A Thanksgiving Story

Some time back I listed a home for a couple who was going through a most difficult time. Because of some financial hardships, they had reluctantly decided to pull up stakes. They had a modest home on some great property, but it needed some cleanup and repairs that the owners just didn’t have the time or money to do. Not long after listing their property, they moved out of state and quit making mortgage payments. Before the bank started foreclosure proceedings, I helped them get approved for a short sale.

The condition of the home was a significant negative for most prospective buyers who viewed the home. But eventually a very nice couple contacted me about the property and fell in love with it. The husband was a do-it-yourself type of guy and wasn’t the least bit intimidated about the needed repairs. They said that the house and acreage was the perfect fit for them. And they loved the area as it was close to their family. This property had everything on their wish list and nothing else they had seen had come close. Even the sellers were overjoyed that someone would continue to appreciate the property as they once had.

It sounds like a nice ending to a sad story, but there was a hitch. After contacting their lender, the couple learned that they were some issues that had to be resolved that could take 6 months to a year to work out. The sellers’ bank would not wait that long for them and directed that the property stay on the market in search of another buyer. I felt their pain as this nice couple saw their dream home slip away.

But there just had to be another way. What if an investor purchased the home, leased it to this couple and then sold it to them when the time came that they were able to purchase it on their own? I ran this idea past several investors that I work with and one of them agreed. Working with the sellers, the seller’s bank, the buyers, the buyer’s lender, and the investor, an agreement was reached when all parties were able to get the terms and assurances needed to go forward with this plan.

My clients signed the lease moments after the investor closed on the property. They quickly moved in and immediately began sprucing the place up. It became very obvious that they were committed to doing whatever was possible to purchase the home from the investor as quickly as possible. They worked diligently with their lender and followed her suggestions to the tee. In seven short months, they were able to purchase the home from the investor.

I’m typing this article after leaving the closing table. The joy in the room was contagious. The buyers commented that someone should make a movie about how this all happened. They were still in awe how everyone worked together to help them realize their dream. Along with the lender and the investor, I was happy that I was able to play a part in this story. Hugs abounded and I think I saw a tear or two from some of the folks in the room.

There are so many sad stories these days stemming from the prolonged economic recession we’re suffering from. But there are still some heartwarming stories taking place. As I sit down and give thanks this Thanksgiving Day, I will be thinking of this wonderful couple celebrating their first Thanksgiving Day in their new home.

Dreams still come true. Happy Thanksgiving everyone.

Ever Changing Nature of the Real Estate Industry

I was watching a TV program the other night and saw something that actually made me stop and think for a minute. It was a story about the late Ruth Graham that was told by her husband Billy Graham. It seems that years earlier, they were driving home from an event and encountered a stretch of road that was under construction. When they finally worked their way past it, they saw a sign that said “End of construction. Thank you for your patience”. Mrs. Graham remarked to her husband what a marvelous epithet that would be and directed that it be put on her tombstone after she died. It was told with great admiration and was a great reminder that we should never quit our personal quest in becoming a better person as there’s always something to learn or to do.

OK, I’m a realtor and not a motivational speaker. But Reverend Graham’s story made me reflect not only on my own personal life, but also on my career choice. The real estate profession is continually under construction and has changed drastically in recent years. Like most professions, technology has advanced at breakneck speed and Realtors have had to stay abreast of the changes. This technology has enabled agents to produce a much better product, but at the same time, buyers and sellers of real estate expect much more than ever before. So Realtors have had to keep up or lag behind.

As an example, in just the past few years, smart phones and tablet computers have enabled agents to have a fully functional mobile office while on the go. They can conduct business in a parking lot and give their clients the same information that they could if they were in their office. Agents can respond to their clients more readily and don’t have to wait till they’re back in the office to address their concerns. Or they can be touring the county with clients and download information on properties of interest on the fly. Right outside of a home for sale, an agent can upload pictures and let their clients view them to determine if they want to make an impromptu appointment to tour the home. This makes the task of showing houses so much more productive for clients as well as agents.

