Let's make them true "news" letters

I continue to subscribe to newsletters done by realty agents and mortgage lenders who are not (advertising / marketing) clients of mine from around the country. These can be an interesting resource for ideas (and columns). At least, they should be.

This morning, the morning of July 2, I received "my July newsletter" from a realty agent in Chicago. I have found his previous newsletters to be well presented even if the content has been inconsistent over recent months.

Thinking I'm going to truly see a "July" newsletter, I open it, and note that the first story is about home sales in April. Yes, April. I didn't check to see if it was April 2009. It didn't have to be. Geeez. This is July. I should have been reading about April during April or at the very latest within the first 10 days of May. Two months ago.

I take it this guy has nothing current and topical to write about for his "July" newsletter. He might have been better off not to send it out. The "lead story" was already outdated, no matter what the information it contained.

If I was a client of his, I would not be pleased that "my" agent is providing me with information that is no longer timely. I also find that a lot of the sales statistics we are bombarded with as it pertains to real estate is not pertinent either. I would let him know that I am interested in what is happening in the local market "today" and that I will start looking for someone who can tell me that on a regular basis. As it is, I preach about how realty agents do not provide enough information which is specific to local home owners, and examples like this only add fuel to the fire.

Why am I reacting so heavily to one newsletter from one agent that I don't even know?

There is an answer for that. In this marketplace, everyone associated with the real estate community needs to work harder in order to survive and hopefully thrive. Even one agent sending information from more than 2 months ago as their "current" newsletter gets a few people to think that there is no progress and little hope for the real estate market to rebound.

In all likelihood, based on its overall appearance, this agent is using one of those services that composes and sends the newsletter out for different agents around the region or around the country. My hunch is that this newsletter isn't just going out in the Chicago area today. But if I were a realty agent that was considered responsible for having sent this out, I would have already canceled this service and be putting out my own retraction.

My point of contention is that if this agent "doesn't have time" to compose his own newsletter, it would mean he is making a ton of sales. If he is making sales, THAT should be what his newsletter is all about. He should be describing elements of his successful sales (which can be done without naming names, etc.) and showing what a good month June was and what he hopes to accomplish during July. This would make an appropriate July newsletter.

If this agent did not generate any sales during June, he should not be going back to April for content. Frankly, this sort of newsletter could very well be a reason he did not generate sales, since he offers not one compelling reason to contact him today.

You see, I have no idea if he even got a sale during June, or if he made several and raked in thousands of dollars. Yet, I still don't know this minutes after reading HIS newsletter.

Earlier today, I took steps to bring two realty agents together from different parts of the country to try and bring a couple of properties to auction before the listings expire. My hope is that this story will result in another property being sold as a result of the listing agent's effort prior to the expiration date and from a winning bid solid enough that the seller didn't refuse it and move on.

Hopefully my client could use that success story in her newsletter within a matter of days. It could help the real estate market one property at a time.

Real estate market musings..........

Upon reviewing more of the day to day real estate news stories of late, I am coming to the conclusion that the real estate market should actually be divided into 2 parts.

This reflects more on the mortgage side, but loans are a huge factor in determining the market, especially in today's credit crunch.

The 2 factions would be divided among those really looking to buy or sell and those who would like to refinance if and when conditions are right. People looking to buy are looking for the right home for their "right" price, and are not going hold off on the "right" deal because mortgage rates have risen within the past 2 weeks. Yet, it seems that too many people within and outside of the real estate community believe otherwise.

Those looking to refinance should be on high alert at the end of this month. The government is playing games with mortgage rates and that will probably continue for some time. They lower the rates to spur activity, and then raise them again to slow down the flow and keep those in the industry busy enough to survive (in most cases).

My personal prediction is that the rates will drop again on Tuesday June 30th, and perhaps by at least 1/2 point. You can't go by what has happened to the rates in Junes past, just as I say the experts should not keep going by home sales statistics from years past either.

Those who have also been tracking the rise and fall of mortgage rates over the past 8 months would have noticed the reductions coming prior to holiday weekends. The first significant drop took place right before Thanksgiving weekend in November. It happened during the exact week that a lot of people were traveling, preparing for the holiday, and generally not ready. Those who were in position started taking advantage of the reduced rates, but it wasn't everyone.

