Salesperson or Consultant?

Had another dream last night that made an impression. In the dream I was in a university setting having some dialogue in a lecture hall -- don't think I was the professor, but I wasn't a student either--maybe it was a seminar? The topic involved how knowledge is conveyed. What can be conveyed via written instructions and what is better understood with personal attention in a mentoring environment. The example I used in the dream focused on distinguishing different fruit vs distinguishing different varieties of a specific fruit--perhaps not the ideal example, but that's how dreams work--and my ex wife offered to share some apples she'd purchased earlier in the day--LOL.

Being able to tell apples from pears is pretty darn easy--written guide should do fine--probably wouldn't even need pictures. On the other hand there are a huge number of apple varieties out there now. Many of the my favorites from my youth are rarely seen, but there are hybrids galore. If you didn't had labels on the bins, how would you tell them apart--the printed word would probably not get the job done very well. Photos would improve the process, but might not get down to subtle differences. You might need to sniff, cut them open and taste them to actually distinguish them all.

So what's the dream got to do with real estate? That's kinda what I wondered when I woke up about 3AM, but I quickly flashed on the connection (that's rare for me at 3AM--usually go back to sleep and forget the dream entirely).

Compared with the other professions involved in creating and transferring ownership of the nations housing, real estate agents spend very little time learning their craft and little of that time is spent learning about houses. Most of it is spent learning arcane State laws and the even more convoluted approaches to managing risk arising from those laws that are dreamed up by the state association attorneys--in the form of a growing stack of forms nearly no one understands or even reads.

Architects go to college, serve as draftsmen, work under supervision of experienced architects, attend workshops etc etc. Contractors complete courses, take tests, after most have chalked up considerable practical experience. Other trades have the benefit of apprentice systems where the craftsmanship of generations is handed down to cabinet makers, tile setters, etc.

How much time does the average agent spend really studying the houses they list and sell? Not nearly as much. There seems to be a tacit assumption that the Buyer knows what they want and will light up like a Christmas tree when they see it. Gee, that sounds like agents are salespeople more than consultants.

Car salespersons (shudder--LOL!) aren't held in particularly high esteem, but I bet most have at least sat in, and probably driven all the models of the makes they sell. If car salespersons worked like real estate agents they'd not be attached to one dealer--a car salesperson would accompany you to all the car lots and help you purchase whatever make and model you desired---whether they'd had any personal experience with that model or not.

One of the reasons this topic is important is energy efficiency, AB 32 requirements, Climate Action Plans and the state and national association's position on point of sale energy ratings and retrofits. It seems getting traction among agents to incorporate green thinking into their approach to business is going to be difficult.
There's a possible chicken and egg relationship with the trade association policies. Are the policies that clearly encourage the agents to attempt "business as usual" for as long as possible driven by long standing philosophical principles? Alternatively, the trade associations may know that the agents, whose business behavior has been largely created by trade association education, code of ethics and one size fits all paperwork, aren't likely to rush gleefully into a rather technical arena placing new expectations in the minds of Buyers (and hence Sellers).  Agents may need to undertake some heavy lifting to understand factors that combine to create energy efficiency (or lack thereof).

The prior to marketing energy rating (HERS II, for example) is an easy way around this issue, but that's not consistent with trade association policy. The trade associations evidently believe Buyers should NOT have access to information about energy efficiency prior to their decision about which is the RIGHT house to purchase.  That raises the question of HOW MUCH expertise an agent should apply in assisting the Buyer in evaluating similar houses for energy use. Obviously Buyers can hire a HERS II rater, but are they going to do that for several houses on their short list at $300-$400 each? Not likely. At present there are few HERS II tests being done at all and there is no central repository of tests---if there were, one could at least see what the HERS II ratings were on roughly similar houses and get a ballpark estimate. That's not even possible.

All this energy circus is taking place in front of a backdrop of Climate Action Plans and a requirement to achieve GHG emission reductions of 20% by 2020. Organized real estate is trying to take a pass on participation, but keeps trumpeting that they are at the center of every transaction---in what capacity?

Salesperson or Consultant?

Strategic?

Enjoyed an excellent presentation on strategic planning today--a good time of the year to take stock and all that. 

Although I've been to several strategic planning sessions, was able to watch state association SPF committee one year as assistant regional chair and conducted a couple sessions myself, I am not a strategic planning enthusiast. 

Bottom line, I'm a chaos fan. We're all moving toward chaos--a state of greater and greater entropy every moment of every day. The organizers are just creating a temporary refuge that is comforting to them, but ultimately futile. It's really just a matter of whether you embrace the inevitable or struggle for control over a tiny slice of reality that will slip from your grasp when you least expect it. 

I enjoyed the recent presentation because I had an hour to review in my own mind why I don't like lists and planning--the way they are generally done. Now, I'm not saying planning is bad, but there are risks and pitfalls the avid planning folks don't generally tell you about. 

What brings me the most pleasure in life is to find a pristine intellectual beach on which there are NO OTHER FOOTPRINTS. How do you find that beach using a task list and time blocks? Without realization, planning can lead us into a very productive rut (and a rut is merely a grave of elongated shape). 

Making plans and lists creates a virtual world. It is tempting to assume that when something is checked off your list there is a one to one correspondence with events in the real world. Not always the case. The world that existed when the plan was drawn and the list was made no longer exists. Strategic plans tend to be either forgotten, or treated like an end in themselves, rather than a means to an end. That end my not have the merit it had when it was created. The end may not exist at all in the present environment.

Now with diligent checking, measurement, attention to balance, evaluation of all the stakeholders, etc etc. a strat plan could potentially be a marvelous tool--but all those things almost never happen, whether the plan is being done by a high school student or a national government. The ripple effects on diverse stakeholders are seldom considered. Lists work best for the list maker, but all those within the ripple zone may have a different perspective. 

Turning to real estate for a moment, a prime focus of planning and strategy I must contend that much about the business is over planned and under thought. It is possible to become very wealthy in real estate by developing a great strat plan and implementing it. That cool, because the measure of success tends to be monetary, not a strong level of client satisfaction that lasts through time. I've worked with, supervised and observed a number of the local superstars. They're remembered for their production, not the quality of service or those special times when they created magic and art with skill and diligence. Some of the top producers savor those magical moments, but others consider them an obstacle in meeting their plan designed to close even more sides than last year. 

One of my frequent mantras when I ran offices was "your clients measure success one transaction at a time". The planning mavens usually don't measure that way. One transaction is an item on a list. The clients don't care about the strat plan or the number of listings or the gross closed commissions. They want to find the RIGHT HOUSE at a fair price and enjoy the purchase process during a smooth transaction. Production real estate involves hits and misses. The end of year success may meet the plan target, but what about the misses? Necessary by products? 

Another thing that turns me off about strat planning is science. I was (am) a scientist. I live to test hypotheses. Testing hypotheses is never done. There is no right answer--even if we happened upon a right answer by random chance, we wouldn't know it. Constantly testing hypotheses, creating new ones and testing them doesn't mix well with finishing items on a plan or checking off items on a list. You just don't say--following that string of hypotheses isn't on the list --- so I won't go there. 

Ok, one more thing, really! Sometimes things just drop into place--as though by magic. Other times progress hurts like trying to run though an Arizona dust storm. Planning devotees tend to muscle through the bad times to complete their daily schedule--at the expense of the product. It usually looks like a "muscle job". 

On a personal note, my attraction for chaos may stem from my OCPD tendencies. I can and have become swept up in an activity or assignment that was, for a time, all consuming. There were usually benefits for some stakeholders, i.e. a level of work was done that was way beyond the norm. Perhaps so far beyond that no one else could have accomplished the task in just that way (not that there weren't other ways). Other stakeholders suffered and, ultimately, I suffered.

Making lists and plans and targets invites that swept away experience as the focus drills down to the plan, excluding the real world merrily swirling out of control nearby. The whole thing is an exercise in stark contrasts. Obsessively pursuing specific tasks on one hand and gleefully embracing the chaotic terrain leading toward virgin beaches on the other. Beaches enchant me. 

Quick post re idea for energy efficiency

Woke at 4:40 this am with a blazing idea--that I may have had before, but this time, the time is right.

What if houses displayed symbols or letters when they had completed an energy audit and/or a retrofit.

Maybe a H for HERS II and a R for retrofit.

If there was a for sale sign on the house the buyer would KNOW that the house had information about energy use AND had been retrofitted to conform to the CAP program of that community.

It wouldn't be a point of sale thing as such. Just a way of letting neighbors and passers by know that house was using less energy and the owners where doing their bit to help meet AB 32 goals. A little peer pressure and with home for sale some added value, because everyone who saw the house would know what those letters meant--regardless of MLS or trade association aversions to transparency regarding energy use.

