Blog : Agents

Lake Geneva Market Conditions

Lake Geneva Market Conditions

I had a dream last night. In the dream I was just myself, no one else. I wasn’t able to fly, or able to breath under water; nothing terrific like that. I was just a Realtor in this dream, going about my Realtor business. I was in a living room, someone else’s living room, not a room I had been in before. It wasn’t a very nice living room, but it was okay, I guess. In dreams, decor rarely matters.

The seller was someone I knew. A kid I knew a few years ago, he couldn’t be more than 22 now, as he was in the dream. He was sitting in his house, except in real life it is his parent’s house, but not in dreams. It was his house and he wanted to know how much it was worth.  He kept repeating three million dollars. He was intent. Three million dollars. Maybe three million five hundred thousand dollars. He wasn’t sure.

I was uncomfortable in the dream. I wanted to hear him out, to listen to the myriad reasons his house was worth this much money, and so I sat on the couch as he pointed to comps. The comparables were indeed nice homes, lakefront homes, big ones and fancy ones and I had sold many of them. I nodded along with his charismatic plea. Three million dollars.

When it was my turn I explained that those homes were large lakefront homes, and that his home was a small A-frame located two blocks from the lake. He sat back in his chair, feigning disgust at my lack of enthusiasm. I used the example of the Knollwood house that sold two years ago for $2.2MM, and said that the only reason that home sold for such an incredible number was because the home was so amazing. It was perfect, I said. Luxe Magazine, I said. Three million dollars, he said.

When I sensed I was making some progress with him, I asked what he had into the house. He said $300k. I said, “you mean your parents had $300k into it”. He smiled and acknowledged that yes, it was his parents’ money and their investment, not his. I told him he’d be lucky to get $400k for the house, but that he shouldn’t be so upset because that’s a lot of money for a kid his age. The dream ended without any further commentary. I’m uncertain if I got the listing, but it didn’t matter because I didn’t want it anyway.

This was a dream, but this is my life today. The market at Lake Geneva is filling with competition, I should say, with other agents whom, no matter their lack of knowledge or prior success, are intent on telling the world of their proficiency. The competition isn’t that, but it looks like it when you drive around and see names on signs that you’ve never seen before. It’s a market chock full of agents, of open houses, or letters and websites and Instagram hashtags. Experts are everywhere. Things are changing, and it’s the competition in the business of real estate that’s often bad for the consumer.

And that comes back to my dream. Sellers know the market is hot. They know it because all 500 some agents in Walworth County are telling them. Hot. Hot. Hot. And so agents are bidding up the listing prices of houses, especially lakefront houses on Geneva Lake, and sellers are feeling flattered by all the attention. The dream I had was just that, a dream, but it’s based on the reality of this season. Sellers, a note of caution. A hot market means there are market buyers for your house. Someone might even pay 5-10% more than the market value if they love it enough. But if we take the bait and price homes too high just because there’s a slight chance we’ll get away with it, we’re going to damage the market by filling it with overpriced homes that will, ultimately, drag on the market and put downward pressure on the unrealistic listing prices.

Buyers, work with an agent who knows the market because they’ve proven that they sell the market. Sellers, work with an agent who knows the market because they’ve proven that they sell the market. This isn’t really that hard.

About Your Agent

About Your Agent

The business of listing homes is a curious one. If we were going about this business of finding a broker and an agent, we’d assume we’d look at our options objectively, hoping to secure the best agent to represent our property. But this isn’t what happens, because real estate isn’t really about results, it’s about friendships and loyalties even when those friendships and loyalties hurt the chance of a sale. I can’t list with this guy because he’s the best, I have to list with this guy because he’s also my son’s baseball coach and my cousin.  Objectivity is for more serious matters, not for real estate, or so it seems.

Every homeowner who is considering a sale knows how to go about searching for the agent that will represent the subject property. It’s typically a mix of internet searching, newspaper perusing, and lastly, checking the refrigerator, assuming it’s not stainless, to see who sent the most recent football calendar. Then, once the list is compiled, it’s time to interview these assorted agents. Some are from large offices, some small offices, some work out of Starbucks, mostly. Some are successful some are sweet, some are your son’s baseball coach who is also your cousin but we know he’s a second cousin, so that’s something to take into consideration.

