Business

The Effect of the Cause

Midday Friday, I was informed that an expected closing had fallen. My associate, the listing agent, received a call from the buyer’s agent with the very sad news that the buyer was laid off from his job this morning, an hour after his wife had completed the final walk through for the scheduled 1:00 P.M. closing. Fallen sales are always disappointing, particularly so in the present economic climate, but this one got me to thinking about the effects of this one fallen sale.

Consider that the buyer got of bed today with high hopes, enjoying the adrenalin rush that comes from the anticipation of securing a new home. He had a job as he started the day, and I am sure that he and his wife were happy and pleased with how life was treating them. For those two unfortunate people, their day is not ending anything like it started. In a few short hours were lost the security of income, the security of shelter, and security of relevance.

It gets worse. The seller had made plans to move to a short term rental. The seller had to unwind the lease on his quarters, recover his deposit, and cancel the movers. The movers lost the income associated with moving the seller to new quarters. The owner of the rental property has to find a new tenant. The buyers lender had to cancel a mortgage loan, loosing not only the income (lenders have bills too), but the time devoted to the effort. The cost of the appraisal, inspections, title insurance commitment, and other miscellaneous fees suddenly had no value. Time spent by all the parties, lenders, title insurance employees, the Realtors (they also have bills to pay), and who knows who else, produced no benefit.

The seller has to again expose his property to a less than stellar market and find a new buyer. The buyer has to find employment, stabilize his life, and hopefully try again to buy a home in the future. I could go on with the ripple effects, but you get the picture.

When we are talking about statistics, it just isn’t very personal. When some economists are speaking about the overdue need for a correction, I can only assume they are speaking with tenured professorships in hand. But when you are watching the correction happen to people you know, it gets your attention. And it is happening often, all over the country. The finger pointing and post mortem discussion is historically important, and necessary, as we restructure the economy to avoid this sort of meltdown in the future. I suspect, however, that most of us get it.

Memo to the President –elect and the sitting President:

Get together. Get on the same page, or at least in the same hymnal, about a plan. The citizens of the United States are facing the crises of a lifetime. Mr. Obama, the great orator, needs to offer definitive assurance to the entire country that there is a plan, a direction, a unified agreement as to what must be done to restore confidence in ourselves. It might be a nice touch if Obama and Bush could share a podium and speak with one voice. We can only have one President at a time, but it is not written that we cannot have two leaders at the same time. Then, when we are feeling better about our prospects, and only then, should we begin the debate about how to fix all of the other things that ail us.

Written by Larry D. McGee, Denver Realtor - Visit Website Sphere: Related Content

As the Broker/Owner (AKA: The Boss) of The Berkshire Group, most of the chats I have with my associates are just that, chats; usually about structuring a contract, or those one minute training moments that have so much value. However, occasionally, my conversations are much weightier, such as the one I had yesterday with an associate regarding a legal dispute over a contract to buy and sell. While the issue was of some significance, it was a particular snippet of our conversation that stuck in my mind. The snippet was “why are you so interested in helping me solve this problem?” I was so interested in responding to that question; I almost missed the significance of the question.

Once upon a time, brokers were responsible for the actions of their associates. That meant, along with multiple hundreds of other things, the broker went to bat for the associate if there was a dispute. I am still laboring under that concept. As another case in point, late last year, when another of my associates was stiffed on a coop commission, I went to bat for her. The hours I spent documenting the case for the attorney, completing the arbitration forms, and attending the hearing with her, were not things I had to do according to the current Colorado Commission rules or state law. I did it because I believe that is part of my job and morale responsibility as the Broker and leader. I believe that much of the consumer’s disconnect with our industry is a lack of interest and active supervision by the broker for the associates in their charge , and I want my associates to have the whatever advantage I can provide to them.

I operate a small brokerage, what is described as a “boutique” in current parlance. That means I can pay attention to what my associates are doing, not to hold them back, but to support them in moving forward, and sometimes going to bat for them. One can make many arguments about the best size of a brokerage and management “span of control” but in today’s real estate world, with sometimes hundred’s of associates operating under a single broker or manager, it is simply impossible for the leader to be attentive to the needs or issues of their associates. There just isn’t time. The question is, who cares, or perhaps, does it make any difference?

Actually, most brokers and their associates really do care. Brokers nationwide are struggling with the economy, just as everyone is, and there are now and will continue to be enormous challenges and changes in the real estate brokerage business. The industry may return to smaller brokerages, more able to make changes quickly to serve their associates and their consumers. Big brokerages will have to retool to cope with financial challenges, and more brokers will play a larger role in the success of their associates. As technology advances, previously high tech costs will become markedly lower, encouraging the transparency that all consumers are demanding. Franchises will become less attractive as the desire to create a Realtors® personal brand becomes more cost efficient, and the cost of franchising becomes prohibitive with reduced profit margins.

It will matter, and make a difference to many Realtors® to have a broker that will provide leadership, currency, support, and the occasional bat; because the average productive Realtor® will, by necessity, have to focus intensely on creating and executing the fewer business opportunities available.

Written by Larry D. McGee, Denver Realtor - Visit Website Sphere: Related Content

We stopped taking the newspaper a few months ago. What I miss most about the daily rag is the comics, which I guess goes to show you just how valuable the daily was in my life. Oddly enough, about the same time, I stopped watching the 10 o’clock news, which is now the “all the time” news, so I am no longer in touch with the talking heads of broadcast media. So, it was a bit unusual that as I was waiting for my plane home after an out of town conference a few days ago, I was idly watching a talking head on a television in the terminal. The talking head was speaking in sad tones about the state of the economy and mentioned in passing the national real estate market having lost XXX trillions of value in the last few years. It suddenly occurred to me that the talking head did not understand the concept of a market, as he was just reading the script. So goes my inspiration for this article.

According to Webster, a market (from the Latin -mercatus), is “a meeting together of people for the purpose of trade by private purchase“. Further, a market is a geographic area of demand for commodities or services. Real Estate is defined as property in buildings or land. So, a “real estate market” is “a meeting together of people in a geographic area for the purposes of purchasing buildings or land“. What the media is constantly referring to as “the real estate market” is really a reference to housing data compiled from thousands of markets to present simple and reportable national averages that can be addressed in 30 or 60 second sound bites.

In the Denver area real estate market, as with most markets nationwide, there are really many “markets”. Certainly there are many geographic markets, with values in neighborhoods such as Washington Park remaining steady, and values in Green Valley Ranch plummeting due to excessive foreclosures.There are new development projects such as The Landmark in Greenwood Village that are selling as fast as the builder can finish them, and other new home projects that are not selling at all. There are also markets stratified by price. Today, in Metro Denver, the price bracket of $100,000 to $200,000 is actually a sellers market, with multiple offers presented on some properties, and sales well over asking price on many bank owned homes. However, there is a glut of million dollar plus homes, with sales slowed to the level of watching grass grow.

And the “real estate market” is very dependent on another market, the “monetary” or “credit” market. With the worldwide money market in complete disarray, the housing market, as well as every other market, is captive to the lack of available credit.

The “real estate market” is much too individually specific, much to complicated, and much to local to accept what the talking heads are spewing on the nightly news. If you have need to buy or sell real property, you must take time to understand the market as it applies to your specific needs. You might want to spend time with a knowledgeable Realtor® and have an extended conversation about how your specific needs relate to the “market”.

Written by Larry D. McGee, Denver Realtor - Visit Website Sphere: Related Content