On the Campaign Trail

I was invited this noontime to a lunch for women business owners with Linda McMahon, the U.S. Senate candidate.  We had a very nice meal at Cave a Vin, a new wine bar on State Street in New Haven.  Ms. McMahon is doing a listening tour of the state to hear what problems women businesses are having in the current economic climate.  Several things emerged as themes:  the cost of governmental regulation compliance; taxes; health care costs; and, most of all, the sad state of the economy.  The last item comes down to jobs, of course, and is most evident in what sector?  You guessed it--real estate.  It was surprising how much effect real estate has on the business fortunes of firms in other lines of work.  Real estate matters to everyone. 

It was also clear that many of the businesses represented were not making money at the present time.  Some owners were not paying themselves (this was more common than I would ever have guessed).  Others were retooling their firms, and their skills, to find new and different ways to attract revenues.  Those in retail spoke often about the lack of disposable income among their patrons. 

We didn't expect any immediate or easy answers, and we didn't get them.  To her credit, Ms. McMahon made no campaign promises, took no pot shots at incumbents, and seemed really to be there to listen and learn.  We all learned, and the enduring message we took away was that women needed to be cooperative and help each other succeed.  That is something that men should be able to buy into as well!

News from Tulsa

I just got back yesterday from meeting with The Leadership Council, a group of large independent brokers from around the country.  This time we met at Chenowth & Cohen in Tulsa, where growth is high and unemployment is low.  Tulsa turns out to be almost in the exact center of the country geographically, both north to south and east to west, so it is home to a lot of company distribution and service centers, as well as energy companies and others.  It is just approaching the million mark in population. People are moving from all different parts of the US, and many that I met had come from Texas. Boy, does it seem different from New Haven in those regards!

Tulsa has about two and a half months of housing inventory.  Prices are rising, and units are growing.  Like us, they have problems with mortgages and closing times, and sales are not easy.  However, it's really about jobs.  If people have jobs, and employees are moving into the region to work, then it's obviously easier to sell your home and buy another one, because there is a steady supply of buyers being created.  In addtion, the West has ranches and open land all around, making it much simpler and cheaper for builders to add new product. 

The real estate business has some characteristics in common all over, but there are some differences.  They have centralized showing, so agents make one call to arrange all the properties for a buyer to see.  They also have lots of listings where contact is through the owner, which seems odd to us.  States with title companies owned by real estate companies are more real estate agent driven than lawyer driven.  Towns and cities are farther apart, and many agents I met worked an hour or more from home.  There seemed to be more concentration--one agent I met with had 159 listings!  Advertising has left newspapers in many places, and you don't see the big Sunday ad sections.  Everything is done on line, or directly by real estate companies. 

Other practices were similar to ours, including the work ethic of agents, the changes brought by technology, and the complications of lending and governmental regulations.  It's always refreshing to see both the old and the new, and to step out of the regular daily grind and view it from a distance.

Mortgage Woes

There has been a lot of talk about how low mortgage rates are today--the lowest in memory--but much less talk about how hard they are to get approved.  We have found that buyers may wait for weeks with promises of commitment, only to be told after a long period of time that they are being denied.  The annoying part--actually, make that one annoying part--is that the denial is frequently for something that you would have thought that the bank had known all along.  This is true of delays as well.  We have had closings delayed multiple times, with some delays being for things that should have been settled well in advance. 

I suspect that some of the problem lies in confusion at the banks, and probably understaffing.  The bigger issue may be that no one has the authority to pull the trigger on anything, so things have to wend their way up a ladder of approvals.  Just to be clear, all of the blame does not belong with the banks.  Governmental changes in policy have caused all kinds of changes, and sometimes at the last minute.  The feds are always trying to protect us against the last problem, so many of the rules seem largely unnecessary.  This is one of the situations where we can groan when we hear that "we're from the government, and we're here to help you."

Buyers can contribute to the delays also.  Anyone who has gotten a loan in prior years may be amazed at how much information is demanded on today's applications.  Some people waste time trying to argue their way out of requirements.  Since most are imposed on the banks, as opposed to by the banks, this is a delay not worth taking.  The one I hear frequently is this:  "I don't need to get a loan.  I could pay cash.  If they just look at my bank balance, they won't ask for all this paperwork."  Not true.  Get over it, or go ahead and pay cash.

The statistics from the CT Multiple Listing Service show closing times of around 60 days.  That's not so far from the 30 to 45 days of the past, but should be noted, especially as almost 40% of sales are for cash these days, and therefore have no delays.  The time frames may get worse as we near the holiday season, so plan ahead to avoid disappointment. 

Playing the Odds

We were doing some research this week, and were startled to discover that, from January 2010 through the present date, only one-third of all listings taken have sold.  That means that, for every seller who put his or her home on the market and sold it, two sellers put their homes on and nothing happened.  If you add those people who haven't bothered to list their properties due to the poor selling climate, there is a big supply out there. 

Since real estate agents work solely on commission, this is obviously a troubling state of affairs.  We only get paid one out of every three times we list a home, and listing always used to be the guaranteed way to make money, since the percentage of buyers who look and don't buy is higher than that of sellers who don't sell.  The combination is deadly.

 It does prove, however, that sellers should be listening to their agents about the price and improvements necessary to attract an offer in today's market.  What's the point of cleaning everything up and making plans to move, only to sit there for two years without a sale?  If you do want to sell, you need to do more than just sign a listing--you actually need to have a property in the top third of all properties, in order to sell it.  That's food for thought.