Same thing happened during the Christmas and New Year period, and again in February prior to the Presidents Day weekend. It was after Memorial Day that the mortgage rates have risen to their highest in a while.....from their lowest in years.

Why June 30th? Because it is the end of the month and end of the quarter, which distracts from lenders and financial types dealing with closings on properties, and closing out their month of June and 2nd quarter. Not coincidentally, this date comes 2 business days before the business world shuts down for Independence Day weekend. (Most businesses are considering Friday July 3rd to be a holiday.) This would also be 4 weeks after the current rise in rates.

But for those who would purchase, again, I don't see mortgage rates being prohibitive even if a bit higher than during prior weeks.

Within the past 2 days, I have read articles and opinions from the rentals angle. One point of view says that because fewer multi-family unit loans are available it means that fewer new apartment units will be built, resulting in reduced inventory. The angle is that less inventory will result in higher rents for what is available, and that means many who would be renters might be better off to purchase.

The other side of that coin indicates the same circumstances could be better for renters. Entities which develop apartment buildings for income would stand a greater chance of obtaining one or more new construction loans for multi-family if and when their present holdings are full and producing demonstrated income. That would seem to favor keeping rentals at reasonable rates in order to have them filled. Thus, a "renters' market" if I may coin a new phrase.

As of today, I favor the "renters market" argument. There are plenty of vacancies in many cities for rentals. Look through your local real estate section under "Apartments" and you'll find some of those "1 month free" type of offers.

Regarding the housing market, I have been saying this for months and will continue. With housing prices dropping in many cities, the issue for many sellers is finding a qualified buyer. When that is the issue, it means that the price is reasonable and that potential buyers are trying to get the property, but do not qualify.

The problem I have with that scenario is that the potential buyer winds up "turned away" and then either goes elsewhere or stays put. Rent to buy could be the way to go. If that potential buyer didn't qualify for a loan, chances are they could afford the monthly mortgage on the property they are seeking.

Often times the potential buyer is turned down due to credit issues, and NOT because they don't have a reasonable down payment. I'm not saying it's easy, but I am saying I don't hear about much of an effort to make something happen so that buyer and seller can both move on.

If you didn't refinance yet.............

If you did not yet refinance, and conditions have been such that you would have benefitted in some way, you need to keep some changes in mind if and as you revisit the possibility in the weeks to come.

Fannie and Freddie have added what they call "loan level price adjustments" which take effect on April 1st - no fooling. It looks like the only way to avoid these extra fees is to have a FICO score of at least 740, and that isn't easy in today's economic client.

Yet, it could depend on which lender you would use. It is believed that some lenders (and we don't know how many or how few) already have incorporated these "extra" fees into their costs during the first quarter. While doing so likely cost some borrowers more than it should have, this does mean it is possible that a quote of costs you may have recently received could include these figures.

Thus, if you are planning on contacting one or more lenders about doing a re-fi in the near future, please clarify about the impact on these additional fees. If it could cost you a few hundred dollars more than you anticipated to get a re-fi done, factor it out against your total and actual monthly savings.

I have also heard about some lenders increasing their underwriting and processing fees by as much as $300 to $400. On one hand, I can understand this because many lenders have to work harder to put loans through because of the new credit concerns and restrictions. But on the other hand, the lenders need these loans in order to survive and a reduced profit is a lot better than none at all.

My point is that if the new costs and additional fees were to, for example, result in an additional $1,200 cost, you could look at it that it is really costing you an "additional" $100 per month over the first year. If you are refinancing to save, say, $150 per month, your savings would really be equal to $50 per month for your first year. Is it really worth it?

On the other hand, I have heard too many "I'm going to wait and see what happens" stories from both consumers and lenders over the past few weeks. My fear is that too many people will wait an additional 6 months or so to refinance to THEN start saving a couple hundred dollars per month. But in waiting, they paid the "extra" $200 per month (total $1,200 using this example). Add another $1,200 for the additional fees just described, and a borrower could, in effect, have paid $2,400 more because they waited. Probably not enough to offset the lower rate they waited for.

