Lessons from Zillow Talk

  I just finished reading the new book Zillow Talk, written by its CEO and its Chief Economist.  It was full of the Freakonomics type of factoids that I love.  Many I already knew, as would most real estate agents, but others were new to me.  Also, Zillow uses all of its data to quantify things we know intuitively.  They also use statistics, of course, to try to prove things we don't necessarily think are true.  That's the beauty of statistics!

We had a lot of fun at a recent sales meeting with where to bet on getting the most appreciation on a home (near Starbucks), what neighborhoods gentrify quickly (gay ones), and what real estate agents sell properties fastest (women).  It was interesting to note that, statistically, newer agents perform just as well as older agents.  The question that the figures don't answer is why that is.  Speculation ranges from the fact that they are more eager and have more time to devote, to the likelihood that newer agents are younger, and more technologically advanced.  Good to know, though, if you want to use your nephew.

One of the most striking propositions was that there is a best time to list.  We know that, of course, and always thought it was right about now.  When Zillow analyzed the sales data from all over the country, however, they determined that the absolute best time to list your home is about 30 days after the bulk of spring listings comes onto the market.  As they put it, "between the time you fill out your NCAA bracket and the time that the winner at Augusta slips on the green jacket."  That's important news for all prospective sellers:  Get ready to list at the end of this month, for best results!

Live Time Chat

As we tread further into the brave new world of digital marketing, we try new ways of reaching and serving our clients all the time.  This week, we have begun offering "live time chat" on our Pearce website.  People who log onto our site between 8 AM and 1 AM will see a pop-up box after they begin browsing, that will offer them the chance to talk to a person immediately.  While that person is not an agent, and will ultimately be referring certain questions to our offices during business hours, it represents our latest attempt to give buyers and sellers what they want, when they want it.

It's certainly been a long journey since the days when buyers had to come into a physical real estate office, and sit down with an agent to go through "the book".  That was the MLS compendium of currently listed real estate properties, and it came out every two weeks, with the latest in inventory available twice a month.  Twice a year, we could buy a book that had the sales for the past six months chronicled for our use.  We didn't give out maps or addresses of listed properties, and most information we did give out was only available on little cards, that we kept in a little box that looked like something in which you would store recipes. It seems strange now, but it was what we had, and it seemed normal to us!

We've gone all the way in the other direction now, and you can find out almost anything about a property, currently listed or not, with the flick of a finger on a mouse.  It may not all be accurate, but it is readily available.  Real estate agents, on the other hand, have morphed too; they've become consultants and counselors.  They no longer control the information, but they are adept at interpreting it, as well as in streamlining the process of buying or selling.

So, if you are scrolling the internet at midnight, and you happen to talk to our live receptionist, think for a moment of how much things have changed!  And how much they still remain the same--we're still here to help you in any way we can, to make the very best real estate decisions for you, your families, and your firms.

Evening Open Houses?

I have an idea on which I'm interested in input from the public. We have traditionally done almost all open houses on Sunday afternoons. That isn't true everywhere in the country, since I have noticed that, in Arizona, Saturday seems to be just as common as Sunday. There is an historical logic to the current pattern, since people were usually less busy on Sunday afternoons. The idea of going to open houses seemed to fit in with the practice of taking Sunday drives.

Today's world is different. Children's sports, in particular, take no holidays. Sunday afternoons may be as jam-packed as any other day. In addition, weather is a huge factor. All real estate agents know that there is a bell curve for attendance--if the weather is too bad, no one comes, and, if the weather is too good, no one comes. For busy people, a great day may just be too precious to pass up.

So why not vary the routine? If you are like I am, you may prefer to squeeze in all you can into the work week, leaving bigger blocks of weekend time for other things, especially outdoor activities. In this season of extra light, we could hold open houses late in the day, and interested parties could stop on their way home from work or picking up kids. Even for commercial properties, this idea has appeal. Many owners and managers are too busy to take time out to look at space during the work day. We could serve wine and cheese, and let people take their time after the end of the work day to explore real estate options. Even agents would benefit, as it would leave weekend time to work with buyers.

