Tim's Atlanta Real Estate Blog: March 2007

It's that time of year down here in Atlanta where everything gets covered with a layer of green pine pollen.  It's really incredible.  I couldn't believe it the first year that I moved down here.  There's a greenish yellow haze on the horizon and everything gets covered with a layer of green dust.  People keep the windows shut and the eye wash flowing. 

It seems like such a waste that a pine tree would use so much energy producing and spewing out all of  that pollen.  Probably 99.9% ends up missing the target and being useless as trash.  It's a shame that pine trees need to irritate so many in order to remain viable. 

It reminds me of the marketing methods of some agents.  They send out massive amounts of junk mail or spam emails that annoy many in order to pollinate the seeds for future business. 

I prefer how plants with flowers go about getting the same thing accomplished.  A flower offers a sweet reward to the bees who help the plants out without ever even giving it a second thought.  The flower's offer is so exciting that the bee who stumbles upon it goes buzzing back to the hive and starts doing a dance for the others to tell them how to get back to the flower.  The bees make honey and the flower gets it's seeds pollinated all without irritating innocent bystanders.

So do you have a compelling offering good enough to get your target audience buzzing and dancing.  Instead of having people cursing your junk mail and trying to shut you out, you'll have people enjoying your gifts and telling their kin where to find you.

Let me tell you 'bout the birds and the bees
And the flowers and the trees
The moon up above
And a thing called love
Business and love are so similar.                   

It is very interesting to look at a 10 year chart of housing prices in the 20 metro areas that the Case-Shiller  Index tracks.  If I didn't know any better, I'd say that many markets that have had huge run up in prices are just barely starting to come down.  It doesn't look at all like a crash so far.  The scary thing is that with so little of a price drop, we have had quite a bit of pain and agony.  What is going to happen if the charts eventually regress back to the mean. In some markets, that could mean over a 30% drop.  OUCH!!!

The Case-Shiller Index tracks housing prices based on recorded changes in home values and a repeat sales methodology. This is different than the NAR numbers which tracks median home values where if more expensive homes are being built and sold, you'll get a bias up even though your particular home hasn't increased in value.

Check out this page that has graphs on 20 individual market areas along with the overall US market. The most interesting graphs are for the 10 year time periods.  Point the mouse pointer over the 10 year icon at the bottom to get the overlay graphs of the other asset classes over the same time period.

In some markets like Phoenix and Las Vegas, you see a huge run up in prices around 2003 and 2004.  They have just leveled off and have come down just slightly recently.  If such a small decrease in prices is causing so much pain, I'd hate to see the carnage when prices drop 20-30%.  There is a lag time though.  The prices that just came out today were taken from sales for November, December and January.  So prices could have come down more in the last 2 months.

You can actually buy futures and options on the index to hedge real estate prices in particular markets. 

Sooner or later, prices for things usually come back to the mean.  In some markets, that mean is pretty far below what prices are today. You can actually hedge the real estate market by buying puts on the S&P Case-Shiller index.  I just became aware of this index today so I haven't done much research yet.  But I find it very intriguing. It might be an opportunity to make money in a falling real estate market.

Google just did another Google Dance this month.  In the SEO world, one thing is certain: Nothing is certain and things keep on changing.  After every dance I try to  see if I can I can spot any new patterns to try to deduce what might have changed to the ranking criteria. 

Google uses a big secret algorithm to automatically bring up their search results.  If one understands what goes into the algorithm, one might be able to make changes to their website in order to obtain higher rankings.  Some call this search engine optimization while others  call it gaming the system or even spam. There's white hat and black hat techniques but I'm not here to make those judgements.

I have heard some say that there are over 100 factors that Google considers when ranking a web page.  Some are weighted more heavily than others. The trick is to know what the most important factors are so you can get the most bang for your efforts.  It's difficult to maintain rankings sometimes because it seems like Google keeps changing the importance of varying factors in each update.

I have been trained in the scientific method where one is taught that a good experiment only has one variable.  With search engine rankings,  there is never going to be an opportunity to construct a well controlled experiment.  There are just too many variables and things keep on changing.  What one can do is to look at the results and try to detect patterns.  Take two very similar pages with limited differences and see if you can deduce why one ranks better than another.

