TNR - January 2012 Real Estate Edition by The Niche Report

TheNicheReport.com

Real estate agent & broker Edition

For the serious real estate professional

Issue 001/January 2012

Donald Trump

Insights from the iconic billionaire, page 18. Tech & Gadgets by Hock Zillow app reviewed, page 38.

Can I Safely Walk From My Mortgage? And do these principles apply if I Short Sell?

Five Stories That Will Dominate Real Estate Headlines In 2012 Foreclosures will finally find the market.

Setting Your Property Management Fees Four principles that you can bank on.

Up 46 Bringing The Rear Neil Lipschutz, Managing Editor of Dow Jones Newswire

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CONTENTS

Issue 01

January 2012

Publishers Robert Pegg robert@thenichereport.com

Donald Trump An interview with the iconic billionaire. Rick Roque

David Pegg david@thenichereport.com MANAGING EDITOR Rick Roque rick@thenichereport.com EDITORIAL / CONTENT MANAGER Kristen Moser kristen@thenichereport.com ACCOUNTING MANAGER Shawna Ingram shawna@thenichereport.com

14 16 26 28 30

Can I Safely Walk from my Mortgage?

Michael monteiro Buildium LLC Four principles that you can bank on.

Mitchell Sussman palmspringslitigationattorney.com And do these principles apply if I Short Sold?

The Art of Negotiation ... Are You a Skilled Negotiator?

DEPARTMENTS

Peter Vekselman www.coachingbypeter.com Be prepared to do the "take away."

Five Stories That Will Dominate Real Estate Headlines in 2012

Steve HarNey www.kcmblog.com Foreclosures will finally find the market.

What Will 2012 Bring for the Real Estate Industry? Eric Lichtenheld president Integra Group Real Estate LLC

It Takes a Village Joshua Weinberg Director of Compliance First Choice Bank Yes, it takes everyone involved to close that deal.

Setting Your Property Management Fees

36 38 40 43 44 46

note from the founder/ note from the Editor Market conditions and analysis straight up with j predovich The G-hock rating online lead generation service provider classifieds LENDER & RESOURCE DIRECTORY BRINGING UP THE REAR

Advertising Director Jessica Grizzle Jessica@thenichereport.com Advertising sales Heather Bopp Heather@thenichereport.com Production Manager Henry Suchman henry@thenichereport.com Production Assistant Dawn Exner dawn@thenichereport.com Cartoonist Martin Bradford COLUMNISTS & Contributing Authors Martin Andelman Steve Harney Griffen Hock Eric Lichtenheld Michael Monteiro Jocelyn Predovich Chaibia Sarhrou Mitchell Sussman Peter Vekselman Joshua Weinberg TheNicheReport.com

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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

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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.

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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. 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.

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note from the founder

Welcome to our very first issue of The Niche Report for Real Estate Agents & Brokers. Although this may be the first time you’ve ever heard the name The Niche Report, this isn’t the first time we’ve been around this block. We launched our original title The Niche Report for Loan Officers & Mortgage Professionals nearly five years ago in July of 2007. It was born at the exact time our industry was imploding; but we just kept growing. You see, our inspiration was to inform, educate and entertain our readers. Nobody else was doing this and it made our magazine a success, our readers were hungry for what we were serving. It caught on and we grew to be the premier magazine for Loan Officers, Mortgage Brokers and anyone working in the mortgage industry. It is with this same concept we deliver you our newest magazine for Real Estate Agents & Brokers – we want to bring you edgy, informative and entertaining content that will enrich your career and profession delivered in a 70 lb paper, high gloss, four color, quality magazine. And while I have the spotlight, I must convey my appreciation and thanks to our writers. The authors we chose to put in our inaugural issue of TNR are the absolute best in the industry. They are what this magazine is about – Inspiring, edginess, informative, educative and entertaining. I would also like to express a special thank you to Mr. Trump and his staff for allowing us a glimpse into his life, and especially because we know how busy he is. You and your staff have been phenomenal to work with. Thank you for seeing and believing in our vision!

We’ll see you on the flip side!

Robert Pegg

Official

MEMBER

Letters to the Editor may be e-mailed to info@TheNicheReport.com or faxed to 703-991-2362. Include your full name, email address, and daytime phone number. We are unable to publish all letters and may edit letters for length and clarity. Visit us online at www.TheNicheReport.com to subscribe to our magazine and/ or eNewsletter. Or call toll-free at 866-964-2695 for more information.

January 2012

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note from the Editor

Real estate agent & broker Edition

This magazine marks a new beginning for leading edge, Real Estate and Housing related news, analysis and commentary. No single publication today effectively educates and informs Real Estate Agents and Brokers as to the dynamics of the housing market and how to become most successful – until now. I, introduce The Niche Report: For Real Estate Agents and Brokers. First of all, thank you for your hard work in Real Estate and continuing to be a part of a housing revolution. What is happening in this marketplace is nothing short of a dramatic restructuring of our economy. Once, housing related expenditures consumed roughly seventeen percent of the United States’ GDP; it now has fallen below a 40+ year historic average (of 14.2%) to around thirteen percent. How is this good news for agents and brokers? With thirty year rates around four percent and fifteen year rates at three percent, how can the consumer be educated as to why this is the best time in our history to purchase a home? Where does the Real Estate industry go from here? In a time when Real Estate Agents and Brokers need to be working most effectively with their mortgage professional counterparts, why is the hostility between the two sectors at its peak? How can this divide between professions be bridged in order to best serve the consumer? The Niche Report is your reliable source to answer these questions. My father had a successful Real Estate Agency in Vermont. I spent much of my adult career in Banking and Mortgage Finance. I am a proud supporter of Real Estate Professionals on many levels. Our goal is to tie together two industries that are intimately connected at every point of the buying and selling of residential and commercial real estate and help you close more deals efficiently and quickly! This publication will make a dramatic impact in your professional life – if not, we want to know and I’ll jump on a plane and come visit you personally! We kick off the publication with an exciting interview with Donald Trump, the future of the Real Estate Industry and his trade secrets for success. Moving forward, be on the watch for our National Real Estate Tour where we’ll conduct industry seminars in targeted cities across the U.S. and more exciting features on Real Estate Professionals from across the country. Our focus is to set a new course for the Real Estate Industry. Our goal is to challenge and inspire you to think differently as we take the industry to the next level. Consider us a partner in your growth as we help you locate, sell and qualify every one of your clients for their dream home. Thank you and I look forward to seeing you in the trenches!

Rick Roque Managing Editor, The Niche Report TheNicheReport.com

Market Conditions and Analysis

Market Conditions and Analysis By rick roque

Editor’s Note: I have a unique background. My approach to the market is one of a business analyst who seeks to identify trends and conditions that are ripe for growing a realtor’s unit volume in your respective markets. An economist speaks on economic factors however these comments often lack context and business value. In the end, you still ask yourself the question: what does this mean for my business? While at the same time, sales professionals tend to be less knowledgeable about the market and therefore they are especially frustrated when the strength of a relationship is no longer the only factor in getting a deal done. The goal of this column is to highlight specific trends to consider in the context of your business. As you compete in your local marketplace, the goal is to differentiate yourself in substantive ways as compared to your competition. The one key way to be both reliable and 10

January 2012

competent as a real estate professional is to extend your knowledge beyond the buying and selling of homes and become better at understanding the housing market. This suggestion assumes an interest in economic trends, local and regional home sales factors, a better understanding of the mortgage qualifying process and overall, assessing the borrower’s financial situation well enough to set appropriate expectations pertaining to the required documentation. In the months ahead, we will have leading economists and housing experts write on economic trends and analysis; however I will always look to present this in the context for managing and growing your business.

SURVIVAL SKILLS: KEY MARKET AND ECONOMIC TRENDS THAT WILL HELP (OR HURT) YOUR BUSINESS The role of the Real Estate professional has evolved dramatically in much of the same way the mortgage retail role of the loan officer has. Lender overlays in order to either mitigate risk and/re recoup from past losses are the challenges

that confront both of these sales professionals. It is important to note that for all us in the housing markets, we significantly benefited in the era of virtually free lending and no underwriting standards. Up until the era of ‘free love’ ended and the ‘era of financial responsibility’ began, the borrower themselves benefitted from this culture of purchase and refinance, or purchase and sell. Financial Russian roulette is where after the gun has been passed four or five times, eventually the last person with the gun becomes the loser however no one knows just who this will be. The reality is, in this game where losses are spread albeit unevenly, everyone is negatively impacted when the gun goes off. Well, the gun went off in 2007 with the collapse of the market and all of us in the housing market lost. Realtors, Builders and Mortgage Professionals all have suffered from this however the main losers are the end investors and homeowners. For a variety of market driven reasons, Realtors, Builders and Mortgage Professionals don’t play

Market Conditions and Analysis well together. The criticisms for the mortgage side are loud and clear – lender overlays, large margins, slow turn times and poor service. If you are a realtor – broker or agent, you are used to being called lazy, lacking sales skills and of course, people who collect a commission for doing very little work. Builders are not rescued from these criticisms; they build cheap homes, they cut corners to save a buck and of course they frequently run into financial problems leaving home owners with little recourse in the year or years that follow the purchase. The list runs long and yet these are the criticisms we throw at one another let alone the criticisms that come our way from market critics, journalists or even worse, politicians.

