One of my favorite US myths is that you will always have payments, specifically credit card and car payments. I often wonder who started this myth and why it has been perpetuated. I do not have a car payment and I do not have a credit card. I do have some debt but it is 100% tied to real estate. I am not better than anyone else out there. I just decided that I will NOT always have a car payment or credit card payment. I made that decision because it provides freedom.
There are lots of myths out there. I have written about many of them. One surefire way to identify a myth is to look for absolutes--you will always have a car payment. Before you blindly believe things like this, don't be afraid to ask, "why?"
Part 2
"Why?" is a dangerous question for some folks. It challenges the status quo. It makes you stop and think about your actions. It may even make you realize that you don't know why. That means you have been doing something blindly, like sheep. That makes you uncomfortable. I love "why?" If I can't come up with a good reason, then the answer has to be preference or tradition (pretty much). I am ok with those answers if, and only if, you are ok with giving me those as the reasons. If you have thought about it and your requirements are your requirements because of your preference, great. I am for it. If I want whatever it is from you, I have to go with your preference. Whats dangerous, however, is when you tell me to do something, I ask "Why?" and you have no idea. I am not ok with that. That means the action is up for debate or adjustment.
I asked "Why?" all the time growing up and I used to get frustrated with my parents for saying things like "because I said so." That was never good enough for me. Give me a reason. Even if the reason truly is, "no reason, just my preference." I think it is lazy to not give a why. Believe me, I catch myself now saying "because I said so" to my son. I acknowledge that it is laziness.
When folks ask you "why?", don't be offended, don't feel like they are challenging your authority. Perhaps they are building their own basis for understanding and trying to use you as a role model. Most kids build their sense of morality, right and wrong, from their parents. Finding out the motivation for things--the "why?" is an absolutely essential part of this moral code. Not just that you do something but why you do it is very important.
Wednesday, April 4, 2012
Wednesday, March 28, 2012
Expectations
So this morning I was contemplating what to write and I thought about expectations. Specifically, the power of expectations and the role expectations play in shaping our culture, our lives, our experiences. You may not ever really give much thought to the idea of expectations but they are always present, shading your every move. 99% of the time they are subconscious, only rising to the surface when they are NOT met. For example, your boss is a jerk. You go to work expecting to be mad at him or her. Guess what, you get mad at him or her. No surprise, you expected it to be that way. But what if the jerk boss surprised you with an encouraging word, a raise, a promotion, a cupcake or something like that. Your expectation would NOT be met and it would certainly shade the experience. Perhaps you would change your opinion of your boss, perhaps you would expect the hammer to fall at some point. Those expectations turned something fairly ordinary into an event shaded with fear, suspicion, elation, contemplation or some other emotion simply because what you expected to happen did not happen. Keep this in mind, we have lots of names for expectations--fear, anxiety, anticipation, restlessness, motivation, etc. Different names, but the same thing tied to differing emotions.
Expectations are super important in my line of work. When I meet with a buyer for the first time it is essential that I find out what their expectations are. See, they may have set their expectations from gathering information from sources like Trulia or Zillow. These sources are notoriously incorrect. They may have set their expectations from a previous experience with another Realtor. I need to find out if that Realtor was competent, a good communicator, etc. They may have set their expectations from the national media. If thats the case, then I have a TON of work to do! Regardless, I have to find out "where they are coming from" in order to best serve them. My goal is always to exceed their expectations, or at least meet them. I never want to fall short. Why? Because expecations color the experience and determine whether or not they will become fans. Most importantly, I am in the service industry. If I didn't meet or exceed my clients' expectations, what did I really even do for them?
So, how do I do this. Number 1, I simply ask them. What do you intend to happen? How much do you intend to spend? What kind of time frame are we dealing with? What information have you already gathered? From where? Have you purchased a home before? Was it a pleasant experience? You get the idea. For sellers, it is basically the same thing, just a little more in depth about the specific home and financial situation.
What other ways do expectations cloud our perceptions? How about in the dating arena? Like it or not our parents' relationship often sets our expectations. Our intake of media sets expectations. Our friends set expectations. Be very careful in relationships to acknowledge where your expectations come from and if they are worthwhile expectations. Often, they are not. They are unrealistic, unhealthy and unattainable. I'm not saying to lower your criteria, but rather to simply look at it from a holistic perspective.
