Tag Archives: real estate

Staging a home can now include “live-in manager”

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Staging a home – even the Photoshop way – is important these days so perhaps it is little surprise staging can now include having a live-in manager:

At the Little Gables house, a home manager moved in late in April and plans to stay in the home until it sells.

The manager, David Hein, is from Ohio and living temporarily in South Florida so his son, David Hein, can train in a sailing campaign for the 2016 Olympics. The Little Gables stint marks his fourth house.

In exchange for managing the home, Hein gets to live there at a reduced rent — about one-third the market rate, Salas said…

The home manager’s responsibilities include keeping the home safe, clean and secure so that it is shipshape whenever prospective buyers take a tour…

The manager has to strike a balance: to make the home feel alive, with food in the pantry and refrigerator, but with everything as well organized as a Container Store display.

This would be an interesting kind of job/life: you get to live in a home that is probably in decent shape for cheaper but your home life is also a kind of performance intended to help sell the move and move yourself out. If is like house sitting but with the added burden of being a salesperson. If you are good at your job, you actually have to move around more.

It would be interesting to see the cost breakdown for the homeowner who is employing the live-in manager. Does a live-in manager add enough value to a home’s price to make it worthwhile?

More Americans again view owning a home as a good investment

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The burst housing bubble reduced the value of many homes yet more Americans are again seeing a home as one of their best investments:

According to a recent Gallup poll, real estate beats out stocks, bonds, savings accounts and even the Great Recession’s investment darling, gold, as the favored form of long-term investment. A full 30 percent of Americans see real estate as the best investment—up from just 19 percent in 2011.

A new survey by the Pulte Group echoes such sentiments: 35 percent of Americans reported that they would like to buy a home soon in part because they see it as a smart financial investment, said Valerie Dolenga, spokesperson of Michigan-based home builder, Pulte Homes.

This kind of growing confidence should make us all wonder, though: Haven’t we learned anything from the housing crash? One of the big takeaways from the crash was to avoid this exact line of thinking…

Now that the market is recovering, and home prices are growing again—in fact home prices are at an all-time high in nearly 1,000 cities across the country, according to Zillow—the siren song of seeing your home as an investment is becoming tempting once again.

Then four tips are offered to help ensure your home can be a decent investment: location matters, buy a home that needs some work so you can increase its value, “don’t buy the best house on the block,” and expect to stay in the home a while to allow the value to increase. In other words, a house is not automatically a good investment yet good planning can go a long ways.

At the same time, sentiment about seeing homes as good investments is not necessarily related to making bad choices about buying houses. In other words, we need to see how these beliefs become translated into actions. For example, more Americans may want to buy homes but if other pieces are not in place, such as good inventory or readily available mortgage credit, then this may not lead to another housing bubble. The bigger issue may come when everyone involved from buyers to lenders to the media gets caught up in a housing rush and it takes on an inertia of action that goes far beyond consumer sentiment.

Finally, views on homeowership as a good investment are tied to other factors:

Upper-income Americans are much more likely to say real estate and stocks are the best investment, possibly because of their experience with these types of investments. Upper-income Americans are most likely to say they own their home, at 87%, followed by middle (66%) and lower-income Americans (36%). Gallup found that homeowners (33%) are slightly more likely than renters (24%) to say real estate is the best choice for long-term investments.

Social class and wealth matter when determining what are viewed as good investments.

Liechtenstein losing the equivalent of a McMansion

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The Wall Street Journal notes how the small country of Liechtenstein just got a little smaller, about the size of a McMansion.

Last month, Liechtenstein’s government said it altered its official map, part of a move to a more precise, satellite-based surveying system. The result: Bits and pieces amounting to about a quarter of an acre disappeared.

The land, cumulatively big enough for a McMansion, didn’t abruptly leave anyone living in a new country. So locals viewed the tweak as little more than a curious result of advancing technology…

The lost territory, which only shows up on the most precise technical maps, might have singed national pride or prompted a call to arms in some places. Not in Liechtenstein, a country of roughly 37,000 people who relish their homeland’s diminutive stature the way Texans prize enormousness.

