TheNicheReport.com
Real estate agent & broker Edition
For the serious real estate professional
Issue 004/April 2012
Resurgence of the Sales Professional By Rene Rodriguez
Page 16
8
The Cost is More Important Than the Price The case for buying a home today is extremely compelling.
22
The Efficient REO Office How digital are you?
25
Can You See What I See? The American homebuyer is rapidly changing.
29
Using PR to Increase Your Sales The emerging PR generation.
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CONTENTS
Issue 04
April 2012
Publishers Robert Pegg robert@thenichereport.com David Pegg david@thenichereport.com
16
MANAGING EDITOR Rick Roque Rick@thenichereport.com
Resurgence of the Sales Professional
Associate Editor Cathy Johnson info@thenichereport.com
Bringing pride, integrity and professionalism back to the lost art of selling rene rodriguez
ACCOUNTING MANAGER Shawna Ingram shawna@thenichereport.com
Advertising Director Jessica Grizzle
8
The Cost is More Important than the Price
38
steve harney The case for buying a home is extremely compelling.
10
Foreclosure and It's Income Tax Consquences Mitchell Reed Sussman
22 25 29
The Efficient REO Office Eric Lichtenheld How digital are you?
Can You See What I See?
How the Mortgage Acts & Practices Rules Affect Real Estate Agents & Builders, Part II Karen Deis
DEPARTMENTS
06 12 14 32
Joshua Weinberg The American homebuyer is rapidly changing.
35 40
Using PR to Increase Your Sales
42 46
Rick grant The emerging PR generation.
Jessica@thenichereport.com
note from the Editor Market conditions and analysis top agent straight up with j predovich online lead generation service provider classifieds Advertiser DIRECTORY BRINGING UP THE REAR
Advertising sales Heather Bopp Heather@thenichereport.com
Production Manager Henry Suchman henry@thenichereport.com
Production Assistant Dawn Exner dawn@thenichereport.com
Cartoonist Martin Bradford
COLUMNISTS & Contributing Authors Martin Andelman Karen Deis Steve Harney Rick Grant Eric Lichtenheld Jocelyn Predovich Rene Rodriguez Chaibia Sarhrou Mitchell Reed Sussman Joshua Weinberg TheNicheReport.com
5
note from the Editor
Real estate agent & broker Edition
We are on a roll. We concluded my interview with the Today Show’s Barbara Corcoran, who is quickly becoming known for her investment prowess on the hit show, Shark Tank. Her strategies for success are the focus of our featured interview for the May issue - a perfect way to kick off the real estate season as we roll into the summer of 2012. I am pleased, with the feedback we are receiving from our readers. Please keep sending us your feedback on how to improve our publication. What we are doing is unique and readers are noticing! Combining the best of mortgage, real estate and housing-related topics into a single publication, we are the only magazine that understands the industry as what it truly is: a huge professional family who depend upon one another in dramatic and yet unique ways compared to other industries. So, thank you readers – and keep the feedback coming our way. This issue is exciting! Our focus is on sales success - what makes you, your brand, your company and professional practice unique in your marketplace. I interviewed Afshar Properties, a real estate firm based in California, which has been negotiating distressed real estate on behalf of clients for over ten years. The professional demeanor and competence of this real estate team was ideal for the complexity of these sales, and I couldn’t have been happier to talk with them about their approach to the market and how they service their clientele. Sales strategies are a dime a dozen. It is difficult to separate the sales pitches from the sales methodologies that will take the average sales professional to new heights. The substance is difficult to discern; after you’ve spent money on that sales coach and software, and invested in some hard-earned marketing efforts, if you’ve come up empty handed this could be an expensive lesson to learn. In the real estate industry, while it truly is ‘every man, woman and child’ left to fend for themselves, there are some alternatives out there worth highlighting. Rene Rodriguez is a coach and sales expert based in Minneapolis, Minnesota. His firm Volentum, for “Voluntary Momentum” (www.volentum.com), is a practice that is set up to deliver. If you are a real estate firm and you need to make drastic improvements in your firm’s sales and branding within your market or across the United States, Mr. Rodriguez can assist you by bringing about much-needed change to support the results you which to attain. Mark your calendars for April 19th for the Pacific 2012 Northwest Housing Summit in Seattle, Washington at the Emerald Downs Racetrack. I was asked to speak and moderate a panel of a number of nationally recognized Mortgage and Real Estate figures and top producers who excel with cutting-edge marketing strategies. Be one of the 500+ to attend: call Martin E Lough at (253) 381 0933 or go to: http://nwhousingsummit2012.com/ to register on line. My goal for The Niche Report, RealEstate Edition, is to provide useful insights into the real estate economy and how real estate professionals can grow their business in today’s challenging environment. Remember, if you want to learn more about what we are doing, email or call me (408.914.5895) and I’ll jump on a plane and come visit with your real estate team! Thank you – I look forward to hearing from you!
Rick Roque Managing Editor, rick@thenichereport.com
6
April 2012
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MEMBER
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The Cost Is More Important Than the Price The case for buying a home today is extremely compelling By steve harney
B
uyers are still concerned that home values might continue to soften throughout the year even though the housing market is showing signs of recovery in many regions of the country. The fear originates from the uncertainty that has existed in the market over the last several years. This is evidenced by the fact that there are many buyers still perched on the fence of indecision, and others that place offers that are unrealistic in the current environment. It is our job as industry professionals to eliminate the fear by bringing clarity to the situation. More and more research is coming out showing that it makes great financial sense to purchase a home today. Whether it is rent-vs.-buy ratios, income-to-price ratios or income-to-mortgage payment ratios, purchasing a home right now is a bargain compared to historic norms. Research is also showing that their housing expense is probably going to increase rather dramatically in the next several years if they are renting. The Wall Street Journal, in an article earlier this year on their online resource Market Watch, reported: 8
April 2012
Apartment dwellers could be facing double-digit rent increases in the coming years as a shortage of new multifamily units, coupled with a rise in prime renter-age households, gives landlords clout they haven’t seen since the mid-1990s. ‘Demand pressures are building. It’s not bad today because rents have been down the last two years,’ said William McLaughlin, an executive vice president with Avalon Bay Communities. ‘But it feels a lot like 1992, when we were coming out of a deep recession … and we ended up seeing double-digit rent increases after that,’ he said. …Already there are signs the apartment market is tightening and in some cities rents are already going up 7% or 8% per year.
Does it make financial sense for a young person, couple or family to pick a form of housing that will dramatically increase in cost over the next several years? They still may think they are being forced to pick the ‘lesser of two evils’ knowing that house prices are still falling. They must realize, even with prices still softening, the COST of purchasing a home is at a historic low. They can lock in their housing expense for the next 30 years at all-time bargains in price and financing costs. We must be able to communicate this to purchasers in a simple and effective manner. We often talk about interest rates being at historic lows and home values being at pre-bubble prices. We
must be able to put these two advantages together to help a buyer easily decipher the tremendous opportunity that exists in today’s market. According to the most recent S&P Case-Shiller price index, residential real estate values have returned to 2003 first-quarter prices. That, in itself, says something. However, when you factor in mortgage rates, the case for buying a home today becomes even more compelling. In 2003, 30-year mortgage rates stood at 5.88%. Today, they are 4%. How does that impact the actual COST of a home? On a home purchased for $250,000, here is the difference in monthly payment: Real estate agents and BRokeRs eRRoRs & omissions insuRance
www.RealProeando.com Go online today to see how the world’s leading insurance broker can bring you custom solutions, superior coverage and affordable rates. We’re #1 for a reason! The buyer saves $285.30 a month, $3,423.60 a year and $102,708 over the life of a 30-year mortgage! They buy the home for the same PRICE but the COST is over $100,000 less. This is why so many financial advisors are saying that this may be one of the greatest times in history to purchase a home – even Warren Buffett. Buffett appeared live on CNBC’s Squawk Box last month. During the interview, he was asked about the current real estate market and whether he felt now was the time to buy. His response was rather emphatic and has been used as a headline in hundreds of articles since the interview: “If I had a way of buying a couple hundred thousand single-family homes I would load up on them.” If Warren Buffett is saying now is the time to buy, perhaps we should be giving the same advice to our purchasers. Steve Harney has been chosen as one of the Top 100 Most Influential Leaders in Real Estate by Inman News and has appeared on Fox Business News. He is the founder and chief content provider for www.KCMblog.com.
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Foreclosure and Its Income Tax Consequences By mitchell reed sussman
I
n a recent issue of The Niche Report I wrote an article on how to safely “walk away” from your mortgage. That article discussed consumer protection statutes, enacted by such states as California, known to lawyers and real estate professionals alike as “anti-deficiency” legislation. This legislation protects homeowners who can no longer afford to debt service their mortgage from personal liability on their mortgage and allows them to simply “walk away” from an overencumbered or “underwater” property. That article sparked a number of inquiries from our readers, many of whom wondered what the impact of the Internal Revenue rules on cancellation of debt had on those homeowners who elected to “walk away” from their mortgage, lost their home through foreclosure or benefited from a short-sale or modification that included a principal reduction. This article attempts to shed some light on that subject. 10
April 2012
Generally, if a debt for which you are personally liable is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. In the context of today’s real estate market, this means that when your property is foreclosed upon or repossessed and sold, you are treated for purposes of income tax as having sold the property at the fair market value. Whether you ultimately have a recognizable gain for tax purposes depends upon whether you are personally liable for the debt and whether the outstanding loan balance is greater than the fair market value of the property. When a foreclosure takes place, whether by a strategic “walk away” default or otherwise, it is common for the underlying debt securing the home to be far greater than the current fair market value of the property being foreclosed upon. Why else would someone “walk away” and allow their property to be foreclosed, but for the fact that there is no equity? Should you lose your home by foreclosure, cancellation of debt occurs. However, foreclosure is not
the only situation in which cancellation of debt occurs. Homeowners who were able to secure a short sale or deed in lieu, or those lucky enough to have negotiated a principal reduction modification, are all subject to the Internal Revenue rules on cancellation of debt. Given that foreclosure, short sales and modifications are pervasive in this economy, the subject of cancellation of debt is something that all homeowners must consider when deciding how to deal with their over-encumbered property. While the general rule is that taxpayers who receive the benefit of a cancellation of indebtedness are subject to taxation for a recognizable taxable gain, fortunately there are several exclusions and exceptions which may result in part or all of the forgiven debt not being nontaxable. The first and most often used exclusion is the “Bankruptcy” exclusion. Under this exclusion a debt cancelled as a result of filing for bankruptcy under Title 11 of the United States code would be excluded and nontaxable. The second most common exclusion is the “Insolvency” exclusion. This provision of the IRS code provides that if the total of all your liabilities was greater than the fair market value of your assets at the time the debt was cancelled, there is no recognizable gain from the cancellation for tax purposes. By far, however, the most important exclusion can be found in the Mortgage Debt Relief Act of 2007. Enacted by Congress as a direct result of the crash in Wall Street, our economy and the real estate market, this legislation was specifically designed to protect those homeowners who are burdened by a mortgage they can no longer afford and a principal residence they are unable to sell. This Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for this relief. The provisions of this Congressional enactment apply to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.
Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion. One must be careful, however. Proceeds of refinanced debt used for other purposes – for example, to pay off credit card debt – do not qualify for the exclusion. In addition, debt forgiven on second homes or rental property does not qualify for this tax-relief provision. In some cases, however, other tax-relief provisions – such as insolvency or bankruptcy – may be applicable. More information on this subject including detailed examples can be obtained from your tax professional or found in IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17. Mitchell is a California real estate attorney specializing in real estate, foreclosure and bankruptcy. His website is http://www.palmspringslitigationattorney.com.
Market Conditions and Analysis
Market Conditions and Analysis By rick roque
Sales Volumes are Down. Results are Mixed. Forecasts are Up. Are You Confused Yet? Real Estate has functioned like the weather - this year has been unpredictable and difficult to get your arms around. March 20th was the first day of spring after a winter that really felt like spring all the way through. 2012 was the fifth warmest year on record, and in the United States, the weather pattern we’ve experienced this Winter/ Spring resembles weather systems that generally occur in early summer (May or June). More than 2000 high weather temperatures were hit in the month of March, making places like Minnesota as warm or warmer than winter retreats in Florida. This makes organizations such as Minnesotans For Global Warming (http:// minnesotansforglobalwarming.com/) happy as they are sick of the cold. 12
April 2012
Other than affecting the second-home market by snow birds, I’d say it was a good winter and spring. The real estate market was equally a paradox. February showed a decline in existing home sales figures after a gain in January, but 8.8 percent above sales volume levels posted in 2011 (yes, that was as confusing to write as it was to read, I am sure). Lawrence Yun, NAR chief economist, said underlying factors are much better compared to one year ago. "The market is trending up unevenly, with record-high consumer buying power and sustained job gains giving buyers the confidence they need to get into the market," he said. "Although relatively unusual, there will be rising demand for both rental space and homeownership this year. The great suppression in household formation during the past four years was unsustainable, and a pent-up demand could burst forth from the improving economy." Regionally, the results were mixed. Declines were realized in the Northeast and the West Coast. The Northeast dropped 3.3% with median
prices declining 1.9 percent from a year ago, at around $225,000. The West posted a 3.2 percent monthly decline but is up 6.1 percent as compared to a year ago, with median prices improving by 3.1 percent; once again, very confusing. The Midwest and South were both up, rising 1 and 0.6 percent respectively with the media price down to $120,000, the lowest in the nation. The South was the only ‘up’ condition with the median price of a home up 1.8 percent in the first quarter of this year. So are we in decline, are we recovering, should we be optimistic or should we brace ourselves for a difficult 12-16 months? Well, the answer, once again, is ‘mixed’. The housing market, like our economy, is clearly in recovery, but as one economist coined it, it is like walking ankle deep through a mud bog; you don’t get any deeper but you still find your feet muddy. The market is bogged down by existing shadow inventory but these numbers are visibly in decline also; it is a market hangover that is progressively getting better, but our collective head still
Market Conditions and Analysis pounds. In May’s issue, we will dive more deeply into regional dynamics where 12 different markets (cities/ suburbs) will be reviewed in detail; however it is worth noting here a few sales strategies in light of the market dynamics. Written extensively in this publication is the opportunity that exists with seniors and young adults – aging baby boomers (born 1946-1964) and their echo-boomer children (born after 1981 – 1991). The echo boomers, otherwise known as the Facebook generation, make up approximately 80 million people while the baby boomers make up slightly less at just under 80 million people. From advertising, marketing, direct mail, logo design, office appeal and overall sales training, I think if real estate agencies aren’t specifically targeting these two demographics, they are missing a big opportunity. I suggest even how sales agents dress, speak about the market and also identify the main marketing mediums in which the respective generations learn about real estate, all make a significant difference to gaining that one extra listing. The Northeast and Midwest are likely to see a large number of older homeowners sell their homes to younger homeowners (within their family). This generation will purchase 75-80% of the available inventory of owner-occupied housing by 2020. This is a staggering figure.
Why Should Realtors Love Rental Markets? Connected to this is the unpredictability of the stock markets as they are connected to the retirement of individuals. It is much easier in most markets to purchase several properties and sell them at key points in one’s life in order to live off this extra income. Since the
rental markets are on the rise and a percentage of Americans are struggling to qualify for a mortgage, discussing investment options for younger baby boomers to purchase several homes and to rent them for both short-term income and long-term investment options is a good option in this economy. The market will be more ‘mixed’ between purchasers and renters; however, there are opportunities to place some, and to cultivate relationships with the renters today, buyers tomorrow. Builders are also taking notice of these trends, building homes that are smaller and focusing on home health care (baby boomers) and more eco-friendly, communitybased designs for the echo boomers. "Don't expect this to be a broadbased, rocket-ship recovery," said KB Homes Chief Executive Officer Jeff Mezger on an earnings call. "The overall housing market is better, but this is definitely a localized recovery ... and in some cases, it's a zip-codeby-zip-code recovery." New home sales held above 300,000 units for the sixth straight month; however, this is over 70 percent lower than the peak in July, 2005. New home sales in 2012 are anticipated to post the first annual increase in seven years, according to Wells Fargo economist, Sam Bullard. New home sales surged in the Northeast and West Coast but slumped in the South and Midwest. The growth in sales of new homes is stifled by the excess inventory due to the foreclosure factors and simply inventory that was built but never sold.
advantage of these low interest rates that are destined to increase. This will help the primary and secondary home markets, and will motivate renters who are presently saving their money to move from renting to buying a home around April through July of 2013. The number economists look for is 6 million; 4.59 million homes were sold in February, down from January’s number of 4.63 million, which was the highest since May 2010. Six million reflects a number that equates with healthier markets. It is worth noting, in hard-hit ‘rust belt’ states like Ohio, existing home sales rose 1.2 percent and were up 27.3 percent from the year before. This is a reflection that the economy is improving slightly, but the confidence of buyers is improving as well. Condominium sales in the 15 counties that make up northern Ohio jumped 43.2 percent. Economic trends tend to roll from West to East, and these are strong signs for firsttime home buyers, which is critical to the housing recovery – in a healthy market this should be around 40 percent of all home sales which in recent months have hovered around 32 percent. These are improving signs, and over the next 12 months, these numbers are expected to improve. In May, we will review in great detail, 12 geographical areas and their real estate markets. The focus will be on successful tactics by specific agents in each market and how our readers can build their business around them.
Buying Recovery It is worth noting that that rates have bottomed out, and eventually home buyers will rush to purchase a home in the next 24 months to take
Any questions or feedback on this article, email Rick Roque, Managing Editor of The NicheReport Real Estate Edition at rick@thenichereport.com or call him at 408.914.5895. TheNicheReport.com
13
Market Conditions and Analysis
Top Agents Q&A with Afshar Properties: Why most short sale agents are a dime a dozen and how top agents stand out According to CoreLogic, with approximately 23% of homes with negative equity, there are over 11 million homes that agents drive by helplessly wishing there was something they could do to get some of that business. Well, in Southern California, for 10 years a husbandand-wife team has serviced the shortsale and distressed housing market at a time when it was a niche segment of the real estate industry; little did they know that this ‘niche’ would become the market itself. In a distressed housing situation, confidentiality and dealing with someone who is competent is what separates a homeowner from solving a serious economic problem and, in many cases, fraud. What is striking about Afshar Properties in Los Angeles is their consistent emphasis on confidentiality and their long history in the business. Their focused line of questions is aimed at identifying opportunities for the borrower to get out from underneath what, to many, is a crushing financial situation. In a sea of companies who have jumped into the market to meet this market demand, Afshar has been at the forefront of this since the downturn. Lining themselves up with Coldwell Agents, they’ve closed a little over 400 short sales to date. This group caters to high-end homes, of which many are in default in the Los Angeles. The affluent areas – many of them $2-$3M+ properties – that are in default are some of the most pristine properties in the most affluent communities in the world.
