NAR Officer's Blog: Father's Day and Leadership

My father’s best leadership lesson:

It is Father’s Day 2009 and I am so aware of my great fortune. I have been blessed with an exceptional family and three awesome children. Each shared his or her best wishes, love and thoughts with me today. It was touching and heartwarming. Being a father is the best part of my life: it is the rainbow, the sun, the moon, and the breath of my being. It is who I am.

Yet, I feel hollow today because I miss my father, who passed away five years ago. In between two open houses, I visited my father’s gravesite. We talked, or rather I talked and he listened. It is really hard today to hear him. He was an exceptional father who taught each of children to be people who lived lives of service to others and to do ones absolute best. He was one of those rare people who understood that teachers are most effective when they live the lesson they teach. He did.

This past May, I was voted in as the 2010 President-Elect by the NAR Board of Directors, and I will become President the following year. People who know me well commented on how proud my father must be. I agreed with them, but I still wanted to celebrate the accomplishment with him. He was a procuring cause. He encouraged this fulfilling journey.

In leadership, you realize that you achieve as the result of great mentoring and teaching. No one gets into leadership without lots of help. In truth, my teacher and mentors are numerous. My father’s best lesson was to find the best teachers and mentors, then study them and learn from them. Give them a stake in your progress. It is a great life lesson. You cannot become a NAR national leader without lots of help.

This past week a small group of REALTOR® leaders met to make 2010 Vice Chair of Committee selections. The challenge was to choose just one person for each position when so many capable and talented people had applied. We are working to complete the process. I cannot help but think about the example of my father: pick the best person for the position. We are working hard to do that, but how do you do that when you have so many ‘bests.’

It is also a privilege working with such a talented group of people on the leadership team. They teach my father’s lesson by example: be the best. Moreover, Charles McMillan, Dale Stinton, Vicki Cox Golder and I all have sons getting married on the 25th of July. Who says that the stars do not line up? It is my prayer for each of our sons, that they know unconditional love from their wives and children. We are part of a very special, extended family, the REALTOR® family. Our family includes all of YOU.

Thanks, Dad.

Navigating Rough Seas and Fog: The Summer 2009 Real Estate Market

The most common question most Realtors are asked, particularly in the back slapping among friends: Are we at the bottom of the market, yet? Almost every Realtor wants to say it is here. In truth, we do not know. There are sign of stabilization, and signs of further price reduction. Additionally, you do not know that you have been to the true bottom until you begin to climb out of it. It can only been ‘seen’ with clarity in ‘hind sight.’ What makes it more complicated is that the market is not a single market: In real estate, we talk about all real estate being local. In the advent of a global economy, and a global recession, that seems almost counter intuitive, but it is not. The condo market in Providence is very different from the suburban real estate market in East Greenwich. Furthermore, the markets are very different in the brackets of price points. The first quarter MLS statistics showed a significant drop with the ”average” single family price for East Greenwich, from $474,000 to $323,600. The average price house did NOT drop by a third. Yes there was a significant drop in prices overall, but not as extreme as the numbers suggested. There is a reason, not a rationalization, for the change. More less expensive homes were sold. That is more homes some in the 100-400 range than sold in the upper price point, so the average was much lower than it should have been. What you really want to know is what is the true change in price for a specific property. Naples Florida is now given market information bases on price points: 100-350k, 351-500k, 500-1000k, and up. This is not a rationalization, but rather a long explanation, to the importance of looking at like kind homes to get a ‘true’ picture of the real value of the home. A four bedroom Moorehead colonial is worth more in Signal Ridge than Cindy Ann Farm, overall. All real estate is local, even by neighborhood. You need to compare like kind with like kind to determine true value.

As a seller you need to analysis the properties in your immediate neighborhood. What has sold recently, what is pending, and what is on the market? You need to look at the absorption rate, how many houses are selling each month, and how long will it take to sell the entire inventory at the current rate of sales. A healthy market is about 6 months. Right now we are at 10.2 month nationwide. We are much higher in the upper bracket, above 750k, in East Greenwich. Once you complete this analysis, you need to price in a COMPELLING way, not a competitive way. To be effective, meaning to sell quickly and close to real value, you need to price aggressively low.

As a buyer you need to do the sale process to identify the best buys in town. It is also helpful if you have two are three choices when it comes time to negotiate. The market has an oversupply, and a noteworthy oversupply of overpriced properties. Sometimes the overpricing is the result of the existing mortgage balance, sometimes the result of poor-inexperienced agent advice, and sometimes seller’s exuberance-nostalgia: “My house is the best in town.” Many buyers are attaching a list of the comparables to offer to purchase package. Some sellers are still ignoring the comparables. As a buyer, it makes sense to move on to a seller who is realistic.

What you need to know about this market, very simply is that price matters. You can have the best landscaping, the most expensive kitchen appliances, and the most awesome home theater, but your price has to be competitive to encourage a buyer to make an offer.