2011 Was a Good Year ... If it was 1998. Before highlighting a few helpful trends for your business, it is important to note that mortgage trends are roughly hovering around 1998 volumes – at around $1T between new purchases or refinance

loans. For many of you realtors who were in the business in the 1990’s, like my Father 1998 was a good year. In fact, 1998 was a strong year as compared to the previous decade of housing activity. If the subprime market had never been created by Fannie Mae, former CEO

How are consumers spending their money?

Source: Bureau Labor & Statistics

Franklin Raines and the Clinton Administration, and if the market had been allowed to grow organically from 1998 levels onward, we would never have known anything different than the levels we are seeing today. We all benefited from the illusion of growth fueled by the subprime market, so, let me start by saying: 2011 was a good year but only if you get rid of your ipod and smart phone and think back to the market fears of Y2K, because 2011 was a repeat of 1998. So, if you are a Real Estate Broker or Agent, here are a few market trends to keep an eye on. These have an impact in two ways; they are trends that if understood and executed upon, will help you strategically position your business in your markets; and secondly, trends that could be used to educate your client and build a better relationship with them. The economy over the last three years has strained the cash flow of your client. With unemployment at TheNicheReport.com

Market Conditions and Analysis

its highest levels since November of 1983 (at 8.6%) , the monies that your clients have are being shifted away from their mortgage (e.g. a renters market) and toward expenses that are considered more important such as healthcare, transportation and heat, which all take up a larger percentage of available income today than they did three years ago. A renter’s market today is a housing boom in the waiting especially as credit and underwriting guidelines begin to loosen up albeit very slowly. Given the stability of home ownership, realtors who build relationships with renters and potential homeowners will be tomorrow’s winners.

Homeownership Rates Have Declined But Remains Very high If you recall what was said previously in the article that 2011 is a repeat of 1998, this was the year homeownership was at its highest level in the history of our country. So when I say 1998 was a good year, it was emblematic of all that was right about American values and home 12

January 2012

ownership. If you simply erased the illusion of home ownership created by the Federal Government from 20012010, the good news is: we are still at historic levels. Combined with several other charts, one of the first discussions I would have as a realtor is why today is the right time to buy and why joining other people today in buying a home is still the single best thing that you can do as an American in today’s marketplace.

Who is buying a house today? The NAHB is counting on Gen X’ers, named after Billy Idol’s 1970’s band called GenX (it is also interesting to note that this is also the demographic formerly known as the “Baby Bust” generation due to the decline in birth numbers as compared to the “Baby Boomers”). Gen X’ersare people born between 1967 and 1980. Despite being thirty percent of the overall population of the United States- roughly fifty Million, there is growing optimism

in this demographic regarding homeownership. We believe this is exaggerated but a worthy market segment to target. Keep in mind, this generation of clients simply don’t have a down-payment as their savings is significantly lower than their Baby Boomer counterparts. This is also why many of these borrowers are receiving one time tax ‘gifts’ from their Baby Boomer relatives in order to afford a down payment and afford a home. Only six percent of pretax compensation is allocated toward savings (on average) versus the average savings rate for Baby Boomers, which is around nine percent. Another factor to keep in mind, is to understand that Generation X is heavily in debt. With nearly fifty percentof Gen Xers opting to not have children, this is the college debt generation. If you basically understand the mortgage process as debt versus income, then you’ll see that this generation has challenges. This is why the Baby Boomers are so important because they often help with the down payment to get the respective monthly mortgage payment down to as low as possible. Without this help, there is a limited chance for home ownership for this demographic. The Millennials or Gen E or Gen Y (depending upon the sociologist) are the Echo-Boom generation with, interestingly enough, a demographic nearly as large as the Baby Boomers with around 70 Million people. These are people born from 1981 to 1993. These are your first time home buyers but once again, are strapped with the same problems that Gen Xers have but without the assistance of the Baby Boomers. If

Market Conditions and Analysis there is evidence of a resurrection of a ‘subprime’ mortgage product that has more liberal underwriting requirements for borrowers laden by debt and with challenged credit, it revolves around this demographic. If nothing is done for these first time home buyers, 2011 will be the glory of yester –years as we look to 20132020 housing markets. Nearly half of buyers today are Baby Boomers (born between the years 1946-1964). This market segment is cautious and they are downsizing to preserve much needed retirement savings that has been depleted due to the instability within the stock market. They are also not in a hurry to sell their existing home which makes them prime targets for non-owner, occupied vacation property homes (and not

Nahb

condos because condos don’t retain any value). That vacation home will become their new retirement savings, something they can cash in on if they need to rely upon the cash flow in later years. Baby boomers also have the highest amount expendable capital with over thirty percent putting forward high down payments on their home purchases; nearly twenty five percent are paying all cash for their home purchases. It is important to note, that these all cash purchases that later become investment properties and will be used as the new ‘retirement’ income stream. As a realtor, my sales presentation would focus on these key themes; having two hundred thousand dollars in a 401(k) is far more risky at the age of sixty, then it is in a home that is purchased for all

cash down. This is especially true as property values increase in value over the next twenty years. As we look to future issues, several Gen X economists will contribute to these evolving trends. These are economists that you’ve never heard of but are at the leading edge of the economic thought leadership of the housing market. You have to remember that Bernanke and today’s policy leaders are Baby Boomers with few roots to globalization factors, technology, the connectedness of social media and the collaborative power of the internet. These are cold war era economists who are accustom to building walls and sharing less, rather than tearing down boundaries and sharing more, typical attributes of Gen X and the Millennials. Builders are taking notice of these trends, building smaller homes, nestled in connected communities, built with these social media concepts in mind. In February’s issue, we will review credit criteria for a mortgage and how a realtor can take advantage of this to build effective relationships and sow the seeds for tomorrow’s purchases. Rick Roque, Managing Editor & Gen Xer. For Comments, call me at 408.914.5895 or email me at rroque@ thenichereport.com

Can I Safely Walk Away From My Mortgage? And do these principles apply if I short sell? By Mitchell Sussman

his is an educational article about the current financial crisis and whether it is wise to "walk away" from your mortgage. The answer to this question depends to a large part on whether you live in a state that has consumer protection statutes known as "anti - deficiency" statutes. These statutes are designed to protect the homeowner from being responsible for loans secured by their personal residence when the personal residence is "underwater." An "underwater" personal residence is one in which the principal balance on the loans that are against the property are in excess of the value of the property. In many states, some form of consumer protection has been enacted by the state legislature which prevents banks from suing homeowners for deficiencies. These laws typically apply to single family owner occupied residences. In California, for example, the legislature enacted Code of Civil Procedure section 580b which prohibits a deficiency judgment in the strict sense, i.e., a personal 14

January 2012

judgment against the debtor. In relevant part the code section provides as follows: "No deficiency judgment shall lie in any event after a sale of real property or an estate for years therein for failure of the purchaser to complete his or her contract of sale, or under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price of that real property or estate for years therein, or under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the purchaser." In layman's terms this means that a homeowner who secures a "purchase money" loan (a loan used to purchase their home) cannot be sued by his bank on the loan that is secured by the home. You will also note that this section only applies to a "dwelling of not more than four families" which in essence means that if you live in and own and duplex, triplex or fourplex, this anti - deficiency statute applies to you. This type of statute has been adopted in many states

across the country. You should check with an attorney in your state to find out the exact language of the statute in your state and whether or not it applies to you. So if your personal residence is "underwater" in the state like California and it is secured by a "purchase money" loan, you can safely "walk away" from the mortgage and its financial obligation without fear of being sued by your lender.

Does the "anti-deficiency" statue stop deficiency judgments against homeowners that participated in a short sale? Recently the California Legislature approved Senate Bill 931 (SB 931) amending Code of Civil Procedure CCP §580e to provide for anti-deficiency protection to certain short sales. Short sale sellers have been traditionally faced with the possibility that their lender would seek a deficiency i.e., the difference between the sales price set forth in the short sale and the existing loan balance. While in many situations the short sale paperwork provided by the bank provides for a waiver of the deficiency, most contain a warning to the seller that the bank was retaining its option to recover the deficiency by an action in court. With the passage of SB 931, which went into effect on January 1, 2011, a short sale borrower that comes within the language of the statute no longer needs to worry that he or she will be sued by the lender for the difference between the loan balance and the sales price received by the lender. It should be noted, however, that this short sale anti – deficiency protection is afforded only to a loan secured by a first trust deed. Furthermore, it applies only to a single family residence which the statute defines as “a dwelling of not more than four units.” There are certain limitations to this anti – deficiency consumer protection statute. The first and most important limitation is that it does not apply to junior liens. Thus, the holder of a note secured by a second trust deed would still retain the right to sue for the non – payment of the note. Another limitation is that it applies only to human borrowers not corporations. Interesting, however, there is no requirement that the human borrower be an owner occupant. Finally, this statute does not apply when the borrower commits either fraud. While this statute, on its face, may be a boon to short sales in that it insulates the homeowner from deficiencies in connection with a sale for less than the balance of the loan, there is a potential that this recent

enactment will have a chilling effect on short sales because note holders, who can no longer sue for a deficiency, will likely require higher payoffs to offset the potential recovery that they formerly had when deficiencies were possible. Once you made this determination, that you are in an anti - deficiency state and that the anti - deficiency statutes apply to you, your next decision really is one of personal choice. Do you love the house? Do you think the market will recover? Can you afford your mortgage payments? It is certainly nice to know that you do have choices. However, be clear not everyone can simply "walk away" from their mortgage. It is best that you seek legal advice from a competent real estate attorney in your state before you make the decision to "walk away."