Think about some areas of your life where your expectations hold you back. How about your spiritual life? Are you afraid to go to church because you expect the people there to be judgemental? Totally understandable but unhealthy. What about your job? Just because you never got a promotion does not mean you won't be promoted. BUT, you definitely won't be promoted if you go through your job everyday expecting that the boss hates you.
I would love to hear about how your expectations held you back and you overcame those. I would also challenge you to identify and to challenge the expectations in your life that might be detrimental. Have a great week.
Expectations are super important in my line of work. When I meet with a buyer for the first time it is essential that I find out what their expectations are. See, they may have set their expectations from gathering information from sources like Trulia or Zillow. These sources are notoriously incorrect. They may have set their expectations from a previous experience with another Realtor. I need to find out if that Realtor was competent, a good communicator, etc. They may have set their expectations from the national media. If thats the case, then I have a TON of work to do! Regardless, I have to find out "where they are coming from" in order to best serve them. My goal is always to exceed their expectations, or at least meet them. I never want to fall short. Why? Because expecations color the experience and determine whether or not they will become fans. Most importantly, I am in the service industry. If I didn't meet or exceed my clients' expectations, what did I really even do for them?
So, how do I do this. Number 1, I simply ask them. What do you intend to happen? How much do you intend to spend? What kind of time frame are we dealing with? What information have you already gathered? From where? Have you purchased a home before? Was it a pleasant experience? You get the idea. For sellers, it is basically the same thing, just a little more in depth about the specific home and financial situation.
What other ways do expectations cloud our perceptions? How about in the dating arena? Like it or not our parents' relationship often sets our expectations. Our intake of media sets expectations. Our friends set expectations. Be very careful in relationships to acknowledge where your expectations come from and if they are worthwhile expectations. Often, they are not. They are unrealistic, unhealthy and unattainable. I'm not saying to lower your criteria, but rather to simply look at it from a holistic perspective.
Think about some areas of your life where your expectations hold you back. How about your spiritual life? Are you afraid to go to church because you expect the people there to be judgemental? Totally understandable but unhealthy. What about your job? Just because you never got a promotion does not mean you won't be promoted. BUT, you definitely won't be promoted if you go through your job everyday expecting that the boss hates you.
I would love to hear about how your expectations held you back and you overcame those. I would also challenge you to identify and to challenge the expectations in your life that might be detrimental. Have a great week.
Wednesday, March 21, 2012
Covenant Marriage Law
I read a story the other day where Alabama is contemplating a "covenant marriage option." Basically, when you get your marriage license in Alabama, you can opt for a "covenant marriage." This option would not allow you to divorce for "irreconcilable differences" or to have a "no-fault divorce." This means that the only way to divorce is to have a very, very good, provable reason. I am intrigued by this proposal.
First, let me say that I believe marriage already IS a covenant. I also believe the government should have very, very little to do with marriages. I know they have intertwined themselves in the process through tax codes and priveleges for couples. I don't think they should. God established marriage as a covenant. There are lots and lots of scriptures that describe His plan for marriage. That said, at its core, all a marriage really is is a promise between two people to be true to each other, love each other, and share a life together. How you interpret the specifics is going to be shaded by your religious (or lack of religious) beliefs. I happen to believe that anything that strays from God's very specific plan is not, in fact, a true "marriage", regardless of what you call it. That said, the government does not have the authority to discriminate. When they started giving incentives for marriage, they opened up a can of worms. That is just my opinion.
So, should there be a law that gives you the option for a marriage that is harder to break? The proponents think it will force people that go for that option to work through the tough times. You can't just end the marriage when it gets tough. What are the risks? What if you opt for the covenant marriage and then discover your spouse had something hidden? You have to prove it in order to get away from them. This means more court cases. At least with a no-fault divorce, the divorce itself is relatively easy (settlement of assets and child custody may not be, but the divorce is). How much more complicated will it be for a covenant marriage to be ended? Perhaps this is a moot point. Perhaps there won't be any covenant marriages broken. I don't know. Perhaps the private investigator business will boom in Alabama!