14
April 2012
Claudia Afshar
For the higher-end clients, any property $2M or over, it is often their business managers who are working with specific families. At present, Afshar has about 35 listings. On the buying side, there is a phenomenon in the higher-end markets reflecting a substantial opportunity for investors and cash buyers. The biggest obstacle in getting these deals done - the seller needs to understand that this is the best existing strategy, and to learn to rely upon experts like Afshar to identify a solution in the transaction. The lenders are willing to work with professionals to help sell the property. These housing negotiations are complicated, and the deal needs to be structured to determine which lender and creditor gets which amount. These transactions revolve around the reduced purchase price of the home, negotiating with multiple lenders,
Aram Afshar
negotiating tax liens, county liens and credit card liens. Their history and expertise provides a comfort level for their clients, and for good reason – their success rate is 90%. It takes approximately 90-120 days to finish a transaction and, in the end, their clients are significantly better off as a result. I was able to ask them a few questions to get ideas for Agents across the country as to how to successfully penetrate this market segment. Here is what they had to say: In what new markets are you starting to see short sales? While short sales are not a very sexy segment of the real estate market, they have become quite prevalent and now include many luxury properties. Recent figures show that 25% of all sales in the fourth quarter of 2011 were either short sales or foreclosures. These
Market Conditions and Analysis
numbers are predicted to grow in 2012. How did you get into this segment of the market? After graduating from USC's Marshall School of Business 10 years ago, I helped run a very successful mortgage company. When the market collapsed in 2007, I believed that the risky loans lenders were offering would eventually begin defaulting. At that time, I formed Housing Assist of America with my brother Ari to focus on that segment of the market. We created technological systems and a high level of expertise to help the homeowners that were struggling with their mortgages. In 2011 we joined Coldwell Banker Beverly Hills North. Since I started, I have closed over 300 short sales while assisting thousands of homeowners in distress. What's one of the most significant changes that you've noticed? The typical short seller has changed greatly over the past few years. It used to be mostly lowerincome earners in severely distressed regions. Now, we are seeing the higher earners in more affluent areas needing to short sell. For example, there are over 160 properties with Notices of Default filed in Beverly Hills and Bel Air. This was unimaginable a few years ago. Describe a short-selling scenario. Short selling can be a great way for someone to start fresh and rid themselves of overburdening mortgages. In many cases, when a person owes more than the value of their property, they are in a position of negative net worth. It may be years before the market recovers enough for them to have any equity in their
property. Businesses often will cut their losses or stop putting "good money after bad." Consider a common example of the homeowner with $100,000 of negative equity and the decision to either accept a loan modification from their lender or short sell. If they go the modification route, they will have lower payments but it will take them approximately eight years for their property to appreciate enough to have any equity in it at all. On the other hand, if they were to short sell today and purchase a property in two years, they would set themselves up to have almost $100,000 of equity in their new property. It is clear that the short seller is financially better off over the long run. There are definitely reasons to consider short selling sooner than later...there are laws in effect until the end of 2012 that protect short sellers from the lenders pursuing them for the deficiency as well as their tax liability on the lender's loss. After 2012, all bets are off. What's the process like? There are a couple of prequalifications for a short sale. You need to have a property worth less than the loans and liens on it. A common term for this is being "underwater" or "upside down." The other qualification is hardship. Common hardships include reduction of income, increase in expenses, medical issues, and divorce. From my experience, most lenders generally prefer any resolution over foreclosure. I have received lender approvals for many clients of mine who stayed current on their mortgages. Short sales can be very complex, so having an expert on your team can
be critical to getting the job done. I have been told by my clients that the manner in which we treat them and the level of clarity they receive during the process was the opposite of the nightmare stories they have heard elsewhere. My team really does make the process as easy and painless as possible for our clients. What is the take-away factor for short sales that you would like people to know about? I think at the end of the day, I would like people to know there need not be a stigma with short selling their property. It is a responsible action that puts the control in their hands. They are agreeing to the exact terms on which they will be leaving the property. I can speak to this, since I shortsold one of my own properties. Like many, I purchased at the height of the market. As the market continued to deteriorate, I realized that I was able to rent a better place for almost half of what my mortgage payments were. At the eleventh hour, my lender offered me a modification that would reduce my payments slightly. However, they would not do anything about the principal loan balance which was now twice the amount of my property value. I decided to take advantage of the laws that protected me financially and I successfully short-sold. After I sold, the negative emotions that I experienced disappeared and I have been able to put myself on a positive financial path which includes responsible home ownership. I hope to show people in the same position that they can do the same.
TheNicheReport.com
15
Resurgence of the Sales Professional Bringing Pride, Integrity and Professionalism Back to the Lost Art of Selling By rene rodriguez
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f Justin Timberlake can “bring sexy back,” then I’m “BRINGING SALES BACK!” It’s time that we return to the roots of what we really are – salespeople. That’s right, I said it, salespeople. Not Real Estate Agents, Real Estate Consultants, Account Supervisors, or Business Development Specialists. No matter what we call ourselves, no matter what our title says, at the end of the day we are salespeople. And it’s time that we bring the pride and professionalism back to the lost and ever-sobeautiful art of selling. Okay, now that I got that off my chest, let’s talk about the first challenge in getting back to “Sales Professionalism.” If I asked you for the first words that come to mind when I say “Car Salesperson,” what would you say? If you are like several thousand other people I have asked, you probably thought of words like “sleazy, pushy, dishonest,” and you might have even said “con man.” Ouch! The reality is that what you said about car salespeople is probably a pretty good reflection of how you subconsciously feel about salespeople in general. Sadly, you are not alone. Research shows that most people feel the same way. This fundamental belief means that no matter how great a case one can make for becoming a “sales professional,” no matter how much money someone would offer, nothing will make you feel okay with being pushy, sleazy or dishonest. So step one is to change our beliefs – our basic feelings – about being in sales. We need to realize again that we are here to solve our clients’ problems, to make our clients’ lives easier and to make a good living doing what we are passionate about. And we can only achieve all those goals if we sell, which means we have to close deals. Though faced with decades of negative stigma, I am confident we can make the necessary changes.
TRUE SALES PROFESSIONALS We’ve all experienced those rare but unforgettable moments of complete and utter surrender to the skills, technique and enthusiasm of a true “Sales Professional.” We entered the scenario totally convinced that we were not going to buy. We even had the conversation in the car on the way over, making a pledge with our spouses that no matter how good it sounded, we weren’t buying! Then about half-way through the presentation you began to rethink your previous assumptions. You looked over at your spouse and shared a look that said “maybe there is something to this.” By the end of presentation, you did not change your mind, but you made a new decision based on new information that made you want to buy what they were selling. It was masterful: the timing of his questions, the tone of voice, the amazing ability to listen to what you were really asking for. It was like poetry in motion. It seemed like that salesperson could read your mind – and wow – even understood your pain! We were helpless and totally at the mercy of the Sales Professional’s defined sales process and perfect sequence, and the most fascinating part of it all, we loved every moment of it! The process was effortless and enjoyable, and we even spent more money than we had originally planned. Why? Because the level of professionalism made us feel that our needs were safe and we could trust this person. We felt comfortable enough to be confident that this process would solve our problem and add value to our lives. You see, we love working with true professionals. We love buying from them because they make our lives easier. Even better, we love referring them because they make us look good. We tell their stories at dinner and we go out of our way to ensure that our friends and family uses them. So here are a couple of questions to consider. How many sales people do you know that are that good? My guess is that it’s a low number. Why is that? I believe that the answer lies in the fundamental problem with the sales industry: there are few systems to create true “Sales Professionals.” There are often very few barriers to entry in the field, little real sales training and often poor management systems that fail to hold people accountable. The madness has got to stop! DEFINING THE PROBLEM As a consultant, over the last decade I have consistently seen the following gaps with many salespeople. I encourage you to use this article as a springboard for discussion with
your business partners to delve into ways to improve your business models. 1. Using marketing as a cop-out to selling Marketing and selling are both absolutely necessary to build a successful business, but very different. Struggling salespeople tend to prefer marketing because of the simple fact that it reduces the amount of rejection they need to face. Marketing, in its simplest explanation, attracts prospects to call us, while selling forces us to find people to call on and to risk rejection on a daily basis. 2. Lack of defined job descriptions This problem is worse in some industries than it is in others, but is widespread enough to warrant a look. For example, ask 100 Real Estate Agents what their job is, and I would bet that all 100 would say something like “to sell homes.” Or they’ll give the textbook answer, “to help my clients.” The challenge with seeing the job as “selling homes” is that getting a client into or out of a home is a “result,” but not a “job.” 3. Confusing activity with productivity (results) This is a result of bullet point #2. If people don’t know what their job truly is, then any opportunity can seem like a good way to spend time. They live their work life like a feather in the wind, going in whatever direction the winds of “opportunity” decide to blow. It’s easy to look “busy” while being broke. Perhaps this statement appears blunt, but the faster we can get real, the sooner we can solve the problem. 4. No structured, sequenced sales system Not having a predefined, step-by-step process to take prospects from initial meetings to close, salespeople can find themselves eating up not only their time, but even worse, their clients’ time. TheSalesBoard.com research showed that “80% of salespeople do not understand what the primary purpose of their sales call is.” Their research goes on to say that by having a clear “commitment objective” you can cut your sales cycle by 25%. That equates to three extra months of sales time! 5. No “canned” presentation of value I have seen many people go into sales calls without a prepared presentation, resulting in saying something different at every sales call. You cannot depend on your ability to talk to save you from this one. Every successful salesperson you know has perfected their scripting and presentation. And the true “Sales Professional” can deliver
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his or her presentation on a napkin just as effectively as using a PowerPoint. The ultimate goal of having a “canned” presentation is to make it sound and feel natural. 6. No training in the fundamentals of selling This was the first thing I noticed years ago. In many industries, either because of a very favorable market or because of a great marketing department, there was no great need for sales skills. Business was so abundant that anyone could make a great income. This was particularly true in the mortgage industry during the early 2000s. I was challenged about this once by an originator who said, “Well I made $250,000 in the ‘Refi’ boom, so I must be a sales professional.” My response was that a lot of people made $250,000 then. The sales professionals, however, made $700,000$1,000,000 during that time. 7. Ashamed to be identified as salespeople This is at the core of the problem. People who are ashamed to be salespeople don’t engage in the habits of successful salespeople such as closing, driving commitment, countering objections, prospecting, etc. The Resurgence of the Sales Professional is about bringing true skill and pride back to the profession of sales. Our industry, unfortunately, is full of “order takers” NOT “Sales Professionals.” A good friend and true sales professional, Scott Hardy, defines an “order taker” as someone who “facilitates a transaction that would have happened anyway.” If the transaction would have happened anyway, then wouldn’t a computer suffice to get the job done? Isn’t that what vending machines are for? The world has changed and technology will continue to become more advanced, which is why becoming a “Sales Professional” is becoming more and more crucial to long-term success.
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this foundation. Returning to the fundamentals is the secret to getting out of a selling slump. 2. The art of selling Anyone can draw a picture of an apple, but an artist draws an apple so beautifully that you might pay to put it on your wall. Learning the fundamentals is a great start and will make a dramatic impact on your sales career and pocket book. Now add learning how to deliver those skills in the same way an artist makes a painting, and see your results soar. The art of selling consists of the proper use of voice inflection, body language, presentation skills, timing of questions, use of silence, pace of speech, etc. Research shows that tone of voice and body language make up 93% of the impact we make on other people. Essentially, it’s NOT what you say; it’s HOW you say it that matters. 3. The psychology of selling All sales people face the same psychological challenges of facing rejection, insecurity, fear, call reluctance and procrastination. These are not logical problems but rather problems of emotional self-regulation. Pure will power can sometimes be sufficient, but when we fail to overcome these challenges it may be due to taking a purely logical approach (better time management) to solve emotional problems (lack of impulse control). The psychology of selling consists of coping strategies and tools to deal with the realities of being a salesperson, and creates the proper mindset and winning beliefs of a “Sales Professional.” This is a complex topic, which is why it is so difficult to master.
WHAT IS A “SALES PROFESSIONAL?” My years of selling and studying successful sales professionals have resulted in the creation of the 7 PILLARS OF A SALES PROFESSIONAL™. Professional sales people build a solid foundation in each one of these pillars and grow in each one on a daily basis. They are as follows.
