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This week I had a mortgage lender that has been a client for more than a year decide to cancel an advertising campaign I helped him to secure. He told me that he wasn't drawing enough business from it. Some people just don't get it.
Lately, consumers are bombarded day after day with negative news about the real estate industry, ranging from mortgage loan problems, foreclosures, fewer sales, and the illegal actions by people trusted within the industry.
As I have done in recent weeks, here are a few stories about people in the industry I have found as part of my daily reading.........
http://www.law.com/jsp/article.jsp?id=1202424077252&rss=newswire
http://www.dailyherald.com/story/?id=229999&src=109
http://www.canada.com/theprovince/story.html?id=1fb3c5da-cc5f-4f00-ab45-492b77621a9c
http://www.latimes.com/business/la-fi-harney24-2008aug24,0,4322966.story?track=rssBut that's not important now.
I told my client that this is the worst possible time for him to stop his campaign. Consumers used to seeing his campaign every week in the same place will "figure" this lender has also closed its doors. He will lose the "recognition by repetition" factor he built up over the past year. Those consumers who are looking at options today for what they want to do when conditions get better will see his competition instead.
No, I'm not complaining because I lost a sale. Truth is I am complaining because I could lose a quality client forever because he wasn't getting enough instant gratification.
Consumers know it is a buyers' market at the moment. When they are poised to jump on an opportunity, they will jump with whoever is there at the moment to jump with them.
This morning I was talking with a Realtor in the business for over 25 years. She told me about a colleague who showed a first-time buyer more than 50 different houses. Her client made several "low ball" offers, but none of them were accepted. The potential buyer was upset with the Realtor for taking him to all of those houses and not being able to buy. The lady I talked to expressed her frustration with the potential client.
From my corner, I'm going to side with the potential buyer that his time was basically wasted. That realty agent should have stopped after no later than the second "low ball" offer. If the offer was for $200,000 on a home listed at $230,000 and it was rejected, it is up to the agent to step it up. Find that potential buyer a similar home that he could get right away for $200,000. Don't keep taking him to homes he isn't going to get.
Instead, the sellers are still sitting there upset that veteran realty agents aren't bringing them a good enough offer to sell. These "low ball" buyers get upset that their agents aren't finding them these good deals in a "buyers' market".
It is up to people in the industry to make a possible transaction work for all concerned. No agent should be showing a buyer 50 houses and not have an offer accepted - in any market.
Meanwhile, a thumbs up for Forbes for their recent story about using real estate investing to put off tax bills. That is what I call creative financing. I regular contact some mortgage lenders who are also CPA's or also have a tax service in order to diversify. Yet, I wind up reading about this years old concept in Forbes.
(If you didn't see that story, please contact me and I'll send it to you.)
And then.....
I read that the NAR admitted to spending more than $3,000,000 in just the 2nd quarter of this year to lobby for measures related to the housing market. And I'm upset about that.
Give me the chance. I'm not the brightest bulb on the planet, but I would have done things way differently than the Association has. For next quarter, give my company the $3,000,000 to work with.
Let me work with a P R expert on changing the negative reporting. No more of the "sales are down 22% from a year ago" stories. Those should be billed as "more than 26,000 homes sold during July....." and forget the negative comparisons. A $100,000 public relations campaign blitzing the media with only positive facts and happy homeowners would be a solid start.
Next, I would implement an Association promotion. As of a pre-determined date, the first 10 homes sold in each of the 50 states will receive a $1,000 closing rebate from a fund started in conjunction with the Association. That would total $500,000 in rebates. I'll allot $400,000 in legal and administrative costs to make that happen. No advertising or P R costs because I would expect aggressive agents to get their buyer clients in gear.
This promotion would be a major score. Buyers and sellers not going through an agent would not be able to partake. It creates much needed urgency in a starving marketplace.
And, I just showed how it could be done and benefit people in all 50 states on a budget.
Of course, doing all of the above with a budget as large as $1,000,000 will pay off for the industry.
My next step after that? Take the $2,000,000 profit I would have made and buy a $2,000,000 mansion and live happily ever after.
Meanwhile......
Let's watch the Kolter Group, based in West Palm Beach, FL. Commercial Property News reports that they have become the second large commercial real estate company to announce a financial commitment into residential. To the tune of a $1 billion joint venture including residential developments within Florida.
Later that same day, I read the story from Hawaii about how the number of inactive licensed agents in that state has increased to 6,254 (as of July 30) from 4,702 last year, according to the Department of Commerce and Consumer Affairs' professional licensing division. Try that on for size. More than 1,400 licensed agents not even paying dues to remain active in local real estate.
Shows what can happen if you, as an industry professional, stop advertising.
Still looking for more positives about the market while others, including those in the industry itself, continue to spread the word about doom and gloom.
Now, an article in the Nashville Tennesseean caught my attention, about how appraisers are coming under fire:
http://www.tennessean.com/apps/pbcs.dll/article?AID=/20080818/BUSINESS01/808180322An article in the Kane Country Chronicle (suburban Chicago) over the weekend further illustrates my point. First, it shows declining home sales figures again. Released by the local realty association.
