We have about 3,300 real estate agents in Ada County.

Those agents closed a total of 5,350 residential transactions in the past twelve months, which works out to an average of 1.6 closed transactions per agent per year.

But, those numbers don’t even begin to tell the story.

If you take our median sales price of roughly $200,000 X 3% each (assuming a 6% total commission shared by two agents), that works out to about $8,400 gross commission per agent.

But the buck doesn’t stop there.

Most agents split their commissions with their broker and a typical commission split is around 50/50 to 60/40 for all but the most experienced agents.

If their broker is generous enough to let them keep 60% of their earned commissions, that works out to $5,040 in net earnings for the agent over the past twelve months.

From that, the agents get to pay their own expenses including auto, telephone, advertising, insurance, etc.

By the time they’re done, they didn’t even break even let alone come close to a poverty level income.

There are only 1,728 agents in Ada County who have closed one or more transactions in the past twelve months, leaving about 1,600 agents who haven’t closed even one transaction in the past year.

Then there’s the fact that about 10% of the agents (the really competent, established ones) are doing about 90% of the business that’s being done.

Winter is just around the corner and we all just received our annual dues statements.

This is the time of year when many of those agents are asking themselves if it’s worth it to remain in real estate.

I have been through many markets worse than this during my 36 years in real estate, including times when interest rates were 21%.

I will still be around when the dust settles.

I actually do better in difficult markets like this one because my clients want/need someone who knows what do do when the going gets tough.

Data pertains to Ada County single-family homes on lot/acreage for the period of 12/1/07 to 12/1/08.

I achieved a milestone in Boise real estate on October 31^st that I would rather forget about.

I failed.

My failure was my first expired listing since in the past eight years in the Boise real estate market.

I have always prided myself on selling every listing I take and I will not take a listing unless I’m sure I can sell it.

Contrary to popular real estate practices, I have never felt that a listing was a prize to be won.

(amazingly, some real estate companies conduct listing contests to see how many listings they can accumulate in a month, regardless of salability).

I have always felt that listings are a huge responsibility for the listing agent; not a casual undertaking.

With this particular listing, I had willing, motivated, cooperative, referred sellers with little equity who couldn’t reduce their price in a declining market.

And, the market for that property declined by about $10,000 during the time I had it listed.

The good news is that this was my one and only expired listing out of the 103 listings I have taken in the past eight years.

That works out to more than 99% of my listings selling over the past eight years - a record I will proudly claim.

So, no need to worry; I am not suicidal over this failure.

It simply proves that I am human.

It also proves that both sellers and listing agents must do everything right to achieve a sale in this market.

I closed my worst escrow in 36+ years of real estate this past Wednesday.

And (surprise!) it was a short sale!

Here are the details:

• Property was worth $210,000 to $215,000 at the peak of the market in 2005-2006.
• $106,000 1^st loan with Countrywide.
• $90,000 HELOC with Washington Mutual (WAMU) after seller stripped equity to buy another home.

(the above loan amounts mean that Countrywide would benefit by foreclosing and thereby wiping out WAMU’s 2^nd position, and that WAMU has no negotiation power whatsoever unless they want to pay off Countrywide and try to sell the property themselves).