4. The science of selling This pillar is exciting because it offers the opportunity to take a giant leap forward in generating results if applied correctly. By using key scientific methodologies understanding the role the human brain plays in making buying decisions, the Sales Professional can experience vast improvements in closing ratios and speed the trust-building process with clients and referral partners. Plus, the results can be achieved on purpose every time by following the scientific process/methodology, versus crossing fingers and hoping that the gift of gab or instinct will get you by.
1. The fundamentals of selling The fundamentals of selling consist of a basic, foundational sales skill set. This includes features and benefits, hot buttons, closing, silence after asking for the sale, the law of averages, the 80/20 rule, the six moneymaking activities, open-ended questions, etc. It is virtually impossible to build a career as a sales professional without
5. A defined sales process Sales professionals know exactly what their job is on a daily basis. They know what their objective is on every sales call and are comfortable driving the sales process forward because they are crystal clear on what step is next. Their clients find it easy to do business with them because they reduce the number of decisions the client needs
April 2012
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to make, allowing them to focus on their business. The foundation of a defined sales process is made up of what I call the Six Money Making Activities: Prospecting, Setting Appointments, Presenting Value, Closing, After Care/ Follow-up, and Referrals. 6. Advanced selling strategies Advanced Selling Strategies consist of creating leverage and compression, preemptive selling to eliminate all objections before they come up, and consultative selling. In essence, here you begin moving from $25/hr. activity to $2,500/hr. activity. 7. A lean sales accountability system All of the first six pillars are, fundamentally, subject matter and skills that can be learned and honed by committed sales professionals. However, the key to bringing them all together and turning them into more income is a lean system that ensures that all the right things happen, at the right time, every time, with minimal wasted effort and maximum benefit both to the customer and to the sales professional. These principles are ones that have been applied for years and with great success in the manufacturing world, but have yet to really break through to the service world. Essentially, this would apply a “Toyota-like” approach to your business, leading to tremendous efficiency and quality gains. Such a system should keep track of every one of your contacts as well as your current lead pipeline, and then drive each lead through the Defined Sales Process (Pillar 5) that you created to take advantage of best practices. Contact management and CRM systems can be helpful here, but a lean workflow automation solution is the way to get it done right. Such a system brings accountability to how you are handling the leads in your pipeline and whether you are moving them through your Defined Sales Process at a pace and conversion ratio that ensures that you are consistently making money. With competition high and unskilled salespeople lowering their prices on a daily basis, Sales Professionals need to streamline their business, focus on highest payoff activities and still deliver more value than competitors. By defining your sales process and accountability system, you then can focus on creating the life and business you’ve always dreamed of.
A FOUNDATION OF INTEGRITY I purposefully waited until the end to talk about the importance of integrity in the world of selling. Bottom 20
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line, we are fighting against the negative stigma because of the previous lack of integrity in our profession. Stanley Kubrick is quoted as saying, “If you can talk brilliantly about a problem, it can create the consoling illusion that it has been mastered.” Given all the general press, business publications, self-help books, research data and market analysis over the last decade, it is possible we have mastered the talk about integrity, but progress on the practical, applied “how” of integrity continues to confound even the best business leaders, managers and employees. There is much to be done to move the integrity rhetoric into a common business practice. In conclusion I would like to call on you all to join me in bringing pride, integrity and professionalism back to the world of selling. Take pride in being a salesperson. Continue to educate yourself in your chosen profession. Go back to why you sell what you sell, and be willing to act on the care that you feel for your clients. Care enough to be unreasonable when they don’t understand the value of what you are offering and ask again for the sale. Your customers need the value you are offering. I hope that the fire of pride and passion has been re-ignited inside of you. The world needs salespeople of integrity to sell the right things to the right people at the right time. I look forward to seeing you all out there in the trenches as we lead the Resurgence of the Sales Professional! Now go make some sales calls and make us proud! The 7 Pillars of a Sales Professional is a trademark of Rene F. Rodriguez. Rene is Chief Executive Officer of Volentum, (www. volentum.com) a Management Consulting Firm that specializes in sales training, employee engagement, professional influence & change management, with significant expertise in applying brain research to improving results. He has a trusted advisor to Leadership and Business Teams Bank of America, Coca-Cola, Liz Claiborne, Daimler Chrysler, dozens of mortgage and real estate companies and many other major corporations. As a highly sought after keynote speaker, Rene's mission is to lead the Resurgence of the Sales Professional and to ignite the voluntary momentum within organizations to reach their goals. For more information on improving your sales process or how to become a more influential leader, please visit www.Volentum.com, www.FollowRene.us or call 612-310-4010.
The Efficient REO Office How Digital Are You?
By Eric Lichtenheld
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any real estate and broker offices have been making the shift to paperless during the past few years. Paperless is a term that is often thrown around by companies if a portion of their workflow is completed without pushing paper. However, in many instances real estate agents and brokers still use paper for certain transactions and house paper files in cabinets. The topic of "how to go digital" usually enters the discussion among real estate professionals, but the majority of the conversation is focused on programs that are useful in minimizing the use of paper, and rarely on strategies for transitioning to a paperless office. I have personally seen the transition to paperless and have been working in a digital office for the past five years. In my experience, working in a digital real estate office has meant the only copy paper used is for printing contracts. And, when a box of paper is purchased, the date of purchase is written on the last ream of paper in the box so it is known how long the supply lasts - which should be at least three months. The savings on paper are immense, but data security is key when going digital. And, there are a 22
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few steps real estate agents and brokers should follow when considering stepping down the path towards having their own digital office. The first step to take in progressing toward paperless is to become proficient in programs used for producing PDFs. There are programs such as Adobe Acrobat Professional and other more cost-effective solutions that can be used and have complete document-editing capabilities for the entire team. If there are documents that need to be printed, staff should consider printing files from the other documentediting programs with the PDF driver so all documents are stored on the hard drive as a PDF. Offices can take an extra step to ensure no documents are accidentally printed by building a script into the logon for each computer to ensure the default printer is the PDF print driver. Make sure to dedicate time and effort to understand the nuances of the various PDF programs – the document-editing and security capabilities of these programs are impressive and will save a lot of time in editing and compiling offer packages. The next step in the process focuses on the network configuration in offices. It is essential to have a file storage system on your network to guarantee all work is backed up – this can be a file server or a network attached storage (NAS) device. I have seen both file servers and NAS devices,
but recommend the latter due to the simplicity and ability to easily implement sophisticated RAID strategies for hard drive redundancies, which protect your data in the event of a hard drive failure. When speaking to an IT expert, I was told that the most likely point of failure on a computer is the power supply followed by the hard drive. Unfortunately, a single hard drive on a computer will not protect your data adequately. To ensure there are no surprise hard drive failures, it is possible to implement a small NAS device for around $1000 that can be easily set up by following basic menus. A basic NAS is a solid addition to an office that gives real estate agents and brokers tremendous flexibility for future data requirements. The third step in the process is to implement layers of redundancy. It is very important to quickly implement offsite storage to protect real estate agents and brokers against catastrophic events in their office. In the event of a total loss of paper and hard drives, it is physically impossible to re-create several hundred gigabytes of lost data - so there must be frequent backups that are stored off-site. This can be done initially with nightly backups to a portable hard drive that can be taken home, but a better strategy is an automatic backup to a cloud backup service or to a NAS that is located off-site for this purpose. A system can perform nightly backups from 10 p.m. to 6 a.m. to an off-site NAS so that the net exposure to a catastrophic failure is only the current day’s worth of data accumulation. It is also important to implement "time machine" or "shadow directory" backups of data in the event that a directory is accidentally deleted. Offices should also consider having a second NAS to mirror the primary in the event of a failure. If the primary NAS malfunctions, simply redirect the IP addresses of the network computers to the additional device and all users will be working without any interruption within minutes.
Next is to add the ability for remote access to a network. Adding a remote terminal server to an office can simplify the backup of data on every computer used in the office. Users can log on at each workstation and then log onto a terminal server so that everyone is working off the same machine. In the event of a problem with the terminal server, each local machine is configured to access the NAS and the Internet. E-mail accounts can also be accessed via Web-mail to give complete redundancy to the terminal server for office users. This also enables staff to work remotely if needed. Terminal servers can also be accessed from tablets for complete portability of a workstation. This functionality can be built into the tablets used by a property preservation team so that they have complete access to the property database while they are in the field. Going digital the correct way will take time and due diligence - it took me approximately four years to go from step one to step four. And, additional functionality continues to be added as technology is always evolving. NAS units can now be used as e-mail servers, web servers, and SQL database servers. and provide many other capabilities to an office. And with the new trend of clients requesting videos during initial property inspections, it is important to have enough storage capacity. Once the hardware is in place there are no limits to what can be done, and going digital the right way is that much easier.
Eric Lichtenheld is president of Integra Group Real Estate LLC, a brokerage firm specializing in the management, preservation and marketing of REO, HUD and distressed properties to underserved demographics in Southern Arizona. For more information, visit www.IntegraTucson.com.
