TNR - August 2012 Real Estate Edition

TheNicheReport.com

Real estate agent & broker Edition

For the serious real estate professional

Issue 008/August 2012

What Does Russell Hantz Know About Real Estate?

Turns out, a lot Page 18

8

Seven Uncommon Tips for Selling Your International Property Be prepared to get engaged and be proactive

24

Leveraging Opportunities for Leasing Commercial Real Estate

32

Property Rights Owning real estate and home ownership is the dream of many and a nightmare for others

34

FHA 203K: Breaking the Mold and Stigma

Photo by Dale Porter / KillerImage.com

Work Smarter You were dissatisfied with your previous franchise organization. What made you start looking around for something new?

Many agents in that brokerage couldn’t sustain the high desk fees and still run their real estate business. When they finally got a commission check we

had to take it away – I felt like a collection agent. It created a negative relationship between the agent and the broker. When my agents came over to EXIT Realty, they didn’t have that monthly expense – they could now use that money towards their marketing budget to help them grow their business.

By taking advantage of the EXIT Formula of single-level residuals, agents can benefit while helping to grow the company and enjoy that third stream of income – that was powerful for me and for my agents.

So why EXIT Realty?

To me, owning an EXIT Realty franchise means freedom. It’s working smarter, not necessarily harder. When I joined EXIT in 2007, my father’s health was declining rapidly (he eventually passed away in 2009). I had just opened a brokerage in Virginia and I had to spend a lot of time in Pennsylvania.

Receiving sponsorship income allowed me to spend the time with my father that I needed to and still be able to pay my expenses.

EXIT has the solutions to all of the problems faced by the real estate industry – things like health insurance (through EXIT’s Approved Supplier program), retirement benefits and a third stream of income. In other real estate companies, many agents go out and become dual career agents because they need some type of steady income in order to sustain them in a tough market.

Personally, what does EXIT mean to you?

Terrylynn Harrell, Broker/Owner EXIT Choice Realty, Woodbridge VA EXIT Realty Virginia’s #1 Office (2011) by Gross Commissions

Does Terrylynn’s story resonate with you? Call Tami Bonnell, President – US, today to find out more! 1.877.253.3948

www.exitrealty.com

速

Is your referral pool feeling more like a puddle? ® An ABR designation can help you weather any market.

The market is always changing. A great way to increase your opportunities and your referral pool in any market is through education. Becoming skilled at buyer representation will help you change the way you do business and cater to clients at every stage in the home buying process. As an Accredited Buyer’s Representative (ABR®) you will gain a unique understanding of home buyers’ needs and how to best serve them, specialized information to stay on top of home buying issues and trends, and exclusive resources to share with your clients and give you even more of a competitive edge.

Earning your ABR® Designation has never been easier. The 2-day core course can be completed online or in class, and you can choose from over 16 elective courses based on your business goals and market trends.

Get the advantage you’ve been looking for. Visit rebac.net to learn more.

Get more buyers on board with the ABR® Designation.

CONTENTS

Issue 08

18

August 2012

Publishers

Investor, Opportunist, Entertainer An interview with Russell Hantz: The Bad Boy of Reality TV turns to Real Estate Rick Roque

Robert Pegg robert@thenichereport.com David Pegg david@thenichereport.com MANAGING EDITOR Rick Roque Rick@thenichereport.com

Associate Editor Cathy Johnson info@thenichereport.com

ACCOUNTING MANAGER Shawna Ingram shawna@thenichereport.com Photo by Dale Porter / KillerImage.com

8

Seven Uncommon Tips for Selling Your International Property Claudia Gonella Be prepared to get engaged and be proactive.

22

How to Get a Steady Income with a Real Estate Investment that is Not a Rental Property Karl stockton

24 31

Leveraging Opportunities for Leasing Commercial Real Estate

32 39

Terry Martin-back Owning real estate and home ownership is the dream of many and a nightmare for others.

Seven Lessons I Learned About Negotiating While Watching Barter Kings Iman Yusef-Yahya

DEPARTMENTS

06 14

Endre Rex-Kiss A negotiator's guide to office space.

27 34

Borrowing from Hard Money Lenders for Real Estate Investments

41 43 46

karl stockton

Property Rights

note from the Editor market conditions and analysis online lead generation Straight up with jocelyn predovich service provider classifieds Advertiser DIRECTORY BRINGING UP THE REAR

Advertising Director Jessica Grizzle

Jessica@thenichereport.com

Advertising sales Hilary Bateman hilary@thenichereport.com

Production Manager Henry Suchman henry@thenichereport.com

Production Assistant Dawn Exner dawn@thenichereport.com

Cartoonist Martin Bradford

COLUMNISTS & Contributing Authors Martin Andelman Claudia Gonella Terry Martin-Back Jocelyn Predovich Endre Rex-Kiss Chaibia Sarhrou Karl Stockton Iman Yusef-Yahya TheNicheReport.com

5

note from the Editor

Real estate agent & broker Edition

Are Housing Markets Improving? Yes. Is Homeownership Increasing? No. The central theme of this issue is the Realtor and the dynamics that are underfoot as the market continues to evolve and take shape. There were many positive signs for the housing market with property values improving, and markets deeply impacted by the market collapse in September 2008 showing modest signs of recovery. Excess bank-owned inventory on the market for sale is decreasing and investors are purchasing units in bulk – so what is there to be concerned about? Well, these are the surface-level effects which appear positive, but there are a number of risk factors that lie beneath the surface that Realtors and Mortgage professionals need to understand. For policy makers, it is important to understand what we are bargaining for. Are we genuinely looking to expand homeownership, assist consumers to invest into our communities beyond what renters sociologically do, and help credit-worthy borrowers get access to capital? Or are we setting ourselves up with a number of unintended consequences that simply leave banks with more capital but less lending, and otherwise stable, credit-worthy consumers with few mortgage options available? Are we reducing competition rather than increasing it? Are we bolstering the political themes – the rich are getting richer and the poor are getting poorer – under the guise of government intervention on behalf of the consumer? Is the government deepening class divides rather than making the playing field more equitable?

Realtors: The Compass of the Housing Industry. These are the policy decisions that Realtors and housing professionals should be concerned about. They impact when consumers put their homes on the market, when buyers buy, and what kinds of mortgage products lenders make available. This is the market and economy we find ourselves in. It is confusing even to market researchers like myself and economists as a whole. In today’s global economy, there are many forces that intersect our ability to buy and sell homes. How does this impact you in your local market? How does this affect your market position and sales skills, and how you plan for your business? The top agents are able to explain these factors in a compelling way in order to increase the urgency to buy or sell now. The more agents can educate borrowers, the better positioned they will be in front of their clients and subsequent referrals. It is in this way that Realtors are the compass of the borrower – and there is no better sales position to be in with your clients.

Understanding How to Distill the Big Picture into Every Deal. Each and every deal is a composite of broader trends within each region and, of course, this drives the national trends as a whole. The reverse is true as well. A detailed understanding of the ‘bigger picture’ will help you understand where the exceptions are and how each deal is impacted by the social, economic and demographic trends in your marketplace. This is what I speak about at regional or national conferences and company meetings and, if you are interested, we at the Niche Report can help. 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 visit with your real estate team! Thank you and I look forward to your hearing from you!

Rick Roque Managing Editor, rick@thenichereport.com

6

August 2012

Official

MEMBER

Published monthly by BODA Publishing, LLC PO Box 494, Bentonville, AR 72712 Phone: 866.964.2695 Fax: 703.991.2362 Email: info@thenichereport.com www.TheNicheReport.com

SUBSCRIPTIONS

Where are your marketing dollars landing?

This publication is intended for real estate professionals. If you are a real estate agent, broker, appraiser, title agent or other real estate professional and you do not currently receive The Niche Report, please go to www.thenichereport.com.

An annual subscription is $24.99 (twelve months/twelve issues). For additional copies being mailed to the same address please call 866.964.2695 or email us at subscriptions@ thenichereport.com for multi-copy discount.

Send address change requests to info@thenichereport.com.

Remember to include the old address.

To opt-out of receiving The Niche Report, please send your request, including name, company name, and address to opt-out@thenichereport.com.

ADVERTISEMENTS To inquire about advertising in The Niche Report, please call 866.964.2695, or send an email to ads@thenichereport.com.

Visit our website, www.TheNicheReport.com to request a copy of our Media Kit.

EDITORIALS / ARTICLES To submit an article for consideration in The Niche Report, please send an email to rick@thenichereport.com or call 866.964.2695. We are interested in original writings relevant to real estate agents and brokers and other real estate professionals.

Get longevity out of your marketing budget.

If you have a comment or question about an article or editorial published in The Niche Report, or if you have a suggestion for a topic you would like to see featured in a future issue, please send an email to rick@thenichereport.com.

Get more for your money.

THE NICHE REPORT POLICY The information and opinions expressed by contributing authors and advertisers within The Niche Report do not necessarily reflect those of BODA Publishing, LLC employees and should not be considered as endorsed or recommended by BODA Publishing, LLC.

Get cutting edge editorial, shared and kept for reference.

Advertise with The Niche Report.

866-964-2695

www.thenichereport.com/advertise-with-us

7 Uncommon Tips for Selling Your International Property Be prepared to get engaged and be proactive

By Claudia Gonella

O

wning a property overseas used to be something that only the super-rich could afford. But in the last couple of decades many of us have taken advantage of money built up in the US property boom to buy our own piece of paradise abroad. And who can blame us? Great weather, an easygoing expatriate lifestyle, tasty food and more house for our money.

But what happens when plans change, which they invariably do, and you need to sell your overseas property?

Many international markets are small, inefficient and unregulated – which means unless you own the last piece of beachfront in a wildly popular tourism destination, you will need to do more than list your property with a local agent and hope it sells. Truth is, you’ll be in competition with other sellers, inventories are currently high, and since 2008 the environment has been firmly tilted towards buyers.

If you’re after a quick sale, be prepared to get engaged and be proactive. In this article I’m not going to cover common selling tips like pricing and staging as these have been addressed countless times before. I’m going to tackle thornier issues of getting exposure for your international 8

August 2012

property because that’s where most sellers are struggling.

I’ve worked in the international real estate sector since 2002 including a time as Director of two international real estate franchises in Central America. What’s clear from this experience is that core sales strategies and techniques that work in the US or Canada don’t deliver good results in many international real estate markets.

Here’s why: • International real estate markets (particular those in emerging markets) are inefficient. With no centrally managed property listing databases (comparable to the US Multiple Listing Service for example) it’s hard for buyers to access all properties available for sale (including yours).

• Official statistics are typically not available, making it hard for both buyers and sellers to get their hands on reliable market comps to build an accurate picture of what constitutes value.

• Overseas markets are generally small with one-of-akind properties sold to a small pool of potential buyers.

If the pool of local buyers financially able to buy your

property is small – as often is the case in emerging markets – sellers are almost exclusivity dependent on foreign buyers for a sale.

• Unfamiliarity breeds concern. More than anything, foreign buyers fear economic and political instability that could result in the full or partial loss of the asset.

This brings an entirely new set of objections from prospects that sellers will need to address.

• Sellers may not be physically present in the country where their property is for sale, raising logistical questions of access and presentation. Lockboxes aren’t the norm in international real estate markets.

None of us can change the market, but we can try to adjust aspects of how it operates to our advantage. As a private home seller in an international market you can educate yourself on how the market works on the ground, make sensible decisions and take strategic action to sell your property.

In this article I outline some of the actions you can take. They are framed as “uncommon” tips, as most sellers won’t apply them. That’s good news for those of you that do, as it becomes easier to make your property stand out from the crowd. You’re in a competition to get your property in front of buyers. It’s time to get competitive.

