“Three years ago in Phoenix, you could have put a For Sale sign in front of a cardboard box and you could have sold it,” says real estate broker Jay Thompson of Thompson’s Realty in Phoenix, Arizona.
Today, of course, things are a just a wee bit different, both in Phoenix and the rest of the real-estate world. However, Phoenix is ultimately going to rise from the ashes. And Thompson is a gutsy survivor, with good reason. He opened his brokerage on the frantic last days of the real estate bubble, in 2008. Just as he hung his first shingle, the industry hung itself. But Thompson saw it coming.
“What goes up, comes down,” he says, “and we came down hard. But I think we’re bouncing along the bottom right now. The question is, how long do we bounce along the bottom?
“We had home values that were appreciating 50-60% annually. That’s unsustainable. You can’t do that for long. I can tell you dozens of stories. People would put down a deposit on a lot to build a new house and turn around and sell it – sell the lot – the house hadn’t even been built yet — and make thirty to forty thousand dollars in two months. Anybody with half a lick of sense would have seen it coming. You knew it had to pop.”
The momentum these days may be a bit less feverish, but Thompson has kept his doors open by keeping his cool and remembering the rules of old school.
“Ultimately, people still buy houses,” he says, “everyday.”
He has been surviving just fine through all the drama. How?
“There are three things that get a house sold,” Thompson says. “It’s price, location and condition. You can’t do anything about the location. A house is where it is. That gives the seller two levers: condition and price.
“You have to price a home aggressively. But you’ve got to be realistic and you’ve got get over the ‘my house is the best home in the neighborhood’ mindset. Everybody thinks they have the best home in the neighborhood. They can’t all be the best home in the neighborhood. So you’ve got to price it right.
“The condition, at least in our market, has to be as perfect as it can be. It can be little things: wash the windows. Clean the carpets. De-clutter. All those old standbys are really important in this market.
“A lot of it is old school, at least in the Phoenix market. We have so much inventory, and there are a lot of foreclosures and short sales. And whether you like to admit it or not, you are competing with your next-door neighbor, whose house has been sitting vacant for six months because it was foreclosed on.
“So a little thing like curb appeal is huge. Curb appeal has always been important. These days, with 47,000 listings on the market in Phoenix, your house has to stand out. And that’s curb appeal: condition.”
The advice may seem simple, but an amazing amount of sellers do not take this into consideration, and lose the game before they even start playing.
“It’s all about education,” Thompson says, and he emphasizes the importance of learning, especially for first-time homebuyers. “You need to understand everything you can about how real estate works. I don’t care what market you’re in.
“There are so many people I know who just don’t process. By process, I mean the steps that you go through to buy a house, to get a loan and to purchase the house. They’ve got to understand market dynamics. They have to understand that their home is not going to automatically appreciate through the roof.
“It’s tough with first-time homebuyers, because they think, ‘if I buy this house now, in five years it will be worth this much and I can sell it and I can buy a bigger house.’ Well, maybe, maybe not. That’s where I think a lot of people got into trouble during the boom, during these ridiculous appreciation run-ups. People started using their houses like ATM machines, refinancing and things like that. So education is so important for everybody, but particularly for the first-time homebuyer.”
A challenge he faces on the other side is unrealistic sellers. He says, “We will do a listing presentation, and the [seller]will say, ‘A year ago, my neighbor sold his house for $X!’ And I say, ‘Okay, that was a year ago, $X doesn’t matter. What happened a year ago doesn’t matter anymore.’ You have to look at today.
“Getting sellers to understand realistically what their home is worth in this market is tricky. It’s getting a little bit better because there is so much press and media about the market, but people still don’t want to believe [their actual home value]. Convincing people of the true market value of their house is probably the hardest job we have when it comes to selling.”
For real estate professionals, he strongly recommends the power of the internet and the vital importance of social media to maximize sales and communication. Younger agents know this through osmosis, but some of the more seasoned professionals have trouble warming up to this strange new digital world. Thompson discovered the internet early, while most of the industry was still thumbing through hard-cover listing directories.
“Before real estate, I was in semi-conductor manufacturing, which is a very technical industry,” he says of his life at the dawn of the digital age. “I got transferred a couple of times, and I was incredibly frustrated with what I could not find on the internet [real estate listings], because I was an internet guy.
“So when I would get transferred, I would say, ‘Okay, let’s go look for houses. Let’s find an agent.’ I lived in Austin and we were going to move out to Phoenix. I was shocked at how little I could find on the internet.
“Then the semi-conductor manufacturing industry took a big giant downturn. I was in human resources and I was just laying off people and closing factories, knowing that it was just a matter of time before I myself got laid off. That’s when I decided,’ I’m done with corporate America. I’m sick of working for the man. I’ll go get my real estate sales license. And I’m going to be internet-based.’
“I said that from day one, because I know that there is a need out there for that. And it wasn’t that there was no real estate on the internet. There was some, but it just made sense to me. I talked to lots of people in real estate, who were knocking on doors and cold calling and mailing postcards and newsletters and I thought, this is not efficient at all. So I started building our first website before I got licensed. I taught myself HTML. I’m not a coder or a developer by any stretch of the imagination, but I taught myself basically how to work on a template, and built that up.
“Then, five-and-a-half years ago or so, I started my blog. That was partly because I always loved to write, and I needed a writing outlet. I thought, well a blog is perfect for that. I’ll just blog about real estate. In 2005, there weren’t a whole lot of real estate blogs out there; a few, but not very many. You really had to look to find a real estate blog. And probably a year after I started that, it just started to take off. By take off, I mean that I started to get leads and contacts and prospects from it.” [The Phoenix Real Estate Guy]
What resulted was an adventure in real estate that includes a little bit of everything that Phoenix has to offer.
“We’ll sell anything we can in this market,” he says. “It’s all residential resale. My wife and I used to do a lot of land transactions but [now]land is dead here. So it’s typically resale, and we’ll sell anything from $40,000 condos to $700,000 homes. And everything in between.”