Once the interviews occur, some agents are smug, some smell, others show up too early or too late. But there’s one agent who showed up on time and had a nice little suit on, and he spoke politely and he drove a car that didn’t have his name tattooed on the passenger and driver side doors. His name was Frank, and he seemed to be a good agent. His firm has some signs around the area, so you know he must be competent. Frank has a nice folder and some really cool brochures with incredible pie charts, also graphs. He has a separate folder, bound with rings, titled “HOW TO SELL YOUR HOUSE”. His picture is on the bottom left of the cover. He’s the one.

He hasn’t necessarily sold a lot of homes in your neighborhood, nor has he sold all that many outside of your neighborhood. But he returns your calls very quickly and he says yes ma’am and no ma’am and that’s enough. He’s hired and the sign goes up, Frank is the man. Your man. The best man, because he wasn’t smug and he wasn’t rude and he wasn’t really upset that your price was super high. He’s a good man, Frank. Things are looking up.

As a homeowner, you’ve done your homework. You vetted his company, you met him in person. You asked him questions. You determined he wasn’t a derelict. You’ve read his blog, “101 THINGS TO DO BEFORE YOUR FIRST OPEN HOUSE”. Frank, for all of these clues, seems to be a fine choice. But there’s one thing in choosing a listing agent that you haven’t yet considered. In fact, no one considers it, yet it’s the single most important factor in choosing representation. Do the other agents think your agent is going to sell your house?

Strange that this would be the question that matters most, right? Not really. It’s not something people talk about, and it’s not written on park benches. But the most important thing in choosing an agent is determining if your agent has credibility amongst the other agents in the market. Note I didn’t say that you agent had to be adored by the other agents, because that’s not it at all. Of course your agent shouldn’t be perceived as one who is difficult to work with, even there are plenty of agents like that. But this is about whether or not other agents think your agent is an effective agent.

The reason this matters is in terms of how quickly other agents will motivate their buyers to see your house. How quickly will they write an offer?  When the listing agent tells the buying agent that there are other interested parties, is your agent one who can be trusted? Not by you, remember, but by the other agents. This is the most important aspect of choosing a listing agent.  Hire the agent who the other agents worry about. Hire the one they know to be effective and clean. Does the market perceive your agent as an agent who is supremely capable of selling your home quickly? If so, hire that guy, or gal. If not,  don’t hire the guy you know because he’s your kids soccer coach. He might not even be your real cousin.

 

Trust Fall

Trust Fall

A sudden twinge of pain. A shallow breath. A pain here, another there. The symptoms of something, but of what? A quick google search reveals what you already suspected. You’re dying. Classical symptoms, classical profile, soon it’ll all be over but the weeping, and there’s a very significant doubt that more than a few will weep. Maybe your mother, but that’s about it. Your kids, sure. They’ll be sad for a while, at least one could hope. The funk sets in, the languid life lived as one who will soon depart from it. The world will go on, and you don’t find encouragement in that fact. It’ll go on, all right, the same as it did today the same as it did the day before, but you won’t be there. The absence won’t be noticed, no one will care. The car passing outside your window right now won’t know if you’re in that office or not. Soon, no one will remember you, unless your friends hold a golf outing in your memory. But that, like all things, will slowly fade and everyone will move on and they’ll be happy that your wife found a new husband, and so quickly and she’s so happy! It’ll be just fine, and the pain comes again and the breath feels shallow and so you nap a tortured nap. Death, soon.

But you don’t do this for long, because you go to the doctor who studied about your pain and your breath and he says you’ll be fine. He says you have anxiety and you’re not really dying at all. For the advice, you’ll owe him money. If you have Humana, you’ll think your insurance will pay for the visit, but they won’t. You take your family to Chili’s. Another year, another near miss. And when your car sputters and the light comes on, you google and find yourself on a message board. The members use words you don’t really know, but you’re smart and you can figure things out. The member forum contributors have names like TieRod (everyone assumes his name is Rod). Others are Sparky (and they assume his nickname is Sparky, but it might only be for this forum, no one knows for sure). The moderator doesn’t even use a name, just V-10. We assume he has one of those BMWs with that size engine. You search for others that have discussed what it is that your car has. You search for the positive, something like, yeah, my car did this and then I did that and now it’s fine.