We have tried this a few times, at least in residential, but it hasn't caught on. I'm curious as to why it has not. What do you think?

Independent Contractors

Yesterday I explained to a client that real estate agents are independent contractors. I know that most people realize that real estate agents, and companies, only get paid when someone buys or sells a piece of property. But sometimes I doubt whether they know the full extent of what that means. It means that agents don't get paid for their time. Or their gas. Or the lunch that they might buy you when you spend a long day looking at houses. Or their cell phone. Or their car, car insurance, and repairs. Or their real estate license, continuing education, Board fees, and MLS fees. Or the extra advertising and marketing that they may do on your property (while our firm pays for postage, advertising, and training, many firms charge agents for those services). It's expensive to be a real estate agent, and even more expensive to be a real professional, with all the tools.

Indpendent contractors, who don't get salaries or benefits, deduct their business expenses themselves. In effect, they run their own small businesses. They affiliate with brokers, and use the branding and offices of those brokers, but they don't work set hours. We aren't even allowed to carry worker's comp insurance on them. They assume the costs of working, and, as I often say, they "eat what they kill" in terms of compensation. They get paid for what they do, when it goes well. When it doesn't, they bear the risks.

Why, you may ask, did I decide to blog about this now? The simple answer is that, when I was told by this client that he understood that an agent only got paid when he bought, and that those were the breaks, I'm not sure he really got what he was saying. I guess it gets down to the Golden Rule, as most things do. How much time would you spend doing work for someone and not getting paid, before you felt that it was unfair?

Clients didn't create our compensation system in the real estate industry, and I'm not asking them to be responsible for changing it (although I would certainly love to change it!). I just want them to understand that, if they aren't serious, or they aren't willing to stay with someone until the transaction is completed, then they are really asking for services for free. And the way you treat someone who is doing you a favor may be different than the way you behave if you think it's someone's paid job to help you. It's that simple, and that complicated.

Blizzard

We were closed yesterday. I was supposed to be leaving town, but that obviously didn't happen. When I woke up, I couldn't tell how much snow there was, because it had blown around so much. There is no school this week, so I couldn't use the school closings as a guide. It was Monday after a holiday, so I didn't have yesterday's news to go by. Since we'd already cancelled the paper and Comcast was knocked out by the storm, I didn't have today's news to go by! So how did I decide to close?

Well, real estate is almost always a delayable purchase. Many buyers, as well as agents, don't want to drive if they don't need to do so. Those warnings and pleas from the Governor's office, to stay home if you can? They generally apply to us. In addition, most people don't want their properties shown in bad weather, because they don't want to take the risk that a prospective buyer would fall or get hurt trying to get in. Most inspections, closings, negotiations, and other business can be delayed for a day. Everything else, including anything that can be done with a computer and email, will proceed as usual. It's one of the benefits of the change in real estate, away from bricks and mortar and toward clicks.

Of course, we always worry that we will inconvenience someone who expects us to be open. That's why it matters whether everything else is up and running. As far as I could tell yesterday, not much was. So why make employees struggle to come in, only to sit around without any calls or visitors?

Finally, I think a lot of people hoped that the Christmas spirit would linger one more day, if we all took a deep breath and relaxed. And, at least for us, it did!

Is the Tide Turning?

Yesterday was the busiest day for property sales that we've had in a long time. I spent the morning today trying to track down the reasons, and there are several possible causes. Two sales came about because the owners brought down their prices. In at least one instance, that produced multiple offers, so clearly buyers are motivated also. They aren't closing before the end of the year, so I don't think it's for tax purposes on the seller's part. It could, however, be due to the cold weather and the arrival of heating bills.

Two of the buyers are coming from Manhattan, so we're wondering whether the bonuses came early this year. There have been some news articles that make that claim, so it could be true. One buyer is about to start a new job, and was in a hurry (although, in the past, those people could have--and probably would have--rented in the short term). One renter turned into a buyer, and that could be an outgrowth of interest rates rising, with the prospect of higher rates next year.

