CNNMoney has published a piece entitled It Doesn’t Pay to Remodel Your Home. Overall, I couldn’t agree more, and I have banged this drum for a while. Am I against home remodeling? Of course not. I am against the expectation that you’ll cash out handsomely in the current economy. One of the toughest jobs I have had the past few years is convincing home sellers that their improvements did not raise the value of their home, and that their value often declined.

For example, if the going rate for a raised ranch in a given market area is $450,000 and someone bought their home in 2003 for $425,000 and put $75,000 in improvements, they simply won’t get $500,000. Why? Because the buying public is skimming the cream off the top, and the homes that sold for $450,000 are by and large well matched to their place. Many improvements don’t raise value as much as they shorten market time. Equally priced homes will see the nicer one sell first. The article has a useful chart on the dollar for dollar return on improvements, and the top upgrade, cement fiber siding, only paid back 80 cents on the dollar.

In the example sited, the return on the improvements was only 33 cents on the dollar. The reason? The property the home rests on lost value for most of their ownership. Improvements seldom to never outrun property value declines. In the rock/paper/scissors of real estate, land value trumps everything. This is especially the case in fully developed New York, where land is scarce and land values are so relatively high. If the land goes down 20%, there is no improvement upon that land that can reverse the tide. As a result, many sellers who poured a ton of money into their home are understandably depressed.

Should people shun improvements? Not necessarily, no. If you have a 1962 kitchen, upgrade if you want. Just don’t expect to cash out as a result, and don’t splurge on every upsell thinking it will pay you back. It won’t for a long time, probably when styles have changed. The same goes for new roofs, furnaces, and other mechanical improvements, because buyers already expect roofs that don’t leak and furnaces that heat for their consumer dollar.

The idea is more in expectations. As I blogged recently about master bedrooms becoming absurdly opulant, improve your home for your quality of life, hopefully with an eye toward resale. But don’t expect the prospective buyers to appreciate your personalized amenities with their checkbook. In the current economy, dollar for dollar return on investment is negative until values get bullish again.

Originally posted on Active Rain

Announcing November’s Lucky Striker Social Media Club Dinner and Meeting. This month we’re fortunate to have Matt Daimler, from Buyfolio.com, whose topic will be learning how to trust & empower your customers to create stronger and more fruitful relationship with them.

“Buy-side brokers need to evolve their customer approach in an industry where data is a commodity and customers have the power of information,” says Daimler. “The buy-side brokers who focus on relationships and embrace new tools and technology that empower their customers will find success.” During the presentation, we’ll examine other industries and professionals that have successfully overcome similar challenges and relate their experiences directly to real estate.

When: Wednesday, November 9th
7:00 pm (sharp!)
Where: The Roger Smith Hotel
(Lexington & 47th St)

Seats are very limited. If you’d like an invite to the event, please click through to our Facebook page and post a request. We’ll be in touch ASAP.

About Matt:

Matt Daimler is the founder of Buyfolio.com, a new online platform for NYC real-estate brokers working with buy-side customers. Prior to Buyfolio, Matt founded the award-winning travel website SeatGuru.com, one of the first websites to monetize its content by displaying advertisements through Google AdSense. After years of significant traffic and revenue growth, industry leader Expedia purchased SeatGuru in early 2007. At the time of the sale, the site averaged 1 million unique users and 5 million page views each month.

Prior to SeatGuru, Matt worked for technology companies in San Francisco and Seattle. He has a BS in Computer Engineering with a Minor in Entrepreneurship and Management from Johns Hopkins University and currently resides in New York City.

About the Lucky Strikers Social Media Club:

We are NY/Metro Real Estate and technology professionals collaborating to maximize each of our web exposure and generate business referrals.

The LSSMC meets monthly for dinner to connect and discuss the issues and challenges in the industry and how to prosper by networking/introductions. Relevant speakers attend to provide value to members and to offer their unique perspectives.

Our site, Luckystrikersnyc.com is a cooperative content syndication portal.

Lucky Strikers know that Social Media means business!

Real estate might be one of the largest financial decisions a person makes, but it’s often not just about practical or rational choices. More often than not, buying a new home is a gut-decision where emotions rule.

At this month’s Lucky Striker Social Media Club dinner and meeting, Vince Collura from Gotham Photo Company will join us to speak about using media to create an emotional response from potential buyers.

Just a quick formal announcement to let you all know that the migration from our old host to the new one is complete. We shouldn’t have anymore problems. Hope to see you all tonight at the event!