Mitchell Reed Sussman is a California real state attorney specializing in real estate, foreclosure and bankruptcy. His website is http://www.palmspringslitigationattorney.com.

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The Art of Negotiation â&#x20AC;Ś Are You A Skilled Negotiator? Be prepared to do the â&#x20AC;&#x153;take awayâ&#x20AC;? By peter veksleman

s a real estate investor and coach, negotiations are a part of my everyday life. As a Realtor, Seller or buyer the art of negotiation can mean the difference between great success and dismal failure. Everyone should take a lesson in the art of negotiation as it is an integral part of your life and your business. Artful negotiation is what separates the men from the boys so to speak. Can you say as a Realtor that you are a true negotiator or just the presenter of an offer? If you are a true negotiator, then selling yourself to potential clients should be like breathing in air. Once people realize that you have the power to make deals happen and make everyone in the transaction happy or at the very least feeling good about the deal, then you are worth your weight in gold...Add this to your resume or marketing campaign "I am a skillful negotiator" You have to know your opposition in the negotiation game and understand their motivations. 16

January 2012

Successful negotiation is when both sides feel like they walked away with what they wanted. This is a true skill and anyone who is in the real estate business knows that this can be the most difficult, challenging part of your job, but it is also in my opinion the most rewarding when done right. When it comes time to making a deal of any kind, you first must establish your bottom line. In other words it is sort of like gambling. If you go to the casino with a set amount of money that you are willing to lose and walk away from it when that money is gone, then YOU are in control of the situation. If you do not have a plan then the casino is in control of the situation. All too often it is the latter. As a buyer and especially if you are a real estate investor, you have to have a ceiling or a maximum amount that you are willing to pay in the back of your mind and stick with it. Start lower than that of course, but walk from it if your ceiling is broken. They say in the real estate investment world your profit is made at the time you buy the home, think about that for a

moment! If you go over "the budget" so to speak you are eating right into your profits right off the bat. Not a good way to start. If you are a seller it can be a little more difficult, you want to set a price at which you will not go below, but you also have to take into consideration your carrying costs to hold the property whether you are a real estate investor or not. You want to get that home sold as fast as you can for as much profit as possible. This is where a good Realtor comes into play to help you determine where that fine line falls. As a Realtor you are the one that has to make the two ends meet if the buyer and seller are too far apart. Many times quick action in other words thinking on your feet is required to make the deal come together, strike while the iron is hot so to speak. I remember when we were selling one of our first homes and we were back and forth on the price. We countered one last time to the buyer, our Realtor was on the phone with the buyer and it looked like they would walk. This was the first good offer in months. Our Realtor said to the buyer as soon as there was hesitation on the buyers part that they were only talking about $50.00 a month more over the term of the loan and were they willing to lose the home over this small amount...That was a lot better than focusing on the few thousand dollar more that we wanted on the home. It worked and they accepted our counteroffer. The whole point is if you find you are in a negotiation that is not going to go anywhere, you walk...I know it is easier said than done, but you have to be in control of the situation and not let others control you. This is true not only for buyers and sellers but for Realtors dealing with potential clients. If they are

making you jump through hoops that you would rather not or they are not worth your time and effort...walk away. Negotiations occur in all phases of life both business and personal. How about negotiating with your spouse, family members or friends...this can be especially tricky as personal feeling are involved. You may have to do a little more compromising in these situations, but true negotiators get what they want and the other party feels as though they got what they wanted...big difference from compromising. So review your business and personal situation and consider how you can hone the art of negotiation.

Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1000 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US www. CoachingByPeter.com. TheNicheReport.com

2012 Interview Series

Donald Trump Insights from the iconic billionaire. By rick roque

here is no more controversial figure in Real Estate than Donald Trump. And to secure an interview with Mr. Trump for the launch of a new Real Estate publication was a long shot at best. What made us different? First, The NicheReport is a publication for innovators and those who see the existing market as an opportunity. There is no single greater innovator in residential and commercial real estate than Mr. Trump. It is important to note that success at every level has common themes. Throughout one’s career even the most successful of real estate professionals have experienced the successes and failures emblematic in every transaction. Most agents manage their careers in the ‘feast or famine’ cycle; in boom times, these agents do extremely well while in a contracting market with an excess of homes in inventory, these realtors struggle. The challenge is to identify the common traits for success and to select which ones make the most sense for your marketplace. If there is one person who has experienced the highs and lows of one’s career its Mr. Trump. But Donald manages to stay on top. As sales professionals, it is easy to draw distinctions between people like Trump and everyone else, however when you dig beneath the surface, Mr. Trump is remarkably down to Earth and real, and so is his success. First, everything about Mr. Trump is consistently successful. From his office staff to everyone who surrounds him, success is in the Trump brand. There is momentum of success in his organization. Even before a transaction is completed, you can simply feel the force of his brand and personality to be just enough to close any deal. That aura of success is an important presumption when dealing with a successful real estate professional. This is true with Trump in as much as it is true with any successful agent, in any market. The ability to succeed on behalf of your clients is paramount at every level.

Mr. Trump is a New York Military Academy high school graduate and has a Bachelors degree from the University of Pennsylvania, after which he began working for his Father in 1968. Working on real estate investments for his father was instrumental in shaping the success he later realized in his own companies. Throughout our discussion, you know just how important not only his Father is to him, but how important his relationship to his own children is. There is an authenticity to Mr. Trump that bleeds through the pretension of his circumstances that all fits elegantly well and seems quite natural. Focusing on what is most relevant is our readers. Mr. Trump was very focused on providing facts and reflections that would be the most relevant to real estate agents and brokers in today’s market. Having said this, the interview was classic “Donald Trump” as we were approaching the fall Republican nomination. With only a couple of months to go before the Iowa and New Hampshire ballots are cast, you can tell that Mr. Trump is anxious for the future of our country and the need for a strong leader – a much stronger leader than he has seen amongst the crowded Republican field. Just maybe, this may entice him to run for President (again), or maybe he will throw his support behind one of the candidates. With Mr. Trump you never know but what you can bet on is his ability to influence the national debate in ways no one else can. Going into the interview, with this in mind, we began our questions:

: What are the key factors in growing a residential real estate company today? Mr. Trump: You have to know your territory. When I started out, I walked the streets of Manhattan and got a feel for the neighborhoods. Nothing can compare with getting the feeling of residential neighborhoods first hand. I also lived in Manhattan and paid attention to everything, got an idea of how things worked. It’s wise to know everything you can about what you’re doing, or getting into, before you start doing it. : When do you think real estate and property values will recover in value? What may have been lost in the last three years? Mr. Trump: It is hard to put a number on what has been

lost. It’s a lot and covers a variety of losses, commercial and residential. Confidence in the market has lessened and yet there still opportunities to be found. I’ve done well as I have cash and have bought a lot of acreage, between golf courses and the Kluge Winery. I’ve done well. I’m hoping the property values will recover in a few years if not before, but a lot depends on what Washington will be doing to help or worsen the situation. : Do you foresee technology in bringing the buyer and sell together in a closer way changing the dynamics of what it means to be a real estate agent? Mr. Trump: Yes, it makes communication faster and easier for both the agents and the buyers. It saves time. : So the big question is, do you plan on running for President? We think that a man with your business savvy would be ideal for this country ... Mr. Trump: At this point, I don’t plan on it. But I’d like to see who will be in the running. This country needs a businessperson and a negotiator. : With your skills in business and negotiation, you seem like a natural step-in as President. What are your aspirations for the next election, and what would you change? If not President, will we see you in Politics? Mr. Trump: I’m already involved in politics because I care about this country and it’s a mess. I’d deal with China and OPEC to begin with. We are being ripped off. And when it comes to the countries we help, they should pay us back. We give billions and lose many soldiers, and for what? Those are a few issues I’d address. : What are your thoughts on the GOP candidates so far? Mr. Trump: I haven’t settled on any one person, but there are a few promising candidates. : If you were President today, given the size of the Nation’s debt, what would you do to stimulate the economy and more specifically, what would you do to stabilize and grow the residential real estate market?

