SPAC Disease Reaches Pandemic Proportions

Seller’s Price Perceptions Cause National Uproar

In  today’s real estate market, the refrain from Realtors is the same: “These sellers are living in La La Land (or Neverland). Everyone is thinking their home is worth much more than it is. We can’t get them to see the truth!” Alas, the “truth” is that this is an age-old problem that is not necessarily intrinsic to any particular market, but may be a little worse than normal in 2006-07. The history books are replete with examples dating as far back as the paleolithic period of neanderthal men and women chasing Realtors from their caves with raised clubs over a price dispute.  This euphoric optimism of the common home seller has been studied by the American Medical Dissociation, and it has coined a neologism: Schitzo Prospectus Actualis Capitalis. (Editor’s Note:  a break with reality concerning the expectation of material gain.)

     The acronym, SPAC (pronounced “Space”), has entered modern parlance to speak of sellers with the disease. “Spacers,” as these unfortunates have become known, appear to be causing Realtors  apoplectic frustration.  But what is this disease, and how has it reached epic proportions?

One of the contributing factors of the disease appears to be neighborhood gossip. It is not uncommon for homeowners in a given community to keep each other apprised of the going rate for homes through the neighborhood grapevine. Our reporter asked a local homeowner to give her opinion of her home’s value:

 WUSA Reporter: “What do you think your home is worth today, Mrs. Bon-Mot?

Mrs. Bon-Mot: “Well,  the Pastiche’s place down on Maple Drive is very similar to ours, and his sold about a month ago for $525,000. It took him a couple of months to sell, the market being what it is, but it did sell.  Now, our home has Teflon wallpaper, which his didn’t. Also, we have an above-ground pool that the kids just love. Oh, we also got a new air conditioner about, oh. . .ten years ago? Yeah. All these things add up! So, I would expect that we could get about $550,000, maybe $560,000.

Our intrepid reporter, after researching county records and the local MLS data, found the truth about the Pastiche’s sale:

1.  The Pastiche’s home was 1357 square feet bigger that the Bon-Mot’s.

2.  The Pastiche’s home was on the market with 4 different Realtors for a total of 296 days.

3.  The Pastiche’s home was originally listed for $495,000, and eventually sold for $421,000.

4.  According to MLS data, the Pastiche’s home had been extensively remodeled in 2002  including new floors, paint, pebble-tech play pool, and a new kitchen.

 So, how does this information get passed along and corrupted? According to local specialist Johnson Smack of Swindle & Crouch Realty, homeowners hear what they want to hear: “It’s an ongoing problem. So and so tells so and so, and the story gets twisted until the guy down the street who sold a year ago had a dilapidated hut that sold for way more than it should have. We see it all the time. These ‘Spacers’ really need to get with reality.” How does Mr. Smack deal with these idiosyncrasies?

“I just show them the comps,” says Smack, “and let them see the truth. That guy down the road from you had a nicer house, and it didn’t sell for as much as you think it did.”

However, this revelation can sometimes lead to volatility, as our erstwhile reporter discovered. When revealing our own research concerning the sale of the Pastiche’s property to Mrs. Bon-Mot, she at first demurred. “No, that’s not right. Maybe you’ve got the wrong home.  The Pastiche’s didn’t have all that stuff,” she said. When confronted with pictures of Mr. & Mrs. Pastiche holding a sold sign in their front yard that our reporters found posted on their former Realtor’s Website, Mrs. Bon-Mot became indignant and semi-politely asked our reporter to leave. 

SPAC disease is challenging medical researchers across the US to find a cure that will enable the sluggish economy to regain its footing in the coming years.  The housing sector is a major driver of the aggregate economy, and while home seller’s suffer from SPAC, things look grim.  Biological chemists, psychologists, and even holistic specialists have been facing the challenge head on. “We have begun looking at different forms of hallucinogenic drugs to combat the problem,” says Dr. Mustapha Obslooke, a spokesman for I.G. Farben, “The initial trials have been giving our people an optomistic outlook. We expect that, after FDA testing this fall, we will be able to get help where it is needed most.”

According to department staff at the University of Tulsa’s Jung Research Center, electo-shock therapy and traditional prefrontal lobotomy do not seem to be the answer. One student researcher, on condition of anonymity, reported that “sellers just do not respond to this approach. After we get them cleaned up and wipe the saliva from their faces, their responses to our inquiries is just not adequate to suggest a significant change.” Researchers are now involved in removing parts of the hypocampus of sellers in an effort to combat the disease. The first trials of this new procedure have proven inconclusive, but there are reports of unexpected side benefits, notably an ease of irritable bowel syndrome.

 Holistic specialists have had limited results in their treatments. According to Radiant Moonbeam, an independent practitioner of holistic medicine, her patients are having some success. “We really had hoped for better results, “she says, “but, until now, our healing herbs, along with a regiment of progressive muscle relaxation and sunshine colon-cleanse (patent pending) have only gotten a few thousand dollars relief.”