This could lead to some discussions of how more precise mapping leads to boundaries changes like this. But, the comparison to a McMansion is more interesting here. If you had to make a size comparison, why choose a McMansion? The article notes that land lost was about a quarter of an acre. This is about 11,000 square feet. Is the suggestion that this is a typical lot size for a McMansion? One definition of a McMansion is a big house squeezed into a small lot such that the house dominates the lot. Is a McMansion too big for this space? Or, is a quarter-acre lot enough space for some lawn and a McMansion? McMansions themselves aren’t typically 11,000 square feet.

Statistics for new homes in 2012, averaging 2,505 square feet, suggest the average new home was built on a 15,634 square foot lot. Perhaps the better comparison in this article might have been this: the amount of area lost by Liechtenstein was less roughly 66% of the size of an average new house lot in the United States.

Terrible real estate photos or providing helpful (and ugly) information about the home?

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I’ve highlighted some cases of bad photos of a home for sale (like here) but here is a Tumblr with a collection of bad photos: terriblerealestateagentphotos.com.

Some of these photos are clearly poorly done. Whether taken from a bad angle or including bad staging of furniture (does photoshopped furniture count?) or way too much clutter or weird clutter, this can detract from showing the home at its best. The photos also suggest plenty of people are unwilling to change their home much to appeal to potential buyers. The seller and their real estate agent should want to put the best image forward so the new buyer can imagine themselves in that space.

However, there are other photos here that don’t seem to be as egregious. The March 4, 2014 picture of a green pool. It is not inviting but wouldn’t it be better the potential buyer know that the home has a pool? While the pool should be clean, the other option is to list the home with an in-ground pool and then never show a picture. Or the February 27, 2014 picture of an unfinished hallway. Again, isn’t it better for the buyer to see the space at all rather than have it hidden? I find myself frustrated when I can’t find a picture of one of the home’s features (this seems to happen a lot with basements). Without a picture, what are they hiding? If the person isn’t going to do much to make the home look more presentable, I would still rather see that and have more information.

I’d love to see some data on how hiding some of a home’s worse spots from online photos might help boost in-home visits or eventual home sales.

Super rich investing billions in office blocks, hotels

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The global super rich are spending money beyond the dreams of average people on certain kinds of real estate:

The world’s super rich are turning from luxury mansions to hotels and office blocks, as they hunt for bigger property deals to preserve their growing fortunes which hit a combined $20 trillion in 2013, data showed on Wednesday.

The move into commercial property comes as wealth levels rebound after the financial crisis and home values in London and Monaco soar, prompting the rich to look for riskier investments that offer higher returns than gold or bonds.

Wealthy individuals spent $11.2 billion on hotels, offices, warehouses and shops globally in 2013, up from $7 billion in 2012 and three times the amount spent in 2008 after the crash, data compiled for Reuters by research group Real Capital Analytics (RCA) showed.

Such high net worth investors, most of whom come from Asia or the Middle East and made their fortunes in manufacturing among other sectors, often already own homes in cities such as London and Hong Kong, said Jeremy Waters, head of international investment at UK-based property consultants Knight Frank.

This is quite a flow of money. It is too bad the article doesn’t talk about the ROI on these office and hotel properties; what kind of investment can be expected in today’s economy?

I wonder if this means there just aren’t many luxury homes left in the world for the super rich. If so, this could mean builders will look for even bigger and more luxurious homes in the near future.

Interesting stat: 42.1% of December homes purchased with cash

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As the American housing market tries to regain its mojo, a lot of cash exchanged hands in the purchase of homes in December 2013:

In December, 42.1 percent of all residential property sales in the U.S. were paid for in cash, according to RealtyTrac, a housing data firm. Several circumstances drove this eye-catching figure, including higher mortgage rates and tougher lending standards.

