Luxury Insider: The Ying & Yang of Dual Agency

0 Comments

I bet that if all Realtors were asked what “gun-powder-smelling” topic they would least like to talk about, “dual agency” would get the bulk of the votes. FYI, dual agency is created when the same broker represents both the seller and the buyer in the same transaction.

Across all States, real estate pros who are keen on following the law and therefore protect the public as well as their own license, know that not disclosing to either party the fact that they are handling both sides of a sale is unethical and illegal. Double representation requires written consent. If the proper disclosure is made and the consent obtained, it’s generally OK, although there is sometimes a suspicion of something fishy in the atmosphere.

Here is why: we owe fiduciary duty to our principal (the client). That includes the utmost care, integrity, honesty & loyalty. So the million dollar question is: can a broker abide by such stringent & virtuous requirements and nonetheless agree to double-end a sale? To put it in another way: Can a broker create a win-win situation for both the seller & the buyer, or will the interest of one suffer from the attention given to the other?

Those fine minds who are opposed to dual agency make the argument that an agent can only serve the best interest of one party. They claim that attempting to offer the same degree of care to the second side without affecting that owed to the first, is just wishful thinking.

Money is the big scarecrow here. Since the agent has the opportunity to collect the sales commission on both sides, “he” may be tempted to place his own interest ahead of the interest of the principals. That could include keeping the listing away from other agents who may bring a better deal, or deliberately playing dead for a while in order for the listing agent to first write/present his own contract, get it accepted and win the jackpot. Who is benefiting from the crime, you might say.

OK, let me give you my take on the matter. First, a disclaimer: what I am about to say is only my personal opinion. My corporate attorney is likely to have a view on the subject quite different from mine. As usual, however, I will speak my mind, rather than keep quiet as to avoid making waves.

What I think is that we are getting more & more paranoid in this business, seeing evil intentions in just about every thought or action. We are thinking like lawyers, not Realtors. In a way, it’s a good thing, as we need to be aware of the risks in everything we do. But, in a way, it’s excessive, as it paralyses our actions and could negatively affect our ability to get the job done for the benefit of… Our buyers & sellers.

It is true that some real estate agents are somewhat devious and may not hesitate to cheat the system to reap a financial reward. Bad apples belong to any profession and industry. They are, however, a tiny-tiny minority. Not anywhere close to a good enough reason to jumble up all scenarios and vilify one million agents who are devoted to serving the best interest of the principals.

I am not advocating dual agency. Far from it. I am just using whatever common sense I have to present the two opposite points of view with fairness and reasonable arguments.

The fact is dual agency can sometimes be a good thing. It may prove to be a positive course of action. For example:

  • It cannot be argued that the listing agent is likely the agent who knows the property best, giving the agent an advantage over others when trying to identify possible buyers. After all, we have to assume that this is a good reason (if not the main) why the sellers chose this agent in the first place. You don’t just expect your agent to babysit the listing, you want him to sell it.
  • It cannot be argued that an agent working with a buyer is likely to know that buyer best, in terms of needs & means. Knowing the peculiarities of the subject property and the sellers’ wants & aspirations represents a non-negligible advantage that may result in a happy sale.
  • If and when a situation arises that an agent is in a position to create a “Perfect Match” in between a seller and a buyer, that agent is only doing his job. Granted, the agent could refer the buyer to another agent, but, honestly speaking, we are getting more into cunning alternatives than meaningful substitutes.

Again, it’s only my opinion. OK to agree or disagree. Let the ultimate objective of doing the best possible job for both buyers and sellers be your guide.


Luxury Insider: Know, Like, Trust

0 Comments

It takes at least 2 people to create a relationship, whether in business or in personal life. Those two people may be equal in terms of power, or they may complement each other, kind of the alpha & the beta dynamic duo. No matter what, it is assumed that the two sides benefit from each other and often need each other to be happier and perform at a higher level: 1+1=3.