• Seller turned subject property into rental with $600/month negative cashflow.
• Seller had to evict tenant who abandoned property in poor condition, costing seller $2,000 in lost rent and repairs.
• Listed the property @ $184,500 in June when the seller stopped making payments.
• Reduced the price to $165,000 in July after no activity at $184,500.
• Sold the property @ $165,000 and submitted sale to WAMU for approval.
• Seller unable to contact anyone at WAMU except for “Kumar” in India who didn’t speak English
• Buyer withdrew offer because WAMU didn’t respond to offer after more than 30 days.
• Sold property 2^nd time to investor for $165,000.
• Nervous investor withdrew offer when three major wall street investment firms collapsed.
• Reduced price to $149,900 in August.
• Sold property for 3^rd time to first-time buyers and agreed to pay $4,500 of buyer’s closing costs.
• Resubmitted offer to WAMU.
• WAMU finally approves the deal, but misses the fact that they are to pay $4,500 of the buyer’s closing cost, which results in requiring another two weeks to “rework the file” (WAMU’s national short sale manager e-mailed me, saying “we don’t have time to read all the contracts we get” when I pointed out that the $4,500 of buyer’s closing costs were spelled out in the contract).
• WAMU unilaterally reduces the commission from 6% to 5%, a clear violation of Idaho law covering interference in an existing business relationship; not to mention that my listing agreement is between me and my seller, not WAMU, but I have no choice but to agree to their “commissionectomy”.
• Home inspection is completed with only minor repairs noted.
• Property appraises for $157,000.
• Buyers run clock, stalling to close, because they need to “give 30 days’ notice” to their landlord despite my warnings to the buyer’s agent that Countrywide could file foreclosure and kill the deal.
• Buyers are working with a mortgage broker who changes companies in the middle of the deal and buyers fail to lock their loan, thereby risking rising rates in a tumultuous financial market.
• Countrywide files foreclosure on 11/22 ~ four days before closing and five months after the seller stopped making payments.
• Countrywide orders locks changed and property winterized on 11/25; I tell winterization contractor they will be prosecuted for illegal entry and trespassing if they set foot on the property.
• Seller contacts Countrywide about not winterizing the house, no one at Countrywide can tell her what’s going on or who to talk to, and that they don’t know if they have begun foreclosure proceedings.
• Miraculously the contractor calls and says the winterization order has been cancelled.
• After days of calling Countrywide to get a final payoff amount, my escrow officer gets it at 11:00 a.m. on 11/26 and learns Countrywide has added on $3,300 in legal fees to file the one-page Notice of Default that officially starts foreclosure proceedings (gee, I wonder if Countrywide owns the company handling the legal paperwork and makes a profit from foreclosing on their own loans?).
• Seller brings a cashier’s check to escrow to cover the additional legal fees so she can avoid a foreclosure on her credit report.
• Escrow closes, no contact from the buyer’s agent, and this five-month long saga is over.

Some title companies are now charging extra to handle short sale escrows.

The word on the street is that only 1 in 4 short sales closes escrow, and the typical short sale often takes months to close.

Now you know why very few real estate agents will go near a short sale and why they languish on the market.

8 of the 18 sales were in Eagle, with the rest distributed amongst other MLS areas.

The lowest price was $520,000 and the highest price was $1,275,000.

Marketing times ranged from 14 to 221 days.

These 18 sales comprise a 5.6% market share of the 322 closed single-family homes on lot/acreage during the 10/1/08 to 10/25/08 time period.

Greed is an amazing thing.

Just three short years ago, the Boise real estate market was overrun with flippers and speculators flooding into our market hoping to get rich quick.

There was even one day when two busloads of “investors” (I use the term loosely) from Sacramento drove into one Meridian subdivision and tried to buy every existing home!

I first noticed the beginning of the feeding frenzy when I started getting offers above list price and multiple offers on my listings from people who hadn’t even seen my listings.

I also encountered buyer agents with Powers of Attorney from their absentee buyers, with instructions to “just get it bought and don’t worry about the price”.

Many of those buyers financed their purchases with “liar loans” (no documentation/stated income) loans or Option ARM loans (where you can skip payments, pay interest only, etc.)

This financing often resulted in substantial negative cashflow, not to mention no reserves for vacancies and repairs.

Well, guess what, folks?

Many of those absentee investors held on too long, failed to flip those properties for a profit, and have since become absentee landlords who haven’t a clue what’s going on with their properties.

I routinely see listings of these homes with burned up lawns, occupied by tenants with multiple Pit Bulls, with several cars parked in front of what’s supposed to be a single-family residence.

When the hapless sellers decide it’s finally time to take their beating and sell in our now-declined market, the properties are in poor condition and showings are obstructed by tenants who will do everything they can to keep the property from selling so they don’t have to move.

