Realtor Bloopers -- Photography Division

Hey, why is there a secret passage in the middle of the Bathroom mirror?

With what looks like someone wearing a coal miner's helmet?

Oh, I get it! :)

P.S.: the amateur photos didn't cost the home owner a sale -- the home sold last August (I pulled the property in the course of looking at comp's for a nearby home).

"Flash Crash" After-Shocks

Plugging That OTHER Hole
(the Regulatory One)

Remember the SEC's press conference last week announcing that it had isolated the cause of the "flash crash" May 6, and unveiling a sweeping set of financial reforms designed to prevent a recurrence?

Me, neither.

That thought comes to mind as I see that the Dow Jones is already down about 250 points (so far) today.

Would-be bottom fishers don't want to wade in just as the bottom potentially falls out (again).

Housing Market Hindsight

Low Interest Rates -- Then & Now

Three (four?) years into the housing market downturn, what conclusion is it possible to draw?

In retrospect, it seems obvious (at least to me) that it was a liquidity-driven phenomenon.

Add a tsunami of cash, subtract any vestige of underwriting standards, and real estate will go up.

Subtract liquidity, and tighten lending standards . . . and it goes down.

No Pop from Low Rates

Astute market watchers will point out that, if cheap money drives real estate upwards, it should be positively flying now, because mortgage rates are at record lows.

What that analysis ignores is: 1) the cheap money is itself a symptom of the downturn, as the Fed is using cheap money (free to the banks) as its weapon of choice to support housing (the so-called "hair of the dog" cure); and 2) to qualify for a cheap mortgage, you must have good credit and a job.

If you're a move-up Buyer, you also need some equity for a downpayment.

Weekend Storm(s) Aftermath

The Wisdom of a Sump Pump

With a Battery Backup

Q: What's worse than biting into an apple and finding a worm?
A. Biting into an apple and finding half a worm.

What's worse than having water in your basement from one of the two(!) deluges that hit the Twin Cities last weekend?

Having water in your basement . . . and not knowing it.

For every 10 homes locally with a dehumidifier working furiously to dry out a wet basement at the moment, I guarantee that there's at least one home, vacant, with standing water right now.

And it's a good bet that the owner of that home is a bank.

Price of Neglect

What happens next depends on a couple factors:

How much water; how long it goes undetected; and the weather (specifically, the temperature).

Worst case, a home with a lot of water turns into a very large Petri dish, incubating a nasty brew of mold and microbes that make future remediation extremely expensive -- if it's possible at all.

P.S.: just because you have a sump pump doesn't necessarily mean you're protected from water in your basement.

In a huge storm -- precisely the kind likeliest to unleash a flood -- you're likely to lose power, too. Unless your sump pump has a battery backup, it's out of commission until the power comes back on.

Faux Photo?

"Is it Live . . . or is it Memorex?"

I just tripped across a new Fern Hill listing with the lead photo reproduced above.

Is it just me, or is the grass too green, the sky too blue? (not to mention uniform)

At the very least, this photo looks heavily doctored/colorized; at worst, it's a computer simulation.

The clincher?

The listing is a FSBO ("For Sale By Owner"), which means the non-Realtor Seller doesn't know the MLS rules -- or that they're breaking them.

Update: When I'm wrong, I'm wrong: I drove by the house this morning, and it sure looks a lot like the the photo above (the new, white siding gives it a bit of a surreal look; the new roof really does look that uniform; and yes, the grass is perfectly green).

Betting Grandma's Money

The Financial Crisis for Beginners
(or Grandmothers)

Mystified by the financial crisis?

Here's one of the simplest -- and most accurate -- descriptions I've encountered yet:

My mother is paying taxes to the government. The government is giving her money to the banks. The banks are gambling like they’re watching ‘Fast Money.’ But my mother didn’t sign up for that.

--Dylan Ratigan, quoted in "From CNBC Business Journalist to Critic of Bankers on MSNBC"; The NY Times (6/27/2010)

Unfortunately, it's really not much more complicated than that.

From 1934 to 1999, "betting with grandma's money" was illegal, thanks to a Depression-era law called The Glass-Steagall Act.

Wall Street got that law repealed -- and its legislative agenda enacted generally -- in the last 15 years or so.

(City Lakes) Realtor Stress Relief

Changing Tenant Mix @ Calhoun Village

I'm not expressing a personal preference, or examining the broader economic ramifications.

But I do find the changing tenant mix in Calhoun Village, where the Edina Realty City Lakes office is located, to be interesting -- and telling.

Gone: a video store and liquor store.

In their place: a "wellness center" offering massages, holistic health counseling, etc.

Probably better for any overstressed Realtors in my office -- personally, I don't know any :) -- to unwind with a massage then to down a six-pack while watching a video . . .

Why I Don't Price Other Realtors' Listings

Real Estate's "Heisenberg Uncertainty Principle"

The observer influences the thing observed.

--Heisenberg uncertainty principle

It seems self-explanatory, but as a principle, I don't price other Realtors' listings.

The issue usually comes up when I do a listing presentation -- essentially, a job interview for Realtors.

In the course of interviewing Realtors, homeowners (and prospective Sellers) naturally want to know how you'll market their home; your qualifications; and what their home is worth.

While I always come to listing presentations armed with the latest, nearby market activity (and am happy to offer a ballpark range), I decline to name a specific price until the homeowner commits to using me as their Realtor.

Rationale

There are four reasons why I take that stance.

One. Time.

Carefully pricing a home (vs. haphazardly) takes a great deal of due diligence.

At least for me, the steps include: identifying and analyzing the Comp's (Comparable Sold Properties); learning the history and condition of the client's home (vs. taking the 10 minute tour after first arriving); previewing the Active listings that the client's home will be competing against; identifying any Pending homes similar to the client's home and estimating what their likely Sold price is; and pouring all the foregoing into a CMA, or Comparative Market Analysis, then crunching the related numbers.

All of the foregoing takes . . . time. Done properly and well, lots of time.

As a Realtor, the two things I ultimately have to sell are my time and expertise.

If I spent undue amounts of time working for non-clients, my actual clients will suffer.

That hardly seems fair to them.

And spending the requisite 6-8 hours carefully pricing a home that another Realtor is ultimately going to list isn't fair . . . to me!

So, I don't invest that time . . until I'm hired.

Two. My price for any given home isn't a fixed number.

Rather, it depends not a little bit on the homeowner themselves.

So, do they need/want to sell quickly, or can they be patient waiting for an offer?

Can the home benefit from staging, strategic updating, etc. , and if so, is the client willing and able to do it?

Does the client want to price aggressively -- and take the risk that goes along with that -- or do they want to price more conservatively?

And so on, and so on.

Three. My price may not be the same as another Realtor's (call this phenomenon "Real Estate's Heisenberg Uncertainly Principle").

Whereas homeowners tend to think of their home as having a fixed, objective value, Realtors (and anyone who knows marketing) understand that the actual price is a range -- a fluid range that is influenced by the skill of the professional(s) involved in the sale.