OK, with this being said, let’s now transpose these scenarios in the real estate business. On one side you have the broker/the company, and on the other side, you have the agents. They are independent contractors, meaning that they work for themselves so-to-speak. They work “with” the company, but not “for” the company. I know it does not make a great deal of sense but that’s the way it is. It’s actually a good thing since it affords agents & companies more latitude to pick & choose who they want to work with.

In this day & age, the relationship between real estate agents and their brokers takes all kinds of forms. Depends on the business model and the culture of each company. Some companies offer full service to their associates the same way they offer full service to clients, buyers or sellers. Some companies offer little in the way of added value, mostly providing, for a fee, desk-space in an office in exchange for higher commission splits. Many are somewhere in between.

Some agents need to leverage the strength and the various services of a company to have a chance to take off and eventually thrive. Some top agents don’t need (or think they don’t need) the company as much to drive their business. I am OK with either-or. I am not judgmental today. The question to consider is always: what is making the phone ring? Is it the firm, or is it the agent? The ideal scenario should be both.

The most substantial and reputable real estate companies have a little bit of an edge, otherwise they would not keep on growing, they would not be as good as they are… And they would no longer be reputable. Some go up and some go down in an industry where you need to reinvent yourself every day to remain relevant to the clients’ needs as much as the needs of the associates.

The good firms are those which cater to those needs and facilitate their associates’ aspirations to go to the next level. They usually offer superior leadership, vision, marketing, technology, training, coaching and a myriad of tools, services and support systems. Those firms, realizing that they cannot do everything, are always attentive to creating the right connections/affiliations/partnerships, to multiply the opportunities to attract buyers, get listings and get them sold.

However, one must recognize that, even though agents cannot be better than the firm they are with, companies are only as good as the agents they have. That’s the value of a happy relationship. Another way to put it is that regardless how good a company is (or believe it is), at the end of the day its success is entirely predicated on the success of its agents. They sell real estate; the company does not. Hence the need to continually try to provide the associates with what they need for them to get better and excel, for their benefit and that of the broker.

Agents and companies share mutual benefits. The best agents, all over the world, are associated with a company rather than try to open their own individual business. The company contributes to their strong identity, their image and their batting average. Agents understand their limitations in a competitive environment where clients’ expectations require more and more financial strength, global connections and all the bells & whistles necessary to run a successful business.

On the other side, it is more and more obvious that companies rely on top agents to carry the torch. Only the best agents can give credibility, legitimacy and effectiveness to any company’s programs. The company creates but the agents deliver. They are on the front line. They are the ones sellers and buyers want and ask for. They are the ones who are liked and respected. They are the ones who are trusted with the task of selling a home or buying a new one.

Know, Like, Trust: the magic words in any lasting relationship. That goes for our agency obligations to the clients, and that goes for the “partnership” between agents and companies.


Luxury Insider: A Digital Magazine for Intero’s Premier Properties

0 Comments

This month marks the release of the 14th issue of The Intero Prestigio International Magazine. Composed of some of the finest luxury estates Intero has to offer, this Prestigio International Virtual Magazine gives you a glimpse into the world of high-end properties. Since it is an online piece, feel free to enjoy it at your leisure, whenever you can take the time to relax and open your eyes to an album of beautiful homes. This also allows you to instantly share it with friends and family through social media, websites, or email. Browse through the gorgeous photos and find the property information and unique qualities of each one of the exceptional properties featured.

Prestigio International is a division of Intero Real Estate Services, a Berkshire Hathaway affiliate, specializing in the marketing of high end homes and estates in all relevant markets, whether local, regional, state-wide, national and international. We offer the widest scope of marketing coverage to multiply the opportunities to reach out to the most qualified buyers.

It is wonderful to see how this global high-end marketing program has become the reference in the industry for this type of publication and the standard by which others are judged. The release of our fourteenth issue attests of the mark that Intero has established in this prestigious market. Take a look at the beautiful homes that are the finest in the San Francisco Bay Area and beyond… you just might find your next home!

PM_I14_COVER sm

View the virtual magazine for yourself here.


From Luxury Retreats to Mountain Mansions, Prestigio’s Digital Magazine Has It All

0 Comments

Over 90 pages of luxury homes to browse online.

