J. Philip's Westchester Real Estate Blog

Inman news is hyperventilating over a Youtube announcement from ARG (Abbott Realty Group) that they are not  permitting their listings to be viewed on 3rd party syndicators such as Zillow, Trulia and even Realtor.com. The link is already behind Inman's paywall so I have embedded the video below. This comes in the wake of a similar announcement from midwest Giant Edina Realty's decision to do the very same thing this past November. Jim Abbott, broker and president of ARG, gives what I consider a very well reasoned explanation for his company's decision. You may not agree, but his explanation is well presented. 

As much as I'd like to be the enlightened, philosophical, transparency embracing dude I strive to be, the small business owner in me is quietly applauding Mr Abbott's guts. Here's why: You might expect on Zillow or Trulia that if you click on the smiling face next to the advert for more information that you'll be put in touch with the listing agent, but you would be wrong much of the time. I spend 5 figures annually to keep myself as the contact on my listings on these sites, because they are in the business to sell zip codes to agents posting themselves as the local experts. In other words, that smiling face might be some guy who never saw the house in his life but wrote a check to be the contact for the zip code. Any  consumer who has ever made inquiries on Zillow and Trulia knows this.

Some listing agents view this as extortion, because they provide the websites the content, but then have to pay for the privelege of being the recipient of the consumer inquiry on their own listing. 

The argument for syndication (and the natural rebuttal to Mr Abbott) has always been the same thing: exposure. When a broker is hired to market a property, it is our fiduciary duty to maximize exposure of the home, and these websites get mammoth traffic. It is also a matter of raw competition: "I'll put your listing on Zillow and Trulia" is the 2012 version of "I'll buy an ad in the supermarket homes magazine," which was the better mousetrap when I was first licensed in 1996. Here's the problem with that: The data is often inaccurate and not up to date, and I'm not so sure we are doing our clients any favors when we allow inquiries on their homes to go to some guy at another firm who never set foot in their living room. "Hire me and I'll make sure the guy who bought the zip code gets the calls" doesn't sound too compelling to me.

This is where the syndicators play both ends against the middle: they sell their high traffic and exposure, then have a highly caffeineted sales team contact agents and promise them buyer leads if they pay $XX a month. This puts the agent next to anyone's listings in that zip code who haven't paid themselves. I virtually pay an annuity every month to box out Joe Meatball from getting the calls on my listings, and I get a perk for being the contact guy on Bertha Hairnet's listings. Fair? Hardly, it is the cost of doing business.  

When a home is multiple listed, it goes to literally hundreds of websites automatically thanks to the IDX (Internet Data Exchange) feed to search sites of cooperating brokerages, association searches (Like MLSLI.com on Long Island) and national aggregators. The IDX feed is the real time data from MLS. If the information is wrong, it is the fault of the broker, so they have to be on their toes. The trend appears to be that the providers of the content, the listing brokers, are taking back control of their data to ensure accuracy and certainty that they field the consumer inquiries. This takes the property off some popular websites, but if more firms do this those websites may also lose their popularity. 

ARG -and Edina- have made  their counterpunch. ARG, with about 25 agents and 41 listing on their website is about the same size as my firm. This took some thought and backbone. 

I have written before on what a buyer's market is and what a buyer's market isn't. Westchester County and our surroundings are a sought after destination; even if a home has been on the market for a year, once the price is right it will sell. I wish I could impress this upon a few buyers who have lost opportuntities when more motivated people came along and outbid them.  

We recently listed a newer build in a desirable subdivision. While it was a short sale, it was also upscale. Not long afterward, an offer came in almost 15% below asking price, a hefty discount not supported by any other market activity. The rationale? It's a buyer's market!

The seller countered, and the would-be buyer raised their number gradually, but well short of what we thought we could submit to the bank for acceptance (by "we" I mean my seller and their attorney). This went on for weeks. They never came up to the bottom line number we felt we could work with, and this resulted in some frustrated emails and phone calls from the agent. Then even the buyer called me directly. I don't know if the buyer thought they could be more convincing than the professional they had representing them, but I told the person both times that there was no comparable sale that justified accepting the offer. 

"But it's a buyer's market!" I was told. The house has been for sale for TWO WHOLE MONTHS and hasn't sold. I was risking having the bank take the house back if my client didn't take their offer. Furthermore, I was told, they were perfectly happy to wait until the bank repossessed and buy it at foreclosure to get their price. 

How lovely. This actually happened with two different byers on the same house- the same pattern and rationale. 

In each case, I asked the agent to ask the buyer to stop contacting me and go through their rep. 

Not long afterward, another buyer came along and made a stronger bid, which was accepted. They got the house.