On the flip side, I applaud Alabama for trying SOMETHING to secure the family. There is overwhelming evidence that both parents at home gives children a tremendous advantage in many areas of development and achievement. That said, if the parents are terrible for each other, still choose to have a kid, raise that kid in a home filled with discord and arguments because the mom can not actually "prove" the husband is lousy, is that really better than a no-fault divorce? I don't know. All I do know is that Alabama is at least trying to strengthen the family. They have at least taken a step to fight for what is good. AND they didn't do it in such a way as to be oppressive. You have the OPTION to get into this agreement. You do not HAVE to do it. It shouldn't cost much, if anything, to implement up front (just may cost after a while with increased court time, unseen as of now). Why not give that option?
First, let me say that I believe marriage already IS a covenant. I also believe the government should have very, very little to do with marriages. I know they have intertwined themselves in the process through tax codes and priveleges for couples. I don't think they should. God established marriage as a covenant. There are lots and lots of scriptures that describe His plan for marriage. That said, at its core, all a marriage really is is a promise between two people to be true to each other, love each other, and share a life together. How you interpret the specifics is going to be shaded by your religious (or lack of religious) beliefs. I happen to believe that anything that strays from God's very specific plan is not, in fact, a true "marriage", regardless of what you call it. That said, the government does not have the authority to discriminate. When they started giving incentives for marriage, they opened up a can of worms. That is just my opinion.
So, should there be a law that gives you the option for a marriage that is harder to break? The proponents think it will force people that go for that option to work through the tough times. You can't just end the marriage when it gets tough. What are the risks? What if you opt for the covenant marriage and then discover your spouse had something hidden? You have to prove it in order to get away from them. This means more court cases. At least with a no-fault divorce, the divorce itself is relatively easy (settlement of assets and child custody may not be, but the divorce is). How much more complicated will it be for a covenant marriage to be ended? Perhaps this is a moot point. Perhaps there won't be any covenant marriages broken. I don't know. Perhaps the private investigator business will boom in Alabama!
On the flip side, I applaud Alabama for trying SOMETHING to secure the family. There is overwhelming evidence that both parents at home gives children a tremendous advantage in many areas of development and achievement. That said, if the parents are terrible for each other, still choose to have a kid, raise that kid in a home filled with discord and arguments because the mom can not actually "prove" the husband is lousy, is that really better than a no-fault divorce? I don't know. All I do know is that Alabama is at least trying to strengthen the family. They have at least taken a step to fight for what is good. AND they didn't do it in such a way as to be oppressive. You have the OPTION to get into this agreement. You do not HAVE to do it. It shouldn't cost much, if anything, to implement up front (just may cost after a while with increased court time, unseen as of now). Why not give that option?
Wednesday, March 14, 2012
Success
How do you measure success? The question can be answered in so many ways and often it depends on the context of the question. For example, I wrote a short blog last week that 34 people read. The whole point of the blog was to inspire some dialogue and hopefully explore the crippling lethargy that I sometimes experience. 34 read it, 0 commented on it. Based on context, the blog was an epic failure. It did not achieve its intended purpose. It was not successful. I earned two awards in the past 2 weeks for hitting arbitrary sales goals and helping a specific number of people. I sold 22 homes last year. In order to "qualify" for these awards, I needed to sell at least 15. Who set that number? What is significant about that number? If I sold 14 homes, am I less successful? What if those 14 homes were $1 million dollars each, I would have made WAY more money than selling the 22 homes I did sell. Then who is successful? One person has the award, the other has a lot more money.
"Society" worships success. There are thousands of books, blogs, videos and other media out there centered on "success." There are movies made about "successful people." Everyone has an idea of what success looks like when they see it but very few can explain what success actually is. This is an important distinction as we strive to be successful people. It is very hard to strive for a goal when your definition is "I'll know it when I see it."
Let's start with the flawed description above. Who do you see as successful? Frequently we see celebrities as successful. They started down a path to be a star and they made it. Now they have gobs of money, live in big houses and are household names. Does that define success? We look at business owners and entrepreneurs that have achieved an independently wealthy status, i.e. they can survive the rest of their lives very comfortably without working. Does that define success? How about the president? There is not a higher elected official in our country. Is that success?