-Patrick

As Yogi Berra says, you can see an awful lot by watching. And as a broker who oversees 20+ agents, 50+ listings and who still works in the field with select buyers, I do see both sides of an issue that sellers often bring up in the discussion of listing and selling their house.

Many of the people who list their home for sale with me already experienced failure with a prior broker. They often tell me in our preliminary interview that they were frustrated with the lack of “selling” they witnessed with the agents who showed their home when they came by. Why they were even home to see this in the first place is a post for another day-suffice to say the folks aren’t free to speak with the owner 2 feet away. The question itself speaks to the need consumers have for education and understanding as to how homes are chosen and bought.

“The agents who show the home just walk through and hardly say anything about the house. Don’t they want to make a sale? Why aren’t they pushing for a sale?”

To understand the fallacious underpinnings of the question, you first have to understand the process a 2011 buyer goes through in the selection of a home. They don’t want to be “sold.” This isn’t a home-o-matic that comes with free steak knives if you act now. This is a six figure decision in an unreliable economy that will house their family. And owners or agents who follow them around the home tour peppering them with data about the storage under the stairs, an anecdote about the wall oven, and dozens of other well meaning tidbits are viewed as a distraction and nuisance.

Buyer agents who are not talkative are not ignorant about the house. They aren’t talkative because they do know their buyer clients. Rather than seeing a home tour as a sales pitch, it is better to view it as a dressing room or a library. They are studying it. They are taking it in. They are soaking in it. They are seeing if it fits them. They are assessing how they look in it. And that’s hard to do with someone in your space the whole time.

If it feels like home, they’ll ask questions or gladly take a data sheet with a list of all those improvements and enhancements the owner wanted to ram down their throat in the first 15.8 seconds they walked in. If itdoesn’t feel like home, no list will matter- it is off the list. Just imagine how little clothing a store would sell if the sales staff followed you into the dressing room and yapped about the pleats. How intrusive and unsettling would that be?

A smart buyer agent therefore lets the buyer client go through the very personal process of understanding the house in as pressure free a manner as possible, selecting what to say carefully tailored to their clients needs as they see them apply through the home. They aren’t not trying to sell. Quite the contrary. They know that doing what a biased, emotional un-trained homeowner does will foil a sale.

I’ve said it before and I’ll say it again: Homeowners are wise to not be present for showings. And mandating that a listing agent accompany showings as their proxy is a bad idea in most cases also. Let the buyer agent do their job. If you are an owner and you have a pitch you feel works for the house, write it up and print it for the buyer to take with them so they can reference it quietly, at their own pace, and without pressure on their own terms. Homes are bought, not sold. If it doesn’t feel like home in the first place, you’ll never talk them into buying.

Let the buyer try it on and see how it fits in peace. Let them study it without noise. Stay out of the way. My results say this is the way to go.

I remember as a child in the 1970′s hearing my mother lament that she knew that she was making less than her male counterparts. It was a problem, and pay equality continues to be an issue to this day. Things are improving, but I don’t think we’re there yet.

But is real estate an occupation where pay equality is an issue? According for a recent article in Forbes, real estate ranked as one of the top 10 sexist jobs in the United States, along with truck driving and marketing managers, earning about 70 cents on the male dollar. The piece also put women at about 52% of the agent population, which struck me as peculiar.  In my area, women dominate the agent pool; I’d put them closer to two thirds of licensees.

Since real estate is virtually only a commission based pursuit, the 70 cents on the dollar statistic can’t refer to a lower salary. Commissions are negotiable; you earn what you sell. In my market, female agents dominate the high dollar producers. There are plenty of males who are high producers (like, for instance, Yours Truly), but we’re outnumbered. And I don’t think that New York is an aberration. I think females make up the lion’s share of the agent population just about everywhere. So what gives?

I really don’t know the source of Forbes’ data. However, if the average female agent really does earn less than $700 per week and the average male almost $1,000, I have some theories.

#1 – While men may very well be a minority of the agent pool, a higher percentage who are licensed are full time bread winners. This is where women being in the majority works against them, because the more part timers you have, the more your numbers are pulled down.

#2 – Commission splits for women could be lower for women, which strikes me as incredibly unlikely. The competition for productive agents is fierce, and I have never heard of such a thing as offering a female agent less and expecting to get her license hung in your office.

#3 – A wild card could be that female agents negotiate lower commissions with clients, but, like number 2, I see no evidence of this at all.

My guess would be that with females in the majority, there are more part timers making less, pulling their average down. But I remain dubious as to the source of Forbes’ data.

“YOU are your most valuable asset. Not what apartment you just sold or the company you work for.  YOU!  Your personality, your memorable personal brand!

