J. Philip's Westchester Real Estate Blog: September 2010

Two items of significance today:

1. I have a closing at 1pm. This is very pleasing to my wife, who attaches importance to having funds in the company operating account. 
2. Regarding the wife: Nine years ago today, Ann showed up. For our wedding. This was something that at the time was not an absolute certainty, as she had some serious pre-wedding jitters the whole week before, and I remember getting to the church hearing an old car in the parking lot with its alarm blaring loudly for what seemed like 15 minutes. The owner did turn it off before the ceremony, but I was paranoid that it was a bad omen. I really was afraid she might not show up. I remember seeing her arrive in the back of the Church looking like  a million bucks and feeling relieved and dazed. As we walked out of the Church, she turned to me and said "Oh, that's not any different." I am sure every husband can remember that first moment when he wanted to strangle his wife. That was mine, 30 seconds after the wedding. She worked fast. 

Actually, working fast seemed like Ann's superpower. Luke arrived 9 months and two  weeks after we wed. Huge blessing that was, as anyone married in their 30's knows. In the past nine years we have brought 4 children into the world, endured a miscarriage, said goodbye to two dogs, my brother and her father, and partnered up in this crazy real estate company. Ann is the administrative goddess who has harnessed all my hot air like a virtuoso, and we now have 18 licensees docked with the company with half a dozen more waiting in the wings. The company has grown in the midst of a horrid market, but she's been right there with me every battle, skirmish, win, loss, tie, injury, obstacle and solution and she always packed me a nice sandwich, often with a pickle, and always garnished with encouragement and faith in me. 

Gregory, our 5 year old is on the spectrum for autism and she's been an endless well of support and love for him, educating herself immensely into that mysterious world in spite of all the overwhelming plates we must spin as self employed parents of 4 working in an uber-competitive New York market in a miserable economy. 

She is still a fun date, cuts across a room like a Rockette, and has not completely been jaded and corrupted by my dark sardonic humor. The children worship the ground she walks on, and with good reason. She has created their childhoods to be like the Garden of Eden. The dog reveres her. The agents in the company adore her. I have learned to listen to her. Sometimes. I can completely be myself around her, which is priceless to me. 

As hard as we work, there are times when she relaxes by playing the piano. The children all take their stations nearby with their book or toy of choice, the dog takes his perch, and I hear it all from whatever table I am tapping on the laptop. The phone is mercifully silent for a few minutes, and there is no fire to put out as her music echoes throughout our home. These are the moments where I am reminded that I am blessed. 

More wedding pictures. 

I was first licensed in Rochester, New York in 1996. I remember receiving a paper memo from my mentor about what tools I'd need to start my career. Just the fact that it was a paper memo speaks volumes. Among the things needed:

• Beeper
• Voicemail account
• 3-ring binder
• Plastic sleeves for the listing presentation
• Day planner
• Copy of "List More, Sell More" by Jerry Bresser
• Cassette player for training tapes
• A photo of myself saved on a floppy disc for cards and brochures
• Atlas map

The office would provide all MLS forms, a dedicated fax number, and post it notes for phone messages. I had my own section in the message carousel at the front desk. 

AOL arrived in the office in 1997, when a PC replaced the MLS idiot terminal- listings now had a photo!! I chose the screen name JPHILIP as a lark- I hated my first initial/middle name setup inflicted by my parents. It was my first email address and I still have it today. The conventional wisdom at that time was to not devote too many resources to web pages or Internet marketing because it was an unknown commodity. I was approached by someone selling websites to get one, but all I did was pay $50 and register jphilip.com. My girlfriend at the time asked why, and I said jokingly that I thought I better get it before someone else did. If I only knew the headache getting jphilip.net would be a few years later. 

By 1998 I had my own PC and could work from my apartment, to the consternation of my manager. I had an analog cellular phone and a voicemail hotline tree with 15+ extensions for property descriptions of my listings. I added Microsoft Word (not Office- Word.) to my tool box. I retired my beeper and voicemail accounts. CDs replaced cassettes.  

Today, a new agent would have a far different list of tools needed to begin their business. These are the things a new licensee should have to begin their career:

• A smart phone with blue tooth
• A laptop with a wi-fi card
• A dedicated website with an IDX home search
• An Active Rain account, a Twitter account, a LinkedIn profile, and a Facebook business page
• A Gmail account with Google Docs and other Google business solutions, such as online photo and graphic storage.
• Full online organization so what used to be on Outlook is now in the Cloud- calender, planner, events, contact database, and a robust RSS reader for news, blogs, and Google alerts. 
• GPS
• Copy of "List More, Sell More" by Jerry Bresser

Having represented buyers and sellers for 14 years I can appreciate the job that licensees have to do for their clients on both sides of the transaction. I may expound on the role of the listing agent in another post, but for now I want to address a trend I am seeing more and more in Westchester agents who identify themselves as a "buyer's agent." 

