No Worse Than…

 Posted by at 8:43 am
Oct 062012
 

“Remember, people will judge you by your actions, not your intentions. You may have a heart of gold – but so does a hard-boiled egg.”

 – Author Unknown

Having recently experienced a rather painful transaction and participated in the development of a course on buyer representation, I am not at all suprised by a study earlier this year that revealed that “Buyer Satisfaction with Real Estate Brokerage Companies Hits All-time Low.” You can read some highlights on the Real Estate Economy Watch website.

One of the things I found interesting about the analysis of the latest data (based on national data involving large companies) is the rationalization that this is somehow due to the difficult market. Although I must say, to J. D. Powers credit they note that the companies with the highest ratings are inclined to be more skilled at managing the customer’s expectations.

While the article obviously doesn’t report all the data, the analysis yields some interesting conclusions. “Notably, although the agent/salesperson has the largest impact on overall customer satisfaction among both home buyers and sellers, customer loyalty is stronger toward the real estate company than toward the agent. Less than 20 percent of customers say they ‘definitely will’ switch real estate companies if their agent moves to another company.”

If I owned a company, I’m not sure that I would sleep well at night as a result of that. This could be as much about inertia as loyalty. Let’s not miss the import of viewing these numbers from a slightly different angle. The data is suggesting that only one in five (20%) of customers see enough value in their agent to stick with him or her if that agent moves to a different company. Something doesn’t add up.

Note that the same analysis suggests “the agent/salesperson has the largest impact on overall customer satisfaction among both home buyers and sellers.” That’s a statement that’s hard to disagree with. So help me understand how an agent who couldn’t create value and loyalty on an individual level creates a high level of customer satisfaction for (and loyalty to) the company, please.

I’m the first to admit that the current market situation is causing a crisis for many agents and companies. In plain language, it’s darn tough to make a living in real estate–especially in rural Maine. But agents and companies should not be making that the customer’s problem. Managing expectations ought to be about the market, not about the level of service we are willing and able to provide.

Unfortunately, when satisfaction decreases, so do expectations. Some years ago Tom Peters had a lot of fun with a ficticious company who’s slogan was “We’re no worse than anybody else.” Unfortunately, that might well be what the survey is identifying as loyalty. Buyer satisfaction is at an all-time low. Seller satisfaction is decreasing. So the tempting conclusion for customers is “might as well stick with company x, they’re no worse than anybody else.”

Blaming the market doesn’t work, really. What about customers? Do they contribute? If customers do have a role in the state of affairs it is in the acceptance of mediocrity. (The survey notes that 60% of the respondents were repeat buyers and sellers–not limited to one experience.)

Customers: Raise the bar, increase your expectations. You are probably entitled to a lot more than you think. You can change these numbers.

If you are dissatisfied or having issues with your agent or company, check out this article What’s the Number for the Real Estate Police? As one who loves platitudes, I would close with “if you are not part of the solution you are part of the problem.”

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Buyer Beware!

 Posted by at 9:06 am
Aug 182012
 

Disclaimer: Clearly I am not an attorney and it is not my intent to engage in legal analysis or advice, but this incident (reported by the Maine Forest Service) is just too interesting NOT to write about.

A seller who happened to be a logger sold a parcel of land to a buyer but maintained the “stumpage rights” (the right to harvest the timber) on the property. This is certainly not an unusual practice and we are reminded that seller’s can, of course, maintain a number of different rights. Typically this is negotiated to both parties agreement and documented in the purchase and sale agreement. We need to do more than hope that these rights (and responsibilities) are accurately recorded when the deed transferring title is written.

For purposes of keeping the players straight, once title transferred, our buyer in this story becomes the owner.

In this interesting case, the logger subsequently exercised his right and harvested the timber (on property he no longer owned, remember). In completing the harvest, the logger (perhaps unintentionally) committed a 50 acre clearcutting violation of the Forest Practices Act (FPA). In the settlement agreement both the logger and owner were assessed penalties and the owner was required to to develop an after-the-fact forest management plan for the clearcut area.

We might, of course, debate the fairness of this. (The Maine Forest Service’s position is that “penalties for forest-practices rule violations are intended to remove the financial benefit obtained through such violations.” The implication in this case is that both the logger and owner received some financial benefit from the harvest.)

But the point for our purpose is “buyer beware” of ANY arrangement that gives another party rights to your property. Conveying (or in this case allowing the seller to keep) those rights does not leave you without responsibility.