Then I became more successful than before. And you have to be tenacious, you can never give up. Never ever give up. : Who were your mentors and what were the key take-a-ways that were the foundation for the growth of your business? Mr. Trump: My father, Fred C. Trump, was my mentor. I worked with him and also learned a great deal from him when I was growing up. I’d hear him on the phone, negotiating, and we’d go to construction sites. I knew a lot about the real estate business before I even started. It was a terrific education. He always emphasized to know everything you can about what you’re doing—he was very thorough. He also loved his work. That was apparent, and he never tired of it. I was very fortunate to have him as a mentor. : Small independent real estate firms seem to be at a disadvantage to larger ones—what would you do to grow from one of the smallest to the largest firms in town? Mr. Trump: One step at a time. You have a have focus as well as vision. The most important thing is not to give up—you have to have staying power. And your vision has to be tempered with reality. It requires a lot of small steps that will add up over time. Mr. Trump: First of all, jobs should be kept in the US. Dealing with China and OPEC would bring in revenue. The residential real estate market depends on jobs, creating them and keeping them here. When people are secure they are more likely to buy. : The Trump Success Story includes both up and down markets. Part of your success has been seeing through challenging times, what three things do you attribute your success to? Mr. Trump: I love what I’m doing, and that’s the number one ingredient for success. Second, you have to have focus. When I had some challenges, I realized I had lost my focus. 20

January 2012

: If you weren’t in real estate what would you do professionally? Mr. Trump: I had considered attending USC to study film so I might have gone into the entertainment industry as a producer. I chose Wharton and real estate and am happy I did, but as the producer of The Apprentice, I’ve had a bit of both. : What are your hobbies that are not related to work? Mr. Trump: I love to golf, but as I own many golf courses, in a sense it’s work too. I’m always checking out the courses and making sure everything is perfect.

: Are there any charities close to your heart? Mr. Trump: Many, and I’ve been active with Police Athletic League for many years, as well as Make-A-Wish, and with Eric Trump’s Foundation, which benefits St. Jude Children’s Research Hospital. : If Mayor Bloomberg wasn’t mayor, would you consider being the 2nd businessman to run the largest and greatest city in the world? Mr. Trump: I don’t think so. I have a lot to keep me busy as it is. : What is your single greatest idea you haven’t pursued? Mr. Trump: I’m not sure what it is yet. But I have a few in mind, you’ll have to wait and see.

With that, the interview was over. Mr. Trump is arguably the most powerful and influential businessman in the world. Able to only spend thirty minutes with us however what led up to the Q&A and the discussions after with his staff made the experience well worth it. Dealing with his staff was like dealing with Mr. Trump. The focus, attention to detail and the ability to support the quality of tbe brand in all that is said and done are all reflections of Mr. Trump himself. These are all important lessons for any real estate professional. In our busy lives, we tend to forget details and cut corners. Potential clients can detect this even without necessarily putting their finger on it, the experience with you will either lead them toward you or away from you, all accomplished in just a few conversations either over the phone or face to face. In today’s high tech world, that impression of success and execution has never been more important. And with Donald Trump, this has been perfected. Mr. Rick Roque, Managing Editor, The Niche Report

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five Stories That Will Dominate Real Estate Headlines in 2012 Foreclosures will finally find the market By Steve harney

Making predictions regarding the most volatile housing market in American real estate history is no easy task. However, we believe five major stories will dominate industry headlines in 2012. Here are our projections:

Sales Will Surge In 2011, a lack of consumer confidence in the overall economy dramatically impacted the housing market. Buyers were afraid to make a purchasing decision on any big ticket item. Economic conditions will continue to improve throughout 2012 and consumer sentiment will solidify. Once that happens, home buyers will realize that, as MarketWatch.com said at the end of last year: “Now could be the best time in history to buy a home.” As prices continue to soften and mortgage rates remain at historic lows, study after study will show that all the industry ratios (such as those listed below) heavily favor homeownership over renting. • Home price-to-income • Home price-to-mortgage payment • Rent-vs.-own housing expense 26

January 2012

The iconic financial news sources (WSJ, Bloomberg, Forbes, Fortune, etc.) will begin to impress upon their readers the financial advantages of purchasing real estate as both a great long term investment and as a hedge against inflation. As positive media coverage increases, potential purchasers will see the opportunities that exist and will act upon them. We believe that the increase in home sales will be more than 10% and may approach 20%. Another reason sales will increase is because the inventories of distressed properties which sell at substantial discounts will balloon in the first half of the year.

Foreclosures Will Finally Find the Market The ‘shadow inventory’ of foreclosures which has been growing since the robo-signing challenges of late 2010 will finally be introduced to the market. Real estate professionals will tell you they were surprised at the limited number of foreclosures that became available in many markets across the country in 2011. Though delinquency rates have been declining for the last two years, there is still a tremendous backlog of properties that are in the foreclosure process. Now that the banks have addressed many of the paperwork challenges that caused courts to put

a hold on foreclosures and the settlements associated with this issue are coming to a resolution, the flow of REOs (real estate owned by banks) is about to explode. Some states have been systematically liquidating their foreclosure inventories (examples: Nevada, Arizona and California). These states will not have the influx of foreclosed properties that certain states will. Other states forced banks to delay the foreclosure process for over a year. These states will see a major increase in distressed properties entering the market in the first half of 2012 (examples: New York, New Jersey, Illinois). Distressed properties sell at discounted prices. They will impact the housing values of the non-distressed homes in the area.

Prices Will Tumble As more and more foreclosures come to market, there will be greater downward pressure on the values of houses in the region. Foreclosures impact values of non-distressed properties in two ways: 1.) They will eat up some of the buyer demand in the market. 2.) They will impact the appraisal on ALL transactions in the area. When a home buyer decides to purchase, price is a major component in the equation. Every buyer wants to make sure they are getting an excellent deal especially after what has taking place over the last five years. Foreclosures, on average, sell for approximately a 40% discount according to RealtyTrac. These distressed properties might not be in the same physical condition as the non-distressed properties. However, at sizable discounts, many purchasers are more than willing to do the necessary repairs. Every buyer who buys a distressed property is one less eligible buyer for the other homes. Less demand in a market with an oversupply of houses for sale means lower prices. The number of foreclosures in an area also impacts the bank appraisals in the area. We recently interviewed Chip Wagner, a third generation appraiser and an industry icon. He explained: “If a specific market area has a low amount of distressed listings and comparable sales, it is likely there is little impact on property values, and we may be seeing appreciation taking place. A ‘low amount’ would be under 10% to 15%. In market areas where there is a high amount of distressed market competition, typically greater than 1/3 of the market, this distressed competition has to be analyzed as this is the

new ‘norm’ for that market area. Buyers active in that area are looking at all of the competing properties and making their purchase offers and buying decisions based on all of the information available to them.” An increase in foreclosures will have a negative impact on values. This will cause more homes to be underwater.

Short Sales Will Skyrocket As mentioned above, we strongly believe that home prices will soften through at least the first half of 2012. Falling prices will force more homeowners into a position of negative equity. CoreLogic, in their December Negative Equity Report stated that there were 2.4 million homes with less than 5% equity. Analysts are projecting depreciation percentages anywhere from 3.6 to 13 percent. Millions of additional homes may be underwater by June. Negative equity is one of the triggers that cause people to strategically default on their mortgage obligations. If this happens, there could be an increase in the number of foreclosures. However, we predict that banks will take preventative measures which will help many of these homes avoid foreclosure by easing the requirements in the short sale process for both homeowners and real estate professionals. The short sale process has already been streamlined as evidenced by the continued increase in completed short sale transactions quarter-over-quarter in 2011. The process will be further simplified and banks will aggressively recruit the help of real estate agents to assist homeowners in fully understanding their options. The short sale business will be a major piece of many agents’ business this year. True Professionals Will Prosper Just as war identifies the great generals, the challenges mentioned above will identify the true industry professionals in real estate and mortgaging in 2012. Those who have invested the money, time and energy to truly understand what is happening and why it is happening will separate themselves from their competition and do very well this year. Those who take that next step of learning how to simply and effectively communicate the market to their clients will be seen as industry leaders. These experts will dominate their markets. Steve Harney has been chosen as one of the Top 100 Most Influential Leaders in Real Estate by Inman News and has appeared on Fox Business News. He is the founder and chief content provider for www.KCMblog.com.

TheNicheReport.com

What Will 2012 Bring For The Real Estate Industry? By Eric Lichtenheld

he demise of the housing market over the last few years has resulted in an excessive number of distressed properties across the nation. The industryâ&#x20AC;&#x2122;s downfall has caused lenders, real estate agents and servicers to reevaluate inventory and potential growth opportunities. Industry professionals should examine the factors associated with supply and demand within the housing market to understand what 2012 will bring and create sound strategies for the future.