Another recent advancement is the QR (Quick Response) code. I suspect many folks have seen the odd little square ink blots but didn’t know what they were. These QR codes have a unique imprint and serve several purposes, but most often represent a website address. Anyone with a QR reader (an app that is resident in many smart phones) can just point their phone at the QR code, and a designated website pops up on their viewer. I recently listed a home that had a number of very unique features. I simply created a QR code for each feature and incorporated it into a flyer placed next to each feature. The QR codes were linked to either a manufacturer’s website for the product, a video about the product, or a customer testimonial. It turned out to be a powerful sales tool.

So what is the next big breakthrough? Many of the things we routinely use today could not have been imagined by most of us just a few years ago. But as sure as the sun will come up tomorrow, I know there will soon be something that will make my profession more exciting and lead to a more satisfying experience for both buyers and sellers.

Obviously, Mrs. Graham was thinking in more grandiose terms that real estate when she chose her epithet and it is certainly more meaningful when thought about in a spiritual, moral, or humanitarian context. But I believe the meaning of the story is relevant in all important aspects of one’s life. Even real estate.

Separating Fact from Fiction

I have always preferred going into stores where the sales staff informs rather than persuades. Most times I encounter a blend of both styles. When I sense that the information is heavy on persuasion and short on facts, I’ll usually shop elsewhere. But it’s a welcomed relief when I sense that the information is heavy on facts. It starts my relationship with the store on a most positive note.

Establishing a relationship with a Realtor can have similar challenges. Before a home seller selects a Realtor to list their home, they may speak with one or more Realtors before making a decision. A Realtor should be prepared to provide some biographical information, data on the home’s value, home selling tips and a marketing strategy. Here is some factual information to expect:

• Biographical information should include years of experience, certifications, number of transactions, verifiable references and examples of the quality of their work.
• Data on your home’s value should include recent sales of comparable homes. Comparable homes should be in the same neighborhood, similar lot, and with similar amenities. For example, a waterfront home should not be compared to an identical home on an interior lot.
• Home selling tips should be objective, proven and reasonable. Decluttering, paint touchups, and replacing rotted trim can have a positive impact on the home’s impression to potential buyers and can be done without much time or money. A suggestion to remodel the kitchen would also have a big impact, but in most cases would neither be a reasonable suggestion nor a cost-effective selling tactic.
• The marketing strategy should describe how your home will be presented and how the Realtor will get the listing in front of as many buyers and Realtors as possible.

The vast majority of Realtors are professional and stick to the facts. But Realtors are human and every agent wants listings. So here are a few tidbits of information that might be more designed to persuade than to inform:

• Stating that they already have a buyer for your home. Realistically, the odds of a buyer just waiting in the wings for you to list your home at the price you want is not very likely.
• Stating how quickly they sell homes. In 2010 in Montgomery County, the average time on the market was 132 days. A great listing presentation and marketing strategy help move a home faster, but keep in mind that some homes sell quickly simply because they are undervalued.
• Stating that they have buyers from foreign countries. That may sound impressive but in reality all MLS listings are easily accessible by anyone with an internet connection anywhere in the world. It is very common these days for Realtors to work with interested buyers from all parts of the globe.
• Stating that their website attracts more buyers than other Realtor websites. Bear in mind that once a listing is entered into MLS, it finds its way onto a vast array of both national and local real estate websites. The quality of the pictures and narrative are infinitely more important than the power of the website itself.

Montgomery County has a large number of professional, experienced Realtors with the confidence to compete for your listing with factual information and do not feel it necessary to puff up their presentation with vague claims and exaggerations. And it always pays to be a wise consumer, especially in a matter as important as selling your home.

The Sunday Drive

One of the outings I enjoyed as a youngster was the Sunday drive. After church we would go home, have the customary pot roast and if there was nothing else on the agenda, we would sometimes pile in the ’59 Chevy for a drive around the county. I always enjoyed those outings as my dad would usually venture into areas we had never seen before. That made it adventurous and made me more knowledgeable about the area we lived in.

As a Realtor, outings around Montgomery County are a daily occurrence. After being in this business for over 10 years, you would think that I would have seen every nook and cranny. But on occasion, I still venture into an area I’ve never seen before. And I get those same feelings of adventurousness that I felt as a kid. And that is just another part of being a Realtor that I love.

Recently, my web master incorporated a new header to my website’s homepage that features a slide show of pictures. They asked me to provide 20 pictures to display. I already had a number of nice pictures of homes that I’ve listed over the years. But in addition to property photos, I wanted to incorporate a few photos that represented the diverse real estate market in Montgomery County. I seized on this task as an opportunity for a Sunday drive. But to avoid crowds, I chose a Wednesday instead.

