Oil prices and housing, is there really a link?

It seems that anytime there is turmoil in the Middle East, there is concern over disrupting the oil supply and spiking energy prices – notably at the gas pump. Spiking gas prices not only makes everything seem more expensive, it has been thought to compel people to re-think their home buying strategies as well. Is the chaos in the Middle East and increasing oil prices coinciding with a shift in home sale trends?

Gregory White, of Business Insider (businessinsider.com), stated that “The simple reason why a rise in crude prices could tank the housing market is that it has done it before.” This is not a recent story; no, White wrote this in a March 6^th 2011 piece titled: “Barclays On How The Oil Price Spike Could Crash The Housing Market Again.” The article was a brief commentary on Luca Ricci’s (who was at Barclays at the time he was quoted) analysis of the possible consequences of the surge in oil prices to the U.S. housing market.

Ricci was quoted to say, “The main effect is on consumption via gasoline and energy prices. As consumption generally accounts for 60% of GDP, the effect is large. In oil exporters this effect will be offset by windfall revenues from the higher oil prices, so the overall effect is unclear. In our view, the oil price increase in 2008 significantly contributed to the recession and the financial crisis in the US, which then spread globally. By raising CPI inflation, it reduced real disposable incomes and, hence, the purchasing power of the average households, leading to a contraction in real consumer spending and lowering the ability to repay mortgages.”

Indeed, a 2008 sharp increase in gas prices and road congestion was a factor for many to re-think their home location. It was not only those living in suburbia whose idea of an ideal home shifted toward saving fuel costs; home buyers at that time, who did not put their housing search on hold, looked for a home that was closer to their work or easily accessed some form of mass transit. A National Association of Realtors® (realtor.org) study reported that 28% of home owners surveyed indicated that high fuel costs were a decision to sell their home, while 40% of home buyers surveyed indicated that high fuel and commuting costs offset the higher home prices closer to the city center.

How much could you save by moving closer to your office? Based on the Washington Metropolitan Area Transit Authority Savings Calculator (WMATA.com), eliminating 20 miles of daily driving can save over $224 per month or $2,688 per year (estimates at the date of this article). And if gas prices peak like they did in 2008, savings from curbing your driving could be double – or more!

However, while the immediate focus may be on saving on energy costs, urban living could have a trade off in higher property taxes and housing costs. And as much as increasing oil and gas prices may have an indirect effect on the housing market, the urbanite trend may be more about convenience and a healthier living style rather than saving money on gas and commuting costs. Nonetheless, the urban living trend surged in 2010, when sales soared in planned walkable communities with embedded shops and services. Market demands resulted in suburban renewal, where planned urban villages were built (and are being built) in convenient locations; which have also become destinations for the community’s restaurants, shops and offices.

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By Dan Krell
Copyright © 2014

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

May 7, 2014September 29, 2019

Big brother is watching – surveillance cameras in home listings

Surveillance technology is everywhere these days; some are obvious and others covert. A growing awareness of government and law enforcement surveillance has become a major aspect of the growing debate of “reasonable expectation of privacy.” However, in a time when many are pushing back against surveillance, home sellers are increasingly turning to video cameras to protect their homes, valuables, and trust. And as the technology becomes cheaper and easier to use, the trend could become the norm.

The thought of the home seller remotely viewing your activity may seem creepy at some level; however, you might reconsider if you caught the recent ABC’s 20/20 segment “Caught on Tape: Real Estate Agents Gone Wild.” Highlighted were real estate agents who were caught on camera violating the trust of the seller; including: a Maryland real estate agent who was caught rummaging through a woman’s underwear drawer; the New Jersey agents who used their listing as a rendezvous point for sex; and a number of other agents caught stealing jewelry and prescription medicines from trusting home sellers. Real estate broker and author Brendon DeSimone, who was interviewed about how to protect your home during the listing period, suggested that the video camera can help you keep your agent honest; he stated: “just ‘cause they’ve done a lot of deals, it doesn’t mean they’re trustworthy.”

According to a Supercircuits.com infographic (The History of Video Security Cameras), the idea of “video monitoring” was first widely spread with the 1949 publication of George Orwell’s “1984.” Two years later, the first tape video recorder is operational. Since then, there have been mega leaps in technology making cameras smaller and easier to use. It wasn’t until 1992 when the “nanny cam” was introduced; before then, surveillance cameras were primarily used for law enforcement purposes and commercial applications. The “IP” enabled camera with onboard video analytics was introduced in 2005 as the internet technology and usage greatly expanded. Today, surveillance cameras can be placed almost anywhere and watched from any remote location.