But after some time you don’t find anything and that sputter persists and the black tape you stuck to the dash glass over the shining cartoon image of the engine has begun to peel and sag. You take the car in to a mechanic named JEFF, the cursive signature stitched into his shirt a reassuring endorsement. He’s been there long enough to have the personalized shirt. The mechanic says your car has a this and a that, something serious, but not fatal. You agree to have him fix it, for a price. When you return to the dealer two days later your car is ready, it’s been washed, the invoice is $870.54. Good, you think, because you had feared it might be over a thousand but it wasn’t. You take your family to Chili’s in your car, the one newly fixed.

You’ll need to sell your house soon. You’re looking to upgrade, to improve, because your health is okay and your car is fixed and it seems like the time is right. You’ll need to sell the house. A Realtor is summoned, the one with her name on the city bus bench. She arrives, a yellow Hummer with her name emblazoned on the side and her face, too. She looks nothing like the photos, but that’s okay because you don’t look like you did 20 years ago, either. You ask for her advice, what’s the house worth? She tells you $375k. Maybe $385k, but certainly not $395k. Your list should be $389k. Start soon, clean the clutter, fix those holes in the drywall, clean up the oil stains in your garage, the drips that dropped from your car before you had it fixed by Jeff. You thank her for her time, for the sweet brochures, and you tell her you’ll let her know.

You toss and turn that night, not because of the shortness of breath and the slight wheeze that the doctor said was nothing, but because you question the advice. Why would this agent tell you $389k? The neighbor once asked $429k for his house. He’s not better than you. The agent must have just wanted to get your house sold immediately, so she under priced it. She wants her commission, that’s really all she wants. Yeah, that’s what’s going on here. You get it. You’re not dumb. You weren’t born yesterday. In fact, when you fill out online things where your birthdate is required you have to scroll way, way down the list. This isn’t your first time. You’re not to be trifled with. Nice try, Realtor lady, but that’s not going to work with you. Those four comps she showed you on your street, and her lifetime of sales and experience, those aren’t going to just steal money from you. When you wake up tomorrow you’re going to find a Realtor with the right number, because that Realtor knows you, and your house, and they know that you once replaced the water heater just because. It wasn’t even leaking!

I get it. Realtors aren’t doctors. We aren’t even mechanics, though shamefully, some Realtors do wear name tags. Realtors aren’t really motivated by a desire to help you with your housing goals, just as a mechanic isn’t motivated to help you with your tie-rod assembly. The mechanic fixes your tie-rod because he wants to make a living. A Realtor works on Sunday mornings and Wednesday nights because she wants to make money. She puts pictures on Facebook of a kid running through some lakeside lawn with the title “WELCOME HOME”, because she wants to make money off the emotion. You’re working at your desk today and not laying in bed because today you want to make money. You didn’t buy that stock because you want the company to usher in world peace, you just bought the stock because you liked the dividend and think the stock will appreciate- because you want to make money. Realtors are greedy, you say, they just want to sell your house or sell you that house to make money, you say. Guess what? You’re right. There’s never been a successful Realtor who wasn’t motivated to make the wage that can accompany success in this business. Is that an indictment on the real estate business? That depends, does a printing press operate because they love the thought of people reading the instruction manual that comes tucked into a package of a a wireless router, or does the printing press print those manuals because they are trying to make money?

The real estate business is clouded by the thought that Realtors are representing their financial interests, rather than those interests of their clients. This, in the presence of agents who have not proven themselves honest and effective, can be the case. But this can be the case with the printer, and with Jeff, and with your doctor who prescribed you some medicine that you might not have needed, even though it might help if you actually have that thing you think you have, the thing that makes your breath shallow when you’re nervous. Want to find a Realtor who isn’t very good at their job? Find one that doesn’t find motivation in the promise of wages for success. All this is to say you can’t discount a broker’s advice just because you’re afraid he’s going to make money if you listen to him. That’s the way the business has been structured. If you’d rather pay me hourly for my time, I’m happy to discuss a fee-based arrangement. But you know what would happen then? You’d assume that open house I’m doing is just a ploy to bill you for my time.