I would suggest that "being successful as a person" is not the same as "having success." Having success is very simple to define--the intended outcome has occurred. In other words, a goal was set, an activity was set in motion (or multiple activities) and the intended consequence was met--I woke up hungry, my goal was to not be hungry, I decided eating would solve the issue, I ate and I was no longer hungry--SUCCESS.
Being successful is not as simple. The real hard part is that you and only you can set the meter that measures success--and many, MANY of us don't know (A) what we truly view as success in life and (B) how to get there. I challenge you to figure out what needs to be in place when you get old in order for you to look back at your life and say, "wow, I was successful." It may involve your children, it may involve your work. It may involve strangers you help. It may involve money and material things. It may involve your giving. Regardless, YOU need to define that goal and ignore what society says is success. You will be much happier that way.
"Society" worships success. There are thousands of books, blogs, videos and other media out there centered on "success." There are movies made about "successful people." Everyone has an idea of what success looks like when they see it but very few can explain what success actually is. This is an important distinction as we strive to be successful people. It is very hard to strive for a goal when your definition is "I'll know it when I see it."
Let's start with the flawed description above. Who do you see as successful? Frequently we see celebrities as successful. They started down a path to be a star and they made it. Now they have gobs of money, live in big houses and are household names. Does that define success? We look at business owners and entrepreneurs that have achieved an independently wealthy status, i.e. they can survive the rest of their lives very comfortably without working. Does that define success? How about the president? There is not a higher elected official in our country. Is that success?
I would suggest that "being successful as a person" is not the same as "having success." Having success is very simple to define--the intended outcome has occurred. In other words, a goal was set, an activity was set in motion (or multiple activities) and the intended consequence was met--I woke up hungry, my goal was to not be hungry, I decided eating would solve the issue, I ate and I was no longer hungry--SUCCESS.
Being successful is not as simple. The real hard part is that you and only you can set the meter that measures success--and many, MANY of us don't know (A) what we truly view as success in life and (B) how to get there. I challenge you to figure out what needs to be in place when you get old in order for you to look back at your life and say, "wow, I was successful." It may involve your children, it may involve your work. It may involve strangers you help. It may involve money and material things. It may involve your giving. Regardless, YOU need to define that goal and ignore what society says is success. You will be much happier that way.
Wednesday, March 7, 2012
Lethargy
Ok, this one will be short. It is more of a question. I struggle with lethargy sometimes. I have lots to do but absolutely no drive to do it. Sometimes it is being physically tired, sometimes it is mental exhaustion, sometimes it is just plain procrastination. I think sometimes it is even being overwhelmed at the sheer amount of stuff I have to do and it is fretting over how to get started. There are days when this is nearly incapacitating. Do any of you struggle with this and if so, how do you get over it?
Thursday, March 1, 2012
Busyness vs. Handling Your Business
Sorry this is a day late. It has been incredibly busy lately. That is actually the topic of this blog!
Americans are addicted to busyness. We have it so ingrained in our culture that we don't even think about it anymore. When was the last time you said, "What have you been up to?" or "How are you doing?" We say these things instead of "Are you well" or even a simple "I have been thinking about you" or something to that effect. The point is, we assume that person has been doing something. It would be weird if they haven't. We stay in motion constantly. What if you asked someone what they have been up to and they replied "Absolutely nothing for the past week. I have done nothing, zip, zero, zilch." MOST of us would automatically say something like "oh, have you been ill?" In other words, it is just not normal to do nothing, you must be sick.
Why are we so addicted to being busy? I think, and this is just a theory, it is fear and worry (really the same thing). Fear of being behind or missing out on something. If we are idle, we don't get rewarded with material items. We may miss our opportunity to make more money which gives us more stuff. Stuff is really what its all about, right? Just as a personal example, somewhere around 23 or 24 years old I looked around at my life. I was still in college (working on a master's degree), renting an apartment and had no kids. I was married to an awesome wife. I looked at some of my friends and they already had their "first big job", had already bought a home, already had cute kids. I found myself thinking I was "behind". I was too slow in getting my life started. Sounds absurd, right? I bet, if a lot of you are honest, you have had that same feeling at some point. The natural solution to this "problem", GET BUSY.