Let’s face it, you’re competing with tons of agents with great track records and experience.  Thus, it’s critical that you clearly and concisely bring YOU to life.  Whether you like it or not, you’re already a “brand”.  This 30 minute workshop will teach you to take control of that brand and influence what others are saying about you by creating a memorable, personal brand statement.“

Join the Lucky Strikers Social Media Club for what will undoubtedly be an exciting, energy-filled and  interactive presentation by Eric Barron. Eric’s current crop of endeavors includes his role as managing director for the New York Real Estate Institute — the largest real estate school in New York — and as founder of N2K.tv, a broker-centered video educational site.

When: Wednesday, July 13th
7:00 pm (sharp!)

Where: The Roger Smith Hotel
(Lexington & 47th St)

Seats are very limited. If you’d like an invite to the event, please click through to our Facebook page and post a request. We’ll be in touch ASAP.

About Eric Barron:

Eric Barron’s life took an uexpected turn after graduating from Washington University, as he spent the next 15 years in the middle of a huge real estate boom, operating mortgage companies throughout the NY tri-state area.  During this period he also had the fortune of finding his true passion – teaching, coaching and motivating others.  Introduced to the DiSC personality styles, Eric trained more than 3,000 real estate agents on how to maximize the connections they make with others in order to close more deals.

Escaping the mortgage collapse in 2007, Eric went on to launch ericbarronlive, later known as The Ability Project – both of which focused on the development of essential “soft skills” most lacking in business professionals, particularly the art of personal branding.

Over the past few years he has worked with career builder, vault.com, appeared on over 50 college campuses along with numerous career fairs and alumni events.  Eric is currently finishing up a project to launch fun and engaging continuing education courses for the real estate community via online video.   Stay tuned.

About the Lucky Strikers Social Media Club:

We are NY/Metro Real Estate and technology professionals collaborating to maximize each of our web exposure and generate business referrals.

The LSSMC meets monthly for dinner to connect and discuss the issues and challenges in the industry and how to prosper by networking/introductions. Relevant speakers attend to provide value to members and to offer their unique perspectives.

Our site, Luckystrikersnyc.com is a cooperative content syndication portal.

Lucky Strikers know that Social Media means business!

Earlier this month Stephen Haines (commercial director of Facebook’s U.K. operation) raised a ‘startling if self-promotional possibility’ when he asked the following question at the Technology for Marketing and Advertising conference; Will Facebook replace company Web sites?

In the following fascinating video Scott Galloway (Professor at the NYU Stern School of Business where he teaches brand strategy and luxury marketing) furthers that ideology in part by predicting that:

“Facebook is going be the most valuable company in the world within 24 months.”

Noting that many young people already use Facebook like an online operating system, Galloway argues the social media giant may represent the evolution of online life: “If Facebook gets to forty or fifty percent of the internet, then effectively Facebook has become the internet.”

Video Date: February 2011

It seems that the older I get, the more meaningful each Memorial Day becomes.

When I was 23, it was a day off, and the marker for wearing summer clothes.

When I was 33, it made me a little nostalgic for my father, who passed away when I was 25.

Now that I’m 43, Memorial Day is a day of reflection and gratitude.

This might have to do with my own growing awareness of my mortality, but it is deeper than that. Life experience teaches you things, and among the lessons I have learned is that even veterans who make it home uninjured physically still have things to deal with. It could be lost time, trauma, or the death of a close friend. They can’t pretend what they went through never happened.

My own father, who served in two wars, couldn’t wake up the way you and I do. He woke up violently, as if he were having a nightmare or expecting a bayonet in his face. I hated waking him up from a nap or on early mornings. I never understood as a youth what it meant. After he passed, we found out, quite by accident, that he won a Bronze Star at Inchon. He never spoke of it to us, and explained the events once to his brother. That was it.

I’ve thought quite a bit about the 60 Minutes story Sunday of Sal Giunta, a 26 year old Medal of Honor recipient, who is still adjusting to life after combat. He is is the first live MOH recipient since Vietnam, is uncomfortable with his fame, doesn’t consider himself a hero, and would trade it all to have his two friends back who perished the night he won the medal.

Honestly, I wish I could give the guy a hug. I wish I could give my dad a hug. I wish I could express my gratitude to the men and women in uniform who sacrificed so much so that I could live in this free society. We read so many stories of our returning vets who have lost houses, had issues with the VA or not been treated as they should. It is heartbreaking. We should be thanking them, not subjecting them to more hardship.

