April 26, 2004
The gold coast | A Portland real estate broker hones in on lucrative coastal properties
By Brendan Hughes
It's been a busy few years for residential real estate brokers in southern Maine, what with the steady demand from out-of-state buyers looking for their own little slice of vacationland, not to mention all the former renters lured into home ownership by sustained low interest rates.
These are facts with which Ken Hall is well acquainted. Hall, 51, founded Portland Properties, a Portland-based residential brokerage, in 1989 after working on the original marketing team for the Chandler's Wharf condominium project built on the Portland waterfront by developer Michael Liberty. Last year, in an effort to broaden his geographical reach to the midcoast and beyond, and to tighten his focus on what he describes as "upscale" coastal homes, he changed the name of his brokerage to Maine Coast Properties.
(Portland Properties still exists as the company's property management and tenant placement division.) Today, the company is in growth mode, with plans to hire more brokers ˆ Hall currently has two brokers working for him ˆ and open an office in Blue Hill to serve the area from Camden to Bar Harbor.
Mainebiz spoke with Hall recently about the status of Maine's real estate market, Portland's property tax woes and the reality of being a small, independent company in a consolidating industry. Following is an edited transcript of that conversation.
Mainebiz: Why did you start Maine Coast Properties?
Hall: The market around here was, and still is, very hot. I was looking for more exclusive properties, where there's not much competition right now. We look for properties that have a motivated seller. The key thing is the motivation and the chemistry between us and the seller.
Do you specialize in any specific areas?
I'm a pilot, so we're willing to go anywhere from York Harbor to Bar Harbor. We'll be opening an office in Blue Hill [by the third quarter of this year], but right now we're concentrating on southern Maine, from York Harbor to Boothbay Harbor.
Who are you looking to market these properties to?
We market our services to anyone who is selling their property. Again, the key is the motivation of the seller. And we are more of a sellers' agent than a buyers' agent. There are a lot of agents that specialize in buyers' services, but our emphasis has always been on the seller and giving the seller the resources they need to put the right price on their property, market it and get it sold.
What do the properties you represent sell for on average?
Well, all of ours are over half a million. I was on the original marketing team for Chandler's Wharf when they went on the market, and I've sold many of those several times over. I've watched [a progression from] initial offerings between $250,000 and $300,000, down to the recession and auction in 1991 for around $108,000, to one we have under contract right now for half a million. So, we do Chandler's Wharf and the Portland House and Gables by the Sea in Scarborough; [in addition] we recently closed a $1.9 million oceanfront property [whose location Hall can't disclose due to terms of the sale].
Is there a lot of competition to become a listing agent for a property in coastal Maine?
I think there's a tremendous amount of competition. And more than that, because of the shortage of properties for sale out there, there are more agents willing to put a higher price on a property that is actually worth less. I'm not going to go down that path. A property is worth what a property is worth; it's worth what a buyer is willing to pay, and not what an agent has to say to get a listing. Unfortunately that's been going on more than I'd like to see in this industry.
Do you think the market is inflated? Do you think that we are experiencing a real estate bubble?
No, I don't think there's a bubble. There's been some incredible appreciation, with falling interest rates. The interest in investing in real estate instead of the stock market because of that bubble has really kept the market strong. In our markets there are more people who have had enough of city life who are moving to this area and can afford to pay these prices, as well as people looking for second homes who are coming up here and can afford these kind of prices.
All of New England has seen great appreciation. I think that it's different this time around, though, than it was in 1989. In 1989 there were factors ˆ not to say that there aren't factors on the horizon here, like Greenspan raising interest rates, property taxes going up and property values going up ˆ I'm sure we'll see seven percent interest rates in the next year certainly. But it's sort of a rare market that we're in. Usually it's either a buyers' market or a sellers' market, or no market at all, but this has been one that's been both a buyers' and sellers' market. Sellers are happy because they're getting what they want, buyers are happy because they can afford to pay these prices because of the low interest rates.
It's been good for both buyer and seller, which isn't always the case. 1994 was the bottom, in 1997 things started to take off, and it was around 2000, when we had the crash in the [stock] market, that [real estate] just kept going strong. I haven't understood why it has, but it's kept doing that, and I foresee this being a good year for both sellers and buyers.