So I recruited my photographer / husband and embarked on a road trip around Montgomery County. We left our home off McCaleb Road about 9AM and headed south across the new FM 2854 overpass. Taking pictures along the way, we headed toward The Woodlands. We went to the Cynthia Woods Mitchell Pavilion and strolled along the walkways and took pictures of some of the architecture and sculptures. We then went to Market Square and took a few pictures of the shops and green spaces. About this time, we realized that covering Montgomery County in a day was going to be a challenge.

We headed back north on I-45 toward Historic Downtown Conroe. We took pictures of the Crighton Theatre along with other historic buildings. It was about noon by then, so we grabbed a deli sandwich at our favorite sandwich shop and ate in their dining room situated in one of the historic buildings on the square. After lunch, we headed east on Hwy 105 and took some photos in Cut ‘n Shoot, at the airport and fairgrounds, the Lone Star Convention Center and the new Lone Star College campus. We then headed out to the treasure trove of landscape photos, Lake Conroe.

No slide show about Montgomery County would be complete without a picture of the lighthouse at Seven Coves. The Southern Empress was in dock, so we managed to get a picture of the paddleboat with the lighthouse in the background. We headed toward FM 1097 and went across the bridge to Playa Vista on Lake Conroe. We get a great photo of Playa Vista with the FM 1097 bridge in the background.

We then went to Montgomery, took a few photos downtown and then went to Memory Park in Buffalo Springs. What a relaxing and scenic park. A great place to reflect on what had become a great, enjoyable day. It was now getting late, so we headed back home down FM 2854. But we stopped several times along the way to take pictures of some of the ranches along this scenic drive.

Back home, we found that we had taken several hundred pictures. I soon found out the more difficult part of this assignment is narrowing down the photos to only 20.
With the economy still struggling and gasoline prices still high, it might be a good time for stay local and rediscover the Sunday (or any day) drive. There’s lots to do and see right in our own backyard.

Making Money the Old Fashioned Way

Very seldom do I get a tidbit of wisdom from a TV commercial, especially something that is still sticking in my head several decades later. It was from a Smith Barney commercial in which the eminent actor John Houseman said of the brokerage firm “They make money the old fashioned way … they earn it.” He gave extra emphasis to the word “earn” in his distinguished accent. Those words rang true to me as the fruits of one’s labor taste so much sweeter when they have been earned through hard work.

In the real estate industry, I feel that it’s especially important to make money the old fashioned way, if you want to have some staying power. Every commission needs to be earned, not just received. So when can a Realtor walk away from the closing table, with a commission check in hand, and feel like they have “earned” their money? Here are a few items that should be on the checklist:

1. The Realtor has kept their client’s best interest in mind at all times by providing them with thorough and relevant information in a fair and objective manner.
2. The Realtor has minimized their client’s stress by being capable, responsive, communicative and proactive.
3. The Realtor has treated all parties involved with respect and professionalism.
4. The Client’s objectives have been met.

With these items checked, the Realtor should feel that the commission has been earned and should have a satisfied client that will provide future business through additional transactions and referrals.

Unfortunately, not everyone has the same concept of “earning” their commission. For example, I represented a client recently that needed to sell their home quickly in order to relocate for their job. It was a great property and after just a few days on the market a prospective buyer expressed interest. Since she hadn’t yet been pre-qualified for a loan, I gave her the names of several local lenders to get pre-qualified. After chatting a while about the property, she said she would call back after getting pre-qualified to set up an appointment to view the property. About a week later, I got a call from a Realtor in Galveston requesting information on this property for their client. Turns out he was calling on behalf of the same prospective buyer that had earlier contacted me. Instead of calling a local lender like I suggested, she contacted an internet lender based in Austin. The lender then directed her to the Galveston agent that he had an alliance with.

As it played out, I learned that the Galveston agent only handled referrals from this mortgage lender, had another full-time job, was inexperienced , and basically had very little time or ability to handle their client’s transaction. Additionally, neither the Realtor nor the lender understood or was willing to learn anything about our local market. In other words, they mostly wanted to “receive” their commission, not “earn” their commission. Unfortunately, the client’s advisors simply couldn’t get it together and were unable to close the deal. So the contract fell apart and the home was sold to the next person in line.