1. Define your perfect buyer This may not sound very action orientated, but defining the person who is the best fit for your property should be starting point for your entire sales strategy.

Before you even think about pricing or writing a listing description, you need to know exactly who you are targeting.

Who would get the most out of owning your property?

Who would be the happiest living there? What makes them tick? What are their hopes and dreams? What do they care about? What are their biggest fears?

Take the time to get really detailed. It may feel a little ridiculous but it’s a good idea to write this down. Be as specific as possible. Instead of “educated middle-age person who likes to travel,” you should end up with something like this: “Mary 62 lost money in the financial crisis and is worried about funding her retirement. She wants a change and is considering relocating to Central America. She has enough money to buy a property with her IRA but needs to live somewhere that is affordable.”

Or “John, 40, thrill seeker who works in Silicon Valley as an entrepreneur running his own business. He's got plenty of money but values the "money can't buy" experiences. He loves to impress his friends with doing unusual things including investing in exotic property.”

Once you’ve found your one person, you can go about getting their attention. Which brings us to our next tip – writing a compelling property listing.

(In case you’re worried. Focusing on one perfect buyer does not mean you’ll miss out on a larger audience. Quite the opposite. Instead of being generic and diluted, the message your property will be sending will be pithy and focused. Your message and consistency will inspire not only the right person, but also anyone who feels affinity with that person or admires what that person represents. And that’s a far better strategy than targeting everybody and nobody.)

2. Write a compelling property listing What’s the goal of your property listing? To give your perfect buyer a set of compelling “reasons why” they should buy your property. You do this by answering this question for the buyer: “What would my life be like if I lived here?”

If that sounds too complex, here are 3 actionable steps.

1. First, jot down why you bought the property (e.g., close to a great surf break, affordable lifestyle, rental return) 2. Second, identify the best features of the property (e.g., large open deck, ocean views, huge kitchen) 3. Then pick up to three things from these lists and create a compelling headline for your property (e.g., Income-generating ocean view property close to a surf break).

You won’t be able to fit everything that’s great about your property in the headline, but your headline isn’t trying to do everything. It only needs to do one thing: Get your prospect to read the first sentence of the listing description.

Pack this description full of “reasons to live here.” I often include these as a set of bullet points (see box).

TheNicheReport.com

9

Then take your list of features (what your buyer will actually buy) and translate them into a list of benefits (the kind of lifestyle they’ll get). Ultimately, you want to weave a story about what their life will look like if they owned your property.

This is the way to tap into powerful buying motivations and desires. With international property, common desires are to make money, live more cheaply, experience something different, enjoy a better lifestyle, embrace the exotic, escape from the daily grind, impress friends and so on.

But before we get carried away with the prose, remember that the true language of real estate is photography. Carefully choose a small number of seductive images that showcase the very best of your property. More is not always better with real estate imagery, so don’t fall into the trap of using photos to catalogue every room and every feature. All that does is document the home, when your photos should be advertising it. Remember you’re not selling four walls and a roof; you’re selling an emotion. An experience. A lifestyle. A dream.

As the owner you are a great marketing resource for your property. You know things about your property and the neighborhood that even the best real estate agents won’t know. Instead of filling the space with empty marketing catchphrases, you’ll be able to deliver the perfect how-itfeels-to-live-here message to your buyer.

3: Give your listing to all local agents active in your marketplace When a seller lists a property with a Realtor in the US it will be added to a Multiple Listing System (MLS), enabling other agents to access the listing and show the property. This concept of a massive, shared listing database does not exist across much of Latin America, Southern Europe and Asia. Rather, individual agents maintain their own, independent, separate listing databases. And while there is more collaboration in some markets than others, your best bet as a seller is to make sure every agent receives your listing directly.

This does involve some legwork, but it’s a crucial step in getting your property as much exposure as possible. A typical agent in an emerging real estate market acts more like a buyer agent than a listing agent, so you won’t receive sales pitches, listing presentations or intense competition to secure your listing as an exclusive. The market just doesn’t operate that way.

If you’ve taken the time to write a magnetic listing description and shoot some seductive photos, the process 10

August 2012

of listing your property with multiple agents should run smoothly. After all, you’ve already done the hard work.

And if you’re operating in an unregulated market (of which there are plenty) you’ll find that selling real estate is not an activity that’s restricted to “formal” real estate agents.

Anyone can sell real estate.

So cast your exposure net as wide as possible. Tell every real estate “actor” that your property is for sale. That means your taxi driver, hairdresser, the owner of your local restaurant, the hotel receptionist and anyone else you can think of.

Make sure you’ve thought through the mechanics of property viewings. For international sellers who reside out of the country, ensuring your house is accessible could be a tip in its own right. After all, if prospects can’t be shown your property, they can’t buy it. Lockboxes are not the norm, so I’d strongly recommend giving an access key to each local real estate agent. If security is a concern you’ll need a local caretaker. Make sure they have working cellphone.

4. Broaden your online reach Relying on the marketing strength of local agents may not be enough to sell your property in a slow market. As buyer agents, they typically do not put focused marketing effort into individual listings – after all, it’s an open listing and anyone can sell it. And don’t expect marketing reports or viewing updates either. If after a few months you have not received qualified prospects, it’s probably time to take things into your own hands. It’s time to take control.

Let’s remind ourselves of the #1 secret to selling an international property quickly. Well, not really a secret – it’s getting the property in front of as many of the right buyers as possible. The good news is that doing this is easier than ever given the advent of the Internet.

The statistics are very clear – your buyer will start their search for your property online, almost exclusively. So all you need to do is join them. Let’s say you are selling property you own in Nicaragua. Do as your buyers will do and type “Nicaragua real estate” into google.com. In fact, let me do that for you.

Typically you’ll find the top results dominated by real estate brokerage sites and owners listing sites. You’ve already listed with all of the agencies, right? (If not, scroll back up to Tip #3.) The key here is to broaden your reach by adding your property to owners listing sites that receive the most traffic for your target market. But don’t list with

every site you come across. There’s little point in placing your listing on sites that are not targeted to your location, however impressive their overall traffic numbers.

You need to know exactly whom you are fishing for.

Then set about getting their attention. You can get as geographically granular as you need to. For example, if your property is located in Placencia, Belize, type “Placencia real estate” into google.com and ensure you are listed on all the sites that appear on the first page.

5. Deepen your marketing even further Let’s recap where we are in the process of selling your international property: • You’ve identified the perfect buyer for your property • You’ve created a compelling listing description, • You’ve listed with all active real estate agents in your market, • You’ve made sure you are listed on owners listing sites that rank well for specific search terms that make sense for your property.

You’re in good shape. Your properly is now not just on the market but in the market. You may have done enough.

But as with most things in life, there is always more you can do to take things up a notch.

I’ve listed 9 “extras” below. Whereas creating a great listing description and getting it on highly trafficked sites is absolutely crucial to your sales strategy, consider the ideas below as a set of tactics that you can use to take your marketing a few steps further. Some of the tips can be done very quickly while others require an ongoing time investment. I suggest you do the easiest ones first.

1. Update your email signature and add a direct link to your online property listing. This is a low-key, unobtrusive method to getting the word out that you have a property for sale.

2. If you participate in any online forums update your signature there too.

3. Tell everyone you know (friends, family, co-workers) that you have a property to sell.

4. Post a notice to your social networks. If you are a user of Facebook, Twitter, LinkedIn, Pinterest or other social media sites, tell your network about the property you have for sale.

5. If you have a website or blog, post a notice there – again linking back to your property listing. Remember that international real estate buyers may be concerned

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! scan to leaRn moRe!

Coverage benefits • • • • • •

Multiple limit and deductible options A Separate Limit for Claim Expenses Fair Housing Discrimination Coverage Limited Pollution Coverage Franchisor Coverage Included Deductible reduction of 50% for Use of Alternative Dispute Resolution • Regulatory Hearing Coverage • Owned Property Coverage

We make the right choice easy with custom-designed E&O solutions created exclusively for real estate professionals at affordable, competitive rates!

1-866-795-9613 CA Ins. Lic. #0633005 • AR Ins. Lic #245544 d/b/a in CA Seabury & Smith Insurance Program Management 59712, 59713, 57914 (02/12) ©Seabury & Smith, Inc. 2012

6.

7.

8.

9.

about buying in an unfamiliar market. A blog filled with stories and anecdotes about the great lifestyle on offer can really help assuage their fears.

Post a video about your home on YouTube. Walk through your home and neighborhood showcasing the best parts. It’s the perfect place to explain the “reasons why” you bought the property in the first place and how much you love it, while allowing them to visualize living a great life there too.

Join the conversation on blogs that cover the real estate market where your property is located. Add value by leaving good quality comments, placing your property listing url or your own blog in the website field.

Tell your neighbors about your property. Neighbors like choosing their neighbors and may encourage people they know to join their community by buying your property. If you belong to neighborhood message boards or email lists, add a link to your home’s online listing.

Leave a folder in your home that provides details about the local area for prospects to leaf through. Fill it with information on your favorite restaurants, surf breaks and local attractions. Sell the lifestyle. The experience. The dream.

How we see it

6. Get creative with incentives This is where you take the extra step to make the transaction easier or more attractive than a buyer would expect. It’s a great way to “lower your price” without actually “lowering your price.” Below we’ve listed examples of incentives that have been used successfully by owners selling their international property.

• In one development where owners were locked into rather onerous monthly HOA dues for a five-year period, an enterprising seller offered to cover the payments over this period. (After five years owners would be free to restructure the HOA and reduce the payments.)

• A common incentive in Central America is for sellers to pay the transfer fees and registration taxes (both of which are typically paid by the buyer).

• In order to entice the lifestyle buyer, consider leaving personal property behind so that they can pick up where you left off. You can take this well beyond a standard “turnkey” sale by not only providing sheets on the beds, silverware in the drawer, and artwork on the walls, but also a surfboard, a golf cart, a flat screen TV? I’ve seen sellers throw in a golf membership, a return flight and even, rather outlandishly, a car with the house.

• Seller financing is one of the strongest incentives in Central America particularly when selling to an international buyer, as they will typically find it difficult to secure local financing at attractive rates, if at all.

• Consider incentivizing local real estate agents, your caretaker, the developer, or whoever shows your property with a commission bonus in the event of a successful sale. This can help oil the wheels at a property viewing.

Any of these incentives will help your property stand out from the competition. Consider carefully whether it makes sense to add them to your property listing or offer them during the negotiation process. Seller financing for example would be a good candidate for inclusion, if you were willing to offer it, as it’s such a strong selling point for your property.

Don’t approach the negotiation process with a goal to “win” or “come out on top.” You’ll be more successful treating the process as a problem-solving exercise. Take the emotion out of it and start by identifying the full range of items that can be negotiated. Your needs must be met for the transaction to move forward, but so do your buyer’s.

12

August 2012

Finally, if you have had lots of interest from a buyer but have not yet received an offer, consider turning the tables and making a reverse offer. Also known as a pre-emptive offer, this involves putting together an offer to sell to the buyer, usually at a lower price than the property is listed at. Create some urgency by making the offer expire a few days after issuing it. It shows you are flexible and willing to negotiate and may be enough to encourage an on-the-fence buyer to take action on your listing.

7. Be prepared at the closing You’d be surprised how many real estate sales fail during the closing process. Any liens, encumbrances, liabilities, boundary issues, or annotations that the buyer’s attorney finds during the due diligence property can easily kill the deal.

