Success From the Ground Up

COLUMN ONE
Success From the Ground Up
* In a business that’s both a belief system and a key to the state’s culture, Realtor stakes out her piece of paradise.
Series:

By TERRY McDERMOTT, TIMES STAFF WRITER
SONOMA, Calif. — Thirteen years ago, Maria Lounibos, a young and not very accomplished secretary–in her own words, a flake–saw an employment ad from a realty company.
Why not? she figured. She was 28, single and bored stiff working in the office of a civil engineer in the tiny Sonoma County town of Windsor. How much worse could selling real estate be?
This was, of course, the wrong question. What Maria didn’t know–could not have known–is that real estate in California is not a business; it’s a belief system. She also didn’t know–could not have known–that she was an ideal candidate for conversion.
She answered the ad. I will sell houses, she said.
Maria’s voice, even today, has a teenage quality to it. Then, she must have sounded like a fourth-grader. The person on the other end of the phone line asked Maria how long she had had her real estate license.
License? she answered.
She was coolly informed that she would need to pass a test and obtain a license to sell real estate in California.
This was news to Maria, who was naive about many things in America. It hadn’t been that long before that she had arrived in Sonoma from her native Jalisco. She came to visit her father, a worker at a local dairy. On the first visit, she fell in love with the place and decided to abandon her dead-end job in a pharmacy back home.
Like many immigrants, Maria’s initial concerns were modest: getting by, not getting rich. Foremost, she spoke no English. She enrolled in secretarial school mainly to learn it, then went to work in a series of office jobs, none of which she liked.
The realty people wished Maria well without even asking her name, she recalls. She did as they said, however, and signed up for a real estate course, took the test, got the license and called back to the same Century 21 office.
“I was very successful since day one,” she says. “At first I thought Hispanics would be my clients. But not really. Everybody wants to do business with you. The very first year, I made $80,000.”
She flashes a smile as she says this. Then frowns.
“And spent it all,” she says. “That’s the problem. So I have to make more.”
There are a great many dreams tangled up in real estate. Not least of them is the Realtor’s own dream of independence and wealth. Many have achieved it; certainly not most.
Last year, Maria sold more real estate than all but two people in Sonoma County. She closed, on average, two transactions each week. She made $500,000. This year she expects to do better.
This is, as Maria might say with typical gusto, fabulous.
Maria uses the word fabulous a lot when speaking English. In Spanish, she often substitutes perfecto. Both come in the company of many exclamation points. She is a woman who speaks in exclamations and manages to sound sincere. In much the same way, she is a woman who can wear leopard-skin print clothing and look sensible, even sophisticated, in a pampered, feline way.
Maybe whatever she wears would seem understated compared to the exclamation points, which form an invisible cloud around her through which she calmly sails.
A Land of Plenty
In the way of few places at few times in history–cave men, perhaps, or medieval monks–contemporary California is defined by its shelter, by hillside after hillside of cookie-cutter trilevels, by sunbaked plat after sunbaked plat of cheerless bungalows, by celebrity mansions of ridiculous glory.
More than movies, more than agriculture, aerospace or computer chips, real estate is California’s essential industry. It has transcended economics to become a defining part of the culture.
California has more houses than all but 10 states have people. There are more dwelling units of one kind or another just in Los Angeles County than there are in 43 states.
One of every 10 free-standing, single-family homes in the United States is in California; one of every 100 in the world. Residential real estate in California is worth more than $2 trillion, one-sixth the value of all the housing in the world.
That’s an awful lot of houses and, as you might expect, it takes an awful lot of people to sell them, although not as many as it might appear.
California has 95,000 Realtors, but industry data indicate that a mere 7% of them sell 90% of the homes. That’s not very attractive math for the other 93%.
Good real estate agents are nimble-minded. They do things quickly. Watch an agent walk through a house. In and out, five minutes. Tops. They do not linger. They survey, count, calculate and move on. They seldom even take notes.
