Sacramento Real Estate Reflections

My wife and I have a friend that is moving out of the area. My wife, being the good advocate she is, suggested that I represent our friend in the transaction. Our friend told us that they have another friend that is also a realtor and don’t want to play favorites. Our friend decided to not use either of us in the transaction. Also, they were afraid that if something went wrong the friendship would be lost.

I too get nervous when representing a friend – actually I’m becoming more and more confident when doing so. The thought of business jeopardizing the friendship makes me sick to my stomach. However, this is my profession and I feel strongly that I will represent them just as well, if not better than anyone else. I’ve learned to be upfront and honest about unexpected situations that come up in a deal. I take responsibility for any mistakes made on my part – if there are any. I found that strong communication throughout the process is key, making my clients aware and minimizing surprises leads to a growing relationship. Actually all my client have remained friends or on good business terms.

We encouraged our friend to at least use their other real estate connection as a better alternative than to go with someone that they don’t even know.

In my mind, integrity is all about doing what you say. It’s about follow through and admitting where you went wrong. There is a sense of solidarity and trustworthiness. In a business that may be known for hustlers and manipulators, integrity may just be a biggest commodity on the market!

There is a big temptation to calculate commissions before considering what is best for a client. I believe that a few “fast deals” might earn a few quick bucks, but honesty in business enables a person to sleep well and in the long-run develop a lasting business.

This is what I am attempting to live by.

TWO: Listen and Ask Questions

Have you ever noticed or been guilty of talking AT someone (rather than TO them)? Lately I’ve been keenly aware of other agents and especially mortgage brokers , going on and on about all the information that they want to dispense. I’m thinking to myself, “Take a breath!” or better yet ask a question mid-stream to check in. It’s as if they’ve been shut down all their lives and never got a chance to speak and now need to get it all out.

There is an underlying sense of assumption when someone talks at you. While, by asking probing questions and carefully listening I can truly identify what a person needs. I find that people feel cared for and respected when I listen intently. Questions help me accurately respond to the person with whom I am are dialoging.

Listening and asking questions, as well as, returning phone calls promptly – These are simple things that I strive to implement into my daily business and personal life.

ONE: Return the call!

I am continually amazed at how hard it is for some people to return a phone call. The more I deal with other Realtors, mortgage brokers, and business affiliates in general the more I find that people are clueless when it comes to simple success. One mortgage broker I use and refer continually is the one that told me, “You know Keith, the reason why I’m successful is, I return phone calls – it’s as easy as that!” I might add, he returns the call the same day, usually within the hour. This alone has kept me coming back (not to mention he knows how to work a loan like no other).

Then there’s the flip side… There is always that eager beaver salesman who won’t stop calling you once you’ve “made eye contact.” They are like flies on _______. Buzzing around me, “Can I help you?; Let me show you how I can help…; I’m sure I can help you somehow; I’m here, just holler; Don’t miss this opportunity; ….” Alright already – I know where to find you! I have your phone number! I will call you when I need you! Just return my call and close the deal once I serve it up!

While I stand by my statement, “I will never purchase a home warranty for myself,” if the seller wants to pay for one, there is a company I’d recommend. Due to the major complaint that home warranties don’t cover much, and many times you end up paying for a repair person to come out and not be able to perform, Buyer’s Home Warranty Company (www.bhwc.com) is the only company I know of that has a “no fix, no pay” policy. That’s right, if the repair person cannot fix the problem (even if it is not covered in the policy) you do not have to pay for the service call.

Again, make sure you specify in the purchase agreement the name of the company, what you want the policy to cover, and the amount of money it costs. I strongly recommend making sure the AC is covered.

In a few past emails I’ve waxed negatively on Home Warranties and Home Inspections.

As my wife and are in the process of buying a 1926 brick tudor, with me being my own agents… I just received the pest inspection from the listing Realtor. There were three distinct areas that the reporter said, unable to inspect due to seller’s storage being in the way. One area was the garage – not that big of a deal. The area that disturbed me, both on the side of the inspector and the owner, was the attic. The inspector should make every attempt to inspect, and the seller must clear a path!

I emailed the listing agent and asked when he was going to have the house re-inspected – to me this was an incomplete report. Of all areas, I want to know what’s going on in the attic! There could be a family of rats living up there for all I know. The listing agent emails me back and says, “I wasn’t planning on having a re-inspection.” He added that it was only the garage, failing to notice the main area – the attic. I clarified this with him and have not heard back.

I did receive a call from the seller apologizing. He conveyed that he was disturbed by the report too and it was only some hanging shirts that needed to be pushed aside to access the attic. He was more than gracious and offered to have the inspector come back out.

