Santa Barbara Market--Best time to buy?

Here is a quick market update:

Santa Barbara real estate is not like the other markets in California. We aren't seeing prices softening any more, but holding stable at a nice low bottom end. We are seeing quite a few multiple offer scenarios, both REO and non REO, more so than any other part of California that I know. All signs put to the next 6-12 month window as the best time to buy. If prices to continue to soften, it won't be more that 5-7% scenario best (or worst depending on how you look at it) case scenario. If interest rates go up, that will more than offset any potential advantage of waiting.

Pursuing Foreclosure Properties

Foreclosure properties, which is a non-technical term used by today's home buyers, are a very hot topic. As such, I wanted to address the two classifications and technical terms for foreclosure homes, and what each process entails if you were to pursue them as a home buyer.

There are two classifications of "foreclosure homes". The first is labeled "short sales". These are homes that are currently going through the foreclosure process, but have not become banked-owned yet. In this process, the homeowner has to classify for being in financial duress and can no longer make their mortgage payments. They approach their bank and a real estate agent and all three parties work to sell the home before it goes through foreclosure process and bank to the bank. These homes are sold for less that what is owed on the property, so not only is the homeowner losing all their equity, but the bank is also taking a major loss. Sometimes the bank is willing to do this though if they consider it the "lesser of two evils". Often times, if they take a property back in foreclosure, they have repair/maintenance costs, legal fees, marketing costs, etc. They also are severely limited in the amount of money they can lend out based on the dollar amount of real estate they are holding in their portfolio.

Short sales can be extremely frustrating for buyers, so I also caution my clients against moving forward on one of these properties. While the seller may approve the offer right away, the bank or banks may not give final approval until 8-10 weeks, or more! I had one recent client who waited 100 days for the Bank's final approval until they told us "no". It was an extremely frustrating process for all parties involved.

As to the owner foreclosure situation, these are classified as REO's or Real estate owned properties (Bank-owned properties). These are properties that have gone all the way through the foreclosure process and are currently owned by the bank and all their books. The banks are very motivated to sell them and as a homebuyer, the process of buying one of these homes is very similar to working with a typical seller. REO's are some of the best deals on the market in the under $1 million sector and if you contact me, I can put you on a list to receive all of the weekly REO's.

There are some caveats to working with a bank when buying an REO. One of these is that they will counter your offer with a standard, typically 8-page, counteroffer/addendum that basically states that they know nothing about the property and that they don't have to fill out the same disclosures as a typical seller. In addition, banks can be less flexible as far as creative offers and prefer "As-is" offers where items like repairs, pest work, etc. are already incorporated into a lower offered price by the buyers. They can also be less flexible during escrow if issues arise, you need to extend escrow, etc. All-in-all I highly recommend not pursuing short sales, but definitely pursuing bank-owned properties as well as properties listed by conventional motivated sellers.

"Golden Nuggets for Success" Tips for Real Estate agents-- PART 3

7) Build a network of support, encouragement and accountability.

• Real estate, especially during your first few years, can be an extremely difficult endeavor. Locate friends, family members, and other real estate agents that can be your “cheerleaders”, celebrating your successes with you, and helping you to hold the course and stay diligent during the dry spells.
• Accountability is important. Consider finding another agent to be accountable with. This could include meeting prospecting goals, following through with your business plan, staying consistent with your code of ethics, and NOT giving up!
• If you are not finding this encouragement and/or accountability in your current office, consider joining Prudential. (That’s a joke, we have many great companies in Santa Barbara). But truly, if you are not getting that encouragement and team environment at the office, the answer may not be to switch offices. Instead, take the initiative to go to networking meetings, meet other agents while caravanning, and surround yourself with the type and caliber of agents that you want to emulate. They will rub off on you. Be honest with them. Ask how you can add value to them, and offer some ways (if they express interest) of how they could help you.

8) Ask people how you can add value to them

• Part of my business and life philosophy is to go out of my way to add value to every person in my life. I have asked most of the people I know this direct question, and after initial surprise, many of them will communicate ways I can help them. This may be keeping them updated on the market, sending them properties, or other services tied to real estate. Or, it may be lending a hand to move furniture, or supporting the cause they believe in, or celebrating their children’s successes with them.
• If you are asking for them to help you with your business, ask how you can help them with theirs. Do they need/want referrals? If so, who are their best or target customers?
• One of the ways I stay connected and add value to my SOI and clients is to pray for them. Depending on your religious beliefs, this may be a different way to stay connected with people on a more personal level, spending time wishing and praying for the best for them and their real estate transactions.

9) Maintain a Balanced Life

• Due to the nature of the real estate business, it is very easy to be overwhelmed and let the “business” become all-consuming. You’ll be a more successful and happy real estate professional if you structure your life so it is well-balanced.
• Areas of your life to keep in balance: Friends, family and relationships, attending social events (good for business too!), vacations or at least short weekend trips to rejuvenate (consider combining this with a day of business planning), cultivating your Faith or spiritual life, exercising regularly (this can be combined with interacting with your SOI by going on walks, runs, or bike rides together, playing volleyball, etc), eating healthy, and GIVING BACK.