They talk on the move, in passing. They talk over their shoulders, shouting questions down hallways and answers across streets.
“Are your buyers on 1865 going to qualify?” one will ask.
Or: “We close escrow on the 23rd and my buyers would like to get in and paint on the 21st. OK?”
Or: “Arnold Drive is in trouble. It only perc’d for three and they really want four.”
Maybe in a slower market, agents would have time to stop and have real conversations, or at least eye contact. Maybe, in other words, if this were any time in the early 1990s, when the California real estate market tanked. It was just this past summer that prices in much of the state regained their pre-recession highs.
For reasons everyone predicted and no one truly foresaw, the housing recession ended sometime in 1998, in the spring or summer, depending on where in the state you were. Sales picked up steam through the end of that year, rolled through the next and continue to hum along, requiring agents to hum right with them.
What is most impressive about agents’ shorthand conversations is the degree to which one agent knows precisely what the other is talking about. They must be mental jugglers. Maria typically has at least 20 transactions in some stage of completion, which is another way of saying she has 20 deals on the verge of falling apart. On average, even among prospective home sales that get as far as an escrow account being opened, which is when checks actually get written, about a fifth never reach completion.
Deals collapse, sure things, every day. The reasons can be as ordinary as a loan denied, as powerful as love lost.
Energy Aplenty
Maria is a woman of unanticipated discipline.
She starts her days with a single caffe latte. Any more than one, she says, would be redundant, by which she means her temperament is sufficiently, shall we say, forward, that more caffeine would best be spent on someone who needs it.
She buys her morning latte down on the Plaza, old Sonoma’s town square, at the Basque Boulangerie Cafe, chatting her way in and out, talking to acquaintances, competitors, customers, former customers and, of course, future customers, which is to say, all of the above, plus everyone not in any of the other categories.
After she has her coffee, Maria, still talking, gets in her dewdrop new silver Mercedes E320 and drives three blocks to her office, which, in the morning, is a mess.
“Normally, at night I leave and leave everything in chaos,” she says. “Francie [her assistant] comes in at 9 and takes over the chaos.”
Maria, her husband and partner, Michael, and Francie work out of a small suite of rooms in a low-ceilinged loft above the rest of the Century 21 sales staff. Michael’s office is truly tiny, about the size of a telephone booth.
Maria’s is larger, but with its industrial gray-brown carpet and pale cream walls, hardly lavish. It is decorated with sales trophies and plaques and a couple of photographs of the two of them and their two children.
The office has three phones, two on her desk, one next to a computer on another desk. She has a fourth phone in her purse and a fifth built into the radio in her car. When something is ringing, it’s not always immediately clear what it is.
Maria starts the day with a fresh to-do list, built as she cleans yesterday’s detritus off her desk, sorting and piling and prioritizing. She has learned, she says, “to do the most important thing, not the most urgent. In my mind, the most important is new business.”
One of the reasons Maria does so much business is because she doesn’t wait for it to come to her. She and Michael spend a sizable part of every day calling potential customers. They prospect for customers in particular neighborhoods, or among people trying to sell their houses by themselves, or among people who other people have told them might be interested in selling or buying. They’ll call anybody.
At 10:25 a.m., Maria has finally cleared her desk of yesterday’s leftover business. She has an appointment at 10:45 to show a piece of undeveloped property on South Central Avenue, off Highway 12. It’s 10 minutes away, which leaves 10 empty minutes. Maria starts making prospecting calls to people who are trying to sell their houses without benefit of a Realtor–For Sale By Owners, as they’re known in the business.
“Hello, this is Maria Lounibos. I’m a Realtor with Century 21. Question for you: Is your property still for sale?”
“No more?” she says, her disappointment audible.
“Termites?”–oh the horror!–“naturally, a problem muy grande.”
She listens. The seller pulled the property off the market when a termite infestation was discovered. The house will be back on the market.
