Laguna Niguel Real Estate Blog

If you have been through one of my open houses in the last year, my contact at the Wall Street Journal would like your opinion. She is currently working on a piece, and would like to interview people who are attending open houses in the area. Email Me and I'll be happy to put you in touch for a possible interview and possible inclusion in a WSJ article.

Posted by Rory at 1:43 PM | Permalink | Comments | links to this post

Next I talked with Russ who is selling a home in Dana Point. I asked Russ all of the same questions. Russ had some pretty strong opinions about the way the market is now, and how things are structured. (With respect to representation in a real estate transaction).

Russ is an internet marketer by profession, and he plans to market his home himself using the internet and all of the traditional methods like classified ads.

"Are you doing open houses?" I asked.
"No". He said that he would welcome showings however, and after 3 days on the market he had not yet spoken to a qualified buyer.

Russ was using a combination of his own marketing with an MLS flat fee service, and even has his home range priced in the event that a real estate agent comes to him with a buyer.

I asked Russ how he determined the price of his home, and he mentioned that he used Zillow. He admitted that Zillow was not as accurate as an actual appraisal, but that it comes close enough. I'm sure that exactly what the Zillow folks aim for, "the close enough" house pricing methodology.

Russ said that if someone is going to sell their home on their own that they have to be "very very realistic about their price." He added that most FSBOs aren't realistic about their price.

Does the price from Zillow help or hurt FSBOs in being realistic about their price? I wondered.

It is Russ' conviction that the listing agreement contract in California is "one-sided" and just protects the real estate agents. He mentioned that it allows the real estate agents to be long on promises without having to deliver results.

I'm reminded of some other local agents who include the "cancel anytime for any reason" policy. There are even a couple who will buy the home from the seller if it doesn't sell. That would be my personal policy, if I had the capital to back it, but I think it is very strong, and instills much more confidence and encourages performance from the agent.

Russ also said, that "with the tons of paperwork involved.." in the real estate transaction, that it was, "probably good to have a professional help with the paperwork." He mentioned that For Sale By Owner's are still susceptible to lawsuits, and that the paperwork involved in a Real Estate transaction doesn't make that easier.

Russ also had an exit strategy from the FSBO concept, albeit he planned to use an alternative broker business model to sell if it takes him too long.

The market is tight and only getting tighter, in my opinion I think that the market conditions make it harder on both FSBOs as well as non-traditional business models. With the right patience level and motivation experimenting to save a buck here or there may really be o.k. if sitting on the market isn't a factor for these locals.

Posted by Rory at 1:30 PM | Permalink | Comments | links to this post

In my effort to improve my SellYourHomeAlone.net site, I decided to reach out to a few of those home owners who are going about it on their own.

I found out that FSBOs are surprisingly optimistic about selling their homes. If only more agents were this positive and up-beat.

For Sale By Owner is a paradigm that will always exist regardless of the market or the underlying circumstances. There is something about the Do It Yourself that has great appeal.

Part of the common and convincing priority say these FSBOs is saving money. I wanted to talk to some local FSBOs to get a feeling for any other things that may be driving their decisions.

Chris is Selling his Home in Aliso Viejo. One of the first questions I had for him was, "What made you decide to sell your home on your own?"

He said that he did some research and after talking with his neighbors, he decided to give it a shot. He said that he wanted to at least try it first and that if that didn't work he could always, "fall back on a Realtor". Chris also cited that he read somewhere that he felt that he could get a just as good of a price selling his own home.

I was curious about that statistic, he said that he didn't remember where that one came from, and I wondered if it may have been a result of the recent 60 minutes report about some FSBOs in Wisconsin. Speaking of Wisconsin, isn't that a huge distance both economically and geographically from here?

Chris also mentioned that he read the bestseller Freakonomics. Remember my review of that book? Chris also mentioned that he had an exit strategy from trying to sell his home by himself in the event that it doesn't work out. I applaud him for his effort. If his house sells soon great, if not, I'll be here because no one appreciates the value of a real estate agent more than someone who has experienced a taste of what it's like. That's why I like talking to FSBOs.

