Volume XXVII • Number 2 • February 2013 Sponsored By:
Key Issues to be Settled in 2013
commentary
The Real Essence of Building a Successful Organization
2013 will bring continued increases in sales units and prices in almost all markets as jobs and incomes continue their gradual improvement. Here are a few other key areas where we think there will be resolution in 2013.
What follows are two separate but related stories that we think are worth your consideration. The first is the story of how 17 firms managed to grow in three key categories over the last ten years – out of 500 firms that we measured from the REAL Trends 500. It talks about the power of relationships above all else. The second was an opinion piece written by Michael Wolff that appeared in USA TODAY some weeks ago. It caught our attention because it gets to the heart of what successful brokerage firms know (or should know) about what leads to success. We trust you will enjoy them.
Commentary cont. on p2
inside 3 Trust Used To Be Worth Something 4 Sure You Can Aggregate It, But Can You Distribute It?
6 Leveling the Playing Field – Right Down to Zero
7 The One Thing — The Surprising Truth Behind Extraordinary Results
5
8 6 Questions With Jay Gaskill, CEO of Real Estate Digital 11 REAL Trends Housing Market Report – January 2013 14 How To Appeal to a Niche Audience Online 18 ShowingIndex – January 19 The New Engel & Völkers
Berkshire Hathaway HomeServices Since the acquisition of Prudential Real Estate Affiliates in late 2011 the affiliates of this network have been waiting for a new brand name and new service package – some of the most essential parts of the network experience. This will get clarified to a great extent in the first quarter as Berkshire Hathaway HomeServices announces its new brand along with other component parts of the new network; Key Issues cont. on p12
GAT H E R I N G o f E AG L E S M AY 1 , 2 & 3 , 2 0 1 3 • D e n v e r, C O T h e We s t i n D e n v e r D o w n t o w n
Commentary cont. from p1 Office: 7501 Village Square Drive, Ste. 200 Castle Rock, CO 80108 Phone: 303-741-1000 FAX: 303-741-1070 E-mail: realtrends@realtrends.com Web site: www.realtrends.com
Editor: Steve Murray – smurray@realtrends.com REAL Trends Team: Amy Broset – abroset@realtrends.com Jaime O’Connell – joconnell@realtrends.com Travis Saxton – tsaxton@realtrends.com Daniele Stufft – dstufft@realtrends.com Tracey Velt – tracey@traceyvelt.com Doniece Welch – dwelch@realtrends.com Copyright 2013 by REAL Trends. All rights reserved. Material in this publication may not be electronically stored or reproduced in any form without written permission. Violators will be punishable by a fine of up to $100,000 per offense.
To purchase a membership or any of the following REAL Trends products please visit us at www.realtrends.com: • Brokerage Compensation Report • Game Plan • Online Performance Study • REAL Facts • REAL Trends 500 • Valuing a Residential Real Estate Services Business
The 17 The recovery in housing really started late in the third quarter of 2011 when unit sales turned up for the first time—without benefit of tax credits—since 2005. The turnaround came so suddenly and with such force that most were unprepared for it. They didn’t really believe in its strength or endurance until the second or third quarter of 2012. From peak to trough unit sales of new and existing homes decreased somewhere in the neighborhood of 3.5 million units. The prices of homes being sold, depending on the market one found oneself in, declined from 15 percent to 55 percent. Overall sales volumes in the country fell by over $1 trillion dollars, from over $2 trillion to under $1 trillion from 2005 to 2011. If the overall economy had fallen by a similar percent economists would have classified it as a depression, not a recession. REAL Trends has been tracking key measurements in the residential real estate industry since 1987. The REAL Trends 500 is our annual ranking of the nation’s largest residential brokerage firms ranked by both closed transaction sides and closed sales volume. Given that 2011 marked the end of the recession and the start of a recovery we investigated to see how well the nation’s largest firms had faired through these stormy times. We found that regardless of the market these leading realty firms are tough, adaptable and durable. Of the REAL Trends 500 ranked firms from 2002, 379, or just fewer than 76 percent of all of them, survived the downturn. In itself this is an amazing testament to the skill and determination of these mostly privately owned firms — to survive no matter the market, no matter the stress on their business or their person. We then went a step further. There are many ways to measure success in owning and operating a realty business. Profit is surely one key way, but this is more a result than a reason for survival and prosperity. Surely there were many of the survivors that had a few years of losses and many for whom it was worse. There are three ways of measuring success for realty firms that we look at frequently. First, was the firm able to grow the number of sales professionals within the organization? Another way to
measure success is to measure the growth of closed transactions done. Lastly, was the firm able to increase it’s per person productivity. We measured the 379 survivors in each of these categories. We found there were 217 of the 379 (57.3 percent) that increased the total number of sales professionals within their ranks (while the national number of Realtors was shrinking). We found that 86 of these 379 (22.7 percent) were able to increase the total number of closed transactions during the 10 years from 2002 to 2011. Lastly, we found that there were 43 (11.3 percent) that were able to increase their per-person productivity in that time.