The box below identifies 6 pieces of information that savvy sellers will have ready at the start of the process. The core documents relate to legal and title aspects, but also listed are other pieces of information to address concerns that international buyers often have. Do this right and your buyer will feel at ease, their attorney will give your property a glowing report, and your closing will proceed smoothly.

Don’t be surprised at the closing meeting.

Having this information ready to email or fax to potential buyers will often make the difference in selling

your property quickly. You don’t want title issues to be the reason the deal falls apart.

I often take this process one step further and ensure that I have title insurance on all properties that I am preparing to sell. Unlike in the US, title insurance is not a requirement to sell a property in most international markets, but it’s a great additional step to take. Presenting a title insurance certificate with no exceptions helps address concerns about the legal risks of buying in a foreign country. Granted, the buyer will have to take out their own policy once they

purchase the property, but knowing you have a title certificate goes a long way to show that your title has already been thoroughly researched and has come up clean.

I’ve kept these 7 tips as action-orientated as possible. If you’re not getting traction with your current sales strategy it’s time to shake yourself out of the holding pattern of "hoping that one day you’ll sell your property" and take control of how your property is being presented and where it’s being presented. And there’s an added bonus: most sellers find that moving from a passive stance to being proactive not only increases their chance of making a quick sale, but is also a great stress reliever.

Now I know I said I would not cover price, but I will say one thing: If you apply the 7 tips outlined in this article and still don’t receive any realistic offers within 6 to 8 months, take that as a sign that your price is too high.

Claudia Gonella has been active in the Central American real estate sector since 2002. She is co-founder of Reveal Real Estate, an FSBO listing site that connects buyers interested in property in Belize, Nicaragua, Costa Rica and Panama with sellers who have listed their property for sale. Reveal Real Estate has a free guide for owners looking to sell their overseas property.

Market Conditions and Analysis

market Conditions and Analysis By rick roque

Turning the Corner of the Summer Market with Leading Economic Indicators It is the end of July as this article is written, and the economic news for the housing industry is constantly in flux. There is a mix of very positive indicators amidst a number of market factors that give market researchers, like me, caution.

It is the tenuous place our economy resides; a teeter totter of sorts where we toggle between positive and cautionary economic news. It is a market of contradictions. Very positive economic news could reflect short-term gains in a field that is increasingly becoming an upward climb. The degree to which the pitch of the economic field increases, decreases or becomes flat is a confusing mix of public policy pertaining to household factors (price of oil during the winter – price of gas during the summer), taxes (tax credits etc.), government incentives for private 14

August 2012

investment and, even more difficult to interpret, indices pertaining to the various housing industries – builders, realtors, mortgage etc. – along with consumer confidence metrics and an ever-convoluted mix of international trade and banking policies.

Economics is a qualitative science, as it is enveloped by a number of quantitative indicators. The best practice is to keep a hand on the pulse of various economic indicators that can tell the economic story and what the ripple effects could be. There is a laggard effect, since quarterly economic news is released approximately 2-3 months after the numbers have been posted. As a result, there is always a challenge in the reporting, because indicators are a look backwards in an effort to look forwards. Our goal is to provide economic news and provide interpretation as it affects housing markets as close to publication as possible. This keeps the publication as relevant and current as possible for the professionals who rely upon it.

It wasn’t long ago that home values were plummeting as thousands

of foreclosures flowed into the housing market, forcing realtors and mortgage professionals to deal with the excess inventory. Now the tide has turned. As this inventory diminishes, various markets around the country tighten, forcing bidding wars and price increases. Housing is increasingly becoming the bright spot of our economy in the recent flow of disappointing economic reports. “Consumer confidence and jobs are down but real estate keeps going up. It is the plank that the rest of the economic clings to,” says CEO of RedFin, Glenn Kelman.

With low rates and a more narrow population of Americans who either have the excess cash or can quality for a loan to purchase this inventory of homes, you get a mix of good news and bad news in the housing market. While excess inventory is being purchased (good news), we get the consolidation of home ownership around a more narrow population and the establishment of a renter-landlord society (bad news). Economically this reflects good news, but it is wrapped

Market Conditions and Analysis around economic effects that may fuel broader cultural concerns among financial classes within the United States. Increasingly, we are seeing the tension rise between those who have money and those who do not; those who participate in the knowledge economy and those who struggle making the ascent from low income to middle class, from middle class to wealth.

Home ownership is central to this ascension for the American family.

In an effort to make wealth, money or capital easier to get, the opposite becomes true. This reflects probably the greatest irony in government intervention in the housing market.

There are always good intentions (which is typical of politicians), but even more typical are the unintended consequences. This has been rampant, especially in the ‘too big to fail’ (e.g., CFPB and Dodd-Frank) policies that are intended to distribute risk across more banks and alleviate consumer dependence on institutions that become ‘too big to fail’. These policies have resulted in the most rapid consolidation of depository and non-depository banks in U.S. history, leaving larger more capitalized banks even larger, and squeezing small to mid-sized banks out of business due to liquidity and regulatory burdens intended to keep watch on larger firms.

Therefore as homes are being bought and sold, the demographic of the buyer is changing to older, wealthier Americans – excluding minorities, younger Americans, legal residents and those with catastrophic financial events that impair credit scores of otherwise very creditworthy borrowers. Having said this, units are moving; homes are being bought and sold, and excessive inventory is being

consumed at a record pace, which is turning the tide of real estate’s fortunes.

Here is what is driving inventory down and prices up, and what is boosting residential construction:

Bank-Owned Properties: The inventory of REO or bank owned homes fell significantly over the past year from 817,000 in June of 2011 to just over 600,000 in June. This exists amidst new foreclosure filings, which means financial institutions are holding onto real estate assets because they are forecasting price improvement of properties and a demand for new homes. This actually is a good statement of confidence, an appreciating sign for our nation’s homes, and good news for sellers as it will either maintain or increase sales prices.

New Home Construction: With fewer foreclosures to be purchased in the market, more motivated buyers who are left on the wrong side of the bidding war end up putting down deposits with builders who now are seeing a demand for new construction inventory. This has improved the confidence of the National Association of Home Builders Association. As previously reported in the Niche Report, new construction permits in March were at four-year highs and builder confidence took its biggest jump in nearly 10 years. A renewed interest in newly built homes has generated an increase in sales of new construction homes over the past 12 months.

Seller’s Remorse: Before that short sale or downsizing, there are signs that sellers could be waiting for home price to increase before they sell. “Regular homeowners don’t want to sell their home because they think they can wait two years to get better pricing,” Kelman says. This is a good sign for homeowners to recover the net worth losses largely tied up in the value of their home and/or property. This, it in turn, helps bolster new construction demand.

For a “normal” market, whatever that can really mean today no one really quite knows – however the expectation is to be doing 1.5 million starts to reflect a healthy market. The housing market has been stuck due to recessionary constraints holding back consumer demand, down to around 500,000 annually.

Investors Turned Landlords: As a result of these factors, prices are rising and, in many cases, at the expense of consumers. This isn’t a sign of a healthy recovery; it is a sign of a recovery of exclusion. Those who benefit are cash-rich investors and those excluded are average consumers who have consistent and sustainable incomes but challenged credit. There are many individual consumer investors such as a mid-40-year-old professor at a university in New England who purchased a tri-plex in Springfield, Massachusetts. It listed for $155,000 and was purchased for $59,000. With approximately $20,000 in construction costs, this property will be rented and more than likely sold in less than 10 years as the value of the property appreciates. There are thousands of opportunities in various markets, some of which are discussed below.

To illustrate this trend on a more institutional level, Blackstone Group LP (BX.N) spent more than TheNicheReport.com

15

Market Conditions and Analysis $300 million to purchase over 2,000 foreclosed homes, reflecting their bet on the recovery of the U.S. housing market. “Our bet is over time, vacant homes will fill up and markets will begin to recover,” said Jonathan Gray, senior managing director and global head of real estate. “Our exit will be to sell the individual homes to the renters themselves, or there could be a very large market for public housing REITS.” Blackstone is a very successful hedge fund and private equity firm with plans to raise money to acquire more foreclosed homes, and to rent them out for several years before selling them as the housing recovery takes hold.

Another example of this is Beazer Homes USA, Inc. (BZH.N). In early May Beazer announced a Pre-Owned Rental Homes, Inc. program founded in partnership with investment group and private equity firm, Kohlberg Kravis Roberts & Co (KKR.N).

This leasing program capitalizes on borrowers who can’t afford to qualify for a home but desire to one day own a home. At the end of the lease, the borrower can purchase the home, but at a handsome profit to Beazer Homes.

This creates an ‘affordable housing’ market for the broader public, which once again benefits a select group of investors and owners and not the citizenry as a whole.

It is in the best interest of the housing market and the public to spread the risk and the ‘skin in the game’ to as many homes’ occupants as possible. Otherwise, occupants feel little attachment to their homes, which has been the hallmark of homeownership over the last 50 years in the United States. In investorowned, occupant-rented property arrangements, something is lost. If the emotional connection to the property is diminished and if occupants feel less 16

August 2012

vested in their domiciles, something is lost to the American character to home ownership, let alone specific economic metrics concerning how much occupants are willing to spend to maintain the property and improve its value. A landlord spends as little as necessary to maintain the property; an owner-occupier will spend as much as they want given their love of the home or as much as they need to improve its value. In both of the latter cases, this is lost in these otherwise very attractive arrangements for investors.

Home Appreciation Indicators: June Home Prices Rise, but Sales Drop. Home resales fell in June, but the median sales price was higher than a year earlier as fewer people sold their homes under distressed conditions.

As previously mentioned, this reflects

the duplicitous conditions of the U.S. housing market and its recovery.

The National Association of Realtors (NAR) released on July 19th that sales slipped 5.4% to an annual rate of 4.3 million homes last month (June). This was the slowest pace in eight months, and well below analysts’ expectations of 4.6 million units. The median price for a home resale rose to $189,400 in June, up 7.9% from a year earlier. Reflecting this trend and for reasons already discussed, the nation’s inventory of homes (those for sale on the market) fell 3.2%, which contributed to the rise in prices. The key to this indicator is what is for sale. As banks perceive a

recovery in home prices, they sit on the bank-owned inventory until they can sell at prices that will return a profit.

While the broader U.S. economy is losing its recovery strength, the housing market is gaining traction.

Concluding Thoughts on Risk, Loan Applications & Economic Liquidity Because of the mix of surfacelevel improvements and underlying fault lines to these improvements, a robust and self-sustaining recovery is probably not in the cards for quite some time. Nouriel Roubini, an economist who is famous (and infamous) for his prediction of the 2008 economic crisis, outlined five reasons those bullish to our economic recovery have been wrong, and argues that continued challenges in Europe and lack of Congressional agreement in limiting the impending tax increases due to reset in January 2013 will keep spending and growth slow. Roubini believes the U.S. is looking upon a “fiscal cliff” built by a growing public sector, unfunded retirement systems, and declining economic growth in light of China and emerging markets.

"And now, after getting the first half of 2012 wrong, many are repeating the fairy tale that a combination of lower oil prices, rising auto sales, recovering house prices, and a resurgence of U.S. manufacturing will boost growth in the second half of the year and fuel above-potential growth

Market Conditions and Analysis by 2013,” says Roubini. Roubini is referring to the bullish economists who predicted a greater than 3 percent annual GDP growth rate when less than 2 percent has been realized.

The “fiscal cliff” that Roubini refers to could knock 4.5 percent off the growth that will take place in 2013 should all the tax cuts be allowed to expire. In this scenario, growth will be foreseeably less than 1% since much of the global economy is built on U.S. spending – and with the expiration of these tax cuts, disposable income growth and consumption will slow.