By all means, check with different lenders and examine everything you are being quoted.

If you are lender, be sure you explain the new fees and their impact on potential borrowers so that you don't leave them disappointed. If you are a realty agent, you might wish to help your client consider the merits of refinancing vs. a downsize or lateral move for greater monthly savings in this economy. Doing that could produce either an immediate or long term sale for you.

How Supernanny can help lenders and realty agents

I’m going to once again pick up on the theme for industry professionals to be the messenger. More than ever, consumers need to be reminded that you are still in business with each day’s news of some other large company being in financial trouble.

If you are in Milwaukee, Chicago, Madison, or Green Bay (within 100 miles or more of Milwaukee), you have a reason to contact current and potential clients with a large family household within the next few days. ABC-TV show “Supernanny” is having a casting call in, of all places, the Milwaukee area on March 28th at an area restaurant. (Those in that part of the Midwest can contact me for the specifics. I’ll be happy to provide that for you. E-mail me at Dave at firstin.com.

True, this has nothing to do with real estate and won’t lower your mortgage for April. But it could have something to do with some easy self-promotion. Think about it. Even for those families who do not wish to attend, chances are it is news targeting them they would likely spread around to friends and other family members. Followed by the inevitable “How did you hear about this?”.

The person asking that question is not expecting to hear “My mortgage broker told me” or “From my real estate agent” in response. For once, it is a chance to have your name associated with something other than a stalled homes market.

So are home owners who have been waiting to refinance getting spoiled? The 30-year fixed at 80% LTV has been hovering around 5% for weeks now. The constant lowering of the rates that started just before Thanksgiving and continued for 10 consecutive weeks seems to have leveled off. That is still a good thing.

I could certainly understand people waiting to see if and how much the rate would drop “next week” while it was dropping. But now that it has been holding steady, isn’t it time to get the ball rolling? Some lenders have been telling me they have clients who are “still waiting” to refinance.

Some of these same lenders are not telling these potential borrowers that the fees associated with getting these loans are still expected to increase before year’s end. It is possible some lenders might be screwing themselves (and the potential borrowers) by playing the waiting game.

After all, if it would cost a borrower an additional $1,000 to refinance 6 months from now, and you factor in (for example) $200 “extra” per month by not refinancing, it means the borrower has really spent an additional $2,200 to wait that 6 months. And that is if the 30-year fixed rate doesn’t go up. We don’t know for certain that it won’t. If it goes down slightly, it might not be enough to recover $2,200 using this as an example.

Some of the mortgage lenders who are not explaining this to potential clients now might be out on the street themselves by the time those 6 months pass.

Same theory applies when a potential buyer decides to wait on a good deal for a home or investment property. True, the price could drop and the loan rate be lower in 3 months. But the property might not be available at that time either. The creative people are the ones who are succeeding in this market.

If you are thinking refinance, think it now!

About half of my work week consists of contacting mortgage lenders and brokers around the country, including current and potential clients. Some appear to be holding the "wait and see" attitude regarding campaigning for business, including refinances. They could lose out, just as consumers could, by not looking into a refi as soon as possible.

Personally, my wife and I took advantage of the quick dip a year ago and reduced our monthly mortgage payment by more than $200 per month while the getting was good. I already know that this latest dip isn't worth it for me, but that's because I have been working with realty agents and mortgage lenders for 20 years. I'm not like most home owners and potential buyers out there.

Lowering the monthly payment is not the only reason for a refi. Just because the amount due is lowered on a refinance, it doesn't have to mean a reduction. Paying the $200 per month (or whatever you save) toward the principal will make a difference in the long run.

Yet, many mortgage lenders are playing the "wait and see" game and it keeps consumers from finding out the advantages of refinancing now if it makes sense. The smart ones have already done so, some at higher rates in late 2008 than what is out there right now.

Freddie Mac reports that U.S. homeowners cashed out over $17 billion (that is BILLION) in home equity through the refinance of prime first-lien mortgages for in the 4th quarter of 2008. That is the lowest amount since the first quarter of 2001. Statistics show that 14% of refinancing homeowners paid in extra money when they refinanced, reducing their mortgage debt. This is the highest cash-in share since the fourth quarter of 2004, when 19 percent of refinancing homeowners put cash into their home equity.

