Jim Sherry

Sherry, who recently spoke to LeadershipPAR participants, said, “Consumers are taking charge of discovering data on where they want to live. Before buying anything, they collect tons of information and often show up with more data than the REALTOR® has.”

This requires a shift in how REALTORS® must perceive themselves, Sherry said. If a REALTOR® sees himself as a salesperson, he limits his value to a client who has already done most of the research and knows what he wants to buy.

“REALTORS® should consider themselves advisors who need to understand their clients’ needs and help them find a home that matches those needs, whether it’s a ‘green’ home, closer to their workplace or in a specific neighborhood. They should know specific data like what percentage of students from each school district go on to college. This is the kind of information an advisor can help with,” he added.

Sherry said more than half of homebuyers today are Generation ‘X’ and ‘Y.’ To work with these clients, REALTORS® must be versed in working with the Internet and social media, Sherry advised. “REALTORS® are being asked to change the way they do business because the consumer is demanding change.

“I’m convinced there’s a place for REALTORS® in this new market as an expert advisor, not as a salesperson,” Sherry said. “REALTORS® need to understand how events around the world affect their businesses. The recent economic changes have made that very clear.”

Sherry concluded that extreme customer service is of utmost importance. “REALTORS® provide a service for a ‘big ticket’ purchase and they receive a commission for that service. Their service should be of ‘big ticket’ importance to their clients,” he added.

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Question: How do you defriend someone on Facebook without causing bad feelings? Is there a way you can do it without them knowing?

Answer: A contact on Facebook will not receive a notification telling him you removed him as a friend (defriended). There are a few ways he could figure it out, such as noticing a decrease in the number of friends and trying to figure out who he is no longer connected to or one day wondering why he hasn’t seen your name on his newsfeed and realizing you’re no longer connected. If the person has a large number of friends and you don’t usually interact on Facebook, I would say the chances of him noticing your “defriendship” is slim.

That being said, unless you have a truly compelling reason to delete him from your network, I recommend hiding his feed. In a recent post, I explained how to hide people and applications from your news feed. This means you don’t have to see his status updates unless you specifically look at his personal page.

Another option is to control what your friends see on your page by using Lists and the privacy settings. To learn more, visit facebook.com.

Do you have a social media question? Ask Meghan by filling out this form.

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A virtual phone service allows the user to have one phone number for all phones and phone calls are all funneled through this one number.

“With a virtual phone, you can set it to ring at the office or on your cell phone or go to voicemail if you don’t want to be disturbed,” Vezina said. “One of the features allows you to receive an e-mail or voicemail notification about messages.

“For a real estate office, a virtual phone service replaces an expensive phone system and allows agents to be accessible from one unique phone number,” he added.

Some virtual phone services work with a virtual receptionist first answering the call and then directing the call to either the agent or to a dial-by-name directory. “This gives the real estate office a more professional appearance and helps ensure that all calls are answered,” Vezina said. “It also offers voicemail for all employees, main and after-hours greetings, informational messages, call screening and conference calling,” he said.

Some virtual phone services like Google Voice may offer a free plan while others may charge additional costs ranging from $10 to $50 per month depending on the features added. The ultimate benefit is flexibility, mobility, productivity and the ability to respond quicker to clients.

You know you are in a different time and place when:

1. House prices are lower this year than last year and last year’s prices were lower than the previous year’s prices.

2. There’s a continuing danger that the equity in many homeowners’ properties is at risk, especially the down payment for recent purchasers. In today’s real estate market, down payments evaporate if prices fall.

3. Despite recoveries over the past seven months in terms of prices, sales and reduced numbers of foreclosures, markets are still weak. The Wall Street Journal reported that new home sales dropped another 11 percent in January 2010 (after a December 2009 decline of 7.6 percent) to a seasonally adjusted rate of 309,000. This is the lowest level of new home sales since record-keeping began in 1963!

4. Interest rates are at historic lows yet consumers are not buying most things, including houses.

5. Tax shelter is increasingly being viewed as a bad thing in the housing market (since it results in higher asking prices today). Brokers may promote it as an advantage to homeownership but buyers, especially first-time buyers, would rather not have to pay the premium built into the settlement price.

6. Sub-prime loans, Alt-A mortgages and Option ARMs were heralded as favorable innovations by industry and consumers alike; soon afterward, they became dreadful memories.

7. Defaults and foreclosures have become everyday terms around America’s water coolers. Once a fraction of one percent, now these are everyday problems.