Then there are the institutional investors, those newish guys on the block who have been bringing cash to the table to buy literally hundreds of thousands of single-family homes that they will turn into rentals.

Since the average American doesn’t have the cash to make this sort of transaction, it seems like this many cash purchases would skew the market. It would be interesting to then see: (1) where cash purchases are more common and (2) the kinds of real estate properties are most commonly purchased in cash. If I had to guess the answers to these two, I would think coastal cities and plenty of high-rise condos.

Using drones to sell expensive homes

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What if the expensive home you are selling is really big or has stunning views? Show all of this better via drone:

On Monday, a house in the East Bay town of Alamo was being prepped to go on the market for nearly $1.5 million. To really showcase the home and its view of Mt Diablo, the realtors brought in a drone.

“You get the scale, you get the feeling of the actual home. You can see, ‘hey, this thing’s on an acre. This is what it looks like,’” said Randy Churchill of Dudum Real Estate…

Churchill says for the $500 he’ll spend on the drone video he may get 10,000 hits online, making it very cost-effective relative to hiring a private helicopter.

“This will be something that we do now on every home that we’re marketing in this price-point,” said Churchill.

This doesn’t sound all that expensive for a pricey home. I could see how this would be particularly useful for a house with numerous exterior features (as opposed to the caricatured McMansion where all of the impressive stuff is on the front and the sides and back are lifeless) or a big property, perhaps 1+ acres, where seeing it all is difficult through two dimensional pictures.

If drones do become normal parts of selling a home, how long until we see some drone images that are blurry or clearly below average, just like some of the photos available online today that appear to be taken with little skill?

Attempting to decrease the average age of American real estate agents

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Efforts are underway to attract younger Americans to become real estate agents:

The National Association of Realtors says the median age of its members has inched up to 57, its highest level in 15 years. Agents 40 and younger were just 11 percent of its membership in 2013, down from 20 percent in 2003.

With this in mind, Warren Buffett’s real estate franchise unit, Berkshire Hathaway HomeServices, recently formed a task force called the REthink Council to explore the topic. Ten agents who are 35 and younger from its offices around the country will gather this month to brainstorm and come up with ways to make the profession more attractive to a younger demographic.

One member of the task force briefly explains what he thinks is happening:

At the time, though, it seemed pretty obvious to me why there weren’t more people my age who were doing this: It takes a lot to get started in real estate (before income starts to flow). There’s a lot of fear and apprehension — what if I don’t make it, what if it takes a while to make money, how am I going to pay my bills?

It was obvious to me then and it’s obvious to me now that there’s a major lack of businesspeople jumping in to real estate. We’re going to have one generation getting out and the next generation is not filling the hole that’s going to be there.

All of this could be very interesting given the projected trends that younger Americans still generally want their own spaces as adults but are more frequently living alone and often want to live in denser areas that offer more cultural and entertainment amenities. If a majority of real estate agents are older, can they still connect with younger buyers who want different things?

Also, this younger agent makes a real estate job sound quite entrepreneurial: you have to take risks, trust your selling abilities, and work hard to drum up business. I’m just speculating but I wonder if this is indicative of declining interest in individual entrepreneurialism. It is one thing to want to go into business with a firm but another to strike out more on one’s own as an agent.

Finally, what are the figures for how much a new real estate agent could expect to make within 1, 5, 10 years? With the glut of articles these days about the income different jobs can expect, how many new real estate agents succeed? Here is some recent info:

Only 2% of Realtors, a trademarked term used by the National Association of Realtors to which the majority of real-estate agents belong, earn more than $250,000 a year. The median annual income nationwide was $43,500 in 2012, up from $34,900 in 2011. The average commission rate for 2013 is projected to be 5.2% of total sale price, according to Real Trends, a Castle Pines, Colo.-based research firm…

Most hopeful agents need to save up before they begin. Studying for the broker’s license exam, which covers both national and state laws and regulation, can take weeks, says Bopa Touch, administrator at the Rockwell Institute, a real-estate training school in Bellevue, Wash. In 2013, the company almost doubled the number of students taking its three-week, $489 broker’s license course, compared with 2012, says Ms. Touch. Between registration fees and desk fees—an amount paid to the brokerage firm to cover operating expenses—most new agents spend $2,000 or more to get started, which doesn’t include months of living expenses necessary before commission checks start coming in. “They don’t realize how much money they need to start,” Ms. Touch says.