Specialists are still working on the problem, and may have new reports out this summer. Until then, the disease will have to run its course. There is some hope among researchers that the body’s own immune system will begin to fight back, giving new hope to the US homeowner, economist, and Realtor. We’ll keep you posted.

reprinted by permission of The Daily Bender

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DOM Trickery

Recently, there have been discussions about the ethics of agents who attempt to manipulate Days On Market in an attempt to remove stigma from a property. This discussion over on Active Rain really got me thinking, and I wanted to get the pulse of people’s feelings concerning this issue. Indulge me for a moment while I pontificate:

So what, exactly, does the tracking of DOM actually accomplish? Is it a tool that buyer’s agents use to determine value for their clients? If a home is on the market for 365 days, does it mean that the home is over-priced? Absolutely. However, let us say for the sake of discussion that you take a client to a home because they saw pictures of the listing on line, and thought it looked nice. So, you take them out to the listing, and they fall in love with the home. Now, as a professional agent, you have a duty to your clients to protect their interests. When they say to you that they love the property and want to write an offer, they are relying on your expertise to help them make a good decision. Would you advise them on what price to offer simply based on DOM? Of course not. In fact, to determine a good price for your clients to offer, would you take into consideration the DOM at all? You shouldn’t, as it has no relavance to the home’s value. To come up with an equitable offer, you would simply pull the comparable sold properties, and advise them of this. You would then advise them that the price you have suggested is what the property will likely appraise for, and that unless they want to pay part in cash, they should offer within this range. Paying any more would be unwise. However, an unwise person could pay whatever they want for a property if they have cash, they just need to sign a disclaimer that you advised them against it (someting I did repeatedly in the hot market of 04-05).

Now, can DOM stats help us to determine market trends? I would submit that they can, but that those numbers would be spurious anyway, because of agent’s manipulation of these numbers. There are much better methods to use to determine market trends, such as calculating absorbtion rates.

Bear with me as I put on my flame-retardant suit before giving my undoubtedly unpopular opinion.  I think that, in the best interest of my clients, I need to be ethical with them. That means sharing the absolute truth about what their property could sell for. I also need to condition them to the idea that even though the price may be “right,” it may not be the price that someone is willing to pay. Now, if I take an expired listing, I am of the opinion that the 1st agent was either not exactly honest with the seller in order to get the listing (buying the listing), or that they were simply a weak agent, and caved to the seller’s demands. Either way, the agent failed on the job. Now then, should we punish the seller by publishing either their, or their former agent’s, ineptitude? I don’t think so.  I am not advocating that anyone manipulate data, just that that particular piece of data is useless anyway.

On Podcasting

Hello Folks! 

 It’s been a very interesting few days. I have become involved with the dogs of The Bloodhound Gang, helping out with some podcasting they’re doing over there. First, I must say that the people over there are just a total class act; you couldn’t ask for a better-hearted group of people. Those guys are going places, maybe even to heaven.

Well, as it happens, I have some experience with professional audio engineering, and offered to help by cleaning up some audio files so that they could post them on the site as pod-casts. First, I did one for Kris Berg in SoCal when she interviewed the CEO of Redfin, Inc. You can listen here.

Next, I “scrubbed” some audio for a seminar on web potency for Realtors that was conducted by Dustin Luther from Move.com & Realtor.com. You will find these pod-casts at BloodhoundBlog soon, I’m sure.

I’m very excited to help these guys out, as audio engineering is actually rather relaxing for me. It’s a really fun hobby (although extremely expensive), and gives me a chance to exercise the other side of my brain. One of the things I would like to offer to the world at large, is just a bit of advice on how to go about setting up a very affordable and professional sounding portable audio rig to do some recording. For the purposes of this brief treatise, I will assume an absolute ignorance of all things audio, so if you’re a know-it-all, just indulge me for a moment.

I have come up with a plan that includes 3 or 4 very small and inexpensive pieces of audio gadgetry that together would cost less than $400, and would capture audio for both interviews and seminars (or anything else, for that matter) with aplomb.  Now, these items that I am about to list are readily available, and are cheap. (Note to Audio Geeks:  I know that there are much better tools for this job, and you’re foaming at the mouth to make a recommendation. Let me just preemptively state that I am aware that this job can also be done admirably for around $12,000. Just go back to your corner.)

The first scenario that I envision is that you’ll want to interview a person and record it for posterity. Maybe you’ve found a really neat person whose opinion really matters, and you want to share it with others. Maybe you would like to record your next listing presentation (is this a real estate site?) so that you can hear how ridiculous you sound. Well, here’s what you’ll need:

1 Digital Recorder

2 Lavalier Microphones

2 Cables

There you go! Two close microphones to pick up the sound, two cables to carry the sound, and one stereo digital recorder to capture your every breath! NEAT! And it all runs on batteries.

Now, the next scenario presupposes that you are at a geekinar seminar where there’s going to be a master guru sales weasle. First, you’ll want to ask him if it’s okay (maybe you should’ve asked the guy you interviewed too, sheesh! Details!) if you record him giving his talk. If he says it’s a great idea and asks for a copy, you’re golden. If he looks around for his attorney, or his bodyguards, make a break for the crowd and try to blend in.  Once you’ve got permission (in writing?) you just slap this puppy on the table near where he’ll be pacing and ranting, and BAM! You’ve got it.

I hope that you’ll take these little ideas and run with them. Make beautiful audio recordings. It’s fun!

Allen

Welcome to my world!

going-fast.jpgHello Folks!

This otta be interesting. I have decided to move along the path of technology. What makes this fun is that I have no idea what I am doing, and I love it. I love to tinker with technology. I love to read other people’s blogs about real estate, and thought it might be fun to join the fray. There’s just too much fun to be had out there in cyber-space. In upcoming blogs, I’ll be addressing LOTS of issues about real estate, buying and selling, what a Realtor actually does, digital photography, marketing, and lots more.

    I have an idea that the information on this blog will be useful to the general public, as well as my fellow Realtors.  I am a guy who really likes to tinker (I’m also obsessive compulsive), so I do a lot of . . .well, obssessing. . .on matters of real estate. So you can expect me to share my thoughts on marketing, sales, prospecting, customer service, websites and tools I use and like, software, hardware, home staging, and anything else I can think of that might be remotely connected to real estate.  This really should be fabulous, so hold on. . .to something!

Allen