8. It’s good news when the number of borrowers in arrears increases but at a decreasing rate.

9. Mortgage modifications currently total over 116,000 but four million borrowers seek help.

10. The federal government has announced a new program to bail out borrowers in states with large price declines and high rates of unemployment — but even before it’s implemented, government officials are lowering expectations. As important as $1.5 billion will be to those five states (California, Arizona, Nevada, Florida, and Michigan), it’s not going to solve what is a catastrophically large problem.

11. “Strategic defaults” are beginning to be questioned as immoral financial decisions.

12. Even the market for jumbo loans is very tight. A recent report indicated that a borrower with $8 million in assets could not refinance his home mortgage.

13. “More affordable” is about the best thing you can say about the current housing market.

14. Rents are falling and are expected to continue to decline.

15. In terms of legal issues, the authority of eminent domain is a significant government threat rather than the major constitutional protection of private property in the U.S.

16. Commercial real estate defaults are likely to be the next shoe to drop. One report indicates as much as $1.4 trillion in commercial mortgages will require refinancing over the next four years. Expect $200-$300 billion of defaults threatening as many as 3,000 banks.

17. While the housing market is on a “path to recovery,” no one believes there will be significant appreciation, revived sales activities or shortages of inventories for a very long time.

More consumers are looking for homes that are energy-efficient and more ‘green,’ said REALTOR® Steve Matthews of Prudential New Jersey Properties, Montclair, NJ, who’s seeing an increase in consumer demand as his region is limited in new construction.

Matthews, who has a GREEN designation, said, “In the northeast, we’re still playing catchup to the west coast in terms of looking at issues like greening our homes.” Many northeast metropolitan areas have little or no space for little new construction and consumers have focused on how to make existing homes more environmentally friendly.

Clients thinking about selling an older home can make a few changes:

• Add blown-in insulation and energy-efficient windows. Document the difference in your energy savings. “It doesn’t sound like a lot to start with but during the winter  months these can make significant savings,” Matthews said.
• Conduct a home-energy audit to see where the house is losing energy. An audit will show cold or hot spots.
• Add Energy Star appliances. These appliances add value to the home and make the home more energy efficient.
• Make changes to the landscaping. Use indigenous plants that require less maintenance and less water.
• Use low VOC paints when repainting the home.

“Keep documents on everything you do,” Matthews added. “Make them available to potential buyers. If someone’s especially interested in green aspects, this gives him extra confidence in what you’ve done.”

Kate Hart of Hart and Associates Staging and Design of suburban Philadelphia  agreed with Matthews. “You don’t have to gut your house to make your home more energy efficient. There are some simple things to make a difference,” she added. “Replacing windows and garage doors helps the appearance of the home and helps with energy savings. And some items are available for a tax credit as well.

“Make a list and show it when potential buyers come through,” she said. “Show the buyers the savings you’ve seen in your utilities. With the deregulation on utilities in Pennsylvania, buyers are going to be concerned as they’re looking at a new home.”

Photo credit: Kate Hart

It’s easy to make an older home look updated with an accent of a new, trendy color, according to Kate Hart, president of Hart and Associates Staging and Design in suburban Philadelphia.

“There’s a misconception that everything has to be white or beige,” Hart said. “If you want a home to feel new, exciting and trendy, especially a resale home, a pop of color instantly updates the space.”

Hart said the hot color of 2010 is turquoise. “Turquoise is a fun, tropical color,” Hart said. “It’s especially important in today’s market to have something that’s a pick-me-up. You want people to come into the space and be happy.”

Colors that work well with turquoise include lime green and coral.

“Using accent colors doesn’t mean that you paint the room turquoise,” she added. “Keep the walls, carpeting and furniture neutral. It’s easy to add a pop of color by adding pillows, lamps or a vase to bring some color to the room. It’s also a good idea to use this same color throughout the house to create flow from one room to another.”

Hart said she uses the 60-30-10 rule. “Sixty percent of the room should be one color like your walls, 30 percent is another color like the flooring and 10 percent is the ‘pop’,” she added.

Neutral colors are trending toward gray tones and whites are showing a gray undertone. Hart noted that homes with natural wood floors often continue using neutral colors with brown undertones.

Metal tones are going more toward brushed silver and nickel and away from bronze or brass tones.

“I try to remind homeowners that they really want to sell their home to one target buyer,” Hart said. “Who’s buying this house? What are they going to want to do with the rooms? Once you know who the target buyer is, stage for that buyer,” she added.

They found that 213 of the 299 cities selected for the study were over-valued. Number one on the over-valued list was Naples, FL, with a whopping 84 percent of its housing stock selling for more than what was thought to be the “correct” price or fair value. The 2010 follow-up study found that housing in Naples now sells at a 29-percent discount to fair value. Median prices fell from more than $390,000 to about $165,500.