Thus it starts--finish school, get a job, have a kid or two, work the hours it takes to get promoted, buy a house, work on that house, work at your job more, hate your job, work for the weekend, work on the house on the weekend, work toward vacation, go on vacation and spend so much time running around and "doing stuff" you want to have a vacation from your vacation, work some more, etc, etc. It nver stops. We get so busy we forget to enjoy life. Why? So we can get "ahead" in this race we have created for ourselves. Silly isn't it.
I had this discussion last night with a bunch of college age guys at church. I especially wanted them to hear it. We approached it from a few angles. One, you have understand YOU invented that race. It is not real. Two, God wants you to take care of your business but to not get so involved in BUSYNESS that you forget to pay attention to him. Psalm 46:10 says to be still and know that I am God. Its interesting because God is telling you to DO two things, 1) be still, 2) KNOW that I am God. I think that in order to do the second thing, you have to do the first thing--completely. You have to shut off all the garbage going through your head. You have to stop being BUSY in order to be in tune with your creator.
We looked at one other verse (out of context but I think it fits). Exodus 14:14. Moses is leading the Israelites out of Egypt. Pharoah is chasing them and they start to grumble. "Was it because there were no graves in Egypt that you brought us to the desert to die?" Moses tells them (this is the New Harmon Paraphrase Translation), "Look, God told me to bring you here. 'The Lord will fight for you; you need only to be still.'" Then God tells Moses how to handle his business, the sea is parted and the Israelites go to safety. You know the story. The key here is that the Israelites were afraid and worrying about something they could not control. If they would just still their minds, handle the business God put in front of them, God would take care of them--and he did--in spectacular fashion.
I don't foresee any of us running from Pharoah's army but I do know that sometimes I feel like I have that much pressure on me. I feel like I am pushed into a corner with all the work I "have to do" and the pressures of life. At times like this I need to still my mind, handle the business God has put in front of me and let Him take care of the rest. In other words (back tot he New Harmon Paraphrase Translation) Exodus 14:14--"Chill out, I got this" Your Friend, God.
Americans are addicted to busyness. We have it so ingrained in our culture that we don't even think about it anymore. When was the last time you said, "What have you been up to?" or "How are you doing?" We say these things instead of "Are you well" or even a simple "I have been thinking about you" or something to that effect. The point is, we assume that person has been doing something. It would be weird if they haven't. We stay in motion constantly. What if you asked someone what they have been up to and they replied "Absolutely nothing for the past week. I have done nothing, zip, zero, zilch." MOST of us would automatically say something like "oh, have you been ill?" In other words, it is just not normal to do nothing, you must be sick.
Why are we so addicted to being busy? I think, and this is just a theory, it is fear and worry (really the same thing). Fear of being behind or missing out on something. If we are idle, we don't get rewarded with material items. We may miss our opportunity to make more money which gives us more stuff. Stuff is really what its all about, right? Just as a personal example, somewhere around 23 or 24 years old I looked around at my life. I was still in college (working on a master's degree), renting an apartment and had no kids. I was married to an awesome wife. I looked at some of my friends and they already had their "first big job", had already bought a home, already had cute kids. I found myself thinking I was "behind". I was too slow in getting my life started. Sounds absurd, right? I bet, if a lot of you are honest, you have had that same feeling at some point. The natural solution to this "problem", GET BUSY.
Thus it starts--finish school, get a job, have a kid or two, work the hours it takes to get promoted, buy a house, work on that house, work at your job more, hate your job, work for the weekend, work on the house on the weekend, work toward vacation, go on vacation and spend so much time running around and "doing stuff" you want to have a vacation from your vacation, work some more, etc, etc. It nver stops. We get so busy we forget to enjoy life. Why? So we can get "ahead" in this race we have created for ourselves. Silly isn't it.
I had this discussion last night with a bunch of college age guys at church. I especially wanted them to hear it. We approached it from a few angles. One, you have understand YOU invented that race. It is not real. Two, God wants you to take care of your business but to not get so involved in BUSYNESS that you forget to pay attention to him. Psalm 46:10 says to be still and know that I am God. Its interesting because God is telling you to DO two things, 1) be still, 2) KNOW that I am God. I think that in order to do the second thing, you have to do the first thing--completely. You have to shut off all the garbage going through your head. You have to stop being BUSY in order to be in tune with your creator.