We've had walk-ins as well, which means that people have gotten the message that the time to buy is now. Or maybe it's our Christmas present as agents! Either way, we'll take it.

The End of Civility?

I'm going to make a kind assumption, and start with the premise that people don't understand the life of a real estate agent, or how they get paid. We work on commission, which means that we only get paid when something sells or leases. Obviously, that means that there are many instances when we do work for which we are uncompensated. While we have always accepted that fact as a part of our lot in life, it seems lately to have gotten much worse.

Our commercial agents shocked me recently when they told me that at least half of the buyers they go to meet arrive late, and some not at all. Also, they said that they are actually very surprised when a buyer or his agent takes the time to call after a showing with feedback or information. For instance, one agent was pleased that a buyer called him to say that he'd found space closer to his current building, and was no longer interested in the space we had shown him. I found it amazing that an agent would be happy to be told that someone wasn't renting something, but he said that it saved him a lot of time chasing the guy around for an answer.

With that low standard for polite behavior, I have to guess that most buyers don't stop to think that an agent who shows them property is not paid to do so, and in fact uses his or her own car, gas, and time to do so. I've been told that many who do not call back assume that, if you don't hear from them, you are supposed to know that they are not interested. While that may be true, it doesn't help us to do our job for the owner. If you were the owner of the property, and not the prospective buyer or tenant, you would certainly be unhappy with an agent who couldn't give you information or feedback about a showing, and probably wouldn't be satisfied with the answer that they hadn't called with a response. That leaves us caught between a rock and a hard place.

While real estate agents are resilient, and while they are taught to follow up if they don't get a call, it would certainly be nice to be thanked for our time, and treated as professionals. In the current commercial market especially, buyers and tenants often know that they are using us to test the waters, so that they can go back to their current landlords to renegotiate their rent. If we oblige them, and give them what they need at our own expense, is it too much to ask that they get back to us and thank us?

Closings

Yesterday and today are the two biggest closing dates of the year, in no small part because no taxes need to be adjusted, as tax years run July 1st through June 30th. As a result, the tension level around real estate offices is very high these days. Not only are we dealing with all the problems of the current market, but sellers and buyers are under enormous stress, as they try to get into and out of homes quickly. Sometimes they are trying to get in while someone else is still trying to get out, which is one of the situations we've been faced with today.

It's the time I feel sorriest for real estate agents, who often take real abuse from overwrought clients. It's often that the clients disconnect their mouths from their brains, and blast the agent simply because he or she is lower on the food chain (meaning, simply because they can). Agents are usually very good about letting it roll off them, but they may not forget it quickly. I would write some of the things they say, but it wouldn't be family friendly!

In addition, agents often get asked to do the most menial tasks. Again, they usually comply, because they want their clients to be happy, but we have to laugh to ourselves. One agent's husband was amazed that she was driving 50 miles round trip this week at the request of her client, and buying a 6-pack of Coke and 2 Chicken a la King frozen dinners to be left in the refrigerator of a rental home.

It may be all in a day's work for the agent, but it's worth noting that they deserve some kudos for all that they do!

Hello from Sunny Arizona

We arrived last night in Scottsdale, where it's almost 70 degrees and very sunny. I wanted grapefruit for breakfast, so I went out and picked a couple. I went running for a long time (with a few stops at new retail areas) without worrying about snow and ice. There are lots of real estate signs here--it's pretty much ground zero, along with Nevada and Florida, for the distressed real estate market. Inside my father's gated community, there are signs for the first time, and today there were multiple open houses. The median sales price in Arizona was $232,000 at the end of 2007, and $150,000 at the end of 2008. That makes Connecticut look pretty good!

We had our company holiday party at our house the night before we left--100 people for dinner. It was festive and fun, and spirits were high-enough so that those not in real estate were surprised. I'm not really, because people who come to parties tend to be a self-selected group of those who are going to have a good time under all circumstances, plus real estate agents in general tend to be resilient and optimistic. As Winston Churchill said, "I am an optimist. It does not seem to be of too much use to be anything else." Amen.