Vetting Prices, Choosing Representation | RealPodVA

The podcast continues. I think we’re going to start numbering them, as we’ve been doing these for a year. Coming soon: guests!

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Topics covered

  • Vetting prices amongst professional colleagues. It’s good to be in an environment where we can vet the data analysis with our professional instincts.
  • Too early to have a good read on the market.
  • Value of homeownership, in a word: stability.
  • Hiring the right representation; finding the right fit.

Transcript follows


Bart: Jim, what are we going to talk about today?

Jim: Talk about choosing the right fit for an agent and vetting prices and maybe a quick little market update.

Jim: What, it’s mid February, start of February, and we’re starting to get a lot more seller activity. Sellers are putting their houses on the market. They’re getting ready if they haven’t already been doing so in the late fall and winter. And then we’re starting to see more inventory coming on the market in Charlottesville [inaudible 00:00:32] I write a monthly note as well. It’s like a new domain, jimsnote.com.

Bart: Jim wanted to write more.

Jim: Yeah, you know. More content is good.

Jim: Um, but it’s too soon to say. People ask, you know, what the market’s doing today and it’s way too early to know what’s happening. Um, so we’ll know mid-March what likely going to happen. And it’s tough because we don’t have enough comps to really determine a lot of pricing stuff. You know, you have comps, you know, a comparable sale from October, which is a vastly different market than Spring 2019.

Bart: Sure.

Jim: The first nine months of ’18 were good to very good as far as increasing velocity in sales prices. The last three months in Charlottesville, showed about a 10% decline. So, you know, we’re going to see what happens in January, February.

Bart: Yeah.

Jim: January is too low velocity and too low numbers to really making any determinations.

Dave: Yeah. Well it brings me also back to a comment that, uh, you and your guys on the podcast-

Jim: The Nest pod.

Dave: -on the Nest pod brought up, which was, you know, you can’t, you can’t look at the weather in October to predict the weather for tomorrow.

Jim: Exactly.

Dave: So, yeah.

Jim: Yeah, it’s tough, but at Nest, we have, you know, 50 some odd agents and they’re all productive and they’re all good. And so, a lot of times, when we have a challenging property I get these requests from agencies. It’s just friends just saying, Hey, what do you think about this?

Dave: Yeah.

Jim: Um, you know, but I’ve got one now that I’m putting in the market in a few weeks, I hope. And it’s a hard to price. Okay. I have my sense of where the data says and what my gut says and where I think the price is going to be. I’ll make up the numbers, but you know, I think it’s probably in the 400 range, give or take. And I called one agent just describe the basics of the house to him. He said, ah, you know, I think that’s probably, 400-ish, give or take. Great. You know, I feel good. I feel pretty good. I called the other agent, she’s like, ah, yes, so you’re thinking six? What?

Dave: Whoa.

Jim: That’s what I said. And uh, I think, okay, I don’t think so, but thank you.

Jim: So I call a third agent and talk to her and she’s like, yeah, you know, probably in the 4’s, you know, somewhere in the 4’s. But she looked at the stuff real and quick. Yeah. You know, low 3’s. And I’m like, uh no, here’s a little more about it, and here’s running my thinking, my logic. Okay. I can see the 4’s, you can push it a little bit.

Jim: But it’s hard when you don’t have … When I look at pricing listings and I look at making offers for clients, I look at the actives in the under contracts.

Dave: Right.

Jim: Especially this time of year, more than I do the solds, because the solds a backwards looking thing.

Dave: Yeah.

Jim: And the actives under contracts show really –

Dave: Currents.

Jim: -current, if it shows that market segment you’re looking at. If you’re making an offer on a house and there are 12 other comparable properties, you might go in lower, you know. And if you’re looking to make an offer on a house and it’s one active in 19 under contract, there’s probably a lot of competition for that property.

Dave: Sure.

Jim: So it changes day by day and week by week. So when I’m advising clients like, whatever today is on, on Tuesday, I think the price is this.

Dave: Right.

Jim: Next Thursday we could be having a very different conversation. Again, to beat that dead horse, especially in February when you don’t have the full slate of, of properties that have come on the market. So it’s not quite throwing it a dartboard with a blindfold, but it is with a maybe a thin veneer over your eyes about where the market really is.

Dave: And so that’s coming at that from a seller and a listing agent standpoint. I’ve got a little bit of an anecdotal story that I’ve been waiting to tell you for this pod moment. Um, and it kind of leads to, let’s put this back into the buyer category then. What does this mean for those who are looking?