We looked at one other verse (out of context but I think it fits). Exodus 14:14. Moses is leading the Israelites out of Egypt. Pharoah is chasing them and they start to grumble. "Was it because there were no graves in Egypt that you brought us to the desert to die?" Moses tells them (this is the New Harmon Paraphrase Translation), "Look, God told me to bring you here. 'The Lord will fight for you; you need only to be still.'" Then God tells Moses how to handle his business, the sea is parted and the Israelites go to safety. You know the story. The key here is that the Israelites were afraid and worrying about something they could not control. If they would just still their minds, handle the business God put in front of them, God would take care of them--and he did--in spectacular fashion.
I don't foresee any of us running from Pharoah's army but I do know that sometimes I feel like I have that much pressure on me. I feel like I am pushed into a corner with all the work I "have to do" and the pressures of life. At times like this I need to still my mind, handle the business God has put in front of me and let Him take care of the rest. In other words (back tot he New Harmon Paraphrase Translation) Exodus 14:14--"Chill out, I got this" Your Friend, God.
Wednesday, February 22, 2012
Disconnect in Housing
Yesterday at the sales meeting a new agent brought up a really, really important topic that I feel compelled to write about. It is an age old problem anytime someone is selling just about anything. It has been compounded in the housing industry, however, with the volatility and the tremendous swings we have had in the last 10-15 years. The problem is, of course, pricing what you have for sale and, conversely, figuring out what to pay for what you are buying.
Real estate, at its core, is actually very simple. People have a need for housing. Other people build houses. The first people find one that fits their personal tastes, needs, etc. They agree on a price and the home transfers ownership.
Of course it is not that simple. There are legal requirements for registering ownership, lender requirements, laws to follow when marketing, etc, etc, etc. The main complication I want to focus on today is in pricing. How does the seller offer at a price a buyer is willing to pay? I specifically want to look at the current climate we are in.
Let's rewind about 15 years. In the late 90s, we saw growth, lots of it. Government started telling people to buy homes. Lenders starting making that more possible. Lots and lots of people wanted to buy and lenders said "yes". This flooded the market with buyers. That means that sellers could get basically what they asked for. Life was good if you were a seller. Agreeing on price was a fairly simple process. Seller asked for $----- and buyer, if he liked the home, said ok. They did this because there was a shortage of homes available. Now move forward a few years. The feeding frenzy escalates beyond anyone's imagination. Literally anyone who wanted a loan could find SOMEONE to give them one. This means we basically have an infinite supply of buyers and sellers are making tons of money. If the seller did not want to sell, they could still make money by taking out the equity in their home. This volatility (and yes, it was volatile--just volatile upwards) made it somewhat more difficult to agree on a price because sellers started trying to sell at what the house could be worth at some unknown time in the future. Buyers still were buying because they thought it was their right to own a home. Lenders were still lending because it was their paycheck (and lots of big ones at that!). Plus, if they didn't lend, someone else would. Then it got really complicated.
Depending on where you lived, the crash started in 2007, 2008 or even 2009. Basically, a few lenders realized people were not paying their bills. Then a whole bunch of people weren't paying their bills, then a WHOLE bunch of people weren't paying their bills. Lenders were in hot water and so they retracted--big time. It became harder and harder and harder to borrow. This meant the infinite supply of buyers that were driving prices up and up and up dried up--AND FAST. The momentum swung way more quickly than we could stomach and thus prices dropped big time. This meant that you could have literally had your house appraised at $200k one day and $175k the next--or sometimes worse. The media compounded the problem by using fear tactics and a sort of "self fulfilling prophecy". In other words, they started talking about how awful the housing market was, buyers pulled out and the market became worse.
Normally there are a handful of people that can't pay their bills. The market absorbs those issues with no problem. When the market becomes flooded with those issues, prices drop further. This compounds the problem that we started talking about--agreeing on a price. Lets look at a hypothetical that I deal with on a regular basis.