I stumbled upon two web profile pages here on ActiveRain that I think might be able to shine light on  theories that some have as to what makes a page rank high.  Since both pages are on the same ActiveRain url and have pretty much the same age and html coding, we should have a few less varibles that would normally confuse the issue.

Do a Google search for "Metro Denver real estate" and you'll see that the  13th and 14th  results are two profile pages of members here at ActiveRain.  The most number of results for a particular domain name like ActiveRain for a search is two.  So you'll see that #13 is Judith Clausen's profile page and #14 is Kristal Kraft's profile page. 

By comparing these two pages, I think that much can be learned about what is and isn't important any more.  From all of my SEO studies, I would have predicted that Kristal Kraft's profile page would have been much more highly ranked than Judith Clausen's.  It has many more of the things that most people in the SEO world talk about, both on page and off page factors.  One can never have the complete details about a web page but let me list some of the details that I see Kristal Kraft's page having that I would have expected to make her out rank Judith Clausen.  Since these factors didn't do the job, one has to wonder whether they are that important anymore.  Remember that the keyword phrase that we are talking about here is "Metro Denver real estate"

1. Kristal Kraft uses the keyword phrase in her signature line. "Kristal Kraft ~ Metro Denver real estate".  That means that every time she leaves a comment, she creates a link pointing back to her profile page with her key word phrase.  She has left 4009 comments so far.  Also, she has 203 associations and each one of those pages has the same keyword link phrase pointing back to her profile page.  Judith Clausen uses just her name in her signature link and only has 94 comments and 37 associations. This might mean that keyword phrases in your anchor text might not be that important anymore.
2. Kristal Kraft's profile page has quite a number of links pointing out toward other real estate related sites and sites having to do with Denver.  This is usually a standard practice of optimizing.  Judith Clausen's profile page hardly has any outgoing links.  Have relevant outbound links been devalued?
3. If you have the Google tool bar, you can see the Page Rank of a specific page and also the number of backlinks to a specific page.  These two things seem to have been devalued in the past already but it's interesting to check these items out.  Kristal Kraft's profile page has a PR of 4 with 141 backlinks while Judith Clausen's profile page has a PR of only 3 with only 7 backlinks reported.
4. The title tags for both pages are fairly similar.  Both use "metro" twice and "Denver" and "real estate" a few times.  To look at these, Click on the "View" button on your browser's menu and select "Source"  This will show you the HTML code for the page with the meta title tags.  You also can see most of the title by reading the very top of the browser window.

Things still might be in flux with Google so it might be too early to start analysing these things. It would also be interesting to find other pages to do side by side comparisons.

I've read about search engines going to artificial intelligence and other things to try to index pages in a relevant manner. 

I have a feeling that many of the old SEO tricks will be obsolete soon, at least for Google.

Can anyone see any other differences that might matter?

I was meme'd a few months ago and didn't participate. I was kind of new here and didn't feel comfortable sharing yet.  I guess it was my natural shy character holding me back again.  Jeff Belonger was kind enough to meme me again.  So here I go with 5 things about me that you wouldn't really know from Active Rain. 

1. I've always been a shy and quiet person.  I think it started when I was pretty small and had trouble pronouncing some words.  When kids laugh at you for the way you talk you find it much easier to just be quiet.  I worked at it over the years and eventually got over it.  I used to have a  fear of public speaking but now I find it quite enjoyable.  People thought I was nuts for going into sales.  How could a shy, quiet guy like me make it in sales?  I learned to use that difference to my advantage.  So if I can do it, anyone can do it.

2. I grew up in a family of seven kids.  I'm in the middle.  We were some of the last people to get indoor plumbing.  I still remember the outhouse with the flies and the bees.  So I really appreciate the little things in life  like a nice clean toilet inside.  

3. I never read much until I was 25.  I was single, living by myself in Baltimore, and had a lot of time on my hands.  I decided that I would try to find the secret to living a good life and the secret to wealth.  I'm still on my journey and am learning every day.  To me, every book is a little treasure.  I must have over 1000 books on my shelves in the basement.  I focus on religion, philosophy, metaphysics, health, politics, marketing and money.  There are so many interesting  things to learn about that I don't care to read fiction too much.  My favorite fiction book is "Atlas Shrugged".  Probably the most interesting non-fiction book has been "The Tao of Physics".  I also love an old book called "The Law" and of course "Think and Grow Rich".