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Spreading the
Wealth Mirna Santana Single mom and proud owner of EXit realty’s Habitat build austin, texas
BErnadEttE ColE Franchisee and Sales Representative EXit landmark realty, White Plains, Md
Homes for Heroes® ribbon Cutting Photo provided by Bernadette Cole
“If we expect the community to support our business, we have an obligation to give back to the community,” says Bernadette Cole, Franchisee and Sales Representative with eXIt landmark Realty in White Plains, Maryland. and give back she does. Whether by buying car-trunks-full of toys for the Charles County Christmas Connection or sponsoring an NFl® camp for 275 youth, Cole is deeply involved in the needs of her community. One association in particular is dear to her heart – homes for heroes.® through the far reaching powers of cause marketing and the internet, homes for heroes® has expanded into a nationwide company with affiliates such as real estate agents, lenders and other real estate-related service providers who agree to give significant rebates and discounts to heroes, including military personnel and first responders. Participating agents in Cole’s office give back 25% of their commissions to the heroes. Cole’s husband, lieutenant Colonel alex Cole (retired), served for more than 20 years in the air Force, and was one of a select group of pilots who supported the Vice President, First lady and other high ranking officials. “The heroes and their families sacrifice so much, it’s a privilege to give something back. It doesn’t compare to the sacrifice they’re making but it helps,” she says. Cole attributes much of her ability to give to income earned through eXIt Realty’s unique compensation packaged called the “eXIt Formula” which is revolutionizing the real estate industry. “With all of the
taMi BonnEll, President EXit realty’s U.S. organization at EXit realty’s Habitat build in austin, tX
different activities we’re involved in, having the additional income provided by the eXIt Formula gives us more money to work with to make things happen,” she says. eXIt Realty brokers and agents aren’t the only ones who benefit from the Formula. Every year EXIT’s head office pays a bonus to the secretarial and administrative staff across North america in proportion to the sales volume generated in their office. These employees don’t work for the corporation, but for the offices across the continent. “at eXIt, we recognize that the administration staff is the cornerstone of an efficient real estate office,” says Steve Morris, Founder and CeO of eXIt Realty Corp. International.
home.” “Obviously we deal in home ownership every day, but I don’t think you fully realize the value and meaning until you hand over the keys to someone who wouldn’t have had the opportunity any other way,” says tami Bonnell, President of eXIt Realty’s US Organization. If a company can have a mentality, then eXIt Realty’s is one of abundance - whether it’s in the form of rewarding associates through its unique compensation plan or by helping to make the dream of home ownership come true for families with habitat for humanity. “When I went to my first EXIT Realty Convention in 2007, I understood the
additionally, a portion of every transaction fee collected by eXIt Realty Corp. International is dedicated to its charity of choice, and to-date, $2.25 Million has been pledged to habitat for humanity. the company has been the corporate sponsor of 17 habitat home builds, and the majority of the families selected are led by single mothers. eXIt associates volunteer and members of the community come out in full force to help to build the homes for families across the continent. “I dreamed, but I never thought this dream would happen in my life,” said Mirna Santana, single mom and proud owner of eXIt Realty’s habitat build in austin, texas. “I really appreciate eXIt Realty – we’re really excited to have this brand new
company’s belief system,” says Cole. “hearing Steve and tami speak made me want to be part of eXIt even more because I saw how the company gives back. It reflected my vision for my own company. It comes from the top – eXIt has that vision, my office has it and my agents have it. It makes work that much more fulfilling and it doesn’t feel like work when you’re helping other people.”
w w w . e x i t r e a l t y. c o m
CAN YOU SEE WHAT I SEE? The American homebuyer is rapidly changing
By joshua weinberg
T
here’s no question about it, today’s home buyer is not the same compared with just four or five years ago. The impact of the economy and the shifts in lending standards have caused real estate professionals to change tactics and strategies to keep up with the changes. The best in the industry take advantage of the current challenges and set themselves apart by exceeding their customers’ expectations.
A Diamond in the Rough, Or Just a Shiny Stone? The majority of properties currently on the market are distressed. This means the sellers are having a hard time keeping up with their payments, or the property has already been taken back by the lender, or is in the process of being taken back. Purchasing a distressed property adds to the time and complexity of the transaction and influences who the buyer is. If the previous owner was evicted through a foreclosure proceeding, chances are they’re less than thrilled with what’s transpired. Unfortunately, it’s not uncommon these days to find the
homes they’ve moved out of completely stripped. From missing appliances, to missing sinks and toilets, even sometimes to air-conditioning units being stripped of their copper coil, properties are left in differing levels of disarray. This is in contrast to heightened vigilance by Lenders and federal Agencies like the FHA and VA to ensure any property involved in a loan meets the minimum safety and soundness requirements of their lending guidelines. FHA for example requires that all floors be covered (no exposed plywood) and all screens on windows be intact with no holes. More significant areas to look out for are electrical outlets left uncovered or wires not properly installed or grounded, and signs of potential structural damage, like leaky or damaged roofs or damage from wood-destroying pests like termites. Remember, if the loan for the property is going to be backed by the VA, a pest inspection is required if the property is in a “termite state” (http://portal.hud.gov/ hudportal/HUD?src=/program_offices/housing/sfh/ref/ sfh1-23a), but the Veteran is not allowed to cover the expense of that report. The Seller, Lender, or real estate TheNicheReport.com
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agent can pay for the inspection, but deciding who will cover the cost of any repairs that come to light because of the inspection is another area to be watchful of, especially in terms of the removal of financing contingencies and closing deadlines. Keep in mind, however, that the average credit score of FHA borrowers is now well over 700, so today’s FHA borrower is far from the borrower of years past, when FHA loans were compared against Sub Prime loans and had average credit scores around 640. To help keep your buyer and closing remain on track, be sure to stay in constant contact with your mortgage professional teammate and work together regarding the scheduling, review and response to inspections. If repairs are necessary, a 203(k) loan may be able to help cover the expense, and sometimes sellers (both banks and people) are more willing to negotiate when they know they have a qualified buyer and the challenged condition of the property can be overcome. Open lines of communication with the Seller are also helpful and improve the negotiation process when the time comes to have those difficult conversations. Especially if the seller is a bank, their perspective is to dispose of the property and recoup as much as they can from the sale. Skillful negotiation and the use of reliable data may help persuade a bank to cover the cost of repairs, when they realize the holding cost of the property related to not selling it.
How we see it
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April 2012
Equally important is to know your clients and stay in constant contact with them. Keep them informed of the process and set realistic expectations. Especially if it’s winter and the property is located in Minnesota, be mindful that appraisals, repairs or improvements may be delayed due to weather. Just about the only loans available today with low down payments are offered with backing by the FHA, VA or USDA, so many first-time borrowers are utilizing these products. Combining the nuances of working with a first-time home buyer, the intricacies of a governmental loan, and a distressed property requires patience, great organizational skills and frequent and transparent communication. Remember, the worse a problem is, the more people you should tell and the faster you should tell them.
Skin in the Game In contrast to first-time home buyers, many of today’s buyers are professional investors from a country with a better economy and money to spend, or people previously reluctant to buy who have been saving for years and are finally ready to take the jump. Regardless of their situation, the common factor for many of these buyers is they have significant down payments, or don’t need a loan at all to buy the property. Buyers with resources to purchase a home outright used to be few and far between. However, since property values have dropped so significantly and the value of foreign currencies compared to the dollar have increased so dramatically, a material percentage of people buying properties these days are doing so without obtaining a loan. This market used to be reserved for only the wealthy, but with properties in Baltimore, Detroit, and other areas hit hard by the economy selling for less than $25,000, some estimates put the percentage of all cash buyers at or above 30% of the total purchaser market. Working with a buyer with money to spend can expedite the process, but also puts more pressure on the real estate agent, since there’s no lender to scrutinize the appraisal, review the chain of title or sufficiency of the insurer’s coverage, or the other normal steps lenders take to protect both their and their borrower’s interests. These buyers also tend to be more demanding in terms of the timing of the process and especially with returned phone calls and communication. While recommending the use of well-qualified tax and legal professionals is something I do on every transaction, I would almost insist an all-cash
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buyer use the assistance of these professionals. As a real estate professional, we’re often asked to perform duties well outside our profession. Sometimes it seems like we’re marriage counselors, or interior designers, but the legal liability in providing bad advice is daunting. Including the appropriate professionals helps you focus on your specialty, allows the buyer to be adequately represented and informed, and also helps protect you from being accused of negligence or breaching a fiduciary duty.
Oh the Times They Are a-Changing Leading economists like Jay Brinkman and Mike Fratantoni, from the Mortgage Banker’s Association, have made poignant observations about today’s real estate market. One note I found particularly interesting is a difference in the familial and cultural impact of our current economic crisis. In the past, it’s been typical for children to move back in with their parents during recession or financial hardship. During today’s crisis we’ve seen this occur, but this time we’ve also seen a dramatic increase in the number of parents moving into the homes of their children. This is significant from a generational perspective, because of the impact it will have once we begin to recover from the crisis. It’s unlikely that these parents will re-enter the housing market as buyers in the same numbers as the children who move out of their parent’s home, but does likely indicate a need for additional rental properties, which are already at low levels due to almost non-existent new construction. What I find very interesting is many of these parents are using the equity they’ve extracted from the sale of their property to help their children become homeowners. Finally, we can’t discuss the current or future face of the home buyer without discussing the impact of technology. Just 10 years ago, ubiquitous websites like Facebook and Zillow didn’t even exist – let alone the iPhone and
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iPad, which are being used by potential buyers today to search and locate properties in real time well before they’ve even contacted a real estate professional. Multiple Listing Services have been in place for decades, but they were seldom available to consumers, and definitely not searchable from the web without interaction with a real estate agent. Today’s top professionals take advantage of emerging technology, like virtual tours and easily accessible neighborhood data. Technology has led to huge changes on the loan side as well. Consumers are now familiar and comfortable using the internet to search for loan offers, and even stores like Costco offer loans online though partnerships with approved lenders. Borrowers can apply, receive disclosures, e-sign and return them, get pre-approved and know the majority of the conditions they’ll need to close the loan, all online from the comfort of their home and without ever actually speaking to another person, in less than 20 minutes. Today Appraisers accept inspection appointments from their Smartphones and use data validation when uploading their reports to reduce errors or omissions. Real estate professional need to embrace technology and cannot rely on dated tactics. Sure, Open House Flyers should be left at Open Houses, but if people can’t find the information online, then an entire segment of the buying population will never see it. The pace of technological innovation and consumers’ dependence on it continues to increase, and this will have an impact on how we do our jobs and how we service our clients. As the age of buyers gets younger and technology becomes mainstreamed, we’ll need to continue to adjust to the changes by being available and providing services in-line with our clients’ expectations.
Joshua Weinberg is a nationally recognized speaker, author, consultant, and leader in the real estate industry, specializing in integrating compliance and technology. He is currently Director of Compliance for First Choice Bank, a State Chartered and FDIC insured Depository institution, and Senior Vice President of Compliance for First Choice Loan Services Inc., its subsidiary. Previously he was one of the owners and COO of a real estate services firm in San Francisco, CA providing real estate sales, mortgage brokering and property management services. He can be reached for consultation or questions at jw_mortgage@sbcglobal.net
Using PR to Increase Your Sales The emerging PR generation: It’s Social, it makes a statement and it gets traction By rick grant
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pproximately 49% of American population is under the age of 34 years old. We have an entire population of people buying products who will not spend a dime on a product if the company website doesn’t include third-party content from other product owners who have rated the product highly. They don’t believe anything they read in the paper, see on television or hear from someone who was born in the 1960s because that makes them old and out of touch. Thank God they’re not buying real estate yet, but they will be, very, very soon. In the glory days of public relations, if you weren’t a member of a key target public, you didn’t really matter. You couldn’t impact the way the company sold goods and you had no influence over the people who bought them. You weren’t part of the equation. Today, anyone that wants to spout something online can become part of the conversation. And if they’re clever, like Dave Carroll who saw his guitar get smashed by a United Airlines employee, their message may go viral and impact how millions view a company’s brand. At this writing, Carroll’s clever song about how the airline failed to compensate him for his
property has been viewed nearly 11.7 million times. Public relations are no longer a game just for those organizations who can afford it; it is an essential sales tool to grow your business. Given the complexity of social media, 24x7 news cycles and the seemingly endless abyss called the internet, it’s now a game you can’t afford NOT to play.