Homeowner wants to sell his home. First step is to figure out how much it is worth. They had the home appraised in 2008 when they refinanced and took out $20,000 to buy a new car and pay off some other debts. They now owe $175,000 on the house. They paid $185,000 in 2005. They have $10,000 in equity still, right? When they invite the Realtor over to evaluate the home and price it for them, they find out that their neighborhood has had 10 homes sold in the last year. 3 of those were foreclosures, 4 were short sales and 3 were "normal" sales. Based on comparables, the home should sell for around $170,000. This causes an array of emotions--anger--at the market, at the Realtor that sold them the house, at the Realtor that is in front of them, at themselves, Sadness and hoplessness--like they are stuck, and of course, defiance. They are determined to sell the house and, further, to sell the house at their price--$190,000 because it is silly to think they could actually LOSE money on their home. So they interview a few Realtors. Most of them tell them the same story. Then they find one that is willing to list it at $190,000. That Realtor works hard with good pictures, a well crafted marketing plan, open houses, etc. Surprisingly, they get no activity. So the homeowners fire the Realtor and get another. This time they agree to $185,000. This time they also get a buyer. The buyer wants the home for... $170,000. They disagree because of what they paid and what they owe. Negotiations ensue. Finally, they settle on $180,000. Then the home appraises for $170,000. This seller did not have an accurate perception of the market.
On the flip side--there is a buyer that watches all the "experts" on TV talk about how bad the market is. They watch the late night infomercials about buying homes for pennies on the dollar. They know everything there is to know about real estate except how to get into the homes. They call a Realtor to open doors for them. They only want to see homes that are "great deals." They look at 30-40 homes. Some of those homes are great deals based on condition, price compared to the market, location, potential, etc. They aren't good enough because they aren't "pennies on the dollar." What they don't realize is that the media shows a national picture and we live in an ultra local market for housing. What happens in Smyrna is not the case in LaVergne or Antioch or Nolensville. They get discouraged and angry that the Realtor is not showing them the best deals. Then, as humans are prone to do, they fall in love with a home. They want to offer 30% less than asking price. The Realtor tells them that the home is priced pretty close to right and it should only be about a 5% reduction. They make the offer anyway and the seller doesn't even acknowledge them. 2 weeks later it sells for 3% above asking price with closing costs.
The point is this, both sides have misconceptions about the market right now. Both are selective in the information they retain. Both are wrong. Obviously it is not always this way. Deals are still going on. I am as busy now as I have been so far in my career. Bottom line, if you are on one side or the other, find a Realtor you can trust, one who knows their local market. One who will explain the position to you. Also, take in all types of media but do so with a critical mind. Verify facts and pay attention to the scope of the report. If they talk about "national housing trends," pay very little attention to them because, just like "averages" they include all the extremes. In our area, in particular, we are a solid upper middle. We took some hits but nowhere near as bad as many other places. Even then, some areas were hit harder than others. There are some parts of Nashville, at some price points, that NEVER really lost value. Find an expert and trust him or her.
Real estate, at its core, is actually very simple. People have a need for housing. Other people build houses. The first people find one that fits their personal tastes, needs, etc. They agree on a price and the home transfers ownership.
Of course it is not that simple. There are legal requirements for registering ownership, lender requirements, laws to follow when marketing, etc, etc, etc. The main complication I want to focus on today is in pricing. How does the seller offer at a price a buyer is willing to pay? I specifically want to look at the current climate we are in.
Let's rewind about 15 years. In the late 90s, we saw growth, lots of it. Government started telling people to buy homes. Lenders starting making that more possible. Lots and lots of people wanted to buy and lenders said "yes". This flooded the market with buyers. That means that sellers could get basically what they asked for. Life was good if you were a seller. Agreeing on price was a fairly simple process. Seller asked for $----- and buyer, if he liked the home, said ok. They did this because there was a shortage of homes available. Now move forward a few years. The feeding frenzy escalates beyond anyone's imagination. Literally anyone who wanted a loan could find SOMEONE to give them one. This means we basically have an infinite supply of buyers and sellers are making tons of money. If the seller did not want to sell, they could still make money by taking out the equity in their home. This volatility (and yes, it was volatile--just volatile upwards) made it somewhat more difficult to agree on a price because sellers started trying to sell at what the house could be worth at some unknown time in the future. Buyers still were buying because they thought it was their right to own a home. Lenders were still lending because it was their paycheck (and lots of big ones at that!). Plus, if they didn't lend, someone else would. Then it got really complicated.