4. My philosophy is "Don't Worry, Be Happy".  I believe there is a reason for everything and I have faith that it will all work out one way or another.  I believe we all have a purpose.  I hope I'll eventually find mine.

5. My kids are geniuses and have a great sense of humor.  I always was afraid that I would have dull, boring kids like me.  I guess they take after their Mom.  I really can't imagine kids being any more interesting and fun to be with than my 8 year old son and 9 year old daughter.  I learn things every day by being around them.

There you have it.  Now you know more about me than most of my friends. 

I'd like to Meme George Tallabas , Amber Riviere, and Rob Robinson

Some things just sound like the right thing to do.  Who doesn't want everyone to be a homeowner?  It's the American dream.  Who doesn't want to save the environment by driving a fuel efficient Prius instead of a gas guzzling Hummer?  But sometimes good intentions have unintended consequences.

I heard today that a Prius actually does more damage to the environment than a Hummer.  The Prius uses big batteries which use a lot of nickel.  The nickel is mined in Canada and the mine spews toxins into the water ways and makes the surrounding area lifeless.  The nickel is processed with various steps being done in Europe , China and Japan before batteries are finally shipped to the US to be used in Priuses.  By the time you add up all of the energy that goes into creating and operating a Prius, it turns out to create a bigger energy footprint than a Hummer.  Who would have thought?

It's kind of the same thing with home ownership.  On the surface, it sounds so wonderful to have 100% of Americans owning their own home.  Lenders were giving out loans to just about everyone.  I remember President Bush citing the high percentage of home owners as a great achievement. 

All that easy credit helped create a real estate bubble in many markets and now many people are being hurt by it.  Maybe home ownership for everyone isn't such a great idea.  Some folks just  aren't ready to take on all that is involved to maintain a home, both financially and physically.

John Stossel just wrote an article about this same topic today.  He covered the unintended consequences of bicycle helmet laws and child safety caps.

There are many areas where things that sound good might actually be creating much worse problems when you took time to look at the total picture. How about global warming?  It's pretty scary to hear what some want to do on the basis of so little information.  Will we be making the total picture worse?  Who knows?

So don't be so quick to jump on a feel good bandwagon.  For every action there are always some unintended consequences.   Make sure they aren't worse than the original problem.

I'm a real estate agent.  This means that I help people find homes and assist them in negotiating a good deal.  Come to me only when you have decided that buying a home is what you want to do.  Tell me what you want, how much you want to spend and I'll go to work for you. 

Should you buy a home?  That's not for me to say.  Is it a good time for you to buy? I really don't know.  You are going to have to make that call yourself.

Some agents want to give advice and take on the responsibility of counseling their buyers on their financial decisions.  That might be OK in states that require a fiduciary relationship with a buyer. Here in Georgia, it is caveat emptor.  It's best to go to the contract to clarify exactly who's responsible for what. So let's visit the Exclusive Buyer Brokerage Agreement for Georgia.

Broker's Duties:

1. Attempt to locate property suitable to Buyer.
2. Assist...in negotiating the terms of and filling out a pre-printed real estate purchase and sale agreement.
3. Comply with all applicable laws.....

Let's see what specifically an agent is not responsible for.

Limits on Broker's Authority and Responsibility:

Shall not be responsible to advise Buyer on:

1. The tax or legal consequences
2. The appraised or future value of the property
3. Any condition existing off the property which may affect the property
4. The terms, conditions and availability of financing

It goes on to state:

Buyer acknowledges that Brokers are not experts with respect to the above matters and that if any of these matters or any other matters are of concern to them, they should seek independent expert advice relative thereto.

I really recommend that before you buy, you sit down with a good financial planner.  How can I help you make a decision to buy or not to buy when I don't have access to your complete financial records?  Do you really want me to look at the details of your financial life.  There's so much that goes into proper financial planning that I would be doing you a great disservice by making you believe that I could give you a worthwhile opinion.  Everyone's priorities and risk tolerance are different. 

Do I know whether the market is going up or down?  Will a particular area appreciate faster than another one? I'll give you my opinion and a guess, but that's all it is.  It's so easy to look back and see what has happened and extrapolate it into the future.  But look at what just happened in some of the bubble markets.  All the way to the top, many "experts" said things were different now. 