Intero Real Estate Services, Inc., a Berkshire Hathaway affiliate and wholly owned subsidiary of HomeServices of America, Inc., is releasing their largest issue yet of Intero Prestigio International digital magazine. The digital magazine is a combination of the innovative, tech savvy power of the Silicon Valley real estate company and their division specializing in high-end real estate, Intero Prestigio International. This issue includes everything from a Mediterranean luxury retreat in Atherton to newly built County Club homes nestled in foothills of the Sierra Nevada Mountains.

PM_I14_COVER smThe magazine offers enhanced and global promotion for Intero’s most exclusive homes and estates. Designed with ease of circulation in mind, it can instantly be shared through social media websites and email. As if reading a handheld magazine, online viewers can browse through gorgeous pictures and enjoy articles written by the luxury real estate icon, Alain Pinel. The digital magazine aims not only to raise awareness of properties offered in the Prestigio International collection, but also to exhibit their finest qualities. This piece only touches the surface of what is offered through the Prestigio International marketing program.

Renowned real estate entrepreneur Alain Pinel, Senior Vice President and General Manager of Intero Prestigio International, is the primary mastermind who pioneered and launched Prestigio International as part of his goal of expanding Intero’s luxury brand. From local print advertising to international display, properties in the Prestigio International collection have an elevated level of exposure to help them sell quickly and efficiently.

“Technology has linked all corners of the world together on an unprecedented level and it is clear that we are only going to grow more connected,” states Alain Pinel. “We no longer have high-end buyers confining their search for luxury homes to their neighborhood––or even to their own country. Nor are people searching in the conventional ways of decades past. Globalization has been the buzzword for some time now, yet nowhere is it as real and apparent as in the high-end real estate market. We, at Intero, put the puzzle pieces together. That’s why, among a host of innovative tools and services, we created this online magazine to reach the worldwide audience using the digital means that connect us together.”

View the digital magazine for yourself here.


Luxury Insider: False Expectations

0 Comments

A couple of months ago, I wrote about the headache that Realtors have today trying to put a price on a listing. A price that makes sense, and therefore can be rationalized when talking with the seller, potential buyers and cooperating agents. The task is getting to be hazardous in a hot market when real estate pros are using all kinds of bizarre strategies and tactics to yield the best deal for the owner while forging for themselves a reputation of superhero.

The one scenario (gimmick?) that has been in vogue the last two years or so, consists of putting a price on a property well below what the listing agent perceives to be today’s market value, in order to create a bidding war that may result in multiple offers well over the asking price.

The technique sometimes work to the benefit of the seller… And always work to the benefit of the listing agents. They can brag in the media that they are so darn good that they get top dollar (like 10-20% more than the list-price) for their listings. Obviously a bunch of would-be sellers are supposed to be so impressed by the performance that they will want those superheroes to list their homes and duplicate the magic.

Between you & me and the rest of the world, I have a hard time understanding how reasonable home-sellers can fall for such a deceptive marketing formula. I mean, if you have a $2M home which may go for $2.2 in a “sellers’ market” and you list it at $1.8M, it does not take an eagle to predict that the house will likely sell around the same $2.2 or so. Hello?

Such edgy way to do business, in my opinion, is not only dangerous but is creating lots of unwelcomed side-effects. Let’s deal with these two points, one at a time:

  • Dangerous: when we play games with the market, the market can play games with us. Real estate is not an exact science. If you deliberately underprice a property, there is no certainty that the gimmick will work every time. When it does not, the seller (and the perspiring agent) may be faced with a nasty dilemma or how to respond to clean offers just matching the asking price. At the high-end, you never can count on a host of qualified buyers fighting over a property. Often, there is only one candidate writing a bid, and he sure does not want to pay a dime more than he has to.
    Also, after months of madness in the marketplace, mostly due in many areas to a record low inventory, many are the buyers who are emotionally exhausted. They keep on writing offers and get rejected time after time, losing to the one buyer who cannot live without that particular home, at any price. The excitement of trying to buy can quickly become the discouragement of over-negotiating and coming up empty. Most buyers are no longer willing to play games. Sellers beware.
  • Unwelcomed side-effects: Not all sellers, on the advice of their agents, underprice their home… to get more. The great majority of the sellers list their homes at market, if not a bit over. Makes sense. The problem is that, even though they are told by their agents that the listing price is indeed on the high side, lots of sellers, intoxicated by ads suggesting that some brokers routinely sell homes 5/10/15/20/25% over asking, fully expect that they too will get a heck of a lot more than the advertised price. It’s contagious.