“Oh, perfecto!”
This is delivered with a trill of excitement, as if the greatest possible thing that could ever happen to anybody would be to offer a house for sale.
“Fabulous!”
When the call is finished, Maria puts the phone down, brushes her auburn hair from her eyes and looks up. She smiles, shyly, as if caught, hand in the cookie jar. She makes a hash mark on a sheet of paper, a scorecard, and punches in the next number.
A third of her business comes from these solicitations. Michael’s specialty is identifying prospects. Maria’s is closing them. She is able to invest such substantial emotion into routine exchanges that they transcend the routine. She elevates the ordinary.
This is an aspect of all sales, and most salespeople fail utterly at it. Their attempts at elevation, if they make them at all, ring false. The customer sees it as a sham and is embarrassed at best, irritated at worst.
Maria passes her enthusiasm on to the other person. When she seems giddy with excitement, she is. It’s not an act. Her whole body animates, even when she’s talking to an answering machine.
Her husband’s true love is songwriting. Maria says, “When Michael talks to me about music, I listen, but when he talks to me about real estate, I think, ‘Yeah!’ ”
In the 10 minutes before she is supposed to leave for her appointment, she makes 11 calls. She gets three answering machines, four no answers, one wrong number, one house that has already sold, one that is still on the market, and one person who is tired of the hassle of trying to sell her own house and is willing to entertain the idea of giving the listing to Maria.
“That was a good contact,” Maria says. She thinks there’s a good chance she will be able to convert this prospect into a customer. She’ll call back in a week.
Incoming calls stack up in a holding pattern, like jets in the fog. All the buttons on her phone are lit up. She’s being paged over the office intercom. She’s ecstatic.
“Do I want to do one more?” she asks. She looks at the clock. “It’s time to go, huh?”
She makes one more call. No answer.
“We should probably go,” she says.
She makes another call.
She reaches a seller who has taken his house off the market to make some small repairs. She immediately becomes the seller’s new counselor.
“You wish you did, huh? I hear you. You got it. Do you have any other real estate needs?”
“Good lead,” she says as she hangs up. “They’re going to do the repairs and put it back on the market. I’ll follow up. I’ll follow him to death.”
Old Land, New Money
Sonoma County is a 60-mile-long, wedge-shaped piece of land, lying on a northwesterly diagonal above San Pablo Bay, the northernmost extension of San Francisco Bay. It is bounded on the west by Marin County and the Pacific Ocean and on the east by the Mayacamas Mountains, a low range dividing the Sonoma and Napa valleys.
Sonoma was the birthplace of the short-lived Republic of California, the so-called Bear Flag Republic, which bridged the period between Mexican and American governance in the middle of the 19th century.
It was also the birthplace of the California wine industry, which, unlike the Republic, lasted. The long, hot summer days and cool, cloudy nights blanket the inland valleys of Sonoma Creek and the Russian River with ideal grape-growing weather.
The low yet steep Mayacamas and Sonoma mountains assure a mix in soil, exposure and elevation, making every mile a new world for a vintner.
Apart from their agricultural richness, the valleys and vine-covered hills grace the place with simple loveliness. It’s a rustic charm, lower-key than the rugged beauty much of California possesses, but it wears well.
Famous past residents Luther Burbank and Jack London never tired of proclaiming the place a garden of earthly delights. Burbank, the great horticulturist, famously declared it the best-endowed place on the planet.
London, the adventure writer, was so enamored of his Glen Ellen ranch and pig farm that he told people he devoted five hours to the pigs for every hour he gave to his writing.
For most of the county’s history, its country grace was its best-known feature, and agriculture was the main business, especially dairy and egg production. The big business now is telecommunications manufacturing.
A group of largely anonymous companies that make fiber-optic cables and switching devices in the past few years have colonized the southern portion of the county.
Petaluma, formerly best known as home of the annual Egg Day Parade (it once had a pharmacy devoted entirely to poultry medicines), now has one of the nation’s heaviest concentrations of telecom companies, most of which are young, obscure and growing furiously.