Unfortunately, this scenario is being played out with more and more frequency. Alliances are being formed between the various individuals in the real estate industry. Knowing that they are unlikely to ever get a referral or repeat business, they have to rely on the internet to cast a wide net to get new business. So they invest heavily in an internet website making grand promises to capture clients. But in reality are more focused on generating commissions than helping their clients successfully navigate through a major life decision.

Fortunately, there are many fine local Realtors who still feel that a successful business is built through satisfied clients. And as long as satisfied clients are the mission and the commission is not the mission, everything else will fall into place.

If you are looking for a home, I would love to have an opportunity to earn you business. I can be reached at 936-537-1656 or Claudia@ClaudiaHohlt.com.

Demystifying Short Sales

There has been an increased interest in “short sales” over the past several years. In 2010, about 2% of all single family homes sold in Montgomery County was identified as short sales. But the number has been growing each year. A short sale is essentially a pre-foreclosure arrangement where a lender agrees to accept a sale’s net proceeds as full payment of the homeowner’s outstanding debt. It is a viable option when a homeowner can no longer make their mortgage payments, their home is worth less than the amount owed, and efforts in acquiring a loan modification have been exhausted.

So how is a short sale different from a foreclosure? To a lender, a short sale prevents the legal costs associated with a foreclosure, eliminates the holding costs associated with owning the foreclosed home, and minimizes the risk associated with an unoccupied dwelling. To a home seller, a short sale has the potential to be less damaging to their credit score and could indicate to future creditors that they were proactive in mitigating their lender’s losses. It is also a less traumatic process for the home seller as it allows a more orderly transfer of the home and enables the seller to make a more graceful exit. Under certain circumstances, the home seller can even qualify for relocation assistance under the Home Affordable Foreclosure Alternatives (HAFA) program administered by the U.S. government. Details of this program can be found at www.makinghomeaffordable.gov.

For someone interested in a short sale, an experienced Realtor can be helpful in navigating through the process. One of the first steps for the homeowner is to contact their lender’s loss mitigation department to discuss their situation and give permission for their Realtor to communicate with them. The bank will expect evidence from the homeowner that a hardship has been incurred, there is an inability to make ongoing mortgage payments, they are unable to qualify for a loan modification, and there are no other assets to pay all or part of the debt. After the bank is on board, a short sale is handled much the same as a traditional sale, but with the bank negotiating offers, not the homeowner. And although there are a few more steps involved, most experienced agents can easily handle a short sale.

There are some things that homeowners should be aware of when considering a short sale. A second mortgage, for example, can make a short sale more challenging. The difference between the lender’s proceeds from the sale and the amount of the outstanding mortgage may or may not be forgiven by the bank, although the merits of pursuing the remainder through a judicial action would appear fruitless considering the documented hardship of the seller. If the debt is forgiven by the lender, the amount forgiven is taxable, unless the home is a principal residence. In that case, the amount is not currently taxable under the Mortgage Forgiveness Debt Relief Act of 2007.

In recent years, short sale negotiation companies have attempted to insert themselves into the process. Their claimed expertise is to handle the negotiation with the bank on behalf of the listing agent. To compensate them for their involvement, the homeowner is typically required to sign a contract requiring any future buyer of their home to pay the negotiation firm a fee. This fee can be significant and along with its unusual nature can sometimes be offensive to potential buyers. Because of this, home buyers looking at short sales should always inquire upfront about any fees that they would have to pay to a short sale negotiation firm, so that it can be factored into their offer.

Fear of losing one’s home is something none of us ever want to experience. But unexpected hardships can happen to any of us. If you are a distressed homeowner in fear of losing your home, be sure to discuss your options with trusted advisors who have your best interest at heart. And if you conclude that you can no longer afford your home and are upside down on your mortgage, be sure to consult with an experienced Realtor who understands and has direct experience with short sales.

Girls Scout Cookies and Real Estate

love the onset of spring. Birds are chirping, trees are budding, and Girl Scouts are selling cookies. Ok, I’ll be the first to admit it. I have an addiction to Thin Mints. My family has even tried an intervention, but I can’t seem to kick the habit. I think that even the Girl Scout Organization is trying to help Thin Mint addicts such as myself, as they have downsized the number of cookies in each box. Well, they can’t fool me, I’ll just buy more boxes!