First, an example: A buyer sees a home they like, and they email their agent that they'd like to see it, but have a few questions. One of the questions is whether or not the complex is approved for FHA financing. The buyer agent emails the listing agent, who says that he knows of no prohibition on FHA financing but they should ask their loan officer, who can run the address. The "buyer agent" then tells the buyers that the listing agent knows of no problem with FHA. They see the home, like it, and make an offer. After inspections, contracts, and shopping around for a mortgage, the FHA issue is forgotten. The buyer's attorney and loan officer, seeing that the townhome is Fee Simple ownership (not a condo), do not ask about FHA. 2 weeks after the question is asked by the -ahem- "buyer's agent," FHA financing is chosen as the best option. 3 weeks later, the deal dies when the bank refuses to do a spot approval on the unit because the complex is not FHA approved. 5 weeks are wasted. 

Sound unlikely? It isn't. More and more *ahem* "buyer agents" are nothing more than glorified chauffeurs and door openers who do little to no research to advocate for their client. They lazily ask the listing agent to do their research for them and sloppily interpret what is told-or not told- them, passing it along to their buyers to speed to process along to the closing and the collection of the check. 

While we can criticize listing agents for inaccurate information, it is irresponsible for buyer agents to accept listing information as gospel, and it is antithetical to buyer agency to not independently verify code compliance, clear title, or to rely on listing aqents to research curveball questions from their buyers.

I'll repeat that last part in case it wasn't clear: If you are a -ahem- "buyer agent" and your client has a question on a property that requires independent verification, you are screwing your -ahem- "client" over by not getting the answer yourself and demanding that the listing agent research the answer, especially if the property hasn't been shown yet.  

I'll restate that if it wasn't clear: It takes chutzpah to ask the listing agent to do your research for you. 

Among the questions posed to me lately that a buyer agent ought not rely on the listing agent to answer:

• Is the complex FHA approved?
• Are there any rules governing additions?
• Are there any prohibitions from the town on a privacy fence? 
• Will the setback rules allow for expansion of the garage? 
• Can we build an addition? 
• Does the co op allow pets/renting? 

The listing agent is not the advocate for the buyer and is not obliged to bird dog unique questions. Buyers are civilians; they are going to ask millions of questions- subdivision rules-mineral rights-setback rules-zoning-and their buyer agent need to diligently get answers from  primary sources, not the other side. It's like Johnny Cochran calling Marcia Clarke and asking how he could get OJ off. It doesn't work that way. Many agents (and their assistants! don't get me started) don't like it when I tell them this. But I'm not splitting my fee 50/50 when I do 90% of the work. I've got my hands full over here, thank you.  

I have to say that I normally cringe when Westchester Magazine ranks anything related to our local communities. My own home town of Ossining is often left in the shadow of the more affluent communities, and believe me, Westchester has some affluent towns. Yet the October issue of Westchester magazine has ranked Ossining 2nd out of 40 places to live, and unapologetically so. 

The article took the following criteria into consideration:

• Diversity
• Housing Costs
• Parks and recreation
• Proximity to NYC
• Safety
• Schools
• Proximity to water
• Nightlife
• Shopping 
• Downtown

I just found out that a former client passed away. 

This was not just anyone; he was a father, a grandfather, and the house he listed with me was the home his grandfather bought in the 1940's. I loved that house, and I liked Joel a great deal as well. It was a rare home for our area: it was a beautiful stone home on 5 acres, and in the breakfast room Joel told me how the wild turkeys would see a colorful blanket through the window and try and eat it, hitting their beaks on the glass. 

He never moved the blanket. 

Joel's original art was throughout the house, and one got he feeling of peace and serenity just being there. The sun porch was his favorite place, and he even had an old stove there for the winter time. He spoke of how he would someday return the stove to New England, which was a deal he made with the guy who sold the stove to him. 

It never sold. I got an offer once early, but it fell through, and I continued to market it for another year and change. It came off, and I didn't hear from Joel for a time. I drove by with a new trainee at one point, and ran into my friend again, who invited us in. He had a bout with cancer, he was engaged to a woman he loved, and he was ready to sell again. SO- we relisted the house at an aggressive price...and the economy tanked. 

After another generous term on market with no sale, my friend had to switch horses, which I never begrudged, and I saw some enormous price reductions which worried me that he might not want to secretly keep the house, it again expired. I knew the other agent, and we spoke recently. He informed me that we lost Joel last year. 

This is the first time I have learned of a client's passing. We never did a transaction but he was a good, kind guy and I liked him a bunch. Yet again, I'll say it. God takes his best work back early. 