Then, it quotes, among others, Linda Ayukawa, who is managing broker at a local Coldwell Banker office as saying “People for whatever reason just haven’t been that motivated to buy,”.
Let me get this straight. Another local realty association continues to make lagging home sales figures available on a regular basis. A managing broker in the same area gets quoted as not knowing why consumers aren't motivated. Thousands of consumers saw that article.
If I was a real estate professional or a lender in the Kane County area, I'd run ads with Linda's quote, identify her CB office, and in big letters, state that "We work with the motivated buyers and sellers in (name of community)." There is a saying among marketing experts that "Sometimes any publicity is good publicity". Someone should tell Linda that this is the furthest from "any time" I have personally seen in years. But she is probably busy bragging about how she was an expert quoted in the local paper.
Perhaps the rise in some of the homebuilder stocks last week will make some investors and potential buyers take notice. D. R. Horton, Pulte, Red Bank, and Centex, all showed increases in share prices at some point last week. A bit of consumer confidence could go a long way.
Nice reporting by HispanicBusiness.com, with a recently completed study showing that lower home prices are "more than offset" by higher mortgage rates, even to the tune of 10 - 20% more. This came out the same week as a report showing state-by-state which areas have the highest closing costs.
I take that as a message for investors to explore joint venture possibilities with other investors to grab some of the good deals out there. It's not easy, but nothing successful ever is. Get together a group of 6 investors with $50,000 each. A barrel filled with $300,000 CASH up front just might get you a property listed in the $500,000 range since the seller receives all cash immediately. No waiting and waiting and waiting for a qualified buyer to come along. The buyer group can then re-list for a $450,000 - $500,000 sale price without having its own mortgage payments to worry about. Some will call it "group flipping", but it is a way to do some power buying.
Finally some positive sales statistics from a big city. The Detroit Free Press reports that home sales in metro Detroit rose 15%. Before I could join you and say "that is because of foreclosures", that same article added that during the month of July foreclosure activity fell by percentage points. While the article contained many more positive and negative statistics, its most important points were positive toward the industry.
An Aspen CO real estate firm came up with a way to keep the local market going. Chaffin Light Real Estsate purchased a $7.65 million office building to house its operation. How does this impact the local market? I'd say with the right advertising campaign. I am not their marketing consultant, and normally don't give valuable free advice, but in this market I need to get industry professionals thinking and acting positively. Chaffin Light should point out that "We invested over $7 million into this community, and we'll get you the best local investment for your money". And show off their newest listings.
No matter what you read, think positive. Create opportunity.
I’m disappointed at what I hear from experienced real estate and mortgage lending professionals in recent weeks. Let me change that. I’m disappointed in what I am NOT hearing from these same people. I’m not hearing the positive.
Those of us on the inside realize that there are more challenges than ever before in the real estate market. But we have the choice of responding rather than accepting. As a consumer, I tune to the electronic media and check for information online just like the next guy. It seems like all I hear, see, and read, is the negative. Where is the response?
New stories pop up every day about how many banks are now struggling because of problems with outstanding mortgage loans, foreclosures, and funding sources. It seems the perfect opportunity for established mortgage lenders to advertise and promote “All we do are local mortgages. We do not have the problems your local bank faces.” Instead, the media keeps story after story about the banks in crisis going day after day.
Same thing on the real estate side. I’ve been seeing realty boards and association monthly statistics report “June sales down 15%” or whatever it is. Why can’t they report that 5,740 homes sold in just the Dallas-Ft. Worth Metroplex for the month of June? Even if that amount is lower than previous years, realty firms need to point out that homes ARE selling in the area.
Instead, without specifically looking, I found several stories about problems with realty agents and crime. Here are a few from the past few days: (You can look if you want to, but this is to make my point.)
http://www.newsday.com/business/ny-lsbirth5797493aug13,0,5752132.story?track=rss
http://www.newsobserver.com/business/story/1175429.html
http://www.myfoxla.com/myfox/pages/News/Detail?contentId=7185501&version=4&locale=EN-US&layoutCode=TSTY&pageId=3.2.1
http://deseretnews.com/dn/view/0,5143,700250103,00.html
http://www.aspentimes.com/article/20080729/NEWS/222688344/-1/rss02
http://www.myfoxorlando.com/myfox/pages/News/Detail?contentId=7081078&version=2&locale=EN-US&layoutCode=TSTY&pageId=3.2.1
Let me put this another way. The news is overflowing with reports about banks and sub-prime lenders in serious trouble over hundreds of millions of dollars. Realty firms are downsizing and closing, and professionals are finding legal trouble on a regular basis.
Yet, most of what I hear and see is about dealing with a challenged market. Don’t you wonder where the “challenge” really is?
This is the time for creative advertising and marketing. Mortgage brokers and realty agents can and should bury the hatchet and truly work together. With gas prices still outrageous, even working to find someone the “same” house 10 miles closer to work can be presented as monthly savings. Consumers could get the tax advantages of a move, and a new mortgage even for the same amount brought by a local move brings a realty agent commission and a mortgage where a refinance isn’t justifiable.
In the days to come, I’ll try and share specific stories of creative real estate and mortgage business. If you can contribute to the positive, please let me know. I’m happy to share!
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