Don’t get carried away with your voyeurism just yet; there are legal implications when using surveillance cameras, as well as possibly interfering with your negotiations. Rather than using the cameras for protection, there are some home sellers who are tempted to use the videos as a way of understanding the buyer by analyzing their gestures.

Does a home buyer have a reasonable expectation of privacy when viewing your home? After all, many sellers vacate the house so the buyer and their agent can view the home on their own; although sometimes they are escorted by the listing agent. Even though there has yet to be some ruling or professional opinion from a real estate board about the matter; an increasing number of home sellers are using obvious and observable cameras to monitor their homes. Aside from the “broker blooper reel” that was put together for 20/20, it seems as if the cameras have helped some home sellers go after rogue real estate agents.

For most people, a notice indicating they are being video recorded is enough to alter their behavior; sometimes a notice is enough to deter theft. However, there are some whose bad behavior is not deterred, even when looking directly at a camera. If you’re considering using surveillance cameras in your home during the listing period, you should consult an attorney about legal implications.

By Dan Krell
Copyright © 2014

December 12, 2013December 13, 2022

Games people play in real estate

Studies suggest that your experience during a real estate transaction may depend on you and your agent’s ability to communicate. Clear communication between you and your agent should leave no doubt about your intentions, as well as your agent’s ability to convey and interpret motivations from your counterpart. How to understand the games people play in real estate.

A pop-psychology theory called Transactional Analysis, originally used as a psychotherapeutic tool, has been touted as a way to facilitate communication and assertiveness. One of the giants in the field was Dr. Eric Berne, whose work seems to carry more weight in the corporate world today as it did when his self help book “Games People Play” was first published in the 1960’s.

Games people play during real estate transactions

Have you ever wondered why a certain person makes you respond in a way, which, after the fact you thought was unpleasant or embarrassing? Transactional Analysis theory suggests that, unbeknownst to many, we often react and interact with each other in a way that can be described as games. Not so much the games that you might think, but more precisely these are psycho-emotional games that are played to satisfy unconscious needs that were not met during our childhood and adolescence (also called ulterior motives). And because these behaviors and traits are part of our behavioral “repertoire,” we are more than likely unaware of them in many situations. These ulterior motives can get in the way of a successful real estate transaction.

A simple explanation of Dr. Berne’s theory is that there are three mindsets from which we interact: the parent, the adult, and the child. When you interact as the “parent,” you are acting much like you perceived how your parents’ responded to situations; acting as the “child,” you react as you would have when you were very young. However, when you interact as the “adult,” you are reacting autonomously and objectively. Conflicts can arise when the mindsets are not amenable.

For example, if you’re butting heads with your agent because both of you are claiming to be the expert and the other should listen intently, chances are that both of you may be interacting with each other in a “parent” mindset. Likewise, if a home buyer and seller tantrum and attempt to bully each other over accepting the other’s offer, they are most likely reacting as the “child.” While the objective “adult” interacts and reacts free from unconscious motivations, and is most likely to communicate clearly and resolve most issues that interfere with a successful transaction.

Negotiation, like communication, is sometimes described as a game of personalities. It is a common misconception successful negotiators are good at bluffing; this belief may actually originate from a person’s own unconscious tendency toward dishonest communication described by Berne as “ulterior motives.” In fact, top negotiators happen to be honest communicators. Even though Sun Tzu’s “The Art of War” is often thought of as a metaphor for negotiation, it might be considered an early precursor to Transactional Analysis, since the piece is about sizing up and dealing with your counterpart.

This article not meant to give psychiatric advice (please seek a mental health professional if necessary); rather, this is meant to offer an alternate perspective of communication with your agent and counterpart. Regardless of the outcome, communication is a key factor in determining whether your home buying and selling experience will be positive or negative.

by Dan Krell
© 2013

November 26, 2013November 23, 2021

Increasing anger about real estate issues

What’s behind the increasing anger about real estate issues?

Did you know there is an anger epidemic in the U.S.? Dan Bowens of Fox 5 (New York) cited a USA Today study indicating that 60% of American adults polled reported they had angry or irritable feelings – which is a 50% increase from a 2011 poll. And if you are in a service industry, such as a real estate, you not only encounter the occasional obstinate client; but you can also find yourself engaged with bullies.

by Dan Krell © 2013

According to the American Psychological Association (apa.org), “Anger is an emotion characterized by antagonism toward someone or something you feel has deliberately done you wrong.” Anger can be used constructively to solve problems, but it can also cause problems that can interfere with thinking and “…harm your physical and mental health…”

Anger was common when the market declined: Many home owners were irate about deflated home values; many other home owners were outraged about their underwater mortgages, while others were furious about lenders foreclosing on homes. In fact, it was common to see foreclosures that were trashed by the owners as a way to express their anger.