Now if the dynamics of the market are not enough to persuade you, be aware of the new appraisal underwriting requirements. In an effort to curb potential mortgage defaults, most lenders have adopted new appraisal guidelines. One of the most challenging elements is called ‘bracketing.’ In truth it is really not new, but now the rule is applied in all cases. Very simply, an appraisal my have comparable sold properties below and ABOVE the value of the subject property within the neighborhood. It makes it very difficult to obtain a mortgage for the most expensive sale in the neighborhood. The result has been that many transactions have been RE-negotiated after the appraisal.

To say it, yet again, price matters. Price where the market is, not where you would like it to be. Otherwise, wait until the market recovers. The cold hard truth is buyers are careful and strategic right now. They will not overpay, even if they are from New York, Boston, or Los Angles.

National Association Leadership Model

Team Leadership

As the newbie on the leadership team, I have lots to learn! Much of what happens in leadership is process driven. In an organization of the size, 1.14 million members, and complexity of ours, there is a lot to do and a tremendous amount to study. While engaged in that process, you cannot help but notice how great the ‘system,’ works.

Specifically, there is an amazing collaboration between the volunteer leaders and our professional staff. Each year the volunteer leaders change, people leaving the team, people joining the team. These include, the President (Charles Macmillan), President-elect (Vicki Cox Golder), First Vice-President (me), Treasurer (Jim Helsel), and Immediate past President (Dick Gaylord), Vice President of Committees (Steve Brown), and Vice President of Government Affairs (Gary Thomas). The annual transition happens seamlessly. That is the result work the professional staff does. Dale Stinton, is the Chief Executive Officer. who with his equally amazing team, forwards the ambitious agenda and critical mission of this organization. This is not an easy task…You cannot help but smile when you think about the different personalities of the volunteer leaders that pass through leadership. As soon as the professional staff gets used to one presidential personality, a new one is in office.

What is amazing is that it works and no one sees or knows of the challenge. (Sometimes staff protects leadership from itself). It is always a balance. The volunteer leaders are responsible to map the strategic course of the organization. Dale and his staff work with us on the plan, but they are responsible for the execution of the programs.

Also amazing is the ‘espirit de corps.’ that develops among the leadership team. You have friends, mentors, and co-leaders. Each one is so committed to doing right by the organization and the membership. Sometimes we commiserate. Sometimes the challenges are overwhelming, but the team members support each other. When we need to fill in for each other, we do. When we deliberate issues, it is issue centric not personality driven. It takes time to create that level of trust and respect.

The Right Tools, Right Now program is a great example of the effectiveness of the model in place. Last fall, the leadership team meeting included a discussion of how bad our individual members were faring. This was as the result of an email sent by Realtor member from North Carolina. As leadership, we were listening, but” felt” unable to do more that encourage people to simply ‘bear it.’ After the first of the year, Dale and his team stepped up and came up with the Right Tools, Right Now program. More people have used it than we would have imagined. It is the effective.

The leadership team model works. Leaders listen and things happen.

Real Estate Questions and Answers APRIL 2009

Right now everyone seems to be asking the same questions. Some have answers, some will have answers, but everyone seems to be asking the same questions:

