Before going any further, we have to define the ground rules. We like to keep it simple. We look at sold dollar volume in the Connecticut Multiple Listing Service for agents based out of West Hartford. We compare teams and individuals, and try to consolidate MLS records for agents that work together as teams if they use individual CTMLS IDs. This isn’t a perfect system, but it’s widely accepted and the best data we have. Check out last year’s version of the post for more commentary on the criteria. All data is from the CTMLS, which is deemed reliable, but not guaranteed.

Once again we found that over 300 real estate agents based in West Hartford did at least one transaction. The chart below shows how many agents finished the year with production in specific ranges. For example, there were 9 agents that finished the year with total production of between $4 million and $5 million.

As usual, the vast majority of agents are on the low end of the sales volume distribution. The number selling less than $1 million in real estate for the year increased to 173 agents this year (from 150 last year), while most other buckets remained about the same.

The other end of the chart, the “Top Producers,” is made up of the usual suspects. The order changes from year to year, but the names are all the same and are probably familiar, especially to those who keep a close eye on the West Hartford market. Many will claim to be number one in something, but the true Number One had a very strong year with over $29 million in sales volume. Number Two was close behind at over $26 million, and then we drop down to $22 million, $21 million, $17 million, $16.5 million, $13+ million, and $12+ million before the chart kicks in.

For 2010, we ranked 13th overall, officially selling about $8.1 million. Our performance is an improvement over last year (17th), and once again puts us pretty high up the list. We’re still not to the level of Most Awesome (or should the highest level be “Totally Awesome?”), but we’re making good progress.

Last year we staked our claim as the Number One Under Age 40, and are happy to report that we defended that title in 2010. Thank you to all our clients and advocates! Your patronage and referrals, not to mention trust and confidence, is the only way that a business like ours grows, and we definitely appreciate your support.

Looking forward to 2011, we hope to defend our current title again and continue growing our business. Although we highlight the rankings once a year, our day-to-day priority is providing top-notch service to individual clients. We hope to have exciting news to share next year at about this time, but the nature of the real estate business makes long-term predictions difficult. The year looks promising so far – that’s the best we can do. So we’ll just have to keep working hard and doing right by our clients and trust that they’ll spread the word.

We’re going to take an hour or so today to enjoy our awesomeness (we’re thinking our level is “kinda awesome”) and then we’re back at it. Thanks again for all your support and referrals!

But real estate isn’t always as glamorous as it may seem. We not only have to find our clients, but we also have to demonstrate the expertise and provide the level of service that we advertise. Most agents work on their own. They have to follow the activity in the markets, keep track of numerous dates for each transaction, and make sure all their paperwork is in order. At the same time, they have to be available to show houses to buyers and market their listings. There’s a lot of grunt work involved to make the overall experience seem effortless.

We feel we have an advantage in working together, and think we’ve done a pretty good job building the operations of our business. However, it can always be better. This summer, Kyle and I are going to make a fresh start. We’re going to keep everything that is working well, and we’re going to improve everything else. Most of the changes will be behind-the-scenes, and not visible to our clients.

For example, one task is to make our home office workspace more efficient. Right now we’re a little cluttered with files and marketing materials that have built up over the years. Do we need folders for deals that closed three years ago next to our desk? No, they can move to the basement. Do we need 37 copies of a glossy marketing sheet from a sold listing? No, those can be recycled. What about all of these blank contracts and forms? Let’s go electronic and get rid of them all. We can get our workspace set up so that we have exactly what we need, and only what we need, close at hand. I know, yet another example of us being dorks. But the faster we can get our paperwork done, the more time we can spend with clients.

Another task is to take a close look at the expense side of the equation. Are we getting the support services we need for the best possible price? This leads to a change that will be visible to clients. As of today, July 1, we’ve switched to a different broker, RE/MAX Premier, REALTORS based in West Hartford Center. Because we think of ourselves as entrepreneurs, we end up doing a lot of things differently than other agents. We don’t rely on our broker in the same way that many agents do. RE/MAX is more supportive of the specific ways we run our business and a better fit for us.

Contrary to common perception, brokers work for agents, not the other way around. They provide office space in which we can work and hold meetings. They provide legal and business support so that we don’t have to launch and run our own company. They provide educational opportunities. They sometimes generate leads based on their brand. Some brokers offer more services than others. In all cases, the agents pay for these services.

By moving to a different broker, we’re getting only what we need and not paying for extras that we don’t use. We’ll still be providing the same level of service that we have since we started in the business. The change really doesn’t impact our buyer clients at all. And the only difference our seller clients will see is a different color sign in their front yard – our marketing program for listings does not change at all. It may seem like a big deal, but it’s really not.

The final phase of the Fresh Start is looking for new opportunities. As we go through the summer, we’re going to be searching for ways to work smarter and better. Are there new technologies or techniques to advertise our listings so that our seller clients get more offers and better offers? Are there different ways to communicate with our buyer clients so that they have a better understanding, and more confidence, in the search process? What can we do to improve this blog so that the general public understands more about the local residential real estate markets?