productivity over that period of time. We compared each of these firms against their local/ regional peers to see how their performance stacked up. The results were startling:
From year end 2002 to year end 2011
_____________________________________________
% increase in % increase in % increase in agents sides productivity
The 17
88.3%
134.3%
22.0%
Peers
1.9%
(18.6%)
(15.3%)
All three are important in measuring the health of a brokerage company. We then asked the last question, “How many firms were able to do all three in that 10-year period?” The answer was 17. 17 firms out of 379 (4.5 percent) increased the number of sales professionals, the number of closed transactions and increased their per-person
Who are these companies? Who are these leaders? What did they do to get this done? Was it through mergers and acquisitions? Was it through increased use of technology, marketing services or the web? What separates these 17 firms from the others? Click here to read the White Paper Or access it at: http://realtrends.com/image/files/ PDFS/RT_WhitePaper_The17.pdf
Trust Used To Be Worth Something by Michael Wolff for USA TODAY The company that I would like to start — or at least patronize — sells trust. That’s its product. It gives you a good feeling. It reassures. It lets you rely on it. It overcompensates for your anxiety. It leaves little room for doubt. Trust was, at a certain point in consumer history, what most successful brands were selling. Trust was the ultimate scalable asset — once you established it, you could keep producing it at no further cost. Some brands could even extend their own trust levels to other products. Famously, the Good Housekeeping Seal of Approval, a marketing brainstorm if there ever was one, let you feel good about anything with its imprimatur.
Now, most major brands have implicit trust problems, to say the least. Most are on a terrible treadmill, having to grow ever faster to make up for their constant loss of public trust. The other day, The New York Times ran a story about Amazon’s efforts to purge its user reviews of untrustworthy reviewers — members of an author’s family, for instance. This naturally gave way to a larger issue of trust: How does Amazon know who’s related to whom? Would you trust Amazon? Do you trust any company whose main mission is to collect your data? You might acquiesce to it, but do you trust it — or anyone whose central activity is to keep tabs on you? Google, founded on a do-gooder credo, is now the leviathan of data collection and opacity. Trust cont. on p7
additional commentary Sure You Can Aggregate It, But Can You Distribute It? by Jeremy Conaway, Contributing Editor One of the joys of my world is to encounter the similarities of opportunity and challenge facing clients within the three industries we are currently engaged with. Our thoughts trace back to a recent meeting in the Wexford County Road Commission garage in central Michigan. In attendance were twenty some county road superintendents each of whom is responsible for the treatment of snow and ice on the roadways within their county. We are there working with Western Star, a Division of Daimler North American and the manufacturer of what is undoubtedly one of the most technically sophisticated vehicles in North America. The challenge before the group is how to use technology to automate one of the longest standing tasks in the transportation industry, maintaining commercially passable roadways during the winter months.
to land perfectly on just the right road surface. All of these advances have transitioned the task from an art to a science. All that remains is to create a labor culture that is willing to coordinate its skills with these technologies without feeling competitive or challenged. In some ways it takes us back to the tale of John Henry who used his physical power and a sledgehammer to unsuccessfully compete with a steam powered drilling machine in 1871.
More specifically, how to motivate maintenance vehicle operators to use new technologies to both improve service delivery and, more importantly, to reduce the costs of highway maintenance. Ever present on the agenda is what to do about those who refuse to play.
In other words the transportation sector is committed to using technology to not just aggregate data but also to redistribute it in ways that will substantially improve its ability to generate profits, promote safe travel and improve the lives of all of its beneficiaries including consumers.
By way of background the transportation sector has spent millions researching the challenge of improving highway maintenance while reducing costs for the cash strapped governmental units responsible for the task. The results have been most impressive. Manufacturers like Daimler North American, Monroe and Rexroth have collaborated with end users like our road superintendents to design and manufacture equipment that approaches amazing in its ability to solve the challenges.
How close is the tale of the traditional snowplow driver to the current status of so many real estate agents? Our industry is in the midst of a love affair with big data. We covet it, we scheme over it, we spend millions of dollars trying to mine it, we spend huge amounts of energy attempting to create coalitions to share it and we lose sleep over controlling it. Believe it or not there are substantial elements within our industry that are still trying to deny consumers access to it. Almost unanimously we gaze into the heavens as we gather to declare that data is our great hope for the future.
New deicing materials, new snow removal techniques, new abilities to measure road conditions and technologies that allow the perfect mix on materials
But what we are not doing is addressing the
challenge of how to distribute it. Little if any effort is being expended in the area of developing requirements, techniques or standards relative to the distribution of information within the real estate transaction. As an industry we continue to expound the idea that the agent should be the center of the transaction through various information control techniques and tactics. Yet little or no effort has been invested in identifying just what information should be distributed through these techniques.
Issues of information distribution and analysis will have broad ramifications for broker profitability and influence. At the risk of oversimplifying what some will certainly want to qualify as an amazingly complicated industry challenge the following recommendations are hereby submitted:
The industry is appropriately anxious about the current agent value proposition. Many suggest that the centerpiece of value should come from the agent’s mastery of all information regarding both transactional practices and information at both the general market and specific target property levels. Yet, here again, our research has developed no recommended practices or standards regarding what information buyers and sellers should have at each stage of their transaction.