How has that market affected coastal properties?
Well, coastal properties up north especially are taking longer, but the key is that there are buyers out there, and sellers have to be motivated and realistic. These buyers are sharp. They're going to shop by comparison like we all do, and they're not going to pay the inflated prices. We could get away with it in 2000 or 2001 because there were so many buyers. You could say, "Look, if you don't buy it now, someone else is going to buy it and they're going to pay more," whereas now buyers have the opportunity to look at a property, then look at other properties and shop around.
Do you see the market bottoming out anytime soon?
I think the market has stabilized. We're still seeing, in Cumberland County in the first quarter this year, a nine percent increase in units sold, a 13% increase in property values [according to the Maine Association of Realtors]. That doesn't sound like a bottoming out. That's the first quarter in Maine ˆ it doesn't get any worse than this mud and gray and snow and cold. I think this is still going to be a strong year.
You still represent a lot of properties in the Portland area. Is there a difference between selling those properties and the coastal properties?
The big difference is in marketing and how you go about it. It's a lot more expensive to market these kind of [coastal] properties. It's always the same thing, though. It's finding out what the seller wants, providing a realistic price [based on] the value and going out and finding a buyer for that property.
What is your approach to marketing the coastal properties versus marketing the Portland properties?
I don't think there's any difference in approach; there's just a difference in intensity. It does take longer for the higher-end priced properties, therefore there's a greater cost and you have to be more creative.
What would you say the hottest area of the coast is right now?
I think that the Cumberland and Sagadahoc [areas] have been the highest going. All along the coast, though, it doesn't matter where you are, is seeing high appreciation ˆ the Yorks, the Kennebunks, Cape Elizabeth. Even up to Washington County. The properties up there have appreciated through the sky. Up in Washington County they've seen a 200% change, which is the highest in the state, in the amount of sales. Lincoln County and the Camden area have been highest in terms of property appreciation. We've seen a 21% increase in homes sold there. Those would be the hottest markets.
Have property taxes had any effect on the coastal real estate market?
I think there's been a lot of media hype about the rise in taxes. Keep in mind that, for instance, Portland's last revaluation was in 1994, and that was the very bottom of the market. They had done a revaluation in the late 1980s when properties were at a new high, and after that there was such outrage because the economy was bad and property values did not relate to market values.
But now, I've gone online and seen how [Portland assessors] determined fair market value and I think the city is right on. They tax us more than they need to ˆ I'm not an advocate of taxes at all ˆ but at the same time, there can't be a complaint about an unfair approach to determining market value. I mean, you look at the prices the city has come up with and you look at what the properties are selling for, and they're equal. And we still don't know what the mill rate is going to be.
People should be looking at the new assessed value and saying, wow, it's doubled or tripled. That means your investment has doubled or tripled. That's a good thing. But that doesn't relate to your taxes doubling or tripling. I think there's a misunderstanding about this.
I think it's too early to tell [about the long-term impact of increasing property taxes]. I think it's going to affect some people, and some people will have to sell their properties. I feel bad for people on a fixed income who can't afford it. And Maine folks aren't making the kinds of salaries to support the mortgages to own the real estate.
Are those concerns you hear from the sellers you represent or the buyers you see?
Not at all. Once again, we're dealing with properties of a half million or more. There's a lot of "It costs what it costs." And it's a snowball thing. Raise taxes, and I'm an employer so I'm raising my fees.
Consolidation has been a common trend in real estate recently. Have you had any offers from large brokerage corporations?
I have not, and I'm a small company so I'm not sure somebody would want to do that. I'm not sure we've been necessarily noticed. We do a lot of silent business here. We're in and we've closed before a lot of people take notice. The consolidation is there and it's been happening for the last couple of years, but it's constantly evolving and constantly changing as well. Mark Stinson was the big person [in Portland-area residential sales] and DeWolfe came in and bought them out, and then Coldwell Banker bought them out, and on and on.
Do you think that's good for brokers like yourself and for the market?