Not only that, but by playing the "wait and see" game, the additional funds being paid each month until or unless you refinance your home are going to add up. In other words, if you wait 6 months to save $300 per month instead of $200, it will in effect cost you an additional $600 by waiting.

In addition, there are no guarantees to home owners that the fees involved with a refinance will not rise between now and six months from now. Using the example in the previous paragraph, if six months from now the lender's fee to refinance increased even $500 from today, your waiting for better rates would actually be an additional $1,100 out of your pocket. (Compare that amount with your current monthly payment!)

This while I talk to homeowners who "figure" the mortgage rates will go down even further this year, and to lenders who want to "wait and see what happens". Seems to me there are a lot of homeowners who should know their mortgage refi options.

A winning investment in residential property

Creative thinking continues to put a few ahead of the game in this weeks' real estate market. Instead of soaking in the barrage of negative statistics from the realty associations and industry officials, there are a few people acting and investing on a great idea.

And, no, it is not making lowball offers to try and prevent specific foreclosures. You see, it is not just "complete" houses that are owned (repossessed) by the banks. Unfortunately, many small builders have vanished from the scene. In some cases, this happened while one or more single family homes were still being built and thus not yet sold.

I got curious when I saw that someone bought a 3,000 sq. ft. house in Central Florida for $28,000 cash and may have been the only actual bidder. Upon further investigation, the buyer got himself an unfinished house that was left for dead by a failed builder. In today's market, consumers and investors who can afford to take advantage of the deals out there want something they can turn a profit on without having to spend any more to do so. Yet, in this instance, it translates to missed opportunities.

This buyer/investor estimated that the house needed about $50,000 more worth of work to be completed, and he has the contacts (and the finances) to make that happen. The result is that within a few weeks, he will have a completed and brand new 3,000 sq. ft. house in Florida ready to sell - or rent. And his total cost will likely be under $80,000, with no mortgage.

If over the next few weeks the market doesn't improve to the point of easily being able to find a buyer, he knows the rental market is strong among people who don't have credit worthy of getting a mortgage. Better yet, there will likely be a ton of "rent to buy" candidates out there.

Those who rent to buy make much better tenants, as they are not likely to let necessary household matters slide.

This, after the bank which "took over" this unfinished property was amazed to get rid of something they couldn't sell against the foreclosures ready for immediate occupancy.

What gets me is that this investor/buyer, to the best of my knowledge, is NOT a licensed realty agent.

Now put this together with the usual batch of negative real estate market stories started by the people in the industry. Notice that the realty associations continue to release the "down market" statistics so fast it's hard to keep up:

http://news.yahoo.com/s/ap/20090126/ap_on_bi_ge/home_sales_southern_cities_1

http://news.yahoo.com/s/ap/20090126/ap_on_bi_ge/home_sales_northeastern_cities_1

Now the Chicago market joins the rest:

http://www.suntimes.com/business/currency/1398509,CST-FIN-wallet27.article

Let me get this straight. The realty agents and mortgage lenders complaining about the lack of business (except for mortgage refi's) are sitting around reading the doom statistics, while investors not in the profession are using creative thinking to score a nice profit within the course of the new year.

What's wrong with this picture?

Lenders fight the battle, too............

It's not just the realty agents, builders, and developers having to fight the battle against the negative publicity and its additional harm to the marketplace. Sometimes, it is also the mortgage lenders, although they get it from all sides.

http://www.wptv.com/content/financialsurvival/survivingthesqueeze/story/Harder-to-qualify-for-refinancing/li2cdjNQjU-mFMsq_S1pQg.cspx?rss=762

That article would have you think that getting a loan is even more of a challenge. Imagine a consumer faced with the situation described after all that consumer went through to find a property he/she actually could get a deal on.

Yet, too many of the lenders I have talked with this week are more concerned with contacting their database of past and potential clients. If the people they are spending their time and money to contact don't believe in the possibilities, it makes the battle that much more challenging.

see what I mean........

It appears that for some reason a couple of posts did not come through over the past few days, so this is being reposted..........