Fatal mistake number one: Buyers should NEVER assume that they are the only game in town.  
Fatal mistake number two: A "buyers market" does not give the buyer fiat to set the market unilaterally. Comparable sales matter. 
Fatal mistake number three: When a buyer circumvents their agent and tries to negotiate on their own, they aren't accounting for the fact that they probably suck at negotiation and are hurting their own cause.  

In all three cases, the "buyer's market" phrase was thrown around as if it were some childhood game wildcard phrase that granted immunity from logic or true market forces. And in that buyer's market, the would-be buyers lost a home because they were their own worst enemy. The people believed that if they gave in just a little that they'd "lose." 

Pigs get fat, hogs get slaughtered. 

This is one of those topics I have been meaning to write about for a dog's age (sorry) and I finally have the time and inspiration to do just that. 

It is my view that an inordinate percentage of real estate agents are dog lovers. Canine devotees. Poochophiles. And they aren't just dog owners, they rescue them  adopt them, and give them foster homes. When I peruse Facebook, I can bet that the people who are posting about a dog that needs a home are real estate licensees. 

My very non-scientific observation in my 44 years is that a higher percentage of real estate people are dog people than any other occupation I know. Their dogs were always in their print and home magazine ads, they are on their web pages, in their cars, and often in their offices. They love their dogs. Actually, I should say WE love our dogs because I am one of them. We own a rescued 90 pound purebred German Shepherd who is a big goofy loveball, thinks I am the cats meow the greatest guy in the world, and adores the children. Before Max we had two yellow labs, Logan and Bella, and Logan was also a rescue who was nursed back from heartworm and near death. 

I was around dogs when I was a kid. That's my excuse. Do dogs cause people go go into real estate, or is it something else that causes the canine mania in so many of my colleagues? 

I actually think that the dog things does go hand in hand with a love of homes. Dogs make a house a home. They bring love and warmth, companionship and warm fuzzies. And when you are all about a home, a dog is not a far leap. 

But I think it is deeper than that, and I think what I am about to say should make our profession proud. We have compassion. By and large we are a benevolent group. Sure, there are some crummy, mercenary shazbuts in our ranks but overall we're a home loving (often dog loving), softed hearted crowd. If we weren't we wouldn't be so devoted to our furry family. 

Reading so many blogs and listening to my own team of agents, we lose sleep over our clients. We mother hen. We worry. We SO want them to win. We invest our selves and our efforts in a happy outcome for them. We literally bet our income we can make a difference for them. The public might think that all we see is a commission, but that's the minority. When we look at our clients, we see a noble mission. Is it any wonder that so many of us see the same when we look into a dog's eyes? 

That's my theory- any other ideas? 

I'm seldom political-I'm a capitalist, not a ideologue- and while I like President Obama, I have to say that I am incredibly disappointed by the State of the Union speech this evening for one good reason: he barely touched on housing or what he'd do to fix the industry. It is among our biggest problems and he barely went there.  I could also do without the camera on the person Mr Obama was just about to mention, because it made the whole thing seem like a choreographed effort between journalists and politicians, but I guess that's nothing new. 

It was a grand speech and he's a marvelous rhetoritician. There were some inspiring things he said. I agree that the American worker is the best in the world. I love the commitment to freedom around the world, and agree that nation building should start in our own back yard. But where I feel let down is the very brief minutes discussing housing that followed his patting himself on the back for the recovery of the auto industry.

What good is importing cars to Korea when you can't pay off your mortgage with the offer on your home? There was one promise to help people reduce their principle or be able to refinance withour red tape, and that was met with a heartbreakingly tepid response from the chamber. I shook my head. 

GM is the largest auto maker int he world. Swell. I guess we should just have millions of at risk homeowners who have no equity and no straight forward way out live in their cars instead. That might as well have been the solution. It was a 75 minute campaign speech with 90 seconds devoted to our most pressing issue, housing. 

We deserve better. They aren't listening to us. 

With apologies to Bill Clinton. 

My firm sells a wide range of properties: upscale 7 figure estates right over to a $7500 trailer. Among our niches is the area broadly described as the distressed property market. This could vary from short sales to bank owned foreclosures to property that is owned free and clear but in poor shape. The latter category could be an estate home or a house that sustained fire damage. Westchester has tons of pre-war builds, and we never seem to run out of this inventory. It is often a very good opportunity. 

Virtually all distressed property, especially bank owned and short sales, is sold "as is." Even a neophyte buyer seeking something they can fix up can deduce that if they want the fixing done before they buy that it really isn't a fixer upper anymore.