The trade association would hate the idea. They really want buyers to ignore energy use and FUTURE mandates when they make purchase decisions. I read a stat last week that home buyer today expect to be in their home for 15 years---imagine what the retrofit requirement will be in 15 years as the municipalities discover they are NOT going to meet the CAP standards. Buyers need to plan ahead NOW, but they don't have the information they need--thanks to the trade associations.

When does that green glow begin?

Housing stock accounts for 40% (SLO County's CAP cites 43% ) of energy use. It also can supply a significant amount of energy savings at a relatively modest cost--compared to some other ways to reduce green house gas emission (GHG). So how is that going? Not well at all.

The state and national trade organizations want their member agents at the center of every transaction and they apparently want to control how those agents perform in those transactions. They spend millions of dollars to develop and maintain that control, though forms, education, promotion and marketing their products, most of which include not very well hidden agendas.

So when we start looking around for reasons why agents don't seem to care much about green (energy green, not currency green), it's not hard to glance over at the trade organizations. What do you see? NO POINT OF SALE--EVER, NO HOW! There's talk of voluntary retrofits, incentives to retrofit (without any means to pay for the incentives). The mantra contends point of sale is a hardship on the Sellers, because they don't net as much money at close of escrow. Why don't they? Are we to believe that Sellers NEVER factor in point of sale costs when they negotiation the price and that the listing agent doesn't either? Could the cost of point of sale expenses be a total surprise? What about Seller's net sheets? The ones the state association creates.

In the end, the Buyer ends up paying for the house, the retrofit, the commission, title insurance, loan costs, etc. The retrofit provides a house with some benefits to the Buyer who paid for it. The trade organizations apparently feel the Buyer should be compelled to say "I want an unretrofitted house that's cheaper at purchase, but will cost more later on and ultimately harm the planet and the future fate of humanity". How many Buyers would forgo the retrofit to save a little on the price? If the retrofit is done by Seller, the Buyer rolls the cost into the financing at low interest rates. There may be rebates, incentive etc, if the Buyer pays for retrofit later--but there may not.

The argument that point of sale requirements unnecessarily delay time sensitive closing of escrow is hollow. I've had escrows in which $10,000+ of pest work was completed; a landslide removed access to a house--that was repaired during escrow; septic tank/leach field replacement completed; failed furnaces replaced, new roofs installed, the list goes on and on (27 years worth!). ALL those complications exceed most energy retrofits in complexity and expense. The time factor is a thin ruse.

A few days ago, the realization hit that point of sale must work a lot better than the trade organizations are willing to admit. Here's why.

Berkeley, and a several other towns, have had mandatory energy retrofits for some years now.
Surprisingly, property values didn't plummet, people still bought houses AND LOTS of energy was saved.

HERE'S MY POINT
Given the resources within the state trade organization, don't you think if there was any objective measure showing what an absolute failure Berkeley's RECO was and how much damage it had inflicted on real estate and the American way of life, they would have put up billboards and websites proclaiming the evidence? Hasn't happened.

So the big question is how will the state and national associations confront the last chapters of Planet Earth as a habitat for humans? Will they be part of a plan to extend the page count in those chapters or will they be an obstacle aimed at business as usual until the last page turns. So far they're headed in a do as little as possible as long as possible direction.

We have had point of sale in the past---water retrofits are common around here. They work--slowly, but they work. Are they a hardship? Ever heard a Seller say they'd sell, but couldn't or wouldn't pay for the retrofit? Ever heard a Buyer say they'd rather buy in a town without a point of sale provision because they'd rather waste water and pay for it?

We have non-mandated point of sale protocols, too. In areas with septic systems, inspection and certification is pretty much universal and the Seller almost always pays. Pest control used to be that way, but with distressed properties anything goes--usually nothing gets done until the buyer takes ownership.

So is the state trade association part of the solution or part of the problem when it comes to greening the housing stock and prolonging the life of planet earth as a human habitat? Both, but at present there's way more problem going on than solution.

The interesting thing is that the level of passion and energy exhibited by the trade organization faithful in opposing Point of Sale exceeds the level demonstrated in support of greening the housing stock several times over. Assuming that is the intent of the trade association, it raises some hard questions about priorities. Lots of chest pounding from the local state association faithful--all looking over their shoulders to make sure the state association elite are watching--future leadership points are being scored.

Business as usual is ranked more highly than making a positive change in the fate of the planet.
State leadership and staff decided to empower their followers to contest point of sale associated with implantation of AB 32 through CAPs while continuing to soft sell increased energy efficiency to such an extent that there's virtually no more awareness or enthusiasm among most agents than there was 5 years ago. How's that work for the planet and the public?

I've been working on a CAP energy efficiency plan--my second version, so fewer postings. Should post the plan by mid week.

CAP it off

The Oct 13th Planning Commission hearing rolled on most of the day covering the Climate Action Plan with County staff AND representatives from the firm who produced the template (don't believe they were there last time).

There were emails urging the brokers and agents to go parrot the state and national association "DON'T even think of a point of sale component"dogma, but not many showed up or even knew about the hearing or cared. What the state and national association continue to miss is that if you do someones thinking for them and discourage any discussion of alternative views, the organization presents a nicely integrated front, but individuals within the organization are often loath to get up at a microphone and speak on a topic they really haven't thought through themselves. Now there are the political ladder climbers who, after drinking copiously from the barrel of Kool Aid, will get up and fervently support trade association doctrine till the red light goes on. Sure enough, those folks are rewarded by moving up the fabled leadership ladder. Are those the people who should be in leadership--the faithful tools of the party line? Where are the artists? In other professions!

This unfortunate pattern is clearly consistent with organizations in both the public and private sector. How many people think for themselves? It's so easy to let someone else think for us. Thinking is --why, it's almost like work!

I'm reading a book on subjective well being that is pretty heavy going with chapters delving into the history and philosophy of human social structure. The idea that all members of a society shared an interest in  governance was NOT pervasive throughout history. Often there was an elite class--defined by blood, wealth, etc and the worker bees, raising the point of how authentic the opportunity is for an individual to change his or her future through participation in the process. Put another way Wall Street tends to control Wall Street regardless of protests or government intervention (mostly orchestrated by people who used to work on Wall Street). We'll see what long term effect results from the Occupy movement.

I did listen to some of the afternoon's discussion of the CAP on streaming video. Mostly, I was impressed, or maybe distressed would be a better word, at the lack of scholarship displayed---by everyone. County Staff knew some stuff, the representatives from the CAP template firm knew some stuff, The Planning Commissioners knew some stuff too.  Problem was that no one REALLY had a thorough understanding of the document or the subject matter being discussed, much less the collateral and downstream implications of approval. This has been a long process at County Staff level. It has been fast tracked as far as the public is concerned--to avoid too much input or scrutiny.  Conduct a couple of workshops that are poorly attended, then zip through Planning Commission to be followed by the Board--who may well get the rubber stamp out, deferring to the intensive "work" of the Planning Commission.

In the end there were a lot of questions about a lot of issues that were not answered--because the expertise present in that room on Thursday was a mile wide and about an inch deep. Put it this way---if ANY of those people were up before a Doctoral Committee taking their orals on that CAP, NONE would have had to rent a cap and gown.

What does that say about the process? A college kid trying to get a Ph.D. is held to a higher standard of scholarship than a whole ROOM of highly paid professional staff and consultants and appointed representatives of the supervisorial districts that have been working on this for MONTHS. The document will affect property values, energy use and the lives of every resident of the entire county for years--maybe decades. The results will exert some degree of impact on the future of the entire planet. So who decided to leave out the scholarship?

AND the answer is another question. Where's the accountability? If the CAP is bad because a number of people performed poorly in their positions, what happens? Pretty much NOTHING. They go on getting paid, or serving their appointed positions or writing more one size fits all templates for sale to Counties who don't care to create their own--because they couldn't

Our nation in microcosm.

Now, I'm not holding myself up as an expert on the CAP. I've scanned it enough to know what's there and that those at the hearing should know more about what's there than they do.

I did create a document containing some actual plans for improving the energy efficiency of the County's housing stock. Simple permutations and combinations. That's the part that falls under implementation and they are not really talking about that much, YET--that's the whammy down the road. Then, they'll say, but this whammy is consistent with the CAP, so it's OK.

There is little apparent concern about the planet in an environment defined by staying in office, moving to a higher status or maintaining a position until retirement and robust benefits.

Steve Jobs and big foot prints on the sand

Jobs was not a very public figure, so aside from the Apple roll out clips, the Stanford commencement and several other things we don't know much about how he was as a person, but he was an artist of multiple dimensions in the evolution of personal computers. He had ideas and then produced products that implemented them, that were marked by stellar design and available at prices that were within reason. Apple gear was never cheap, still isn't, but considering the tech, the design and the build quality, LOTS of people were willing to pay more.