Principal supply factors There are many key market conditions driving strategic defaults and impacting the number of homes available for resale. The distressed property inventory will continue to increase as many people walk away from homes through strategic default, while others face challenges due to a lack of employment and refinancing options. Unfortunately, it is very likely that we have not seen the worst of the housing crisis and the industry will continue to experience a rise in strategic defaults until 28

January 2012

the unemployment rate decreases. Due to the severe number of foreclosures, the industry has observed a significant decrease in the quality of inventory. Three years ago, three owner-occupant quality homes sold for every one investor-grade home. The ratio has now depreciated to a low 1-to-1 due the increase of the â&#x20AC;&#x153;scratch and dentâ&#x20AC;? inventory release. These inventory problems are national issues despite regional differentiators. The infamous shadow inventory for example, eventually will have to release properties onto the market. However, this will likely not start until mid to late 2012 due to the slow progress in resolving the robo-signing issues. There must be a large release of assets into the local and national inventory to replenish stock based on current record-low inventory levels. If inventory is released gradually, price stability for owner-occupant quality homes should increase, but will likely cause decline in the value of investor-grade assets. Stimulating growth relies on the quality of the released inventory. FHA financeable homes sell 20 to 30 percent more quickly than investor-grade properties due to reduced availability of owner-occupant quality homes caused by overall lack of inventory and tendencies

of servicers to not invest in improvements required for financing. Some asset managers have stated that the inventory eventually released from the robo-signing crisis might be sold as notes, as the stigma of working with tainted foreclosures drives many to hedge their bets by acquiring businesses that specialize in non-performing loans. Many note buyers observe that there is more of a demand for NPLs than available supply, but that will likely change by the end of 2012.

Principal demand factors Net migration has been a crucial function of employment growth and perceived value in the housing market. Employment and population growth will most likely continue to be flat during the next three years, meaning a flat demand for housing. For example, in Southern Arizona there has been a negative migration to Mexico based on the politics regarding immigration, resulting in fewer numbers of home sales. On the positive side, home purchases in the Southwestern U.S. will commonly be upscale second homes from buyers in Latin America and Canada. This will be tempered by the relative strength in exchange rates, but overall will not be significant enough to stimulate considerable demand in 2012. The availability of financing and favorable interest rates should not cause concern among homebuyers in 2012 since lenders continue offering competitive rates. However, aggressive appraisers who are single handedly trying to recover the market further complicate the situation. Over the next year real estate agents should take advantage of the opportunity to work with lender partners who specialize in neighborhood stabilization programs (NSP) with underserved communities, so they should become familiar with the down payment assistant programs available to several segments in the market. Also affecting the demand of housing inventory are the investors and, of course, the homebuyers themselves. For investors, there are multiple cash flow opportunities created by the distressed and REO properties on the market that can easily be turned into investments that pay themselves off in five to 10 years. With the current interest rates and growing awareness of low inventory levels, there appears to be stimulation among owner-occupant homebuyers as well for those properties whose condition permits FHA financing.

What 2012 will bring This coming year means many different things for servicers, lenders, investors and homebuyers, but overall 2012 will bring several opportunities for real estate agents and brokers. There will be many avenues for working with investors, and real estate agents should partner with contractors and property management companies to offer turnkey â&#x20AC;&#x153;buy-rehab-rentâ&#x20AC;? packages that attract investors -resulting in greater returns and diversification of services. Industry professionals will also gain opportunities to use NSP funds to help people purchase homes who could not otherwise afford them. And, remember to be sure and have a great 203k-lender partner, since this is where home values are for more ambitious potential owner-occupants. There will also be an increase in the number of HUD homes available, and real estate agents should become familiar with these transactions. Many agents believe this is a difficult process, however, that is not so once the agent learns the intricacies, and HUD homes offer terrific home ownership values. Agents and brokers should also become familiar with hedge funds. If there were missed opportunities in working with REO clients, agents should now reach out and offer to be of service to hedge funds who are acquiring NPLs or bulk sales. Hedge funds require real estate agents to acquire a different skill set; they must be able to conduct broker price opinions on potential acquisitions and assist in negotiating with distressed borrowers. Being successful in this area depends on building relationships and trust with occupants, which will improve your relationship and future business potential with the hedge funds. Real estate agents, brokers, servicers and lenders, overall, will not see a significant increase in demand the housing market in 2012. However, seizing the opportunities available will allow for possible growth in specialized markets and give real estate agents a competitive advantage with new expertise moving forward. Eric Lichtenheld is president of Integra Group Real Estate LLC, a brokerage firm specializing in the management, preservation and marketing of REO, HUD and distressed properties to underserved demographics in Southern Arizona. For more information, visit www. IntegraTucson.com. TheNicheReport.com

It Takes a Village Yes, it takes everyone involved to close that deal.

By Joshua Weinberg

Editor’s Note: Josh is a housing expert whose experience is deep in both real estate and mortgage environments. Based in Santa Cruz, California Josh travels the United States to speak on the housing and mortgage regulatory requirements in today’s real estate market. His insights are invaluable. If every Realtor knew what Josh knows about how to prepare a consumer for qualifying for their mortgage program, a Realtor would better set expectations and have control of the process across the board. Rick.

ike raising a child, originating a mortgage these days, seems to take the work of an entire village to ensure it closes on time! Working on the compliance side of the loan process, but with the experience of originating fresh in my mind, I’ve noticed a few patterns lately when loans have problems at or near closing. To me, patterns identify areas of strength or weakness in a process and often allow us to find straightforward solutions to difficult problems. In the next few paragraphs, I will highlight a few of the patterns and the solutions I’ve been able to implement “in the real world” that have helped our bank improve the loan and real estate sale closing process. 30

January 2012

It starts when we’re still young You can tell early in a transaction’s development how well the partnership between the interested parties of the loan game will result by how well they play together during the process. Sometimes there are time tested relationships built on referrals or the successful closing of many transactions. However more often now a days, Realtors are forced to find new business partners as the result of people leaving or being forced out of the industry. Buyers and Sellers can also make a big difference in the outcome of the transaction, let alone the stress or joy along the process.

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No matter how well you know your client, or the others involved, frequent and thorough communication can never be understated. Human nature often leads us not to discuss difficult subjects or problems; however this is the single largest factor I’ve noticed in loans and relationships falling apart. The key to reducing stress and the anxiety all of us feel when we’re getting close to the contract deadline and we don’t have a clear to close on our loan is honest and direct communication. My suggestion is, the worse the news is, the more people you should tell and the faster you should tell them. No one likes getting bad news, but I assure you, people like getting bad news at the last minute even less. It almost sounds cliché to say teamwork is critical to smooth transactions, but just because the idea is basic doesn’t make it any less important. Let’s face it: getting borrowers qualified today is an uphill battle. There is nothing more effective than simply anticipating these challenges and setting the best expectations possible for your clients. This will require working closely with all of your working partners in the supply chain of the purchase agreement and the mortgage itself. Difficult situations are usually best handled by including everyone involved and working towards mutual solutions. Another cliché that proves true in these circumstances is more minds are better than one. That doesn’t mean that the Realtor should try and become a mortgage expert, or that the Buyer should try to become an electrician to fix a problem, but by including everyone in the process, ideas outside of your own perspective come to the surface. Often, we get so bogged down into the specific details of a scenario that we lose perspective that someone not as involved may recognize. Also, by including everyone in the problem it reinforces the spirit of teamwork and promotes an inclusive feeling. When people find out about bad news and then learn that information was kept from them, it’s natural to feel excluded and to harbor negative feelings.

The counsel of neighbors I remember growing up, my mom always used to try and convince me that a wise person learns from other’s life lessons as much as their own. While I sometimes had to hit my own head against a wall to believe it actually hurt, I eventually learned that when people told me things were dangerous or painful I could save myself some trauma. This is also true in the real estate industry. No matter what role you play in the industry or the process, it shouldn’t come as a surprise to you to read that virtually everything in this business is built on relationships. Especially with the ease of access to personal and company websites, social media, and affinity relationships, it’s easier than ever to learn more about your business partners. Asking friends and colleagues about their experiences, while not a guarantee for how your transaction may go, it can often give you a good idea. When confronted with a problem during the transaction and the conversations seem to be hitting a dead end, it’s often helpful to reach out to your co-workers, managers, or other business partners to see if they can lend a hand. Like asking your neighbor to borrow a cup of sugar can help you finish your cake and avoid an unnecessary trip to the store, asking a loan originator you work with, but who is not part of the specific transaction if they have been able to resolve a similar issue, can often help you close your loan without delaying the process or jeopardizing its completion. I’m not suggesting you pull the loan from the current lender, but most people feel flattered to be asked for their opinion and are happy to help. That being said, when you find you’re continually going back to the same person to ask for guidance or assistance, that’s a pretty good indication that there’s a relationship that’s more like a partnership than it is just another contact.

Pattern: Lack of communication, especially when there’s bad news. Solution: Say it right away and include everyone.

Pattern: Trying to close a transaction without the input of others. Solution: Do your homework and use the counsel of peers and trusted advisors.