I think what's important is that it's good for the consumer. I don't know if it's changed anything. What it has changed is it's allowed agents for these large conglomerates to pay a lot less for marketing services. But hey, if the agents aren't using it, what good is it? I guess I don't have an opinion as to whether it's good for the consumer or not.
Do you see the consolidation as being beneficial to you and your company?
Well, I can't compete against these large companies. A two-page spread in Down East magazine or a page in the Portland Press Herald ˆ I can't compete with that kind of exposure. But because [large brokerages] have a lot of agents, they can all share the cost.
You know, I don't think that a whole lot has changed in the industry. I shouldn't say that ˆ a whole lot has changed in terms of the technology ˆ but the way you go about meeting with a seller and selling their property and meeting with a buyer and finding them a property ˆ it's still the same thing: finding out what their needs are, finding a buyer and doing the right marketing along the way.
I think there is going to be a real difference in terms of comparing some agencies against others. This industry is moving so fast that some agencies out there are getting lost in the shuffle. There are great resources out there that don't get used.
You said that the market has slowed down a bit due to the economic downturn. How much has it slowed down?
What I had said was that properties are taking longer to sell. I don't think the market has slowed down. I think the number of homes sold is up; I think sale prices of each quarter are exceeding past quarters.
What we are seeing now more than before is more properties expiring [meaning their listing goes out of date before the property sells]. Again, that goes back to the responsibility of the agent and the lack of accountability. Some absurd prices are being put on these properties and they should expire. Then I see the seller turn around and re-list with an agent who has not done a service to the seller because the property has been on the market for longer than it needed to be, and they'll say, let's not show that, it's been on the market six months, there must be something wrong with it. I think that we're still in a very healthy, strong real estate market in southern Maine.
What's the most amazing property you've sold?
We have a property on a two-acre lot, six bedrooms and five baths, just recently sold by Charlene Farley [of Maine Coast Properties] for $1.9 million in the area. Another interesting property we have is a historic property in Wiscasset for $575,000. It's an octagon house, [and] it's on the list of Maine historical homes.
But we've moved to focusing more on the owners along the coast of Maine. They're properties that agents have not chosen to pursue for whatever reason, and it's a niche that we have found has worked very well for us. And I love the coast. I'm a boater, I boat up and down it all the time, I'm a pilot, I fly up and down it all the time. It's something I have a passion for.
These are facts with which Ken Hall is well acquainted. Hall, 51, founded Portland Properties, a Portland-based residential brokerage, in 1989 after working on the original marketing team for the Chandler's Wharf condominium project built on the Portland waterfront by developer Michael Liberty. Last year, in an effort to broaden his geographical reach to the midcoast and beyond, and to tighten his focus on what he describes as "upscale" coastal homes, he changed the name of his brokerage to Maine Coast Properties.
(Portland Properties still exists as the company's property management and tenant placement division.) Today, the company is in growth mode, with plans to hire more brokers ˆ Hall currently has two brokers working for him ˆ and open an office in Blue Hill to serve the area from Camden to Bar Harbor.
Mainebiz spoke with Hall recently about the status of Maine's real estate market, Portland's property tax woes and the reality of being a small, independent company in a consolidating industry. Following is an edited transcript of that conversation.
Mainebiz: Why did you start Maine Coast Properties?
Hall: The market around here was, and still is, very hot. I was looking for more exclusive properties, where there's not much competition right now. We look for properties that have a motivated seller. The key thing is the motivation and the chemistry between us and the seller.
Do you specialize in any specific areas?
I'm a pilot, so we're willing to go anywhere from York Harbor to Bar Harbor. We'll be opening an office in Blue Hill [by the third quarter of this year], but right now we're concentrating on southern Maine, from York Harbor to Boothbay Harbor.
Who are you looking to market these properties to?
We market our services to anyone who is selling their property. Again, the key is the motivation of the seller. And we are more of a sellers' agent than a buyers' agent. There are a lot of agents that specialize in buyers' services, but our emphasis has always been on the seller and giving the seller the resources they need to put the right price on their property, market it and get it sold.
What do the properties you represent sell for on average?