A home that is optimally staged and photographed, then aggressively and expertly marketed by an excellent Realtor at a top-flight Broker is likely to sell for one price; a home where a less-talented and motivated Realtor simply shows up, gets the requisite signatures, then puts a "For Sale" sign in the front lawn, is likely to fetch . . . another price altogether.

Four. "Buying the Listing."

The last reason I won't casually price a home is because I don't want to get caught up in what Realtors call "buying a listing."

Pretty much what it sounds like, the practice consists of appealing to a homeowner's vanity (or ignorance) by throwing out an unrealistically high price for their home, and thereby beating other Realtors' "bids."

With the listing secured, the Realtor then focuses on getting a price reduction -- or several of them -- when the home proves unsaleable at the quoted price.

Bidding wars are great for Sellers, but not so great for Buyers.

That's true for Realtors, too.

As a prospective listing agent in an already tough market, the last thing I want to do is get into a Realtor bidding war to list what is certain to be an overpriced home.

P.S.: For the record, when prospective home Sellers interview both me and another Realtor . . . they hire me the vast majority of the time.

Bees, Bats & Ants (Oh, My!)

Unwanted Tenants

Most people like to live in a quiet, undisturbed dwelling where they're afforded a modicum of privacy.

It turns out, so do critters.

In the course of showing any number of vacant properties this Summer, my Buyers and I have encountered (so far): wasp nests; bats (or evidence thereof); ant colonies; and the occasional squirrel's nest in (or under) the roof.

None of those things are good for a home's resale value -- or make for good showings.

And that's just the exterior.

Inside, a vacant home is almost never as appealing as a well-staged, occupied home.

P.S.: Think Winter spares owners any of these concerns? Think again.

While there may not be critters, there is the risk (at least in MN) of frozen pipes, ice dams, etc.

Buyer Freudian Slips

So THAT'S What That Check is Called

A colleague just showed me an earnest money check in a deal they're handling.

Except that's not what the Buyer wrote in the check's "memo field."

Instead of "earnest money," they wrote "unrest money."

Not too far off . . .

The Plight of the "Move-down Buyer"

Stuck in Place

A healthy housing market functions like a gigantic escalator.

The bottom rungs are occupied by first-time Buyers. As they purchase entry-level homes, the Sellers of those homes ("Move-up Buyers") typically buy larger homes, enabling Sellers of those homes to buy even bigger homes.

And so on, and so on.

One of the most remarked consequences of the housing bear market the last three(?) years is that falling real estate prices have clobbered the equity of move-up Buyers.

So, the money they need for a downpayment to buy a bigger home is either diminished -- or gone.

In the most distressed housing markets -- places like Florida and Las Vegas -- many people who bought at the peak are now "underwater" (they owe more than their home is worth) to the tune of tens (or hundreds) of thousands of dollars.

Voila! No more moving escalator.

Stranded at the "Top of the Food Chain"

All of the foregoing is now very-well documented.

Less remarked is the plight of the "move-down Buyer" -- the owner of a bigger home, typically close to retirement age, who is ready for a smaller dwelling, but is unable to sell (also known as a "down-sizer").

If move-down Buyers are lucky, they bought decades ago, and have so much equity that even a 30% drop in housing prices still leaves them able to sell (and they've been prudent enough -- and financially secure enough -- to leave that equity untapped through the years).

It's also true that financial products like reverse mortgages can help move-down Buyers (at least the ones over 62 years old) transition to a smaller home.

However, the flip side of buying a bigger home decades ago is that the same home today could easily require hundreds of thousands of dollars of updating and remodeling to appeal to today's (financially hamstrung) Buyers.

Even if those Buyers can still muster a six-figure downpayment and qualify for a jumbo mortgage, coming up with a couple hundred grand for remodeling, out-of-pocket is (often) the kiss of death.

So what happens?

Nothing.

Move-down Buyers can't sell, which means that the owners of homes at lower price rungs can't sell -- and so on, and so on.

Public Policy Implications

The foregoing dynamic suggests that the best way to unfreeze the housing market isn't to buttress first-time Buyers, as policymakers have done so far.

Rather, the smarter approach is to help move-down Buyers.

That could be done by making a pot of cheap money available to Buyers undertaking major remodeling (cheap purchase money, courtesy of the Fed, doesn't do it); by giving tax credits to Buyers who tackle such projects; or even by giving incentives to investors to buy and remodel such homes.

Such a strategy not only would unlock the housing market's frozen upper brackets, but it would have a huge ripple (multiplier) effect as billions of dollars spent on labor and materials coursed through the economy.

Which all makes eminent, common sense.

After all, as everyone knows, a working escalator needs to go down as well as up.

Mid-Month Closing Logjam

Great(?) Minds Think Alike

Realtors know that the end of the month is usually the busiest time for real estate closings.

That's especially true in Spring, and even truer this year because June 30 is the deadline for closing deals struck by April 30 to take advantage of the Buyer tax credits.

So, to avoid delays, savvy Realtors typically advise their clients --at least those who have the option -- to close in the middle of the month (and then, first thing in the morning, to avoid being delayed by closings earlier in the day that have encountered hitches).

So, guess what the busiest day of the Summer is shaping up to be for Edina's Parkwest closing office?

Yup, July 15.

"The First Cut is the Deepest?" Not in Real Estate

Seller Psychology

I would have given you all of my heart
But there's someone who's torn it apart
And she's taken just all that I had
But if you want I'll try to love again
Baby I'll try to love again but I know

The first cut is the deepest
Baby I know the first cut is the deepest

--Rod Stewart, "The First Cut is the Deepest" lyrics

Is the first cut the "deepest"-- the one that hurts the most -- in real estate?

Not in my experience (and many other Realtors').

That status seems to be reserved for the third cut, or price reduction.

It's at that point that many Sellers seem to reach their limit, and refuse to reduce their price anymore.

Sometimes that patience (stubbornness?) is rewarded . . . sometimes it isn't.

Late June Housing Statistics

Post-April 30 Hangover

Here are some late June housing statistics (analysis costs extra). All info is for Edina Realty.

--Drop in showings since expiration of Buyer tax credits April 30: 40%
--Drop in "Pending" sales since expiration of Buyer tax credits: 40%.
--Percentage of Buyers who are first-time: 48%
--Percentage of homes sales under $250k: 80%

The narrative that accompanies the foregoing? Pretty self-evident.

P.S. Statistical averages are just that. For example, the neighborhoods close to Cedar Lake in Minneapolis (Fern Hill, Lake Forest, Sunset Gables) have been bucking the over all trend, with 8-10 pending sales in just the last two weeks.

Delivering Bad News -- How & When

Scoring Points for Courtesy

It's never great when one party to a transaction has to deliver bad news to the other -- like, for example, when the Buyer's inspection reveals a major issue (or several of them).

But it's always better to deliver such news quickly and directly, for three reasons:

One. Getting the issue(s) on the table gives the parties more time to resolve them.

While the timetable for resolving inspection issues can always be extended if both sides agree, it's good for a deal's momentum to get a head start understanding the scope of the problem(s), lining up second (or third) opinions, etc.

Two. If the problem(s) can't be resolved, both sides get to move on faster.