As positive as we need to be about the current state of the real estate market right now, the new year brings still another example of the industry shooting itself in the foot.

I know I keep harping on this endlessly, but the problem is it hasn't changed. Here we are waiting to find out if (and since this writing they did!!) mortgage rates will drop for the 9th consecutive week, and here is another industry official publicly quoted about the "down" real estate market. If I paid dues to this association, I'd be even more upset:


http://www.bgdailynews.com/articles/2009/01/05/news/news3.txt

These stories should focus on the number of properties sold - not on comparisons to the past. People could be buying properties for the future. In this instance, we don't need to know about the past.

Getting The Dirt On Your Local Real Estate Market

All this concern about the environment and "going green" continues to increase in our daily lives, yet I am not seeing it reflected in the local real estate community. I'm not talking about throwing soda cans into the recycle bin at the real estate office. I'm talking about the history of both commercial and residential properties.

If you are considering a purchase, lease, or rental of new construction, shouldn't you know what used to be there?

Last week I happened to be driving through the neighborhood in Chicago that I grew up in. I noticed a recently built condo building that appeared to be almost if not completely full within a short period of time for this market. That's fine and dandy. Until my mind raced back about 20 years and I remembered the number of years that location was a gas station.

What I don't know is if or to what extent that information was disclosed to the buyers within this condo building. Did they know that they could (emphasis on "could") be living directly above pipes and coil which used to carry gasoline before buying? Maybe they did not, since a number of years have passed since that usage was taking place on a daily basis. Or maybe they did, but looked an excellent deal in the eye at the same time and chose to overlook the underground.

Perhaps 20 years is enough time for unused gasoline pipes to clear out or even be removed. This still brings up the point that with the change and growth in big cities and further reaching suburbs, we often don't know, don't recall, or aren't told what is and was underneath the home we now live in.

This doesn't always mean that potentially unhealthy chemicals lurk just below. I recall the time many years ago I was taken to look at some undeveloped land near Cape Coral FL. This was before that community had become much more than a few houses. I was being shown several residential lots that were available at the time, while I could see patches of standing water in several places. No way, Jose!

How could they expect someone to buy property when we don't know how much and how easily there could be standing water nearby. How solid is the ground in the surrounding area? I didn't hang around long enough to see if there was any wildlife on the property. However, years later when I returned to that area, it was a city with houses and stores everywhere.

You are probably asking - What does this have to do with real estate marketing?

My answer is - PLENTY.

Speaking as a consumer, the real estate agent should KNOW the answer about what is or was underneath when selling a property, whether commerical or residential. As it so happens, I happen to know what used to be in the new construction townhome I presently live in, but I'm happy to say that the builder told me anyway before making the purchase. And since then, I have made a positive personal recommendation of that builder. It's these "little things" that make a huge difference with me as a consumer.

Believe it or not, our government actually has a helpful resource available. You truly can get "the dirt" on a property online.

http://websoilsurvey.nrcs.usda.gov/app/

That is for the USDA Natural Resource Conservation Service's Web Soil Survey.

This is a big part of why I constantly tell consumers (friends, family, acquaintances) to do as much research as you can before making a real estate or big ticket purchase. The realty agent (or whomever) doesn't know how much or how little you know. You should ask these questions anyway, even if you know the answer. I'm disappointed to report that 2 of the first 3 realty agents I asked did NOT know the above site exists.

When you are considering a realty agent and/or a mortgage lender, test their knowledge before proceeding.

Since this blog is just as much for those realty agents and mortgage lenders within the industry, the message should be clear. A property you are representing or assisting with is a big ticket item for the buyer and seller. You can't treat it like another brick in the wall.

My best advice is to treat a listing appointment or loan application like a job interview. In addition to making sure the needed paperwork is on hand and accurate, you should use every opportunity to reinforce that you are the person to handle this transaction. Even AFTER the papers are signed.

I don't know the person who wrote this about job interviews, and will mention that the comments which follow present just as many interesting views, but this will hopefully bring out the importance of my "job interview" theory:

http://glipress.blogspot.com/2008/12/5-interview-questions-that-mean-youre.html

During the course of my personally contacting more than 1,000 lenders and realty agents every month about a variety of advertising and marketing concepts, I have several of them each day tell me that "I work by referral".