China’s slowdown, uncertainty in U.S. elections, an unstable Middle East and unresolved debt and currency issues in Europe could realistically add to the drag in the U.S. economy.

How does this impact the housing Industry? The above issues are at the very HEART of the mortgage

rates, consumer demand for homes, qualifying criteria and whether or not sellers are confident they can sell their home should they put it on the market. To facilitate this process, the U.S. Federal Reserve has carried out various rounds of quantitative easing to purchase financial assets from private banks and institutions in order to increase capital reserves of said institutions. This in turn is intended to lower lending rates to end consumers.

This practice moving forward will be ineffective as long-term interest rates are already very low, and lowering them further would not boost spending, only the liquidity of banks. “The credit channel is frozen and deal velocity has collapsed,” says Roubini. Banks and investors only continue to increase their reserves, which doesn’t equate to lowering credit standards or broader consumer lending.

This is the reason for the mixed forecast and the series of positive and cautionary indicators that fuel the debate between economists and confuse real estate professionals as to how to position their businesses. If housing professionals are confused, just imagine the confusion of the seller as to when to put their home up for sale. or the buyer looking to identify the right time to buy. It is no wonder politicians struggle to understand why businesses aren’t spending and hiring, and banks aren’t lending. One thing is for sure – it will be an interesting election this November, and an even more interesting 2013.

Any questions or feedback on this article, email Rick Roque, Managing Editor of The NicheReport Real Estate Edition at rroque@thenichereport.com or call him at 408.914.5895.

2012 Interview Series

Investor, Opportunist, Entertainer An Interview with Russell Hantz: The Bad Boy of Reality TV Turns to Real Estate By rick roque

R

eal Estate is made up of all kinds of people. Those who are licensed real estate and mortgage professionals make up the institutional ‘players’ in the business, while others are investors looking to take advantage of cheap credit, depressed home values and the ability to turn properties for a profit (sound familiar?). These types of opportunities attract a lot of investors who have some money to put into real estate. Quite frankly the market today owes itself to this segment of buyer. Due to tightened credit-qualifying criteria, so few consumers can qualify for a mortgage that the main buyers today are individuals or a group of investors, or foreign buyers and other consumers buying homes for second properties, retirement purposes or for family members. Approximately 30% of all purchases in today’s market are all-cash transactions – these are the buyers we love to hate and need to have. So, in many respects, we are seeing more and more people like Russell Hantz, who may not have won $1,000,000 as the villain of the hit TV show, Survivor, but has applied his cutthroat approach to business in real estate on the new A&E reality show, Flipped Off. It is for this that he is known as an investor, opportunist and probably one of the more colorful real estate players visible in today’s market.

Hantz is the star of Flipped Off, a reality show focused on the ups, downs and drama of the real estate business. In the end, it is clear that that there is little glamour in real estate and more sweat

Photos by Dale Porter / KillerImage.com

equity than anything else. The show reflects the trials of real estate on his family, his relationship with his kids, dealing with contractors, stolen inventory – everything that reflects the many hurdles real estate professionals are confronted with every day as they attempt to buy and sell properties in today’s real estate market.

Hantz stages this show in one of the hardest-hit markets in the United States, Houston, Texas. “There are tons of reality TV stars sitting on their couches and twiddling their thumbs because they haven’t created anything else,” Hantz says. “I expect to be one of the biggest house flippers in Houston and I am here to bring Houston’s economy back on its feet.” Ever since the subprime mortgage crisis, flipping homes has been more difficult, since the demand for homes remains very high but qualifying consumers to purchase homes is the main obstacle. Therefore, unless borrowers are interested in renting and investors are in it for the long haul, flipping isn’t for everyone. Hantz’s life as a real estate investor is outrageous, genuine and entrepreneurial and fits into the broader market trends that are seen in today’s market.

Tell us about yourself. Where did you grow up?

Russell Hantz: I grew up in Vinton, Louisiana. My father prepared me before I ever worked outside the family. He had me do all of his entrepreneur ventures, shrimping, oystering, working in his sawmill, and much more.

Most people know you from Survivor. How did you get on the show?

Russell Hantz: By sending my video in just for fun, not thinking I would make it, and got a call two years later.

Why real estate? Why this time, and why this project coming off Survivor and Heroes vs. Villains?

Russell Hantz: First, my playing on Survivor had nothing to do with getting into real estate. Second, the man I respect the most is Mr. Trump and he's in real estate. I figure, if he can do it I can do it.

Did you have a history in real estate? And what attracted you to Houston for this next project?

Russell Hantz: I have no history in real estate, and what attracted me to Houston is that it's the fourth biggest city in the U.S. and still growing.

What do you think has made you stand out in reality TV as compared to the thousands of other ‘reality’ TV personalities that no one ever remembers?

Russell Hantz: Good question. I am truly driven for success whether it is reality TV or not. Most people just want to be famous; all I want to do is win, and succeed. I think that separates me from the rest.

Are you really that rough around the edges or is this part of your TV persona? What makes you tough?

Russell Hantz: My father made me tough, but to be successful you have to be aggressive, focused, and driven.

Sometimes it takes a little hollering to get that done.

You are working with your brother Shawn, - while many siblings could never work together, how do you make it work? Do you guys fight?

Russell Hantz: We do fight, but I believe in Shawn and that's why I gave him this opportunity [working on their current reality TV show Flipped Off], not because he's my brother but because I believe in him.

You seem to have a kinder or softer side when it comes to your kids - how does your home life mix in with your reality TV ventures?

Russell Hantz: That's easy; my hat comes off when I come home. I do not let the two, reality shows and home life, intertwine with each other.

Your current TV show (Flipped Off) is pretty open with your issues in your marriage - how can you bare all for the cameras? Does this add to or alleviate the stress on family or marriage?

Russell Hantz: Reality TV always adds stress to a marriage. You have to be strong enough to overcome it.

Survivor was the launch of your career – do you see it this way? Who benefited more – you from the show, or the show from you?

Russell Hantz: The show benefitted way more by having me, obviously. They already had my nephew Brandon Hantz and my brother Willie Hantz on Big Brother (also on CBS). So you tell me, who benefitted more, me or CBS? TheNicheReport.com

19

Define Success in how you view it?

Russell Hantz: I truly think that success is happiness.

Many view it with dollar signs, but it's not so bad to be rich and famous.

What kind of negotiator are you?

Russell Hantz: I am an aggressive negotiator when I have to be, also a submissive negotiator when I have to be. I am everything I have to be at that point to make the deal happen.

How do you negotiate? – lay out your key principles to keep in mind when negotiating.

applicable from your show that could be applied to private business?

Russell Hantz: I think the ones that succeed in real estate these days are few and far between. If you’re trying to get in this business and you’re a newbie, I would suggest talking to a professional, because it is easy to lose money. It's not as easy as I make it look.

How many siblings do you have? Being the ‘younger’ brother to Shawn, does he ever try to pull older brother tricks or put you in your place?

Russell Hantz: I have two sisters and three brothers, my brother Shawn being the oldest. Shawn knows his place, so he never puts me in my place. I am the boss.

Russell Hantz: First, it depends on who I'm dealing with. But my key principle would be to make that person extremely comfortable and excited about what they're about to buy.

Your Mom was in the first episode (of Flipped Off) – what role has your Mom played in your life and what influence has she had in your ‘survivor’ skills?

What are the five things you look for in flipping a property?

Russell Hantz: (1) Big city, because there's no property to buy outside worth the risk.

(2) Comps on the neighborhood you are about to buy from within.

(3) How much it would take to flip the house and make a solid profit.

(4) Getting it off the books.

Make sure you can do it in a timely manner.

(5) Making sure you have the best Realtor around to sell it.

You are an oil tycoon? So what can we do to lower the price of our gas in the U.S.?!

Russell Hantz: Stop driving, I guess. I can’t help you there.

Oil will always go up, and will forever go up, sorry, but it's true.

What is the key to success for Realtors, as they “survive” and thrive in today’s market? Are there principles of success 20

August 2012

Russell Hantz: My mother and my mother's father had a huge influence in my life. To be driven and happy. My mother had nothing to do with my lying, cheating, and stealing in a game to win a million dollars on Survivor.

So who is the real Russell – the one from Survivor or the show Flipped Off? You were so polarizing in Survivor – people either loved you or hated you.

Is Flipped Off a way for people to see the real you?

Russell Hantz: You'll never know the real Russell. I'm aggressive, I'm happy, I'm sad, I'm lonely. I'm everything that a person is expected to be, I am me.

Do you still watch Survivor?

Russell Hantz: No, I do not.

Why not?

Russell Hantz: It makes me sick to my stomach when I see a deserving winner lose, and unfortunately the reason that happens is because of weak, bitter people. The game has a serious flaw.

Do you have more future real estate projects in mind?

Russell Hantz: I have three houses as we speak, and you’ll see much more from me.

How did you choose your real estate agent, Kristen?

Russell Hantz: I did my research, found the top three realtors in Houston and interviewed them all. If you’ve seen Kristen, it was easy to see who the best pick was. Pretty people sell.

How do you deal with sellers who simply aren’t realistic about the value of their property? Tough love, or do you work with them, show them it won’t sell at that price and then hope they’ll listen to you on round two?

Russell Hantz: Right now, I deal in Houston. The city of Houston is too big to deal with people who are ignorant

and wait for that person who needs the money. And trust me, cash is always king.

Do you support any charities?

Russell Hantz: My main charity is "Give Kids the World." It's kind of like a sister company to "Make a Wish Foundation," but it means a lot to me, and no matter what, I will always be there for the kids. I may pause on saving the animals, but I will always make sure I spend my time saving the children.

What are your passions or hobbies, outside of Survivor or your current reality TV show?

Russell Hantz: I like to fight so I'm training for MMA (Mixed Martial Arts), so besides business, that consumes my time.

Excellent, Russell, thank you for your time. You’ve been great and I hope our readers take into account what you’ve said. I’ve always said, confidence is everything, and this is something you definitely have!

How we see it

TheNicheReport.com

21

How to Get a Steady Income with a Real Estate Investment that Is Not a Rental Property

By Karl Stockton

R

eal estate investors purchase tax lien certificates to collect taxes plus any accrued interest. It is an attractive investment, and many investors can receive a steady income while collecting their investment from property owners during the redemption period. As tax lien holders, real estate investors can receive a high return on their investment, because interest rates that accrue on tax certificates range between 5% and 36%. Many investors consider purchasing tax lien certificates as a potentially profitable investment, because most property owners generally pay the back taxes prior to the expiration of the redemption period.

Purpose - When a property owner fails to pay property taxes, the property taxes fall into delinquent status. At this point, the county where the property is located can place a secured lien on the home until the owner pays the delinquent balance. Tax lien certificates are the secured liens placed on properties for unpaid property taxes. Once a secured lien is placed on the home for unpaid property taxes, the tax lien certificates incur interest while the property taxes remain in delinquent status.

Public Auction- Real estate investors can become tax lien holders by purchasing county-held tax certificates. These tax certificates are generally sold at public auctions. These public auctions are usually held around the same dates each year.

The tax certificates are sold on a first-come first-served basis, and real estate investors must pay the face value of the tax lien certificate in addition to the accrued interest amount and any additional processing fees. Investors must bid on the tax lien certificates, and typically, the certificates are sold to the highest bidders. However, investors are required to make a deposit on the day of the public auction, which is a percentage of

22

August 2012

the total cost of the purchase. Rather than purchasing the tax certificates at public auctions, many municipalities also allow anyone to purchase the certificates directly from the county’s tax collector’s office.