• Identify a number of key waypoints along the transaction path and establish standards and/or guidelines relative to what information an informed consumer should have at each point and how they should use it to further their interests in the transaction.
Other elements within the industry seem to have succumbed to the notion that the information battle has been lost because today’s consumer can use online resources to learn all that there is to learn about their transaction. This concept apparently suggests that students, having purchased the textbook at the onset of the course, need not attend classes or lectures because there is no need to know how to use the information within the text to either pursue excellence or to survive even the most basic of encounters. Lost in this misinterpretation is a giant sector of the potential agent value proposition, the ability to assist the consumer to make sense of the information to improve their personal real estate experience. Lastly, we suspect that lurking beneath this suspicious decision-making process is the influence of legal counsel. Powerful contingents within this group have long advocated that standards regarding any aspect of agent practice are dangerous and ill advised. Like traditional opponents of universal suffrage and public education there are those who feel that risk management is best practiced through minimalism and plausible denial. This approach completes the agent value proposition circle and takes us back to where we are today with more and more consumers questioning, “why use an agent?”
• As an industry we should quit focusing on controlling information and instead direct our attention to distributing it.
• Differentiate between possessing the information and being able to evaluate or analyze it thus providing agents with a valuable addition to their value proposition and consumers with a safer real estate experience. • Adjust the knowledge management system to assist agents, in a risk management appropriate fashion, in their efforts to be both information providers and/or information analysts. In the final analysis it may well matter not where consumers get the information but rather how they use it. With these matters implemented the industry can finally focus its attentions on sourcing issues. Who is wholesaling accurate, relevant and useful information and who is peddling junk that no one will ever need or use? Our industry is fast approaching that intersection where the brokerage value proposition will take its appropriate place within the transactional matrix. Over the next eighteen months we will experience the combined influences (in some cases conflicts) of transformational investors and enlightened consumers. Out of this crucible will come a brokerage business model that will address and compliment the expectations, demands and needs of all involved. Information distribution will play a critical role in this new formula for success. We can do this. n
Leveling the Playing Field, Right Down to Zero Contributed by Lorne Wallace, CEO, Lone Wolf Real Estate Technologies There’s been a term I’ve been hearing more and more of recently, that is called “leveling the playing field.” Now skipping for a moment the obvious question: “When did the Communists win?” this whole concept that is being propagated is leading to unintended consequences. For years we’ve heard about how the airline ticketing business was taken out by the likes of Expedia and others. And that happened because they were able to make the “product” being offered into a commodity. And once something becomes a commodity, the price becomes very elastic based upon supply and demand. This is Economics 101. In our industry it is quite simply, too many real estate agents, too much supply, the price goes down. Then forces like Zillow came into the industry with the goal of commoditizing our “ticket”, that being the one that got your house sold or a buyer into that new home. But the fact is that the service of handling a real estate transaction is just too complex to turn into a commodity. They failed in their initial goal so it’s time for Plan B. Let’s have a plan to turn the providers of this service into a commodity instead. And you do that by making them all the same! Or leveling the playing field. But that is just looking outside the industry as to who is doing this, and trust me with Zillow offering training and services to agents they are trying. What we are not paying attention to is who inside our
industry is doing the exact same thing. That would be our friendly, neighborhood MLS who is busy putting in place tools and software to accomplish the exact same goal, that is leveling the playing field! Maybe we should take a step back because many would argue that MLSs were formed for just that reason, leveling the playing field. But that meant things like we all used the same listing forms and we all collected listing data in the same format. To use a football analogy, that means we are playing on the same field with the same ball and the same rules. I mean really, who ever at the end of a listing appointment had the seller say, “I’m going to list with you because of these great forms you have.” No, the seller picked an agent based upon what the agent was going to do for them. What effort they were going to put into marketing the property, what tools the agent would use to promote with, what techniques the agent would employ. But what happens if all agents are using the same tools because they are supplied by the MLS? If every agent’s value proposition is the same because they are all using the same MLS supplied tools and systems, the agents only have one thing left to compete on and that is price! And we all know where that ends up. Look “leveling the playing field” might sound like a noble goal, and it certainly has its roots in the creation of MLSs, but what we are talking about now, to use the football analogy again, is everyone using the same playbook. Can you imagine
watching the NFL® on Monday night when both teams are running the same plays? Pretty much the game ends up scoreless because that is what happens when the other teams knows what you are going to do. Do we want to end up scoreless in this industry? A lot of us, myself included, have our life’s work tied up in the industry. We should get the MLSs, the Zillow’s and their ilk out of the way of the players, those who are making the real estate industry at the office level where the real work is done. Invest in your office; hire, train and manage your agents; make your own decisions and live or die as a business based upon those. It is time for the people
Invest in your office; hire, train and manage your agents; make your own decisions and live or die as a business based upon those. who have invested in the industry to stand up and take back control of it. n
The One Thing – the Surprising Truth Behind Extraordinary Results New book by Keller Williams Co-founder Gary Keller and Jay Papasan
Buy it and read it. Keller and Papasan make a simple straight forward case for how to get more successful, more productive and be able to keep it all straight in your head and your heart. The One Thing is not a book about real estate, it is a book about being able to stay focused on what matters and avoiding that which wastes your time and your energy. While there are pieces of The One Thing that almost everyone has heard elsewhere Keller and Papasan have constructed an easy to read and understand prescription for a new way of organizing how and where to invest the scarcest resource of all – our time. n