The legacy will continue at Apple, but the modest roots of what was earlier this summer the most valuable corporation on the planet will be a little more remote than they were before today.

I'm still enjoying my new MacBook Air--almost as much as I did my Macintosh 512K Enhanced, vintage March, 1985. It was the fonts that lured me in. I loved the fonts--even before I started real estate. I was an aspiring graphic artist in addition to being a scientist and illustrator of crustaceans. I did some work when I was employed at a small publishing house running a HUGE Xerox machine. I did graphics---BY HAND--paste up. The Mac was the future and I saw it. Paid $1800 for a Mac, external floppy drive (single sided back then--400K!!!) and an Imagewriter I---9 pin printer that made the fonts look pretty darn good.

In today's $$ that was like $6000, but it was worth it. The enthusiasm for Apple products is still there. When you go to the Apple Store in SLO you see--young people and really old people (like me). Not a lot of middle aged types. The old folks there still have some passion left--it's very cool!

Had an interesting "discussion" at a meeting today that crystallized some  thoughts on the real estate industry and where it's headed and where it should be headed instead. More on that with the next post.

Steve is probably devising something totally new in another dimension right now!

Where's the cred?

A short follow-up to the Climate Action Plan post (OK it started short and took on a life of it's own). Of course the local real estate community is concerned about the possibility (very likely) that point of sale provisions will be a part of the CAP implementation.

The faithful state and national association members will continue to protest point of sale with conviction. After all, it's been a part of THAT party's political doctrine for decades. The problem that arises with CAPs is that they MUST identify MEASURABLE and VERIFIABLE savings in GHG emissions. Any sort of, yet to be created, incentive programs might accomplish significant energy saving, but measuring how many property owners might indeed take advantage of which incentives at what benefit level is difficult.

It's comparatively easy to chart the number of residential properties sold in the past, present (pending to become sold) and future (projections of sales). Then it's just calculating how much energy could be saved if every one of those properties was retrofitted in a certain way to comply with whatever point of sale requirement emerges. The real world savings won't be as great as the calculations suggest, but getting to the numbers are easy. Easy is good when you're in the public sector--and the graphs are very impressive.

If the "no point of sale" crowd wants to achieve any traction they need to offer an alternative that is similarly easy and has a strong chance of delivering the needed results. Just saying NO, because state and national trade associations told them to, isn't going to get anywhere in the CAP environment. These municipalities want to stay eligible for funds and they'll do about anything to do that.

The secondary effect of the state and national association's anti point of sale doctrine is a lack of robust alternative efforts to green the nations housing stock. Some of this is understandable. Most every energy saving effort has some point of sale connection deeming it inappropriate.

I mentioned in an earlier blog a personal experience in this regard. I had an idea in 2007 that agents could voluntarily install CFLs in all the houses listed for sale. CFLs were very cheap back then thanks to subsidies from utility companies. A program was developed at our local association, but the idea never went over at state and national level because the activity of replacing light bulbs was associated with point of sale--ie the listing of the property. It was voluntary, but because of the point of sale issue, it was feared that CFLs might BECOME a point of sale issue. Obviously if all the houses listed with members of the national association in the last 4 years had been fitted with CFLs (wherever reasonable), a great deal of energy would have been saved. That didn't happen because saving energy is secondary to sustaining the no point of sale doctrine at all costs.

So what has organized real estate done to green housing and the purchase process? The state association HAD a green task force for a mere 2 years--largely because a particular state association president was a supporter of green matters. It was discontinued in San Jose 2 years ago. The reason offered was that the members could get all that green information somewhere else. In truth there are green pages in the websites of both national and state associations, but there is little real traction out there in the real world.

This is a long way around to reach my point (and the title). How much credibility does the organized real estate have when they seek to limit adoption of point of sale provisions? Their track record in seeking to reduce GHG emissions is pretty lackluster. I sincerely doubt the leadership believe in climate change.

Talk of incentives and voluntary measures is tossed about, but there's little walking the walk. The national association can raise and additional $40,000,000 for political lobbying, but funding pilot incentive programs to improve energy efficiency is someone else's responsibility.

The no point of sale doctrine is openly suppressing important information about the cost of ownership and resulting in some Buyers missing their best opportunity to buy the RIGHT HOUSE. As I've written many times before the state and national associations are focused on ALL the houses selling for the highest possible prices. Matching RIGHT BUYER with RIGHT HOUSE is not their priority. The trade associations don't have a fiduciary duty to Buyers and Sellers. This focus on withholding information until after the purchase decision is made tells individuals who achieve extraordinary energy efficiency that they won't enjoy full return on their investment--and that's OK.

There's a least common denominator mentality in the real estate industry that fails to fully reward those who seek to extend the plant's future health. At present there's no way for Buyers to readily compare energy efficiency and the industry likes it that way. Energy ratings, like HERS II, are available, have been available for several years but are almost unheard of. Energy use is an attribute of housing--like ocean views, size, age, style and landscaping. What's different is that energy efficiency has a direct impact on cost of ownership and is very difficult to predict without a professional energy rating. The state and national association policy on point of sale is suppressing the availability of information regarding energy efficiency. This runs counter to the best interests of the Buyers, the Sellers and, in turn, the agents that represent them.

It's true that some Sellers receive a higher price for their homes than they would if a HERS II rating was available to show that, although charming, the place is an energy HOG. HOW is that good for the long term health of the real estate industry? It sounds like another version of the familiar "pass the problem off to the new owner and evade incurring as much liability as possible for the Listing Agent and the Seller".

Thanks to the no point of sale strategy energy efficiency is caught in a time warp--remember the days before the TDS, back before home inspections were common? Buyer beware was the key. The short sales and REOs have brought back that mentality and made in more acceptable to gush gloriously about granite counters, copper sinks and paver tiles, but remain silent concerning energy efficiency. It doesn't end there. After the Buyer moves into the place the upgrades may not deliver the best bang for the buck if there's not a HERS II energy rating pointing out where the most effective upgrades lie.

Buy a car, a water heater, a refrigerator and there's information---that BUYERS consider in their decision to purchase. Buy a house and you're on your own!

Here are the major talking points from the state association--do they make sense? Not so much.

Point of sale takes too long. Doing nothing takes longer. Point of sale isn't immediate, but over a 5 or 10 year period a fairly large proportion of houses change ownership. Look at plumbing retrofits at point of sale. Many local communities imposed them in the 90's and it's hard to find a house that has not been retrofitted now. Yes, there were some incentive programs and contractors had to retrofit x number of houses to obtain a building permit in some communities, but most of the retrofitting occurred at point of sale.

It increase the cost of homes. Does it? Sure, but the lower utility bills the new owners pay covers that expense, not to mention the energy saved in processing and distributing the energy, water and gas. Despite the state associations efforts to the contrary, there is a societal benefit from extending the life of the planet. It's not always OK to fool with mother nature,just because the cost of increasing energy efficiency may not always be recaptured during the life of the upgrade. It's a classic problem of the commons that organized real estate chooses to ignore.

Housing affordability is not JUST about purchase price. The cost of ownership factors into the picture. Of course by the time the utility bills start arriving the agent, broker and state association have garnered their share of the commission check, leaving the Buyers to discover just how affordable the house actually is in the real world.

Housing account for 40% of energy use-even more if you factor in transportation costs that are influenced by where the housing is built. House should be the FOCAL POINT of any strategy to improve energy efficiency. Organized real estate wants a pass! The smooth flow of commission checks with minimal complications is the kind of efficiency that tops their priority list.

The public has, thus far, given organized real estate a pass. The public may not know any better, but mother earth does and, in the end, she makes all the decisions.

CAPs, not the twill kind!

Among the many facets of AB32 (passed back in 2006!!) is a requirement that municipalities formulate and approve a Climate Action Plan to reduce green house gas emissions (GHG). The formulation part goes easier and cheaper if you use a template plan, plug in some local statistics and get someone else to pay for the whole package by giving you a grant.

Many cities and counties did just that. There are several templates out there in various stages of approval. The one we ended up in SLO County doesn't seem to be one of the better off the shelf plans, but that isn't going to change at this point.

Few people have read the whole document and fewer still have checked numbers and assumptions. I listened to some of the Planning Commission's first swing at review on the 29th. Predictably, County staff is discouraging making "major" changes. That means there should be an opportunity to slide it through the review process and stay in the running for federal and state funds.

The climate? It's changing anyhow, not to worry! The economy? Planning decisions seldom consider their economic implications and this consideration will probably follow that trend. It's someone else's job to worry about the economy--hey they take the same approach in DC!!

The problem with templates prepared by others (thinking in one size fits all mode) using numbers dropped in from local jurisdictions, is that the reviewers, i.e. county staff, planning commission and board of supervisors didn't write it, may not understand it and certainly aren't comfortable making major changes, even it they are needed. With the CAP process the actually implementation is down the road, so there's plenty of incentive to move the process forward and hope that the down the road part isn't THAT bad or that no one remembers who approved the CAP next time an election rolls around.