If only it were as simple as they make it seem. There are a number of times I ask a realty agent or lender a specific question about a property or a loan, and the answer I get is not the correct one. He/she figures I won't know the difference. They probably get away with sounding like an expert most of the time because consumers don't do their research. My point is that a BAD referral is going to cost them additional business.

Yet, they didn't need to spend more for advertising or marketing, as much as that would help. They did need to have done their homework in order to clinch the sale.

Aggressive Marketing for 2009

Here it is late November of a challenging year for realty professionals and mortgage lenders. And here I am continuing to contact more than 250 different realty and mortgage offices every week about making themselves known and stand out at such a crucial time.

Just today, I had 3 lenders tell me that they are or will no longer be in the mortgage business come Jan. 1, 2009. But the ones that are planning on staying and being in the business for next year need to rise to the occasion.

Recent research by the likes of McGraw Hill and PWC showed that businesses which increased, or at the very least maintained, their ad spending during the previous recession period enjoyed noticeable sales growth over the following 3 years - when compared with companies that reduced or eliminated advertising during the same period.

To put it into a sports term, don't let the other team back into the game when you have a lead.

This article puts it even better than I can:

http://www.managesmarter.com/msg/content_display/marketing/e3i4f5a5225e24b60e0f289cef3344b80eb?imw=Y

Granted, I complain a lot in this blog about the negative publicity which is mistakenly generated from within the industry. But I will admit that negative pub, such as mortgage rates rising and fewer homes being sold, does generate a significant increase in the number of consumers who will check for themselves.

http://www.comscore.com/press/release.asp?press=2516

Put it together, and I'm here to tell you that this is the time to increase or start advertising as much as possible. If consumers STOP seeing your name and/or your company name in the midst of the negative publicity, two things will likely happen:

1) Consumers will remember the advertisers keeping their name out there during tough times as soon as things pick up. If the rates dropped significantly this afternoon, they are not going to say "I'll wait until after the first of the year to see what happens!". They will say "I'm going to look right now and see which lenders and realty firms can help me!".

2) If you have reduced or eliminated your advertising and marketing presence, consumers could easily think that your office or company is among those which have closed their doors. You would have to spend double your previous budget to merely try to get those impressions back. And if you aren't spending now, I wouldn't count on having double the money and manpower available when the time comes.

Meanwhile, I'm pleased to learn that there are some positive efforts coming from some companies within the industry to reach consumers.

Kudos to Coldwell Banker corporate in New Jersey for compiling a list of "Major college football towns by home affordability". Great idea! This is the sort of list which will attract alumni of the more popular colleges across the country, who will want to see where their school ranks. Especially those whose football teams are having a subpar year. Gives 'em something to brag about. Of course, many are home owners.

If you are wondering, Akron, Ohio (University of Akron), was the most affordable market with an average price of $135,780. At the other end of the field ios Palo Alto, CA (Stanford University), with a $1.7 million average home price. Texas wound up with 3 of the "top" 11 areas on the list, by the way. Ft. Worth came in #6, Houston came in sixth with an average home price of $158,412, and Lubbock TX came in at #11.

Houston is a major example of the benefits of a story like this. All I have been reading and hearing about the Houston real estate market over the past six months is language not suitable to print here. If I were a CB agent or lender in the Houston area, I'd be all over this story. Finally, a positive and a fun slant.

Finally, there is the recent N.Y. Times story about the J.D. Power study of 4,300 mortgage loan applicants and their positive spin about the loan application process. Considering all of the funding and loan issues of late, this is a ray of hope.

Personally, I am already planning ways to make 2009 even more successful for my clients. But if they are not going to plan, and not planning to spend to establish or maintain a market share, the only way I can help them will probably be as a job reference in some other line of work.

Happy Turkey!!

To be or not to be? That is the question

Those in the industry need to work a lot harder these days in order to succeed, rather than just to "survive". I get the feeling that some experienced professionals would rather give it up than pick up the pace.

First, let me ask you (the realty agent and mortgage broker) this. If you are looking at closing up shop based on the current economic state, what do you plan to do from this point? What looks like a better opportunity to you?