Maybe I'm too humble or not as smart as other agents who seem to put out their opinion with a lot of confidence.  Maybe you should do what I used to do when my stock broker came to me with a great stock to buy.  I'd ask him how much he had in his portfolio.  If an area is so hot, ask the agent if he has bought investment property there.

Finding a home, negotiating a great deal and then giving relentless representation to the buyer is plenty of responsibility for an agent.

You need to take responsibility for the buying decision.  No one knows your situation better than you.  Know who can really give you the qualified advice you need  for each part of your decision.  The buck stops with you.  Agents are just the tools who can implement your decision more effectively. 

Seek advice for your decision to buy or not to buy from someone who doesn't have a stake in the outcome. Then call me and I'll do my best to get you a great home at a great price.

Sometimes I take my preferred loan officer for granted.  He makes it look so easy.  Once in a while he does something incredible that makes me realize how lucky I am to know this guy.

Last year I was working with a first time buyer who had found me over the Internet. He was preapproved with a lender who he had found on the Internet also.  I tried to get him to talk to my local loan officer but he insisted that his guy was giving him a great deal.

I'll make a long story short.  After weeks of the lender assuring me that everything for the loan was in great shape and we should have no worries, at 5:00pm Thursday, with a closing scheduled for 10am Friday morning, the lender called and said he needed 7-14 more days.

I couldn't believe it.  It sounded like they were just backlogged and didn't have the time.  Six weeks and they needed 7-14 more days.  Unbelievable!!! 

I told my buyer that we had the right to unilaterally extend the contract for 7 more days but if he stayed with his current lender he would be making a huge mistake. He finally gave in an gave my preferred lender a call.

I gave my lender, Craig Bland, a heads up call at 5:05pm on Thursday afternoon. I was hoping that he would be able to get a loan done within 7 days.  My buyer called him at 5:15pm with all of his financial details. 

At 7:00pm that evening, Craig called me up and said that he could do the loan.  I asked him what day next week should we reschedule the closing for.  He said, "Tim, don't bother to reschedule.  We can close tomorrow at 10:00am as originally scheduled."  I asked him how can that be?  He said he had to pull in a few favors, but my buyer had pretty good credit, and all he needed was to get an appraisal done.  He had his appraiser pulling up the comps on the computer that evening and if I could have someone let the appraiser in the home the next morning by 8:30am, he could get it done.  He was going to email the package to the lender the next morning at 9:00am.  Since they had title and everything else done, there was no reason to delay the closing.

The next morning went off like clock work.  The buyer got the same rate that he was going to get from his other lender and I think his closing costs were a bit less.  I was in complete disbelief. 

Craig has told me that a big reason he can pull off these "miracles" is due to the products and support system he has at SunAmerica Mortgage.  A loan officer can only do so much by himself.  But when you combine a great loan officer with a great lender, you get some opportunities to make the game saving play that the fans talk about for years to come.

I've invited Craig to be a member of Active Rain but he says that he is just too busy taking care of his business.  Do me a favor.  If you think that what he did was really amazing, send him an email.  I'd love for him to share his stories and experience with us.  craig.bland@suntrust.com

I am throwing my hat into the ring for the project blogger competition.  Hopefully there is still a slot available for an apprentice.  If not, I will continue on as a lone wolf learning the craft of blogging all by myself.

I love to write and I think that I come up with some interesting posts every so often. I have had a website since 1999 but didn't look into blogging until this past Thanksgiving.  So far my blogging has not resulted in any business.  I see blogging as a great release for my creativity and at the same time a way to attract the business I want.

This competition sounds like American Idol.  Maybe the name should be changed to "American Blogger".  One of the things that I love about American Idol, especially when it gets down to the top 12, is watching every week how the special guest performer helps each aspiring singer improve their performance. I also love the way Simon Cowell gives them criticism and advice.  The smart ones listen very carefully and make adjustments. I am very coachable and will take any criticism as a special gift from my mentor.

I've had 14 featured posts so far but I'm not happy with the results that I'm getting.  I'm only number 76 on the most subscribed list.   My goal is to connect with real buyers and sellers by standing out from the herd.  I do think there is a herd mentality with most agents and I try to do things a little different than most. 