The devil is in the details part is that housing stock is different in every community and the provisions contained in the CAP make some very general assumptions about potential energy savings possible with retrofits and apply those assumptions indiscriminately. In fairness, the assumptions are valid in some neighborhoods of some communities, but there are all those other neighborhoods where they just don't work.

The big question is whether AB 32 and the CAP requirements are intended to satisfy the terms of the legislation, thereby keeping the municipality eligible for funding, or whether the is a sincere intent to make a positive difference in the future of the planet. No answer to that question is expected anytime soon, but it is worth remembering that mother nature (AKA the planet) is the final judge of CAPs, AB32, intent and political motivation.

There will be a reckoning. Individuals, neighborhoods, communities, states and nations will possibly ponder whether they did everything reasonably in their power to extend the ability of the planet to support human life.

That sort of soul searching will not enter the arena of CAP review.

How Green?

The state association meetings certainly reinforced my belief that the organization is in climate change denial. Short term commission flow apparently takes precedence over all else. Any complication that would obstruct or complicate the business of selling houses is to be avoided at nearly any cost. Interestingly, the state association attorneys have created a set of "standard" forms that have done more to complicate and obstruct the flow of business than any point of sale provision, but that's a different story. Back on topic--forms are destined for another blog post.

One of the motions passed with no discussion on the floor, and very little in the Land Use and Environment or Legislative Committees, focused on creating a definition for "cost effective" energy efficiency improvements that is carefully devoid of any implication of societal benefits, i.e. requiring that costs of energy efficiency improvements, including maintenance costs, be less than the present total value of the energy saved during the useful life of the improvement.

That would take pressure off point of sale benefits--relatively few upgrades will qualify as cost effective and those will tend to be inexpensive. How does that philosophy match up with decisions by the public? Not that well. People buy hybrid cars that costs substantially more than those with gas engines, they put photovoltaics on their houses, they recycle--not because it's cost effective, but because they feel it has societal benefits. So should all matters green be purely personal choice?

While sitting listening to the "OMG, not point of sale" rhetoric, I had an idea for a green strategy that could be the best compromise, but would never happen because the state association lives in its own special world and will not change its doctrine for a mere global climatic event. One tends to forget that when the "no point of sale", never, no how doctrine was codified there was little understanding of global warming, green house gases etc. Scientific discoveries pale in comparison to national association doctrines in the world of real estate. Science sometimes requires thinking and that gets in the way of sales production.

Here's one of my WHAT IF scenarios. What if the ONLY point of sale requirement in the green realm the state association and national association would support is energy labeling. For example HERS II ratings on each residential 1-4 property. That's ALL. No upgrade requirements, just labeling. Buyers could see the rating before they reach a decision concerning which house to purchase. Just like they see the ocean views, the amount of living area, the color and all sorts of other attributes. Energy efficiency should be considered along with other characteristics that may or may not represent material facts in the purchase decision. Cost of a HERS II rating per property would probably drop below $300 due to inspection volume. The rest of the story would be written by free market factors. How much is a better HERS II rating worth? The market would determine that amount. It would take some time and it would vary by location, climate, etc. The HERS II reports also give some solid guidance about what upgrades are best (most cost effective--LOL) for each house--something many one size fits all point of sale upgrade programs don't.

The down side would be houses that are not very energy efficient would experience a loss in value, BUT why should they maintain a value level based on a suppression of information? Why should the state/national association support that lack of transparency? Because they believe it's good for business to keep Buyers uninformed about energy efficiency until AFTER they choose the house? Eventually, Buyers will learn more about typical HERS II ratings, but it sure isn't happening very fast. There are very few more ratings being performed now than there were two years ago.

What about societal impacts? Those aren't on the table. What if housing was a major contributor to GHG emissions and what if reducing those emissions was critical to prolonging the ability of the planet to support human life with reasonable quality into the next century? Both those "what ifs" are true, but the real estate industry is apparently more concerned about how many sides close next quarter than what happens to humankind in the next century.

There is always the argument that point of sale works very slowly and incentives are more effective, but there's not much traction with incentives either. Slowly is better than nothing when a global event is unfolding in which the tipping point has already come and gone. Incentives work pretty slowly too and they still require some participation from the property owner. Incentives and HERS II ratings would be a nice combination. Do the improvements and get a better HERS II rating, which raises the value of the property. What a concept!

A problem is that at present there is little incentive from the real estate industry to pursue outstanding energy efficiency--the treatment of green features and energy efficiency is not handled effectively or in a uniform manner in MLS data or by the national property resource. Is that intentional, or? Appraisers are all over the place in how they address energy efficient attributes. Finally, few brokers seek to get out front on climate change and the greening the industry. There are opportunities to differentiate marketing and promotion with little downside. Not many folks would exclude a brokerage from consideration because it espoused green consciousness.

The long term mismatch between brokers, agents and the public continues with the net result being that a Seller who expends an exceptional amount of time, planning and expense into creating an unusually energy efficient house probably will NOT receive the value he or she should get upon resale. The point of sale doctrine suggests that energy inefficient houses will loose value with labeling, but what about the highly energy efficient houses that will never reach their optimal value because of a lack of labeling. You probably guessed how this plays out--there are many more energy inefficient homes to sell than energy efficient ones. Follow the commission checks to discover the policy path.

Lots of lip service is paid to giving the public what they want, but does it really happen very often? There's a greater interest in giving the public more of what's easy to give them, just make sure it doesn't inhibit the smooth flow of transactions.

This returns us to the RIGHT HOUSE/RIGHT BUYER concept. Is there an energy efficiency component in defining the RIGHT HOUSE? The industry isn't making it very easy to incorporate that consideration into the decision process. I feel the demand is there, at least for a substantial number of Buyers.

The Buyers and Sellers can speed the process, if they become educated, but that education won't likely be coming from the real estate establishment.

This post is a little long--sorry. I'll try for shorter on the next few re the meetings.

Next post is related to this--regarding Climate Action Plans--mandated by AB 32 and coming to a California town near you very soon, if it's not already there.

State Association Meetings, San Jose

No, I'm not going to cover the entire event--whew!! As the business seems to get more complex, so do the meetings and the discussion. Then there's the big business aspect getting folded into the mix. The state association is BIG business.

San Jose is warm, but downtown area is very interesting. Lots of art, many restaurants and a more cosmopolitan feel than the coastal resorts areas have. I'm staying in a 1911 vintage hotel all renovated and very comfortable.

Seth wrote a blog today about writer's block and why writers should write every day. They won't all be gems, but you don't improve by not writing and there are those odd times that the process itself offers insights totally new.

I will be better about blogging. Have some things to say about green issues, real estate stuff and technology triggered by thoughts during the meetings. I'll explore those in the next few days.

Looking forward to returning to cool foggy coastal climate!!

the closing of the year

I know, it's early for that, but the final state association meetings are this week up in San Jose and local associations are wrapping up the charity events, seminars and forming next year's committees.

In the past I've often held a year end presentation to highlight what I learned over the course of the year. I don't go to many seminars anymore, preferring to pursue independent study. I focus on non-real estate sources and extrapolate the information to fit the rather odd real estate environment. It's a jungle out there.

Late last year I did a talk on photos, statistics and the Right House/Right Buyer concept. Those topics are perhaps more relevant today. Our MLS now allows 25 photos, there are more readily available analytical tools and the metrics of success still have nothing to do with Buyers or Sellers maximizing their benefits.

New wrinkles for 2011 include hedonic adaptation, further insights into decision making and the widening gap between the amount and speed of delivery of information and the almost mythical realm of wisdom.

It is easy to obtain more information and push it out faster to more different platforms. Wisdom remains illusive, largely because it's defined, not by the pusher, but by the recipient. Wisdom is a tool set and blue prints, not a bigger pile of lumber. It is so easy to deliver a bigger pile of lumber. The right pieces could be in there somewhere, so bigger is better, right?

By the time I return from San Jose, I'll decide if I'm game to throw another year end presentation together. The Mac presentation application looks pretty cool, so that may weigh in the decision. Much of the motivation arises from forcing myself to attain coherence in explaining the fruits of my random studies. It's good to create a benchmark--my intellectual progress was HERE on these topics near the end of 2011.

Seth has recently blogged about WONDER--and how rare it is these days. When's the last time you experienced wonder while in a seminar? Seminars are entertainment, but like most entertainment these days, there is little effort to surprise, amaze and astound. Why? Are things so bad that people desire reassuring predictability rather than a portal to a never before experienced landscape of discovery?
What if that landscape held the secret to a brighter future? Are we better off finding comfort in our discomfort?

Looking at the political scene is not reassuring!