One humble and practical piece of advice to Realtors out-there: when you think of a price (“rational” or not) for a listing, be sure to have a good/clear talk with the seller, to explain what your strategy is and what he can reasonably expect in the way of offers. Not a bad idea to repeat the explanation again & again. Nothing is more deceiving than a false expectation. It’s a relationship killer. You want a win-win, not a lose-lose. The time to prepare the minds and set up the stage for what’s coming is before you jot down the price on the listing contract. Good luck!


Luxury Insider: The Global Fairytale

0 Comments

The real estate business is fascinating. Full of surprises. One that makes my day whenever I happen to turn the pages of local weekly magazines and look at real estate ads, is to discover that just about every company, no matter how big or small, pretends to be the real thing at the high-end and capable of reaching out to the world to find buyers for our local trophy homes.

Today, the buzz word is “Global”. Yes, I know that “global” has been a magic word for a heck of a long time already, but it is funny to observe that now, many real estate companies are waking up to the fact that there is a world out-there. Yesterday (or the day before), they were doing business as usual in a most unusual market; today, they are global. Nice.

I remember the day, in the mid 90’s, when I got myself a “globalsomething.com” domain name. It was at a time when the story in the real estate industry was that “buyers come from within 5 miles”. I used to reply to those who said such a dumb thing that the only reason they always did business with local buyers is because they never bothered to go beyond 5 miles to find out if there was life and potential buyers there.

I guess most brokers caught up with the news. Whether all have the financial & technical means of actually changing their marketing strategy & tools accordingly is another thing, but at least they use the big fashionable words. There is a big difference between words & deeds.

The business has changed, thanks to Internet and many of its offspring. Thanks also to the explosive growth, over the last 15 years or so, of many countries that have become major players on the international real estate scene, particularly in the upper-end.

Recognizing these facts at the start of 2012, at a time when the real estate activity was still trying to pull itself out of the recession, we, at Intero, created a new division: Prestigio International and launched the most exhaustive global high-end marketing program in the industry. Let me explain further why we felt compelled to shake up our strategy and methods:

  • One cannot market extraordinary homes with ordinary means. In the select high-end market, every home is unique. The marketing vehicles and services need to be tailored to the subject property, in terms of location, architecture, style, size and price range. If you want to be legitimate and effective in the upper-end, you need to rely on a unit specializing in the listing, the marketing and the sale of exceptional properties and estates. We cannot mix apples & oranges.
  • Luxury properties may be local / Most of the likely buyers are not. The luxury market keeps on evolving, because the world keeps on changing. While many years ago, as we alluded to earlier, the majority of the buyers were living close by, today’s buyers often reside or work hundreds or thousands of miles away. Buyers from China, India, Europe, the Middle-East or other continents and countries, represent the most active and potent segment of the qualified demand.

The job we have, as Realtors, is not merely to list a home, it is to get it sold. It takes size, power, connections and an impressive array of specialized tools and mediums to get the job done today at the high-end.
Hard to know, when you list a house, who the buyers are going to be and where they will likely come from, so we need to open the windows wide. The target is, all at the same time, the local town, the region, the State, the US… And the rest of the world.


Luxury Insider: Smart Money Is Getting Smarter

0 Comments

Money does not grow on trees. You heard that before. Some of us, who have been waiting under the branches until leaves turn yellow and fly to the ground, learned the lesson the hard way. Those who “made it” in this world come from many different horizons and accumulated success & wealth thanks to an eclectic list of talents, imagination, determination and hard work. There is at least one quality that they all have in common: they are smart.