Worse yet, many of those properties were purchased with little or nothing down and now are “upside down” (see my previous post) with negative equity.

Flipping and speculating is not investing.

Investing requires a prudent analysis of present market conditions, future potential, cashflow considerations, and a long-term view.

Investing in real estate is not a get-rich-quick scheme.

If you’re trying to sell your home in a subdivision where your builder is still building homes, you may face some unexpected challenges.

Here’s why:

The home you bought had the builder’s profit built into it and you will be competing with your builder who may be willing to negotiate away part or all of his profit to sell his standing spec home inventory.

It’s also possible that your builder may have acquired additional lots at a lower cost after building your home, thereby making it possible for him to build the same home at a lower cost.

Things can get even more interesting if you are competing with a builder who also developed the subdivision because the builder/developer has TWO profit margins (land and home) that he can discount to achieve a sale.

Further, many larger builder/developers have the cost advantage of having salaried salespeople who get paid as little as $500 (or less) per sale vs. the higher commissions you will incur in the resale market.

Finally, some builder/developers have formed partnerships with lenders, which gives them yet another profit center and allows them to offer better financing for their buyers.

The bottom line?

It’s difficult to compete with a builder who’s still selling homes in your subdivision.

1. Sellers Aren’t Motivated
2. Unresponsive listing agent
3. Poor Marketing
4. Overpriced
5. Poor Location
6. Poor Condition
7. Difficult To Show
8. Pets
9. Reduced commission
10. Tighter lending requirements

My sellers often wonder what buyers and their agents think of their home when it is shown.

I have always tried to call buyer’s agents who showed my listings to get feedback from them, but most of them don’t return such phone calls, believing them to be a waste of time.

I’ve actually had more than one tell me “if my buyers liked it, you would have an offer by now!”.

I recently found an innovative solution to this age-old challenge.

It’s HomeFeedback.com, a cool web-based program that scans our Supra lockbox website twice a day to capture showing information, then automatically sends an e-mail to the buyer’s agent, politely requesting showing feedback.

I have configured it to send three e-mails to the buyer’s agent, spaced two days apart - so I can politely bug them until they respond.

The best feature of Home Feedback is that the buyer agent’s feedback is sent directly to my seller and also copied to me so I can follow up if appropriate.

And, since the buyer’s agent doesn’t know that their feedback will be going to my sellers, the buyer’s agent is often candid about the price, condition, and features of the home, thereby giving honest feedback directly to my sellers.

And, my sellers also know that I am actively trying to follow up and are aware when buyer’s agents fail to respond to my automated requests for feedback.

It’s yet another way I provide exceptional service to my sellers.

New home sales activity in the Boise real estate market remains stagnant, as shown in the following breakdown of October new homes sales in Ada County:

• $150,000 to $199,999:   38 sales
• $200,000 to $249,999:  18 sales
• $250,000 to $299,999:  10 sales
• $300,000 to $399,999:  15 sales
• $400,000 to $499,999:   8 sales
• $500,000+:  8 sales

It’s interesting to compare the above sales activity to a total listing inventory of 4,527 single-family homes in Ada County at this time.

Data obtained from Intermountain MLS on 11/21/08 and pertains to single-family homes in Ada County on lot/acreage.  Data does not include condo or townhome properties.

I recently closed two transactions of sales of my listings that were sold by part-time agents.

One of those agents also had a part-time broker who was nowhere to be found and she couldn’t even figure out how to complete the purchase agreement.

I ended up writing her contract, using my home inspector, and my escrow officer to get the transaction closed in 11 days (before the buyer’s loan program expired).

Which brings me to my point:

Real estate is not my hobby.

I’m a dedicated full-time professional with 36+ year’s experience who has closed thousands of transactions.

Real estate is my chosen profession and those of you who have worked with me know how focused I am when it comes to getting the job done for my clients.

Why would anyone entrust the purchase/sale of their most valuable asset to a part-time agent?