That's usually especially important to Sellers, who want to know if their deal is still intact -- and if not, to get back on the market as soon as possible.

Three. Good Will.

It's the unusual (or unusually confident) Seller that isn't at least a little bit anxious waiting for the results of the Buyer's inspection.

Minimizing the time they have to wait -- anxious and in limbo -- helps create/preserve good will -- good will that will be especially important negotiating the issue(s) to come.

Selling Price as % of Tax Assessed Value

Tax Assessed Value as Benchmark

No, I don't have any hard data backing me up (and don't have the time to compile it), but at least anecdotally, it sure seems that there's a correlation between year built/last sale, and fair market value.

Here it is:

The newer the construction date/last sale, the higher the percentage; the older/less recent, the lower.

Put another way: the reliability of tax assessed value fades the older a home is and/or if it hasn't sold in awhile.

So, for example, a 2009 townhome with a tax assessed value of $200k is likely worth pretty close to that.

By contrast, a 1975 townhome occupied by the original owner, with the same tax assessed value, probably has a fair market value quite a bit lower -- as much as 20% less, or $160k.

Updates (or lack thereof); nearby competition (or lack thereof); location, etc. all affect -- but don't alter -- the basic relationship.

Buyer - Seller Resemblance

More Than Just a Coincidence?

The resemblance between Buyers and Sellers first struck me a few years ago at an Inspection.

I arrived near the end to get the wrap-up, and walked up to my client and his Inspector chatting on the front lawn.

Except that when my client turned around, it turned out to be the Seller! (He'd come home to fetch something from the house, and was explaining something to the Inspector.)

Same age, height, body type, hair color, attire -- you name it.

How unusual is that?

Actually, not very -- especially if you make an "apples to apples" comparison (i.e., compare the Seller's profile when they bought, vs. the Buyer's now).

Demographics ("Birds of a Feather . . .")

If you think about it, the resemblance makes sense.

The same home and neighborhood attributes that originally attracted the Sellers undoubtedly also appealed to the Buyers.

So, family homes with four bedrooms up and big yards tend to attract . . . growing families with a couple kids.

Maintenance-free downtown Condo's appeal to . . . empty nesters close to retirement age.

Factor in socioeconomics (middle class, upper, etc); life stage; and nearby amenities (restaurants, parks, etc.), and sometimes the self-selection principle practically screams at you.

Something in the Water??

Perhaps the most uncanny example of the foregoing involved . . . me.

My wife and I bought a 1927 Fulton Tudor in 2000 from a family with two boys. One year later, we had our second.

We subsequently learned that all but one of the home's owners, spanning more than 70 years, were families with two boys.

Five years later, after we'd had our third (a daughter -- maybe that disqualified us?), it was time to find a bigger home.

At the closing, I shared with the Buyer the home's unusual, "two boy" history.

He laughed, and rather emphatically said that he and his wife -- both in their early '40's -- were quite happy having just one (then 6 year-old) son.

One year later, a former neighbor informed us that the Buyers unexpectedly had a second child.

A son.

Football, Baseball & Real Estate Metaphors

Multiple Lines of Scrimmage

In football you wear a helmet
In baseball you wear a cap.
In football you receive a penalty.
In baseball you make an error.
In football, you invade enemy territory.
In baseball, the object is to go home.

--George Carlin, "Baseball vs. Football"

I don't know about other Realtors, but to me managing a busy real estate practice feels like overseeing multiple, parallel football games -- on the same field (hopefully touch, not tackle).

Each line of scrimmage corresponds to one deal, with a Buyer and Seller (and their Realtors) on opposite sides.

And like each possession, each real estate deal starts at one end zone, and ends up (hopefully) at the other.

In a smooth deal, it takes a handful of big plays to cover the field.

In a bumpier deal, gains are eked out a few yards at at time, grudgingly.

Good fundamentals --"blocking and tackling" -- are key in both football and real estate.

And just like in football, a good real estate "quarterback" minimizes fumbles, interceptions, and other unforced errors.

P.S.: the one metaphor where baseball is better than football? The one about the "object being to go home."

$80 to Mow a Lawn. In Phoenix

Green Gold?

Interesting article in the Sunday NYT about the spiraling cost of bailing out Fannie Mae and Freddie Mac.

The article profiles one Phoenix-area Realtor in particular, who sold homes at the peak, and now sells them for Fannie and Freddie after they've repossessed them (albeit at dramatically lower prices).

But here's the line that caught my eye:

Fannie asks contractors to mow lawns twice a month during the summer, and pays them $80 each time. That’s a monthly grass bill of more than $10 million.

--"Cost of Seizing Fannie and Freddie Surges for Taxpayers"; The NYT (6/19/2010)

Nice gig, especially in Phoenix in the summer!

P.S.: the above recalls a favorite cartoon from the last baseball strike. It shows a striking (and overweight) ballplayer -- in uniform with his gut hanging out -- knocking on a random house doorbell with the caption, "mow your lawn for $20,000, Ma'am?"

"Don't Buy That New Car/Boat/etc. Till AFTER You Close"

New Fannie Mae Credit Check

Planning on a(nother) major purchase, but haven't closed on your home yet?

Better hold off.

That's because Fannie Mae has just announced plans to pull Buyers' credit a second time -- this time, up until 5 days before closing (credit check number one is when the Buyer initially applies for the mortgage).

Home Buyers who splurge just ahead of their closing risk having their credit scores decline, which in turn could have disastrous consequences for their home purchase.

To take just one example, a Buyer who finances a new car purchase and whose credit scores fall from 685 to 675 as a result would suddenly have to boost their downpayment from 10% to 20%.

If they don't have it . . . their home purchase could collapse.

Expensive new car, indeed.

"Service Minus" Plan

Covered by a Home Warranty?

Don't Be So Sure

It's supposed to be the CenterPoint Energy "Service Plus" Plan: a home warranty that covers some (or all) of the appliances in a home, depending on what coverage the homeowner selects (and corresponding monthly premium they pay).

However, depending on the age and make of the appliances in a home, it can very quickly turn into the "Service Minus" plan.

As in, the problem(s) aren't covered.

0-for-2

A client of mine has now had that experience twice in three days.

First, their SubZero fridge developed a problem that wasn't covered; according to the CenterPoint Energy repairman, Service Plus doesn't cover "closed system" repairs -- which, of course, was what was needed.

Today, the contractor who came out to fix the broken central a/c said the problem had to do with malfunctioning zones.

Surprise, surprise, that's not covered; the client now needs to call a "zoned system contractor."

Think you're covered by a home warranty plan?

Better check the fine print.

"What's a 'TEKO House?'

Busy, Busy

Been working 16 hour-plus days -- "a high quality problem to have," as they say -- so posting has been light.

How busy?

I got this email about an hour ago:

Just a reminder that the TEKO OPEN HOUSE is tomorrow (Saturday) from 1:30-3:00.

Hope to see you there!

Tracy Bomberg

My reaction(s)?

Hmmm, what's a "TEKO House?"

And: how come I've never heard of Tracy Bomberg -- and which broker does she work for?