10 years is a long time, sometime

This anniversary is pretty strange for many people for many different reasons. The world certainly changed, and we still don't know exactly how. A huge lump of money was dumped into security measures that mostly aren't. Afterwards wars seemed much easier to start, although finishing them remains illusive.

The event and that period in personal history seems recent in some ways and distant in others. Those my age, or thereabouts have experienced frame shifts due to age, loss of parents, employment taper and the ever louder ticking of the clock. What cool things can still be accomplished in the time left? How to choose? How hard to push? Kicking back is always an option, but if you didn't do it earlier in life, you probably won't later on.

The Mac Book Air is two weeks old--now has a external hard drive friend with the important contents of old laptop. Purchased Notes and Numbers and the presentation app--haven't used that yet. Numbers is sure different than the spreadsheets I've used before--I see a trip to buy a book on iWork. I'm a book learner. Online tutorials seem to find me looking at stuff I already know and never seeing the stuff I need. Books have indexes and stuff.

The portability is amazing and I'm still happy with the keyboard. Display is small, but I'm adjusting. Waiting to see what the Thunderbolt display is all about before I buy one.

Did first photo editing job last week. Came out well--using Photoshop Elements with just a touch pad was an adjustment, but I'm already trying to scroll when sitting in front of PCs.

The 30 day escrow is oozing along, but push time is upon us. They often fall in the category of things that sound really good at the time they open--and not so good as the closing date nears.

New MacBook Air

The Fedex delivery came Thursday, but have had little time to spend with the new family member. Have 30 day escrow just starting out and still use the old laptop. The 11 inch screen is taking some getting used to, but zooming is easy and you sit pretty close to it. It is not a computer I'll be showing people stuff on. It is a very PERSONAL computer.

Love the keyboard- great feel and the backlighting is nifty and sorta cheery. Starting to learn the gestures for the big trackpad.

For those who care it's a MacBook Air 11 inch with i7 1.8 Sandy Bridge CPU, 4GB of RAM and a 256GB SSD. I'll get an LED monitor to use for editing photos and such. Also some external storage--my old laptop has well over 200GB of stuff on it, so I will not be bringing that data over. Just need to find it, when needed.

Spent the day Thursday last at Planning Commission re the vacation rental issue--and after I rushed back following a hurried trip to Los Osos to check on business at lunch they postponed the hearing. Probably a good thing because the Commissioners were in a cranky and irritable mood by then anyhow. I'm sorta glad I spent the morning down there because I had an insight to two regarding the first item--I'll address that in the next post.

To give you a little tease, the AM was spent in micro analysis of some environmental aspects of a proposed subdivision in a very sensitive and well known area. Copious amounts of info were available, but that wasn't enough to satisfy neighbors or the Commissioners. In contrast there is virtually NO information about the performance of the present vacation rental ordinance and no analysis of how the proposed changes might alter that performance---and the Commissioners, staff and public seem just fine with that. The data are available in the form of TOT/BID info by house and by month, but no one seem the slightest bit interested in doing the analysis. Soooo the issue is--- environmental impacts vs economic impacts of public policy decisions.

Big difference---why? More in next post.

RW

Planning Commission comments, plus minor revelation

I've been working on this last 3 days--off and on---mostly off--been busy. At any rate today I had a revelation. Read the first sentence of the last paragraph---has there been much coverage of how the changes to retirement income and lifestyle will impact the pricey communities that ONCE were popular final destinations? Think about it!

DATE: August 21st, 2011

TO: Planning Commissioners Irving, Topping, Christianson, Murphy and O'Grady

RE: FILE NO. LRP2009-00005, Proposed Amendments to Coastal Zone Land Use Ordinance Section 23.08.165- Residential Vacation Rentals. Hearing Date: August 25^th, 2011.

FROM: Richard L. Watkins

As the third Planning Commission hearing regarding amendments to the Vacation Rental Ordinance approaches, there are a few remaining issues worthy of consideration. 
> Oceanfront properties in Cayucos should be granted an exemption from the density standards in Section 1 c. (1) Location. These oceanfront houses have no beach side neighbors, experience high ambient noise from surf and exuberant public beach activity. They also front streets with significant traffic count and few are occupied by full time residents. Many oceanfront houses were grandfathered as vacation rentals, but when the older structures are expensively remodeled or replaced with new construction, they are seldom vacation rented again. This creates another source of attrition, within the most productive sector of visitor serving lodging in the County. An exemption from the density standards is unlikely to result in numerous new vacation rentals in Cayucos. Setting aside existing active rentals, houses with unused licenses, substandard houses, houses used extensively for family vacations and full time residents, the demand for additional vacation rental licenses is not likely to be high. Importantly, oceanfront rentals show strong occupancy year round producing impressive TOT/BID figures while providing a singular experience for vacationers who tend to contribute heavily to the local economy. Even a few additional oceanfront vacation rentals would account for far more visitor serving occupancy than a substantial number of vacation rentals in less prime locations.

Note: Oceanfront houses in Cambria share the ambient surf sound, but differ from Cayucos oceanfronts in enough other ways to suggest modifying Cambria oceanfront density standards might pose problems.
> Condominium and Planned Development projects in residential zoning categories of Cayucos deserve consideration for special treatment regarding the density standards in Section 1 c. (1) Location. Avila feels a 50 ft measure from the wall of individual condominium/PD units is fair, but Cayucos has a more complex situation with condos in commercial zoning not subject to density standards and oceanfront condos in which a majority of units are grandfathered as vacation rentals. Home Owners Associations have the ability to ban vacation rentals altogether or set standards that are more restrictive than those contained in the vacation rental ordinance. Why not simply allow the HOAs to regulate their individual common interest developments by creating standards fitting the needs of the owners. If an HOA Board votes to allow all the units to have the option of becoming vacation rentals, that decision should prevail. There are no winners when the County attempts to micro manage HOAs.
> A different means of measuring density standards in Section 1 c. (1) Location is needed for large parcels in both Los Osos and Cambria. Houses on contiguous parcels can be located well over 200 feet apart. For example, where at least one of the parcels in question exceeds a half acre, the distance between house footprints, not property lines, should be used in performing density measurements.
> The staff report regarding "Existing Residential Vacation Rentals (permitted) describes a situation in which a house that is licensed, but not used as a rental, could loose its eligibility for a license, decreasing the number of potential future vacation rentals. Licensed vacation rentals, unused as such at present, could be used as vacation rentals at a later date, either though a change in owner plans or upon a change of ownership. The prevailing motivation for sunsetting unused licensed has always been to allow other houses to obtain licenses. This mechanism would only rarely accomplish that because of supersaturation in prime areas. Net visitor serving lodging opportunities would decrease over time.

> Unlicensed vacation rentals should be targeted by a more effective enforcement program than currently exits. Whatever the County is doing to enforce the vacation rentals license law is not working, as evidenced by the growing number of Internet offerings. A proactive effort by County staff to identify and cite unlicensed vacation rentals is needed, but if that's not feasible, the process should be made far simpler. An online, menu driven system in which a complaint could be filed by a member of the public (identity known only to County), then tracked and resolved in a transparent process, could act as both an effective enforcement tool and a strong deterrent.

The historic role of Cambria as a retirement haven arose from an entitlement/benefit environment unlikely to survive the current economic cycle. Tourism has greater potential as a long term source of economic vitality, but the magnificent geography that provides San Luis Obispo County with unmatched beauty also dictates a need for diverse visitor serving lodging to encourage the necessary travel. The amended Vacation Rental Ordinance to emerge from this lengthy process may be in effect for 10 years, or more. If it fails to accommodate an increase in vacation rentals and their visitor serving lodging contribution that can offset natural attrition in prime, supersaturated areas, the overall well being of these small coastal communities may erode into a bleak future of missed opportunity.

Richard L. Watkins

Richard L. Watkins Real Estate Services

PO Box 211

Cayucos, CA 93430

CDRE # 00897399

Which is the RIGHT house VI

Long gap since number V and I'm still on pain meds (just ibuprofin--LOL), but we're ready to cover non essentials. You'd think that would represent an easier situation, but not really. They aren't essential, so there's this incremental approach to a tipping point at which a house that was in the running to become the RIGHT house becomes just another that didn't make the cut. There's also a price point issue with non essentials attributes. What if a house that didn't quite measure up has a BIG price reduction---you didn't like it at, say $600,000 because it lacked some non-essential items of value, but when it's reduced to, say $545,000, how do you react? You already put in on the "not so much" list, but with that new price it starts to look a little more attractive. Can you get beyond the fact that you already crossed it off? Should you?

It's useful to separate non essential traits into a couple of categories at this point. On contains traits that you already have experience with from previous homes and either like them or don't like them. The other contains traits that you THINK you would like or not like, but have never really road tested in the real world. Both categories warrant some careful consideration--as I said, non essentials are tough.