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For Sale by Angry Wife

 Posted by at 7:50 am
Jul 252012
 

The following is just too funny–and demonstrates that a sense of humor can be important in this business. (I don’t think any of us are making light of the seller’s situation.) Reprinted from Scott Leavitt’s Tuesday Tactics Newsletter, with permission:

“We think this might be deserving of a new acronym: FSBAW (For Sale By Angry Wife)!

For Sale by Angry Wife!

The sign says it all:

“Husband left us for a 22-year-old. House for sale by scorned, slightly bitter, newly single owner… Adulterers need not apply.”

(I bet they’re serving free revenge at the open house. Cold, of course.)”

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May Sales Information

 Posted by at 8:06 am
Jun 242012
 

I found it mildly amusing that the MREIS (Maine Real Estate Information System) issued their monthly press release regarding May sales at about the same time I announced my vacation. Were I inclined to feel self-important I would speculate this is not a coincidence and there was concern that my vacation announcement might impact expectations regarding sales in July. (“Walter’s not working; sales will go down.”) I assure you my contributions (or lack thereof) will not significantly impact the sales data of either the county of the state.

Of course you’ve probably heard that statewide unit sales of residential property were up 32%. That’s certainly good news, but is tempered by the fact that comparing this year to last means comparing this year to a “bad” one. If a picture is worth a thousand words, the graph will show that the overall sales trend for May from 2007 continues a downward slant. But also do not forget this only represents one month–basing a trend on one month is not especially valid statistically.

Of perhaps more interest is the localized version… these releases include a “three month rolling average” by county.  For the months of March, April and May Piscataquis County Sales were up by nearly 13%–but understand that 13% represents four additional properties sold this year versus last and a median sales price this year of $60,000. (The median sales price indicates that half the homes were sold for more and half for less.)

The truly “bright spots” (measured by largest percentage increases) in our state are Washington County (162.5%) and Lincoln County (78.6%). Franklin County was the only county showing a loss (1.7%).

What all this means probably depends on your own bias and interest. Logically, with interest rates and prices this low, demand should (and will) increase–eventually. My instincts suggest that the road is a long one and I would be prepared for plenty of ups and downs.

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Help Wanted–Cheap Brain Surgeon

 Posted by at 7:51 am
Jun 022012
 
DIY Brain Surgery

I’m looking for a cheap brain surgeon. Actually he or she doesn’t have to be a brain surgeon–a secretary that works in the office of a brain surgeon would probably do–after all, I only need minor surgery.

Ok, first off–I don’t really need brain surgery. (There are surely some who would disagree with that statement!) But I’m going to ask you to consider your reaction to that opening paragraph. I suspect it sounds a bit ludicrous to you.

And yet this is exactly the sort of decision people are making everyday where any number of professions are concerned. Nobody wants to pay for the help they need–first of all the help isn’t really THAT much and second it’s too expensive.

Just recently I received an email that began, “If you are still in the real estate business we would like to mention your services on our website. Our site is an informational website about real estate deeds and many of our users are in need of real estate services…”

I visited the site. While the site appears to be “informational,” it actually is commercial–a sort of “do it yourself by filling in a standard form to create your own deed” site. There is some information there–some good general information and, of course, you can purchase “guidelines for filling out” the blank form you can also purchase. As an instructor (not pretending to be an attorney) I found the information too general and in some cases misleading–one reason I’m not giving the link here and also did not list my services on the site.

A bit oversimplified, but I like to think I’m in the business of helping people make wise choices. Making a choice based solely on cost is typically not a wise choice. In this business of real estate I find myself way too often in the position of “fixing” problems that were created by a desire to “save money”–particularly where an attorney’s service is indicated. I had one case, for example, where I was contacted to list and sell a property that had been the subject of “do it yourself” deed writing. When I started my research, it turned out the seller did not appear to actually (legally) own the property. The story at least has a happy ending–after two years of working with a real practicing attorney the title was cleared and we were able to list and sell the property.

I won’t ask you to like the system, but we have to live with it. When you find yourself tempted to ask your friend who works in an attorney’s office for advice, you might think about brain surgery done by the surgeon’s secretary. Or, try this exercise I use with students who are tempted to take the business of law (and filling out paperwork) lightly. Google “million dollar contract comma.” It’s a Canadian case–the United States doesn’t have a monopoly on complicated legal language–that demonstrates the placement of a comma in a contract made a million dollar difference in it’s interpretation.

Missing commas and a slip of the scalpel. How much risk should you take?
 

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Don’t Get Too Excited!

 Posted by at 7:53 am
May 272012
 

While it is not my desire to squash optimism, the recent sale of rose-colored glasses deserves some pause. If you have property listed in Piscataquis County I would not suggest you start planning how to spend the proceeds from your sale.