Implications of a new PR paradigm Naturally, being in business to make sales and profits, we want to know the implications of this new definition of public relations. To answer that, we need to take a closer look at how modern online networks have changed both the way we segment target publics and the way we share information with them. Believe me, this will be valuable when we talk about how real estate firms can capitalize on the new paradigm to make every sale easier. We live in the world of the long tail, where consumers have segmented themselves by choosing online content that meets their needs for information and entertainment. While broadcasters do occasionally garner large audiences for the programming, MadMen a notable example, in general the traditional media has become just another option for the brand owner. Increasingly, they are options chosen less often than online media. TheNicheReport.com
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According to eMarketer, a publisher of data, analysis and insights on digital marketing, media and commerce, US online marketing spend will grow by 23.3% in 2012. Zenith Optimedia put the total US ad spend in 2011 at $154.9 billion. Much of this new spend is expected to go to video (54.7%), sponsorships (27%) and search (27%). Because people have only so much time to spend online in the course of the day and there are only so many outstanding web sites, according to Alexa (about 500 capture the vast majority of visitors each day), you would expect the new paradigm to be pretty much the same as the old one: the brands that spend the most money get the most benefit. But that doesn’t work when communication goes in both directions. The $104.5 billion that advertisers are expected to spend on online video in 2012 will be very, very different from any similar spend on television because people can comment on what they see and share the video with their online friends. When it works to the brand’s benefit, this acts like millions of additional broadcasters picking up and sending out the advertisement with the implied endorsement of someone the receiver actually knows and trusts. It doesn’t get much better than that. It’s not surprising that more advertising money is migrating from traditional, one-way media outlets to online, n+plus1-way media outlets (math talk for where n is any number greater than 1). If you could spend the same amount of money to influence all of the people who watched a particular television program, or all of the people who found your online video and all of their friends and all of their friends, which one would you choose? You don’t have to be an Amway survivor to know how this works. You do, however, need to know how to succeed with online media to make this work. Sometimes that means bringing in a partner. Increasingly, firms that go there are forgoing the traditional advertising agency relationship and going with PR firms instead.
Do you know the difference between a PR firm and an Ad agency? PR firms increase sales. Whether the conversations are taking place on LinkedIn, Facebook, Twitter or one of the hundreds of other social media websites that are springing up on the web, the one thing that consumers have made abundantly clear—especially younger buyers—is that brands are not invited. People are talking to people online and they have little, if any, tolerance for corporate marketing speak. Sadly, Madison Avenue types invented that language 30
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and have traditionally found it difficult to speak any other. It’s the PR team that has traditionally been called upon to speak from the heart to target publics. In the distant past, PR folk spoke the consumer’s languages to give the impression that there was an actual relationship between the brand and its buyers. Today, they do it because it’s the only way their brand will survive. It’s a transition that has taken some time. I’ve been watching it happen for the last few years. It started out with brand owners assuming that the online world was just an extension of the traditional media world. They made up fictitious characters, put them out into the world, let them start interacting with people and watched as they crumbled under the gaze of real-world folks in the online world. The backlash was surprising, to the brand owners. The stories that advertisers tell about their brands are generally less effective when told online. The ability for consumers to rate brands and share their own brand stories has made it necessary for brand owners to think more carefully about the truthfulness of every communication. It turns out that skill was not particularly highly valued in marketing communication departments in the past. But telling the truth in a way that benefits the company is PR that folk have always done.
Successful PR strategies to grow real estate sales: At the risk of sounding like a marketing person, I want to share some nuts-and-bolts information about what a good PR firm could do for a real estate company and some idea of what something like that should cost. First, a PR firm can help you segment your target publics and create a communication plan that will tell you what each of these groups needs to hear from you and understand in order to get them to help you reach your goal. This, of course, presumes that you have set concrete corporate goals that are specific, measurable, attainable, realistic and timely. If you don’t set your goals first, every single dollar you spend will be a waste. Invariably, you’ll find that different target markets need to know and understand different things about your business in order to react the way you need them to. A PR firm can craft these messages, find the best media via which to release them and then distribute them. This is where many New Media firms fall short. They start with the tactic, such as using a LinkedIn status update or a video on YouTube. You must start with the goals, segment the target publics, and then decide whether any
of the messages you have to get across to any of your target publics could best be delivered via YouTube video. Once you get these stories out to the publics, the PR firm can measure the results, letting you know who is “getting” you and who still needs to be convinced. In general, PR firms don’t specialize in the home run viral video production that some advertising agencies have fallen back on in order to remain relevant for a few more years. That’s changing and more of the traditional public relations firms are picking up low-cost gear and shooting very good video for their clients. In addition to giving you the right content to appeal to your online publics, a good PR firm will also serve up the traditional press releases and media alerts that you’ll need to stay in the “traditional” news, propagate through the web and improve your SEO results, as well as get your experts accepted as trade show speakers and traditional broadcast media guests. As for prices, most PR firms are still working to get clients to sign retainers based mostly on their contacts with the most important media. But today, the game isn’t just about the big media, so it’s getting harder to convince firms that retaining a PR firm makes sense. In truth, you’re only
paying for two things: strategy (what stories should be told through what media to influence what publics) and message creation (writing). You can hire a good writer by the word. Strategy is a bit harder. You can pay for strategy by the hour, but you can also get it bundled into certain deliverables, like an eNewsletter customized for a certain market for a set fee each month, etc. You can find firms that will deliver videos, podcasts and social media maintenance. Just be sure that they aren’t starting with the tactic, but are also including the consulting required to correctly target the market segment and generate content that will influence that group. The most valuable thing a PR firm has to offer is the ability to correctly target, intuitively understand and effectively persuade important target markets, starting with your buyers. If you find a firm that can do that, you’ll quickly discover that listings and sales come much easier – and that can be worth a fair amount of money each month. Rick Grant is a freelance writer and editor with over 15 years of experience writing about real estate and home finance industries. He can be reached at rick@rickgrant.net and followed on Twitter at @nyrickgrant.
How we see it
TheNicheReport.com
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straight up
1984 Called and Wants Its Cheesy High-Pressured “Always Be Closing” Sales Tactics Back
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gents have been hurting for awhile now. You’ve accepted that things are different and you have tried to adapt. You’ve expanded your horizons and gotten involved with clients, homes, loans, and lenders you never would have dreamed of. Business can be scarce and you’ve adapted by taking on anything and anyone who present themselves. Congratulations, you have become a crap magnet, and the only thing crap magnets are good at is … attracting more crap. Not to worry, it can be a temporary condition, but first we need to stop the continuous attraction of crap to you. Desperation is like stealing from the Mafia, you stand a good chance of attracting the wrong attention. - Douglas Horton Beggars can’t be choosers. We are at a stage where you must be all things to all people at all times, right? 32
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WRONG, WRONG, WRONG!!!! I know times are tough, but Neediness is the worst! The absolute worst. No matter how clever you think you are at hiding it, it shows - and it’s painful. Neediness triggers fear and uncertainty in your prospective clients. You may think they will be impressed by the fact that you called them five times today to check in and make sure they got the message you left the day before. You may think this persistence will dazzle them, when in fact you are actually coming off like the real estate version of The Cable Guy. They will unconsciously (or more likely, consciously) wonder why you have so much time on your hands if you are so great and have so much to offer. Another sure sign of desperation is the use of highpressure sales techniques. The addition of time pressure to decision-making reduces decision quality, which is why so many sales people use this strategy. I have three comments on this. 1) Don’t be lame. 2) Your sales cycle lasts 30-45 days from the time your clients are under contract. That is A LOT of time to for them to change their minds and in the meantime waste a lot of people’s
straight up time. 3) If you are amazing at what you do and your clients know this, why would you ever have to put on the pressure? This will destroy any trust or credibility you’ve established. You and I both can’t stand the salespeople that are “always closing” and neither can anyone else. Now does this mean you should spend countless hours with people who can’t make a decision to save their life? No. Keep reading.
Be the Agent You Are to the Clients You Love Authenticity is key! The downward spiral of the economy didn’t just affect your clients. It has affected you and your family as well. You know the problems they are facing and the benefits they seek, so be yourself and do what you do best with people you enjoy helping. Eliminating the time, energy and stress involved in dealing with clients who are completely unrealistic will free you up to be the best agent you can to the best clients you choose to work with. AND those clients will send their like-minded friends to you. Time to Define Part of this will be really easy and part of this will make you nauseous with apprehension. First I will butter you up
with the easy part... Who is your ideal client? Think back to the folks who have made you grateful to do what you do. The ones who were actually non-crazy and you couldn’t get out of your head. They were realistic, rational, looked to you for guidance and were clear both in their desires and their bottom line. Next, brace yourself and write down your “ground rules.” Some of your ground rules should include: * I don’t answer my phone when I’m with clients. * I don’t work these hours: * My assistant does x,y,z. He/she is available during these hours and can be reached here. * I need this much notice before showing you a house. * I will not tell you what you want to hear. I will tell you the truth. Hands down, the best thing you can do is to interview your potential clients. This puts you in control, defines expectations on both sides, establishes that you’re professional and that you’re not desperate enough to take
straight up on just anyone. Starting off with, “You’re buying what may be the biggest purchase of your life, and deserve to work with someone who understands what you need and expect in this process. I have ___ years of experience and knowledge in the industry and want to be respectful of both of our time [leave out how much time you’ve been in the business if under two years]. It’s important we’re the right fit for each other - can you tell me more about yourself?” Remember, the first sign of a crap magnet is a being a “Yes” person.