Trust cont. from p3 And the entire financial industry? That trust, once the very essence of its business, is certainly gone. Politicians? A reasonable definition of partisanship may be that for anything you do trust, there is an equal and countervailing force that you distrust more. The very concept of a brand used to be something that grew up over many years on the basis of dependability, or at least habit, which is a form of
trust. But then there evolved a branding industry, whose skill was to create fake trustworthiness — or anyway the illusion of it. __________________________________________ Read More: http://www.usatoday.com/story/money/2013/01/06/ michael-wolff-trust-used-to-be-worthsomething/1566094/ n
featured leaders 6 Questions with Jay Gaskill, CEO of Real Estate Digital, Aliso Viejo, Calif. www.realestatedigital.com by Tracey Velt, contributing writer REAL Trends: What’s your background? Gaskill: I graduated from San Diego State with a Bachelor’s of Science in business information systems. I all but abandoned that major six months out of college and spent the majority of my career around settlement services. There was a five-year period where I was a commercial real estate developer. I’m an entrepreneur with a heavy bent on real estate and technology. I have great partners. We’re an ensemble cast. I know a lot about real estate and some about tech, which makes me well suited for Real Estate Digital. REAL Trends: Tell us about your career path. Gaskill: In the early 90s, I was a developer and mortgage banker. I worked for Fidelity in the title business in 1993 and worked there for 10 years doing various jobs. I rose through the ranks from sales to sales management and more. Fidelity National Financial spun out Lender Processing Services (LPS), where I worked for 14 years. A little over a year ago, there was a management buy out and thus was born Real Estate Digital (RED). RED is a business-to-business software service. We service the real estate vertical. Our core markets are: big brokers, real estate agents, real estate through MLS organizations, lenders and title insurance companies. We build consumer-facing portals on behalf of our customers. So, we’re in a fun, unique spot. We also manage the life cycle of the lead: attraction, incubation, transact and, then, the customers-forlife strategy. Everything we do is for the benefit of our customer.
We’re not tool salespeople. We have enterprise level engagements. We have deep three-day meetings with brokers about what they need and then we make the tech seamless and transparent. With our background, we can engage in that real estate conversation and contribute, helping design the process and the technology. We’re like “Intel”—inside. And, we like the fact that we’re a quiet company that’s working with some very large, impressive clients such as Citibank and RE/MAX. We have 120 employees. About 80 percent of our employees are here in Aliso Viejo and others are spread out throughout the United States. Our senior executives spend a lot of time on the road. REAL Trends: How do you do business differently? What makes RED unique? Gaskill: Well, one thing we do is schedule fireside
chats with employees. We have tech people who come to us from other industries, so we talk about the aspects of the real estate industry that they need to understand. We want our employees to understand who our clients are. We want them to be as passionate about this industry as we are. I challenge my people to make a difference. If what we do and what we produce doesn’t make a difference, then it’s just hurting our industry because it gets people distracted from the good work that needs to be done. If you understand clients and do something meaningful, then you can engage with brokers about our business. The technology that comes out of that is a byproduct of the business. If a brokerage or bank won’t prosper and there’s no ROI in the things we do, what’s the point of selling them? REAL Trends: What are some trends you’re seeing in your vertical? Gaskill: Brokers have realized how their websites are the front door to the brokerage now. You can’t just have a billboard website. You must have a site that supports your brand and helps you recruit, but also drives consumers to the brokerage and through the sales process. Of course, the Internet has been out there for a long time now, but the thinking is that the broker and the tools are becoming more sophisticated, and brokers can finally execute on this vision they’ve had. Transaction and document management has been in nascent stages for 10 years, but we’re at a tipping point. Brokers will have to go paperless in the next few years. I’m seeing a changing of the guard— younger people looking at real estate as a career. You can be a young person who gets into this business, and you can be something. REAL Trends: Do you have any hobbies outside of your career? Gaskill: I play golf. I stand-up paddle board. My wife, Kimberley, and I live in Newport Beach, so we
have a very active lifestyle. We go boating one or two times a week. In fact, we have a couple of small electric boats. We love to take clients out on harbor
Younger people are looking at real estate as a career. You can be a young person who gets into this business, and you can be something. cruises. I have a son, Carter, who’s a sophomore in college. He plays golf. My daughter, McKenna, is a college freshman and a cheerleader at UCLA. REAL Trends: What are you passionate about as it relates to your business? Gaskill: I love what I do. I’ve lived through a number of market cycles. The ups and downs have helped me gain perspective. I’m excited about the business from top to bottom—from mortgage banking to real estate. Many have felt the mortgage finance and foreclosures issues are a real set back, but it’s like a fresh lease on life. Brokers are thinking about business a whole new way. I like to think of myself as being outspoken and direct and that level of candor isn’t always the way this business operates. I consider myself a person who totally understands the real estate business to its core. I used to have my broker’s license. My partner and I are almost giggling about how excited we are about business. We’re living how we want to live and building the company we want. And, we’re getting a reputation for being the serious guys rather than the flashy guys. n
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market news Housing Market Report January 2012 January 11, 2013 – Housing unit sales for December 2012 were up 12.6 percent in the Midwest, the strongest showing in the country. The next highest region was the Northeast where unit sales were up 10.7 percent, the South increased by 9.2 percent and the West saw a decrease of -2.1 percent for the same period. The REAL Trends Housing Market Report showed that the combination of new and existing home sales in December 2012 strengthened from the prior year. The annualized rate of the combination of new and existing home sales increased to 5.773 million up from the 5.395 million recorded in December 2011. The average price of homes sold in December 2012 was up 18.1 percent from the average price of homes sold in December 2011 marking the ninth consecutive month of increased home sale prices.