There is another thing that we all learned that we either like or dislike, depending on which side of the great income divide we happen to be: the rich are getting richer and the others are not. The adage is not always true though, as we saw recently during the “Great Recession” years when many of the most affluent among us took a beating and lost a considerable fraction of their assets. They certainly rebounded however, as a recent report from the Federal Reserve clearly shows.

In contrast to most Americans who derive the bulk of their revenues from wages & salaries, the wealthiest 25% of households get 53% of their income from other means and assets. Like all of us, they work hard for the money they make, and they work hard at keeping most of it as opposed to gifting it to Uncle Sam. The one thing they do very well is to buy real estate at the right time and especially in the right place, particularly if they are investing abroad.

The other day, since I had a couple of hours to kill, I looked at the world map and tried to identify those markets where real estate prices are going up and those where prices are going the other way. Prices, everywhere, are a function of supply & demand. With only a few rare exceptions, the hot & pricey markets of recent years all belong to countries where the tax system (income tax, corporate taxes and real property taxes) are the lowest, relative to neighboring countries.

If you follow the money flow on the world map, you probably noticed that 2 towns led the price surge over the last 10 years or so: Hong Kong and Singapore. Although prices stabilized a bit a couple of years ago after new taxes were imposed on foreign investors, both real estate markets reached world records. Sure enough, the tax rates there are some of the lowest in the civilized world. The top income tax rate in Hong Kong is 15%, while it is 20% in Singapore. The corporate tax rate is respectively 16.5% and 17%, and property taxes are not a factor.

Roughly the same observation can be made about Geneva & Monaco, two markets were prices are moving up swiftly, as we speak. There is no such thing as income tax in Monaco; in Switzerland, the rate is 13.2%. Corporate taxes are respectively 33.33% and 25%. Pretty good considering the alternatives next door, on the same continent.

When you look at Europe specifically, for the purpose of distinguishing which countries or towns are wanted (real estate-wise) versus those which are losing momentum, the striking example that jumps at you is the opposite fate of Paris and London. The City of Lights, which has long been an international gold standard for luxury real estate prices, is now lagging behind many world capital cities.

You don’t have to scratch your head too much or too long to find the reasons. The main one is the skyrocketing income tax charged to the most affluent: 75%… Yes, 75%, not to mention a “wealth tax” on top of that! As you can imagine, a lot of those people affected by this new version of the guillotine packed their bags in a hurry and flew over to…. London, a few miles away across the Channel.

The British Isles don’t have the cheapest tax rates, but compared to France, it’s an oasis where making money is not a crime and where the rich are welcome. Think about it, the top income tax rate in the UK is “only” 45%, and the corporate rate “only” 21% (and going down to 20% in the spring of 2015).

So now you know why people are flocking to London. The fog does not look as thick when you save a bundle. Real estate is hot, even at a time when the local economy is experiencing tough challenges. Today, the average price of a pad in London, closing in quickly on $5,000/sq. ft., is nearly double that of Paris. Who would have thought? Well, look at in a positive way: if you’ve been fantasizing about owning a studio overlooking the Seine, now is your time!


Luxury Insider: Do You Know What You Don’t Know That You Should Know?

0 Comments

We all know that knowledge is power. That’s true in all fields. Real estate is no exception to the rule. In a business where the associates are predominantly independent contractors paid solely on a commission basis, success is indeed predicated on how good they are at the sport. Question for you: how do you define and qualify “knowledge”?

I heard so many different answers to that very question through the years that my head is spinning. Each one of them makes some sense, although not all of them are convincing. Try this fairly common answer for example: “I am a top producer, so I am an expert in my field.” It could be the case, but I would argue that there are quite a few real estate professionals who confuse “knowledge of salesmanship” and “knowledge of the business.”

The best agents possess both. They know HOW to sell, and they know WHAT it is that they sell. It is important to be good at getting buyers or sellers to pull the trigger because, after all, they want to buy or sell, not waste their time with an agent who does not know how to finish the job. At the same time, it is even more important to know everything that there is to know about the market and the property that might affect the value or the desirability of a house, especially at the top of the price ladder.