One of these companies that no one has ever heard of bought one of the others last month for $41 billion, which on the day it was announced was more than the market value of, for example, all airline companies in the United States.
The telecom companies have done more than supplant chicken coops. Coupled with would-be exurbanites from San Francisco and Marin, they are among the big drivers of the real estate frenzy.
Whole companies have moved in almost overnight. Real estate agents with flush young engineers in tow scour the countryside looking for the perfect places to plant the new wealth.
At least, they start out looking for perfect places. They quickly discover there aren’t many of them. The prices for those that do exist rise 20% and 30% at a jump. Prices for the imperfect places follow suit.
The result is that Sonoma County, relative to the income of its residents, now has among the least affordable collections of housing in the country.
Houses get offers before they go on the market. Houses are bought sight unseen. A day without an offer on a new listing is a defeat. More typical is a day with many. They come in swarms.
To handle the craziness, real estate agents have given up trying to figure out what houses are worth. Nobody can outguess the market, anyway. They hold auctions instead.
A new listing often is advertised by simply naming the address and announcing when it will be sold: “Available for viewing Monday, sealed bids opened Thursday.”
The reason for the high prices is simple. The supply of people is growing much faster than the supply of houses.
Sewer and water capacities are stretched in parts of the county, making growth difficult. Renewed demands by agriculture and environmental interests have further restricted development. Every hillside seems to be planted in grapes, and those that aren’t have rows of steel poles driven into them waiting for new vines to grow.
It’s to the point now that the usual debate about development eating up farmland has been turned on its head. The more vociferous complaint here today is from people who say farmland is eating up room for houses.
In the United States, there is a single-family, detached house for every four people. This is the type of fact cited when people try to itemize the elements of the American Dream.
Houses, though, have not always been assumed as part of the catalog. Their availability is a product of industrialization, specifically of what is often called the second industrial revolution.
The first began with the invention in Europe of the steam engine in 1776. Its chief feature was the mechanization of work. The second revolution–mass production–didn’t occur for another century and was of American origin, typified by Henry Ford’s use of interchangeable parts on an assembly line.
The result was as much social as technological: Mass production induced mass consumption, and a new world was created.
It took a while for housing to be much affected by this. What, after all, does an assembly line have to do with building a house? Quite a bit, as it turns out. Houses aren’t built in factories, but the pieces of them are.
The great event, little noted then or since, in making housing a mass consumer good was the institution in 1924 of standardized measures for construction lumber. The Henry Ford of housing was something called the American Lumber Congress. The humble two-by-four was its Model T.
Building housing had always been expensive, custom work. Most American housing was built of wood. Each timber mill cut wood to local specifications. If you didn’t have a local mill, houses were built of stone or mud or not at all.
The development of national standards allowed lumber to be shipped anywhere with confidence that it would be usable. It cut housing construction loose from timber supplies, making possible the development of great residential areas hundreds or thousands of miles from the nearest timber supplies: Phoenix, say, or Los Angeles.
Aside from this convenience, standardization democratized housing, cutting costs enormously. In the process, it created the notion that anybody could afford one. The two-by-four stud-wall system of construction underwrote the post-World War II housing boom that redefined–for better or worse–urban America.
Sonoma County reflects this. With the exception of the old town centers of Santa Rosa, Sebastopol, Sonoma and Petaluma, most housing is in undistinguished tract developments.
Some of it looks as if it could have been built in a day. Some was. The developer of a 2,400-home subdivision in Santa Rosa once built a house in an hour. It was a publicity stunt, but also a celebration of the possibilities of development, and America.
Rohnert Park, the county’s second-largest city, was conceived as “a country club for the working class.” Inspired by Levittown, N.Y., it was an attempt to marry the virtues of mass production to the amenities of upper-class life.