All kidding aside, the marketing strategy of shrinking product sizes has been going on for years. A package of coffee now makes fewer lattes. A container of ice cream makes fewer root beer floats. A bar of soap washes fewer hands. I understand this trend is due to marketing research that has determined that consumers are less sensitive to shrinking package sizes than to increasing prices. But what is the end game? Downsizing can only be used so many times until it becomes ridiculous.

My age may show when I make this observation, but it seems that years ago manufacturers had more respect for the consumer and tried to differentiate their product through quality rather than gimmicks. Real estate is not that much different. I’ve seen developers shrink lot sizes to sell more lots per acre. I’ve seen builders use top of the line granite and bottom of the line lumber, to maximize visual appeal while minimizing cost per square foot. And I’ve seen realtors put more emphasis on production volume than quality of service delivered.

But as consumers, we can all make a difference. We have to be more discriminating in our purchases of goods and services and call out companies when they use gimmicks to capture our business. Perhaps we need to get outraged like Peter Finch in the 1976 movie “Network” when he repeatedly shouted “I’m as mad as &%$#, and I’m not going to take this anymore!”

In shopping for a realtor, I encourage everyone to be a discriminating consumer. When looking for a listing agent, review the quality of their work on other listings that appear online. Foremost, check to see if the pictures are vivid, well framed and clearly described. Additionally, see if the narrative is compelling and presents the property in a favorable light. Most people start their search for a home online and view each home just a few seconds unless the pictures or narrative interest them. So the importance of those aspects cannot be taken too lightly.

And whether you’re looking for someone to help you sell or buy a home, check out agents’ references. Every agent can provide them and most even present them on their website. You can also check out agents’ Client Experience Ratings on HAR.com. Finally, I encourage everyone to select someone who is experienced, full-time, and local.

Discriminating consumers not only make a difference in the quality of their own purchases, but they can make a difference for others. As more and more consumers become informed and use that information in their purchases, sellers of goods and services will respond accordingly.

Well, I’m still going to buy the Thin Mints. After all, it’s for a good cause so the number of cookies really isn’t a factor in my buying decision. In fact, I have only two factors that enter into my Thin Mint buying strategy … how good they taste and the size of my pantry.

A Realtor’s Trip Down Memory Lane

The other day I was checking on a home for a client who had moved out of state. As I was leaving, I noticed a yellowed newspaper that had been left behind. I was very intrigued when I saw it was a complete December 2, 1954 edition of The Conroe Courier. I’ve always enjoyed learning about our local history. I find it interesting and I feel it makes me a better ambassador for Montgomery County during my real estate activities. So I just had to read through it before I put it into a safe place for my client.

It was fascinating contrasting the news and ads of 1954 with today’s news. A front page article about women soon being allowed to serve on juries in Texas highlighted how much things have changed. Other front page articles were not that different from current articles, e.g. a road expansion, school bond election, and a shooting. But much of the paper was filled with personal information such as hospital admissions, births, vehicle transfers, and lots of tidbits about local residents’ comings and goings. I suppose to some extent, that level of personal info is still published today, but instead of calling the newspaper, folks just send a Tweet!

There were lots of ads in this issue. Let’s see, Ipana toothpaste is on sale for $.53 at Thompson Food Market, Flaxman’s has a 16 oz. jar of Foreman’s Picallilli for $.33, and Penney’s has 60 gauge sheer nylon hose with slim dark seams for $.50 a pair. For entertainment we have Julius Caesar playing at the Crighton and at the Hi-Y Drive-in Theater, Ronald Reagan stars in Prisoner of War.

But being a Realtor, the most interesting to me were the real estate ads. There were 4 real estate firms with ads, none of which are still in business today. Many of the homes were described by number of rooms rather than by square footage. Some of the features mentioned in the ads were venetian blinds, in-laid linoleum, a chicken coup and a hog proof fence. But the most unusual ad by today’s standards was for an 8 room rustic log and asbestos house adjoining the Country Club.