Dazzle Them with Value Clients wouldn’t be coming to you if they could do this themselves, so be the leader. If you’re not, then, by default, your clients ARE. This isn’t fair to them and will make your life miserable. Remember those ground rules we talked about? If your clients want to run the show, get rid of them. In fact the best thing you can do is refer them to one of your beloved competitors. Do this honestly, “I have this client and I just do not have the patience to work with them. I feel like they need a fresh start with someone [anyone[ else. Can I send them to you?” It’s not easy to say no to business, which is why the crap magnet condition is so contagious (wink). Establish yourself as an expert and at the same time give away a TON of value. Unfortunately, this means you must be an expert. You must be phenomenal at what you do so you can educate and lead your clients. An educated person is an empowered person. Your clients are placing their entire financial destiny in your hands (at least in their minds), and it’s scary. Educate them so that they can be active participants in this process. This can be as simple as sending the following information when you confirm your first meeting/interview: • The Top Ten Things You Must Know When Listing Your Home
competitive. Your clients need a loan, so co-market lending information. Agents that weave lending programs into their marketing are on the A team for sure. For example – “Find out how to buy this home for only $100 down and receive money to fix it up” (if you missed January’s column on FHA 203k loans, read this). They all need advice from a CPA when buying. They will need to move, so align yourself with a moving company. They all need good credit, so align yourself with a good credit company or advisor. Painters, landscapers, carpenters, etc. will love to have your seal of approval/recommendation and will often give your clients special treatment. Social proof, or what used to be known as advertising, is a requirement - no doubt about it. It just needs to be sincere and approachable. As a friend of mine says, “Tell Me, Don’t Sell Me.” Let your past clients tell prospective clients what you have done/can do instead of you selling yourself. Once you have these testimonials, the sky is the limit. Get them out there - your clients should be able to Google you and find a large number of success stories and recommendations in addition to your contact information (I’m always amazed when it takes me 15 minutes of searching to find a working phone number or email address for an agent). Remember video testimonials are best! Provide exemplary, sincere service and education and you will never have to sell yourself. Surrounding yourself with the clients you prefer is less about “finding them” and more about focusing on being the best agent you can be. Be yourself and get creative, and you will see improvements in the clients you are working with and in your bottom line.
• The Top Five Questions You Don’t Know to Ask • Checklist of Things to Know Before Meeting Your Real Estate Agent • Checklist of Things to Know Before Choosing a Mortgage Lender/Banker • Top Ten Places to Live in (your city) – great for relocation people Don’t forget about the by-products of your business. This is where you can get creative and forget about being 34
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Jocelyn is a progressive entrepreneur who has established herself as a leader in the real estate, mortgage & technology realms. As founder & CEO of Limetree Lending Group, she has created a lending company that is consistently named #1 out of all of the 100+ mortgage bankers under the Universal Lending Corporation umbrella in Colorado. If you would like more information on this program, join our weekly webinar. Contact me at jocelyn@limetreelending.com for registration details.
online lead generation
Facebook Ads 101 – Part 2 Marketing Choice of the Next Generation
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want to pick up where we left off last month and give you more advanced techniques. If you have not read last month’s article, then go grab it and start reading! If you have already read it, I would suggest that you refresh your memory and read it again. It’s been a month! I’m going to jump right in, so here we go!
When you’re just starting out with Facebook Ads, it’s really difficult to create an ad that will deliver a good number of clicks from the very beginning. You will have to keep testing and tweaking until you come up with a good ad (or multiple ads) that are getting a good CTR (Click Through Rate).
Advanced Bidding Strategies When bidding on Facebook, you have two choices. You can choose CPC (Cost Per Click) or CPM (Cost Per 1,000 Impressions). Cost per Click is the maximum amount you would pay when your ad gets clicked on. Cost Per Impression is the maximum amount you will pay when your ad gets displayed 1,000 times. Facebook has limited ad space. In order to have your ad shown in that space, you are bidding against other marketers who are all battling it out for the same space. Facebook gives you a suggested minimum and maximum range to bid. The higher you bid, the better your chances are for your ad to be displayed.
• FYI – The equation for CTR is Clicks divided by Impressions. If your ad has 1,000 impressions and the users have clicked on it 10 times, then your CTR is 1%. If you choose CPM, Facebook will show your ad as many times as possible so that they can generate a higher number of impressions. Remember, impressions are how many times your ad has been viewed. The same person can view your ad 50 times and it will be calculated as 50 impressions, so before you know it (especially if your ad is not the most attractive) you will be paying for that ad even if nobody clicks on it. On the other hand, if you choose CPC you will only pay when someone clicks on your ad. If you are directing TheNicheReport.com
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online lead generation that viewer to a good landing page with a good call to action and a way to capture his information, then you will get yourself a lead. All you have to pay is what you already set as the maximum pay per click. Even if CPC (Cost Per Click) is more expensive than CPM (Cost per Impression), it is a lot safer and less time consuming because it does not require much maintenance. If you stop and calculate the amount of time required to maintain your CPM campaign vs. your CPC campaign you will find that it’s a lot more cost effective to go CPC, considering the fact that ‘Time Is Money’. However, once you start getting better at your ads and you start experiencing higher click through rates, it will then be smart to switch to CPM, and we will discuss that in the next article. Now, let’s focus on CPC.
Cost Per Click (CPC) Best Practices We’ve talked about how Facebook has limited space and how other advertisers are competing against you for that space, and the higher your bid is, the more likely your ad will be displayed. However, Facebook has other factors that they put into consideration when deciding on whether or not they will show your ad – and how much they will charge you per click. These factors are: 1) Ad Space Available – Sometimes Facebook will have free ad space available and they may choose to run your ad even if your bid was lower than their minimum suggested bid, just to fill that space. With the number of marketers getting into Facebook Ads, you have to be very lucky for that to happen! 2) Facebook Philosophy – Facebook does not want to bore its users. At the end of the day, they are the most important, if not the ONLY asset they have. They have to keep them interested and entertained. So, to avoid their
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users getting tired of seeing the same boring content and risking them leaving their platform, Facebook may choose to show them different ads even if the bid was lower than the minimum amount suggested. 3) Quality of Your Ad – This has to do with how your ad is performing. After all, Facebook is a business and they MUST make money. Facebook gives your ad a score. The higher your ad’s score is, the more likely it will be displayed and the cheaper your CPC will get. Facebook rewards the better performing ads to encourage you to keep running that ad longer. The better your ad is, the more clicks it will get and the more money Facebook will make. Remember, you’re paying per click here … so it’s a WIN – Win! 4) CTR (Click Through Rate) – The higher your CTR is, the cheaper your cost gets. 5) Location – The better the location you’re targeting, the higher you will be paying per click. 6) User’s Feedback – Facebook users are a lot more valuable to them than advertisers. Facebook wants to keep their users happy, keep them in their platform longer and bring them back more frequently. Pay attention to the ads that are displayed on your Facebook page. If you hover close to the ad, you will see an ‘X’. If you click on it, Facebook will ask you for the reason that you want to hide the ad. This is very powerful information that Facebook collects. The more complaints your ad gets, the higher your CPC will be, the more likes your ad gets, the more Facebook will reward you for entertaining their users by lowering your CPC. As I said in the previous article, the easiest, fastest way to get your ad running is by bidding $.02 higher than the minimum suggested bid. Once your ad starts running, it’s more likely that Facebook will charge you less than what you have already bid (this happens to me all the time). Try to bid $.02 lower than the “new minimum suggested bid.” Keep doing the same thing until your ad stops running. When it stops running, start over and bid $.02 more than the new minimum suggested bid that they will give you. Make sure that you check your ad multiple times per day to keep modifying your bid’s amount. That way, you don’t end up paying more than you should.
Something to Be Aware Of When you create your ad, Facebook will give you a number of people that your ad will reach (estimated reach).
online lead generation As your ad runs, your reach will go up to approach your estimated reach. While that’s happening, your ad will be displayed to the same people multiple times. That’s what is called ‘frequency’. Facebook will give you that number as well. Let’s go back to the example I have given you in the previous article. Steve comes to you and starts telling you a story about one of his buyers. In your next meeting with Steve, he tells you the exact same story. The next meeting again … same story. Now, even if you really liked and responded to Steve’s story a couple of times, it becomes very boring now and you will try your best to avoid listening to it. That’s what happens with your ad. Even if you get a very good number of clicks on your ad, if you keep displaying the same exact ad over and over again, you will start noticing fewer to zero clicks. That’s a sign that people are getting tired of seeing your ad. This is what we call, ‘Ad Fatigue’. I understand that when you find a ‘Winner’ Ad that’s delivering good results and takes a lot of time and practice to come up with, it’s difficult to change it. The good news is, you don’t have to change the entire ad. Try to only change the image. For example, replace it with an image that’s very similar. You can slightly change the title, body, etc. When the frequency of your ad reaches the number 15 or more, that’s when you need to start preparing the other version of that ad. It depends on how interesting your ad is. I’ve seen ads with frequency of 20 or more that are still getting clicks.
Testing’. This is not the place or time to get lazy. The extra effort you put into testing can double or triple your ROI, and sometimes even more.
FREE Resource! If you have not already done so, please visit www. cssocialmedia.com/fbads and download your FREE Facebook Ads Checklist. This resource is critical in helping you plan your next Facebook Ads Campaign!
Chaibia Sarhrou is the founder of CS Social Media, an Online & Social Media Marketing company specializing in direct response marketing techniques in the Real Estate and Mortgage Industries. Chaibia is a highly sought-after marketing strategist and consultant. She regularly speaks to sales teams educating them on monetizing their social media and online marketing efforts. She does this by implementing simple, yet sophisticated strategies that are available for anyone to use, but many seldom do. If you are not already receiving Chaiba’s Weekly Ezine, please visit www.cssocialmedia.com now and sign up!