And: how do I juggle my appointments tomorrow to go take a look?

It turns out that TEKO is a summer camp, and my kid goes there.

Bomberg is the Camp Director, which her email makes clear at the end.

P.S.: I sold a duplex across the street from the "FlatPak House" near Cedar Lake a few years ago. As far as I know, "FlatPak" is not a summer camp.

PPS: Supposedly, Einstein was so caught up in cogitation that he once forgot where he lived. A Realtor would never do that! (Or forget the houses they're listing, just sold, etc.)

100,000 New App's in a Week?!?

7.3% Weekly Increase

How's that possible, given that the total number of iPhone "app's" (applications) is (only) 250,000 or so?

That's the number of new mortgage applications last week -- the first time the weekly number has gone up in a month.

According to the Mortgage Bankers Association, that represents a 7.3% increase over the previous week.

If you do the math -- and I did, with assistance from Edina Mortgage's Steve Mohabir -- that works out to about 100,000 new mortgage applications nationally.

3 (or less) Transactions per Realtor

800,000 Part-Time Realtors

According to the National Association of Realtors, 80% of Realtors handled 3 or fewer transactions last year.

That prompts the following observations, in no particular order:

--There are still too many Realtors out there (something like one million-plus).
--A core group of Realtors (the 20%) are becoming increasingly dominant.
--The clients of so-called part-time Realtors aren't being served very well (you don't stay sharp doing 3 -- or fewer! -- deals a year. Nor do you have the money or incentive to pop for things like Web sites, custom marketing, etc.)
--Those 800,000 Realtors (80% times 1 million) must be doing other things to pay the bills -- or be with someone who is!

P.S.: On a related note (kind of), just got the news that I'm a Super Realtor for the third year in a row! (Mpls St. Paul Magazine and Twin Cities Business Magazine select what they say are the top 2% of local Realtors annually. Who am I to argue?)

"Mid-Century Modern" -- or "Ancient?"

Real Estate Oxymorons

I know that "Mid-Century Modern" is a much-sought after architectural style.

In fact, one the most gratifying and successful transactions I handled was a Mid-Century Modern just south of Lake Calhoun two years ago.

That said, the last several I've run into could more properly be labeled "Mid-Century Ancient": badly dated, in poor condition, and in general need of (major) remodeling.

Picking Stocks (& the Case for Indexing)

A Realtor's Investing Primer

In addition to advising clients on real estate transactions, I occasionally get asked what I think about stocks (that's what you get for following the market for 40 years -- in my case, literally since I was 10 years old).

Unfortunately, I don't get paid for the latter, which allows me to remind people that "you get what you pay for."

With that caveat out of the way, my standard advice to most would-be investors is to consider low-cost, broad-based index funds -- as opposed to picking individual stocks.

That's because, to do the latter well, you have to get 3 things right.

One. Forecast which markets are poised to grow the most.

Just to take one example, consider whether smart phones are a good market to be in the next 5-10 years.

You'd certainly guess that unit sales are going to go up.

But that doesn't mean that the revenues and profits of companies selling smart phones will go up.

Just look what happened to PC makers.

Even though PC sales are higher today than ever before, PC makers (Apple is much, much more than that) have largely been "dud" investments because PCs have plummeted in price.

So, Dell's stock today is less than half of what it was -- 10 years ago.

Two. Pick the winner(s) in a growing market.

In retrospect, it seems obvious that Google was destined to emerge as the "winner-take-all" in the online search and advertising category.

But that was hardly apparent back in 2000.

Then, dozens of companies were vying for that position.

Companies like AltaVista, Excite, Lycos, AOL, C/Net, CompuServe, Yahoo!, Microsoft and literally dozens of others.

Ask investors in those companies how much money they made (if they remember, and are willing to talk about it).

Admission: my negligible position in Microsoft is worth -- yup -- half of what I paid for it a decade ago. At least I got a tax loss out of it along the way, by doing what's called a "wash sale."

Three. Buy (and sell) the winner(s) at the right price.

Speaking of AOL . . . my all-time home run was buying it in 1997 at a (split-adjusted) price of 29 cents a share.

Not being greedy, I unloaded my position for a huge profit between $5 - $10 share.

The stock ultimately went to $90(!) a share before collapsing -- along with the entire Internet bubble -- in 2000.

Perils of Stock-Picking

To go back to Google, even though the company continues to enjoy explosive growth and bountiful profits, its stock is well below its all-time high of $700-plus a few years ago.

So is it a buy now at around $500?

Search me.

None of the above is to say people shouldn't be in the stock market.

Rather, the right strategy for most people is be in all of the market (including overseas), so they're positioned to gain when stocks inevitably advance again for real, sometime in the future.

"Alphabet Soup" Realtor Credentials

Impressed . . . or Just Perplexed?

Joan H. Doe

CIPS, TRC, ABR, RELO-Specialist

It would certainly be nice if some of the Realtor credentials above -- pulled verbatim from a Realtor's newspaper ad the other day -- were as recognized as, say, "MBA" or "CPA."

But they're not.

Until they are, I think Realtors who append a long string of "alphabet soup" acronyms to their names look more silly and self-important than impressive.

P.S.: for the record, here are the definitions:

CIPS: 'Certified International Property Specialist'

ABR: 'Accredited Buyer Representative'

TRC: 'Transnational Referral Certification (trust me, no one's heard of this)
Relo: 'Relocation'

"Getting One's House in Order Last"

Housing Market "Chicken & Egg" Problem

Aren't people supposed to "put their houses in order first?"

That's not what I've been seeing lately, at least in the housing market.

Instead, the agents showing my listings all seem to be reporting that their clients can't do anything until they sell first.

So, why don't they?

Maybe because they need to find something they're excited about buying first.

P.S.: thanks to City Lakes office manager Josh Kaplan for this insight.

Did the Seller Leave Money on the Table?

Four Ways to Tell

In the history of mankind, no first-time Mother has ever under-dressed their newborn in the winter.

--Manhattan Pediatrician

So which pediatrician uttered the above line?

Mine (and my wife's).

What prompted that comment were the 3 layers of clothing my wife had already put on our newborn son (this was 10 years ago), coupled with her anxiously asking him whether he thought "the baby was dressed warmly enough?"

What's that got to do with real estate?

I've yet to encounter the Homeowner who thought their house sold for too much.

Money Left on the Table

On the contrary, a great deal of Sellers seem to believe that their home sold for too little.

So, are they ever right?

To help answer the question, here are the four, inter-related variables I'd weigh:

One. How long was the property on the market?

It's hard to argue that any home on the market listed for more than a month -- let alone six months or a year -- sold for too little.

In today's networked, 24/7 world, serious Buyers (and their Realtors) often know about properties before they come on the market.

If a home is a good fit for a serious, prospective Buyer, it's a good bet that they'll: a) know about it; and b) have gotten in to take a look.

Assuming, of course, that the home was on the market longer than 48 hours.

Two. Was the home professionally and aggressively marketed?

My checklist of "To Do's" for Sellers literally has 143 items on it.