Anger was also common as the market strengthened: Home sellers were irritated by buyer push back on price. Many home buyers were frustrated about multiple offer situations on some homes; while a few buyers were aggravated by the notion that they were no longer able to purchase foreclosures at steep discounts.

Regardless of the reasons for America’s reported increase in anger, the issue really isn’t the anger per se; anger is a useful emotion that can be productive. But rather, anger seems to be increasingly manifesting in irrational and aggressive means – even in the real estate industry.

A recent edition of Realtor® Magazine (Daily Real Estate News; October 20, 2013) reported that there are increasing incidents of physical assaults of real estate agents; attacks have been reported in model homes, open houses, as well as in their offices. Although these acts of physical aggression are increasing; the article did not report or discuss the more common verbal aggression, which includes threats and intimidation.

Anyone can get caught up in their anger and cross a line; agents, clients, neighbors, and even those who are engaged in a seemingly noble neighborhood cause are not immune. Fortunately, anger can be short lived and resolved; however, if the anger becomes all consuming – it may be time for mental health intervention.

The anger statistics didn’t surprise me. It seems as if we can find something to be angry about if we want to. However, it may be worthwhile, especially those who have been chronically angry and have lashed out at those who do not acquiesce or comply, to let go and be thankful for the good in our lives.

Goal Auzeen Saedi, Ph.D. sums it well (Why Are We Americans So Angry? Psychology Today; Millennial Media; April 30, 2013): “But what do we do with all of this anger? We let go. We forgive. We meditate and pray. We surround ourselves with loved ones…There are parts of all of us that could be made softer and kinder. We can learn to see the good in each of us that exists and teach our children to do so. Or we can continue to get angry, bully each other, make threats and demands. It is our choice.

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of November 25, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

August 30, 2013July 4, 2019

A glimpse into home buyer and seller behaviors

Buying and selling a home can be one of the most expensive and complex transactions you may undertake in your lifetime. Many are increasingly seeking assistance from real estate agents; according to the Highlights of the 2012 National Association of Realtors® Profile of Home Buyers and Sellers (realtor.org), eighty-nine percent of home buyers purchased their home through a real estate agent (a substantial increase from the sixty-one percent who indicated they purchased through an agent in 2001), while eighty-eight percent of sellers listed with an agent.

If you plan to hire a real estate agent, conventional wisdom dictates that you should interview several before choosing an agent. However, the logic is countered by the survey results. Approximately two-thirds of home buyers and sellers only contacted one agent. Additionally, a majority of buyers and sellers reported that the top means of finding their real estate agent was through a referral from a friend or family member. Forty percent of home buyers and thirty-eight percent of sellers found their agent through a referral from a family member or friend. First time home buyers were most reliant on their friends’ and family members’ referrals.

Repeat business was also a frequent way indicated in choosing a real estate agent. Although ninety percent of home buyers and eight-four percent of sellers reported that they would work with their agent again in the future; only twenty-three percent of home sellers and ten percent of buyers reported that they had worked with their agent in the past.

The internet is increasingly viewed as an important source of information for home buyers. Ninety percent of buyers surveyed indicated that they used the internet for their home search; the percentage rose to ninety-six for buyers under the age of 44.

Ultimately, your home purchase or sale falls upon the experience and skill of the agent you hire. Because of the increase in specialized transactions (such as short sales, 1031 exchanges, etc), it is probably a good idea to find out if the agent has the experience if your purchase or sale falls in this category.

A recent research study by Bennie Waller and Ali Jubran (“The Impact of Agent Experience on the Real Estate Transaction.” Journal of Housing Research 21, no. 1 (2012): 67-82) highlights the notion that an experienced agent can yield a better result than an inexperienced agent. They concluded that hiring a “veteran” agent will have a positive effect on your home sale. The data indicates that “rookie” agents, those who have had their real estate license two years or less, sell homes for less, take longer to sell homes, and are less efficient during the process.

Asking friends and family for referrals as well as calling the agent you previously worked with is a good way to find a real estate agent. However, vetting out potential issues can be achieved by asking the right questions before you hire them.

Regardless of how you find your real estate agent, it is probably a good idea to find out more about them. A conversation about their experience, knowledge, and expertise is probably a good way to start. Additionally, knowledge about the local market is extremely important these days as market trends have become hyper-local. Not understanding the neighborhood market can lead an agent to over or under price a home.

by Dan Krell
© 2013