With the new year and new freshman class of buyers entering the market, the definition of "as is" appears to be subject to a nuanced interpretation that challenges the meaning of the word "is." A contributing factor to this trend is a pool of licensees who say they are buyer agents but seldom do more than unlock doors and act as carrier pigeons for uneducated buyer clients they do not have the intestinal fortitude to advise. 

If you seek to buy a distressed home sold "as is" that means that you are buying it subject to much of the following:

• Code violations
• Old open permits
• Non conforming work, such as illegal baths, decks, or additions
• Environmental issues like mold, radon, and submerged oil tanks 
• Shag carpeting

Tonight was the installation party for the Hudson Gateway Association of Realtors. Executives and directors of both HGAR and the Empire Access MLS (EAMLS) were sworn in for 2012, along with drinks, dinner and dancing. This will be my 3rd term as MLS Vice president, and it doubled as date night for me and Ann. 

One of my agents took the initiative to attend, and being a newer agent, she took it all in with great interest. It was a chance to be in a social atmosphere, but of course the chat always veers toward business. Barbara, my agent, brought up a deal she is about to have clients sign contracts for on a condo worth over $700,000. Even in Westchester, that is pretty good, and I told her so. 

She kidded me "You blew it by giving me those buyers!" and we had a giggle about that. I explained that I actually didn't blow it- she made the sale. Had I taken it myself, not only would I parhaps not make the sale, but it would take me away from running the company. 99% of buyers are given to the agents like her, and my efforts have to be more toward listings and overseeing our growing team of 25 agents. That is how we are building the company.

If I were to cherry pick high dollar buyers and throw the scraps to the team, I'd lose. Not only would it sow discontent with the team, it would take my eyes off the ball and the plan which has enabled us to progress these past few years. When I am running around with one buyer, I am being an agent. I have to be a broker and get more buyers to my agents- not keep them for myself. When my team wins, I win. I remember my first boss out of college in another industry telling me "Rich people cash big checks, truly wealthy people write them." I never  forgot that. 

If she keeps getting accepted offers like this one, I am only too happy to blow it more often. 

Month by month, I have watched the 2011 Westchester Real estate market in comparison to the same month in 2010 to see how we'd stack up. Would values rise? Would transaction totals improve? 2011 started out behind the curve compared to 2010, but my theory was that 2010 started out artificially high due to the housing stimulus which ended at the end of April 2010. Going into November, it looked like we'd at least catch up to 2010 if we could hold serve in the 4th quarter. 

We did not hold serve. As a matter of fact, the 4th quarter of 2011 was behind that of 2010 by over 40 transactions and over $50,000 in median price, which was a very disappointing finish. I have my theory about that, but first the numbers:

In 2010, a total of 4018 single family homes were sold in Westchester at a median price of $630,000.
In 2011, a total of 3839 single family homes were sold in Westchester at a median price of $600,000.

Overall, transaction totals were down 4%.
Overall, median price was down 5%.

While these are not cataclysmic declines, they do speak to the malaise that continues to dominate the housing market. Moreover, they do point to 2010 being somewhat of a dead cat bounce after the nadir of 2009, when only 3358 homes sold at a median price of $580,000. A "dead cat bounce" is a brief bounce up not unlike a "dead cat" bouncing after impact with the terra firma. 

The good news: We are indeed up from the lowest point.
The bad news: The market remains flat. And that will most likely be normal for the foreseeable future. 

So why did we trip over the finish line? What contributed to the poor 4th quarter when so many forces would want to close out the year, and the pipeline was swollen with homes under contract? 

The pipeline was swollen with homes under contract. It still is, with almost 700 homes under contract or pending sale. Here is what I wrote in November:

October sucked. The sad thing isn't that buyers aren't buying. They just can't get to the closing table for a variety of reasons. The data on pending sales shows a ton of deals on the 1-yard line that can't get into the end zone. 

...

I hate to be right, but we still have 674 deals under contract or pending sale at that same median price of $499,000. 190 of them are pending, meaning they should close in the next week or two. But they won't. 

And that is exactly what happened. Between short sales that weren't approved or mortgages that didn't get commitment or clear to close, the pending deals killed the recovery in vitro. 

Until we see a commitment on the lenders part to part with their delinquent loans via short sale and an equal commitment to loaning money without borrowers having to regain their virtue while standing on their head spitting nickels, the market will sputter. 

Consider this: Two weeks into 2012, we are down 45 sales and almost $100,000 in median price. That's not a big sample, but it's not encouraging either. 

I'd rather be a buyer than a seller! 