Things like, "work with professional stager to the get the house ready; "arrange professional photography and meet them at the house"; "proof marketing materials designed by professional desktop publisher"; "do pre-list networking with other Edina agents" (all 1,600 of them); "plug new listing at various Realtor meetings"; "draft and proof (flattering) copy on MLS"; "promote the home's Broker Open."

And so on and so on.

All those things come across loud and clear to prospective Buyers.

And so does their absence.

Three. Who was the Selling agent? (representing the Buyer) -- and was it the same as the Listing Agent?

As I've blogged before, there are two types of dual agency: "broker-level," and "single agent dual agency."

In the first type, both the Buyer and Seller have their own agent -- but they work for the same Broker.

While that legally shifts the agents' duties, in my experience it doesn't alter either the negotiation dynamic or the outcome.

The second kind of dual agency-- where both the Buyer and Seller have the same agent -- is much more problematic.

In my opinion, no agent can serve two masters.

Which is why I will only represent one party in the transaction.

Four. Who was the Listing Agent? (representing the Seller).

Good Realtors have good reputations.

They do repeat business in the same neighborhood(s); are known for being thorough and hard-working; and have an established track record.

Mediocre agents . . . don't. (In fact, you're less and likely to run into mediocre agents, because today's hyper-competitive real estate market has already weeded them out.)

So, to sum up . . . . .

If the same (no-name) agent represented both the Buyer and the Seller; the house sold in 3 days with no prep or marketing campaign to speak of; and no other agents had a chance to get their clients through (or even knew the house was on the market) . . . . yeah, it's just possible that the house sold for too little.

Absent one or more of those factors, I'd be dubious.

P.S.: Note that none of the above factors include, "Sold for less than the Comp's would suggest."

While the Comp's (Comparable Sold Properties) certainly frame the owner's asking price and eventual sale negotiation, showings and actual feedback trump Comp's once a home is actually on the market.

Euphemisms -- One More

A Euphemism for the Euphemism

New Realtor euphemisms are being coined all the time.

Case in point: the following disclaimer I just encountered on MLS in the "Agent Remarks" field of a property currently being rented:

What the Realtor said: 'Standard tenant cleanliness to be expected.'

What the Realtor meant: the place is a mess (actually, that's still a euphemism).

"Detached Townhome" vs. "Single Family House"

MLS Style Category Definitions

1. (SF) One Story (ONEST)
One story single-family house
2. (SF) One 1/2 Stories (ONEHF)
One 1/2 story single-family house. Second floor only has adequate ceiling height in a portion of it.
3. (SF) Two Stories (TWOST)
Two story single-family house. Has adequate ceiling height throughout upper story.
4. (SF) More Than Two Stories (MRTTS)
Single-Family house with more than two stories.
5. (SF) Modified Two Story
(MODTS)
Two story single-family house where the second story has full ceiling height throughout but has less square feet of finished space than the first level, leaving a portion of the structure without the second story. However, there is a full set of stair risers to the second story. (Does not include multi-level homes with a half set ofrisers but not a shorter fullset.).
6. (SF) Three Level Split (THRLS)
Three level split home
7. (SF) Four or More Level Split (FOURM). Built like a three level split, except it has a basement level and/or additional levels.

The Multiple Listing Service lists 19 different kinds of housing styles (the first seven are above).

Which one's the most confusing?

Personally, my candidate is "Townhome Detached."

I ran into the issue when a townhome I'd been tracking for a client cancelled and re-listed, but was no nowhere to be found on the townhome search I'd set up and saved for the clients.

The explanation?

The listing agent switched the property's category from "Townhome Detached" to "Single Family (Two Stories)."

The distinction?

The former has a homeowner association that takes care of building exterior maintenance, snow removal, sanitation, etc.

Apparently, at least one other agent is fuzzy on the distinction, too (she was right the first time, when the property was listed as a "detached townhome").

Eye Patch -- or iPatch?

"'i' on the Brain," or, Apple's Next Market?

My daughter needs to wear an eye patch a few hours a day -- which means one of my (or my wife's) tasks before school is to her her find and put it on.

Maybe it's just because we've recently popped for an iTouch, iPod, innumerable iTunes, etc., but this morning I found my myself referring to it, briefly, as an iPatch.

Coming soon: iGlasses?

Real Estate Euphemisms -- Office Manager Edition

"You Crack Me Up" (& Other White Lies)

I've already addressed Realtor euphemisms in a post titled, "Homes with 'Great Personalities' -- & Other White Lies" (ranked fourth in the world by Google, incidentally -- type in "real estate euphemisms" and see for yourself).

In the spirit of inclusiveness, I thought I'd do a follow-up devoted to real estate office manager euphemisms (or at least one in particular):

What the office manager says: 'you crack me up.'
What they mean: 'you exasperate me.'

What the office manager says: 'I think we've covered that' (uttered at a contentious weekly office meeting)
What the office manager means: 'Everyone, shut the &%!@# up already!'

What the office manager says: 'I might have put that a little differently."
What the office manager means: 'You said what?? To them? Are you crazy?!!'

What the office manager says: 'You didn't need me to tell you that.'
What the office manager means: 'You needed me to tell you that?!?"

What the office manager says: 'What can I help you with, [your first name here, uttered (a little too) slowly]?'
What the office manager means: 'You're calling my home line -- after hours -- again??"

Note all the !!'s and ??'s omitted from the first (euphemistic) version of each pair.

Thanks, Josh . . . . (you can't say I never listen to you anymore).

Obama, Lincoln, & Financial Reform

George McClellan Redux?

Politicos will recall that much was made of Barack Obama's admiration of Abraham Lincoln during and just after the 2008 Presidential campaign.

In particular, Obama was said to have been influenced by Doris Kearns Goodwin's book, "Team of Rivals," which studied Lincoln's management style.

Clearly, in picking former adversaries like Hillary Clinton for his Cabinet, Obama showed that he subscribes to a similar philosophy.

Ironies

Almost two years later, the parallels with Lincoln's administration look apposite, indeed.

Unfortunately for Obama, the historical figure he is starting to most resemble isn't Lincoln, but George B. McClellan, Lincoln's top general during the early stages of the Civil War.

Like Obama, McClellan was a hugely popular figure; also like Obama, he lacked the "go for the jugular" instinct needed to vanquish a mortal enemy (Lincoln famously said of McClellan, "if General McClellan does not want to use the army, I would like to borrow it for a time").

Of course, Obama's foe isn't the Confederacy.

Rather, it's Wall Street -- and the rigged, stupefyingly complex financial system it designed and (still) sits astride.

The turning point in the Civil War only arrived once Lincoln installed Ulysses S. Grant and William Tecumseh Sherman as his top generals (after running through a series of others).

It remains to be seen who will be the U.S. Grant and William Sherman of financial reform, circa 2010.

Real Estate "Trump Cards" -- Buyer's Version

Fanning the Fear of Loss

If the ultimate trump card available to Sellers is the existence of multiple offers (see, "Is it REALLY in Multiples?"), what is the equivalent for Buyers?

The threat to move on to another home.

So, how credible is such a threat?

Interestingly, the three-step analysis for Sellers parallels the one confronting Buyers facing potential competing offers.