Ownership Status - Investors do not automatically acquire ownership of the property after purchasing tax lien certificates. The investor becomes the tax lien holder, and the property owner must redeem the tax deed by paying all of the required fees, including any accrued interests. The property owner must redeem the property within a specific timeframe, and each state sets the time limit for redemption, which is usually between 1 to 3 years. During this timeframe, the tax lien holder may not enter the property. If the property owner fails to pay the entire amount of the back taxes in addition to accrued interest, the investor has authority to foreclose on the property and gain ownership interest in the property.

Tax Lien Foreclosure - In most states, tax lien holders must initiate foreclosure proceedings and obtain a judicial foreclosure. In other words, the tax lien holder must receive a court order to obtain title to the property. Foreclosure proceedings can be costly. The tax lien holder must pay any attorney fees, litigation fees and other court costs associated with the foreclosure proceedings. In many states, if the property owner redeems the property during the foreclosure proceedings, the court costs may be added to the delinquent amount owed by the property owner.

Karl Stockton enjoys writing about real estate, finance, investment and current issues. This article was written on behalf of Bailey & Partners. Check back to read more of Mr. Stockton’s articles in the future!

Home Inspection Floor to Ceiling Start to Finish Corner to Corner Coast to Coast Pillar To Post All Pillar To Post 速 home inspectors carry E&O insurance that protects the referring agent Our Continuing Education Program can help you meet your professional requirements* Comprehensive inspection report generated on site and available online to save you time Easy scheduling: Request an inspection online 24 hours/day, 7 days/week at pillartopost.com Find the inspector nearest you and discover the Pillar To Post difference for yourself

1-800-294-5591 pillartopost.com *Where available/applicable

Leveraging Opportunities for Leasing Commercial Real Estate A Negotiators Guide to Office Space By endre rex-kiss

W

hen purchasing office space, many potential clients fail to take full advantage of the opportunity to reduce costs and increase their profitability by negotiating with their potential landlord. This means that landlords are free to call the shots and demand whatever prices they wish – which, let me tell you, works entirely in their favour. Buying office space based on location and price per square foot can really damage your business. But getting the right amount of office space at the right price can have a positive effect on your business and really help it to grow. For this reason, negotiation is essential. This guide will share with you some excellent tips to consider when buying office space.

Firstly, do your research! Make a check-list with the exact details of the commercial real estate you are going to view. This ensures that you will not get overly excited by the look of the office space, but will instead be thinking

24

August 2012

about the practicality and the exact measurements of the property. By following this advice you will make sure that you really are getting a good deal in terms of amount of office space and price per square foot.

However, doing this will also stimulate you to assess the drawbacks of said commercial real estate. This is a brilliant tool for negotiation. Do not simply look at the positives of the property; instead focus on the negatives, as this is a perfect way to reduce cost. Attention to detail is crucial in highlighting faults of the property to the landlord; you will force them to begin to make compromises on the price of the commercial real estate, ensuring that you negotiate the best deal possible.

Do not be overly passionate when viewing potential commercial real estate. The landlord leasing the office space may click on to the fact that you are really interested in the space. This will result in the landlord becoming less flexible on price or putting down a ridiculously

速

high starting offer. When this happens it automatically guarantees that whatever price you reach will definitely be too high. In order to lever the best opportunity in terms of negotiation of office space, you should refrain from expressing too much interest in a property.

Be open with the potential landlord. Ask if they use resident screening on clients. If they do express that you have no obligation for tenant screening and that you would be more than happy to undergo a tenant check, this quickly shows to the potential client that you are an open and honest person. Doing this greatly improves the chance for negotiation, even if you have a negative tenant history, as the landlord will already view you in a positive way.

Assess the type of landlord of the commercial real estate you are viewing. This will make the negotiation process a great deal easier, because you will be able to calculate the margins within which you can negotiate.

For example larger corporations that provide office spaces are much more likely to allow a reduction in price than an independent landlord whose potential pension relies on the earnings of the property. Doing this also saves you the embarrassment of submitting a silly offer, which may cause the landlord to not consider you as a tenant at all.

Another tip is to calculate your storage needs, which will benefit you in a big way. You do not want to negotiate office space without considering your storage needs. If you did this, you could be left with an office that is too small for you. Using this tip could also save you a great deal of money as you may find that external office space is considerably cheaper, and you may actually require less office space than you thought. By this into account when

HOW CAN WE FUND YOU? Bridge Loans from $1 million - $50 million+ fast!

24-hour commitments, commercial loans for land development and acquisitions, bankruptcies, note purchases, workouts, foreclosures

calculating your storage needs, you could save a lot of money – which is extremely beneficial if your business is small or just started up.

Following all these tips will ensure that you can negotiate the best amount of office space for exactly the price you want. Good luck!

Endre Rex-Kiss is a green business advocate with a keen interest in sustainability and social media. He is an occasional guest blogger and freelance writer, currently working for Unger & Kowitt, a company of lawyers in Miami specializing in traffic tickets and resident screening.

Follow his rants on Twitter.

How we see it

7 Facebook Timeline Marketing Tips to Grow Your Business

S

ome marketers complain about the endless changes Facebook keeps making, I look at every change as an opportunity for more marketing ideas and strategies that can help grow my business. If we think of it this way, we will be more excited about every change Facebook makes, and recognize how we can monetize it while the rest of the crowd is still complaining and mourning about it.

Growing up in Morocco, I used to always hear my grandmother say, “Waking Up Early is Gold.” Until I started studying marketing, I thought she meant waking up early in the morning. The meaning of the proverb really applies to marketing. Those who understood the ins and outs of Google at a very early stage, before the rest finally woke up, have made empires out of their businesses... all from being early adopters.

Marketers who saw the opportunity on Facebook ads when they first started have made fortunes online when the ad costs were pennies. This group did very well before everyone else started jumping on board, making Facebook ads more competitive for everyone. Don't get me wrong here; Facebook is still a baby compared to Google, and believe it or not there are many people who still have not awakened!

What I’m trying to say is that you need to jump on board as fast as you can. Facebook is still making changes and updates to its platform. You can still be an early adopter as long as you pick up on the changes and turn them into opportunities to grow your business.

The Timeline itself is no longer new, but Facebook is still testing and adding new features. I wanted to highlight and share some tips and tricks of using them to our advantage: 1) Promote Your Posts: Studies show that only 16% of your fans will be able to see your posts on their newsfeed. Basically, the rest of the fans you spend time, energy and probably money on will not be exposed to your messages. Now, for pages with over 400 likes/fans, Facebook has an option for administrators to promote posts to their fans and friends of fans using the “Promoted Posts” feature. This will give more visibility to your posts and help you get more fans to your page since it also gives you exposure in front of your fans’ friends.

Facebook will suggest a budget for your post ads, and whatever budget you decide to go with, that’s what you will end up paying for the lifetime of your ad (up to 3 days after you create your post) if you don’t stop running or change it.

TheNicheReport.com

27

Facebook will also give you an estimate of how many people will see your post once it’s promoted.

There are some exciting things about this feature I want to point out: • Your ad will show up in the newsfeed: Unlike regular ads, promoted posts don’t show up on the right side of Facebook where all paid ads are showing. This is a very good advantage. Since people don’t generally like being sold to, they tend to have a resistance against paid advertising. Having your ad show on the newsfeed like any regular post made by your prospects' friends or family will make it more likely to be seen and clicked on.

• Very few restrictions: If you have ever used Facebook ads, then you probably suffered from the fact that you are very limited to what you can and can’t say on your ad. With the new promoted posts, you don’t have to go through the pain of creating your ad very carefully, waiting for it to get reviewed, and then having it disapproved because your image was not a good match with your message or for other (sometimes seemingly unknowable) reasons.

• You can promote all post types: You can promote status updates, videos, pictures, questions, events, etc.

• You can target your promoted posts by location and language: If you’re promoting an open house or a live seminar in Las Vegas, there’s no need to pay for your post to show to fans and their friends in other locations.

When creating an ad that you’re planning to promote, make sure to keep this in mind: a) What is your message? What are you promoting – an open house, live seminar for Realtors, teleseminar? b) What action do you want the users to take? Do you want them to register for a webinar, call your office for more info, visit your website, or simply like, comment or share your post for more fan engagement and page exposure? c) Make use of images and videos. By using a video or an image in your promoted post (same for regular posts), you will get more real estate on the newsfeed that helps your post stand out and gets you more response.

2) Schedule Your Posts: There are many third-party applications you can use to schedule your Facebook posts in advance. However, I’ve been always skeptical about using these apps with Facebook, especially knowing that Facebook used to penalize posts made by third-party apps by not giving them enough visibility. You can now schedule your posts within 28

August 2012

Facebook. Just create your post and click on the hour icon, and Facebook will walk you through the process.

Once created, your scheduled post will disappear from your timeline and will only appear at the time you scheduled it to show.

However, if you need to see or edit your scheduled posts at any time, just click on “Edit Page” from your admin panel and select “Activity Log.” You will be able to change the time, publish immediately or just cancel the post.

3) Pin and Highlight Important Posts: Here are some great tools to showcase posts to your page’s visitors.

• Pin Feature: This allows you to bring a past post to the top of your page and keep it there for up to one week so that your page’s visitors can see it when they land on your page. You can be very creative about the posts you want to pin to the top of your page. A good idea is to pin a video testimonial from a buyer or referral partner, or pin a video of you welcoming new visitors to your page... including a call to action for them to like your page, for example.

• Highlight Feature: This will not bring your post to the top. Instead, it will give the post extra space to make it stand out from other posts and grab visitors ' attention to it.

4) Create Milestones: This feature allows you to showcase some of your successes, important accomplishments in your career, etc.…

People love stories, so make your page tell them a story when they’re scrolling down your timeline trying to learn more about you.

5) Watch Your Insights: Facebook does the heavy lifting for you by collecting all of the information you need to know about your fans ( gender, age, location, language spoken) and their level of engagement to your page), and show you where your traffic is coming from (other social media site, your blog, YouTube video etc.). This is just the tip of the iceberg of the information you can get from Facebook insights; I would need a whole article to cover it. The good thing is that Facebook does it all for you, for FREE!! All you have to do is understand these insights and what they really mean to your business. Use them to identify what works and what doesn’t, to give a better experience to your fans and get better results with your Facebook Marketing.

6) Maximize Your Timeline Cover: This generously large real estate is the most important part of your page. A recent eye tracking study showed that visitors look at the timeline cover more than any other content on business pages.

The timeline cover replaces what used to be the “Default Landing Tab.” Be very strategic on what you put on it because that will be the first impression a visitor will have of your brand.

You can change the timeline cover as often as you want.

Posting a picture of a happy family in the new house that you helped them buy, for example, is a great way to show your visitors what you do using social proof. You can also use that picture to tag your buyers. This will help you gain social proof and extra exposure to the buyer's list of family and friends which may lead to more business for you.

The timeline cover has a lot of restrictions. For example, you can’t include any calls to action, contact information, prices or rates, etc. However, you can use everything I just mentioned as the image description people can see when they click on it!

30

August 2012

7) Use Your Business Page to Build Your List: We all know how important the list and the relationship with the list are to any business, You can use your Facebook Business Page as a lead-capturing tool by creating a custom tab that has an opt-in form where the visitor is enticed to leave their information (name, email, phone number) in exchange for a FREE Gift. (See image from a Loan Officer’s Page.)

You can also connect the form to an autoresponder to automatically follow up with your prospects with an email sequence that was previously set up.

There are many low-cost to free autoresponder tools you can use; just do some research to see which one will work best for your business.

There are few things to remember when marketing on Facebook. You need to connect with people on a more personal, human level; after all, you are on a social networking site. Also, keep your posts simple, entertaining and relevant for people to like, comment and share.