We’re going to wipe the slate clean and take a fresh look at how best to be a residential real estate agent in Greater Hartford. Every now and then it feels good to press the reset button.

Thank goodness. All of the time I spent studying interesting facts like “What is the potential fine and prison term for impersonating a licensed appraiser?” actually paid off and now I can open my own real estate firm, if I so choose. (The answer to the question is $1,000 and 6 months, if you’re interested- so don’t go impersonating an appraiser!)

So what exactly does this mean? Well, I am now a licensed Real Estate Broker in Connecticut. Right now I still work for Mr. Bill as an independent contractor and he backs my license. But at any point I can choose to open my own office and hire people to work for me, if I like.

Some people don’t understand why I went through the step of getting my broker’s license if I’m just going to continue working under a different broker. The answer is options. You can never have too many of them when it comes to a career, particularly in an industry that is in such a state of flux…

I never used to think much about these polls when I worked in corporate America. When I would meet people in social situations and they’d ask me what I did for a living I’d respond with “I manage part suppliers for an aerospace company.” Ho-hum. Easy enough. The person would nod and smile and usually get a glazed look in their eyes. I’d typically try to change the conversation to something non-work related, like hobbies or current events or new restaurants, really just anything other than airplane engines.

But when I changed my career to real estate, the reaction I’d get to “what do you do for a living” completely shifted. My response of “I’m a real estate agent” or “I sell real estate” was greeted with a variety of reactions. Smirks. Twitches. Backing away. You’d think I just told the person that I sold my mother to the circus. (Really, she’s a nice lady, I would never do this) My new job was making me a social pariah. What the heck? I was still the same person.

So I decided to do an informal poll of friends and former colleagues to find out why people were now treating me only slightly better than a leper. The general results were that my survey group felt real estate agents were pushy, loud, only in real estate for themselves, and not focused on the needs of their customer but just with closing deals. Huh, awesome.

And what are my perceptions now that I’ve been doing this for awhile? Well, it doesn’t really seem to me that individuals that practice real estate behave much differently than people in corporate America, or any other line of work for that matter. Professional ability and ethical behavior seems to run the gamut. Much of it comes down to the individual’s moral compass. I’ve been in situations with agents that have made me raise my eyebrows and at times say “what you’re suggesting is not legal so don’t even go there.” I’ve been in other situations that could have presented huge conflicts of interest if not handled properly and felt that those scenarios were managed with the utmost professionalism and resolved fairly.

The fact that real estate agents rank in the middle of the pack of the Honesty and Ethics poll illustrates that we have some work to do as a profession. What positive and negative examples have you seen in your dealings with real estate agents? What do you think could be done to improve our perception with the public?

There were a couple of interesting “in the field” points that were made this week in class, particularly in regards to fighting appraisals that come in less than the contract price. Houses “not appraising” is becoming more common because banks are really cracking down on appraisers. They really want to ensure they’re not overpaying for the asset. A few years ago the pendulum was swinging the other way, banks were too lax on appraisal reports. Hopefully we’ll eventually end up at some happy medium in the near future.

But in the meantime, we’ve got all of these properties that are not appraising. In this situation, the Seller seems to be in a more difficult spot than the Buyer. In most cases, the Buyer will not agree to pay more than the appraisal report states as that’s the value that’s accepted by the bank. The bank will not lend on more than the appraisal report indicates, unless the Buyer is willing to make up the difference by bringing more cash. That situation is really not happening now.

So what’s a Seller to do if the house does not appraise to the agreed upon contract price? Well, they can always walk away from the deal. No one is forcing them to sell their house. They can agree to the value on the appraisal report and lower the contract price. Finally, they can try to fight the appraisal, but this is typically very difficult to do and in almost all cases unsuccessful.

Our instructor seemed to indicate that the only good way to get an appraisal reevaluated would be to bring some less than obvious information to the bank/appraiser regarding one of the comparable houses used in the analysis. One way would be if the agent could prove that a comparison sale was not an “arms length transaction,” that might do the trick. For example, if the Seller of the comparison sale sold their house to a relative or a neighbor. That wouldn’t necessarily be an “arms length transaction” because they might be willing to accept a lower price in this type of situation. The comparison sale would then be brought into question, so it could be argued that it should be replaced with a different comp for the appraisal report.

Unfortunately for the Seller, it’s fairly difficult to track down this type of information. And in most cases the appraisal is valid, the appraiser is a trained service provider and they’ve done all the necessary research and are just reporting back their opinion of value for that specific day.

The market is becoming more challenging on all fronts. If you’re a Seller and you find that the appraisal value comes back short, talk to your agent about your options. Everyone’s situation is different. Some sellers will take their house off the market, some will choose to sell to that buyer, and some will keep their house on the market but the buyer will walk away. Only you can make the right decision for you.

Today I learned about 2 of the 3 different approaches to appraise different types of properties; the Sales Comparison Approach and the Cost Approach. Next week we’ll learn about the third approach, the Income Approach. Really fascinating stuff to the lay person, I know.