The average price of homes sold in December 2012 increased 18.1 percent across the country. The West had the best results with the average price of homes sold increasing 26.8 percent followed by the Northeast region at 19.4 percent. The South region showed an increase of 14.5 percent while the Midwest lagged with the average price of homes sold increasing by 11.0 percent. “December 2012 sales of new and existing homes increased solidly with units sales up 7.0 percent and the average price of homes sold up a very strong 18.1 percent. With most economic fundamentals continuing to show strength and with high levels of affordability we expect housing sales will increase for the foreseeable future. Early January 2013 results indicate that ‘fiscal cliff’ debates and other negative factors are thus far having little effect on the housing market,” said Steve Murray, editor of the REAL Trends Housing Market Report. “Additionally, the recently released regulations released by the Consumer Finance Protection Bureau would seem to provide adequate flexibility and protection for all parties in the mortgage lending process as to not be a hindrance to the financing of home purchases. We expect that housing sales for 2013 will be higher in terms of both units and average pricing than was forecast even a few months ago.” n
‘Fiscal cliff’ debates and other negative factors are having little effect on the housing market
11
REAL Trends December/November Housing Market Report (Versus same month a year ago)
December 2012 December 2012 Closed Sales Average Price
National
November 2012 Closed Sales
November 2012 Average Price
+7.0%
+18.1%
+16.5%
+11.9%
Northeast
+10.7%
+19.4%
+15.5%
+5.8%
South
+9.2%
+14.5%
+21.3%
+8.7%
Midwest
+12.6%
+11.0%
+22.2%
+8.8%
-2.1%
+26.8%
+7.2%
+24.5%
Regional Report
West
30.0%
National
Northeast
South
December 2012 Average Price
November 2012 Closed Sales
Midwest
West
25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0%
December 2012 Closed Sales
November 2012 Average Price
-15.0% Key Issues cont. from p1 Consumer Finance Protection Bureau (CFPB) With the recent announcements of the CFPB as to rules affecting residential mortgages, we now have some clarity (and sighs of relief). However, the 3% cap on fees for most loans potentially harms those residential brokerage firms having mortgage, title and settlement services. Funny that it doesn’t affect those who don’t have affiliated services. This and other areas of the new regulations have yet to be clarified.
12
The “5%” Rule Based on work we did in 2008 it appears that in a normal market roughly 5% of all households will purchase a home each year. With nearly 120 million households in the United States that would equate to a “normal” rate of 6 million new and existing home sales. As the market is now around 5.5 million does that mean that the market is less than 10 percent away from normal. And with abnormally low interest rates and home prices driving demand above supply, will we see a surge above the “5%” level for a period of time before returning to its supportable level. n
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How to Identify & Appeal to a Niche Audience Online Case Study: New Era Realty’s Strategic Approach to Selling Lofts & Condo’s in Denver’s Competitive Marketplace by Travis Saxton, REAL Trends and John Stegner, New Era Realty How many Realtors every day start a new website or social media campaign that will never generate enough leads to cover the costs associated with the effort? How many Realtors every day get that call from a company promising to deliver leads or “put them on page 1 of Google” and take the bait, only to discover that they have wasted precious marketing dollars? Unfortunately, more often than not an agent’s online marketing strategy simply does not deliver and is abandoned. The reality is that the competition is more sophisticated and entrenched than it ever has been and the budgets for those who have “cracked the code” are increasing. If you are one of those who are brave enough to go after your slice of the online pie in 2013, then this is a must read article. We will be providing advice as well as reviewing a case study of one company that is currently fighting the good fight online and winning. Step 1: Find a Niche: Audience and Demographic The first step in creating an online marketing campaign that will produce results in a reasonable timeframe is to identify and target a niche that is not prohibitively competitive. In this case study, New Era Realty took a look at their regional market; identified possible target niche’s and evaluated each by criteria such as: • Transaction volume • Average sales prices • Keyword competitiveness & search volume • Consumer behavior/demographic • Market segment growth potential The chart to follow depicts the actual daily searches for the terms researched. This was a determining factor in not only “condos for sale” but the fact that uber-local results where many condos reside were also popular. 14
Following this exercise, the downtown Denver loft and condo market stood out as an opportunity. The demographic of current and future owners was a good fit, being highly mobile and very tech savvy. This was attractive as it suggested that the consumers might use the web as a resource for selecting an agent or inquiring about properties. The physical geography was clearly definable by neighborhood and not so large as to be overwhelming to develop quality content for consumers. Keyword (not provided) Highland Denver Real Estate Clubhouse lofts Denver Silver State lofts for sale Condos for sale in Denver Denver lofts for sale Santa Fe studios Denver Denver condos and lofts for sale denverloftsandcondosforsale.com denverloftsand condos.com
There were a significant number of real estate transactions in the target market every year and across all price points. Finally, in reviewing the page rank and the strategy of other web sites targeting this niche, it was clear that there was room to deliver a better product to potential buyers and sellers looking for information online. Identifying and clearly defining your online niche is the very first step to success. Too often, agents simply go after the entire area in which they sell and end up competing online with every agent in their marketplace. Remember, the more defined the niche, the higher the likelihood that a new web site will be found by consumers in a reasonable amount of time. We suggest brainstorming possible ideas and then getting a professional analysis done by a local Search Engine Optimization (SEO) company. You don’t want to build a site based upon a niche and the associated set of keywords, only to find that there is not enough search volume to make it worthwhile. Worse yet is going after too large a geography or the hottest neighborhood, only to be doomed to failure because you are taking on the 1,000 pound online gorillas. Typically, agents develop web sites and then find an SEO company to try to help them generate traffic.