Posted by Rory at 4:27 PM | Permalink | Comments | links to this post

6/27, 6/28, 6/29



13 Fairlane, Laguna Niguel In Bear Brand Ridge





6/30, 7/1





1801 Calle De Los Alamos (Check out those waves!)
Approx. 4,000 Square Feet 5 Bedrooms, Ocean Views from several rooms.
Southwest San Clemente
Listed: $2,600,000 - $3,200,876

Posted by Rory at 7:11 AM | Permalink | Comments | links to this post

Well it looks as if the summer heat is in full force now. Luckly, Laguna Niguel chamber of commerce is holding a 4 of July pancake breakfast. For those of you unable to relate for geographical reasons, the thing to keep in mind is that the breakfast is staged in a park, where dirt will most likely taint the maple syrup. Now do you see the entertainment?

Posted by Rory at 5:17 PM | Permalink | Comments | links to this post

Remember Reaganomics? Introduced by Ronald Reagan,

it was a principle that stated that tax breaks for the rich would eventually trickle down (also known as trickle down economics).

The idea is central to the concept behind VC or venture capital.

Having been a software developer for a start-up powered by venture capital, I can personally testify that venture capital creates new companies and directly creates jobs. New jobs allow more employees to afford housing, which helps the economy.

Again venture capital comes from the rich, or the super-rich. Why? Because venture capital is an investment that has a return.

With venture capital there is a direct path from the investors (the rich) to the jobs that get created.


On the other side of the coin is the argument to tax the super rich with the idea that the government knows better how to use the money that those rich people are apparently "hoarding".
If the government can sell the idea to voters that they are capable of taxing the rich with the goal of making a "level playing field" they'll start coming up with penalty taxes for success. That will drive money overseas and strengthen other countries economies, and ultimately weaken the US economy.

If the choice is that rich people can invest their money and help the economy, or that the government will use it more efficiently; I will always argue that politicians tend to be inefficient.

What do you think does taxing the rich make the government into a robin-hood and help everyone else?

Posted by Rory at 5:30 PM | Permalink | Comments | links to this post

Watching CNBC today, they had the update from the National Association of Realtors, that is sales are flat (fractionally down). The Dow Jones Industrial Average responded favorably to that report. Experts interviewed had to admit that the subprime fallout isn't enough to take down the market on it's own.

Translation: more inventory helps the buyers maintain their current advantage.
Increasing inventory diminishes the potential profits for sellers.
The problem for sellers lies in the "casual" or not-serious sellers adding to the market inventory to "test the market". That is serving to bloat the inventory. This housing data is inline with the last several months of performance, and continues to be a relatively predictable trend.

Posted by Rory at 7:01 AM | Permalink | Comments | links to this post

In the Wall Street Journal, in an article titled “I'lls Deepen in Subprime-Bonds Arena", James Hagerty reminds us the the housing market is expected to be bullish once again in 2008. What does that mean though? Typically a hot market is equated as favoring the seller. What buyers don't know is that a “soft market” favors them.

So we're provided a clear roadmap with respect to the market nationwide from sources like the WSJ. It is a buyers market until into 2008.

We all know that the way to capitalize on an investment is to buy low and sell high. The if you are looking to buy a primary residence, then lighten up a bit on seeing your future home as a commodity. If you stick to being ultra conservative with respect to the bottom line numbers, the chances are good that you have bullied yourself into timing the market, or attempting to do so. It's also a good sign that you're trying to apply stock-market logic to the housing market.

It seems like I get calls on just about a daily basis of some out of town broker claiming to represent a 100-million dollar investor who wants to get something at 30%-40% below market. I tell them to go search the foreclosure sites instead. The reason? Though prices are on a downward trend, even a probate sale which was 10% below market value lasted only 1 day on the market. Good luck on trying to find something that is in the 30-40 range.

The subprime fallout has increased foreclosure rates in orange county back to a historical norm.
There is a disconnect if you're thinking that that more foreclosures mean more deals to the buyer. There is one thing about banks, they don't want to lose money. So the banks join the ranks of the sellers who are waiting on the market for the typical 90 days.

The word foreclosure does create a lot of buzz and interest from buyers who are trolling the neighborhoods, but they typically end up being disappointed that the condition of the property is not what they expected, and likewise the discount isn't what they expected.

So the market? It favors the buyers still buyers don't need to time the market unless they are investors. This is the expected dynamic through 2008. The increased rates are getting buyers into the game because their price isn't getting cheaper with the combination of rising rates and flat prices.