Dave: Um, so I’ve got some very good friends of mine who recently moved to the central Virginia area. They’ve been renting in Nelson County for a about a year, year and a half now. And they’re starting to look about buying. They were debating between Nelson and Crozet and they’ve really kind of fallen in love with Crozet. They’ve come up to spend time with me and my family. They come up here for hitting all of the cool crazy stuff that we have here. And so they were starting to kind of look at some of the properties that were out there.

Dave: There was a property up at Jarman Gap, there was a property in the hilltop neighborhood. Um, and she was blown away that those properties were listed and gone within hours or days. I had to explain it, I was like, that’s kind of the song and dance here. I kind of said to her, I was like, it’s a bad time right now, there’s not a lot of inventory, but more inventory is going to start to come out in March and February. So like that’s your perspective as far as pricing. The house goes for listing agent and for someone who’s looking to sell.

Dave: What is your opinion then? Again, it’s hard to predict that, we don’t have enough data right now to really know where the market’s going. But like what would be your advice then for those who are looking?

Jim: I think that it’s, you know, real estate is not a commodity. So, I’ve said this and I’ve written this and I will say it a thousand more times. You get to a point in the buying side where if you’re making the decision for the next, hopefully, 7, 9, 15 years of you and your family’s lives, if the asking prices for 445, you want to negotiate as hard as you can. But it’s also, if you’re at 445 and you all come close at 437 but the sellers want 3000 dollars more. Is it worth continuing to look to save three grand?

Bart: No.

Jim: Yeah. I mean it’s-

Bart: It’s definitely not, because in the end that just doesn’t make it.

Dave: Amortize that over 30 years.

Bart: Yeah.

Dave: I mean or don’t do that.

Jim: No, I mean financially, if you amortize three grand over 30 years, that’s going to be 15, 20 thousand dollars, probably. I can do the math real quick but I’m looking at more of if you and your 2.7 kids and a dog, and your lease is up in June.

Dave: And you’re happy with this house, three thousand dollars [inaudible 00:06:56]

Jim: You can say, look, I can be at this house for 15 years. I mean again, I don’t want to diminish the value of a couple thousand dollars but I do want to diminish the value of a couple of thousand dollars.

Dave: It’s 1% of the home value that they’re looking at.

Jim: Yeah. Right.

Dave: Because, like you said, you’re not buying toilet paper. You’re buying a home. Like I said, there is not another one exactly like it most of the time.

Jim: No. I mean I had a client years ago and she still lives in Crozet. She and her family still live in Crozet. When they bought years ago, it was a long journey to get to that point. But she wrote me right after they closed and she said, I now know where my kids are going to go to school, you know I’m never going to be, unless I choose to be out of this place, I’m not going to get kicked out of a rental. They’re not going to sell the house out from underneath me. She’s buying stability for the family. You know, I think that’s what a house, a home is. That’s where you know, you’re going to be, maybe not forever and ever, but for the foreseeable future.

Jim: So it goes back to what my mom said when I first started practicing in a smoking hot market. If you’re one of 19 offers, we had those times, if you make an offer on a house, will you be nonplussed if you lose it? Will you be devastated? Or somewhere in between? And it’s, and that’s where you make the decision of, you know, I’ll pay a little bit more than I want to to get this house so my family knows where they’re going to be.

Jim: But the short answer is, if a buyer sees a house that they want and they can get close enough, go for it.

Dave: Yeah.

Jim: That’s my advice because you never know when that next one is going to come. And on the same side, when I’m representing buyers, there’s always going to be another house. You know, I want my clients to be in a position of logic and reason, and not emotion. Right. Um, even though it’s an inherently emotional process.

Dave: You’d have a really hard time doing that for me.

Jim: Because you’re so overly emotional?

Dave: And not very logical or reasonable. Bart just nods in agreement.

Bart: Yeah. I mean like, but I think that everybody balances that. I think that like when we’ve like been in the search process before. I frankly need a motivator. Like the only time we bought a house, like, we’re moving from Texas. We’ve wanted to buy a house since then but with nothing to push us out of the one that we were in. I, generally speaking, will opt not to. And I think that the other decision is a lot of work. It’s a lot of things. It’s a big change. It’s a whatever. But like, I see a house in a very utilitarian way and my wife doesn’t see it that way. But I do, and I’m like, all right.