1. Are we at the bottom of the real estate market? The best answer is we really do not know. You can not know if you have passed through the bottom until you have. In other words it is a rear view mirror event. Only AFTER you have begun to climb out can you say with accuracy that we have passed through the bottom. There are strong signs; both locally and nationally, that we are on either side of the bottom. Many areas have seen improvements in the number of properties sold. More homes are being sold, albeit it at lower prices. Additionally, the number of pending sales is up. While the supply of homes remains fairly high, the absorption rate is going down. The adsorption rate is indicated by the number of months it will take to sell all of the house currently on the market at the current rate of sale. A normal market here would be about 6 months. We have been as high as 18 months. Right now we are closer to a year. Sum total we are witnessing some encouraging news, but we need to see if it is sustained.
2. Is it a good time to buy right now? The best be answer is qualified. One needs to look at his or her situation. Is the employment situation strong and reliable? Is credit in order? Have you been pre-qualified? Are you likely to be in the location for several years, that is longer term? Assuming the answers to these questions are all yes, and then it does make sense to buy now: First inventory will provide you with lots of choices, even if you are particular. Secondly, prices have come down, so there are in fact better values. Third interest rates are the lowest in 50 years. (Less than 5%, when I started in the industry it was over 18% for fixed rate mortgages). Fourth, there is a home mortgage interest deduction on your federal taxes. (Mortgages below $1,000,000 qualify). Finally, there is an $8000 first time home buyer’s credit against your Federal taxes. In short, there are good reasons to seriously consider buying now.
3. What are the details of the $8000 tax credit? While it is described as a first time home buyers credit, people who have not owned real estate for the past three years might also qualify. Income limits do exist with phase outs beginning at 75k for people filing individually and 150k for married couples. If you owe less than the $8000 the Federal government will issue you a check for the difference: You owe $5000. You will receive a credit for the full $5000 and then receive a check for $3000. There is a ‘recapture’ feature if you sell your home in less than three years at a profit. This is to discourage flipping. Finally, you must purchase, close and occupy the house by 30 November 2009 as the program ends 1 December 2009
4. What does a home seller need to do to sell in this market? Many sellers are still nostalgic for the prices of 2006. While this is understandable it makes the market worse and reduces the chances that the seller will sell. First, you should get expert advice from a Realtor who knows your town and neighborhood. He or she can educate you on the market and effective strategies to sell your home. Secondly, and more critically, you need to price the house to be compelling, not just competitive. In a market with an oversupply, you want to stand out, not just on condition and presentation, but on price. Is your price one of the best values on the market? Think of price like an SAT result. Certain schools will not look at you if you do not have the minimum test results. If your house is priced to high, no one will even look at it. This is the real estate equivalent of an invisible, but tangible REJECTION letter. Buyers are rejecting your house based on price. Also, the MLS tends to amply the importance of price per square foot. Your price needs to be compelling not just overall but also on a price per square foot. In a community like East Greenwich the range is very broad, but $200 a square foot is a fairly good ‘rule of thumb.” Obviously, you need to look at your own market area and situation. Waterfront will be higher…
5. Should I try to buy a foreclosure of a short-sale? The answer is maybe. This should be a long term investment. Buy what works for you and your family and pay attention to the most important rules of real estate, starting with location, location, location. Assuming you find the right property, it may make sense to buy a ‘distressed property.” Incidentally, this is a misnomer. Most often the property was not distressed, the owners were. You need to be very cautious and want professional advice, particularly from a Realtor and an Attorney. Make sure to investigate the condition, structure of the property. Distressed properties are sold in ‘as is ‘condition and most sellers will not make any repairs. Foreclosures tend to be easier than short sales. They can generally close much more quickly. Short sales are transactions in which the owner still owns the house but owes more than the house is worth. Say the house is listed for 150k, but the owner owes 200k. The owner will be short when paying the mortgage off. Therefore it is the lenders decision whether they will accept less than full value of the outstanding mortgage. Thus the term ‘Short sale.” These are challenging, because they can take months to get responses to offers and longer to close. As a potential buyer, you must be very patient.
6. Does homeownership still make sense? As with everything, it depends on your personal situation. It you are going to be moving out of state in the next year, and then it would be unlikely to make sense. If however, you are likely to be hear long term, then it may well, the average homeowner in the United States has a net worth that is 38 TIMES more than the average renter. The important observation is that the criteria must be long term. The demographics also suggest that values will come back over time. More households are being created than homes for them. Finally, shelter is a basic human need. We all NEED a place to live. In addition, if you pay your mortgage off over time, you will live in your home at a very modest cost in your later years. For most people, it does make sense to own your home.


So contact a Realtor, and get some expert advice on your situation.


Ron Phipps, ABR,CRS,GREEN,GRI,ePro

Bright Lights in the Economic Night: Ron Phipps's February NAR Entry

Bright lights in the Economic Night

This past week was a turning point. This week, Richmond Virginia was my port of call. Virginian Realtors are tenacious and gracious. Challenge does not dissuade them, it emboldens them. And yet, they do not loose any of their grand sense of hospitality. The meeting in Virginia went well for the Association, Realtors, and their legislative Agenda. All ten of their bills were approved by the State Legislature. It was turning out to be a great week.


Then two bright stars lit the night: First, Charles Macmillan NAR President and Dale Stinton, NAR Chief Executive Officer, introduced the Right Tools, Right time initiative. It is brilliant concept: For over 100 years Realtors, with the effective stewardship of our professional staff, have invested in the Association Reservoir. As a result, the Association has significant resources: tangible, fiscal, human, and strategic. The Leadership Team with the concurrence of the Finance Committee approved the NAR plan to put tools back into member and Association hands to provide assistance through these difficult times. Tools will be delivered to Realtors and Associations, (local and State), to provide direct benefit during these times. I was reminded the old Chinese proverb: Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for the rest of his life. We are re-tooling and re-teaching our membership. We are lighting up the darkness with not just hope and compassion, but rather the tools to help our members actually survive. It is as if we are letting water out of the Association reservoir to make the electricity to power our Realtor business and light, heat our homes. It is the right program at the right time. It maybe viewed as one of the most pivot decisions for our Association in the past twenty years.

With star shinning brightly, the Congress finally approved the economic stimulus package to send to President Obama. What is amazing is that we obtained three of our four goals: Rates are 150 basis points below where they were a half year ago. Conforming loan limits have been reset at the higher 2008 numbers. The 7500 credit was increased to 8000, (we had hoped for 15k), and there is NO repayment provision. By every measure we met those three goals. The final element, the prohibition of banks in Real Estate is still being pursued.

It these two stars were not enough to lit the night sky, we are about to hear the next phases of the Administration Housing Recovery plans. We have not had a lot of light in this economic night, but now we have two North stars to help us navigate out of the darkness and into the life.