Shhh! Don’t say a word.

Dirty Laundry in public view

Dirty Laundry in public view

My participation in a New York Times Magazine pictorial, “Ruins of the Second Gilded Age” has drawn flack from a number of readers, including Russ Pruner, head of Shore & Country Real Estate. I like and respect Russ and I especially like the team of professionals he’s attracted to his firm, so I’m not happy that I’ve upset him.

But his complaint that I am letting people in on the big secret that we have a large inventory of untold homes is a little ironic because it’s his firm that has compiled a thorough statistical database that anyone who’s interested can access and see what’s happening. I’m not just “telling it like it is” – I’m telling it like  Russ says it is. So where’s the beef?

The Greenwich real estate business operates in a time warp, shaped by the world of just twenty years ago, when all information about houses, prices and inventory was hoarded by agents and passed along to customers on an as-needed basis. There was no multi-list, no central repository of information accessible to the public and, not surprisingly, realtors liked it that way. If you wanted to buy a house, you had to do it through a realtor and she would tell you whether it was on a good street (always), a good buy (always) and whether there was anything comparable (usually not).

The MLS and then the Internet changed all that – information became free and everyone could get it, despite the best efforts of the Greenwich Association of Realtors to prevent it (did you know that Greenwch’s MLS is available only to members, and that agents from other towns can’t access it unless they pay thousands of dollars annually to join our membership?). These days a buyer checks out Zillow, Trulia, and any number of other sites to learn what’s for sale. They can check RealtyTrac or to see who’s in trouble, they can use Russ Pruner’s statistics (or to learn whats available, what’s selling, for how much, and how sales are doing compared to years past. If realtors are to survive, they will have to transform themselves from being mere keepers of the keys to being providers of information unavailable on the web, and a source of expert opinion on value. I think a lot of my peers are uncomfortable with that prospect.

Clients of mine recently received an email from another agent who had signed them up last year as buyers at an open house. That agreement expired and the buyers asked me to accompany them back to the same house, still for sale, and to represent their interests. The first agent was heartbroken and confused. “Didn’t I answer all your questions?”, she demanded, “wasn’t I there to unlock and show you the house whenever you asked? What part of my hard work on your behalf don’t you appreciate?”

Well, several things. The buyers wanted to know what had happened to prices since they’d bid on the place six months ago. The agent couldn’t tell them. They wanted to know the impact of several near-by “municipal improvements” and the agent couldn’t, or wouldn’t tell them. When I walked them around the house, I pointed out that this “new” house, vacant for two years, was already rotting and crumbling, that the builder had used interior plywood on the crawlspace ceiling and it was already delaminating. The first  agent never mentioned the rot and I doubt ever entered the crawlspace in the year she’s had the listing. So her value was limited to having a keypad to unlock the door. An untrained monkey can accomplish that, and doesn’t demand $50,000 to do it.

So if we agents want to keep earning large paychecks, we have to provide value. A part of that value, as I see it, is telling the truth about market conditions. A Pollyannish insistence that everything is fine, there are no troubles in beautiful Greenwich and everyone should buy right now at the price so carefully selected by the seller and his agent contributes nothing and is worth nothing.

As I mentioned, the irony here is that Russ Pruner is exactly the new type of agent who does bring value to a transaction, so I can only surmise that his miffed reaction to my spilling the beans is based on his past role as President of the GAR and not on his personal philosophy. Whatever, the agents who are angry at me are a doomed breed. As a very good spec builder who, sadly, will be building decks instead of houses for the next few years as he recovers from the bust told a mutual friend, “I used to hate Chris but damn it, he’s been right about everything he said would happen.” I claim no special knowledge, just an ability to compare inventory with sales and economic data and draw logical conclusions. Lots of agents can and do do that. Those who think that the key to their survival is to continue attending Greenwich Garden Club luncheons and telling their friends that everything would be just fine if nay-sayers would just shut up will, I hope, find themselves with much more time to tend to their gardens.


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23 responses to “Shhh! Don’t say a word.

  1. anonymous

    Luddites are often delusional, esp Luddites running a damn lucrative middlemen business best done in dark with analog tech

    Same primitive corruption with scant public info and sloppy pricing to benefit of middlemen prevailed in stock markets everywhere in the pre-digital, pre-Net era

    And dumb politicians (a redundant term) don’t realize that capital and talent today are far more virtual, mobile and global than in ’70s, to easily avoid onerous tax middlemen in places like NYC or CA

  2. Front Row Phil

    The Russ Pruner’s of the world should be thrilled to get the word out that there are BIG WHOPPING BARGAINS IN GREENWICH, CT. The logjam will only be broken when buyers know the truth. Perpetuating the myth serves nobody, except sellers and agents hoping to snag ignorant buyers. And as you frequently point out, they’re a dwindling breed given current technology and access to information. Advice to Russ: Adapt or die. Give up the buggy whip. Darwin was right.

  3. anon1

    A good listing agent also has to be willing to tell his/her clients the truth about the value of their property. Overpriced real estate listings are bloating the market. If a seller insists on listing his property at 30% above the market value don’t take the listing, Realtors! Have the guts (not the word I really wanted to use) to walk away from these sellers.