Posted by Rory at 8:08 AM | Permalink | Comments | links to this post

From the Zillow site: "It used to be that an agent would look at the comps and adjust for the differences between homes."

"It used to be...?" What suddenly happened? Is Zillow implying that they just came along and replaced that part of my job?

Does this mean that, like your home's value, the value of having an agent is incalculable, and incomprehensible to Zillow?

Here the folks at Zillow not only try to imply that their zestimates are a replacement for a CMA, but that Zillow is gearing to replace agents. Ok, that's a long shot, BUT, you'll remember that Zillows AVMs are the NOWHERE NEAR AS ACCURATE as a CMA for finding your home's value.

The simple formula of logic goes, how can something automated account for differences of value that aren't automatic?

For a full understanding of the Unzillowable concept.

What is incomprehensible to me is how Zillow can get close.

Posted by Rory at 8:00 AM | Permalink | Comments | links to this post

Let's take a look at where the buyers come from, shall we?

So this is interesting because, as a FSBO, how are you going to access those 36% of buyers that come from a real estate agent? If your home isn't in the MLS, then that 24% you see coming from the internet, just go ahead and whittle that down to about .000003%.

So a FSBO, has is already only working with 27% of the incoming buyers out of a possible 100%. I should say that most agents use a variety of these sources, but builder is not always included.

Posted by Rory at 2:55 PM | Permalink | Comments | links to this post

When it comes to getting out of debt and giving your credit a shoeshine, can you ever really get enough advice? I don't think so, conveniently, they tackle this topic again over at zen Habits.


You may remember the strategies that I relayed to improve your credit with my post back in april "Give yourself some credit".

The point is, there is no mystery behind having good credit, or improving bad credit. Having good credit will be more important now with interest rates and lending policies becoming more stringent.

Posted by Rory at 7:49 PM | Permalink | Comments | links to this post

"Don't spill coffee on my shoes."

Speaking with my manager, Ben Buchannan, Laguna Niguel Ivy Glenn, he feared that my jitters would send coffee spilling onto his dressy shoes as I took this picture:



To start off the meeting, Bob Chapman, manager of the Monarch Beach, Ritz Cove Prudential office explained how knowledge is a higher value than information.
"Consumers are drowning in information but are starving for knowledge," said Chapman.


I have to agree wholeheartedly with Bob. The bubble that so called experts feared never happened here. With interest rates rising, another set of buyers will be excluded from the buying within their desired price range and will simply have to settle for something less.

Posted by Rory at 12:18 PM | Permalink | Comments | links to this post

This weekend the OC Register had dramatic photos some folks in the subprime lending industry packing up their personal effects and leaving their offices. Of course this was closely followed by a discussion about how foreclosures have increased here in Orange County. By comparison, foreclosures here are typically statistically lower than when compared to statewide or even nationwide numbers.

The real question I have is, What is the OCRegister doing to educate consumers not to treat their home equity as an ATM? What is the OCRegister doing to educate us instead of just placing blame on these lenders who are out of jobs?

Posted by Rory at 9:21 AM | Permalink | Comments | links to this post

There has been so much discussion about how the New York Times released a study that looks at the success of a Madison Wisconsin For Sale By Owner Site
Keeping in mind that Madison Wisconsin is about 2000 miles away from here, there are some other caveats that the New York Times points out themselves:
"The researchers found that homes on the multiple listing service sold somewhat faster than houses on the for-sale-by-owner site. The study also did not place a value on other services provided by agents in selling a home."

They also said that Madison doesn't represent the nation as a whole.

I was first tipped off by this story by the guys over at the 1000Watt Consulting blog. My first thoughts started to get too long for the comments section, so I'm just going to copy them here since they are really deserving of their own post.


My Initial Reaction:

I feel like there is a glut of misconception out there.

On some of the comments, I see people blaming Realtors for driving up the prices of homes. C'mon, economics is what does that not some Realtors conspiring together to gouge people. I'm an honest person and I have a thick skin, otherwise I may wither away.

The amount that a Real Estate Agent charges for commission is set by the individual agent. It is negotiable.

I have seen some cases where the commission has been more than 6%.

Let's be clear about something a Realtor's job description is much longer (much, much, longer) than what people realize. It more than selling, being a taxi driver, or just doing the contracts. It is more than negotiations.

