Home Economics

by Virginia Lindauer Simmon 

Three real estate experts address the vagaries of the market

Kathy Sweeten“Today’s market is very different from where it was 10 years ago, when clients came to brokers for the information because they couldn’t get it anywhere else. Now, clients come to brokers as educated, savvy, aggressive buyers or sellers, and they know a lot more.” — Kathleen Sweeten

We thought we’d find out a bit about what’s going on in Vermont’s real estate market. It’s an industry that has seen dramatic changes in the last 10 years; some of them for the better, some of them, not so much.

Four topics immediately leapt to mind: 1) the emergence of the buyer-broker contract; 2) the economy and soaring home market; 3) the recent mortgage crisis and subsequent downturn; and 4) the Internet and its effect on the profession.

We went to the source — three experts chosen because of their experience and connection to the industry. 

The experts

Kathleen Sweeten is executive vice president of the Northwestern Vermont Board of Realtors, which owns the statewide multiple listing service. Sweeten, who has been with the organization for three years, is not a Realtor, but a professional with 30 years in association management. The St. Michael’s alumna says she has managed “everything from national pet shop associations to several Vermont institutions,” including the Vermont Lodging and Restaurant Association, where she worked for 13 years, and The Home Builders and Remodelers Association of Northern Vermont. 

David Raphael is the broker/owner of Artisan Realty of Vermont, a one-man shop in Essex. With a background in information technology, Raphael spent 12 years managing large infrastructure with large companies. “Right when the dot-com era was busting,” he says, “I was with GreenMountain.com. When it relocated to Austin, I had the choice of relocating or losing my job.”

As luck would have it, he knew someone at Signature Properties of Vermont. “Ironically,” he says, “they hired me because they wanted to be one of the first ones with a Web presence.” That was nearly seven years ago, and the National Association of Realtors had mandated that all the multiple listing services begin using the Internet data exchange (IDX), which gave brokers the ability to display other agencies’ listings on their Web sites. Signature wanted to be one of the first agencies in the state to take advantage of the new technology. Part of Raphael’s deal was that he would become licensed to sell real estate.

David Raphael“Representation helps you avoid a lot of the pitfalls in buying property. It’s getting a lot more complicated with the environmental stuff and the laws. Good agents are constantly getting education and adding a lot of value to the transaction. That’s one of the reasons I’m involved with our Realtor board so heavily.” — David Raphael

He managed Signature Properties for almost five years, and then Artisan Realty. He is president of the Vermont MLS.

Tom Heney is a Realtor, broker, and vice president of Lang McLaughry Spera Real Estate, the largest agency in Vermont and one of the largest in Northern New England. Heney has been in the real estate business in Vermont for 20 years. His father and grandfather started Heney Realtors in Montpelier, which his older brother now runs. 

“I kind of grew up in the business,” he says. “When I came out of college in 1988, I got my license and about a year later, ended up in what was then Lang Associates as a new sales agent.”

Lang McLaughry Spera has 170 agents and a staff of about 40, spread among 13 offices in Vermont and New Hampshire.

The Internet

All three of our experts say that our list of changes is probably on target, and that, by far, the Internet has had the greatest influence at every level. 

The Internet is the biggest trend, says Sweeten, and her organization’s educational programs are aimed at helping members get up to speed. Eighty percent of homebuyers begin their searches on the Internet, she says. A website, www.vermontopenhouses.com, about to be launched, will allow members to list their weekend open houses in a central location.

“Today’s market is very different from where it was 10 years ago,” says Sweeten, “when clients came to brokers for the information because they couldn’t get it anywhere else. Now, clients come to brokers as educated, savvy, aggressive buyers or sellers, and they know a lot more than they did 10 years ago.” 

The growth of the Internet allowed, “Number 1, increasingly effective regulation of Realtors because of the data tracking available; and, Number 2, increased expense of being in the business,” says Heney. “Everything has gone online; and the equipment, advertising mediums, and Web mediums have become more expensive. Consequently, when I first came in, the MLS in Chittenden County — it was in a book. The MLS came out every two weeks, and everybody could carry a book in their trunk. Bingo! You were a Realtor.”

He believes that this shift of affiliated cost has also reduced the number of people who are in the business part time or treat it as a hobby. “Their numbers have reduced significantly, and professionalism within the industry has consequently risen, and I think the Internet had a lot to do with it.”

