Friday, March 24, 2006

How To Fill An Open House After The Bubble Pops

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As the Housing Bubble begins to pop, and homes are on the block for months, instead of weeks, the scent of freshly baked bread isn't going to prove strong enough to secure a sale. This is bound to come as a shock for real estate agents who haven't had to actually working for a living for more than five years, but selling houses is about to become like actual work. Check out the LA Times story about Merced, CA. The first few paragraphs say it all:
Where did everyone go? Real estate agent Mark R. Gregory is holding an open house to sell a nearly new three-bedroom on a corner lot, and it's as if the Earth had been emptied.

Last year, this Central Valley city enjoyed the state's hottest real estate market. Sure, things have slowed since then, but Gregory possesses a salesman's indestructible optimism.

He put a sign on the lawn, a note on the Internet, an ad in the paper. He's hoping for investors from the coast marveling at how much house you can buy here for $359,000. Or local couples looking to move up into something nicer. Or Bay Area workers willing to make the long commute.

Three hours quietly pass. At 4 p.m., the agent pulls up the sign and locks the door. Total visitors: zero.

"It's like everyone got together and said, 'Let's not buy for a while,' " Gregory says.
Yep, times are tough, and once they spread south into Los Angeles, they're bound to stay that way for a long time.

Some agents are sure to turn to marketing fads at first, like offering a free moving van to clients, as if that's enough to sweeten the sour taste of an overpriced 2bd/3ba. It's not. In the end, you're going to have to impair the buyer. You're going to have to don that bartender's vest and polish up your moustache.

When yard signs aren't enough to draw prospective buyers through the door, real estate agents would do well to do what the art galleries have made a success. When galleries realized it was damn hard to get anyone out on a Friday night to look at paintings, they started to offer free booze. The galleries mostly went for wine and cheese, but then, they were usually hoping to just make a few thousand on each sale. With the median home price in excess of $500,000, real estate in Los Angeles is going to be a hard sell, and so, this calls for hard liquor.

Scotch, Bourbon, Vodka, Gin, Tequila and Jägermeister will get people through the door, and loosen up their wallets (as well as their judgment). Make a party out of it. Put a Bernanke dart board on the den wall and throw some peanuts in a dish. Let's get this party started!

And if you're like that poor guy in Merced with nothing to show for a day of waiting, no worries. Just pour the home owners the first of many drinks, wait until they pass out, and then slip away before they come to their senses and start talking about listing with someone else.

Make mine an Irish whiskey with a Sam Adams back, please.

— The Boy in the Big Housing Bubble