Two Curious Lakefront Sales

Two Curious Lakefront Sales

There’s a new commercial on television that features a couple about to board a flight. Just before they step on, a guy carrying flowers rushes up towards them. He’s happy to have caught up with the flight-bound couple. We are meant to believe that he’s wishing to tell the woman that he loves her, that she can’t go off with that guy she’s with, that she has to choose him, instead. But this isn’t what happens. The flower carrier tells the couple that, “you got the house”. Everyone is thrilled! They do a huge group hug, and the commercial is over. This is real estate, brought to you by the National Association of Realtors (NAR). Why the sharp increase in commercials from this trade group? Well because Zillow is trying to destroy them, that’s why.

The commercial is supposed to show you that Realtors, like me, care. We rush to airports and bring flowers, because we care. We do everything we do because we care. This is the message brought to you by one of, if not the, largest trade organizations in these United States. The problem with the message is that it’s entirely and thoroughly wrong. The message tells the consumer that this dorky flower toting Realtor “got” the house for the buyer. This Realtor, without whom nothing in this transaction would have been possible, saved the day. This is why they all hugged. Because the Realtor made it happen. He got them the house. The message is that the getting is the hard part, and it’s the part you hug over. As a point of fact, the getting is the easy part. Anyone can write a contract, and anyone can buy flowers at the airport convenience store. Anyone can get someone a house. The NAR, with tens or hundreds of millions of dollars in income annually, wants the public to believe that the Realtor in the television spot was integral and necessary, because he got the buyer the house.

This, unfortunately, is and has been the message from Realtors to the world. And this message is precisely why Realtors are generally unappreciated and disrespected. If I’m on vacation far away and I meet someone at the pool who requires some conversation of me, I am generally asked what it is that I do for a living. I reply that I’m in real estate, which sounds horrible coming out of my mouth, even though I’ve been in this real estate business for 19 years and have enjoyed at least some level of varying success. When I tell them what I do, I immediately envision their mind snapping to a picture of me driving a Chrysler Sebring convertible that has my name emblazoned on the side. I envision them envisioning me with a name tag on my sport coat, sitting at open houses near the cookie tray. I envision them thinking of me rushing through the airport to tell my customer that they got the house.

The commercial could have been fixed if the agent rushing through the airport were to say this: “I wanted to tell you, we didn’t get the house. Don’t be upset though, because the buyer who did get the house overpaid by 20%, which means they’re suckers and their agent should be ashamed of himself”. If that were the commercial, I would gladly be the actor/agent. If that were the commercial, it would be the first time the real estate industry as a whole actually introduced the world to their importance. The getting of a house isn’t hard, and it doesn’t require an ounce of skill. It requires some general knowledge of a QWERTY keyboard and the ability to remember, or at least write down, one’s username and password. The getting can be done by anyone and doesn’t require a Realtor. It’s the getting at the right price that takes skill, and the failure to promote the actual skill is why Realtors will all end up working in cubicles for Zillow as they process real estate transactions electronically via algorithms.

Along those lines of getting the house, there were two sales this week on the lake. One sale was in Fontana, for a bit under $2.1MM, featuring a shared pier and lakefront easement over the smallish frontage. Nothing further to add. The other sale was on Bonnie Brae, that of the home that sold in 2011 for $2.625MM. The market has appreciated since 2011, as we’ve discussed, but to what extent? Probably 10%. Maybe 15% for some properties, and maybe less than 10% for others. The appreciation that Bonnie Brae just enjoyed? 45%.

I broke the paragraph for emphasis. The buyer certainly “got the house”, but at what cost? Was there anything in the market today that would lead us to believe that we’re up 45%? Was that home, when purchased in 2011, some sort of outstanding value? Well, let’s see what I thought about it in April of 2011 when it sold:

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The pricing strategies aside, the sale doesn’t provide much of a sign for our market moving forward. Some sales are harbingers of things to come, this sale was simply a sale of a nice house on a nice lot at a pretty attractive price.

Sounds like I thought it was okay, but certainly not a steal. I’m not going to bore you with statistics that explain why this sale is an outlier of epic proportions, I’m just going to assume you already understand that. The new price reflects a premium that one buyer thought reasonable, and I suppose it all comes back to the airport Realtor. If all that matters is getting a house, consider the job well done.

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