I have had to be an errand boy, stand in long lines, go to all home improvement stores, research imported rock, deliver food, wash cars, bicker with security guards, on and on and on.

Not all agents are worth it. That is fine, no one is forced to work with them. But if you sit in front of me, and ask me how much I'm worth, I will show it to you and prove it every time period.

The internet isn't going to replace Realtor's because ultimately there is a huge difference between raw information (which the internet offers) and knowledge.

Knowledge would be the understanding of that information (be it pricing data, sales figures, appraisals etc.) as observed in the backdrop of experience, and a long running history of performance.

I'll give you knowledge every time.



Some further perspective:


I just remembered something, that's that most full service agents forget to break down the logic behind why they claim to get top-dollar. If they fail to do the breakdown and properly explain that, then they aren't likely to justify their fee prices or be very convincing to their potential client.

Some agents aren't smart enough to do this.

I'd like to do the breakdown though.
First, I have to reiterate that this is with respect to my market in Southern California, it may be different in Boise or Green Bay.

1) We are swimming in real estate advertising. Every newspaper, circulation, magazine, classified section is packed to the gills with advertising.

2) Real Estate is a numbers game. '
There are 2 groups of buyers:

A: Buyers that know about your house.
B: Buyers that don't know about your house.

The more people you are able to transfer from group B into group A, the higher the statistical probability that you will you get someone willing to pay you the asking (or close to it) price.

3) There are times that lightening strikes right off. The times that a person sells by owner (or with an agent) and a buyer swoops in to buy that house right up.

These cases are usually played up really big, to make it seem like this happens all of the time.

In this market, those would be instances that fall outside the statistical norms. While they are possible, they are less probable.

4) In order to maximize the market saturation of your new listing, and swim as described in #1, a full service agent markets (read not the same as advertising) your listing. This is the basic difference between full service and everything else.
Marketing a property to achieve high saturation in a place where people are bombarded with advertising is critical.
Marketing costs money, that's a big chunk of the money that the agent foots with the aim of getting the commission.

5) The ultimate goal of the marketing is to transfer the largest possible number of people from group B into group A, and give the seller a higher probability of getting top dollar.

6) It's possible for people to do lots of free marketing on their own with the internet. Full service agents aim to do this, but also participate in the marketing that does carry a cost.

Posted by Rory at 9:23 AM | Permalink | Comments | links to this post

You have heard of the 6 degrees of Kevin Bacon.

My clients are always 5 Degrees or closer to Warren Buffet.

Now I bring you, 5 degrees of Warren Buffett.
Starting with my clients:

1) You: My Clients

2) Me - CEO of this Website - and my own Prudential Real Estate biz...

I report to:

3) Steve Rodgers CEO of Prudential California Realty


He Reports To

4) Ron Peltier CEO, Home Services of America


He Reports To

5) Warren E. Buffett



Things I have in common with Warren Buffett:

He is friends with Bill Gates whereas, I'm Microsoft Certified
We both have shopped at Nebraska Furniture Mart
We both root for the same football team
We both started out as paperboys
We both work for, and own Berkshire Hathaway in some form or another
We both sell real estate in Emerald Bay

Posted by Rory at 6:15 AM | Permalink | Comments | links to this post

Tuesday I attended the Prudential Leadership conference held at the St. Regis Resort and Spa in Monarch Beach, (Dana Point).

Besides being a corporate hug session, there was some really fantastic insight to be had while walking among the CEOs.

For Instance, our new CEO, Steve Rodgers is really big on setting goals, and attaining them. That part of why he set up the conference. He said that it has been his goal to be the CEO of Prudential California Realty since 1996 or 1997. Ever since then, he has focused on that until it eventually became a reality for him this year.

Steve attributes part of his success in getting to the top to his own coach,
Brian Tracy. It is ironic, because Brian is now retired from personal business-life coaching.




One thing that strikes me about Steve Rodgers is that he is very approachable. He made it clear that he listens to us agents "in the trenches", and encouraged us to call and email him directly, which I occasionally do.

It is refreshing to see this kind of transparency in the corporate structure, because when it comes to my own business, I'm deeply committed to furthering my agenda of having a client-centric, technology driven, real estate business.



Steve is forward thinking enough with technology that he is constantly trying to further the Prudential technology platform. He said that