Yes, things really have changed in the last 57 years. And I would guess that few communities have changed as much as Montgomery County because of its explosive growth. We’re almost 20 times as large as we were in 1954. The construction of I-45 and Lake Conroe probably had the most impact. I-45 made Houston much more accessible and made Conroe attractive as a commuter town. The Woodlands along with other communities along I-45 sprouted up to meet the increased demand for housing. And Lake Conroe provided another alternative for those who enjoy the many amenities of lakeside living.

All of this growth has caused the local real estate industry to change as well. First of all, there are a lot more than a handful of Realtors these days, so it has become a much more competitive market. And with so many options available, Realtors have had to become well versed in the variety of housing options, including golf course homes, waterfront homes, estate communities, planned communities, condominium complexes, to name just a few. We also have to be adept in working with the many different types of buyers, including second home buyers, retirees, investors, first-time home buyers, up-sizers and down-sizers. In my own practice, I have had increased requests from current and soon-to-be retirees from all over, wanting to live in Montgomery County because of its natural beauty, temperate climate, proximity to great health care, affordability, and its many amenities.

Montgomery County has a great history and a great future. Much credit is deserved by those involved in the preservation of that history. Our beautiful downtown Conroe and the recent restoration of the Conroe Country Club are just a few examples of how history has been honored while meeting today’s needs. It is truly a joy and privilege to be a Realtor in Montgomery County. Now if my ancestors would have had the foresight in 1954 to purchase the advertised “43 acres near Hwy 105, 12 miles west of Conroe, nice home and lake site, ½ minerals for $3,800”, I would feel even more privileged!

Profile of the 2010 Montgomery County Housing Market

Many years ago George Bernard Shaw said “If all economists were laid end to end, they would not reach a conclusion”. In today’s much more complex world, his statement is more relevant than ever. While it appears that economists have differing outlooks on 2011, they seem to be slightly more upbeat than the last couple of years. And although I share cautious optimism with many of my fellow Realtors, I’ll refrain from making any of my own predictions for 2011. Instead, I’ll look back on 2010 and share a few insights. That’s a much easier task

As Montgomery County’s housing stats for 2010 are being finalized, results are shaping up to be a mixed bag. For Montgomery County as a whole, sales of single family residences were relatively flat with last year, but still around 30% below the peak year of 2006. The good news though is that the median home price rose about $3,000 in 2010 as a result of slightly larger homes sold and a slight increase in the average price per square foot.

In taking a closer look at the results, it appears that prices had to resist some heavy downward pressure from foreclosures. Foreclosures were very high as they have been for a number of years and still represent about 20% of all homes sold. The median sales price of foreclosed homes was down significantly in 2010 as banks appeared to more aggressively dispose of their inventories. The average price reduction from 2009 on foreclosures was approximately $9,000. The contrast in the average profile of a non-foreclosed home and foreclosed home in 2010 was remarkable. The average non-foreclosed home was 2,430 SF in size and sold for $89.76 / SF. The average foreclosed home was about 20% smaller and had a 35% less cost per square foot. Of course, many foreclosed homes are not in tip-top shape, but most of these foreclosed homes were great buys.

Without these large numbers of low priced foreclosures, our market would have fared much better in 2010. Since many of the systemic weaknesses in mortgage lending practices have been eliminated, I suspect that far fewer high risk mortgage loans are making their way into the banking system. And as foreclosures get back to the lower levels existing before the housing crisis, housing prices should improve. But I wasn’t going to get into any predictions, so I will let you come to your own conclusions.

Finally, from a geographic perspective, results indicate that southeast Montgomery County was the hottest housing market in 2010 with a 12% increase in sales and a 7% increase in prices. I should also note that new construction represented a third of all sales in this area compared to about a sixth of all sales in the rest of the county. With easier access to major employment centers and with The Woodlands approaching maturity, it makes sense that developers and builders are targeting this area.

In summary, I would conclude that 2010 showed slight improvement. Overall prices have picked up slightly while sales volumes have remained steady with last year. And with Montgomery County having so much to offer, I feel that the future of our local housing markets is bright.

But having said all of the above, most of my clients are not affected by housing trends and predictions. Their decisions to buy or sell property are based on personal reasons, such as a growing family, an impending empty nest, a big promotion, or wanting a change of scenery, to name just a few. But be assured that whatever is driving your decision to buy or sell, you will get maximum value when you contact an experienced Realtor.