  4. Walt

    Dude –
    You just reguritated what I told you a few posts back. “Professional Real Estate Agents” are buggy whips. (OUCH!!!) You are dinosaurs, yet you refuse to accept it.
    So retool my friend. Project Neverland is your best bet. Find that chimp and hold him close. He is the best shot you have. Actually, he is your only shot, except if I reprioritize and go back to the BJ O’Rourke concept.
    Anyway, enough about you. You loser.
    I like L.A. Dude. The folks out here act like they are better then you when the cameras are rolling, but get them alone and they are regular peep’s (Al taught me that, home boy).
    In Greenwich, they act like they are better than you all the time. No matter what. Kinda sad.
    Anyway, here is the hotel where I met Al and Poppa Joe:
    That was us on our way to Grannys House of Soul Food.
    I am trying to convince Al to move into the hood. He is a blast to party with. Really funny and down to earth. Plus he doesn’t golf, so he won’t want to join RHC. Thank God.
    And I told him about Beamer’s in Stamford, so he is pumped. When Poppa Joe heard about Beamer’s, he is thinking of coming east as well. I will keep working him.
    Should I tell Al to call you? Do him a solid Dude.
    Gotta get Andres at LAX. This duo is gonna love him!!!
    Your Pal,

  5. Wally

    “Ruins of the Second Gilded Age”

    “According to Christopher Fountain, a lawyer and expert on Greenwich real estate, [Greenwich] sellers are growing increasingly desperate. “Agents and builders have dropped their prices in half, many have long since stopped paying on their loans and none of the homes have a chance of selling even at their current asking prices,” he said.”

    To summarize, you have stated to the world that (a) Greenwich sellers are desperate, (b) prices have dropped by 50%, and (c) even at these reduced prices homes have no chance of selling. Are these assertions clearly supported by the data? I think that is very debatable. Also, publishing these bearish opinions as “fact” in an international forum is very different from sharing them as your opinions with a client.

    By the way, I am not a real estate broker, builder, or otherwise in the real estate business, just a resident. You have developed a “big megaphone” when it comes to Greenwich real estate (for better or for worse), and although I respect you and think you are smart and entertaining, I do not think you have come to terms with the responsibilities that come with all of that.

    • christopherfountain

      Wally, the quote refers to the glut of unsold spec houses and yes, I do have the statistics to back up my claim that they are selling for half price, if at all.

  6. BackCountryGal

    I, for one, thought Mr. Pruner’s words were over-the-top harsh. Greenwich will always be a fabulous destination for families looking to leave the city, or for people wanting to escape high taxes of neighboring Westchester. No amount of reality-speak from Christopher, or anyone else, will change that. One photo in a NYT photo essay does not a town ruin. Get over yourself Mr. Pruner.

    Back to regularly scheduled BBQ’ing. Happy 4th.

  7. Retired IB'er

    Occasionally I regret having gone to B-school instead of Law-school. It usually hits me when I am watching old re-runs of LA Law and Arnie Becker… but I digress.

    Reading your post is another such time. Given my retired status (and so infinite time, relatively speaking) I think I would pro bono go after GAR and its high profile members on what I can only assume falls into some form of RICO/collusion/extortion.

    Perhaps, one of your readers knows or is a federal/state prosecutor and can persuade them to investigate the market manipulating practices that are so prevalent in the industry.

    Disgusting… and yes I say that as a retired investment banker.

  8. Wally

    Chris, are you seriously suggesting that the tens or hundreds of thousands of readers who will read the “Ruins of the Second Gilded Age” section on Greenwich will note that it is about spec houses only, and not the Greenwich market in general? If so, I think that is the ‘exacting’ lawyer in you, and you have been manipulated by the NYTimes. It will not be generally read that way.

    • christopherfountain

      Wally, if you look at the article itself, you will notice that it is about unfinished developments and in Greenwich, since we don’t have the land for deelopments, unsold spec houses. So I think the average reader will grasp the concept.
      Furthermore, Front Row Phil’s comment is prescient – there are tons of buyers coming out of the woodwork who came out before the article appeared who think “Greenwich is on sale” and for the first time, think that they might be able to afford a home here. That’s not just me talking – speak to any agent in town and they’ll tell you the same thing. So what you perceive as a story of ruin buyers perceive as an opportunity. They know about Greenwich, they don’t think it’s the next Detroit, and many of them would love to live here. Stories like that in the Times gives them hope that perhaps they finally can. That’s not a bad thing.

  9. Lorin

    this is all about percieved worth vs. facts on the ground…Some no doubt think if they preserve the illusion of exclusive access, Greenwich will somehown float through the crisis. Some think that a fresh approach based on actual current financial facts will restart the exchange quicker. Marketeers all subscribe to ” the illusion of worth” scenario…but they often become, in the process, unfamiliar and uncomfortable with actual worth. Kinda like truth and truthiness, hahahaha….