The latest press release from the Maine Real Estate Information System headlined the fact that sales and median sales price both were up in April (8.7% and 4.5% respectively). However, the numbers for Piscataquis County tell a slightly different story. County numbers are always reported on a three month “rolling average”–so the statistics I’m about to share are for February 1 through April 30. We’re comparing this year (2012) with last (2011). By the way, it’s important to remember that last year was not exactly a stellar year for the state or the county.

For the period noted, unit sales in Piscataquis County were actually down by 12.5% and the median price dropped a whopping 17.8%. Our county is a long way from “economic recovery” in just about every sense of the word.

To get a better sense of the market, consider the County Seat, Dover Foxcroft. (For those unfamilar with the area, our county is geographically large and very rural. The population of Dover Foxcroft is slight above 4,000.) There are (using MREIS data) currently 112 residential properties listed for sale in Dover Foxcroft. For the past six months, 18 have sold–an average of three per month.

A generally accepted real estate measure is “days on market” or “DOM.” Basically, this is a measure of how long it takes property to sell. You do not have to be a math whiz to see that with 112 properties for sale and sales rate of three per month, it will take… slightly over three years for all these listings to sell.

Now there are a lot of things “wrong” with this analysis–the largest being that it’s based on totals and really needs to be broken down either by price or location. The other observation that needs to be made is this area has always had a longer DOM that many others. If you are in the market in any way (selling or buying) further analysis is recommended, but it’s probably safe to say this is not a hotbed of real estate activity.

Markets with high inventory, low median price, and slow sales rates are often thought of as a “buyer’s market.” So while there’s plenty to choose from and prices are low (the median price for the rolling quarter is currently $60,000) it might a good time to buy. Again, further analysis of your individual situation is warranted.

(For those who are curious, one reason for the state-wide increase was a 20% increase in unit sales in York County. However, the median price of those sales did drop slightly.)

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Ignorance is bliss!

 Posted by at 7:29 am
Feb 242012
 

But it’s not a defense.  You might blissfully speed down the highway. But don’t try telling the police officer who stopped you for going 60 MPH that you didn’t know the speed limit was 30 MPH. I doubt he’ll say, “Oh, ok! Have a nice day!”

When it comes to real estate the problem becomes the number of laws that potentially impact a real estate transaction and trying to stay “on top” of them all. The National Association of Realtors recently developed a list of some 23 Federal Laws that may apply to a real estate transaction. I’ve decided to offer a link to it here primarily for the benefit of students–many of these laws affect what we do as we facilitate transactions. Consumers may, however, find the list at least interesting — if not intimidating! Remember, these are just federal laws. There are also state, county, and local laws and ordinances.

http://realtormag.realtor.org/law-and-ethics/feature/article/2012/02/23-federal-laws-apply-real-estate-sales

 

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Jan 242012
 

Reprinted with permission from WoodsWiseWire, an occasional electronic newsletter provided by the Maine Forest Service, on topics of general interest to woodland owners, foresters, loggers, and others interested in Maine’s forests. For more information on MFS programs, services, and publications, call the Maine Forest Service at 207-287-2791, or 1-800-367-0223, or send an email to forestinfo@maine.gov  Visit our website at www.maineforestservice.gov.

Tree Growth – also known as the Maine Tree Growth Tax Program – is Maine’s current use tax program for productive forestland. The program is administered in organized municipalities by town assessors and in the unorganized territories by Maine Revenue Service’s Property Tax Division. “Current use” means that enrolled land is valued according to its ability to grow trees for commercial use, rather than according to its fair market value. This often results in a significantly reduced property tax bill for enrolled landowners.

Tree Growth can be a beneficial program for landowners who manage their land sustainably for commercial forest products. In exchange for generally lower property valuations, landowners commit to following a written Forest Management Plan prepared by a Maine licensed forester. A licensed forester must also certify that landowners are following their plan.

Landowners are required to submit a signed Tree Growth Application and a supporting map to the assessing agent. The details of the forest management plan belong to the landowner and are not public information, although the Assessor may request a copy of the plan and hold it for a reasonable period of time for review.

The Maine Forest Service (MFS) provides assistance and education about the Tree Growth Tax Program, and forest management and planning in general, but does  NOT administer the Tree Growth Tax program.

Landowners should be aware of some very important requirements:

1) Land enrolled in Tree Growth must be recertified every ten years. Written management plans must be updated at least once in a ten year period. Could this be your year to update your plan and recertify?

