This from my Arizona Republic real estate column (permanent link):
We represented the buyers for a million-dollar house, our first, that closed this week. A week from now, we will be listing a million-dollar home, also a first for us. We are carrying two listings at $450,000 right now, with another to come, and we will be listing another home at $800,000 shortly.
But also this week, I sold a property for $65,000. Just a few weeks ago, one of my listings sold for $27,000.
Am I schizophrenic? I hope not. But I am scared to death to say no to anyone right now.
Salespeople like to say yes. It’s not in our nature to turn people down. We like to make people happy if we can.
But I have no idea when this recession is going to end, so I don’t want to pass on any opportunity that might present itself.
Here’s the funny part: We’re living with a foxhole mentality, but 2009 is going to be our second-best year since we came into the real estate business. We’re not rich by any means, but we’re making more money than we have in the past three years.
But here’s the unfunny part: Virtually all of our income for 2009 is coming to us in the second half of the year. Our business was all-but-moribund in the first two quarters, and we came much too close to losing our own home.
So I am not proud, bashful or shy. If you have a real estate problem, I’m ready to talk about it. We’re working sixteen hours a day, at least, seven days a week. We haven’t taken time off in three years, and I don’t know when we will take our next vacation.
The job is survival right now, and I know we’re not alone among Realtors in thinking this way.
I’m nobody’s bear, and I would love to believe all the cheerleading I hear in the news about the real estate market. But my strategy for now is to just say yes to every opportunity I get to earn a living.
Spread the word: Click here for a printer-ready version of this column.
Or: Steal this book: I’ve written over 200 of these real estate columns. They are consistently one of the most popular features on our blogs. Many of them are dated and/or entirely Phoenixocentric. But many others are timeless and generic. If you want to use any of my columns on your weblog or web site, feel free. Three rules: Don’t change my text, credit me as the author and give me a link back to http://www.bloodhoundrealty.com/ with appropriate anchor text. Something like this, perhaps:
<a href="http://www.bloodhoundrealty.com/" target="_blank"> Phoenix Realtor Greg Swann</a> suggested I share this with you:
Am I link-baiting? You bet. The quid pro quo is free content for your site that pulls eyeballs and excites interest.
Steve Holben says:
This is my 6th recession. There is absolutely no reason for it to go on any longer. It has gone on longer than any other except the depression. People are acting like the primates in “2001 A Space Odyssey”; hiding under a rock from a tiger before they learned they could vanquish the tiger. The tiger holding us back is paper! I think the cornucopia of media outlets and the internet has spawned an exponentially expanding universe of “experts”, “analysts” and “consultants” who, from my 40 years in the biz, and 65 years of walking upright are mostly full of crap. Seems like negativity and pesimism somehow masturbates their ego. You people get out and function, and tell your chicken little prospects to do it, too. I have a sign on my wall “Function with faith” not necessarily a relegious faith, but faith in ourselves and optimism.
October 10, 2009 — 10:59 am
Greg Swann says:
Three words that should make any Realtor very careful about money, both inflow and outflow: Sellers with equity.
Right now, 100% of our listed sellers have equity in their homes. (Weird, huh?) A year from now, that number could easily be 0%. Until we can foresee a time when most sellers will have marketable equity in their real property, we ain’t done yet.
October 10, 2009 — 11:14 am
Thomas Johnson says:
“Sellers with equity” In my simple brain means this formula:
all taxes, HOA dues must be current plus all liens must be no greater than 90% of the no-BS CMA sales price. If not we will have a discussion about where the shortfall will be funded, in cash, at closing, not by the lender.
Looking at Houston, that magic owner with equity is about 50% of the house owning population. This means we have to say no all to often, because sellers would have to bring cash to closing. Geographic farming has given way to equity farming.
October 10, 2009 — 9:38 pm
Randy Hooker says:
The original sin: self delusion. Sounds like you need to repent. 😉
October 10, 2009 — 10:52 pm
Robert Worthington says:
Greg, way to rebound and pick yourself up! Could you please share with me what turned your business around?
October 11, 2009 — 12:04 pm
Greg Swann says:
> Could you please share with me what turned your business around?
I wish I could tell you all about our insanely great magic bullet strategy, but here’s what really happened:
Buyers crawled out from under the bed and, after some deliberation, went out and bought houses.