One thing I've been impressed with the past few months in looking at houses that need some remodeling is kitchen size. In order to stay within the current building envelope (doing otherwise gets pricey fast) some space often needs to be pushed and tugged. Many people like large kitchens and the kitchen is arguably the most important room in the house, BUT there are many kitchens, particularly in houses built in the 90's and later, that are perhaps a little too big. Now if you're accustomed to a big kitchen and like to have big meals prepared by several people, a big kitchen may be an essential. On the other hand, if there usually only one or two people cooking there may be other ways to use some of the kitchen space--pantry, breakfast/casual eating area, bigger dinning area, etc. There are some very efficient cabinet storage solutions that pack an amazing amount of capacity into a small area. Pantries are also very efficient.

Another other aspect of the kitchens is that opening it up makes a huge difference in the perception of size in living/dining/kitchen area. There are those who want to keep the kitchen separate and allow the meal to appear miraculously at the appointed hour. Most people want to chat and remain part of the scene while cooking. Spaciousness is almost always a good thing upon resale.

Because I'm 6ft +, I have a pet peeve about overhead cabinets blocking my view of living room, ocean etc.
Vertically challenged folks also hate overheads because they need a ladder and some stuff on the top shelf sits there with the spiders for decades, until it's forgotten. When I remodel my contemporary house I'm considering wall hung cabinets (or cabinets with legs) with no bottom drawers and no overheads. I have a large pantry and it's a small house--should be interesting to see how it works out. The kitchen will appear much larger, for sure.

Back from Root Canal Escapade

Had a little diversion last couple weeks as a vague heat sensitivity pain in left side of face developed into a tooth ache and that developed into a root canal. Nerve died on me and I learned that an endodontist who doesn't to anything BUT root canals can make what can be a devastating experience tolerable. It wasn't fun, but I'm not terrified of root canals anymore.

Haven't got much creative work done, what with pain meds and pain. Missed two running workouts, but did loose a little weight--heck of a way to do that, but tooth problems always work.

I'll resume the Right House series and also start laying out the Hedonic Adaptation material I was heavily into when the tooth intervened. Have also done research on FHA 203 (k) loans and how they can play a bigger role in sales (and listings). Vacation rental revision Planning Commission final hearing is coming up in a couple weeks too.

RW

Which is the RIGHT house V

I'm taking a little detour from the details to address the resort property/second home situation. With a non-primary residence you have different considerations. In a second home, hopefully in some ultra cool place, you're probably going to have a different array of lifestyle components--let's hope! Obviously the house should accommodate them. A cute beach bungalow may seem enticing, but remember the surfboards, kayaks, boogie boards, bicycles, jet skis, etc etc.. You can haul them all over to the beach place every time you visit, but with enough storage, they'd just be there waiting.

How many friends are going to help you enjoy your new place? You'll have more friends than you imagined. That may be fine or you may opt for a smaller bungalow and hand out vacation rental brochures to all but a few.

In coastal areas, prevailing winds are important, as well as sun path over the year, fog pattern, beach access (how far and how steep) and what works for local landscaping. The total money spent on plants that will not grow in cool, windy, salt sprayed areas could buy a nice oceanfront house. Look around at the yards of the locals--find a nice one--ask the owner who did the landscaping. You may decide the smallish lots are plenty big enough.

One of the ways to make the thrill of owning a second home sustain over the years is to pursue new activities during your use of the home with in the spirit of adventure and enthusiasm. Experiences trump objects in adding to a positive sense of well being (more on that later--yeah, I'm reading psych stuff again). The challenge is the find a RIGHT house that lends itself to some flexibility in lifestyle and as an activity base. In other words, maybe a house that seems to fit like a glove because it reminds you of the cottage you moved into when you first got married isn't the ideal choice.

The fun thing I've noticed over the years is that people buy and are quite happy with second homes that are quite diverse architecturally and in terms of interior design---let's say they can be rather exuberant! Not something that would even get consideration as a main residence, but among second home there is an opportunity for exploration.

Some people buy a second home and plan to move into it full time later on--that takes us back to the more conventional criteria--although in a rising market (remember those???) it's not uncommon to sell the vacation home for a profit and buy a different home for full time use. I think those folks find out that what was RIGHT for a second home isn't necessarily RIGHT for full time use.

Back to details next post.

Which is the RIGHT house IV

Sorry about the Roman numerals--didn't know how many of these were coming--if we start getting into the Ls and Ms we're all in trouble. I took 3 years of Latin in high school--and could even do math! Did me no good in later life, but I did name some new species and it might have helped then--bad form to improperly derive a scientific name from the Latin. Taxonomists would chuckle throughout eternity--but they need some humor in their lives--global warming and all that!

Back to houses! We're talking about the RIGHT house, but I should make it clear that the RIGHT house is not perfect--oh, it could be, but that's highly unlikely. If you search for the perfect house you'll not buy anything and drive your agent round the bend--that could be a short trip, depending.

If you recall my definition, the RIGHT house is the house that best meets your wants and needs AMONG those houses available for sale. If the RIGHT house isn't that close to being perfect, you get to choose whether it's one you want to buy. It may not be. The important thing is to reach an objective decision about whether it's perfect enough. Don't get tripped out on perfect--I've know many people who worked with an architect to DESIGN their perfect house--and when it's done--not perfect. There's usually a list of things they'd do differently, if they could do it again.

How do those all important priorities shake out? They shake out more easily if there's only one Buyer or if there are two or more that have similar vision (fat chance!). Get ready for some negotiating in the process, or buy a nice duplex and take turns visiting. Priorities come in different flavors. There are absolute priorities, relative priorities and the "gee, it would be kinda nice if" priorities.

Before you spend lots of time looking in what you believe are your favored areas--get an MLS print out from your agent of what's available in those areas in a price range that generously brackets your financial and amenity expectations. See anything good? If you don't, have your agent run the same search on the SOLDS for the two years--same areas, broader price bracket. If nothing looks alluring among two years of SOLDS--it may be time to shift the search other areas or buy lottery tickets and search higher prices. Needle in haystack searches can pay off, just don't tell your agent you've been looking in a particular area for 8 years and remain hopeful for a miracle to come on the market.

Absolute priorities are requisite attributes, such as--you've got 3 teenagers and they each have a bedroom now. You NEED a four bedroom house. Three bedrooms are not going to work--unless YOU sleep in the back yard. Your spouse is an artist and needs a room with north light for a studio. Those type of priorities are good and bad--good because you can eliminate MANY houses without a second thought, bad because you may eliminate all the houses. If the absolute priorities aren't met, RIGHT is just a word that has nothing to do with a purchase decision.

Next post--relative priorities--no it's not about in-laws!!!!

RW

Which is the RIGHT house III

We did areas, we did former abodes and now it's time for some specifics. Buyers need to evaluate their lifestyle and associated needs before falling head over heels for a house that's not going to measure up when actually LIVED in. Little questions like: do you entertain a lot and, if so, for how many people? If you like to have 10-15 folks over for dinner, you need to be careful about small kitchens and limited dinning areas--or be prepared to loose some friends. Do you like to BBQ? In the evening? Is the patio positioned where it will get late afternoon sun and sunsets? Check it out and remember the sun moves around during the year. Here in paradise people can  BBQ year round--but that raises the sun question in a more complex context. Same sorta thing for morning sun--like breakfasts with dawn's early light? You may be eating in the garage on a workbench by the east facing window if you don't check the sun. Gardening is another sunny subject, unless you stick to shade tolerant species.

Obviously every new house is going to produce some lifestyle changes, but that doesn't mean they are all good. Establish some priorities and discuss how those can be met with your agent. They may have some creative work arounds or alternative suggestions that come close.

Out here in oceanview land, the big blue pond can be pretty seductive. More than one buyer has moved in to a house far from the lifestyle mark but possessing stunning views. Everyone has their own adaptation period on stunning views, but in 6 months it's never the same--and other aspects of the house assume a higher profile. Ocean views are great and a cool resale feature, but living in the house is a lot more than looking out the window. Try to find a nice ocean view from a nice house that fits your lifestyle.

A couple of quick words about furniture--from someone who has furnished most of his places over the past 20+ years with garage sale items (I have cats, often lots of cats and cats like furniture for the wrong reasons).

Some of you may have gone beyond thumbing through the Pottery Barn catalogs others throw out in the post office trash bin. The catalogs are magnificent, so I actually went inside a Potter Barn store in Palm Desert once--felt uncomfortable and left quickly. At any rate, if you have some amazingly expensive dining set or leather sofa that cost more than a good used car--be sure it fits in the house you're considering as the RIGHT house. There are tape measures, of course, but even better are patterns--my Aunt lived with us while she went to college studying to become a home economics teacher (don't think they call it that anymore). Her strength was sewing and there were patterns scattered about the living room pretty often. When I started thinking about the RIGHT house series I thought--buyers could cut out patterns for their special furniture pieces and bring along a big manila envelope or two when looking at houses. See how the patterns fit, instead of trusting instinct and eyeball. Remember traffic patterns too. It's not enough to fit the pieces in. People need to move through the house as well. Furniture placement is a big deal and the RIGHT house will have the space and allow traffic flow.