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. 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 ready for anyone to use, but many seldom do. If you have any questions or need help with your social media and online marketing please visit www.cssocialmedia.com and send us your questions.

Borrowing from Hard Money Lenders for Real Estate Investments By karl stockton

F

inding what appears to be an excellent opportunity for a real estate investment deal may mean that you cannot get the money quick enough from a local lender. You have limited time to make good on the deal but need a way to come up with the cash to complete the transaction – you may need to find a hard money lender.

You are in a more urban area and know that there are some real estate investment clubs around. There do not seem to be any other options so you contact them, knowing that they may be very willing to help you if it is a good deal.

You have also learned that a private investor could probably deliver the money as quickly as five days (in some cases).

One very important key in working a deal with private investors is to show them that it is a good deal – even if you cannot pay them back. For this to happen, there needs to be considerable equity in the property, which will enable them to make a profit even if they have to take the property back from you for lack of payment. Even then, you will most often be able to only borrow about 65 percent of the property's value after it is fixed up.

A large part of their consideration of the hard money loan will be the value of the property – not your credit.

Although they will look at your credit score, the largest factor is the collateral. Since they are in it for the money, they are sure that they will make a profit even if you do not.

However, if you handle it right, your investment in a good deal should yield a lot of profit for you, too. How much profit you get will depend on your expertise in real estate

transactions, the market, and the amount of interest you pay to the hard money lender.

It is also important to know the difference between a hard money broker and a hard money lender. A broker is a middle man between the borrower and the private lenders.

They may charge a fee upfront to simply put you in contact with some private investors. This may not be refundable.

A private lender, however, or lenders, will have their own private money to help you finance the deal.

There are some websites online that will enable you to post your request for a hard money loan, and private investors will look it over and contact you if they are interested. Both brokers and private lenders keep track of possible deals, so you will need to know who you are dealing with before an agreement is made. Of course, simply posting your need does not constitute an agreement.

The private investor will evaluate the property before agreeing to give you a loan on the property. If he or she does not believe it is worth the investment, you will not get the loan. This makes it your responsibility to ensure that the amount you are asking for is in line with the typical private investor's expectations. Learning how to do this will come with time, and from talking with other people who frequently deal with hard money investors. Remember – they are in it for a profit, too.

Karl Stockton frequently writes on real estate, finance, investment and current events.

TheNicheReport.com

31

property rights Owning real estate and home ownership is the dream of many and a nightmare for others by terry martin-back

W

hile most of us go through our daily lives working our business, raising our families and finding some time to enjoy our life and community, we neglect to watch what is going on when it comes to our property rights.

As I sit here and write this piece, there are changes going on with our “Unified Land Development Code,” which is slowly impacting our property rights, not just in my community, but in communities all over our nation – and we never even think about how it will affect us, until it impacts us or someone we know. I am presenting three examples of what can happen or has happened when we don’t pay attention, even though many of us work in the real estate industry.

• A 90-year-old gentleman has operated a boarding kennel for over thirty years and wants to sell his property and business so he can maintain a 32

August 2012

comfortable standard of living for his final years. Along comes a buyer who is interested in buying the property and business and is willing to lease the house back to the seller and allow the seller to maintain the boarding operation. It appears that this is a dream come true for the buyer and the seller. The seller doesn’t have to move, gets to live in the house he has lived in for years, doesn’t have to pay for the upkeep of the property, and it also allows him to operate a business that he loves.

As the senior gentleman is attending to business, a Codes Enforcement Officer knocks on his door and advises him that he is in violation of the current code, since the property had changed ownership, and because the classification of the area had changed years before and this property had been “Grandfathered” in per the ULDC (Unified Land Development Code). The owners would now have to petition the zoning board for a special exemption to allow the boarding kennel to remain. The senior fellow was also cited for having too many animals on the property and the operation of a kennel on a property which is not allowed under

the current ULDC. This all came about because a neighbor complained of barking after they had recently purchased their property near the kennel. Keeping this in mind, the only thing that changed was the ownership, and now, the local government is requiring the owner to request permission for allowing a special exemption to operate as a kennel which it had been operating for over thirty years.

• A farmer has a fifty-acre parcel that he wants to divide into five ten-acre parcels, and sell to people who want a place where they can have a few horses or operate a small farm. The owner hires a surveyor to split the properties and contacts a real estate agent to sell the properties.

This is where the problem begins. The agent finds a couple of interested buyers and during the title search, it’s found that the parcels had not been recorded properly and needed to have individual tax parcel numbers assigned. With that being done, the sale went through and the buyers were excited about saving enough money so they could start building their dream home. The new owners fenced their property and maintained the properties for a few years, and when they had saved enough money to pay for house plans to be drawn and hired a contractor to build their dream home, they found out they had to apply for a variance because the zoning was for agriculture only.

Upon further investigation, the local comprehensive plan designated for their property was one house for twenty acres. The owners had to create a plan to present to the planning commission and convince the board on why the board should accept their application, which, in the board’s opinion, equated to sprawl.

• A couple bought a five-acre parcel to place their mobile home in a rural part of the county. After closing on the property, they applied and paid for all the permits required for the placement of their mobile home, i.e., setting the mobile home, well drilling, placement of a septic system and electrical panel and getting final inspections. Once those were approved and they acquired the final certificate of occupancy, they were able to move into their new home. Upon moving in, they started working on the landscaping, cutting trees, installing a fence for their horses and building a small paddock for the horse to keep it out of the weather.

And then, a Codes Enforcement Officer came knocking on their door. Upon sale of the property, the new owners were suppose to comply with the county EPA (Environmental Protection Agency), who had deemed the property an environmentally sensitive area, stating it had to remain in a natural state and the only area that could be landscaped was the plat designated around the placement of their home. The area could not be fenced and the paddock had to be removed.

And because trees had been removed, they had to be replaced with trees large enough to have canopy coverage equivalent within twenty years to what they had removed, as per EPA aerial photograph of what the property was before they cleared the property.

The title search had not revealed the EPA recommendation and was not part of their deed, yet Codes Enforcement was going to levy a fine on the property owners until they met the standards set by the EPA. The couple allowed the property to be foreclosed upon and left it as it was.

These are three examples of what can happen when we’re not paying attention. Elected officials are guided by government employees who are being trained by government employees to slowly remove our property rights or allow government sanctions to be applied that limit our enjoyment of our property.

We need laws to protect our environment and people’s safety – but where do we draw the line? Get involved with the discussions in your community and determine if your ULDC makes sense, and if it doesn’t, see what you can do to change it. It’s your community; what are you doing to keep your property rights? What are you doing to limit your government’s ability to remove your property rights?

Get involved, stay involved, and stay informed; what do you have to lose, other than your personal property rights?

Terry Martin-Back is a Broker Associate and Co-owner with his wife Debra of Exit Realty Producers of Gainesville Florida, Certified General Contractor, 20-year military veteran and combat veteran of Operation Desert Storm. He was appointed to the Alachua County Codes Enforcement Board and the Alachua County Veterans Advisory Board by the Alachua County Commission. Terry was a Congressional Candidate for Florida’s 3rd Congressional District during the 2010 election.

TheNicheReport.com

33

straight up

FHA 203K: Breaking the Mold and Stigma "When you've got them by their wallets, their hearts and minds will follow."

- Fern Naito

I

’m in the mortgage business.

You are more than likely in the mortgage business or a real estate agent. I am going to tell some hard truths today. You are more than likely going to be a little shocked, then maybe a little confused, then a little annoyed, and then hopefully you are

going to think....

Here are some truths that we must come to terms with: 1. Common sense isn’t always so common.

2. People want everything NOW – and think they are entitled to it.

3. We are taught to get a “good” or “secure” job, buy a home and pay it off. I don’t know that this model exists anymore. Other than for our grandparents, paying off a home is a thing of the past. Whether buying or refinancing, the majority of Americans get a new loan every 7 years.

4. The government wants you to buy a house and get locked into the system – why else would they permit you to 34

August 2012

get in over your head? The second you are in over your head, you belong to them. Consider these questions – Who started marketing the message that you should buy a home? The government. Does the government want you to pay off your house? Not a chance! Do they have the statistics on the fact that no one ever makes it to that goal? Of course. Are they depending on people to fall victim to the societal pressures of keeping up with the Joneses? YES. Are they “banking” on the fact that your own psychology, with a helpful nudge from them (unlimited credit), will trap you in their debtor’s prison for the rest of your life? Yes – they are literally banking on this, and it works every time.

5. Most people will choose the path of least resistance.

Rarely do you see someone going against the current. This is yet another psychology principle that has been used on people by governments, advertisers and marketing experts from the beginning of time.

6. The only chance of real freedom in this country is financial freedom. I’m not talking about having millions and being able to tell your boss to screw off; I’m talking about the small daily decisions to keep you in control. This

straight up

starts with your monthly disposable income. This means that even if things fell apart financially you would be able to cover your basic expenses with any job.

7. Most people don’t NEED a new house, or the new car, or the new furniture or another $75,000 student loan to help get a degree that will allow them to make an extra $5,000 per year.

8. Millions of people across the country are buying homes for the first time. They are buying off emotion – purely off emotion. Then they try to justify it with logic.

“If I can have this huge house, I’ll be able to show my parents, friends, spouse – I’ve made it.” “If I can buy this house, things will finally fall into place.” “I might as well buy what I want since I will make more money in the future.” Or the saddest, “What’s another $500/month if it means happiness for me or my spouse or my kids?”

Are the above facts tragic? Yes. Are they accurate? I believe so. While it may be uncomfortable to read these things, we have reached a tipping point. We as consumers and agents and mortgage bankers and brokers feed into these truths on both a large and small scale each and every day through our purchases and how often we choose to

leave that credit card with a 19% interest rate in our wallets.

Here’s my last truth – and you know what they say – the truth hurts...

9. A home is the largest purchase most people will make in their entire lives, and you and I are probably guilty of profiting from our clients’ financial ignorance. What does that make those of us in the business? We’re the dealers, and our clients are jonesing for a real estate fix...

Try not to become a man of success but rather try to become a man of value. ~Albert Einstein So the world is a mess, people are sheep and we are to blame? Maybe – but there is hope. We can all make a mindful and deliberate effort to be part of the solution instead of enabling the problem. Education is the only chance we have. As I mentioned before, buying a home is the largest purchase most people will ever make. When they overextend themselves, this major purchase is also one of the biggest areas where people get knocked out of the running for a successful future. This is where we come in…

By educating ourselves, passing this knowledge on and becoming a financial steward of the community, we

Increase Listings, Loans & Referrals!

Include a 5 Day/4 Night “Cruise Certificate for Two” To Mexico, the Bahamas or the Western Caribbean

Only when your clients do business through you!

Cruise4Two is #1 in customer satisfaction!

What Your Company Can Expect: • Increased Advertising Response • Edge Over Your Competition • Cost Effective Way to Say (Thank You) • Guaranteed Results • More Referrals • Marketing Materials Included

159

$ Call Today (866) 541-8077

only

00

Per Certificate

Cruise4Two.com *Minimum purchase required. Cruise certificate recipient is responsible for port charges, taxes, customs and fulfillment fees. See cruise certificate for full details. © 2011 Cruise4Two All Rights Reserved.

straight up are being a part of the solution. I would suggest starting with the following books: Influence – The Psychology of Persuasion, by Robert Cialdini , The Richest Man in Babylon, by George Clason and Think and Grow Rich, by Napoleon Hill.

Education will also show us how to do our jobs in a helpful rather than a predatory way. We are all providing a valuable and necessary service if we are act intelligently, honestly and responsibly. There is nothing wrong with buying a home – in fact, it is a brilliant move if done strategically – but we must help buyers to think like investors.