I was pretty pissed off at the response of the other agent. I received it as, “We are not going to re-inspect, deal with it!” However, the seller by simply calling and apologizing, offering to rectify the situation, made all the difference. I wonder sometimes, does the real estate agent make deals go sideways more so than seller and buyers? [did I just say that?] When I read the response from the other agent I told my wife, “we may walk away from this deal, are you okay with that?” That’s how disturbed I was – I don’t care if it is a $40k or a $5M dollar home, it must be inspected thoroughly (including the attic) before I move in.

I love (and hate) what someone once said about the business of real estate (or any sales business for that matter)…. You can dress the part; You can drive a fancy car; You can have the nicest office; You can have great business cards, signs and flyers, BUT without leads your business will go nowhere. This is a loose paraphrase regarding the necessity of leads and lead generation.

Most newer agents ask themselves, “Where is the business going to come from?” Everyone at some time or another has this inner panic. The company at which I’ve chosen to hang my license does a great job in training and helping us with business development. One extremely valuable concept that I’ve hung on to is that of honing in on your best lead generation options. While there are something like fifty or more lead generation strategies, we’ve been trained to explore them all, but choose and attempt to master three – one long-term and two short term strategies.

The philosophy behind choosing three, oppose to sampling all fifty, simply conveys that people need to focus on their natural strengths and temperaments, with consistency playing the key role. One cannot determine if a strategy is effective or if it is “a fit” until it is explored and implemented consistently over time. The guy who works an open house here and there (once a month), with no game plan, will undoubtedly remark, “Working open houses are a waste of time.” Whereas, I know several agents that have a game plan to work at least one “open” every weekend. Over the course of six month to a year, their effectiveness can then be accurately evaluated and the above comment can be debunked or legitimized. Those that give themselves to learning and consistency will find fruit, as the strategy (and agent) is cultivated and trained. My associates that consistently work opens with a game plan inevitably become many buyer’s agent and convert those “lookie loos” with grace and consistency.

Tapping into your data base and sphere of influence will no doubt be your number one long-term strategy. Those that know how to stay in touch and relate to those they’ve already met will succeed, period. So it goes without saying, those with a broader sphere of influence are going to be able to ramp up their business faster than those who have to start from scratch. I highly recommend a program that assists you with your data base management – one that will put you on a schedule of staying in touch. What will naturally happen as you stay in touch, when that person is ready to buy, sell, or invest OR knows someone who need real estate guidance, you will be the one they call and refer! And might I add, you will always get the listing over the anonymous “neighborhood “agent who only sends out “blind” postcards.

Many seasoned agents that have talked with make comments like, “All I do now is referral business and just stay in touch with past clients and my sphere.” Another agent recently said to me, “Yeah, I’ve been in business for thirteen years, I try to limit it to three listings at a time.” I know more agents that do not have this problem of limiting listing than those who do. Point remains – over time, with consistent cultivation, yields a harvest of business.

Moral of the story:
1. No leads = no business
2. No consistency = Lack of accurate evaluation
3. No strategy or game plan = Frustration with more losses than wins
4. Not knowing yourself (lack of fit) = Lack of fulfillment (not to mention emotional blisters)

I’ve been reading a book on investing by Gary Keller – “The Millionaire Real Estate Investor.” Despite the title, it’s a pretty good read. He talks about four types of people.

1) Observers – Those that dream about investing and would love to do it, but never take
action

2) Collectors – Those that aren’t really into investing, but just like to own stuff – they buy just for sport

3) Spectulators – Those that take high risks for fast gain – kind of like a gambler.

4) Investors – Those that minimize risk and expect financial gain by following a proces of
knowing value, finding opportunity, and making deals.

Which camp do you find yourself in?

Recently I heard another Realtor say, “Do you know what I call home warranties? … a ‘do-not-call-seller policy’ – they are a wast of money.”

I could not agree more. The home warranty gives peace of mind, but like the home inspector, it doesn’t cover much [See previous Blog on home inspectors]. If the seller is willing to pay for it, great, but I would not make this a deal breaker (or spend one cent on a home warranty).

In my first home I broke a glass in the sink, which in turn jammed the garbage disposal. “Ah ha,” I said to myself, “surely this is a job for the mighty home warranty.” The company sent out a plumber the next day. Here’s the catch – for a repair person to show up, there is a deductable or fee that you the warranty holder pays. No big deal, right!? I certainly wasn’t going to stick my paw down the sink into a mixture of glass, razor sharp garbage disposal blades, and gook [again 🙂 ].

So the plumber shows up the takes one look and says, “I can’t touch that thing [jammed garbage disposal]!”