If you learn one thing from this article, look before you leap into an Query Impressions online marketing 1. Denver 5,500 strategy. Hire the SEO 2. Cheesman Park 1,000 company first and 3. City Park Denver 1,000 then build the tools 4. Downtown Denver 1,000 to capture leads with 5. Highlands Denver 1,000 6. Condos for Sale in Denver 700 their guidance. 7. Denver City 8. Denver City Park 9. Lodo Denver 10. Lofts
600 600 600 600
After intensive efforts you will now see a snapshot of our actual search traffic and how people find their site on the left. You can see a heavy emphasis on lofts and condos. So the niche targeting is a strategy that is paying off. Step 2: Strategies – SEO, Landing Pages/ Dedicated URLS What should you expect from a good SEO company and how can you tell if you have found the right one? New Era Realty worked with several companies with modest success before finding their current provider, Redpoint Design & Associates. The only certainty in the SEO world is that the game will continually evolve and change. It is critical to find a service provider that understands the business of real estate and your local market. The road to the final product for New Era Realty was not like the fidelity green arrow that “guides” you to success supposedly. They had a few missteps along the way like many brokerages carving out a niche to begin with. They went through a few “bad apple” SEO companies before finding the perfect partner. Sometimes no SEO can be better than paying for a company claiming to get you to number 1 in no time. Be selective to avoid the same mistake we made. To start with focus on great content that your audience will love then you can hire an SEO company as a partner to work with you on fine-tuning and delivering even better content.
several new and improved methods to gain an advantage. Not all of these are exclusively online in nature. Their approach is in line with our book “Game Plan” which details how important it is to not only carve out your niche, but also to represent that niche audience as well. A good example of this is that once the loft and condo web site began to gain traction and prove itself, New Era Realty moved their physical office to a Downtown Denver location.
This allowed the company to both service their clients better, but also to attract the right agents to work the leads generated. Further, the company engaged with the downtown community by comarketing with other local business owners and raising funds for a downtown Denver focused charity organization. New Era Realty’s strategy is pretty evident and on target
Another tip in this respect is do not pay for content as they do not usually have an intricate knowledge of your market which is what is needed for success. In this case, to appeal to this more tech savvy and online consumer New Era Realty is employing 15
online as well. Simply put, as a company, they are putting a very big emphasis on their niche and working to deliver value to their target online audience. To start with they are employing several unique URLs outside of their normal domain specifically focused on the Denver Loft and Condo audience (check out www.denverloftsandcondosforsale.com and www.denvers-real-estate.com/lofts-condos-guide/ ). This strategy is effective, but has to be done correctly. The content for each site has to be unique and created on nearly a weekly basis. This content challenge can be overcome in a number of ways. An example would be to require the agents receiving leads to write an article a week to keep receiving them. Professional writing support is another option to maintain the consistency required. However, if you go this route again, find a local writer who is part of the target audience and who can really bring content that is of value to readers. As online consumers evaluate the quality of a site, they will be looking for authenticity in the content. If the articles are sub-par, the best IDX in the world might not be reason enough for consumers to provide their contact information via the web. However, if the impression is that the agents are true experts about the housing they are looking for, a buyer or seller might just pick up the phone and simply request to speak with an agent. Does it take a whole company’s resources to achieve results? Is this such a complex process that an individual agent would be getting in over their head in trying to dominate a competitive niche? The simple answer is no and New Era Realty can provide yet another example. The first agent to join their company was a 60 year old who had never done any online marketing or sold a home for that matter. This agent followed advice and in a relatively short amount of time achieved sales utilizing a Wordpress site with a simple IDX at a total cost to him of only $150/month. His secret was to simply write good content and he stumbled upon some great long tailed search terms that were not competitive at first. His site, www.tophomesforsaleco.com is a great example of authentic content (see example at right). The niche that hit “pay-dirt” first for him was horse properties in his area. A series of articles on this subject led to one getting ranked in the top 3 of 16
Google for a key search phrase/term. Over a dozen horse properties sold later, the site is now ranking for additional niche markets in his geographic area and he has the budget to pay for the SEO support necessary to continue to grab market share. Moral of the story, regardless as to if you are a brokerage owner looking at a strategy for your company, or an individual agent who wants to develop a steady stream of leads, the process is the same. Should you take this adventure, when interviewing an SEO company, discuss their strategy regarding unique meta data, content generation, long-tail vs. short tail targeted search terms and their back linking strategy. If you can find a provider who is willing to educate you on these subjects and explain how exactly their approach will work, you are on the right track. Beware of SEO providers who can only meet over the phone and who promise “page-1” results for highly competitive terms. You want to find a true partner for the long term. Real Estate is the marriage between the practice of law and small business marketing. You can’t fully depend on anyone but yourself for these two skills if you wish to be a top