I've become obsessed with Active Rain.  I've put up 107 posts so far and love reading and commenting on as many other members' blogs as possible.  I get these obsessions every once in a while and usually end up being very successful at whatever I become obsessed with.  A few years ago I became obsessed with SEO and now I'm number one for a Google search for "Atlanta homes".

My favorite bloggers here have been ARDELL, the XBroker and Joe Zekas.  I like how they just speak their minds.  It might alienate some but they leave no doubt in one's mind as to where they stand on an issue.  I've given up trying to please everyone and have realized that it's OK to be opinionated and not agree with everyone.  I love a lively discussion and I love to debate.

Here are my favorite posts that I have written so far here at Active Rain. It's my best of Tim list.  I think they're pretty good now that I sorted them out and read them all again.

You had to see the movie to get my message on this one.  I thought it was very original.  Unfortunately no comments were made.
http://activerain.com/blogsview/26160/Pulp-Fiction-Real-Estate 

This one got third place in Mark Flanders competition.
http://activerain.com/blogsview/47385/What-if-Business-or

I thought this one was cute.  A few people seemed to like the analogies
http://activerain.com/blogsview/48554/Don-t-Fall-in

I pulled together Monster Jam and being your best in business
http://activerain.com/blogsview/35353/Grave-Digger-Has-Raving

Joe Zekas got me obsessed with researching Fair Housing rules
http://activerain.com/blogsview/46332/My-Fair-Housing-Research

This is a poem that makes me cry every time I read it
http://activerain.com/blogsview/44031/Thanks-Mom-I-Learned

Observation on low ball offers. Many agents hate getting them.
http://activerain.com/blogsview/35863/How-Low-Will-They

Comparing myself to a turkey
http://activerain.com/blogsview/35461/If-You-Are-Too

A quote from a book that I really like and seemed to connect with a lot of people
http://activerain.com/blogsview/34000/How-You-Do-Anything

Seemed to get people's attention
http://activerain.com/blogsview/32024/-Full-Service-or

I love sarcasm.  This sarcastic post could be too subtle for most.
http://activerain.com/blogsview/31356/The-REALTOR-Designation-It

I thought this was an original thought until I read a few similar news stories
http://activerain.com/blogsview/31333/Boise-St-and-Rocky

I have this on my website and it makes people stop and think a little
http://activerain.com/blogsview/26574/Beware-of-the-Agent

My rant on shopping for a mortgage
http://activerain.com/blogsview/24158/How-Should-Your-Mother

So if anyone is still looking for an apprentice and think I have some potential, I'd love to get to work and win this thing.   I am willing to put in 4 hours per day on this project and will spend whatever is deemed necessary.

I just passed my state's real estate broker's test!!!  I must say that I really enjoyed the new class that they started and the new test that they are now giving.

The test consisted of 12 computer simulated case studies of real broker situations.  A scenario was described  with limited information.  From a list of about 10 choices, one had to select various pieces of information that  would one needed to obtain in order to come closer to a final decision.  If irrelevant information was selected, points were taken away.

Depending on your selections, the computer would take you to the next step in the decision tree.  A little more information was then given on how the situation changed according to your previous selections.  At the end, you were given  a choice on what the best solution would be.

All of the memorization of details was tested for in the end of the class tests that we had to pass before being allowed to sit for the state test.

I must say that these tests were all very challenging.   They make them so 50% fail on the first go around.  They seemed to have achieved that goal from what I observed.

The class itself was a lot of fun.  It was 60 class room hours of mostly open discussion and group exercises.  Topics were brought up and the class of over 50 would ask questions and share their experiences.  I really learned a lot. 

It opened my eyes to all the liability that broker take on when they open their doors for business.  Many brokers fail due to poor planning and unrealistic expectations. There are a lot of costs to be aware of.

I took the class so I could be better informed about real estate.  I really enjoy being a sales agent and want to leave all those broker responsibilities to my broker.  It's much more fun working with buyers and sellers than working with agents.

SpotRunner.com makes it easy to run TV ads on some major stations for a lot less than you would imagine.  Nice looking ads can be produced for as little as $499.

I haven't tried it out yet and am looking for someone who might be able to share their experience with it.

I've played around with their site to create some sample campaigns.  It amazes me how targeted you can get. You can target a large market like Atlanta or pick from about 20 smaller markets within the metro Atlanta area.

They have a large library of template ads that can be customized with your own pictures.