Bart: I mean there’s, generally speaking, enough bedrooms for the kids. There’s really not but, generally speaking. There’s enough of them we can get a sleeper sofa, check. Guest bedroom, we’re good to go. I mean, you know, 250 square feet per person is like more than enough in Japan. This would be a mansion. I don’t really know what else do we need here? And we’re all never hear at the same time during the week. And like once it Saturday and Sunday, we don’t really want to be there. Like we’re going to want to be somewhere else.

Dave: Right.

Bart: I don’t know what we’re doing, but like something fun I guess. Like whatever families do. Like picking apples or something. But I think it’s hard though, because that process does like become this like battle of emotion and logic. You end up having to like find some easy medium between them. But I dunno, it’s hard.

Jim: It’s hard. I had a client years ago, probably three, four years ago, and it was a volatile, emotional process. Going through the whole thing. I’ve represented her a couple of times, but after it was all over, I remember I wrote about this and she said that she had a greater appreciation for what I do because of what she does. And it’s a hard thing to say, but she said, and she’s an ER doc, and when a kid comes in with X violent injury, she doesn’t have that luxury of, oh my goodness, this is so sad, this is awful. It’s, Oh, problem, fix. And that’s my role is to be that unemotional, distanced person of, I hear you that you love this property and I know that you’re emotionally invested in it. However, look at it through this lens of what your life will be like in 17 or 18 months, or even 17, 18 years. And use your logic to determine whether it fits.

Dave: Right.

Jim: Like you’ve got a junior in high school and a six year old, you might not need that four bedroom home. Because that junior’s leaving.

Dave: Soon.

Jim: Soon. And that’s why you to say, I know it sucks for me to say this to you out loud because you’re probably in that emotional space of, I don’t want this to happen, but your kid’s leaving and he or she is not coming home.

Dave: Right.

Jim: I’d choose a more delicate way to frame that.

Bart: It will be back though at 22 from what I understand.

Jim: Hopefully not.

Bart: He’s definitely coming back.

Jim: Not if you got a three bedroom home.

Bart: I remember my Dad had to sit down with me in college like first semester, fourth year and he was just like, I mean you know that you can’t come home. He just looked at me and said, you know you can’t. And I was like, well I don’t know, I don’t really want to come home to Virginia Beach. He goes, no, no, you can’t come home. And then my brother moved back in immediately after graduation and I was like, what? You said … Well he can come home. It was you cannot come home.

Jim: In fairness, the reason you got the no is because they knew he was coming.

Bart: Maybe. Maybe. But I think in fairness to him the job market was worse by the time he graduated. My dad’s take really was just that I needed the kick in the pants to actually go out and get it done.

Jim: Right.

Bart: And so that was just a personal parenting decision. But I do think that it’s hard to look at things. I’ve thought about it but we buy a bigger house, like we’re probably still only 10 years away from wanting to downsize. So do you buy that house for like a 10 year period and then you downsize back out again. Or do you stay in the house that’s already a downsized to house and just tough it out?

Jim: Well you suck it up. You pay that lower mortgage probably and you just deal with it and you save for that next downsize house.

Bart: Yeah.

Jim: Life’s a funny thing. I think that, again I’m a terrible realtor in that I don’t care about my house and I’ve said this a thousand times. My house is where I leave. It’s a place that has, you know, it keeps the rain off my head and you know, lets me cook and sleep and I’m good. It’s that place where we go and do things for fun. It’s our home base, yeah, but it’s not the place where I personally see that value of, hey everybody come look at my place.

Bart: It’s a really big tent.

Jim: It’s a really big tent with heating and cooling.

Bart: This is Bart [inaudible 00:14:01] eyes lose skirmish play. I was going to write an old school radio jingle for this something slick with a catchy chorus of people just seeing our name over and over again. But we have zero musical talent on staff. What we do have, and that is one slick transition there, is a passion for talking about, writing about, and shooting video of high school sports in central Virginia. For almost a decade we’ve been the top source for high school sports coverage in this area. We’ve also got a podcast that’s now part of the central network. If you love high school sports, give us a listen. And if you like what we’re doing, check out the support link in each episode description and support the work we’re doing. In the meantime we’ll keep working on that jingle.

Jim: Yeah. All right. So the last thing is talking about choosing the right fit for an agent. So a part of my process, when I’m representing a buyer in particular but also sellers, I’m vetting whether we’re going to be a good fit. Like, if someone comes to me and they’re wearing a suit and tie, probably not going to be a great fit together because I tend to be, well today I’m wearing shoes, but oftentimes I’m just wearing shorts and Birkenstocks. Because frankly as I told my older daughter, I’ve earned that right over almost 20 years of practicing to be good at what I do and to also wear Burks. With all respect Bart.

