It’s Up! It’s Down! And the Problem with ‘Virtual’ Companies

Having finally gotten back from vacation, my thoughts are a little scattered . . . but I still have a few morsels to share.

The NAHB (Home Builder’s Association) is out with a list of marketplaces that have shown sustained improvement over the previous six months.  These are places where three indicators (Housing Permits, Housing Prices and Employment)  have improved steadily over the period:

    • Alexandria, LA
    • Anchorage, AK
    • Bangor, ME
    • Bismarck, ND
    • Casper, WY
    • Fairbanks, AK
    • Fayetteville, NC
    • Houma, LA
    • Midland, TX
    • New Orleans, LA
    • Pittsburgh, PA
    • Waco, TX

Meanwhile, Zillow is out with a list of the ten metro areas experiencing the greatest drop in home values over the past five years, based on their own Z-Estimate guess at value.  All of these markets have experienced at least a 50% drop in value, according to Zillow:

    • Merced, CA
    • Modesto, CA
    • Stockton, CA
    • Las Vegas, NV
    • Vallejo, CA
    • Salinas, CA
    • Daytona Beach, Fl
    • Bakersfield, CA
    • Ft. Meyers, FL
    • Phoenix, AZ

Of course, I see a 50+% drop in values and immediately imagine a 50% drop in percentage based real estate commissions.  The whole traditional approach to the business has taken a 50% pay cut and that’s before factoring in any decrease in the number of sales occurring.  Clearly, we are in the midst of a huge change.  I don’t believe we will ever do business again the way we did it in the past.  In the future, consumers will demand a leaner, more efficient, less expensive, no-nonsense approach to buying and selling real estate.  Oh!  What was that I just heard?? Did someone whisper ‘Help-U-Sell?’

In the past, when we had a downturn, there was a purgative effect on the business.  Bad agents – I hate to mince words, but anyone doing less than a deal a month is, well, a bad agent – usually left the business when the pickings got slim.  While REALTOR ranks have shrunk during this long season, they’ve not dwindled they way I expected.

Concurrent with this downturn, we have the widespread advent of the ‘Virtual’ real estate company, an innovation I believe will be part of the future of real estate.  Unfortunately, the current aberration of the ‘Virtual’ company presents a problem.  Most have simply become a place were unproductive agents can hang their licenses cheaply.  Some charge an agent only a few hundred dollars a year, while others charge a small per-transaction fee.   So the three or four deal a year agent – the one who used to get out when things got tough – can now afford to stay in and scrape a few deals together each year while earning a regular paycheck somewhere else.  Of course, that’s fewer transactions available to the real professionals in the business, but in the end, it is the consumer who suffers.  They’re saddled with agents who do so little business they can’t possibly be as current or effective as others who live and die real estate every day.

I think it is very relevant and totally appropriate for any person thinking of selling today to ask their prospective agent, ‘How many transactions have you done this year?  How many last year?  How many were successful short sales?’  Today, you want an agent who is capable of turning numbers, who knows how to navigate a short sale and to solve the big problems that torpedo so many transactions.  One of the biggest mistakes a potential seller could make would be to select an agent who is doing so little, they don’t have the depth of experience to do much at all.

By the way:  Jackson Hole, The Tetons, and Yellowstone were all wonderful, but Utah . . . now that’s a State in which to spend some recreational time.  Zion National Park and, especially, Capitol Reef were amazing.  I learned many important lessons on the trip, especially that dogs and toads don’t mix.  Homer bit one when I wasn’t looking and immediately turned to foaming at the mouth and shaking.  Turned out this was not a lethal toad, just a typical one, and he got through it.  But All toads can produce the same reaction in a dog, even from just licking the little rascals.  There are a few that are lethal, but they are rare.  Although frogs don’t seem to be a problem, my advice is:  if it croaks and hops, give it a wide berth.

 

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