“Why not?”

“It’s too old. I’m liable to punch a hole through the bottom, if it’s rusted out. And I can’t do that, because then I’d be liable to buy you a new one.”

I reasoned, “Look, the thing doesn’t work now, and I’m liable to do the same thing. What’s the difference if you do it or I do it?”

“Nope I can’t touch that thing,” he insisted.

“Okay, if you break it I will take on the responsibility.”

“Sorry…. By the way, that’ll be $40.”

In shock I said, “You mean to tell me that I have to pay you $40 for you to come out and tell me that you can’t work on ‘that thing’! Not to mention, I could buy a new garbage disposal for about $40 more!”

“Well, uhhh… that just the policy.”

This is so typical. Finally I had him at least show me how to use a crow bar to dislodge the glass. It worked! And I had to pay $40 for nothing. And I vowed to never buy a home warranty again!

The other home warranties I’ve had have gone unused. I’m only reminded one year after the purchase, as they warranties company then solicites a renewal – yeah right.

Save your $350 and home visit deductables and put it toward the repair person who may or may not have to come out when your appliance breaks. Or better yet, put that money toward a the new appliance that you really wanted to begin with (e.g., front loading clothes washer, Bosche dishwasher, Jenn Air Gourmet cook top, flat screen TV [hey this this an appliance], etc.)

Talk to me about your good experiences with home warranties – I love to hear ’em.

About seven years ago I bought my first home and had my first home inspection. Even then I knew something was wrong with the picture. Granted, I have an advantage coming from a family of building contractors and carpenters… let me share my opinion on the matter.

While the binder the home inspector gives you (sometimes prepared right on the spot) is colorful and makes you feel like they actually did something, I’m continually alarmed by the content. Yes, major home issues are most of the time revealed, however, what makes me sick to my stomach are the endless qualifications – e.g., “Could not determine without further investigation,” or “Was not able to view – box in the way,” and especially, “Advise consulting a chimney specialist / air conditioner specialist / structural engineer / sewer inspector / roof certifier / etc.” By the end of the report I ask, “What did you inspect and what exactly do you stand by?”

We are currently in the middle of buying a brick tudor. I called a reputable home inspector and shared my concerns. I told him that I needed someone to specifically investigate the brick work, as some settling has occurred over the 80 plus years of the home’s life. Also I shared that I was concerned about the typical reporting which redirects all issues to a “specialist.” Specifically I asked, “Are you going to get out there and look at the brick house, produce a report, and read it outloud to me saying, ‘I recommend you hiring a brick specialist'”? His response was, “Keith, you got to understand, I’m the ‘front man’, I’m the ‘front man.'” So I rephrased the question… “What is your background and understanding of inspecting brick homes?” He said, “Well, I’ve looked at a couple…, I mean they are not much different than any other home.”

This finished our conversation and helped me immensly in making my decision to not hire him, nor any other home inspector (for my own properties). In essense what he confirmed is that he will turn off and on the light lights, check the outlets with his $3 tester, turn the faucets on and off, charge an extra $50 to crawl under the house (literally!), poke his head in the attic, take some photos of the gutters to tell me that leaves tend to clog them in the fall, recommend that dirt should be graded away from the house, and note that there are a multitude of potential problems that old houses might have (lying under and in unobservable areas). Now as a realtor it makes your buyer feel good about their purchase and perhaps acts as a tool for negotiation, but as a buyer myself I just feel like I’m buying a $325 binder, with no guarantees.

Some will inadvertantly be thinking, “You cheap bastard! In the scope of the cost of a home, what’s a couple hundred dollars for a home inspection?” I am advocating home inspection, just not “home inspectors.” In my situation I decided to call a reputable contractor that will probably be doing some work for me. We’ll take a few hours together to go over the house and assess the major areas – Foundation, brick work, framing, electrical, plumbing, roof, etc. I may hire a plumber to send a camera down the sewer line if suspect and I would recommend an air conditioner company to inspect (if I didn’t already know that the AC wasn’t 1-2 years old). Oh, and I own a $3 electrical testor (see pic. at top of page) and a good flashlight! I’ll post the pictures later of me looking at the leaves in the gutters too 🙂 If you haven’t caught what I’m saying, put your money into the specialists, not the “front man.” You may not be a fortunate as I … when I asked my contractor how much he’d charge, he said, “Oh, dont’ worry about paying me, I know it’ll come back to me down the road.” Who do you think I’m going to hire to do my future remodel?! If you haven’t already begun, as a realtor you continually want to be building your sphere of business associates – ones you can recommend to others, and potentially use yourself.

Happy home inspecting.