On the other hand, says Raphael, the Internet has also made it easier for people to do real estate part time. “MLS has this thing called Prospect Manager. If you told me you were interested in houses in the $400,000 to $500,000 range in Chittenden County, I could set you up, and you’d automatically get this shopping cart of homes without my involvement. It allows potential buyers to know immediately about potential reductions, everything. A lot of the time, these buyers are more educated than the agents out there about the inventory.”

“If Realtors aren’t keeping up with the Internet, they are just not keeping up at all,” says Sweeten. Realtors have had to explore the ways the new technology — for example, social networking through sites such as Facebook, and using blogs, and creating virtual tours — can help them carve out niches and solidify their own brands. 

The economy

“Real estate follows the financial markets,” Heney says, “and you can see trends over the years. The big trends have followed some large economic movement, and most recently, the big crash of the mortgage industry over the last 18 months.”

It’s not something that affected Vermont early, Heney continues, because it was driven by lending that was not common here. 

In Vermont, says Sweeten, we did not see the big price swings the rest of the country did. “I think we are lucky that we have lenders in the area that didn’t try any of these smoke-and-mirror lending processes. Also sellers and buyers here have been very good at pricing their homes.”

Tom Heney“With gas at $4-plus a gallon, people are less apt to go looking for properties in rural communities. It’s hard to quantify, unless you talk to agents in the field, but that’s exactly what’s going on, and you’ll see it six weeks from now in the numbers, when the closings don’t happen. If your work place is 35 miles away, that costs $200 or so a week to commute.” — Tom Heney

Therefore, Heney continues, “when those lending practices crashed, even though the papers say we have had a 50 percent increase in foreclosures, we started out with the smallest percentage of them in the country, so the increase is relative.”

During the crash, we were not seeing its effect here, but now we are feeling it, Heney says. In Chittenden County, the number of sales is 4 percent less; in Lamoille, they’re down 24 percent; Franklin County is down 27 percent; and Addison County is down 16 percent. “I think it’s much more related to consumer confidence than any one real local economic factor,” he says.

One reason Heney thinks we’re seeing less activity is, interestingly, because of rising gasoline prices. “With gas at $4-plus a gallon, people are less apt to go looking for properties in rural communities,” he says, adding that it’s hard to quantify yet, “unless you talk to agents in the field, but that’s exactly what’s going on, and you’ll see it six weeks from now in the numbers, when the closings don’t happen. If your work place is 35 miles away, that costs $200 or so a week to commute.”

Buyer-brokers

All three saw the advent of the buyer-broker as a positive trend. “My personal policy,” says Raphael,” is that I may take a buyer out once, but I will only continue to work with buyers if they’ll sign up on a buyer-broker contract. My selfish reason is I don’t want to drive around in a car with a buyer for weeks and months, and they find a property on their own; but it’s mostly about representation. If I drive around, I start to build a relationship with people I represent, so I only do buyer-brokering.”

Buyer-brokering has not taken hold everywhere in the state. There are areas such as Rutland County, where most agencies do not do buyer-brokering, Raphael says, and, according to Heney, in corners of the more rural communities, Realtors sometimes treat buyer-brokers as the enemy. “For the most part, it’s much easier for consumers once they understand it.”

Having a full-time, qualified real estate agent pays off in all instances for a smoother transaction, says Raphael. “Representation helps you avoid a lot of the pitfalls in buying property. It’s getting a lot more complicated with the environmental stuff and the laws. Good agents are constantly getting education and adding a lot of value to the transaction. That’s one of the reasons I’m involved with our Realtor board so heavily.”

“Realtors are funny animals,” says Heney with a chuckle. “We run on adrenalin; we work in a scenario where for the most part we’re really not in control of the result; but all in all, it’s an exciting business, and not an eight-hour-a-day job.

“The pace is erratic, and it does become difficult to not let the business control your life. I laugh: A Realtor wakes up every morning unemployed. We’re motivated by fear; we have children, have to buy the milk; we can work all day, all week, and at the end of the week, the boss can decide whether to pay us or not.”

As for the market, Heney compares it to weather in Vermont: “Sooner or later, this, too, shall pass. If Vermont remains a place where people want to live, real estate here will continue to do fine.”•