  10. Wally

    It is true that there are bargain hunters who will only show up when they think a seller is “bleeding from the nose and mouth”. I do think that the article gives that impression, whether accurate or not about the general market here, so maybe it will have the effect of getting some lookers out here that might not have otherwise come. Then if they want to stay, they will have to come to market terms will some willing seller.

    • christopherfountain

      Wally, I just had clients go to contract this week on property that was reasonably priced, by which I mean the sellers were okay and the buyers were satisfied. It might have sold for a million more in 2007, but the sellers are still doing just fine. My clients originally started looking a year ago with another agent and were frustrated that prices were still so high but by this year, when they decided that nothing on the very bottom suited their needs, they raised their price threshold coincidentally with some sellers lowering theirs. I think that is happening a lot. Sure, we’ll lose some folks who come out looking to pay $425,000 for a $2,000,000 house, but we’ll also draw buyers who want to live here and can, now that prices have begun (in some cases) to get real.
      Every time I drive a newcomer around town and see Greenwich through their eyes, I’m reassured about the enduring value of real estate here. It’s a lovely town. If prices drop fifty per cent well, as property owner, that won’t fill me with a warm feeling, but I’ll sell more houses and people who want to move will be able to do so. We’re not going to zero, we’re just adjusting to a different time. And, in the long run, that’s all right.

  11. Towny

    Reality is not ‘real’ because it is subjective as seen through the lens of different perspectives

    • christopherfountain

      “I refute Berkeley thus!”
      There was a young man who said, “God,
      Must think it exceedingly odd
      If he finds that this tree
      Continues to be
      When there’s no one about in the Quad.”

      “Dear Sir: Your astonishment’s odd:
      I am always about in the Quad.
      And that’s why the tree
      Continues to be,
      Since observed by, Yours faithfully, God.”

  12. Jane

    Hey, the called you an “expert”. You should be proud. And look how many of us are reading your blog on this gorgeous day!

  13. Russell Pruner

    Hey Chris and friends – thanks for your usual constructive comments. Chris – I thought I would give you and the your knowlegeable anonymous readers the real truth about the Greenwich real estate market. Chris if you followed the market closely on a day to day basis you would know that there were 156 transactions completed through the first 6 months and the sales prices of those properties are only down 12% on average below their 2005 full value. You would also know that 25% of these 156 sales sold for above their 2005 full value. So Chris please share with us your market stats that show us and your anonymous readers the entire market is down 30%. I fully agree with you and your knowlegeable anonymous readers that the market is down in value but I think it is very misleading to say the entire Greenwich market is down 30% and is selling at their 2005 assessed value or less. Look foward to seeing your numbers.

    • christopherfountain

      Well Russ, I’ve been posting numbers and analysis almost every day but when I find time next week I’ll be happy to recap them for you. Just to whet your appetite, if prices are 12% below full market value of 2005, and we’re now half way through 2009, and prices rose in 2006, 2007 and part of 2008, is it possible that 88% of 2005 values is 70% of 2008’s? Puzzle over that for awhile and I’ll get back to you. I’m sorry you feel that the readers’ comments weren’t constructive, by the way -I weeded out those i felt were unfair to you personally and not at all “constructive” – the rest, pro and con, seem to me to add valuable insight into the discussion.

  14. Walt

    Russ –
    I am not an anonymous reader. And I have no idea how much Greenwich real estate prices are off. But I do know houses are not selling. And “Professional Real Estate Agents” will soon be a thing of the past. I have been telling Chris this, but as you know, the kid can be stubborn. Dense too!!!
    Anyway, you probably haven’t cashed a commission check in a while. I am tied up in L.A. at least until Tuesday. Any interest in taking a drive to Florida and picking up a chimp for me? I know you can drive. It’s the only job requirement for what you do.
    Chris has my contact data.
    Your Pal,

  15. digler

    The USA currently has the highest unemployment rate since 1983. Wall Street will continue to shrink. We just witnessed one of the greatest bubbles in recent history. These things do not correct themselves over night. Greenwich (and the rest of the USA) ares still no where near the bottom. Sorry folks, this all ends in tears!

  16. Peg

    I personally don’t know how to do business except by being honest. When I am able to give hard data – I do it. When I am asked for my opinion – I offer it, and label it as such.

    Out here in the hinterlands, people do seem to appreciate it. As you say, Christopher: “for what it’s worth….”!

  17. kidding really?

    I have respect for Russ who is the first broker to show up on this site to defend the market. However, things TOTALLY suck balls if you are in financial services industry, looking to sell a house, finance a house or cash out of stock options or holdings to do something with a house. So Russ, I consider you doing something other brokers should do a smart step in the right direction to break the stalemate of buyers and sellers. My advice is to lower prices on new listings and listings held over 6 months by 20%.

    News flash for brokers – if you sell a house you still get a commission so pricing it right increases the odds of getting paid.

    I remain mega bearish! (100% all chips in on the short Greenwich market as loyal readers have seen in my posts over the year). The huge mortgage resets for prime, alt – a adjustable rate mortgages is ahead and it’s going to hit hard causing a huge panic.