10) Be sure to GIVE BACK

• o We are extremely blessed to live in America, and to live in beautiful Santa Barbara. If your household makes $50,000 a year, you are within the top 1% of the WORLD’s wealthiest people. 2/3 of the world’s population lives on less than $2/day. No matter how you slice it, our perspective should be one of immense gratitude, and giving back. Consider ways you can give back to your association, to your community, and even to those less fortunate outside of our immediate local lens. There are hundreds of great international aid and development organizations that are making a tremendous impact around the world. How exciting is it that we can partner with these organizations, as our small donations go so much farther in a developing country!
• My wife and I try to take a 2-4 week trip every year or two to a developing country. Part of each trip is a chance to get away and vacation, while the other part is an opportunity for us to give back, partner with existing non-profit organizations, volunteer at orphanages, and pursue our goals of economic development. This may not fit your lifestyle or your passions, but be creative, and make a plan to consistently give back during the course of your life. This one activity and lifestyle change will pay significant dividends, above and beyond the balance in your bank account.

I hope these “Golden Nuggets for Success” were helpful. I look forward to getting to know all of you, and please feel free to call/email any time, as I want to see you succeed not only in this business, but also in life.

"Golden Nuggets for Success" Tips for Real Estate Agents PART 2

4) Know your local Real Estate market

• It’s important to know what is going on the in the national market, but especially the specific economic forces, history, and pricing trends of your LOCAL market. Buyers and Sellers both will look to you for guidance as to when to buy or sell, and your guidance needs to be backed up by this data.
• This includes touring on broker caravans, doing research online, tracking MLS statistics (Gary Woods is a great source), tracking CORT data (equity title), reading or attending the Santa Barbara real estate review and economic forecast every year (and reading the 6 month updates), etc. Make this information available to your clients and they will have greater respect for you and work with you for more reasons that just liking your personality. This is a great way to create customer loyalty, something hard to come by in our industry

5) Integrate key technologies into your business, without wasting time with those you won’t use or that don’t add significant value

• I’m a firm believer that appropriate technologies, when learned and used well can increase our effectiveness as agents. So many of our consumers today require us to be competent on basic technology like the web, email, fax, the MLS, cell phones, etc. If you are not comfortable with any of these basic technologies, this should be a priority for you as the business will only shift more and more towards relying on these core technologies.
• Every agent should have a website, even if it is a basic one with access to the MLS, a brief bio, and your business philosophy. Do you want your clients going to another agent’s website to search for homes?
• Take advantage of the Association’s classes and resources to learn core technologies.
• If you are not “tech-savvy”, do not get bogged down trying to learn each new cutting edge technology. It will be more of a frustrating and at time drain trying to learn and incorporate them into your business. That said, you cannot afford to be incompetent when it comes to the above core technologies.

6) Set yourself apart with, and stick to, a rigid code of ethics

• A recent survey showed that real estate agents were viewed by the public as having the worst reputation (ethically) of any profession! This is the negative stigma that you most go out of your way to counteract. Find ways to craft and express your code of ethics and moral character to your clients and SOI.
• Be prepared for the potential temptation to be unethical due to the high dollar amount of these transactions. Will you compromise on your ethics if it means earning that much needed commission? What about when the pressure is on and you don’t have money for the next month’s rent? Define your ethics, stick to them, and find people who will keep you accountable.
• Santa Barbara is a small town. One ethical mistake could affect your lifelong reputation as an agent.

"Golden Nuggets for Success" Tips For Real Estate agents-- PART 1

I was recently selected to be on a panel of four successful local agents to give a presentation at the local Santa Barbara Association of Realtors. The goal of the day was to pass along tips for success in the business to local real estate professionals that have been in the business less than 2 years. We had a great turn-out, with many veterinary agents looking to pick up an extra tip or two to succeed in our changing market.

Here is Part 1 of some "Golden Nuggets For Success" that I wrote up and handed out to the agents that attended:

1) Define Your value proposition

• What do you offer that makes you unique to other agents?
• Why should a buyer use you?
• Why should a seller use you?
• Define these items and learn how to communicate them in response to direct questions, and share them unobtrusively during casual conversation.

2) Craft an image of both Success and a Unique Brand

• Consider how you dress—is it professional and consistent with your target market?
• How you communicate: word choice, mirror and match your clients, what forms of communication you use (email, phone, fax, face-to-face)
• What car you drive: (I lost a $3 million listing due to this mistake…)
• Business cards, letterhead, website, property signs, flyers, all should have a consistent, successful, and unique branding

3) Define your target niche markets?

• What market segment(s) will you be most successful in? Take into consideration your age, background, experience, location, current SOI (Sphere of Influence), etc.
• Once you identify these markets create an action plan for targeting each one. Be intentional so you control your business, rather than just servicing the business that “happens to come your way”.