How can I use my home and the system to get ahead, versus putting me in the long line on the financial treadmill?

There is a program that gives people who are buying their primary residence (not just first-time home buyers) the ability to buy a home and fix it up with the bank’s money – a vehicle to catapult someone decades ahead in their financial security. This program is called the FHA 203k Loan and has been around for more than 30 years.

How does it work? The FHA 203k loan program provides home buyers the opportunity to buy and fix up a property, without exhausting their personal savings. Home buyers can purchase a property and include whatever costs to make required repairs and desired updates, or to fully renovate the property – all into one simple 30-year fixed loan. ALL work starts AFTER purchasing the property, using the money set aside by the bank.

Anyone buying their primary residence can receive a loan for the purchase price plus the money required to do the work they specify.

Down Payment? You have a client buying a home at $150,000. They decide to remodel the kitchen, bathrooms and install hard wood floors throughout, totaling $30,000 (total amount of bids) and increasing their monthly

“I’ve gotten great compliments on my newsletter and people say they really enjoy reading it!”

See for yourself!

Susan White Alain Pinel Realtors

rightsidemarketing.com ~ 800.456.4395

payments by roughly $150/month (roughly $25/month for every $5,000 increase in loan amount).

Purchase Price: $150,000 Total Bids: $30,000 Contingency (15% of bids): $4,500 (this is for anything unforeseen) +Fees: $500 (inspections, title work, loan fees) TOTAL PROJECT COST = $185,000 Client Down Payment = 3.5% * Total Project Cost = $6,475 No Down Payment? What if your client does not have the 3.5% minimum down payment requirement?

They can receive the full amount as a gift from a family member or in the form of any city/county/state/federal down payment assistance. The borrower is not required to pay for any cost other than the typical costs associated with the home process (inspection and appraisal). Any money not used is removed from their loan amount once the project is completed.

Not Enough Income to Qualify? This is an FHA loan, so non-occupied co-signers are okay! I smell a marketing opportunity right here. Who other than you cares what happens to a home buyers’ future? Their parents of course! Stick with me here because this is good. You could market a class to baby boomers (a rather large market at the moment) on how they could send their children to college, buy a property with their college student (their primary residence) for only 3.5% down, receive money to fix it up then rent out other rooms to friends. Not only would their college student’s cost of living be paid for, it could provide cash flow if done correctly AND at the end, since they fixed up the property, they could sell the property, using the proceeds from the appreciation to go towards their child’s student loans.

Not the Best Credit Score? This is FHA, so while credit score requirements vary per lender, these requirements are the same as for all FHA loans, 620+ (some places still provide FHA loans down to a 580).

This is not just for first-time home buyers – anyone buying their primary residence qualifies for this loan.

Why Isn’t This Program Better Known? To speak on others’ behalf, other lending institutions, banks, brokers, etc. don’t want to mess with these loans because they are more work and more risk. This is the main reason we decided to become the experts. If you find a contact that closes these loans successfully, you ask for their hand in a

Be the second opinion.

Gain a second revenue stream.

Earn the Broker Price Opinion Resource Certification.

The real estate landscape is changing. BPOs (Broker Price Opinions) are in high demand, and this brings whole new revenue opportunities and ways to stand out in the market. Learn to take advantage of this growing trend, reduce risk, and provide professional and accurate BPOs with the BPO Resource (BPOR) Certification.

During the core course and webinar, you will gain the knowledge and skills to evaluate a property, get introduced to leading market valuation tools, and learn to efficiently generate accurate and professional reports. Upon earning the certification, you will be eligible to receive BPO orders.

Sign up for the BPOR Certification course, Broker Price Opinions: The Agent’s Role in the Valuation Process, offered on November 10th prior to the 2011 REALTORSŽ Conference and Expo in Anaheim, California. Visit bpor.org to register!

Become a BPO Resource.

Earn BPO revenue.

Learn more at bpor.org

straight up very long-term relationship.

In a lot of ways this sounds too good to be true – the exact thing I’ve been preaching against. Could this be dangerous in the wrong hands? For sure. If your clients buy in a terrible location and dump all their cash into it – dumb. If they improve it without increasing the value – dumb. If you help them to create a strategic plan that will be profitable and educational – smart. Yes it takes more time and effort to teach someone new skills rather than enable previous behavior. But not only do we have an obligation to educate; it could be the most profitable business decision we ever make.

What if, with your (the agent’s) help, buyers set out strategically? You assist them in buying a home that with a new kitchen, carpet and some paint is organically, instantly increased in value. But what if you aren’t familiar with thinking like an investor? Find an investor and ask them to help you understand how to look at a property as a cash cow – buy and hold, improve and sell.

With any FHA loan they need to keep the loan for a minimum of one year. So could someone do this strategy once a year? YES! Now we’re talking. Agents want repeat

business, and I bet three houses over three years would be a better payout than letting them buy a bigger house once that leads them into foreclosure (and knocks them out of the game for a minimum of three years).

Bottom Line Our belief systems regarding finances, security, status, instant gratification and needs versus wants are crippling our society as a whole – on a macro and a micro level. Part of our role as real estate agents and mortgage professionals is to educate and advise, and we have an obligation to do so intelligently and responsibly. This doesn’t have to equal financial sacrifice on our end, however. We can be part of the solution – and be more profitable than ever.

Jocelyn Predovich 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.

Email jocelyn@limetreelending.com for registration details.

FINALLY, We have CRACKED The FACEBOOK Code!!

No doubt about it, Facebook is here to stay. Jump in or stay home! Facebook is a VIRTUAL LEAD MACHINE to those who know how to use it.

Why Not YOU? 4It's NOT hard as you might think….

4It's NOT expensive as you might think…

4Have Your Very Own Lead Machine!!

4Stop what you're doing, and visit us RIGHT NOW at:

www.stunningfanpages.com/realtors

Why NOT NOW? 4ACT NOW & receive: FREE CUSTOM DESIGNED Twitter Page ($99 Value) FREE CUSTOM DESIGNED YouTube Channel ($99 Value)

42 Convenient Payment Options:

$ 497 (Save $100) $197 (3 equal installments)

We NEVER Use Templates…EVER!! Friends don't let friends use templates…

Not ready to pull the trigger…??

Take my “How to Profit From Facebook” WORKBOOK & CHECKLIST as our way of saying…Thank You!

For Your Immediate Downloadable Resources, visit: http://www.stunningfanpages.com/workbook

Get Started NOW and have your Social Media working for you!! http://stunningfanpages.com/realtors

7 Lessons I Learned About Negotiating While Watching Barter Kings By iman yusef-yahya

T

hey are reinforcers, actually.

Let me explain....

While searching for something to watch on TV, I ran across a show on A&E called Barter Kings. If you're not familiar with the show and what it's about, essentially, in each half hour show, A&E follows what is called "two 'trading strings,' the dramatic chain of events as items of little value are traded up for items worth thousands!

“At the heart of every trade is the art of the deal...

“It takes a ton of strategy, charisma, and all out manipulation to close them. It's a world filled with amazing characters, fascinating items, and most of all, surprising, unpredictable journeys. When it comes to Barter Kings, anything can happen."

Watching how these guys negotiate their trades to be able to 'trade up' reinforced several things I have learned over the years about negotiating a real estate wholesale deal.

Below are the 7 lessons about negotiating that were reinforced while watching last week’s episode of Barter Kings: 1. Don’t get excited – keep your game face. Keeping your emotions in check is essential when you KNOW 100% you've got a smokin' hot deal.

Case in point, I remember getting a call from a seller about a property located blocks from one of the area

universities here and just about lost it when she was telling me where it was located, that it didn't need a lot of work and what she was looking to get for it.

2. Never feel guilty about getting the better end of the stick. Remember, what we're offering is to pay ALL cash, as-is, with a quick close! We are investors, which mean we are in it to make a profit. And to do that, we have to get it at a discount.

The benefit to the seller is that they are getting cash today, without having to list it on the MLS and sit around and hope and pray that their house, which may or may not be in disrepair, gets sold – QUICKLY. 3. When in doubt, bring up the spouse. I've spoken to many sellers, usually men, who make mention of the fact that their wives have been on them about getting rid of a house that's just sitting there not making them any money.

Pointing that out in your negotiations can prove to be invaluable. It’s still great to bring it up even if that is not a point of contention in the home.

4. This thing isn't bringing you any money. Great to point out, especially in the case where the property is just sitting vacant, not bringing in any income.

5. Let them think that they are right in their belief that the item is not worth a lot. By allowing the person to think that their item isn't really worth a whole lot, they have pretty much sold themselves on why they should get rid of TheNicheReport.com

39

it, and don’t expect much for it.

The same principle applies in our own negotiations.

Stepping back and letting a seller list all the reasons why their property probably is not worth very much (in most cases they are correct), and offer you a number where you need to get the property sold to a cash buyer, is like being handed a gift on a silver platter, so to speak. Those kinds of deals don't come along every day.

6. Find a soft spot. In the case of the two Barter Kings, soft spots for them were children, grandchildren, etc. For example, when someone would mention that they were looking to barter because they were trying to do something for their children or grandchildren, the barter kings reminded them of that fact.

We refer to it in our business as pain points. Herein lays the benefit of letting the seller do a lot of the talking so that you can listen for things like that, and remind them of the reason they are looking to sell in the first place.

7. Closing the deal takes skill and strategy. Having the skill without the strategy to best use that skill is useless.

Skills can get you only so far. From time to time you'll see them researching the value of the item they are looking to trade up to, as well as their own item, all of which makes

for better negotiations.

As with wholesaling, by making the mistake of putting a property under contract without doing sufficient due diligence on such things as the neighborhood, the block the property is located on, back taxes, liens and judgments, etc., you run the real chance of eating into your profits in the end.

Please understand that by no means am I suggesting employing the use of manipulation as was mentioned in the show bio above, or anything unethical or the outright exploitation of others.

I am suggesting that you use the insights from above to reinforce and improve your skills as a real estate wholesaling ninja negotiator. Just don't be that guy/girl who operates without ethics and morals.

There you have it! Seven lessons about negotiating that were reinforced while watching an episode of Barter Kings.

Now go negotiate, ninjas!

Iman Yusef-Yahya, also known as 'That Philly Wholesaler Chick,' hosts a content-focused blog at http://www.

RealEstateWholesalingExplained.com.

Write for The Niche Report magazine or blog.

Let your voice and knowledge be heard by writing for us.

Tap into our huge audience of Real Estate agents & Brokers around the country.

We Want YOU!

Learn more by going to www.TheNicheReport.com/ write-niche-report or call us at 866-964-2695

Service Provider Classifieds

Service Provider Classifieds broker opportunities EXIT Realty Corp. International 877-253-3948

EXIT’s technology incl its Digital Marketing Strategy & CRM/transaction mngt program TORC (coming soon) give agents the edge. MIND-SET offers the best interactive sales training. All this, plus single-level residuals & incredible corporate culture.

Home Inspection Pillar To Post Professional Home Inspection 877-294-5591

Pillar To Post is North America’s leading home inspection company, whose professional inspectors work with both the real estate community and the buyer or seller of a home to provide on-the-spot inspection reports.

Lenders Retail Mortgage Lender PrimeSource Mortgage 888-505-2274

A publicly traded, national retail mortgage lender, with a broad product offering of mortgage products for New Purchase, Refinance, Rehabs, ShortSales and a national staff to assist borrowers at all phases of their decision making process.