January 2012

Education and independence through knowledge Even though mom was right and I should learn as much from others as I can, sometimes there is just no replacement for experience. Many times I see loans bottleneck at closing when the people who are supposed to be guiding the process are trying to drive and navigate at the same time. If you’ve never originated a Veteran’s Administration loan, you are probably not familiar with the nuances of those types of transactions. For example, VA loans require that monthly debt obligation calculations account for childcare for dependent aged children. If that expense is not factored in upfront, there may be underwriting challenges that come up. Some loan originators may try and alleviate concerns by explaining they’ve already received an Automated Underwriting decision, but like most software, the results you get are only as good as the data entered. So if there are no expenses for childcare put into the calculation, the system won’t ask for it to be included, but will give you a decision omitting that fact. Since we’re talking about VA loans, not only are appraisals required to be ordered and reviewed by the VA, but a termite/pest inspection report is also required. In addition, the VA appraiser is allowed 10 days to upload the appraisal to the VA after they’ve completed their inspection and the VA has 10 days to return it’s Notice of Valuation (NOV). Especially when volume is high, everyone involved in the transaction needs to be aware and prepared for these turn-times. By setting realistic expectations of the transaction timeline, many of the last minute delays and problems can be avoided. This holds true for virtually every type of specialty loan program, whether it’s a VA loan, a Reverse Mortgage, a USDA Rural Housing loan, or a 203(k) FHA Rehabilitation loan. Since these loan products are among the only options for many buyers these days, it pays to work with seasoned professionals and to learn about the guidelines and product parameters as well. Never be afraid to ask your business partners to help educate you. If they hesitate, you should consider finding new partners. If you find a particular business partner especially helpful, or if they’re the person you turn to for help when your

transactions with others go sideways, consider inviting them to your office to help educate the other agents. This will help increase the specialization of your team, but is also a kind gesture to return a favor. Reciprocity is a key in building and maintaining a team so pay it forward and help when you can. Pattern: Inexperience causing unforeseen delays and mistakes. Solution: Educate yourself and work with proven professionals. Being a real estate professional is no easy task, especially in today’s environment, but it sure isn’t boring! As much as we’re still feeling the repercussions from the market collapse, we’re in a unique time for our industry. We are literally rewriting the rules of the game while the game is still being played. I hope the suggestions included here are helpful to help resolve any similar problems you may be experiencing, but also help guide you towards a way of thinking that helps keep the big picture in focus. The role of Realtors is as important as ever to help ensure transaction stays on track and grow from inception through to closing. I’m hopeful one of the results of these changes will be a closer alignment between the professionals on all sides of the transaction. We all serve the same customer and have the same goal of closing the transaction. Only by working together do we leave clients satisfied and help restore confidence in our profession. Joshua Weinberg is a nationally recognized speaker, author, consultant, and leader in real estate industry; specializing in integrating compliance and technology. He is currently Director of Compliance for First Choice Bank, a State Chartered and FDIC insured Depository institution and Senior Vice President of Compliance for First Choice Loan Services Inc., its subsidiary. Previously he was one of the owners and COO of a real estate services firm in San Francisco, CA providing real estate sales, mortgage brokering and property management services. He can be reached for consultation or questions at jw_mortgage@sbcglobal.net. TheNicheReport.com

Setting Your Property Management Fees Four principles that you can bank on by Michael monteiro

s is the case with any employment scenario, when it comes to hiring a property manager, landlords walk a fine line between ensuring they hire the best help possible and obtaining the most competitive price. Particularly because property management is not a onesize-fits-all kind of field, setting your property management fee at a rate that is both profitable for you and appealing to potential customers can be tricky. While standard property management fees today are set at ten percent of a unit's monthly rent rate (and go down to as low as six percent), there are a few things you should consider before setting your fee for any given project.

Percentage-based fees, flat fees, and perproject billing Some property managers find a percentage fee works best, while others charge on a flat fee (see minimum charges below) or per project basis. In a case where you charge the landlord a percentage-based fee (let's say ten percent of a unit's monthly rental price) for your services or a flat fee for all of your services on a monthly basis, the 34

January 2012

landlord can easily add your fee to his projected monthly expenses, building it into the rental unit price. Property managers can do likewise, relying on a set amount of income per customer on a monthly basis. Sounds simple - so why consider alternate methods? Particularly in the case of landlords who are only looking to commission a certain, irregular set of tasks such as assistance in renting out or advertising units (as opposed to day-to-day repairs and maintenance) or maintenance and repair work, an hourly or project fee may be a better alternative.

Minimum charges Particularly in cases where a property is large or workintensive enough that you will have to think twice about taking on additional clients in order to adequately service that single employer, you may want to consider setting a minimum monthly charge or a flat fee. For example, if a complex has 35 units renting at $1,000 per unit, you will be paid a minimum payment of $2,500 per month regardless of vacancies. Some property managers work on a straight flat fee while others may add on additional charges once vacancy rates dip below a certain level. For example, in the case above you might be paid an additional 10

percent per unit on top of the $2,500 per month when 28 units or more are filled.

Specify included tasks As mentioned above, different property owners will require different levels of assistance with their units. While, in some cases, property management may be a near fulltime job, in others there may be little more work to do than renting out the unit and collecting monthly rent checks on behalf of the property owner. To ensure you are being fairly compensated and that your client remains satisfied with your work, be sure to clearly define the tasks you will be performing during fee negotiation. Also be sure to discuss an hourly or per-job payment scheme for any additional work not included in your regular duties. Obviously, you can't plan for everything but setting some basic guidelines up front will serve you well in the future. Know the going rate Because property owners are really watching their bottom line right now, property managers are working hard to entice new customers. One way of doing this is by offering incentives. For example, some property management companies are not requiring unit advertising and marketing payment fees from property owners until the

unit is actually rented out. With incentives like this being given on a more regular basis, make sure you are aware of the services, fees, and incentives other local property managers are currently offering. While you want to make the money you deserve, you also want to make sure that you are remaining competitive and abreast of current market trends. With all of this in mind, remember that before you can even begin to worry about figuring out your fee schedule, you have to identify potential clients. When doing this, be sure to advertise not only your prices but also the other intangibles you offer. Remember that in many cases you will be representing the property owner to tenants and vendors as well as looking out for his business interests. It's crucial that a property owner find someone that represents him well-someone who is approachable, efficient, proactive, and budget minded. Make sure you let potential clients know that you possess all of these qualities-and then demonstrate them on a regular basis. Michael Monteiro works for Buildium LLC - http://www. buildium.com, maker of online property management software for landlords, professional property managers, condos and homeowner associations (HOAs) and is author of the The Buildium Property Management Blog - http://blog.buildium.com.

TheNicheReport.com

straight up

Can I get your Autograph? How to become a local celebrity

n 2012 there will be one technology that will separate the rock star realtors from the “if only I would have figured it out first” realtors. Brace yourself…. I am referring to Video Marketing. It has never been easier to become a local celebrity. With little time and next to no investment you have the ability to get in front of thousands of customers as the local real estate expert. So if it’s so easy, why have only one percent of realtors implemented this? Well you know, the other 99% of realtors are working to first lose those ten pounds, waiting to get their hair done, not sure what they would say or wear, hoping to learn how without trying, they are “too busy” and on and on. If you need excuses not to do this, I can give you thousands. There is one reason you MUST do this you can NOT ignore... Because your competition will and once they do, good luck! Does that mean you should abandon all that is working for you now? NO! The secret to video marketing is to use it as a catalyst throughout everything you are currently doing. And I mean everything!

tour developed for a listing make sure you have a thirty second video intro of you and your awesomeness |virtual tour | thirty second ending with a call to action (e.g. for more houses like this go to (www.mywebsite.com), to setup a showing on this property, to download a free report on the top ten things to know when buying a home in this market, go to)

Five ways to Local Stardom.

5) Educate the public – This is limitless: What to expect when buying a short sale, ten things you must know when

1) Virtual tour sandwich – Next time you have a virtual 36

January 2012

2) Spice up your website - With a quick thirty second video intro of you on your home page 3) Have a listing or two? Make sure to gather videos of what it is like to live in a neighborhood where your listing is located, three minute videos of the schools, baristas, restaurants, parks, grocery store, gym, etc … 4) Internet leads – Yes you still need to call them immediately, but while every other agent is killing themselves to “just get in front of them,” just get in front of them with a quick thirty second video on what to look for in our existing market, how to get access to the most recent list of foreclosures, etc…

straight up preparing to buy your first home, five questions you should be asking when buying a home, How to prepare your home to sell in this market (like I said limitless). What if you don’t have listings? I am going out on a limb here, but I would imagine any realtor with listings would appreciate you providing the extra exposure. Here’s another ninja trick: Did you know HUD homes can be marketed by any licensed real estate broker? Umm… Whatever could be done with this? I would create a quick intro video, pics of the inside (grab these offline), outro video of how someone can contact you to find out how to search for more HUD homes? AND don’t forget the possibilities of leveraging yourself across your existing tasks. This can save hours every day! Record videos for clients on how to review and sign a purchase contract, on what to expect now that they are under contract and how you want your staff to implement a task, etc… To Get Started: Get a free Youtube account at www. youtube.com , record a video (don’t make this difficult even your phone records video), upload your video to Youtube, share to social media sites, embed into your website and email out to your database. If you want to edit videos, I suggest the free software on your computer or software called Power Director.