2) In addition, when Tree Growth land is purchased, inherited, or otherwise acquired, new landowners must re-enroll within one year of the date of transfer. New landowners may not harvest timber until they have had a new forest management plan prepared or adopted a previous but still valid plan, and re-enrolled. Have you acquired or inherited forest land recently? 

Why is this important?

Because Tree Growth forest land that no longer complies with the program – including failure to recertify or to re-enroll on time– must be withdrawn from the program, with potentially significant monetary penalties to the landowner. Withdrawal can occur even if you were not the owner at the time the land was first enrolled, because Tree Growth status “runs with the land” – the parcel remains enrolled, even if it changes hands. Continue reading »

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Jan 172012
 
“Leave me alone!”

Nearly every day I have to delete emails or “zip flyers” from other  agents who feel compelled to “market” their listings to me. In some cases these flyers come as huge files that take forever to download… in other cases they represent properties outside the area I tend to work in. Some clearly violate real estate/fair housing rules and a majority violate the “CanSpam” act.

I used to respond directly to the sender with suggestions and observations, but I found the odds were about equal. Half would thank me; the other half would basically tell me to “mind my own business” because they are busy doing their fiduciary duty to their client.

Since I’m pretty obsessive about fiduciary duty (there are actually seven listed in Maine Real Estate Law) I decided to do a little more research on the outside chance I was missing an opportunity to serve my clients. On occasion, I’ll ask my real estate students about “marketing” and what they think it means — especially in terms of fiduciary duty to the clients they represent. Many take the position that “all exposure is good.” I challenge that thinking with this suggestion: “Then I hope you are taping your business card to the wall of every public restroom you use.” How’s that for a technique that is low cost with lots of exposure!? (Pun intended.)

Maybe it’s because I’m an instructor that I tend to wonder what we are teaching our clients with some of the stuff we do and don’t do. I also tend to wonder how much our clients know and don’t know. I do know that when there’s an online real estate discussion, it is clear many do not know basic real estate law and practice. Heck, I see it in my own practice.

Now admittedly, a seller is unlikely to get into legal trouble if the agent representing them violates one of those laws previously mentioned. But a seller does need to monitor their agent’s performance to be sure their “marketing” program is efficient, professional, and not so intrusive that people are responding “leave me alone.”

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Dec 132011
 

Wikipedia defines fair as “in accordance with the rules or standards; legitimate.” One of the more memorable definitions I’ve encountered was offered by a student a few years ago. He said that whenever his kids whined “Dad, that’s not fair,” he would remind them that a fair was actually a place where pigs go to compete for ribbons.

In real estate classes, I “force” students to memorize the definition of fair market value, but we also want to be sure we understand that definition because it’s a pretty important term to sellers and buyers. It’s a lengthy definition, but the core of it is “that price… which a ready, willing, and able buyer will pay…”

Arriving at the fair market value for a property involves both science and art. I’ve brought the topic up because according to a recent survey nearly three-quarters of home sellers think their homes are worth more than the price the agent determines. Where it gets really interesting is that the same survey indicates that 68% of all home buyers believe homes are overpriced. And, yes, it’s possible for both of those things to be true at the same time.

In the article I read, one professional suggests that the problem is “fixing the credit system.” There’s a leap I really do not understand. (The suggestion is that would bring more qualified buyers to the market and increase demand.)

The law of supply and demand is still at work. In general, we are currently working with high inventory (supply) and low demand. That low demand is not totally the fault of the credit system. There are many qualified buyers who are sitting on the sideline for lots of reasons. Most of those reasons fall into the category of “fear” and they are all about the future and mostly about the economy.

This all gets simpler when we recognize that homes are bought and sold one at a time. Things would get really simple if we could remove the emotion from that process. We might then be able to get those sellers who think they aren’t getting enough and those buyers who think they are paying too much together. This means we have to get price into perspective–hard to do for sellers who are faced with a mortgage payoff that exceeds the current market value.  But let’s not forget that it’s also hard for buyers who want to buy more home than they can afford.

(One concern I have that I hesitate to raise–the cost of home ownership is about a lot more than the sales price. I’m afraid that the current situation is making it very possible for buyers to buy homes they cannot ultimately afford. That’s probably a different topic. For today, buyer alert: don’t let low pricing lure you into making a bad purchase.)

 The talking heads will probably continue to over-simplify things. In truth, there’s always been a tendency for sellers to over value and buyers to under value. What makes the current situation unique is the disparity. We might do well to worry a bit less about blame and “fair” and more about buying and selling. Simple, really. Not easy.

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