You can let the system automatically select the correct demographics for the category you are in.  Select a weekly budget and it will create a campaign with specific times and channels.

The channels include Fox News, CNN, TNT, A&E, HGTV, ESPN, Turner South and others.  It seems like most of the time slots are after midnight but some sample campaigns were showing spots on HGTV during prime time.

I created a sample 4 week campaign that had 494 spots for $5660 which works out to $11.46/spot.  I wonder what the conversion rate would be?  You could advertise specific homes while also sending viewers to your website where they have a chance of being converted from there. 

Can you imagine the wow factor if you told a seller that their home would be advertised on CNN or Fox News? 

Let me know if you ever had success from TV advertising.

Polybutylene pipes are a real problem.  More and more pipes are springing leaks that can cause some serious damage.  If you are buying or selling a home you need to face the issue and not stick your head in the sand and hope nothing ever goes wrong.

Polybutylene is a type of plastic pipe that was used in the mid 1990's.  It was inexpensive and very easy to install.  There's just one huge problem.  It seems like the chlorine in drinking water slowly corrodes the plastic from the inside.  It takes years before the pipe bursts and so far only a small percentage of interior pipes have had problems.  But water is a very damaging material and can generate a massive amount of damage very quickly.

Polybutylene is now considered a defective product. There are companies  that specialize in replacing it.  I've had a few homes where this had to be done.  It's easiest done when the home is vacant and has a basement.  A few strategic holes are cut into the walls and the pipe is pulled out.  It can all be replaced with copper. Afterwards, all the holes in the walls are patched and painted so one would never know there was a problem.  A typical house will cost between $5000-$8000. 

Many times the polybutylene is just found in the main water line from the street to the house.  These lines seem to burst with more frequency.  The typical cost to fix this problem is between $1000-$1500.

In Georgia, polybutylene is addressed in the Seller's Property Disclosure .  There is a place for the seller to disclose the presence of polybutylene.  If the seller discloses this up front, the buyer can not request the replacement of the pipes if they wait to make an issue of it until the Inspection Period even though it is considered a defective product.  If the seller discloses this up front, you need to negotiate a concession during the initial contract negotiations.

It is to the sellers advantage to disclose this item because there is a good chance that the buyer just might not notice it until the inspection.  If it's disclosed upfront, and is currently working in the fashion that it was designed to, the buyer can't back out of the contract if you refuse to replace it.

Most of the times I've dealt with this product, the buyer and seller seem to end up splitting the cost 50/50.  New copper pipes does increase the value of a home in neighborhoods where polybutylene in prevalent.  I hear that some insurance companies won't insure a home that has polybutylene pipes.

Make sure you do your homework and become aware of this product.  Here are a few links that I have found to be helpful.

Here is a great picture of a corroded pipe.   

Here is a good overall report on the problem.

Here is the class action website.

Here is a company that specializes in replacing this pipe.  It has some great information.

I see mortgage brokers spend a lot of time analyzing the bond market.  They send me the latest financial highlights on a weekly basis.  They watch the Fed, the stock market and all sorts of other markets.  They make it seem like they know which way interest rates are headed.

Personally, I think it is a big waste of time.  I believe the bond market is pretty efficient and anything that can be known is already reflected in the rate.  Do you really think that you are going to know more about interest rates than all of the thousands of professionals who devote their full time to it? 

I'm giving you a chance to prove me wrong. 

There are some brokers who advise their clients on whether to lock now or wait for rates to go down.  An average time frame to make that decision is about 30 days.  I want to give all of those mortgage brokers who can predict interest rates a place to shine.

Every Monday you can post what you think the interest rates will be four weeks into the future.  We'll use the 10 year US bond as posted on cnnfn.com.  This rate seems to correlate well with the standard 30 year fixed rate mortgage. 

As of today, the rate is 4.55%.  What will it be on at the end of the day on Monday April 2nd?  We can do this every week for maybe 10 weeks and see if anyone can be correct consistently.  Make your prediction in a comment to this post by midnight on Monday March 5th.  Since comments are editable, I'll have to take everyone's predictions and append a table to this post.

If you want me to remind you every week, send me an email and I'll send you a link to my weekly post that I'll create for this contest.

So predict away.  I'm looking forward to finding someone who can help me make money in the bond market.  What an opportunity to show over 18,000 real estate professionals your skill.