Real estate pros share tips | A slumping housing market sparks creativity in those who make a living from it

The housing market has careered into rocky territory, bringing along with it the careers of plenty of real estate professionals. Although the values of many homes are falling, buyers are cautious. The result: Houses are mildewing on the market. In August 2007, 1,425 housing units were sold in Maine. A year later that number had dropped to 955 during the same month, according to the Maine Association of Realtors, and the median home price had dropped almost eight percent (for more housing data, see “Home matters,” page 38.) Despite the challenges, some professionals in the real estate industry are devising strategies to bolster sales. Mainebiz checked in with a Realtor in North Yarmouth, two staging partners in Scarborough, an appraiser in Portland and a real estate lawyer in Falmouth to find out what they’re seeing in their market — the hottest in the state last year — and how they’re maintaining business.

Anne-Marie McKenzie, broker, Allen & Selig Realty, North Yarmouth

I’ve been in real estate for five and a half years and this is clearly a buyer’s market. The supply is enormous. I’d probably say we have we have at least 10 months of inventory. Buyers are looking for a deal on a deal these days. They’re also very fearful that the market will possibly adjust further. It’s common to hear from buyers, “I think the prices will be better next year,” so what we’re trying to do is create a sense of urgency with the buyers.

The fact is that I don’t have a crystal ball to say when the bottom is in the market. And when we do the hit the bottom, the swing upwards tends to be pretty quick. So what buyers need to be cautious of is delaying.

The buyers in this market are also extremely picky. Your home needs to show perfectly on the exterior and the interior, so I tell all my sales reps that they should really spend the time up front improving curb appeal and certainly doing any changing and maintenance that needs to be done.

What sellers also need to realize is price is the motivational factor right now. I talked a little bit about exterior/interior presentation but the price is what really gets the buyer in the door, so the seller needs be ahead of the market instead of behind it and chasing it. I have a seller who paid $280,000 for their home and we started at $294,500 and we had very little showings for four months. I kept on saying we need to adjust the price, and now we’re at $279,900. And we still need to adjust the price. But that’s a hard the thing for the seller to swallow.

A particular home at 27 West Main St. in Yarmouth [was a recent success story] because the older woman was home for the showings, she was in her kitchen working on her puzzles every time we came, Mrs. Roberge. And [the home] was exactly what [the client] was looking for — he was looking for a home that was similar to the one he grew up in. And so after we had walked through the whole home and we came back through, Matt was very complimentary to the seller, and struck it off nicely with her. He talked to me a few days later and said, “It’s a really beautiful home but what I would have to offer for it would be significantly less.”

It was listed at $300,000. And so we talked about it and Matt threw out, “Why don’t I write a letter to her?” He’s a very well-mannered man, so [as] an older woman, it was something she really admired in him. We encouraged an offer with the letter. The final price was $250,000. Meeting the seller and writing the letter is one of the top things in this market that a lot of Realtors don’t necessarily consider. And it’s a piece particularly in this market when you throw in a low offer you have to be careful about insulting the seller. I would say, “Let’s write a story about why you want to be in this home. Tell the story about your family and be complimentary to the seller, and that will put you in front of the seller and in front of the other buyers as well.”

Robert Pietroski, real estate appraiser, Pietroski & Company, Portland

In general, [home] prices have come down or value has come down. But you want to be careful about painting that with a wide brush; there are pockets of the market that haven’t seen that much of a drop, or frankly maybe haven’t seen any drop, depending on where it is and what it is. When the price of gas started going up, the commuting towns all of a sudden seemed to be less attractive. Portland became more attractive if you work in the city, even though your taxes might be higher.

The value has dipped more so west of Portland, like in the town of Sebago, maybe parts of Standish. Those towns seemed to have more of a drop in value than the ones immediately around Portland, the ones more along the coastal corridor: Yarmouth, Cumberland, Falmouth. But you have to look at the different market segments that you’re in. It could be different in starter homes than upper-end, oceanfront properties.

I, myself, am very busy. I do a lot of Veterans Affairs work; that is probably the only loan product out there where you can get 100% financing. FHA financing is coming back, Federal Housing Administration. Our business, though, is slower certainly because of what is happening in the market.

We went through some of this back in the late 1980s and early 1990s. I don’t recall it being this prolonged and that may be because we’ve had such a run-up in values and activity for a good number of years. And then in the mid-summer/fall of 2005, things started to slow down quite a bit. There were a couple of years there where values seemed to be escalating at a fairly rapid rate. We were seeing increases as high as 15% annually in a few communities, [for instance] in South Portland and Peaks Island. Having been in the business for 30 years I knew it couldn’t sustain itself.

I think it will be a while before the market turns a corner. My crystal ball is not that clear. My best guess is it will be a year, maybe longer. It depends on whether we can create jobs in the general economy and people feel comfortable buying or trading up to a bigger house. I think in recent time, there’s been some slow down or stabilization in some market segments [in the last few months], so [the decline in home value] is not as rapid as it had been.