Move on to What?

Step One. Is the threat plausible based on the house and the market?

If there are ten similar homes for sale nearby that are all about the same price and in the same condition, and the Buyer says that they'll move on if their offer (counter-offer) is rejected . . . you'd tend to believe them.

Even if that's a stretch, if the home in question has been on the market for awhile, it may be hard for the owner to pass up the Buyer -- and offer -- in front of them.

That's especially true if showings have been few and far between.

By contrast, a Buyer who threatens to "move on" is less credible when: a home is new(er) on the market; it's priced very competitively relative to its peer group; and its location, design or other features make it relatively unique (i.e., it has no close substitutes).

Good agents know the competing inventory, and whether a given home is poised to sell -- or sit.

Step Two. Probe the Buyer's Agent.

Just like Buyers' agents have been known to ask the identity of other bidders, Listing agents can certainly ask what other properties the Buyer is considering.

They may not answer (and don't have to), but simply the way they field the question can be telling.

I represented a Buyer two years ago who had exhaustively studied the market, and had rank-ordered their top three choices (which were all virtually tied).

When negotiations to buy their first choice stalled, I informed the Listing agent that my client was ready to move on.

"To what?," came the instant reply.

Without hesitating, I gave the addresses of the two "runner-up" homes, and proceeded to rattle off each one's merits and drawbacks relative to the subject home, their market history, current asking prices, etc.

The Seller came around.

Step Three. If neither of the foregoing techniques work, there is always a surefire way to determine whether a given Buyer's threat to "move on" is real.

Wait.

If they were bluffing -- or couldn't get an attractive enough deal on house #2 (or #3 or #4) -- they'll be back (undoubtedly with a stronger offer!).

On the other hand, if house #2 goes "Pending" two weeks later, and the Selling agent is the same one you were just negotiating with . . . it wasn't a bluff.

Listing Presentation Manuevering

Playing the Card(s) You're Dealt

When you have the facts on your side, argue the facts. When you have the law on your side, argue the law. When you have neither, holler.

--Al Gore

Whenever I compete against another Realtor for a listing (as I did earlier this week), I always like to find out as much as I can about my competition.

Not only does that let me tailor my own presentation, but it gives me a chance to rebut any arguments the other Realtor is making.

So what was my competitor touting in their sales pitch?

The value of a broker with national reach, to attract relocation Buyers.

Great Opening

Why emphasize that?

Because that's what their Broker had to offer.

What they omitted -- and I happily filled in -- was the following:

--Relocation sales, perhaps only 3%-4% of all deals normally, are even less in a soft economy because fewer big companies want to spend the money.

--Of that already small slice, the typical relocation sale is usually a more expensive home (think, big companies and senior executives).

--No one relies on brokers -- relo specialists or not -- to check out housing inventory anymore; they go to Google, Edina Realty, Trulia, Zillow and a hundred other Web sites.

Which was a nice segue into Edina Realty vs. the "national broker": if you want to sell your home quickly, for top dollar, you're much better off going with the company with the highest Twin Cities market share (about 20%) and most local Realtors (about 1,700).

And that would be . . . Edina Realty.

Appraisals & Upper Bracket Homes

Risk of Not Appraising Borne by Buyer

The very rich are different from you and me.

--F. Scott Fitzgerald

Fitzgerald might have added, "and so are their home transactions."

One of the features of truly upper bracket homes is that the individuals who buy them -- by definition -- are people of substantial means.

If they need a mortgage at all, it's often for a relatively small percentage of the purchase price (in lender parlance, their "loan-to-value" ratio is low).

So far, so good.

The downside of pouring so much equity into a home is that the Buyer may not have an out if the home doesn't appraise.

Primer on Financing Contingencies

That's because a bank that has a $3 million dollar home as collateral securing a $1.5 million loan (loan-to-value = 50%) doesn't really care if the home actually appraises for $2.9M; they're still amply secured.

But the Buyer may care a lot!

Normally, when an appraisal comes in low, the bank won't make the loan, and the Buyer's Financing Contingency fails.

Voila! The Buyer can get out of the deal.

Now go back to the hypothetical above.

The loan appraisal comes in low . . . but the bank doesn't care.

So, the Buyer in such a circumstance loses their "out."

To protect themselves, more upper bracket Buyers are inserting language into the Purchase Agreement specifying that the deal is "contingent on the home appraising" for the negotiated sale price.

"Will Consider All Offers," Explained

Stealth Price Cut

What does it mean when a listing agent puts out the word -- on MLS or just verbally -- that their Seller "will consider all offers?"

Here is a rough translation: a) the Seller knows that the current asking price is high; b) but for perceived negotiating leverage, they don't want to reduce it; so . . . c) please feel free to make an offer well under the asking price.

Surprise, surprise . . . many prospective Buyers go ahead and do exactly that.

Which is why I'm not such a big fan of the strategy.

Rather than elicit offers as much as 25% below their current asking price, Sellers are usually better advised to do a smaller, incremental price cut; test that in the market for a period of time; then assess and repeat as necessary.

Google vs. Bing

"What's Sauce for the Goose . . ."

Is it my imagination, or did Google's home search page just become a Bing look-alike?

The latter -- Microsoft's entrant in the all-important "search category" -- has famously showcased spectacular natural settings and other arresting scenery on its home page.

And now Google does, too.

My copyright law is pretty rusty, but it's hard to see how a company (Microsoft) that has made a (very nice) living "lifting" its competitors' best features and integrating them into its own has much ground to complain, legal or otherwise, about what Google is doing.

"Couldn't Happen Here" Dept.

Ripped From the Headlines

Chalk it up to the late hour (and the long day).

Or the vaguely Greco-Slavic-Italian byline: 'Nicholas Confessore.'

Nevertheless, I read the following New York Times headline:

"Parties Clash as Albany Edges Closer to Shutdown."

incorrectly as

"Parties Clash as Albania Edges Closer to Shutdown."

Backing up, I realized the article (correctly) referred to Albany.

The capital of New York state.

The land mass Manhattan is attached to.

Couldn't happen here . . . right?

Painting Stucco

No Longer a "No-No"

Until a few years ago, painting stucco was a big no-no; in fact, the whole point of stucco was that you didn't have to paint it (essentially textured concrete, it's famously durable and low maintenance).

Of course, once you painted stucco, you were obliged to perpetually re-paint it, as the last paint job aged. Quickly.

With the new generation of stucco-friendly paints now available, that's all changed; the paint adheres better, and lasts longer.

Best of all, you have your choice of lots of colors.

You may want to pick a color other than green, though . . .

Super-sized Tour Today?

As "civilians" (non-Realtors) may or may not know, Tuesdays from 11 a.m. to 1 p.m. is when local Realtors -- at least in the Twin Cities -- go look at all the new listings.

To facilitate that, Brokers print and distribute "tour sheets" with the addresses of the homes on tour, along with short blurbs summarizing the highlights of each property.

With last Tuesday off because of Memorial Day weekend, I was expecting today's tour to be especially big.

But I was still surprised when I got the especially thick print-out, which was more than double the usual length.

The explanation?

