been in the not so distant past. It may be true that your monthly amount does not buy as much house this year as it did last year. The facts are, you can get more house for your money today than you could have gotten last summer. If a buyer works with a good Realtor, they will benefit. Any dip in property values will be short lived. It will not take long for your home to increase in equity. Interest rates are always in flux. When they take a downward turn in the future, you can refinance your home and at that point you will be in more house for less money. It is a great time to buy.

F.D.R. may have said a lot of things, but he was never more accurate than when he shared the following - "We have nothing to fear but fear itself".

Just remember, those that step boldly forward are rewarded with the spoils of those that feared to step at all.

What, me worry?

The Washington Post continued it's attack on the housing market this morning. Those of us that work in real estate have watched the market change from optimistic to "running scared" as the Post has continued to print articles predicting a burst of the housing bubble. Today's offering, under full color photo, questioned the stability of the DC housing market. The column written by Tomoeh Murakami Tse went to great lengths to reveal that no one agrees which direction the market is taking. Different experts and institutions are quoted to support widely diverse theories on whether or not the market is up, down or sideways. Who to believe?

I live this industry. I work in a very active office. The market has changed. That being said, the market is always changing. There is a normal ebb and flow that occurs in this market. Buyers and sellers are impacted by interest rates, the cost of living, government policies and the amount of first time buyers in the market. This area does not feel the pain of a fluctuating job market. Local governments continue to support the housing industry. The market is alive and well in the Maryland suburbs.

The one thing that impacts the housing market above all other factors is the media. If the press begins reporting gloom and doom, the populace seems to follow. If reports tell of a booming market, sellers end up receiving multiple offers and prices soar. Local and national papers can offer findings from all the ivory tower institutes that support both sides of every equation. Thousands of dollars can be spent to produce reports that are then in turn analyzed to explain pricing of property. No one can seem to agree on the reason that home values shot up in the last two years, nor can the offer a concrete reason why things have leveled off.

A visit to your local library and reviewing news articles will reveal stories that told of the wild market we were experiencing over the last couple years. Agents were unlocking doors at open houses while a parking lot full of buyers waited a chance to quickly walk through and make an offer. Homes were listed at one price that was the starting point of a bidding war that rivaled EBay. Sellers were accepting offers at a certain point in time (a deadline to the bidding war) and then review multiple escalating offers for their property. As one house sold, another up the block came on the market at a higher price and the cycle began again. Stories continued to be printed.

As last fall began, the natural slow down in home buying occurred. One reporter after another began to herald this annual event as the actual end of the wild market. Housing sales began to slow somewhat, but the media continued to predict the bubble was bursting and lean times were ahead. Interest rates began to creep up and the market slowed some more.

Spring is here and the market is not as frenzied. Today the Post printed the story I mentioned. I do not have concerns. I have been around long enough to understand the natural cycle of our market. It is slower. There was no bursting bubble. The cost for the first time homebuyer has increased beyond the comfort zone. It is not just interest rates, they remain very low from a historical perspective. It is the ugly appearance of points which have re-entered the loan approval process. Points translate to increased cash needed to purchase a home (on a $300,000 purchase, 2 points equal an additional $6,000 needed at settlement). The uncontrolled cost of living increases such as gasoline headed above $3.00 per gallon and Pepco rates increasing 40% are an example of items that are depleting expendable cash available to first time buyers. As budgets are adjusted, the market will become more active.

I can only share that if you are thinking of buying or selling a home, today is the best day to do so. Housing may go up and down over the short term, but it remains the American Dream. If you must read the Post, understand that they have to sell papers and touching your fears does that much better than just sticking to the facts.

It seems that a lot of the folks I talk to say that they wish they had bought a home two years ago. The market has changed and even the wisest of experts can not predict which direction it will take. We have experienced a few years of price increases that have far exceeded any past predictions. Homes have literally doubled in price in some areas. Oh to have had a crystal ball in January of 2003.

I thought about it. I have to agree. If you are sitting there today, considering purchasing a new home, it is easy to say "we should have done that two years ago." Looking at today's prices, it seems logical that a purchase in 2003 would have been a great investment. I suppose you should remember that you are looking at 2003 prices with a 2006 income. Maybe you were not really in a position to buy two years ago.

I have one hope in talking with these folks. I don't want to be sitting with them in 2008 and hearing them say "we should have bought two years ago." Prices may level off or they may actually go down a bit, but as sure as the sun comes up every morning, those prices will rise again. There is no better time to buy than right now.

The current market stagnation has created an environment that supports buying now. There is more inventory and there are fewer buyers. Everyone seems to be waiting for someone else to make a move. Today's buyer is operating from a position of strength. Prices and terms can be negotiated to create the best deal for a buyer. Home owners are conceding points they held firm just six months ago. This current status will not remain.

People continue to receive jobs that include relocation. Babies are still being born. The need to find a new home remains. Those that act will reap the benefits.

If I hear from you, that will be fine. Just don't say "I should have bought two years ago." Now is the time to say "I'm ready."

jmac