The median is not very lucrative…

Big companies buying up hundreds of Chicago area homes

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In a sign of the post-Great Recession real estate market, big firms are buying up Chicago area real estate:

The Chicago market is vast enough that even an invasion of this size won’t change home prices overnight. But the frenzied activity is a clear sign that professional investors believe two important trends are ripe for opportunity: housing values are recovering, and many Americans have given up on the dream of homeownership and will become renters…

Three years ago in an opinion piece for the Tribune, Matthew Desmond, then a sociology department fellow at the University of Wisconsin, voiced worries about what he predicted would be a concentration of housing stock among a few owners, causing big landlords to get bigger and smaller landlords to fall by the wayside. He called it the “Wal-Martization of urban housing.”

On one hand, this represents a change in the Chicago market as firms look to buy homes, rent them, and possibly make more money down the road when prices rise again. On the other hand, the percent of units these bigger firms are buying is not huge yet.

Desmond’s comments are interesting. Why shouldn’t real estate and housing operate in a market space where corporations can get involved? We have few problems with this in retail so what is the problem in housing? Desmond and others might argue that housing is a more basic need – though American residents do not have an explicit right to it. Also, there is a long-standing ideology in the United States that residents should have choices among places to live and homeownership, determining the fate of one’s own property, is the end goal rather than having to be subservient to a corporate landlord.

If you don’t like McMansions, be prepared to renovate and live in older homes

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Older homes are an alternative to McMansions but someone has to renovate them and then choose in them:

Enter Barbara Jones. The Needham contractor launched Little Pink Houses a couple years ago to provide an alternative to homeowners who want to sell but aren’t keen to see all their memories bulldozed away to make way for some cold, grotesquely large, and soulless box.

Jones’s aim is to hit the $600,000 to $800,000 end of the market in Needham, where listings are comparatively scarce, while saving some of the town’s graceful older homes from the wrecking ball…

My goal on my houses is to keep the original footprint but to update the entire inside to provide a “brand new” old house for the buyer. Staying within the existing footprint enables the end price to be well below the $1million+ price tag that is becoming the norm here in Needham.

I want to preserve the older homes and keep the charming feel of our 300-year-old town while providing homes in the price range that is becoming increasingly rare: $600k – $800.

The number of people who have expressed their gratitude to me around the preserving of my home has been overwhelming. I credit the woman we purchased my home from. She had multiple offers from builders who wanted to buy the 4 acres my home sits on and turn it into a development. We are thankful that she “waited” for us to come along.

The steady march of McMansions requires that good citizens do nothing – or something like that. Two things strike me by this particular approach:

1. It is still not cheap to preserve these older homes. The average homeowner in Needham might be able to make more money by selling the home and lot to someone who desires a teardown and can pay more. In many places, it might be difficult for owners to take less simply to preserve the houses.

2. It sounds like the older homes are completely renovated inside. So while the exterior appears old, the new buyer gets all the modern conveniences they might expect in a new home. It seems a bit strange that older homes might only be attractive to buyers if they basically look like new homes on the inside. Yes, these older homes may not have been turned into McMansions but this might have been the goal with the interiors.

All together, it can be quite a bit of work to preserve older homes and it requires willing sellers, buyers, and neighbors. It would be interesting to then find out whether it is “easier” to have teardowns and McMansions rather than organize to keep older homes that enough buyers still want.