Believe it or not, a good fraction of the Realtors out there don’t even know such basic things as the population of the town where they have a listing, or the owner-occupied ratio, or the percentage of listings that actually sell, or the time on the market, or the delta in between the original listing price and the sales price, or…. Talk about knowledge is power!

No question that all good agents must know how to use their negotiating skills as much as they know how to leverage their business acumen, their knowledge of the business, the transaction process, the market trends, and of the property they wish to list or sell. If you have to settle with only one of the two types of knowledge, I would argue that the latter is more important than the former. After all, we are selling homes, not hot air.

Real estate is not meant to be an easy job. A real estate license only gives us enough knowledge to be dangerous. Learning is a daily requirement in the quest for excellence. The more we know, the more relevant and essential we are to the principals we represent. It is not a guessing game where it’s OK for buyers & sellers to pay for our mistakes. We know or we don’t. We belong to the profession or we are better off looking for another way to make a living.

What is important for a listing agent to know when answering questions from a possible buyer or a fellow Realtor? Pretty much everything, outside of legal matters and facts that only expert inspections can bring about. Yet, many agents who have a listing or are holding a listed house open over the weekend, would start perspiring heavily if they were “challenged” by some of the following easy questions:

  • In this town, what is the maximum square footage I could build on the lot?
  • Does this include the basement?
  • Tell me about the setbacks for construction and any existing easements?
  • If I were to put a second story, what are the maximum height allowed in this town?
  • If the house is an historic landmark, what can I do to renovate it or destroy part of it?
  • How many homes sold last year in this neighborhood?
  • How much have prices gone up, on average, so far this year?
  • Where do you see prices going over the next few months?
  • Tell me about the comps you are using to justify the listing price?
  • Tell me about the schools?…

Pretty basic stuff, really. Does not take much homework to come up with the answers. We are paid for the good ones. “Buyers beware” only goes so far. Buyers & sellers have to rely on what we know that we should know. Any argument with that?


Luxury Insider: Too Big or Too Small?

0 Comments

Once upon a time, in the medieval days, homes were either huge or tiny, too big or too small. If you were born a Lord, chances are you lived in a castle big enough to play hide & seek with no risk of ever being found. Buckingham Palace, as an example, has over 100 rooms. Not bad, even for a Queen.

On the other end, if you were born a regular citizen, you could consider yourself fortunate to have a roof over your head, even if you had to share your small quarters with cows & pigs. No, life is not fair.

Eventually, many of the smart “little people” became entrepreneurial and set up lucrative businesses in the emerging world of commerce and finance. Bourgeoisie was officially born and, together with it, the need to display success. The word “materialism” was not yet introduced in the dictionary but existed just the same. All of a sudden, fancy townhomes were built on top of downtown shops and mansions started mushrooming in the countryside.

At the same time, monarchy went out of fashion, a lot of Lords went broke and many lost their heads to the guillotine. Today, quite a few castles have been transformed into museums. Others make terrific hotels or B&B’s, where tourists enjoy splashing bedrooms while the host, who collects the money, sleeps in the basement…

Over time, the square footage of a house has become a way to measure success. Location has always been a big deal of course, as were the style of the house and the quality of the construction, but size is still the thing. Big is good. Bigger is better.

Where are we today, in 2014? Well, not too far away from the Middle Age..… Those who made it have their name on a mega property in the most expensive zip codes and those who are not there yet are buying whatever square footage they can afford and hope to grow equity and move it to a bigger and better home.

There is, however, something significant progressively changing the paradigm. The lifestyle of the wealthy is now vastly different from what it was during the Post war era. Back then, people actually lived in and enjoyed their home every day of every month. With the ease of traveling, growing job mobility and the convenience of doing the coffee/newspaper pause downtown rather than at the breakfast table, a lot of people look at their home differently.