Depending on where you lived, the crash started in 2007, 2008 or even 2009. Basically, a few lenders realized people were not paying their bills. Then a whole bunch of people weren't paying their bills, then a WHOLE bunch of people weren't paying their bills. Lenders were in hot water and so they retracted--big time. It became harder and harder and harder to borrow. This meant the infinite supply of buyers that were driving prices up and up and up dried up--AND FAST. The momentum swung way more quickly than we could stomach and thus prices dropped big time. This meant that you could have literally had your house appraised at $200k one day and $175k the next--or sometimes worse. The media compounded the problem by using fear tactics and a sort of "self fulfilling prophecy". In other words, they started talking about how awful the housing market was, buyers pulled out and the market became worse.
Normally there are a handful of people that can't pay their bills. The market absorbs those issues with no problem. When the market becomes flooded with those issues, prices drop further. This compounds the problem that we started talking about--agreeing on a price. Lets look at a hypothetical that I deal with on a regular basis.
Homeowner wants to sell his home. First step is to figure out how much it is worth. They had the home appraised in 2008 when they refinanced and took out $20,000 to buy a new car and pay off some other debts. They now owe $175,000 on the house. They paid $185,000 in 2005. They have $10,000 in equity still, right? When they invite the Realtor over to evaluate the home and price it for them, they find out that their neighborhood has had 10 homes sold in the last year. 3 of those were foreclosures, 4 were short sales and 3 were "normal" sales. Based on comparables, the home should sell for around $170,000. This causes an array of emotions--anger--at the market, at the Realtor that sold them the house, at the Realtor that is in front of them, at themselves, Sadness and hoplessness--like they are stuck, and of course, defiance. They are determined to sell the house and, further, to sell the house at their price--$190,000 because it is silly to think they could actually LOSE money on their home. So they interview a few Realtors. Most of them tell them the same story. Then they find one that is willing to list it at $190,000. That Realtor works hard with good pictures, a well crafted marketing plan, open houses, etc. Surprisingly, they get no activity. So the homeowners fire the Realtor and get another. This time they agree to $185,000. This time they also get a buyer. The buyer wants the home for... $170,000. They disagree because of what they paid and what they owe. Negotiations ensue. Finally, they settle on $180,000. Then the home appraises for $170,000. This seller did not have an accurate perception of the market.
On the flip side--there is a buyer that watches all the "experts" on TV talk about how bad the market is. They watch the late night infomercials about buying homes for pennies on the dollar. They know everything there is to know about real estate except how to get into the homes. They call a Realtor to open doors for them. They only want to see homes that are "great deals." They look at 30-40 homes. Some of those homes are great deals based on condition, price compared to the market, location, potential, etc. They aren't good enough because they aren't "pennies on the dollar." What they don't realize is that the media shows a national picture and we live in an ultra local market for housing. What happens in Smyrna is not the case in LaVergne or Antioch or Nolensville. They get discouraged and angry that the Realtor is not showing them the best deals. Then, as humans are prone to do, they fall in love with a home. They want to offer 30% less than asking price. The Realtor tells them that the home is priced pretty close to right and it should only be about a 5% reduction. They make the offer anyway and the seller doesn't even acknowledge them. 2 weeks later it sells for 3% above asking price with closing costs.
The point is this, both sides have misconceptions about the market right now. Both are selective in the information they retain. Both are wrong. Obviously it is not always this way. Deals are still going on. I am as busy now as I have been so far in my career. Bottom line, if you are on one side or the other, find a Realtor you can trust, one who knows their local market. One who will explain the position to you. Also, take in all types of media but do so with a critical mind. Verify facts and pay attention to the scope of the report. If they talk about "national housing trends," pay very little attention to them because, just like "averages" they include all the extremes. In our area, in particular, we are a solid upper middle. We took some hits but nowhere near as bad as many other places. Even then, some areas were hit harder than others. There are some parts of Nashville, at some price points, that NEVER really lost value. Find an expert and trust him or her.
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