Bart: I skipped that.

Jim: Bart skipped the being good at something and just went right for them.

Bart: I started wearing them in high school. I was good at that stuff in high school. Well I’ve earned this right. Look my GPA was fine at high school.

Dave: I was very glad when you came in today, to see you back in Berks and shorts again. I was like this feels better for Bart.

Bart: It’s going to get cold again.

Jim: I’m wearing shorts or not wearing, I’m wearing pants and boots today because I’m meeting a new client. I don’t want to, you know, go full Burks and shorts until I’ve vetted them and I know we’re going to be a good fit. But you know it’s something, I talked to someone the other day, actually two buyers in the same day. I had this conversation about whether we’re going to work well together. Because it has to, you know, the realtor-client relationship is one that’s oftentimes deeply personal. I’ve got clients who, you know, I had one I’m actually working with again. She called me, they bought a house years prior and then she calls me on the day, she finds out she has twins and says, so we need to move. And I was one of the first people that they called, you know, we were a good fit.

Jim: But it is something that the buyers has to be comfortable knowing that I’m looking after their best interest and they’re not going to, you know, real estate compensation is inherently horrible things. It’s all commission based, right? So they have to trust and be comfortable that I’m working out, I’m working for them on their behalf. And so, I’m not a right fit for everybody, you know? And I’m opinionated. They come to me for that.

Dave: Right.

Jim: You know, and I think it’s something that the number of people that have come to me saying that they hired the wrong person because they, they met, they worked with the first person they met.

Dave: Yeah.

Jim: It’s unfortunate. Yeah. With my guys, let’s go out once or twice. Let’s meet a couple of times to see if we’re going to feel comfortable with these, with each other.

Dave: Right.

Jim: Um, and if, if I’ve got a client is going to sit in the back seat and look at their phone the whole time and not listen, it’s not a good fit. So I think it’s something that I advise everybody when they come to me and say, Hey, you know, let’s not get married today. Let’s see if we’re going to have a good working relationship. And I encourage everybody to do that. Talk to several people, at least two.

Dave: I mean like this is a universal thing. This is not real estate exclusive thing. This is, I mean I do this with my clients. I don’t just bring on everybody that walks into the door. Because I mean, for something to be successful for me it’s a project-based thing for you it’s a home sale thing. But I mean for to be successful we have to know that we’re on the same page. Our goals are aligned. Our visions and views are aligned. We’re all going to be working to achieve that same thing. And that’s where I’ve gotten to in my career as well. I spend time learning and meeting and knowing my clients. I try to give them as much information about me and what I do and make sure that my client’s going to feel comfortable with me and I’m going to feel comfortable with them.

Dave: Otherwise you’re just setting yourself up for an unsuccessful situation. But that takes time to get to that place. I’m 15 years in a career. You’re 20 years into a career.

Jim: 18, I’m not that old.

Dave: I’m giving you 20. We’re rounding up. But I mean it takes time to get to that place. You do have to start with just, I got to put bread on the table and so I have to take clients in to go and do my job. And that’s also helps you understand, establish what it is you do.

Jim: Well, when I started practicing, I would go, I would go to Madison. We’d going to northern parts of Green. I would go to the southern parts of Nelson. I would go wherever the business was because that’s what I needed to do.

Bart: What you had to do.

Jim: But it’s something that clients, if a client comes to me and they say, are we going to be a good fit? And the first answer is, I don’t know. You know, and it’s important for them to understand that. I’m not a jackass about it, but I don’t take on everybody that I could work with. And the ones that I do work with, they benefit from my being somewhat selective.

Jim: I think it’s, it has to be, it has to be fun. You have reasonable goals. If they’re looking for four acres under 250 walking, distance to downtown mall, probably not a good fit. It is something that can [crosstalk 00:19:32].

Dave: Bart’s like the guy who never wants to move heard that he was like, where?

Bart: I’ll move for that.

Jim: Well, I’ll move for that. But it’s, you know, so I think it’s something that the takeaway is that when you’re hiring somebody, whether it’s real estate or producing or whatever that is, make sure it’s a good fit and you’re gonna be comforted was that decision. Um, because my world, I work with people for years and years after closing. It’s important for me to have a good human relationship with them.

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