There is one thing I am going to do in my little corner of the world to make a difference to a veteran in the next 12 months. I will list and sell one veteran’s house in the next year pro bono. They have to have a special need of some sort (it can be financial) because it is a waste to do it for a vet who is flush with cash or in a short sale, but so long as there is a DD-214 and the possibility of an equity advantage I’ll get it done for this veteran gratis as my way of giving back. I can do this for one veteran (or their survivors), and it can be in any of the following counties: Westchester, Rockland, Putnam, Dutchess, Fairfield (CT), Bronx, Queens, or Orange. There is minimal small print to the offer, because I can’t guarantee that a buyer brokerage will be cool with forgoing their end, but there will be no listing commission.

If you know of a veteran who needs to sell and a pro bono arrangement would make a difference between hardship or not, please let me know via phone or email.

If you are a fellow broker-owner, you feel like following suit and such an arrangement would not be an undue burden to the sustainability to your business, I encourage you to join me.

Way back in the dark ages, when I was in graduate school getting a master’s in communication, the subject of opinion research so interested me that I developed and conducted a survey for my master’s project.

The result of that intense effort has been my enduring interest and unmitigated skepticism about polls and other studies that are disseminated by the news media.

Although the news media have grown more sophisticated, especially about political polls, I find myself to be continually astonished by how much evidently shoddy research finds validation on the Internet, in newspapers and magazines, and on radio and television.

Regular readers no doubt recall my recurring rants about research on the nation’s housing market, none of which is entirely — or, for that matter — even mostly accurate. Case-Shiller is my favorite target, a great example being in Sunday’s New York Times, when Shiller cited his research based on 407 and 296 respondents in different years as if they represented a national sample of home buyers. Impossible!

For that matter, how could 407 and 296 responses each reflect national sentiment? If 296 is sufficient, why poll 407? Conversely– you get the idea.

If only Shiller were alone. But none of the others — not Trulia, not Zillow, not RealtyTrac, not CoreLogic, not Radar logic, not the federal government, not one — reveals the true story.

Findings may be out of date, selective (e.g. only single-family houses), too broad (encompassing whole Metropolitan Statistical Areas), too reliant on repeat sales, too narrowly focused on mid- to low-priced properties and so on.

Yet most journalists report uncritically on the studies that flood their inboxes.

What got me started writing this rant were two reports on the same day last week. One was in the Wall Street Journal, which quoted the National Association of Home Builders (NAHB), as having sponsored new research that demonstrated how three-quarters of respondents said owning a home is the best long-term investment. The disinterested NAHB! Who are they kidding?

Of course, there were more results, but I couldn’t force myself to read on even though I included a link to the piece in my Weekly Roundup post on Friday.

The second report was in the online version of Realtor magazine (and subsequently echoed by other sites). Said the magazine:

The number of people unhappy about moving is nearly four times higher than the historical average, according to results of a new moving sentiment survey.

I decided to go to the source, which turned out to be a company that sells moving supplies. Nowhere in its press release or on the company’s Web site did I find a scintilla of information about how the so-called survey was conducted. Neither was revealed the number of respondents.

However, I did learn that “husband-and-wife team Matt and Beth McCabe founded [the company] after their own move left them with an awareness of the difficulty and expense of finding moving boxes.”

My point is that we who consume research results need to ask at least four fundamental questions:

1. Who is sponsoring the survey;
2. Who is conducting it;
3. How are the questions phrased;
4. What is the question order;
   
5. What is the sampling methodology?

To their credit, many of the traditional news media now make a point of describing research methods. For example, the Journal included this information in its article:

The NAHB survey of 2,012 likely voters was conducted from May 3-9 by Neil Newhouse, a Republican pollster from Public Opinion Strategies, and Celinda Lake, a Democratic strategist from Lake Research Partners.

But the only way to judge the quality of the research is to know whether the individual reporting on it has a keen eye for subterfuge, evasion and the integrity of the work. Even better, but far too time-consuming, would be to look at the study and its methodology yourself.

Unfortunately, you can’t even count on having confidence in the results from knowing that a recognized pollster such as Gallup or Harris did the work. If there are 20 questions on a survey, there are 20 ways of manipulating the answers. If there are 2,000 respondents, there are myriad ways of choosing them and slicing and dicing their replies.

The 2,000 number is a good one for getting a national result. But once responses are narrowed by one parameter and then others — say, by state, then age, then income — forget about having much confidence in the stats.

We all know that statistics can be massaged to serve a particular interest. I, for one, prefer my massages to be hands-on; Swedish will do just fine, thank you very much.