Tips to Creating a Video: 1) Be your freakin’ self! 2) Do NOT make it perfect 3) No more than three minutes, 4) Make sure to include your contact info and what you do 5) There must be a call to action at the end (what you want them to do after watching your video). Also, you can search online for what other realtors are doing to get a feel for what you like and don’t like (this is a confidence booster – trust me). Online video is the MUST have tool in today’s marketing arsenal. For 2012, make sure you have a clear video strategy in place that works (I would suggest to start with a niche) alongside your online, social, paid media, PR, and other marketing strategies. Your customers want video, so give it to them! Jocelyn is a progressive entrepreneur who has established herself as a leader in the real estate, mortgage & technology realms. As founder & CEO of Limetree Lending Group she has created a lending company that is consistently named #1 out of all of the 100+ mortgage bankers under the Universal Lending Corporation umbrella in Colorado.

Which would you rather show up in?

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The G-Hock Rating

The Zillow Android App: Instant housing data wherever you are by Griffen Hock

ver driven through a neighborhood and wondered about its housing values? Wonder no more. Zillow’s Real Estate Android application lets savvy investors, real estate professionals and mortgage reps get instant data and information on U.S. homes -- and not

just those for sale. The Zillow app can give the list price, selling price and value estimate of any home in the U.S. It’ll tell you how many bedrooms and bathrooms each home has and provide rental estimates for most U.S. homes, condos, apartments and townhouses. Housing values and property tax trends are presented in clear and useful graphs. Navigation is easy and intuitive. The app has multiple search filters, including homes for sale, homes recently sold and rentals. You can search from your location, type in an address, or use the voice search function. It’s super easy to save past searches, and icons make it easy to contact the listing agent or owner. Best of all, Zillow’s GPS location tracking and voice search commands let you wander through a neighborhood and get 38

January 2012

data instantly on your handheld device. This mobile functionality makes it even more useful than Zillow’s website -- a good test of whether an application is worth downloading. Zillow’s combination of data and mobility will help any realtor deal with home seller push-back on recommended list price. A quick neighborhood tour with the Zillow app may be enough to bring sellers back to reality. In addition, the app’s horizontal navigation arrows make it easy to compare other sold properties on your client’s street, lending more support for your recommendations. Those working with home buyers and sellers should also have this app. Quickly analyze home values, comparables, recent sales and rent forecasts in your car or when showing a home. Not sure if the rental income from an investment property will cover mortgage costs? The Zillow real estate app can help you figure it out on the fly, and give you accurate financing quotes while you’re at it. With this type of tool, numbers need to be accurate -and here Zillow falters slightly. Zillow provides real numbers

The G-Hock Rating But even with its shortcomings, Zestimates are as accurate as a lot of the values we see in appraisals these days - probably because they are based on the same valuation formulas used by actual appraisers - and as good as you could hope for being able to access the data in literally 5 seconds of keying in the address. The ability to drive around your neighborhood and see estimates of home values -- in real time -- makes this a priceless app for the real estate insider. As a real estate professional and mortgage professional, I would pay $10-25 a month for this app. Its actual cost? Nothing. Itâ&#x20AC;&#x2122;s a no brainer. The G-Hock Rating:

HHHII

Zillow CEO Rascoff (C) with Co-founders Barton (L) and Frink (R)

for list and sale pricing, but relies on â&#x20AC;&#x153;zestimatesâ&#x20AC;? for home values. Zestimates are estimates compiled by Zillow based on available housing data, but available data varies from county to county. As a result, Zillow housing valuations may be more accurate (such as Boston, MA where more data is available) or less accurate (such as Houston, TX where less data is available) depending on the county. Zillow uses a similar system to estimate rents - Definitely something to keep in mind when employing this app.

A lifelong entrepreneur, Griffen Hock took Berkshire Capital from concept to a 75 loan officer national mortgage banking operation with 4 offices in just 2 years. In 2011 Griffen founded The Berkshire Real Estate Company and www.tigermarketingcompany.com, an online marketing business with over 200 Page 1 Google Rankings. Griffen is a frequent guest speaker at the Michigan State University Eli Broad Business School and multiple term Board Member of The Entrepreneurs Organization's Detroit Chapter.

online lead generation

have you linkedin?

veryone needs to get more leads, close more deals, and make more connections, especially in this tough economy where most people are struggling. We need more tools and resources that can help us achieve our goals. In this article, I’m going to show you a tool I’ve been using. It has been working great for me and for other busianess owners and professionals who have been using it the right way. It’s LinkedIn. Why LinkedIn? I’m not very fond of using statistics, however, LinkedIn has a unique audience. There are a few crucial things you should know before we begin: LinkedIn has: • A network of more than 120 million Professionals. • 75 of the Fortune 100 Companies using it as its primary recruiting tool. • A new professional joining the network every second. • An audience composed of influencers & decision makers. Let’s see how we can utilize this powerful tool to help you reach your goals.

January 2012

Profile: When people Google your name, your LinkedIn profile comes in the top results making it the first impression people have about you. This is your professional identity. You want it to be a reflection of who you are in the most professional way possible. One of the first things a visitor notices about your profile is your photo. You want to have a professional picture. A photo can make or break a visitor’s desire to connect with you. Are you willing to risk, say, a hundred bucks on a professional photo – or would you rather take your chances and have that step potentially cost you unknown connections and revenues?

It is important – very important – to make sure to have your profile 100% completed. This is NOTHING

online lead generation to put off and have the ‘I’ll take care of it later’ attitude. When people are looking for your services, they will type in certain keywords in the search box. Your objective needs to be to show up on the first page results. One of the most common questions I get is: “How do I get my profile on the first page?” The answer is simple. Just as magnet pulls metal, search engines pull completed and optimized profiles with the proper keywords. You need to put those keywords throughout your profile. 1) Headline – This is the first thing people see when they search a keyword, or your name. They will see your headline, your city, one of your current and one of your past work experiences. You want to put keywords in this area. 2) Current & Past Work Experience – Place the keywords that people are looking for in your current and past experiences. The more keywords you can add, the higher you will rank. Your current experience is more relevant, because it’s what you’re currently doing, so it helps you rank higher. 3) Summary – This is the next place you want to put keywords. You need to make a paragraph, not just keyword after keyword. Create a well-written paragraph that makes sense and doesn’t confuse people. Talk about your business goals and your passions. You want people to feel ‘connected’ to you. 4) Specialties – As you progress in your profession, you will be learning more skills. These skills should be added to the specialties section. You will find that will help increase the amount of leads and opportunities you will be receiving. Make sure to also add keywords in this section.

Connections Your primary goal joining LinkedIn or any other social platform is to connect. Make sure that you connect with your current and past clients, referral partners and prospects. One thing you should be doing on a regular basis to help you grow your network is to bring all of your email connections to LinkedIn. People often change their information. The benefit of importing them to LinkedIn is that you can stay updated on any changes they might make to their contact information – no matter where they work or live. If you are a PC user, there is a LinkedIn plug-in for MS Outlook. There are also other plug-ins for Gmail & Yahoo that have similar functions.

Recommendations We all know the power the testimonials, reviews and word of mouth marketing. LinkedIn has its very own ‘word of mouth’. It is called Recommendations. When someone is looking at your profile, and deciding whether (or not) to do business with you, having many strong recommendations will help them feel comfortable with making the decision to work with you. Your primary goal should be to get more recommendations from past and present clients, coworkers, referral partners, etc. The best way I’ve found to get recommendations is to give recommendations first. Remember, “Givers Gain!” When someone recommends you, an update will show up to their entire network, increasing your ‘Word of Mouth’ exposure. The more recommendations you have, the higher you rank and the more leads you get. Plus, it shows credibility! Groups After you’ve properly set-up your profile and made some connections, now it’s time to expand your network. Groups are a great tool to find potential customers and referral partners. LinkedIn allows you to join up to 50 groups. You want to look for groups that are relevant to your industry and niche. Before you join these groups, make sure they will be worth your time. A good way of doing this is to visit each group and see the type of conversations that are going on. The first thing you want to do, once you find the right group, is to listen. You want to know the theme, or subject, of your group’s conversations. Next, you need to start participating in these conversations. After you become known in a group, start creating your own conversations and answering member’s questions to bring value to the group and establish relationships and trust with the rest of the members. Remember, do not SPAM the group with promotional posts, you’re there to give value. Another great thing about being in a group is that you can send messages to the group members that allow you to do so. Approximately 93% of members will allow you to send direct messages. You can also share links to your blog, articles, videos, etc. with your groups which give you even more exposure and help position you as an authority figure. TheNicheReport.com

online lead generation LinkedIn Answers A great way to showcase your expertise and knowledge is to answer questions. You can find the ‘Answers’ section by hovering over the ‘More’ Tab. Any answer you provide, becomes part of your profile, and will demonstrate your expertise to your connections, potential business partners or buyers.