In their efforts to accommodate buyers and make deals work, more Westchester home sellers are agreeing to either credit money to buyers for repairs or make the repairs outright. In general, I'd rather issue a credit; buyers can do the work as they see fit and sellers have one less headache. 

Often, however, the repairs are things the buyer would prefer be done prior to moving in: asbestos abatement, mold remediation, pest treatment, or something less urgent or elective, like the replacement of a light fixture or carpet. Regardless of what the repair is, unless it is urgent in nature, the only obligation a seller ought to have in making the repairs is to do them before closing. Whether a carpet goes in or wood paneling goes out, the buyer only benefits from it when they take possession of the domicile at closing. 

It is therefore not productive for a Westchester home buyer to demand that repairs be made immediately, before contracts are signed, or before anything other than the closing. Moreover, it is conventional wisdom for the seller to not complete any work or spend a dime until the buyer has provided a mortgage commitment. Once the commitment is provided, the seller can undertake repairs with peace of mind that the financing is not an issue and they they aren't spending money for a buyer who will not perform. The last thing a seller should do is spend money at the behest of a buyer, only to have that buyer not end up buying. The next buyer might not want the work done, and the problem of the lost deal is magnified. 

We recently had a buyer insist, prior to contract, that the seller treat an old paper wasp nest (it should be noted that in Westchester and the surrounding areas, we do contracts far later in the process than the rest of the world). They were told it would be done after the mortgage commitment was provided. Buyers who do not agree to the conventional wisdom and normal protocol in a matter like this cannot also claim to be reasonable. 

Early on the the beginning of the company, I listed a gorgeous old home that dated back to colonial times just outside the border of a village. It was a striking place, and even though it abutted commercial properties, its location outside the border of the village gave it residential zoning. A non-residential use required a special use permit, which probably would have been forthcoming for the right applicant. 

We had offers from a lawyer, an art gallery, and others, all contingent on that special use permit. 

However, the owner refused to do business with any of the offers. 

He wanted more money. He insisted on a premium in value based on the commercial potential of the property when in fact commercial use was not permitted legally. All offers were subject to procurement of a special use permit, which he did not want to wait for.

After 5 months on the market, we had lunch, and he discussed the various offers made. When I pointed out that the common thread in price appeared to be what the market bore, he informed me that I was not earning my keep. "Phil," he said, "I knew I could get $500,000 for the house from anyone. If that's all you can sell it for why do I even need you?"

I forget who picked up the check. 

The house remains unsold as a For Sale By Owner, 4 years after that lunch meeting. The answer to his question, I believe, is that very fact. 

Not long ago, we read about a judge throwing out a foreclosure case, resulting in a mortgage being de-facto-cancelled, due to the plaintiff not being able to produce documented ownership of the mortgage. 

What is being done on the secondary market is not overseen and may well be rife with shenanigans. 

Pay attention to this issue- You know who services your mortgage. Who is the actual investor? That is a much harder question to answer. 

Carol Culkin, whom I had the pleasure of meeting in person recently, wrote a very thoughtful post on listing agent-accompanied showings that prompted me to finish and revise a draft I had. We work the same market, and my thoughts are for Westchester County, New York and the Hudson Valley. Your results may vary. 

The idea of having the listing agent present in my view is the fallacy that the harder the listing agent "tries" in some cases, the more likely the house is to sell. The root of that fallacy is that some people think we pocket the whole commission while not really working too hard for it. We talk a little, take some photos, wait, someone else brings an offer, we take our cut. Voila. 

Therefore, these sellers want the agent to be on showings, jumping up and down "selling" the house to the buyers; pimping the 3 year old furnace, the landscaping, the radiant heat under the sun room floor (look Mom, no baseboards!) and so forth. These people do not understand how to sell. They do not understand what motivates buyers in this economy to make buying decisions. And it isn't because we "try hard."

• People don't buy the house because the listing agent was informative. They buy it because it feels like home. 
• People don't buy a home because the listing agent tried harder. They buy it because it feels like home. 
• People don't buy a home because the listing agent was able to pounce on their questions and give rapid, granular answers. They buy it because it feels like home. 

I have meant to post this earlier. On September 16 the Wall Street Journal posted 10 reasons to Buy a Home, and the article is sound advice. What is good about it is the even keeled nature of the piece- real estate isn't a 1-way ticket to dreamsville, but it is a savvy move for more than just financial reasons. Finally! Some sanity.

My favorite reason to buy a home was number 3: You'll save on your taxes. They'll repeal the mortgage interest tax deduction on the 12th of never, believe me.  

My favorite non-financial reason to buy a home: It's yours. That is a powerful thing, ownership, and if you doubt me go check out a home that has been rented for the past 5 years as opposed to an owner occupant. 

In a world where online financial advice is a cesspool of garbage like "what your agent hope you'll never find out" and other assorted nonsense of that vintage, this was refreshing, true, and timely.