Laid out in the 1950s over a treeless swamp, the town is now a leafy retreat of cul-de-sacs and middle-class comfort. Every house is within walking distance of a park and a school. The experiment worked so well that the cheapest houses in town are creeping up to the $400,000 range, if you can find one. This is hardly working-class heaven.
After you’ve subtracted Bay Area refugees, telecom millionaires and the occasional vineyard owner, this is still small-town America.
The county seat, Santa Rosa, has a population of only 130,000 and, at that, is more than twice the size of the next biggest city. Incomes have not kept pace with housing costs. Cal State Sonoma, the local college, has invited professors to live in dormitories because they can’t afford to live anywhere else.
Sonoma is hardly alone in California in this regard. There are more homeowners in California than in any other state, but high prices are making ownership less and less likely. The percentage of homeowners among state residents has declined steadily since the 1960s.
The Nature of Realty
Maria Lounibos, is, of course, late for her appointment. Her client, en route from Marin, is later yet, a little lost, in fact, as they determine over a series of cell phone calls.
Maria arrives at the property first. It’s a couple-acre lot a quarter-mile off Highway 12, the main east-west thoroughfare in south Sonoma County. Asking price is $195,000.
The parcel is a big, flat, dusty, weed-ridden rectangle. Real estate agents like to say what they’re really selling are dreams. When Maria arranges to take a client to a property, she invariably says: “Bring your checkbook. You never know, you might fall in love.”
It’s hard to fathom what dream this bedraggled patch of ground might provoke, but since Maria put it on the market a week ago she has received two offers, both above the list price. The seller is to make a decision this afternoon.
“Ordinarily, I would not come in this late with another offer, but this is better for the seller,” Maria says. “Maybe, huh?”
The customer, Katherine, eventually arrives, a young computer consultant in a BMW convertible. She surveys the weeds, the distance from the highway, a large oak at the rear of the property and the farm beyond it.
“It is what it is, isn’t it?” she says.
She asks some questions. The property is not on the city sewer line, so the owner will have to install a septic system, which, as is typical in the county, is the main means of restricting how big a house can be built.
In this case, the soil will not accommodate more than a three-bedroom house. Waste water won’t percolate fast enough through the soil for a bigger place. At least, that’s what the county reckons.
This is a long way from computer consulting. It’s confusing.
Maria explains it patiently, but it’s clear that nobody is falling in love today. Maria doesn’t push. Katherine’s husband is coming up from the city within the hour. They’re very eager to make a move. They’ll be in touch.
Much of the rest of Maria’s day is filled with appointments: a prospective seller, a family buying a small commercial property, a young couple observing the inspection of a house they’ve agreed to buy.
Maria is supposed to pick up her father, who has retired to his hometown in Mexico and who is flying into San Francisco International for a family wedding. There’s more going on than most people could keep track of. There are a dozen deals up in the air. She is surely going to be late getting her dad.
Later in the day, Katherine, the computer consultant, calls back. Her husband drove up from the city. They looked at the lot. It didn’t compute. They make no offer.
For all the talk of dreams, a good part of the real estate business is based in tragedy and dislocation–somebody loses a job, dies or goes bankrupt. A real estate agent develops a clinical pragmatism. Maria gets excited about being in a deal, not closing it.
“I love it, but I’m not attached to it. You lose energy if you’re attached to the outcome,” Maria says. “I never worry about closings. They’re going to close some day. Or they’re not.
“When I first started, I used to take it personally. One day, a friend told me, ‘You can’t win them all.’ It’s right, you can’t. So I don’t let it bother me.
“That property was a cold call,” Maria says. “A cold call two weeks ago, selling today. I do feel good, no?”
Amid the day’s commotion, she is worried about only one thing: When can she get back to the office to make more cold calls? There are more people out there wanting to make deals than there are deals to be made. Maria has to get her share. She understands one fundamental fact of her business: Real estate is a pipeline. Her job is to keep it full.
Maria moves on.