Well, all of ours are over half a million. I was on the original marketing team for Chandler's Wharf when they went on the market, and I've sold many of those several times over. I've watched [a progression from] initial offerings between $250,000 and $300,000, down to the recession and auction in 1991 for around $108,000, to one we have under contract right now for half a million. So, we do Chandler's Wharf and the Portland House and Gables by the Sea in Scarborough; [in addition] we recently closed a $1.9 million oceanfront property [whose location Hall can't disclose due to terms of the sale].
Is there a lot of competition to become a listing agent for a property in coastal Maine?
I think there's a tremendous amount of competition. And more than that, because of the shortage of properties for sale out there, there are more agents willing to put a higher price on a property that is actually worth less. I'm not going to go down that path. A property is worth what a property is worth; it's worth what a buyer is willing to pay, and not what an agent has to say to get a listing. Unfortunately that's been going on more than I'd like to see in this industry.
Do you think the market is inflated? Do you think that we are experiencing a real estate bubble?
No, I don't think there's a bubble. There's been some incredible appreciation, with falling interest rates. The interest in investing in real estate instead of the stock market because of that bubble has really kept the market strong. In our markets there are more people who have had enough of city life who are moving to this area and can afford to pay these prices, as well as people looking for second homes who are coming up here and can afford these kind of prices.
All of New England has seen great appreciation. I think that it's different this time around, though, than it was in 1989. In 1989 there were factors ˆ not to say that there aren't factors on the horizon here, like Greenspan raising interest rates, property taxes going up and property values going up ˆ I'm sure we'll see seven percent interest rates in the next year certainly. But it's sort of a rare market that we're in. Usually it's either a buyers' market or a sellers' market, or no market at all, but this has been one that's been both a buyers' and sellers' market. Sellers are happy because they're getting what they want, buyers are happy because they can afford to pay these prices because of the low interest rates.
It's been good for both buyer and seller, which isn't always the case. 1994 was the bottom, in 1997 things started to take off, and it was around 2000, when we had the crash in the [stock] market, that [real estate] just kept going strong. I haven't understood why it has, but it's kept doing that, and I foresee this being a good year for both sellers and buyers.
How has that market affected coastal properties?
Well, coastal properties up north especially are taking longer, but the key is that there are buyers out there, and sellers have to be motivated and realistic. These buyers are sharp. They're going to shop by comparison like we all do, and they're not going to pay the inflated prices. We could get away with it in 2000 or 2001 because there were so many buyers. You could say, "Look, if you don't buy it now, someone else is going to buy it and they're going to pay more," whereas now buyers have the opportunity to look at a property, then look at other properties and shop around.
Do you see the market bottoming out anytime soon?
I think the market has stabilized. We're still seeing, in Cumberland County in the first quarter this year, a nine percent increase in units sold, a 13% increase in property values [according to the Maine Association of Realtors]. That doesn't sound like a bottoming out. That's the first quarter in Maine ˆ it doesn't get any worse than this mud and gray and snow and cold. I think this is still going to be a strong year.
You still represent a lot of properties in the Portland area. Is there a difference between selling those properties and the coastal properties?
The big difference is in marketing and how you go about it. It's a lot more expensive to market these kind of [coastal] properties. It's always the same thing, though. It's finding out what the seller wants, providing a realistic price [based on] the value and going out and finding a buyer for that property.
What is your approach to marketing the coastal properties versus marketing the Portland properties?
I don't think there's any difference in approach; there's just a difference in intensity. It does take longer for the higher-end priced properties, therefore there's a greater cost and you have to be more creative.
What would you say the hottest area of the coast is right now?
I think that the Cumberland and Sagadahoc [areas] have been the highest going. All along the coast, though, it doesn't matter where you are, is seeing high appreciation ˆ the Yorks, the Kennebunks, Cape Elizabeth. Even up to Washington County. The properties up there have appreciated through the sky. Up in Washington County they've seen a 200% change, which is the highest in the state, in the amount of sales. Lincoln County and the Camden area have been highest in terms of property appreciation. We've seen a 21% increase in homes sold there. Those would be the hottest markets.
Have property taxes had any effect on the coastal real estate market?
I think there's been a lot of media hype about the rise in taxes. Keep in mind that, for instance, Portland's last revaluation was in 1994, and that was the very bottom of the market. They had done a revaluation in the late 1980s when properties were at a new high, and after that there was such outrage because the economy was bad and property values did not relate to market values.