Same goes for artwork. Is there a place to hang that special painting or print? What about the sculpture? Can you make a space? Gallery supply catalogs have some nifty display ideas that would work in many houses. You won't be happy if the object of your artistic affection is in the garage under a tarp.

More on this specific bent in the next segment.

Which is the RIGHT house II

First post was about how to evaluate neighborhoods and larger scale geography from a green and mellow perspective. How far is there and how do you feel during the journey (and after filling up the gas tank).

Now for a few tips about the how the houses you've known and loved (or not so much) can help you find the RIGHT house.

Pity the unfortunate few who have had the rare pleasure of living in the RIGHT house already and are forced to find another just as RIGHT or more so (I did resist the urge to type RIGHTER). Most of us live in houses that are FAR from RIGHT--so can we learn from them anyhow? Sure! Remember what your mother told you--you can always find something good about everybody and that includes houses.

Think of the place you're living now or a past house that you have a strong connection to. WHAT about its entire essence did you like? How did it FEEL? Close your eyes and imagine coming home after a challenging day--you're walking up to the entry--how do you feel as you anticipate entering the home? The more difficult question is WHY did you FEEL that way. What about the house engendered that feeling? The entry itself, the kitchen, the hearth area, the master suite, perhaps the back yard with secluded patio? You get the idea. Think of aspects you like (or liked) and how they created the FEEL. You've got a good start on refining your search criteria.

Some parts of a house are particularly important for a majority of Buyers. Kitchens, for example, are the center of food preparation, can be used for eating and social gatherings among family and friends--all major activities of a primal nature--remember we were hunter-gatherers not that many generations ago. Tribal imperatives haven't faded completely away. What do you like about your present kitchen? What would you change? Do you need a big kitchen for big cooking with lots of friends/family? It's important to get the kitchen RIGHT (or nearly so) because they aren't easy or inexpensive to change and you're in there several times a day. If it's irritating, it going to be really irritating. In contrast, if the guest bath has funky floor tile--you can probably live with it. It's a good idea to make some kitchen notes for when you look at houses or even photos of kitchens in IDX displays. Too bad you couldn't just pull up kitchen photos of houses in a certain area and price range, but MLS technology is not there yet--I suggested a system that would do just that 4 years ago--nothing developed so far. I the mean time you can do it yourself. IF you found a really great house in just the perfect location that had a really bad kitchen---could it be the RIGHT house anyhow? Depends on the competition and whether your brother in law is a remodeling contractor. There are no absolutes and you can fix anything with enough time and money---HOWEVER starting with a house possessing good basics is a huge plus.

Next post--more basics and some furniture issues.

Which is the RIGHT house?

Here's a quick post, first in series, concerning what goes into making one house the RIGHT one. It's a little more complicated than many think and it involves factors that don't show up among the 100's of data fields in MLS systems or the data aggregators what depend on MLS information. In fact, some of the basic considerations warrant some attention before the prospective Buyer even looks at detailed information about specific properties.

 I created some of this content for an Earth Day brochure a couple of years ago that focused on greening the search when choosing your next home.

Beyond the energy use associated with the house itself (more on that later) is the cost of buying fuel for the vehicles to do the traveling necessary to function on a daily and longer term basis.

When you have an idea of some neighborhoods that have appeal, use Google Earth or a similar mapping system with path measurements to check out distances for round trips to work, church, schools, shopping, recreation, friends and relatives. If weekly totals differ 100 miles or less between two areas, it's probably not a big deal. If the difference is 200 miles a week or more, do some thinking about ways to close the gap or decide whether that neighborhood should be reconsidered.

You might consider riding a bike a day or two a week. Check out bike paths. RIDE the bike paths, WHEN you normally would--look for hills, safety issues, prevailing wind patterns (AM and PM) etc.

Similarly, drive the commute when you would drive it on typical days. Mileage isn't everything. 30 miles on a freeway with moderate traffic is not like 30 miles on surface streets running cross town. How pleasant (or unpleasant) is the commute (AM and PM)?

Consider driving some other routes you'll probably take several times a week. How do they feel? Always consider shortening travel distance to save energy, time, stress and money. You could join a nearby gym, play golf on a different course or shop at different stores. You might like the new places as much or more. Check out the options. You may not want make those changes to your lifestyle, but be aware of the costs--before you fall in love with a cute house that's in a neighborhood just enough farther away to add several thousand dollars a year to the extended cost of home ownership. It may be worth it to acquire the RIGHT house, but it's better to make an informed decision than suffer apoplexy when the gas credit card invoice arrives in the mail.

Back to the NEW

Listed spec house last week and back to open houses on a brand new construction. Fun talking to the public about real estate, general views on economy, the future, etc. Despite the national trade association (or union) proclaiming the recovery is underway, the public is not convinced. Bouncing along the bottom through mid 2013 was prevailing opinion among the dozen or so offering comments. It was breezy, but ocean views were stunning. Open houses are key, because from a drive by you'd never imagine the views were even half as good. Stairs in this houses have 6 inch risers and wide treads--makes a big difference--particularly to me after going up and down for 4 hours. Another of the little things Buyers should pay close attention to in seeking the RIGHT house. Stairs can be changed, but it's usually costly and often the space for the run just isn't there--so you're moving walls, taking up floor area.

I just finished The Thank You Economy by Gary Vaynerchuk--excellent read. Like many I'm still pondering where social media really fits in with real estate. Of course there are numerous seminars, webinars, face to face courses, etc. pushing the marketing opportunity--more business with less work approach so popular with many agents, but that seems to miss the transparency, relationship, communication (like---two way sharing) aspect.

Assuming Buyers want the RIGHT HOUSE and Sellers want the RIGHT BUYER, a pure marketing thrust misses the mark. What do Buyers and Sellers really want? It's unlikely they're worried about how the agent can do more transactions with less work. The Buyers pay for the whole show, in the final analysis, so getting them into the RIGHT HOUSE is probably a good way to evaluate success in social media.

I'm going to be posting some insights from my 26 years in this crazy business intended to expand the perspective of Buyers as they review property. MLS information is inadequate and because most agents and Buyers rely on local and national data sources that are no better than MLS data, it's a challenge to even approach the real world benefits of individual houses. House hunting has become a virtual experience, but living in a house is not. Sure, Buyers go see the houses at the tail end of the process, but by then they have preconceptions that may color their reactions. They may also totally miss the RIGHT HOUSE because it fell between the information cracks created by virtual bias in the systems that compile and distribute data.

Speaking of which, our access to the national trade associations property resource is now turned on. We gave our MLS data away and now have techie bling in return. I'll be posting some reaction as I test the system. It lacks commissions, but otherwise it is very MLS-like in appearance. It was created by an MLS vendor and cost is rumored to be in the $12M area. It ought to be good.

You may have read my posts expressing aversion to automated valuation models. That's what pays for the property resource. They sell the AVM to banks, etc. and it probably works OK if you want to get a rough estimate of the risk factor associated with a bundle of thousands of loans that might become a mortgage back security. Average accuracy falls into the 8-10% range. You gotta wonder what use that is for a real estate agent. Keep in mind that's average--there are some valuations that are better--and some are worse. There are predictable patterns to the accuracy. Houses with some characteristics will tend to be undervalued and some overvalued. No one is saying where these known shortcomings in the AVM are positioned. If we look at an $800,000 house that would mean the AVM could be, on average, $64,000 high or low. Acceptable for banks and bundles of loans, but agents? What about the public--would a Buyer or Seller want an agent to rely on an AVM that could be off over $60,000 in estimating the value of an $800,000 home? I'll have more to say about how AVMs will actually perform in traditional real estate situations.

Another aspect of AVMs is that they give appraisers a bleak view of their possible future and it's already pretty beak with HVCC insanity still getting worse. AVMs are fast, cheap and out of control--isn't technology swell! Create a virtual world and then sell it as a substitute for the real deal after convincing those impacted that it represents progress. Progress toward what?

Back from SD Marathon

Been a while--final weeks before the Rock n Roll San Diego Marathon were pretty strange. The Team in Training 20 mile major training run went fine--I didn't suffer injury and had a decent time. I was feeling pretty good about the race. Two days later I bent to get something out of a bathroom drawer--and my back went out. That took two days off training, but I came back strong after the rest and was feeling pretty good again, BUT two Fridays before the race I missed a step at at a caravan open houses (that I'd seen before, even!!) and hurt my ankle. Didn't realize how bad till I got home and took shoe off--softball sized ankle greeted me. No training for 3 days, then slow progress. Odd injury, so I didn't know how long recovery would take, but I did know when June 5th was---TOO SOON!