Fontana Lakefront Sells

I’m not going to say what I want to say. I’m not going to say that a house with a modest 110′ worth of cliff frontage shouldn’t sell for five million dollars. I’m not going to talk about the work required to take a basic parcel and turn it into an estate-type parcel; the landscaping, the tennis court, maybe a pool. I’m not going to talk about fit and finish, about what constitutes high end construction and what does not. I’m not going to do any of those things, because a sale is a sale, and the market tells me what it expects and doesn’t really concern itself with what I expect.

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The house sold last week for $5.1MM (I wasn’t involved in the sale). That blue house, the one high on the hill just north of Gordy’s. It sold. It was first listed in 2014 for $6.25MM. Was the home worth $6.25MM? No. And the market proved it, allowing the house to sit and stir on the market for the majority of that year and into this one. Throughout that time, buyers presumably came and went, opting for other things, or for nothing at all, over this house on the hill. But the house had some style, and it had some polish, and it was new and of a contractor pedigree that means something here, and so the house attracted interest but failed to achieve the only measure of interest that matters: A sale.

What happens next is some intrigue, some subterfuge, and disappointment. The listing expired and was removed from the market, but the market knew the home was still for sale. And so it went, a house off the market, an aged asking price that never fell below $6.25MM. If you were simply computer screen watching, as 90% of agents do, you might have been surprised to see this property print in the MLS this week with a $5.1MM closed price. We do not computer screen watch.

The sale now closed was handled by an agent other than the agent that brought the property to market at that lofty price in 2014. The agent who closed the transaction was not the agent who toiled at the high price. This was not the agent that knew the market would react differently to the property if it were listed in the middle to upper fives, rather than the low sixes. The agent who did the fine job of selling this home last week was not the agent who introduced the property to the market, who broadcast it to the agents, who made known the quality and the importance of the home (even if I didn’t agree with the level of importance). The property sold via another agent, and the market, those uninitiated who follow from afar by watching Instagram screens and Facebook posts, will assume that some heroic event was made possible by the introduction of a new face.

When I took over the South Shore Club marketing in 2012, and promptly began selling both homes and lots with a regularity that the market there had never experienced, was it because of me? Was I so much better than the prior representation that I somehow convinced the public that this South Shore Club was worth their time and money? Was I a star who brought with my power of personality and made this development matter again? Or was I just the guy who came on the scene, with messy hair and pointy shoes, and convinced the sellers that the price structure was wrong, and that if they would oblige my suggestion they would find success? It’s the latter, which is why I didn’t take out full page ads telling you how tremendously effective I was. I was merely the person at the helm when the market heated to such a level that success was the only possible outcome.

The same likely applies to the blue house on the hill in Fontana. Was this some feat? Was this a sale that wouldn’t have happened if not for a change in agent or broker? Of course not. This was a sale, like most sales, that had everything to do with price, and had the price of that $6.25MM home been dropped to $5.3MM (the ultimate list price when the property sold) I would suggest that anyone of a 100 different agents in this town could have played the star role. And all of that goes back to this. On television, red carpets and Burning Man parties sell houses. In Lake Geneva, just hack off your price a bit and make your agent a star.

As a market aside, this sale was high. There were multiple parties interested in it, but it was still high. The premium was paid because Fontana is a desirable locale, and new construction in the $5MM range generally doesn’t exist. Buyers can convince themselves to spend $5 something much easier than they can convince themselves to spend $7+. No matter that $7+ gets you a product like 1014 South Lakeshore, a property so vastly superior to the blue house on the hill in every possible measure. Compression is the high end buyer’s friend here, and if you can swing $5 something, better reach a bit and spend $7 something, because that two bucks you left in the market is now worth $1.6 bucks, and a house is so much more fun.