But now, I've gone online and seen how [Portland assessors] determined fair market value and I think the city is right on. They tax us more than they need to ˆ I'm not an advocate of taxes at all ˆ but at the same time, there can't be a complaint about an unfair approach to determining market value. I mean, you look at the prices the city has come up with and you look at what the properties are selling for, and they're equal. And we still don't know what the mill rate is going to be.
People should be looking at the new assessed value and saying, wow, it's doubled or tripled. That means your investment has doubled or tripled. That's a good thing. But that doesn't relate to your taxes doubling or tripling. I think there's a misunderstanding about this.
I think it's too early to tell [about the long-term impact of increasing property taxes]. I think it's going to affect some people, and some people will have to sell their properties. I feel bad for people on a fixed income who can't afford it. And Maine folks aren't making the kinds of salaries to support the mortgages to own the real estate.
Are those concerns you hear from the sellers you represent or the buyers you see?
Not at all. Once again, we're dealing with properties of a half million or more. There's a lot of "It costs what it costs." And it's a snowball thing. Raise taxes, and I'm an employer so I'm raising my fees.
Consolidation has been a common trend in real estate recently. Have you had any offers from large brokerage corporations?
I have not, and I'm a small company so I'm not sure somebody would want to do that. I'm not sure we've been necessarily noticed. We do a lot of silent business here. We're in and we've closed before a lot of people take notice. The consolidation is there and it's been happening for the last couple of years, but it's constantly evolving and constantly changing as well. Mark Stinson was the big person [in Portland-area residential sales] and DeWolfe came in and bought them out, and then Coldwell Banker bought them out, and on and on.
Do you think that's good for brokers like yourself and for the market?
I think what's important is that it's good for the consumer. I don't know if it's changed anything. What it has changed is it's allowed agents for these large conglomerates to pay a lot less for marketing services. But hey, if the agents aren't using it, what good is it? I guess I don't have an opinion as to whether it's good for the consumer or not.
Do you see the consolidation as being beneficial to you and your company?
Well, I can't compete against these large companies. A two-page spread in Down East magazine or a page in the Portland Press Herald ˆ I can't compete with that kind of exposure. But because [large brokerages] have a lot of agents, they can all share the cost.
You know, I don't think that a whole lot has changed in the industry. I shouldn't say that ˆ a whole lot has changed in terms of the technology ˆ but the way you go about meeting with a seller and selling their property and meeting with a buyer and finding them a property ˆ it's still the same thing: finding out what their needs are, finding a buyer and doing the right marketing along the way.
I think there is going to be a real difference in terms of comparing some agencies against others. This industry is moving so fast that some agencies out there are getting lost in the shuffle. There are great resources out there that don't get used.
You said that the market has slowed down a bit due to the economic downturn. How much has it slowed down?
What I had said was that properties are taking longer to sell. I don't think the market has slowed down. I think the number of homes sold is up; I think sale prices of each quarter are exceeding past quarters.
What we are seeing now more than before is more properties expiring [meaning their listing goes out of date before the property sells]. Again, that goes back to the responsibility of the agent and the lack of accountability. Some absurd prices are being put on these properties and they should expire. Then I see the seller turn around and re-list with an agent who has not done a service to the seller because the property has been on the market for longer than it needed to be, and they'll say, let's not show that, it's been on the market six months, there must be something wrong with it. I think that we're still in a very healthy, strong real estate market in southern Maine.
What's the most amazing property you've sold?
We have a property on a two-acre lot, six bedrooms and five baths, just recently sold by Charlene Farley [of Maine Coast Properties] for $1.9 million in the area. Another interesting property we have is a historic property in Wiscasset for $575,000. It's an octagon house, [and] it's on the list of Maine historical homes.
But we've moved to focusing more on the owners along the coast of Maine. They're properties that agents have not chosen to pursue for whatever reason, and it's a niche that we have found has worked very well for us. And I love the coast. I'm a boater, I boat up and down it all the time, I'm a pilot, I fly up and down it all the time. It's something I have a passion for.
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