This home we just listed in Port Chester was appraised a few years ago at over $500,000. It is now on the market for $360,000. 3 bedrooms, 2 baths, fireplace, garage, den, 1st floor laundry, and 2400 square feet. Not bad. Now THAT is a buyer's market. 

To take advantage of the low prices and rates, get yourself a free Listingbook account and search the MLS like an agent. 

What is market share in real estate? 

Market share could mean percentage of closed transactions in a given area. 
Market share could mean the percent of closed dollar volume in a given area.
Market share could be the amount of inventory for sale in a given area. 

At around 11am today, market share took on a different meaning. Even though I am based in Westchester County, I have three listings in Highland, New York in Ulster County. And as a working real estate broker with a family, there are times when the best way to balance things out is to multitask: we pile the kids in the car and have them come on a business-related trip. It could be to put up a sign, install a lockbox, or open a door for someone. I had a little bit of everything today. And once I was finished with my brief Sunday morning appointment, it was made known to me by my beloved that our children were in need of, um, facilities. 

Our little blessings are 9,8,7 and 4. Taking them to a restaurant is not fun. And we're a solid hour from home and hearth. Ann suggested perhaps heading back our listing that I was just in, but it was winterized; you never use the bathroom of a winterized house. What to do? 

But wait! I have other listings in this town! And one, whose owner I just spoke to on Friday, was close by. The owner was out of town for the weekend, so I gave her a quick call. A teacher and a lovely woman, she laughed heartily and gave her porcelain blessing. The kids were on the their best behavior, I checked on my listing, and the drive home was devoid of panic or bladder-driven drama. 

So that's not a bad litmus test. If you are in a town and you have a choice of three clients to call for a little help if nature calls, you've got yourself a little bit of market share. 

Incidentally, the house we were in was pretty awesome: a pre- war Victorian with amazing charm and woodwork- here is the link to see the photos on Homespotters. 1 Tillson Ave Highland, NY, 12528

I remember the conversation like it was yesterday, even though it was 1997 or 1998. The typically sweet, warm and cordial client and I were discussing our next move on a purchase offer, and I was advising them against what struck me as making a rash response. "Well if you don't agree, Phil," she said "Maybe we should just call the listing agent and deal with him directly." It was out of character for this person, over the top, out of the blue, and hostile. And it was also very temporary. Everything worked out fine, but it made me appreciate that the stress of a real estate transaction can bring out some serious passions in people. That's just how it has always been.

Stress can make a person cross-eyed crazy. 

That was 14 or 15 years ago in a healthy economy at lower prices. 

Now...add the shadow of foreclosure to the mix, a recession, and a terribly depressed housing market and you've got yourself a real party. Now we are talking 3-ring circus, half a bottle of vodka won't calm me down stress. 

My job as a broker is to diffuse the stress and be the voice of reason. That's not always easy. Take the lady in my example back in the 1990's. If she were buying a short sale and dealing with stressed out homeowners facing foreclosure and financial crisis, it would be like throwing gas on an already roaring fire. 

The thing that all buyers should understand is that what might, in the fog of stress and emotion, look like manipulation or game playing on the part of a distressed seller is actually just normal people trying to cope. For example: I have had situations where buyers have been eager to get the seller to sign the contract. However, there have been delays on the seller's part due in large part to their circumstances. A signature might be delayed because a divorced spouse is out of state or working funny hours at a second job to make ends meet. Or a financially distressed seller can't make a repair until after they squirrel up some extra money. 

And yet the buyers sometimes don't see that. They see delay. Games being played. Shenanigans. That's what it seems like to them. 

What the buyer often doesn't understand is that their sensibilities are innaccurate because they are stressed and on edge in a situation that occurs in life but a handful of times. The seller isn't playing them. They are just dealing with hardship. It is all in how you interpret through your mental filter. The best thing for the principals to do in a sale- especially a distress sale- is to practice deep breathing and not trust their physical impulses. Suspicion of the unknown may have helped our ancestors survive with sabre-toothed tigers, but it doesn't help negotiate real estate. 

That's what brokers are for. 

I have a conference all day in Manhattan tomorrow, so my Sunday was even busier than usual. At 9am I was at a kitchen table, discussing the next move for a new client. I seldom need "extra" motivation to get the job done for folks- I have 4 kids and a company to run. But sometimes, inspiration does find me. This little sweet thing was going to be put in another room, but I asked that she stay with us. I have had two yellow labs in my life, and adored them both. She looks- and acts- just like my Bella, whom we lost in 2008. 

So yes, I am going to help her daddy sell the house and find a new home that is pet friendly. It isn't just the paycheck; I am about a roof over your head, home and hearth, and yes, a friendly space for the furry family member.