producer. If you don’t understand how and why your SEO provider is doing what they are doing, then you are not driving the bus. Hire a person/ company who is willing to educate you so that you gain the necessary online marketing knowledge and skill to evaluate their performance. Step 3: Social Media: Local Focus, Knowledge, and Expertise It has been pointed out already that the landscape of online marketing is an environment of constant change. If you want to succeed, prepare to have your “cheesemoved” on a somewhat regular basis as search engine algorithms change and SEO techniques have to adapt and adjust. This is a battle for online market share you will be engaging in and the rulebook will continue to be rewritten on a quarterly, if not monthly basis. The owners at New Era Realty have gotten used to the ups and downs of online lead generation. The most recent lesson learned was the importance of “social proof” as part of their strategy. Although, these guys truly understand their local market as high producing agents themselves, this fact has to be supported by information that is easily accessible online. Having just a website strategy is no longer enough, you now also need to integrate content across social media as well. This prompted the owners to kick off a company facebook page and begin working on getting the “likes” necessary to be credible. There are many benefits to having done so as now the active agents have a platform to easily post hyper-local content, without having to worry about it all being web site article worthy. So they truly empower their agents as local experts and give them the medium to express it and it reflects on them with a very active facebook page with several posts daily. This shift provides the opportunity to share good information and success stories quickly and easily. Their online audience is looking for quality “insider insights” into the downtown Denver real estate market. Before they provide their contact information online, more and more consumers are researching the company or person providing the site. By having social proof such as testimonials and active sales stories, the consumer can feel more comfortable providing their information and be more receptive to communication from the company.
New Era Realty’s take away from the many years of experimentation is that the search engines are getting smarter and the better the content you feed them, the better your results will be. Right now the focus is on improving their neighborhood pages in a way that will bring true value to their visitors. They will be rolling out a series of videos on the “street level” with their agents providing consumers with tours of the key Denver loft and condo neighborhoods. But if you are thinking well many companies employ a local strategy such as neighborhood pages, just when you think these guys are local they take it even further. They have individual building pages on their website as well. Here is an example of one such page (below) or online at: http://www.denverloftsandcondosforsale. com/highland-bridge-lofts-for-sale-in-highlandjefferson-park-denver/ If you are hoping to carve out
a niche in urban markets these guys set the bar in this category. It is not an easy feat to identify all of these local condo and loft buildings and generate unique content to populate these pages. Drilling down further into their content, you will see knowledge of local landmarks, events and hot selling opportunities being utilized effectively. One example is the amount of content that was produced about the most recent highrise to grace the cities skyline, the SPIRE building. The SEO value for the long tail searches related to the SPIRE was identified as a very significant opportunity. New Era Realty’s information was newsworthy and included video interviews with the developer and sales
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staff. The result has been that as a company they have sold over 20 SPIRE lofts to the tune of approximately $7M in sales. As consumers go uber local so does the need for your marketing messages and targeting a building in the news was a very profitable strategy. As you would expect their blog is loaded with rich neighborhood related keyword posts and truly reflects their feet on the street strategy. With stories on neighborhoods and hot spots within those neighborhoods it becomes a commitment many companies struggle to match. Step 4: Don’t Get Overwhelmed & Get Started Although this article has highlighted some of what New Era Realty is doing right, there is just as long a list of areas where they could be doing much better. The owners are aware of the missed opportunities, but have come to learn that it is a process and that the process is far from a science. The key is to start developing or improving your online presence now as it is not going to get easier. “As an industry, more and more money from agents is flowing into the large real estate portals in the hopes that they will receive leads. Yet, those dollars
ShowingIndex
could be spent competing with the portals on the local level. The portals’ niche is the entire real estate market and they simply can’t produce the real and relevant hyper local content,” said John Stegner. Search engines and consumers are hungry for the good trustworthy information that only agents who are knocking on doors can provide. So, don’t overanalyze to the point of paralysis, identify your niche and start letting the online world know that you are a good source of information. The results will follow! Conclusion: We hope that this article has provided you with some food for thought or even a spark of inspiration for the New Year. Take the challenge and identify your real estate niche. Then simply begin the process of providing good content for those individuals who you hope will someday be your clients. The process is not that different than more traditional neighborhood farming techniques, consistency over time gains market share. The longer you wait, the longer it is going to take to dominate any niche. So, we encourage you to make the resolution this year to begin carving out your chunk of the marketplace online. n