But now I know that if I want to appraise a house, I would use the Sales Comparison Approach and use sales of similar type properties to arrive at a value. Adjustments are made here and there to take into consideration various attributes. It’s really not that different than what I would do for a market analysis for a seller or buyer.

I also know that if I want to appraise some unique building, that the Cost Approach would be the best way to go. For example, if I want to appraise the new Yankee Stadium (boo, hiss!), this would be the correct approach. Essentially you determine the depreciated reproduction cost of the building (how much it would cost to rebuild from the ground up, using the same materials) and add it to the underlying value of the land on which it sits. Fun!

Much of what I’m learning in class isn’t necessarily relevant to my area of practice in real estate, but it does give me an understanding of the bigger picture, which is always helpful.

At the beginning of today’s class, we were given the chance to talk about our local markets and the trends that we’re seeing. Here were some of the revelations…

Litchfield County- Land purchases seem to be moving. Buyers aren’t developers, but “regular” people. For example, someone will buy 18 acres at $20,000/acre with the hopes of eventually building a house on a large tract and then maybe spinning the rest off in the future to a developer. These “regular” people are hedging that land in Litchfield County will continue to be desirable to city folk.

Also, developers like Pulte and Toll Brothers are starting to explore the market again, anticipating that things will rebounding in the next few years, so they will be poised to react.

Greenwich- Houses in the $5-$8 million range are still selling very well. Huh. Must be nice.

Lower Fairfield County- Houses with a first floor bedroom are highly desirable and commanding premiums, as they are in low supply. The baby boomers are looking to downsize, but don’t want to move far, so they’re fighting over homes with a one-floor living option. I believe this will become more prevalent in all areas, particularly if boomers don’t want to live in 55+ communities.

One concept we talked about that I found particularly interesting was the highest and best use for a property. In order for an appraiser to determine a final value conclusion for their appraisal report, they must understand the optimum use to which land or improved property can be put. To do this, they’ll look at 4 tests:

1. It must be physically possible.
2. It must be legally permissible.
3. It must be financially feasible.
4. It must be maximally productive.

The most common way to use this would be to determine if a large piece of land with a house on it could potentially have a higher and better use by appraising the property as subdividable land, rather than appraising it for the value of the house plus the lot as it currently exists.

The reason I am fascinated with this is because I think I have a higher and better use for my neighbor’s property. I’d like to annex their lot, move their house to another location, and build a garage for my house. My current lot probably not big enough for a garage, based on Hartford’s zoning laws. My neighbor would most likely disagree with my plans. So let’s put it to the test…

1. It is physically possible to move their house and build a garage.
2. It is legally permissable to move their house, annex their property, and build a garage.
3. It is financially feasible to move their house, annex their property, and build a garage. (though not reasonable considering resale value)
4. It is not maximally productive to remove their house in order to build a garage. It fails the highest and best use test.

And because I’m a logical person, I don’t want to violate highest and best use. And now my neighbor is going to hate me for publicizing my diabolical scheme.

Funniest part of the day: We were looking at a Killingworth town engineering map in class. There is actually a street called ROAST MEAT HILL ROAD in Killingworth. I am not joking. Who could actually live on Roast Meat Hill Road? Doesn’t that really kill resale value? Does PETA set up daily protests? Talk about politically incorrect…

UPDATE: Embedded video removed … see it here.

I don’t understand why politicians cannot answer questions clearly and directly. It’s important to me that my representatives are knowledgeable and curious about current events and the world around them. Most importantly, I want to be sure that they have ideas about how to address today’s major issues. How can I feel good about hiring them to represent me if I don’t know what they stand for or what they plan to do to help me and my fellow citizens?

Many times I see real estate agents take the politician approach. The market is doing “fabulously” or is “challenging.” But that’s as far as they go. They don’t back it up with statistics. They don’t know how many days it is taking homes to sell in their market. They don’t know if their town is a buyer’s or seller’s market. They don’t read the local papers or follow the national news to understand how the local economy is being affected by the national economy. The last time they took a class was two years ago and it was because the state board of Realtors required it for relicensing.

Agents with a curiosity and an interest in learning offer a distinct advantage over agents that do the minimum. The MLS offers all the data an agent needs to understand local markets. The agent just has to make the effort to search the data and make sense of it. Local and national newspapers and news programs help us understand the economy and how our market fits into it. The agent just has to take time to do some critical thinking to form an opinion. Independent financial blogs and newspapers are additional resources that help us understand the mortgage market and loan programs available. Classes offered by the local and state board of Realtors help us stay current on new trends such as short sales and internet marketing.

Don’t get caught up in the aura and showmanship of an agent. Make sure that they are curious and knowledgeable about their markets. When you’re interviewing your agents, it’s your opportunity to play “gotcha” journalism. Ask them all the questions you want about the markets you’re interested in. Do they give you facts and figures? Specific examples of recent sales in which they’ve been involved? Recent classes they’ve taken to stay current? After you put them through the paces, you’ll feel much more comfortable about them representing you.