Instead of printing out the tour on the usual double-sided paper, my OA ("Office Administrator") used single-sided paper.

"We-Might-as-Well" Remodeling

How Budgets Get Blown

I ran into someone at my open house last Sunday who explained how their remodeling budget doubled: as the project unfolded and the contractor(s) suggested ways to improve the original plans -- as well as correct problems that became apparent once the walls were opened up -- the owners repeatedly found themselves saying, "Might as well."

That's why remodeling veterans advise "doubling the timetable and tripling the budget" (or is it the other way around?).

On the plus side, I have never seen so many contractors hungry for work, and bidding jobs aggressively.

It's also the case that homes needing major remodeling are deeply discounted in today's market.

Contrite Goldman? Think Again

Still Calling the Shots

Goldman Sachs has inundated the Financial Crisis Inquiry Commission with data — about five terabytes, equivalent to several billion printed pages — and dragged its feet on answering detailed questions about derivatives securitization and other business activities, two panel members told reporter on a conference call.

“We did not ask them to pull up a dump truck to our offices and dump a bunch of rubbish.” the Panel Chairman added, “This has been a very deliberate effort over time to run out the clock.

--"Financial Panel Issues a Subpoena to Goldman Sachs"; The NY Times (6/7/2010)

No, I haven't studied the minutiae of the financial reform package making its way through Congress now.

But when I read how Goldman Sachs is plainly thwarting the Financial Crisis Inquiry Commission . . . . I don't have to. (Its tactic, well-known to litigators: 'the data dump.')

If the Commission had any legal authority or political clout, it would slap Goldman with the equivalent of contempt of court sanctions.

Gauging Sunday Open House Traffic

The Sunday Times vs. Crossword Puzzles

No, the picture (at right) wasn't the line to get into my (first) Sunday open house at 2700 Chowen Ave. South last weekend.

But it felt like it.

Unlike most Realtors, I am not a stickler for sign-in sheets, or otherwise "taking attendance" at open houses I host.

That's because, in my experience, if you force people to leave contact information, they will -- it just might not be correct.

It's also the case that people who want to be in touch with you, will; if they have a sincere interest in the home you're selling, the area, or have a real estate-related question, they'll naturally exchange contact info with you.

So how do I gauge Sunday open house traffic?

By how many sections of the Sunday New York Times I get through during the two hour open (I have it along for any lulls; I'm not into crossword puzzles).

At Chowen last Sunday, I barely read two paragraphs from one Op-Ed piece.

"Don't Miss the $8,000 Buyer Tax Credit!"

Realtor Marketing Faux Pas

Thought you missed the $8,000 tax credit available to new Buyers?

Not according to the Realtor ad I saw (several times) playing on the preview loop at the Hopkins movie theatre tonight.

Besides extolling her 20 years experience selling local real estate, the agent's ad trumpeted that "there was still time to take advantage of the $8,000 Buyer tax credit."

That would be the $8,000 tax credit that expired April 30.

Oops!

Glad it was a Burnet agent, not an Edina one.

Changing the Closing Date

Closing Date: Fixed, or Flexible?

It's almost guaranteed that at some point in every real estate transaction, at least one of the parties will want to change the closing date.

Can they?

A real estate purchase agreement is ultimately just a type of contract, and anything the two parties agree to change, can be.

But therein lies the rub.

If the Buyer is planning a major renovation, and has lined up a series of contractors immediately after closing . . . they're probably not going to be thrilled about pushing back the closing.

And contractually, they don't have to.

Ditto if the Buyer's moving van is arriving from out-of-state on a particular date, and is expecting to pull up to an empty house that the Buyer in fact owns.

Sugar to Make the Medicine Go Down

Sometimes, financial or other inducements can persuade an otherwise reluctant Buyer or Seller to change the closing date.

So, in one deal where I was the Buyer's Agent, my client agreed to push back the closing date once the Seller agreed to pick up the fee to extend my client's loan commitment (like milk, loan commitments have a shelf life; typically, they expire within a few days of the original closing date).

But a Buyer or Seller should never assume that the other party will agree to a change -- and therefore, it goes without saying, pick the date carefully.

So what's the best indicator of whether a new closing date is in the cards?

If the closing date was a key, intensely contested term in the original negotiation, both parties should expect to honor it.

Shelter From the (Stock Market) Storm?

Real Estate as a Haven

Conventional wisdom to date has been that a rocky stock market bodes poorly for upper bracket housing.

That's because, compared to other Buyers, upper bracket Buyers presumably have more exposure to stocks.

When stocks take a hit, so does their purchasing power.

Witnessing the latest stock market gyrations, I'm wondering whether at least some drained investors have decided that they want off the roller coaster.

Smart investors heed one maxim: 'buy low, sell high.'

Nothing is a better value in today's housing market than upper bracket homes (it doesn't hurt that mortgage rates are at record lows -- another side effect of stock and financial market turbulence).

P.S.: a half dozen or so sales do not a trend make, but in just the last two weeks, 7 homes on or near Cedar Lake, Lake Calhoun, and Lake of the Isles -- ranging in price from $900k to $3.3M -- have gone pending.

The "Rebound Realtor"

Realtor-Client "Second Marriages"

Fools rush in where Angels fear to tread.

--Alexander Pope

A second marriage is the triumph of hope over experience.

--Samuel Johnson

"Rebound relationships" seldom work out because one of the people in the relationship usually hasn't had time to get over the last one.

Is the same thing true in real estate?

In my experience, it depends on two things: 1) who the client is; and 2) who the last Realtor was.

(As they say, "Duh!)

In fact, there are four main scenarios:

One. Bad Realtor/Good Buyer.

There aren't that many bad Realtors out there -- they tend not to able to make a living at it! -- but there are some. There are also Realtors who are overextended, burnt-out, inexperienced, or simply inattentive.

"Inheriting" a client who's just had a bad experience with one of the above takes a little extra effort upfront, to establish trust.

However, once that exists, I've found such clients to be very gratifying to work with -- and extremely appreciative.

Two. Good Realtor/Unmotivated Buyer.

For a Realtor, this is by far the riskiest scenario to step into, because ultimately what any Realtor has to sell is their time -- and unmotivated Buyers devour it!

Fortunately, there's an easy way to establish whether a particular Buyer is unmotivated.

I simply ask: a) how long have you been looking?; and b) how many homes did your last Realtor show you?

If the answers are "more than a year" and "more than 50 homes," respectively, I pass (note: unmotivated Buyers have been known to fudge the foregoing numbers).

Three.

Good Realtor/Unrealistic Seller.

Like the unmotivated Buyer, the unrealistic Seller is also usually easy to spot.

Typically, their home didn't sell for one reason: it was priced too high.

When that's the case, no amount of marketing, staging, or salesmanship is going to produce a Buyer.

When it's obvious that that's going on, the key issue becomes: are they now willing to price at market? (which also begs a secondary question: why wouldn't they price at market for their first Realtor?)

Four. Bad Realtor/Good Seller.

I don't see this often, but there are saleable homes on the market that nevertheless are lingering because they're not being properly marketed.