By 2010, only 87 of 330 cities studied were over-valued. The most under-valued market in the 2010 study was Las Vegas at 41 percent below fair value, followed by Vero Beach, FL, down almost 40 percent; Merced, CA, down nearly 38 percent; and Cape Coral, FL, down almost 37 percent.

How do Pennsylvania cities compare? Here are the numbers:

All Pennsylvania cities show evidence of relative price declines from their fair value estimates from 2006 to 2010, except Harrisburg, which extended its over-valuation, and Scranton, which is about the same.

The primary implication of these numbers is that the median prices in the overvalued cities may decline further while the undervalued set (except Pittsburgh) overshot their fair values during the recent years’ declines. The Steel City was slightly undervalued in 2006 and is even more so now.

It is important to note that it is quite possible for over- or under-valuations to persist for some time. Economics and other forces exert pressure on prices to “revert to the mean” but this process may take several months — or even years.

The conclusion of the report observed that for a few years, the average buyer “should forget about home purchases as investments.” But homebuyers, especially in under-valued markets, can expect long-term appreciation as prices approach fair values.

“While lending guidelines have changed in the industry, PHFA’s have remained the same,” said M. Dona Palmer, PHFA Business Development Manager. “We’re still a viable option for many homebuyers, especially first-time buyers.”

“Many homebuyers with a lower credit score or who have less than 20 percent saved are being turned away from the home buying process,” Palmer said. “PHFA has expanded its programs in order to assist more buyers.”

Seminars, which cost $25 per person, are being held from 8:30 a.m. to 4 p.m. at these locations: March 11, King of Prussia; March 16, Harrisburg; and March 18, Pittsburgh. To learn more or to register online visit the PHFA web site.

Those with questions can contact Denise Shearer or call 800-822-1174.

Question: I have been following your posts on PAR JustListed. I have a presence on LinkedIn but that is it, and admittedly, it is only half-hearted. I had read a post before from someone that advised RE Professionals to use LinkedIn for business and Facebook for personal. My busy schedule with work and family does not allow me to sit in the evenings and deal with Facebook, Twitter, etc. Am I missing the boat? How do others handle all the web sites, social media, e-mails, etc. and still have a life?

Answer: LinkedIn is more for business but to get anything out of your profile and efforts, you need to find groups to join and interact with. PAR has a private group as does NAR plus there are other RE groups out there. Be a part of the conversation – ask questions and provide your professional opinion to others who ask them in group discussions.

Facebook is the social network. Use your personal profile to make old and new connections just like you would in the face-to-face world. A Facebook business/fan page is the place to do business.

Setting up your profile is what takes the most time. After you set up the profile, maintain it by accepting/rejecting friend requests, posting pictures, joining groups, etc. To become a source of real estate news to your followers on a business page you can take advantage of RSS feeds and other applications which post the news automatically for you.

Readers: How do you find the time to manage social media and emails? Please comment below.

Do you have a social media question? Ask Meghan by filling out this form.

In the real world of real estate, with unique assets, various local market conditions, changing demographics and uncertainty about the future, property values are unknown. Values remain unobservable, so as before, we rely upon prices. This time, prices are not the same as values: price is merely an estimate of value.

This distinction is important but is often overlooked. Prices are used by market participants as indications of value because true values cannot be observed. Often supply and demand conditions in real estate markets change, sometimes quickly. In these cases, prices can diverge from values upwardly or downwardly, depending on the direction of the change.

For example, suppose housing prices are found to be rising faster than household income for an extended period. We know from experience that there is a relatively constant relation between house prices and household incomes. Yet, we sometimes see prices changing compared to incomes (e.g., consider most housing markets from the mid-1990s until about 2006). We cannot explain the rise in prices relative to incomes, yet it has occurred. Values are determined by the underlying long-term and complicated relationships set out in the past. In this case, prices diverge from values.

The debate over “prices” and “values” is a very old and famous one in economics, perhaps 250 years in the making. In the short run, it is quite possible to find prices higher or lower than values due to unusual events or rapid changes in market conditions. In the long run, price equals value due to market forces.

We make decisions in the short run. Therefore, it is possible that prices will exceed values (this is typically called “over-valuation”) or prices may be less than values (this is called “under-valuation”). If there were no differences between value and price, under- and over-valuation would have no meaning.

Researchers and analysts study markets in attempting to identify situations where there is over- or under-valuations. We can observe prices (as reported by MLS offices from actual transactions) but we cannot observe values. The latter must be estimated in careful studies by statistical analysis.

Are PA housing markets over-valued or under-valued?  A major study of this precise question has just been completed and will be the subject of my next blog.