How we see it
Test, Test, and Test Some More… Keep modifying your ad constantly. Take an ad and make a very small change to it. Maybe a change to the image, title, body or call to action. Let the new ad run and see what happens. If your CTR (Click Through Rate) decreases, you’ll know that the change you have just made does not ‘jive’ with your target audience. If it increases, you just increased your response and ultimately your profit. Once you start seeing how powerful a single change can be on impacting your ROI, you will be more motivated to be changing and testing constantly. Also, try to create different variations of your ad after you’ve completed your first ad. Facebook asks you if you’d like to create a “similar ad,” making it super easy for you to make a tiny change on the previous ad and run them together. I recommend that you create at least five variations of your ad, run them all together, and see which one is delivering the best results. That’s what we call ‘Split TheNicheReport.com
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How the Mortgage Acts & Practices Rules Affect Real Estate Agents & Builders - Part 2 By karen dies
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n the very first article regarding the Mortgage Acts & Practices rules, I mentioned that this new advertising rule now applies to everyone involved in selling and marketing one- to fourfamily, owner-occupied homes. In addition to Realtors® and mortgage companies, it also includes ad agencies, lead-generation companies and telemarketers. The Mortgage Acts & Practices rules have been in effect since August 19, 2011—so it’s been around for a while, but not many people know about it…YET! A large part of the rule explains “definitions” and what they mean. And the biggie here is the Fed’s definition of “commercial communications”— or the various ways real estate agents and loan officers communicate with potential home buyers. Why would you care? Because the rule states that if you do place an ad that includes mortgage terms, you must keep a written or electronic version of it for 24 months, in case you are ever audited. Here’s what is meant by the term “Commercial Communications”: o Any written or oral statement o Illustrations such as charts and graphs o English or any other language 38
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o o o o o o o o o o o o o o o o o o o o o o o o o o
Labels Packages Package inserts Radio Television Cable TV Brochures Newspapers Magazines Pamphlets Leaflets Circulars Mailers Book inserts Free-standing inserts Letters Catalogues Billboards Posters Public transit cards Point-of-purchase displays Film PowerPoint slides Audio transmitted over the telephone Telemarketing scripts On-hold scripts
o o o o o o o o o o
Upsell scripts Training materials provided to telemarketing firms Infomercials Internet Cellular phones/networks Web pages Email Direct mail In-person sales presentation …anything else considered “commercial communication”
To further clarify record keeping, • You must keep copies of all advertising if “materially different.” o If the same/similar ad runs in different areas, only one copy is required, but also a list of places where ad placed • Description of mortgage products offered to consumers o Including terms, conditions and any “unique names” given to the mortgage loan • Details of affiliated products, i.e., life/disability insurance o If a home warranty is REQUIRED as part of the home purchase, it can be interpreted that this may also apply.
Just a heads up—the two federal agencies assigned the task of enforcing these rules are the Consumer Finance Protection Bureau and Federal Trade Commission. Here’s the info if you’d like to read more about it (or you need help falling asleep): Federal Register, FTC 16 CRF Part 321 Next month we will outline the 19 “Prohibited Practices.” Correction to the February issue article called Advertising Rules (Reg Z) for Mortgage for Realtors/Builders Part 1: the disclosure rules apply if real estate agent co-advertises with a lender. However, check with your state’s regulators because some states require Reg Z disclosure—even if you are not advertising in conjunction with a mortgage company. The Mortgage Acts & Practice rules in this article covers unfair and deceptive practices and plugs the loop holes that are not covered by Reg Z. Written and contributed by Karen Deis. President of Foundation Marketing, Inc. which specializes in training real estate agents and loan originators on consumer directmarketing strategies. You may email Karen with comments or questions to this column at karen@karendeis.com
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BRINGING UP THE REAR - continued from page 46
Caine: But we are deadbeats, what about a bailout? Master: For that you must seek the one they call Obama. Caine: But didn’t Obama bailout the banks? Master: Yes he did my son… but have you not heard of the election? Caine: No, Master. Master: Well, when you can snatch the election from Obama’s hand, then you will receive the bailout. Okay, Charlie… work with me here… you’re fluttering all over the place like Woodstock, that little yellow bird that hangs out with Snoopy in a Charlie Brown cartoon. And it’s not very becoming for a journalist of your stature. Let’s start with your initial premise… it’s the “Obama administration’s latest re-election gimmick.” No question about it… you nailed that one. And the whole thing about how the administration “would like us to believe that the nation’s largest banks are finally paying for their bad behavior during the housing bubble and its aftermath, etc. etc.” Bingo… you nailed that part too. After that, however, you started getting your facts all mixed up. For one thing, the banks haven’t signed any settlement agreement, and you had to know that. For another, the banks aren’t paying out $26 billion to anyone, under any set of circumstances. I think cash out the door is $5 billion, and if it reaches that amount, I’ll pick up a cake and celebrate. Here’s how it breaks down… $4.25 billion for the states and $750 million balance to the federal government for whatever and who cares. Now, from the $4.25 billion you have to subtract the $1.5 billion that’s going to the deadbeats who lost homes in faulty and fraudulent foreclosures between 2008 through 2011. And I’m with you on this “robo-signing” nonsense… I mean, the only reason they call it “forgery” is because someone forged someone’s signature… what’s the big deal about that? I mean, if I had a nickel for every time I forged an affidavit… I mean, grow up. And don’t even get me started on the whole ‘standing’ thing. Just because I can’t prove I own a house means I can’t evict the deadbeat living there? That’s just stupid. Anyway, the deal is supposed to pay out $1,500 $2,000 per deadbeat, and I realize that you and Dick Bove are concerned because you know these people are deadbeats, but apparently the Obama administration and the AGs do too. 44
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Just consider that right around four million have lost homes to foreclosure during those four years. If each “victim” receives $1500, then that’s only going to cover one million of the four million deadbeats. To cover everyone equally we’ll be paying $375 each, which really isn’t bad for fraudulently foreclosing on a home. And even if we assume that you’re right and the “fraud” being talked about was insignificant paperwork problems, I think that message is sure to be heard loud and clear whether someone gets $1500 or $375 after losing their house. I’m not sure how to handle the five percent issue though. You said that, “95 percent of the “victims weren’t victims at all,” but that means five percent were? Well, that’s kind of a bummer. They got tossed out of homes, but really shouldn’t have? That’s hysterical… I hate it when that happens. LMAO. I guess it’s not that big a deal, I mean in 7-10 years they’ll be right back where they were. Hey, stuff happens. I have no idea how they’ll divide the remaining $2.75 billion among the 49 states, evenly it’s about $56 million each. In California, that covers a little over one-half of one percent of the state’s prison population for one year. My best guess is the states will end up taking whatever they get and putting it towards their huge budget deficits in 2013 and 2014. One state already said they’d be doing that, and you’ll no doubt be happy to hear that Ohio is going to use their share to demolish foreclosed homes. I know you’re concerned about what we teach this generation of homeowners, because as you said, “If there are no consequences to risk, why not just roll the dice again and again?” Well, I can’t think of anything that’s more effective at teaching ex-homeowners a valuable lesson… I mean, if you get thrown out of your home, just so someone can tear it down… well, you know you’re a deadbeat for sure after that. But, either way… whether the money goes to state budget deficits, or pays to tear down homes… or even if they end up sliding a few hundred bucks to an exhomeowner once or twice, I really don’t think it’s anything to get all worked up over. I mean, yes… technically it’s still a bailout, but as bailouts go, it’s fairly meager. Most importantly, the people that are being refinanced that are underwater aren’t the “victimized” deadbeats; you got this whole part wrong. The people that are being refinanced are current on their payments… they’re underwater, yes… but they’re current. Refinancing them
BRINGING UP THE REAR is the right thing to do… if you’re the bank or maybe the government. For those homeowners, however, it’s pretty much the equivalent of handcuffing them to the bedframe and setting the house ablaze on your way out. I know, they’re talking about refinancing, but lets see what happens when they’re presented with a refi in the amount of … $400,000… and the place across the street just sold for $178,000. You’d have to get me drunk before I’d sign that loan, and my guess is others won’t rush to sign theirs either. The rest of the money, roughly $17 billion is supposed to go to foreclosure prevention, including principal reductions, but once again there are no rules or guidelines so I’d say we’re in very little danger of doing anything even remotely beneficial for deadbeats. Besides, even if the government and the bankers, for the first time ever, actually fell into something in this regard, $17 billion would only give each of California’s deadbeats about $8,500, after which most would still be underwater by a couple hundred grand. So when Big Dick Bove says: “What this settlement did was to help 1 million people who were deadbeats.” It’s not really the case. Okay, sure… maybe a few deadbeats
are technically getting a tiny bit of help, but we’re pulling the rug out from under them before anything would rise to the level of true help. Let Dick know… I’m sure he’ll be relieved to hear it. Also, I’m wondering something… when you say that, “foreclosures are a necessary ingredient to the housing market’s recovery,” how many do you figure we’re going to need to recover? I only ask because we’ve had about 9 million so far, Amherst Securities says about 11 million coming. Do you think 20 million foreclosures, roughly one out of four mortgages in this country, will that be enough to get my equity back and put us on easy street once again? If not, maybe we should start lobbying the Obama administration to extend that HAMP loan modification thing, because that sure was effective at generating foreclosures. Let me know your thoughts. Martin Andelman is a staff writer for The Niche Report. He also writes an almost daily column on ML-Implode called Mandelman Matters. He also publishes a Monthly Museletter and you can follow “Mandelman” on Twitter. Send your responses to Martin@TheNicheReport.com.
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BRINGING UP THE REAR
Bringing Up the rear Charles Gasparino, Fox Business Network BY MARTIN ANDELMAN
I “
t’s hard to imagine a lessdeserving group of victims: people who gambled during the housing bubble by purchasing homes with borrowed money that they knew or should have known they couldn’t afford, but who are now able to stay in the homes they should have never bought because of what amounts to paperwork errors on the part of the nation’s big banks.” That’s how Fox Business reporter, Charles Gasparino opened his column that appeared in the New York Post back on February 10, 2012. Titled, “A Deadbeat Bailout,” he was writing in response to the settlement agreement between 49 state attorneys general and the five largest banks that had just been announced. “But that’s essentially what went down yesterday, thanks to the Obama administration’s latest re-election gimmick — the nationwide mortgage-foreclosure settlement.” Now, I’ll bet you think I’m going to tear this guy apart for being such an insensitive idiot, right? Well, you’re wrong. In fact, I’ve decided that Charles is
absolutely right on target. Millions of middle and working class people, and some richer folks too, all decided at the same time that their lives were not exciting enough. They longed for the days when they were losing their retirement savings, investing in dot-com stocks pumped up by analysts paid for their favorable opinions. Good times. They all got together and decided they would take up gambling in a much bigger way than ever before… they’d literally bet the farm. So, they started gambling with their entire net worth AND the homes in which they lived, and perhaps because they were new to the whole gambling thing… or maybe because they were following the lead of the bankers who also went broke… they lost their shirts and their farms. Today, there are literally millions of them aimlessly wandering in the desert just like Kwai Chang Caine looking for justice… Young Caine: Is it good to seek the past, Master? Does it not rob the present? Master: Only banks may rob the present. You must rob the banks. - continued on page 44
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