The photos are grainy and unflattering; the sales literature is full of typos; the homeowner is amenable to staging, but the "incumbent Realtor" never even brought it up!

Being the successor Realtor in such situations (like scenario #1) offers the opportunity to really be a "hero" to the typically beleaguered homeowners.

Other Scenarios

Are there other scenarios?

Sure.

Just like in real relationships, sometimes Realtors and their clients have style and/or personality clashes that get in the way of their working together.

Usually, that becomes apparent during the interviewing process -- but not always.

The "X" factor in all of the foregoing scenarios is the identity of the former Realtor (which I'll always ask).

If I know them and their reputation . . . I can usually skip all the other questions.

Does Networking Really Work?

Instant Access to 1,600 Realtors

Does Realtor-to-Realtor networking really work?

Well, consider this:

With about 20% of the total listings in the Twin Cities housing market, the percentage of Edina Realty listings sold by other Edina Realty agents is 40%.

That could just be because "we" -- all 1,600-plus local Edina Realty agents -- really like one another.

But the truth is, most of us don't even know each other.

What really explains that 40% statistic is the amount of intra-company networking that constantly takes place -- at weekly office meetings, online, via email, etc.

It's always nice to be able to tell a prospective client during a listing presentation (basically, a job interview for Realtors) that, just by pressing "send" on my PC, I can instantly tell 1,600 other Realtors about my hot new listing.

Dual Agency - Two Kinds

When a Buyer represented by an Edina agent sells a home listed by another Edina agent, the resulting relationship is called "dual agency."

That's because both the Buyer and Seller are represented by the same broker, Edina.

While that creates some legal awkwardness, the benefit to clients -- in my opinion -- more than offsets the drawbacks

By contrast, when the same agent represents both the Buyer and Seller, that's called "single agent dual agency."

As they say, "that's a horse of a different color."

While single agent dual agency is permissible with sufficient disclosure and both parties' assent, I personally think it's not worth the risk.

In my opinion, the only way to be on both sides of a deal is ultimately . . . to be on neither.

Professional Pet Peeves

Unsolicited Voicemail/Email/Texts

To: Anyone I don't know
Re: Your message

Just a heads up to anyone I don't know who wants me to return their message ("Hi, Ross, this is Bob Smith. Please call me back as soon as you get this").

If you want me to get back to you, tell me in your message what you're contacting me about.

If you don't, I will assume you are trying to sell me something (vs. say, returning my lost cell phone) . . . and will delete your message.

Ditto for all successive messages (some people are surprisingly persistent!).

And no, I don't promise to return your message if you tell me what it's about -- but I guaranty 100% that I won't respond if you don't.

Sunday Open House Near Cedar Lake

Art Deco Gem

What: historically designated, Moderne-style Art Deco just south of Cedar Lake. Features 5(!) Bedrooms, 5(!) Baths (almost 3,800 square feet total); first-floor Owner's Suite; and stunning, period detail in everything from the light fixtures to the hammered iron railings.
Where: 2700 Chowen Ave. South
Who: hosted -- and listed -- by Ross Kaplan (broker is Edina Realty).
How much: $875,000
When: 1 p.m. to 3 p.m. this Sunday (June 6). Listed . . . today!

Interested in buying one of Minneapolis' landmark Art Deco homes? (The home was historically designated by the Minneapolis Heritage Preservation Commission in 1996).

Know someone who might be?

Please stop by my open house at 2700 Chowen Ave. South this Sunday, in Minneapolis' Sunset Gables neighborhood.

Not an architecture buff?

The home's also perfect for someone who wants a large, light-filled home on a corner lot just steps to Cedar Lake (and blocks to Isles and Calhoun).

Hope to see you!

Downsizing Developers: 'Stayin' Alive'

Dave Alan Homes in Minneapolis'

Bryn Mawr Neighborhood

Feel the city breakin'
And ev'rybody shakin'
And we're stayin' alive, stayin' alive.
Ah, ha, ha, ha,
Stayin' alive.
Stayin' alive.
Ah, ha, ha, ha,
Stayin' alive.

--lyrics, "Staying Alive" (The Bee Gees)

How does a local home builder weather an epic downturn in new construction amid a glut of upper bracket homes?

By going down-market (relatively speaking, at least).

New Math

In this case, Dave Alan Homes appears to focusing more on mid-tier neighborhoods like Byrn Mawr in Minneapolis, rather than upper bracket spots closer to the lakes or in Edina.

So, instead of buying tear-down homes for $300k-$350k and putting up $1.2M new construction in their place, builders are plunking down $150k or so and building $500k-$600k homes.

In fact, $150k is exactly what the buyer paid for 4xx Thomas Ave. South in February (market time: 1 day).

Judging by the state of construction I saw when I drove by this morning, the home is still about 3 months away from completion (note: the home pictured above is another, similar-looking Dave Alan home, not the one on Thomas).

P.S.: Since it's not on MLS, it's possible that this home is being built for a client (rather than as a "spec home").

Stock Analysts on BP

Is BP Stock a Buy?

No, I'm not going to add my outrage to the flood of commentary already about the BP oil spill in the Gulf of Mexico (a sickening human, environmental, and economic tragedy, on multiple levels).

Instead, given my interest in the stock market (after real estate, of course!), I thought I'd summarize what various stock commentators and analysts covering BP have had to say (I'm paraphrasing, but the gist is accurate):

April 20 -- Date of spill (BP stock price = $60): "Buy! The damage from the spill is likely to be contained, and it's far from clear that BP -- rather than Halliburton or TransOcean -- is liable."

April 30 -- Estimate of spilled oil quadrupled (BP stock price = $50): "Buy! The damage and legal liability are likely to be far greater than originally estimated -- but that's more than reflected in the now-lower stock price."

May 15 -- Various efforts to cap the spill have all failed; oil continues to spew into the Gulf (BP stock price = $42): "Buy! The market has already priced in billions of legal liability -- liability that's likely to be far in the future."

June 1 -- U.S. Justice Department announces criminal probe into BP (BP stock price drops to $36). "Sell! The oil spill and its after-effects threaten to bring down the company."

Hmm, I wonder who's been doing all the selling between April 20 and June 1???

Post-Memorial Day (Consumer) Tides

"It Was the Best of Times,
It Was the Worst of Times"

Best time to buy airplane tix online?

Tuesday a.m. after Memorial Day weekend, when everyone just finished traveling (and isn't thinking about booking future trips).

Worst time to get a car wash?

Tuesday a.m. after Memorial Day weekend, when everyone who went up to their cabin goes to get their car washed (and the sand vacuumed out of their cars -- a process that I now know from experience takes about 10 minutes per car).

"Ummm . . . Nice Tree for Sale??"

I just came across this photo -- the lead photo -- on a current MLS listing (there are a maximum of 10 photos, but only one appears on the first page of the MLS listing).

And no, the home's not listed for less than $100k somewhere in the 'sticks; it's a Golden Valley home on the market for $450,000.

It turns out that what's for sale is actually a to-be-built "spec" home.

The usual convention in such cases is to show some sort of architectural rendering of the planned home, even if it's subject to change.