Susan Hasson, attorney, The Title Exchange, Falmouth

I am a real estate attorney, a transactional lawyer. I’ve been practicing for about 10 years. In 2005, I started practicing on my own. On my own I have a title company and a solo-practice law firm.

It’s always been very busy. As everyone knows, [the real estate market] was freewheeling for a few years, and the closing side of things really became busy, with the peak years between 2003 and 2006. And then I started seeing changes in 2007, before it was really even in the news. We started seeing people not getting the loans they thought they were going to get, more foreclosures, more people in default, that kind of thing.

In August 2007, I started marketing myself and trying to get my foot in the door with foreclosure firms by networking and word of mouth. I thought there was a lot of opportunity, and I shifted my whole paradigm here.

I work with a foreclosure firm, Shapiro & Morley in Portland, and I offer contract services, still transactional — title work, contracts — but on the foreclosure side. My practice has changed a lot; now I’m focusing more on default work, work-out situations, sadder stuff, but still an opportunity to help people and be creative with restructuring existing debt. It’s really amazing seeing [the foreclosure] side of things, seeing the volume, seeing how inefficient that side of it is. And whenever there is inefficiency, there’s always opportunity to get in and streamline the system or help.

The real big volume of business, after a foreclosure goes through, is called the REO sale, real estate owned by the bank. That transaction practice has almost taken the place of the traditional purchasing sale you’d have in happier times. It’s sad, because it’s foreclosed property, but there’s a lot of value, there are speculators coming in on that side and trying to get a good deal.

I still do my original work; I didn’t give it up, I am still here. It is different now. I see a lot more people being creative; they’re doing a lot more seller financing, so people are still buying and selling, but they might not be going through a mortgage lender. They are doing short sales, people are starting to negotiate with their lenders more. The idea of working with your lender and restructuring the debt can help both parties. I don’t think people thought they could do that before, and now they’re starting too, and we’re helping with that.

Traditional sales are not the biggest part of my work anymore. But that being said, sale transactions are still busy, but they’re these REO sales or they’re private cash transactions, family transactions, that kind of thing. The previous years have been so incredibly busy, there is so much clean-up to be done, that will keep people busy for years to come.

Kat Powers and Susan Dobrovolny, stagers, The Designer’s Co-op, Scarborough

Kat: Susan and I have been in business with The Designer’s Co-op for three and a half years. I’ve been in the interior design business for almost 20 years.

As far as change, with the economic situation, Realtors are trying to make themselves stand out a little bit differently, and if they can offer services like staging, I think that’s a key part of it. We did a redesign for Anne-Marie — she understood firsthand how we could transform a space. Often when we can get in and do a home for a Realtor, then they see how this can really make a difference in a property they’re selling.

Susan: I cannot stress enough how viable it is, especially in this market now, to have someone’s house have an edge over someone else’s house on the other side of town in the same price range.

Kat: All but one of the [dozen] properties we have done went under contract within weeks, or at the very least, a couple of months. The success rate has been 80% of the properties we have staged went under contract very quickly.

We offer different levels of service; we try to make ourselves affordable for everyone at every level.

Susan: We have an hourly fee of $80. We can do a staging consultation for $250. We’ll take digital pictures and we’ll give [homeowners] suggestions and they can tackle key rooms for themselves. Typically, [a full staging] works out between $250 to $400 a room, depending on clutter content for staging.

Kat: The ideal scenario is to have us to come in and do a home from soup to nuts. We go from floor all the way to the ceiling. We go in, we give you a price, and we don’t do the entire house, although we will, but typically we go for the key rooms. The key rooms would be the entrance way, the living room, the kitchen area/common area, the master bedroom and bathroom. And always we look at the front of the property; when you pull up the driveway, it doesn’t matter if it is the front door or the back door, if that’s the first door you see, we’re going to put a lot of emphasis on that because curb appeal is everything.

Susan: We even make suggestions on plantings outside. That is how extensive our eye is.

Kat: I think part of what our job is, is to go in, make a home look the best it can and create a space that others can envision themselves in. A couple things we do, we depersonalize the space. If you can neutralize that, take the photos off the wall, it makes the prospective buyer more comfortable with the space.

Susan: Another thing that is really crucial, the minute the “For Sale” sign goes up on the lawn, that’s no longer your home. You have to look at that home and accept it as a marketing tool. You have to have a little bit of an edge, versus Mr. Jones three doors down who’s also selling his home — so it’s really important how the home shows. Often people will walk in, and they don’t see a room for what it can be, and they’ll walk out of the door. They won’t see the great architectural features or layout, because they can’t stand certain colors or knickknacks, and they’ll walk out.

As told to Rebecca Goldfine