• Slide Share (This is a program that allows you to post your professional presentations on your LinkedIn profile. Another cool thing you can do with this application is add a YouTube video. You can have this video play automatically when someone visits your profile. The video can be welcoming people to your profile and showing them around, asking them to visit your website, follow you on Facebook & Twitter, or inform them about new programs or products.) • Real Estate Pro (It’s always good to know what tools are available for your Realtor Partners. Real Estate Pro allows Realtors to feature property listings and promote client transactions on their LinkedIn profile. They can also share their work and completed deals with their business connections.)

IF you try to spend just 10 minutes a day answering questions, you will connect with countless others you would have never otherwise have met. You can also earn Expertise every time your answer gets picked by the questioner as the ‘Best’ (the more your answer gets ‘picked’, the more points you earn). DO NOT underestimate LinkedIn Answers!

Website LinkedIn allows you to promote your website on your profile page. You have the ability to customize the wording and put a call to action that gets visitor’s attention and motivates them to click on your website’s link. For example, instead of keeping the “My Website” … you can change it to “Check out My Site”… or whatever suits your personality! Applications Here is a short list of some applications I think can help you. • Amazon Reading List (Allows you to Share books you’re reading and book reviews and follow what other members are reading to stay current and up to date with what’s going on in your industry.) • Wordpress or Blog Link (Sync your Blog with LinkedIn, it’s important to keep your referral partners and buyers updated about what’s going on in the Mortgage Industry to build relationships and trust.) 42

January 2012

• Events (Find Professional Events from conferences to local Meet-ups OR you can post your own events. This will show up on your network’s home page. Once member’s RSVP, their network will see the event as well. The viral nature of this exercise will help create more exposure for your event.) • Polls (Get to know your prospects & referral partners by asking them questions) In closing, there is much to LinkedIn I did not have time or space to get to. Just as all Social Platforms do, LinkedIn is constantly evolving and changing. If you haven’t already, start NOW! If you have already started, follow these tips to maximize your efforts. LinkedIn is a FREE marketing tool that is highly underused. Start with 10 – 15 minutes a day and believe me, you will start witnessing great results in no time!

Chaibia Sarhrou is the CEO of CS Social Media, an Online & Social Media Marketing company specializing in the Mortgage and Real Estate industries. She has consulted with many top producing agents and speaks at Real Estate and Mortgage companies to educate them on monetizing their social media efforts. Chaibia can be contacted at chaibia@ cssocialmedia.com . For FREE additional LinkedIn training, containing videos, checklists, and articles, Chaibia is offering her minicourse, "Powerful LinkedIn Secrets That Every Professional Needs to Know", simply visit www.cssocialmedia.com/linkedin.

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TheNicheReport.com

LENDER AND RESOURCE DIRECTORY

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January 2012

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BRINGING UP THE REAR - continued from page 46

fruit loop soaked in milk, or he’s just disturbed. What do you suppose he thinks “spread” to Europe and its banks? I mean, I don’t think loans can spread… loans are not germs or viruses… they don’t just spread. Someone has to spread them, right Neal? And let’s assume you’re right and within the mortgage-backed securities and CDOs that were sold to Eurobanks, there were a few loans leveraged to the hilt. So, who do you suppose might have taken them to Europe, Neal? Because it wasn’t me Neal. And then he writes: “Now that worries mount about an ever more likely return to recession amid a significant equities markets decline, we are hearing again about housing.” Hearing “again” about housing? Who's hearing again about housing? I wouldn’t worry too much about you hearing anything, Neal. I just don’t think you’ve heard anything in maybe twenty years. I think you should consider donating your head to the particle physicists at CERN’s laboratories as they’re studying the beginnings of the universe and are apparently trying to find the densest matter on earth. And Neal continues to offend… “There’s the foreclosure mess, the underwater mortgage mess, the tight mortgage lending standards and all the rest. There’s displaced construction workers. There’s consumers unwilling to spend as their perceived real estate wealth evaporates. There’s housing, traditionally the leader out of recession, still generally in decline, and harder to ignore.” It’s only my perceived wealth that’s been evaporating? Well, that’s certainly a relief. Only my perceived wealth. Well, thank goodness for that. Hey, here’s an idea, since it was only perceived wealth, how about you write an article telling the bankers to give everyone perceived principle reductions? You’d be in favor of that right, Neal? Neal’s also got some answers to our housing market problems. Here’s what he says we should consider in order to fix the housing mess he’s having a hard time ignoring… “… more people who are current on their mortgage payments have to be able to refinance their mortgages to take advantage of rates near 4%. That savings for many would go into additional spending, a stimulative measure, and would boost their economic

psychology, which is important. Even if they used the savings to pay down their own debt it would do long-term good.” What kind of a word is “stimulative,” Neal? Let me guess… were you a triple-digit SAT score kind of guy? You know, math and verbal combined, what… about 770? And then straight to the local community college to get your Associates in North American Egotistical Studies or possibly Recumbent Illiteracy? How did you ever get a job as an editor at Dow Jones Newswires using words like “stimulative?” Okay, I’m done. There’s no point in going on about Neal anyway. If I’m not going to get to kick his callous, insensitive and entirely ignorant behind around a parking lot, then what’s the point? I suppose I could challenge him to a ballet of wits, but that wouldn’t be right either because he’s unarmed. And Neal closes by saying… “Given political realities, it’s hard to imagine much of a fiscal push, in housing or elsewhere.” You know, Neal’s right about those “political realities.” The reason we’re not solving the foreclosure crisis isn’t because of economic or fiscal realities… what has doomed us to suffer the economic pain of a deflationary spiral are only “political realities,” or in other words… what people think… just thoughts. At least half the country doesn’t understand that it is a crisis. They think that irresponsible people bought homes they couldn’t afford. They do not think it right or fair to bail out those that made irresponsible decisions. But thinking something doesn’t make it true. Ours is not a housing crisis, it is a credit crisis. And the credit markets froze in 2007, not because of borrowers, but because of bankers. Those that oppose saving their neighbor from foreclosure are costing the rest of us, and themselves, trillions of dollars in aggregate losses. But the people in foreclosure have already lost. And by forcing those losses, everyone else loses too. Only by saving them from further loss do we save the rest of us And as we fiddle… Rome burns. Are you listening, Neal? Martin Andelman is a staff writer for The Niche Report, and a feature writer for ML-Implode.com, where you’ll find his almost daily column, Mandelman Matters. Questions or comments? Send them to: martin@thenichereport.com. TheNicheReport.com

BRINGING UP THE REAR

Bringing Up the rear Neil Lipschutz, Managing Editor of Dow Jones Newswire BY MARTIN ANDELMAN

used to read the Wall Street Journal all the time, maybe even every day for a few years back in the days when Yuppies were king, BMWs reigned supreme, and I was still stupid enough to pay $300 a year to carry around a grey piece of plastic from American Express that I referred to as being “platinum.” These past three years, well… not so much. It’s not just because a gaggle of insensitive and insufferable cheerleaders for the banks write the paper, although that certainly is a big part of it. It’s mostly because the paper’s views are entirely predictable, and unreservedly smug … no they’re smug2. We’re not even having a recession in the Wall Street Journal, its positively surreal. So, I’m clicking around through my news alerts yesterday, and I see this headline: “We Can’t Ignore Housing Anymore.” Huh? Can’t ignore it… anymore? Well, why the heck not? It’s been working so well, thus far. Why quit on a winner? Neal Lipschutz, who first joined the company in 1982, and is today senior vice president and managing editor of Dow Jones Newswires, wrote the article. According to his bio, he “directly supervised the news staffs in the Americas and served as chief arbiter of and

spokesman for news policies, coverage and standards on a global basis.” And today, Neal has global responsibility for Dow Jones Newswires editorial. So, Neal is a man with “global responsibility,” and I’m almost positive that I’ve never even met a man with global responsibility. Apparently, Neal has written articles that have appeared in The Wall Street Journal, Barron's, The Asian Wall Street Journal Weekly, The New York Times, and The Baltimore Sun among others. So, at first I thought… Neal is Journalism Man, but then I started reading what he had to say and I quickly realized… nope, he’s just another Lipschutz. Here’s how he kicked off his article on how we can’t ignore housing… “In the end, we can’t dodge housing. The U.S. recession and financial crisis of the late aughts began with housing and the scourge of subprime mortgages, which were so messily dispensed. It spread to Europe and its banks. For a few years we tried to work around the paralyzed housing sector – the drip, drip of steadily lower home prices, the unresolved status of the wounded Fannie Mae and Freddie Mac — and it seemed to be working.” Obviously, either Neal has the cognitive ability of a - continued on page 45

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The story you've neve r read about the mortgage community Neil Lipschutz, Managing Editor of e Dow Jones Newswir

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