We thought we were loaded for bear in January of 2006. We listed a half-million dollar house and sold it in four days. We listed another one at that price, with us as the third listers, and sold it for more than the list price of the second listing. Another one at that price, two full-price offers in four days. We had been working for more than a year to perfect our listing praxis — even though this amounted to gilding the lily during the boom — and we thought we had the listing beast gutted, stuffed and mounted over the mantle.
And then… Prices started to decline. We didn’t react quickly enough, and some of our listings didn’t sell. And then we started turning listings down fairly consistently. We needed work, but if we knew the house couldn’t sell, we let someone else take the loss — in money and in reputation.
We turned down a million-dollar listing in August of 2007 — because it was really an $825,000 listing. The seller chased the market down for almost two years — straight listing, short sale then lender-owned. It finally sold for $499K, but we could have gotten $825K for it in three weeks, if the seller had been willing to listen to us.
At the same time, I had always done a lot of work with investors, but I had to turn them away as well. There was no way to make money on rental homes in Phoenix.
So we did a great business in 2005, not too bad in 2006. But 2007, 2008 and the first half of 2009 were steadily tougher, all this because people were — quite appropriately — afraid to buy. We both had work, and the listings we took continued to sell quickly and at high SP/LP ratios, but neither of us had enough paying work.
A lot of Realtors didn’t make it, of course, and many of those who did were able to do so by “Shifting” their businesses into other markets — short sales and REOs. Cathleen is doing a little bit with short sales now, and I have successfully sold two to buyers, so far, along with a boatload of lender-owned homes, but we mainly kept our focus on higher-end listings (for Cathy) and buyers-at-all-price-ranges (for me).
Going in, we had no idea how long the drought might last, nor how dry things might get, so in our spare time we devoted our attention to getting better at what we do. And where we thought we were strong listers four years ago, we are much stronger now, with our quiver of marketing arrows augmented by a host of brand new ideas. We built out our web presence, too, although we have a lot more of that still to do.
We’re trying to get better at things we have been bad at in the past — like CRM — so that we don’t suffer future droughts quite so dramatically. But much of what we do is and always has been about doing our work our way, so our real magic bullet, long-term, is training sellers and buyers to demand better-quality representation from Realtors. The more we can do that, the busier and more prosperous we will get.
Thanks for asking. This was fun for me to go through.
October 11, 2009 — 5:44 pm
Bob Wilson says:
Greg,
Glad to see you making it through the drought. I have been through a few myself and one thing always helps is to diversify your income.
October 11, 2009 — 8:18 pm
Leanne Finlay says:
My car goes anywhere.
October 12, 2009 — 5:19 pm
Damon Chetson says:
This is my 6th recession. There is absolutely no reason for it to go on any longer.
You can’t will yourself out of a recession anymore than you can spend your way out of a recession. There is a psychology to a recession, but there is also a logic to a recession. And that logic is economic.
The problem with the bubble is that it was massive and massively inflated. Unlike the tech bubble of 2000-1, this bubble was wide-ranging, affecting not only the real estate market, but the equity markets as well. In addition, because an awful lot of real resources had shifted across the country into building homes and owning homes, this bubble was far wider in scope than a tech bubble that was regionally isolated and industry isolated.
So yes, people are psychologically depressed. But, you know, between 10 and 18 percent of people are unemployed, depending on how the government has cooked the books, so telling them to “buck up” is kind of missing the point.
In addition, this bubble has not fully burst because government has not let it fully burst. When you re-write the rules in midstream so people who cannot afford their houses continue to hold onto houses, and when you pay people $8,000 to entice them to buy houses they wouldn’t ordinarily buy or buy $8,000 more in house than they would buy or spend $8,000 on furnishing they wouldn’t have otherwise bought… that just papers over the correction.
There’s a reason a lot of investors coming to the U.S. are Canadians and other foreign nations. And, god love them, they’ve got wealth to invest.
This thing is not over by a long stretch. And I know I’ve been predicting increased inflation (which means the Fed will tighten the money supply and have to raise interest rates) for a long time. But it’s gotta come, unless the laws of economics have been repealed. And there’s no reason to think they have.
Real Estate enjoyed its run. But now it’s going to get it coming and going. The coming is the collapse of the market. The going are the high interest rates.
That said, people properly positioned in investor-friendly locales (like Phoenix) are going to be ok, and that’s because as interest rates hit the stratosphere, people with cash will have some sweet deals that will do well as Americans, unable to afford 15 percent mortgages, rent in much greater numbers.
October 13, 2009 — 1:36 pm