Fast forward to race day--taped ankle lightly. Sunrise didn't bode well for my knees ( they like to swell in heat), but I ran easily for 4 miles--gentle downhill in the crowds (over 30,000 runners this year). The second time I walked to drink, my left knee seized up--as it does sometimes. It catches walking, but running isn't as much a problem. At that point I knew it was going to be a long day. The knee stabilized in 3-4 miles, but I had to keep it wet to control swelling. Then the thigh on that side began cramping on longer runs. Surprisingly the sprained ankle that started all the drama wasn't that painful. Gave a twinge once in a while, but didn't slow me down. Rest of marathon was accomplished by pretty rapid running interspersed with walking and massaging thigh, then running again. It felt better to run faster than slowly. I ran out of gel blocks again and found myself eating a blueberry/pomegranate gel---OMG--yuk. But it didn't make me sick, nor did the sponsor drink (has whey protein--I'm lactose intolerant). By the time I approached the finish line I was ready. I knew I'd finish from early on--last year I didn't get confident until mile 22. Time sucked, but lines at porta potties were longer (how do you spell "rationalization"). I really felt I ran faster than 2010.

Long bus ride home--really stiff. The taping of the ankle for the race bruised the foot on the other side--that throbbed all the way home. Already planning how to do things better next time--need better watch, new scales to keep track of lean muscle mass and bicycle for cross training.

I bought new insoles at the Expo--still hunting the silver bullet that will make me younger and immune from injury--yeah, right! Don't smile--I'm still doing marathons at 63!

Took a walk down to Post Office today--a little pain, but felt good to move around. May start running tomorrow. It begins again. Forever Run!!!

Will get back to technology and real estate posts now--finished a couple of books and had a few random thoughts during the trip.

RW

state association meetings

I have other posts perking along, but the annual Sacramento meetings intervened. The drive gets longer every year. Made it in 4:30, but I think some of brain cells didn't arrive till evening. Heavy traffic, but fast. The trip home took 5:15 and included traffic jams (2) and the aftermath of 3 wrecks, accented by more flashing CHP lights than I usually see in a year. Glad to be home!

The state association has a number of new educational offerings (as usual--it is a business), including a mentoring program--apparently aimed at replacing brokers and managers from bringing newer agents along in their careers. Maybe there will be a time when brokers aren't needed at all. Just a statewide broker and some online tools. How efficient and what a nice cash flow that would be for the state association--further standardization is just what the industry needs at this critical time.

Speaking of which, there was a live appearance of the home heads Weds PM--OMG! How much did they spend on this bizarre campaign? There was little support from any demographic group and we learned later that the campaign had been scrapped--I was not the only member who did a OMG!! The money's spent and the organizational process didn't work that well--for the same reason it seldom does--and I'll say more about why a little later. Consequences? Hey, this is the state association. When leadership and or staff screws up there are no consequences. It's fantasy land!

Thursday's crush of meetings further revealed that the new organizational system is an accident waiting to happen. If everything goes smoothly and the leadership of the committee is focused and prepared it's possible to cover the details and stay within the time allotted. That doesn't always happen. Things get squished, truncated, ignored, etc and not always in reverse order of importance.

I had a brief opportunity to talk about vacation rentals to Land Use. Perhaps a push to gather material to populate a statewide data base is near. I also got some fine ideas about politics and policy from local government forum. There is a reason I still attend these meetings--they are a catalyst, regardless of the frustration levels.

Friday AM I did my cultural escape and spent time at the Crocker Art Museum--including the new building. I could have spent all day there and later wished I had.

The director's session demonstrated yet again that institutional memory is absent. Committee work on the floor is never pretty, irritates all involved and wastes an amazing amount of time. In this case a task force had been grappling with some short sale issues for many months and came up with some action items to address a few of them. The task force spent considerable time in  research and discussion, but that didn't deter the executive committee from proposing alternative wording in an amended action item. Then a director proposed a substitute motion from the floor. There were now three versions, producing discussion that took the better part of an hour and revealed much about the organization and the real estate community in general.

Real estate is not a business that respects intellectual acuity. It's about repetition and persistence in performing tasks that have changed little in 50 years. Technology offers new ways to accomplish the tasks, but those are all hung on the same template that was in place when I started in 1985. It's a simple business model producing the misplaced belief among agents and brokers that simple works well in all settings. As a result, the real estate community is not the slightest bit reticent in proposing plans for GSE restructuring, QRM standards, mark to market accounting and just about anything else. The fact that the finest minds in the nation can't agree on a plan is of no concern to most brokers who fondly remember the 2000-2006 boom and try to figure a way to have more of the same please!

A rough analogy would be if a salesperson who worked at a dealership specializing in Ferraris was asked to assume the chief engineering role in a team tasked with creating the next Ferrari production model. Hilarious concept? That's what happens at the state association meetings--anything to do with houses is assumed to fall within the expertise of the directors, most of whom are focused on their next commission more than the fate of the worlds economic future.

Because of the odd timing this year, the national association met this week in D.C. Of course the California delegations has many of the shakers and movers in the national organization. The delegates will consider many of the same issues from the same perspectives. No surprises anticipated. The condition of the market will be sugarcoated with just enough uncertainty dribbled in to support the agenda for change in national policy.

outside of inside

Watched "Inside Job" a  few days ago. Good movie as far as it goes, but there's another part of the story that probably wouldn't be as easy, or pleasant to film. BTW, the film got mentioned at state association meeting today--as a great movie--staring those evil bankers and wall street folks--real estate trade associations love to sling a little mud that direction--when they're not so close they could get some mud on themselves.

The movie focuses on the captains of the banking, rating and insurance industries who created and mutated mortgage backed financial derivatives into the CDOs that nearly no one understood (understanding isn't much better now). That creative streak and a dollop or two of naked greed is assumed by many to have brought the world economy to the brink of collapse. Whether that fate is behind us remains to be seen. The storied few had a lot company looking over the brink. A few years later, quarterly profits are way up for the key players who survived and prospered, but for much of the US life is still in a questionable condition. The creative opportunities posed by CDO's merely opened the door leading down a murky path illuminated by greed. A very diverse array of individuals, organizations and institutions from all corners of business and all strata of society tumbled through the open door into a Neverland of false promise, fleeting hope and delusional optimism.

The Inside Job gazes at the alluring, glitzy upper end of the food chain spangled with millions and billions and trillions of dollars, exotic automobiles, mega yachts, high priced hookers and mountain ranges of cocaine. That world seems far removed from the reality of most viewing the movie, but it's sure fun to look and feel a vicarious tingle or two. The actual meltdown included players from all walks of life--a rather prosaic lot, whose participation in the grand plan, for often trivial reward, sustained and nurtured it.

Yes, the financial ecosystem that produced those impressive figures and corporations and governmental officials (lots of overlap there) at the top of the food chain was dependent on primary producers and consumers low down in the hierarchy. It was an aberrant ecosystem perking along for quite a few years--evolving toward the ultimate catastrophe. Back in my university lifetime, I loved looking at the graphical representations of catastrophe theory and attempting to apply the principles to real world situations. This fits the classic cusp!

Way down the food chain, real people bought real houses with the mortgages that got packaged into the CDOs that fueled the whole big bubble. There were mortgage companies, real estate brokers and agents, escrow/title companies, insurance companies, construction firms, suppliers etc, etc. all along for the ride. Some very smart people and probably some not so smart KNEW that things were headed in a wrong direction. The money sure looked attractive though! Maybe things will hang together until we all grab another handful of green?

Unlike the huge salaries and bonuses that seduced the top of the food chain, the folks way down the food chain performed acts they knew were pretty sketchy for almost nothing. A few more commissions here and there, plenty of work at prevailing wages etc. That's all it took--they were all part of the magnificent pageant. Life was good--maybe not a lot better than before, but better enough so not many wanted to ask questions or take a long look in the mirror before going off to do the deeds.

The collateral damage is huge and few are talking about it--heck the simple, straight forward damage is terrifying enough. The most disturbing aspect is that a generation of young people will be altered psychologically by forced relocation and the ancillary nightmare of abandoned friends, separation from beloved pets, loss of familiar scenes and a new life where expectations that were most often realized before will now often be torn asunder. Will those young people ever understand about CDOs and greed and the top of the food chain exerting their diverse, but convergent, manifest destinies?

It's hard to put a price on that sort of decline in the quality of life for millions of people lasting over the next several generations---but we did. The Wall Street, Banking, Insuring, Rating and Governing folks DID put a price on it --- what it would take to make them whole--and we paid that price. The country, and the world will be paying installments on that amount for a long long time. The psychological fallout is unfathomable and can't be measured in dollars, all the easier to ignore!

Oh, anyone who doesn't think there's a next time coming is still living a dream that never started.