A premier lender in the mortgage industry. Our goal is to provide borrowers with the best possible financing options available in today's mortgage lending environment. Visit us at www.primaryresidentialmortgage.com

Primary Residential Mortgage 800-255-2792

hard money/rehab Kennedy Funding 800-342-8500

MultiFamily Apartment Bank 877-442-4003

Specializing in nationwide fast, creative short-term bridge loans ranging in size from $1 million to more then $50 million. Loan commitments in 24 hours. Fast closings. Loans are available for note purchases, acquisitions, land development, construction, workouts, refinancing, bankruptcies and foreclosures.

Apartment Bank, a division of BofI Federal Bank (NASDAQ:BOFI), is a Nationwide Direct Portfolio Lender that has solidified its standing as a premier multifamily lender in the small balance lending space. Apartment Bank’s flexible approach is key to freeing borrowers and brokers from the typical headaches and hassles of small loan transactions. Loan amounts from $250,000 to $10,000,000. Visit http:// www.apartmentbank.com

TheNicheReport.com

41

Service Provider Classifieds

marketing & lead Gen Best Rate Referrals 800-811-1402 Cruise4Two 866-541-8077

Your marketing leader with many services available from Direct Mail & List Services, Telemarketing, Internet Leads, Mobile Marketing, and more.

Cruise4Two provides 5-Day/4-Night ‘Cruise Vacation for Two’ certificates to brokers/realtors for incentivizing homeowners to buy or sell thru you! $159-$189. Free marketing materials.

Call: 866-541-8077 or visit www.Cruise4Two.com.

Right Side Marketing 800-456-4395

Providing exceptional marketing materials for Real Estate and Mortgage professionals since 1985.

Titan List & Mailing Services, Inc. 800-544-8060

Over 12 years of experience catering exclusively for the industry delivering consistent results from our turn-key campaigns. Our Pre-screened data, 24 hour turn around and custom pieces design continue to lead the industry for marketing efforts.

Technology a la mode

Websites and marketing tools for real estate professionals.

800-252-6633 ext 309

Smarter Agent, LLC 888-486-7319

Smarter Agent is your one stop for a full suite of customized broker and agent mobile solutions. Get your own branded version of the Smarter Agent app to easily distribute to your clients, with all calls and emails going to you.

Own your Own Leads!

title work & insurance Entitle Direct 877-936-8485 or 877-9ENTITLE

Hundreds of Real Estate professionals have saved their borrowers up to 35% or more on their title insurance by recommending Entitle Direct.

Marsh U.S. Consumer, a service of Seabury & Smith, Inc.

As the nation’s leading broker and administrator of insurance programs, Marsh U.S. Consumer, a service of Seabury & Smith, Inc., designs, sells, implements, and administers plans that provide clients with easy access to coverage, increased security, and asset protection. Marsh U.S. Consumer programs include solutions that provide businesses, organizations, and franchise operations with customized insurance programs and administrative support.

866-795-9613

42

August 2012

LENDER AND RESOURCE DIRECTORY

Apartment Bank Apartment Bank, a division of BofI Federal Bank (NASDAQ:BOFI), is a Nationwide Direct Portfolio Lender that has solidified its standing as a premier multifamily lender in the small balance lending space. www.apartmentbank.com 877-442-4003 apartmentcustomerservice@ apartmentbank.com

a la mode Websites and marketing tools for real estate professionals. www.alamode.com 1-800-ALAMODE info@alamode.com

Entitle Direct Savings up to 35% or more on title insurance in 30 states. www.EntitleDirect.com/mortgage 877-936-8485 or 877-9ENTITLE SpecialistCenter@EntitleDirect.com Best Rate Referrals Mortgage Marketing Professionals. www.bestratereferrals.com Raymond Bartreau 800-811-1402 raymond@bestratereferrals.com

Cruise4Two - Cruise Incentives Provides 5-Day/4-Night ‘Cruise Vacation for Two’ certificates to brokers/realtors for incentivizing homeowners to buy or sell thru you! $159-$189. www.Cruise4Two.com Shawn@Cruise4Two.com 866-541-8077

EXIT Realty Corp. International EXIT Realty is Real Estate Re-Invented! www.exitrealty.com Tami Bonnell 877-253-3948 tbonnell@exitrealty.com

Kennedy Funding Nationwide. Fast creative short-term bridge loans. $1 million-$50 million +.

Commitments in 24 hrs. www.kennedyfunding.com Edwin Urrego 800-342-8500 edwin@kennedyfunding.com TheNicheReport.com

43

LENDER AND RESOURCE DIRECTORY

Pillar To Post Professional Home Inspection Leading home inspection company, whose professional inspectors work with both the real estate community and the buyer or seller of a home to provide on-the-spot inspection reports. www.pillartopost.com Jay Gregg, Director of Marketing 416-620-3567 jay.gregg@pillartopost.com

PrimeSource Mortgage Publically Traded Retail Mortgage Lender. www.WeWalkYouHome.Com Jeff Smith 888-505-2274 jsmith@wewalkyouhome.com

Primary Residential Mortgage We offer strength, trust, and integrity you can rely on. www.primaryresidentialmortgage.com 800-255-2792 44

August 2012

Marsh U.S. Consumer, a service of Seabury & Smith, Inc. The nation’s leading broker and administrator of insurance programs. www.realproeando.com 866-795-9613 realproeando@marshpm.com

Right Side Marketing Marketing Materials for Real Estate and Mortgage Professionals. www.rightsidemarketing.com Jill Fleischman 800-456-4395 x10 jill@rightsidemarketing.com

Smarter Agent, LLC Smarter Agent Mobile Real Estate Application Platform. www.smarteragent.com 888-486-7319 gomobile@smarteragent.com

Titan List & Mailing Services, Inc. Data Provider, Printing Service & Dirct Mail House. www.Titanlists.Com 800-544-8060 Titanlms@Bellsouth.Net

BRINGING UP THE REAR - continued from page 46

reporting bias has always been built in to the published rate.

What should also be more than obvious is that this scandal cannot be borne at Barclay’s alone because if that were the case, it wouldn’t accomplish anything. One bank misreporting its borrowing rate wouldn’t make any difference, right? They throw out the top and bottom four, remember? So, why would you bother lying if your buddies at the other 15 banks weren’t going to do the same?

Answer: You wouldn’t.

But, somehow… we’re not sure yet whether others are involved. And that’s because – well, because we’re dumber than a box of rocks, that’s why. Or, at least that’s the only reason of which I can conceive. Nothing else makes any sense.

Barclay’s traders have apparently been fudging their LIBOR reporting since 2005 in order to up their profits, and hence their bonuses, and that’s the next “you’ve got to be kidding me” moment in this scandal. Who designed this system of asking traders to self-report a number that affected their bonuses? Was it a small child? And why would it only have started in 2005?

Do you see what I mean? This isn’t just a scandal… it’s an exposé into absolute stupidity. Who thought this system would work? Everyone on that list needs to be hospitalized, because they could hurt themselves crossing the street or tying their shoes.

And yet, the BBC reported: “… the rigging of LIBOR may have pushed attitudes at the highest levels to the point of disgust.” Seriously? They knew how this whole reporting system was set up and what it affected, and yet they figured everything would work out just fine? What could possibly go wrong? And these are the masters of global high finance… the smartest guys in the room, as it were?

Now it’s come out that both US and UK regulators, the Federal Reserve and the Bank of England, have been aware since May 2008 that all the banks, not just Barclays, may have been under-reporting their borrowing costs to the BBA's LIBOR committee.

All the banks “MAY” have been underreporting their borrowing costs? Maybe? It MIGHT have happened?

They’re not sure?

I don’t know about you, but I can handle finding out that global banking is a cartel. I can handle finding out that the whole world is basing its most important numbers on what some trader in London says on the phone every

morning. But, I hate it when people treat me like I’m four years old.

When I heard that JPMorgan lost two billion unexpectedly I thought… wow, someone should invent a product that protects against things like that happening.

Maybe like an alarm clock sort of thing… the alarm goes off after you’ve lost one billion.

And finding out that Bernie Madoff stole $60 billion showed me that we don’t actually have regulators. Because if we had regulators, he would have been caught after stealing, I don’t know… say $30 billion?

And, first Wells Fargo’s and now HSBC’s money laundering antics made me realize that we’re talking tip of the iceberg once again. The Senate's Permanent Subcommittee on Investigations’ report that accused the British bank of having a "pervasively polluted" culture pretty much said it all. So, finding out that said moneylaundering problems were flagged by regulators for nearly a decade barely made me sick.

But, let’s stop kidding ourselves, shall we? I mean, some people are saying that the banks have learned to operate like organized crime. I think that’s giving organized crime way too much credit, because it’s become abundantly clear that if anything, organized crime learned to operate the way they do… from the banks.

How much longer until we all wake up to the fact that we’ve got a problem here? I think the ugly truth is… we won’t, because we’re fundamentally okay with all of it. We just want a piece of the pie… our own kickback.

Because our bankers aren’t from another planet, they are a reflection of us… what we’ve become.

We used to wage war on poverty; now we attack poor people. We used to care about our country; now we only care about ourselves.

We’ve lost eight million homes to foreclosure in this country, and about as many jobs, but we’ve lost a lot more than that. In truth, we’ve lost our humanity… our empathy… our dedication to our common good… in our children’s future. The homes we’ve lost are just pocket change.

Martin Andelman is a staff writer for The Niche Report.

He also writes an almost daily column on ML-Implode called Mandelman Matters, and publishes a Monthly Museletter.

You can follow “Mandelman” on Twitter. Send your responses to Martin@TheNicheReport.com.

TheNicheReport.com

45

BRINGING UP THE REAR

Bringing Up the rear The LIBOR Scandal

BY MARTIN ANDELMAN

O

kay, so now we all know what LIBOR stands for, right? It stands for “Lying in Between Other Reporting.” But that’s not even what I found to be the amazing part of this latest in a long line of banking scandals.

That Barclay’s Bank was lying about something… well, that aspect hardly even raised an eyebrow in this country. It was like, “Big bank caught lying about interest rates,” and most everyone in the U.S. barely paused to yawn. That, I thought, was nothing short of hysterical. We’ve reached a point in this country where we don’t expect bankers to be doing anything less than whatever they can get away with in order to come out on top.

It was like the story could have been mentioned at the very end of the nightly news. “Oh, and one more thing…

Lindsay Lohan was arrested for drunk driving again, and yet another big bank was caught lying about something.

And that’s the news, we hope you’ll have a pleasant tomorrow.” Roll credits.

LIBOR, the London Interbank Offered Rate, is considered to be an extremely important benchmark interest rate used in the financial markets. LIBOR is used to calculate payments on literally hundreds of trillions of pounds/dollars worth of financial contracts all over the planet. It’s so important that the methodology for calculating LIBOR is highly scientific… banks self-report their number… in other words, they use the honor system, if you will.

Here’s how it works. Every day someone at the British Bankers' Association (“BBA”) picks up his or her phone, calls 16 banks and asks each one how much they are paying to borrow money. Each banker contacted provides a number. They then throw out the bottom four and the top four and take an average of the numbers that remain. So, LIBOR is supposed to be the average interest rate at which 16 giant financial institutions based in London can borrow from each other.

It should be easy to see that no one polled in this situation would ever provide a higher number than absolutely necessary, as that would signal that their institution isn’t considered to be on solid ground. So, that - continued on page 45

46

August 2012

PRSRT STD U.S. POSTAGE

PAID

PERMIT #379 BOLINGBROOK, IL

BODA Publishing, LLC, PO Box 494,Bentonville, AR 72712

"TheNicheReport is a national trade publication dedicated to Real Estate Agents, Brokers and Professionals."

FOR THOSE WHO WANT THE VERY BEST!

www.exitrealty.com