Kenmore, WA

I received an email from a good friend who just got back from a vacation in Italy. Quote: "We reluctantly returned today........."He and his wife visited Lucca which happens to be the main town in the province where my relatives live (on my father's side). My wife and I visited there this August so hearing about Italy made my heart race. If you're familiar with the weather here in the Seattle area, you know that the sky is usually gray from October through June (there is an occasional sun-break or two) so the thought of being back in Italy makes me crazy......so much so, that I went back through some pictures of Italy. I hope you enjoy this short, little vacation:

This is a 300-year-old mill (situated over a river) that is currently a guest house five minutes away from the home of my cousins.

A shot of the valley below my cousins house (rustico).

All of the pictures above were taken around Lucca. Ah, I feel better already. Oh, this little vacation wouldn't be complete without a "real estate" angle. Below, I've included a YouTube clip highlighting Tuscany. Watch it and weep.

One of the most interesting programs on Radio today is Weekend America (American Public Media & National Public Radio). The program’s topic today is about the “meaning of home” and it’s and incredibly interesting and timely program. Coincidentally, yesterday I wrote a brief post about how the current financial challenges in America may change our perspectives about the true value of our homes. Are they merely an “investment” or are they more than that? Seems like a simple question but, as you’ll find, the concept of home is amazingly complex. Just click on the picture below and you will be linked to this program:

A couple of my favorite sections of the program are highlighted below. The first is “Your Stories of Home” which includes short essays by many different people around the U.S. Click on it to see more:

As a real estate agent, “The Tragedy of Stuff” strikes a particularly deep cord. In the course of doing my job, I have seen how the human tendency to accumulate things holds a deep psychological grip on our lives. Click on the picture to listen to this story.

I hope you enjoy the variety of stories told in this episode of Weekend America.

According to Steve Kerch, the award winning real estate journalist of Market Watch, the current drop in home values should remind us that house aren’t really “investments.” In his article, entitled Core Values, Mr. Kerch asks us to consider the following:

“At its core, a house is a shelter. Unless the roof caves in, there is always some economic value in that. But most people when they dream about a house or start looking for a house or actually buy one think about value in a whole different way: they think about the fireplace they can gather around with their families, the kitchen where they can show off their culinary skills, the bathroom that they won’t have to share, the schools they will be able to send their kids to, the neighbors they will be able to entertain in the backyard, the parks they can bike and hike and the community events they will be able to attend.”

The current financial turmoil has forced lots of Americans to do some important soul-searching about their lifestyles and spending habits. Many now know that they can’t use their house as a piggy bank. They can’t continue to carry balances on 10 credit cards. They also know that we are all living a little closer to….well…..home.

Recently, one of my neighbors approached me, worried a bit about the softening housing prices. “I’m afraid I’m losing value in my house.” I asked him if he was moving anytime soon and he said no. I asked him if he liked living in our neighborhood. He said absolutely, yes. I then asked him if he liked his home. He said: “I love my house.” I then told him what I’ve always told my clients: unless you’re planning on moving, houses are where you raise your children, where you cultivate joy and togetherness and celebrate life. In general they do increase in value over a long period of time, but they have a much deeper value, a value I hope Americans can rediscover.

Two years ago, my wife and I were visiting my family in Italy during Thanksgiving. We had never been out of the U.S. during Thanksgiving, so we didn’t know what to expect. It is known as giorno del ringraziamento (day of thanks) in Italy. Not surprisingly, most Italians know little about our celebration except that turkey is involved. My family did try to accommodate us and my cousin, Caterina made rotello di tacchino, which is a filet of turkey rolled up around cheese and prosciutto pan fried and served in a light sauce. It was heavenly. BUT it wasn’t Thanksgiving……

The interesting thing is, Americans carry Thanksgiving in our collective DNA. It’s an idea that many cultures find odd. For many people around the world, every day is a constant struggle, so taking time off to be “thankful” is a luxury they can’t afford. This simple fact didn’t occur to me until we came back home.

It wasn’t long after we returned from that trip, that the U.S economy began to show signs of weakness. The real estate market was deteriorating and business got tough. As a real estate agent I have had to change brokerages and offices several times since returning. I have watched many agents leave the business and some have even had to file for bankruptcy due to the current economic situation. Here in Kenmore, WA, home sales are at a virtual standstill. Every day, more grim news comes out regarding bank failures, huge government bailouts and turmoil in the Middle East. We are, indeed, living in interesting times.