- Leading Indication of Home Sales
300% 280%
ShowingIndex
260% 240%
Home Sales
Percent Change from May 1, 2001
220% 200% 180% 160% 140% 120% 100% 80% 60%
Jan.13
40% 20% 0% -20%
Dec.12
-40%
Au
Ma
y-0 1 g-0 1 No v-0 1 Fe b-0 Ma 2 y-0 2 Au g-0 2 No v-0 2 Fe b-0 Ma 3 y-0 3 Au g-0 3 No v-0 3 Fe b-0 4 Ma y-0 4 Au g-0 4 No v-0 4 Fe b-0 Ma 5 y-0 5 Au g-0 5 No v-0 5 Fe b-0 Ma 6 y-0 6 Au g-0 6 No v-0 6 Fe b-0 Ma 7 y-0 7 Au g-0 7 No v-0 7 Fe b-0 8 Ma y-0 8 Au g-0 8 No v-0 8 Fe b-0 Ma 9 y-0 9 Au g-0 9 No v-0 9 Fe b-1 Ma 0 y-1 0 Au g-1 0 No v-1 0 Fe b-1 1 Ma y-1 1 Au g-1 1 No v-1 1 Fe b-1 Ma 2 y-1 Au 2 g-1 No 2 v-1 2
-60%
Source : "Housing Sales" is the actual property sales statistic as reported by the National Association of REALTORS. The "ShowingIndex" is a moving trend statistic that tracks the rate of showing appointment requests from the websites of more than 60 real estate companies throughout the U.S. 40 of the companies are Top 100 companies as reported by REAL Trends.
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networks The New Engel & Völkers “We had a great brand that had proven itself throughout the world. It needed to be adapted better to the U.S. market place and that is what we have developed,” said Anthony Hitt, the president and CEO of Engel & Völkers in the United States. “Our brand works here as well and we see evidence of it every day.” We had the chance to catch up with Hitt recently to hear what is happening at this rare company, an international brand that has come to America. While still small by our standards, with 34 offices and about 350 sales professionals, they seem to have identified a method of operating that will aid them in their efforts to grow in the U.S. It is important to know first that there are several differences in their approach. They remain committed to high-end store front locations in the markets they want to be in, but in a change from their prior standards, they are allowing more traditional office-like facilities where company sales professionals can work as well. They do remain committed to very chic high end store fronts as a means of driving brand visibility and walk-ins. Hitt says the company remains committed to their standards as they relate to the way each and every customer is treated and all sales professionals are still required (a rare word in American real estate circles) to complete a three day training session on the processes and practices espoused by Engel & Völkers. He added that they get very high levels of positive feedback about the training program from those who have been through it. The standards also extend to all marketing materials, web sites and other collateral. There is an “Engel & Völkers” way to market and promote. It does not mean that sales professionals cannot personalize their service but it does mean that certain ways of communicating and extending service are expected to be done according to Hitt. “It does take extra time in the selection, recruiting and training process to build one of our affiliates but we think it is worth it,” said Hitt. “In just one area, our
web sites, we are among the few, and maybe the only, international real high-end real estate company that has one integrated web site for all of our affiliates. That consistency makes a difference, not only for our sales professionals, but for our clients and customers as well.” Hitt said that while elsewhere in the world it may be the case that the brand and its credibility attracted the clients and customers; in the U.S. it is also a matter of having the affiliate and the sales professionals as primary customers of the network as well. Recruiting well qualified affiliates and assisting them to attract high quality proven sales professionals is a top priority for the American leadership. “We refer to our sales professionals as ‘real estate advisors’ not real estate sales people and one thing that is universal is that high-end clients and customers require and expect a much higher level of advice on their sales and purchases. Everything we do is to build the expectation and delivery of a consistent high level customer satisfaction experience whether it is one of our real estate advisors or a homeowner.” It will obviously be a challenge for any relatively new entrant in the American high-end market to grow. There are many existing strong high end oriented brokerage firms in most markets. Having high standards and real requirements may take some getting used to. However it appears to us that should Hitt and his leadership mean what they say there is a real chance that they will succeed. n 19
editor’s note In Tribute — F. F. “Chappy” Adams Our great friend Chappy Adams died in an auto accident on January 10, 2013. Chappy was the head of his family’s real estate firm, Illustrated Properties Real Estate, of Palm Beach Gardens, Florida. He leaves his wife, young daughter and his parents.
Everyone who had the pleasure of knowing Chappy was better for it – and will miss him greatly.
Chappy was among the kindest men I have ever known. He lit up any room he was in just by his presence. One felt better being around him. He was young and full of life. He was accomplished at many many things in business and elsewhere but most accomplished at being a friend and a good father.
“In the end, it’s not the years in your life that count. It’s the life in your years.”
Abraham Lincoln said this and it applies so well to Chappy:
Chappy certainly lived every moment. We will miss you mate. n
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