Ask yourself the following questions: “How much time do you actually spend in your house?”… “How much time do you actually spend in your yard?”… “Are you enjoying all of your house or are you a….prisoner in your own home to justify the mortgage?” I know quite a few friends who go overboard: they paid a few hundred thousand dollars extra to buy a house with a bunch of extra bedrooms just to have a couple of beds for relatives when they visit once every other year for a couple of days! As much as I like entertaining, I think that for the extra money, you could buy a life pass to the Ritz Carlton for your guests and guarantee that you & they sleep better at night!

Over the last sixty years or so, condos have been exploding all over the US, from big cities to small suburbs and villages. At first, they attracted thousands who were looking for functional layouts, beautiful common grounds and convenient locations at a very affordable price. Today, buyers are far more diverse. Condo living is becoming a trend. I am not just talking about singles, seniors, students or buyers who cannot afford the price of land, I am talking also about wealthy buyers who deliberately choose to live that kind of trouble-free life.

The price tag for luxury condo living can be pretty heavy too. Security, concierge desk, club house, exercise room, pool & spa, restaurants, etc…don’t come for free. I know nothing can replace a beautiful single family home surrounded by beautiful grounds. There is no price for serenity, privacy and full ownership. So the choice in between a striking mansion in the suburbs and a fancy condo in the heart of the city has never been tougher. Decision… Decision…. I guess, if you can afford it, you should settle for both!


Luxury Insider: What’s Next After Labor Day?

0 Comments

Summertime came & went already… Did you go on vacation, got a good rest and got a nice tan to prove it? Hope so for you. It’s good for the mind to go into neutral every so often. Summer 2014, however, has not been exactly quiet and relaxing for everybody and in all businesses. Try real estate for example. No time to smell the roses for the true pros; July & August have been hot in every way.

Some people might argue with the above statement. After all, sales units are actually down year-to-date, in many markets this year, particularly (and paradoxically) in the most buoyant of them. The Silicon Valley is a good illustration of this peculiarity. However, this apparent slow-down is more a mirage than the reality of the marketplace. Let me make my case…

First, the number of sales units does not always tell the story. For one thing, we can only sell what is available to be sold. As you know, we are suffering from the most acute (and often incomprehensible) shortage of inventory that I can remember. Give me more listings and I’ll give you more sales. A lot more.

But, no matter how relevant the number of transactions may be to describe the velocity of the real estate market, it is not, in my view, the N.1 indicator of a hot market. Prices are. And price appreciation during the last two months, in many sought after areas such as the Silicon Valley, has certainly continued at a good tempo, seemingly unaltered by the “slow” season.

I know what you are going to say: that too is all about that supply & demand dichotomy I was referring to earlier. Well, OK, up to a point. Prices don’t go up simply because of listings scarcity. There is a lot more to integrate that the eyes don’t see. The significant fact is that most people believe again in real estate; they believe in the value of purchasing a home, whether to live in or to leverage as an investment. The recession years are now well behind us and, if nothing else, the appetite for real estate has grown after a long diet.

There is more. US real estate is wanted. This is particularly true in the San Francisco Peninsula & the South Bay. Even when the domestic demand shrinks, for all the good reasons we can understand during tough economic times, the international demand makes up for some of the loss and keeps on driving prices higher and higher yet.

For most foreign buyers coming to town, prices are no object. They don’t perceive our real estate prices as being too high. In fact, many of them find local homes to be very affordable compared to what “similar” properties would go for in the countries they come from. Not to mention that in some Asian countries, for example, you stand to lose the property that you paid dearly for upon the expiration of a multi-years lease. Title remains with the State.

Hence a growing migration of international buyers to the US. Hence the upward pressure on prices. Cash deals, multiple offers and wild over-the-asking price offers are the new normal. It is what it is. As a Realtor, I am not complaining, I am just observing.

The thing to always keep in mind in the real estate business is that buyers “make” the market. Not the sellers; not the real estate agents. We have to look at the buyers’ behavior to measure the pulse of the market and understand where it is going. Today, the trends are good. Prices, more than units, are the expression of this optimistic view.

Labor Day is now behind us. We are about to start a “new year” of sort when the fall season pushes summer away. A big wave of buyers is approaching. It would be nice to see more listings hitting the streets. Chances are it will happen. Cross your fingers and stay tuned.