And you know what? This is why Thanksgiving matters. It matters because it’s simple. It matters because it doesn’t require advertising, corporate marketing or a religious affiliation. It matters because it’s uniquely American. It represents our deepest sense of generosity, unity and hope. And, yes, it’s the turkey, stuffing, ham, sweet potatoes, pumpkin pie and those delicious leftovers……Have a wonderful Thanksgiving.

Even though this is a reprise of my post regarding the market in Puget Sound, I thought some readers might have some other insights based on their local markets.

The Real Estate section of yesterday's Seattle Times tackles one of the most fundamental and important topics in the real estate industry today: what value does a real estate agent bring to the purchase or selling of a home. The article entitled "Slow housing market means more hours, more expenses for agents," focuses-in on the increased effort and cost agents incur in today's tough marketplace in order to be successful.

What I find most revealing about this particular article is the following confession:

"The days of just taking the listing and putting it into the [Multiple Listing Service] and letting the MLS sell the property are gone," said Brigitte Pascutoi, managing broker at John L. Scott Real Estate's Bellevue North office. (quote from the article)

This may be over-stating the simplicity of a real estate transaction; however, it should be no surprise to the public or, more importantly, the real estate agents themselves that times have changed. In 2004-2007 our local market was overheated to the point of third-degree sun burn. Almost 70% of listed homes were selling each month and prices were increasing at double-digit levels. Lending was, let's say, more liberal (this is a whole other subject) and it was truly the case that merely putting one's home in the multiple service was enough to bring a buyer through the front door and sell the house.

Fast forward to today:

• Only 9%-11% of homes are selling each month
• There are almost 50,000 homes for sale in the multiple service
• Buyers, even willing buyers, are having difficulty obtaining a loan
• Credit markets have been frozen
• Home prices are contracting
• There is a vacuum of confidence in the marketplace
• Technology has revolutionized the relationship between consumers and the marketplace
• Owners must now pay with real money (not fake equity) to sell their home

These trends, among many others, have forced the Real Estate Industry to make huge changes in its business model. It has also revealed many of the weaknesses of agents, brokerages and business practices. I won't go into the subject of commissions in this post, but I will say this: I'm not sure that agents are, indeed, working harder nor am I convinced that "working harder" is what they should be doing. Let me explain:

• We would not have almost 50,000 homes for sale in this marketplace if agents were advising clients to take their homes off the market UNLESS THEY MUST SELL! This isn't hard work, it's professional representation (something that became less valuable when the market was humming along).
• The article points out that some agents are helping owners by doing yard work, putting in crown molding, etc.. I would submit to you that this is hard work, BUT, real estate agents are rarely qualified to do this work. More importantly, they should not be expected to. An agent may recommend a landscaper or contractor to do these chores, but an agent runs the risk of taking on a mantle of expertise that he/she may be held liable for.
• Many agents have been offering FREE staging services or any number of other benefits to sellers to better market the property. Here's something all you sellers need to know. NOTHING IS FREE IN THE REAL ESTATE BUSINESS. The article rightly points out that proper staging and preparation of a home can run into thousands of dollars. In the old paradigm, when the marketplace allowed sellers an easy sale, non of this was as important. Sellers would gladly (or maybe not-so-gladly) pay a high commission to an agent with an expectation that marketing was happening. We all know this was not the case and this lack of integrity on the part of the industry led to a consumer backlash that continues to this day.
• Finally, sellers need to start putting skin into the game. Indeed, there's a lot of blame we can heap on agents, NAR, and a lot of other players in this industry, but ultimately sellers must realize that agents should not be expected to take on all the costs of selling YOUR home. Put another way: Don't expect agents to take your listing at a reduced commission and then demand the agent to overprice your house, pay for staging, marketing, open houses, professional photography, landscaping, your title report.........and carry these costs for the average three to 8 months it's taking to sell a home in this market. On the flip side, if you are willing to pay an appropriate commission, demand that the agent use professional services and hold the agent accountable for these activities.

I know I've gone on a bit here; however, I believe we all need to be more up-front about the current state of the real estate market. There are no magic bullets. There is no amount of hard work that will make this process easier. As the article correctly points out, this is a business based on trust and relationships. I have been in this business going on eight years now and I can tell you, after helping a huge number of families buy and sell homes, real estate can be complicated, emotional and difficult. When the time comes, choose your agent wisely.

Picture by mrsdalloway