I contact an average of 300 mortgage lenders per week around the country that I am not currently doing business with. Over the past two months, I find an average of higher than one per day that I had contacted previously that how has or is shutting down or is already disconnected. Yet, I haven't read or heard about another industry that is aggressively growing via sales.

On the realty agent side, my feeling is that the final two months of the year will see a reduction in the number of realty professionals out there. I was working in Southern California in the early 1990's when the joke going around was "If stopped by the police, you can show either your Real Estate License or your Driver's License, whichever is handy". Agents were part-time, full-time, any time, and all the time.

As we come toward the end of the year, it will be association dues time for hundreds of thousands of agents. My gut feeling is that a sizeable percentage will look at spending hundreds of dollars (and thousands in the case of numerous association memberships) in an uncertain marketplace and decide not to renew their license. They may take the "when the market picks up I'll get back to it" approach.

I think everyone loses if that happens. Consumers will lose out if there are way fewer realty agents to choose from. The remainder will figure they won't have to work as hard and consumers will receive even less information and need to track down agents instead of being courted.

Agents and lenders will collectively throw away years of exerience and expertise, perhaps to embark into an industry they are inexperienced in and have to start at the bottom of.

Meanwhile, for those who know that thousands of home sell every month in any market, it is time to develop a creative plan of attack for the coming holiday season and to start 2009.

For example, the "rent to own" market continues to be underserved. I can't believe how very few ads I see about this concept.

Let's say you have already moved out of a house or condo and are stuck with a monthly mortgage payment in addition to the payment on your current home. If nobody is buying right now, then you need to get something toward your payment. If it were me, I would be all over my realty agent to bring me a potential buyer looking in my area who hasn't been able to qualify for what they need. (And these days, that shouldn't take more than an hour!) I would make them an offer to "rent to buy", starting off at a rent below comparable market value for a rental.

I would get them in at a very reasonable rental price for 3 to 6 months. Even if I am not making enough to cover the mortgage, it is far better than having it sit empty and getting nothing for it. Have a provision that after 6 months (or the pre-determined time frame) they can buy it from you for only a slightly increased monthly payment. This increase would bring their monthly fee up to the amount of the mortgage on this property or slightly higher. For example, if your mortgage payment is $1,644 per month, make their "rent to buy" fee $1,700 per month.

You are, in effect, providing them will seller financing. The "renters" will take good care of the place if they may own the place, along with handling some of the maintenance for you.

When the time comes and they want to "rent to buy" you can accept their down payment and go from there. If they do not wish to stay, several months will have past, giving you the chance to assess the local marketplace. You can try to sell again, find another "rent to buy" possibility, or somewhere in between.

Yet, I don't recall the most recent time I saw any advertising for "rent to own". The marketplace demands this and other options.

So if you are an industry professional and are about to pay your association dues for the coming year, now is the time to plan your approach. There is no shortage of elbow grease.

where the money is not.........

The more realty agents and lenders I talk with each week recently, the more I still wonder if people outside of the industry understand the magnitude of the real estate and mortgage fallout on the overall economy.

We are all impacted by the home sales that are not happening. Think about it. On average, with commissions, closing costs, home inspection, title search, legal, and other related services to a home transaction, you can figure that an average of 7% of the purchase price goes to the aforementioned. That provides individuals and companies with revenue. Revenue that normally goes right back out into the economy in the form of small, every day, and big ticket purchases.

Let's look at the figures. Say 1,000 homes with an average sale price of $250,000 each are sold in your community this month. The 7% in fees that go "into the economy" based on those 1,000 homes totals $17,500,000. If that figure maintains for 3 consecutive months, it would add a total of $52,500,000 to just the local economy. And that is just for your community.

Now, let's look at today's market. In many of the nation's larger cities, the percentage drop in home sales over the course of a month is DOWN by more than 1,000 homes compared with as recently as 2 years ago.

Based on the last two paragraphs, let's look at the results. Ouch. Put those together and you see the size of the impact on the overall economy. Cities, counties, and states losing upwards of $52,000,000+ during one quarter of the year compared with what used to be there.

There is no easy solution.

Meanwhile, the public continues to be swamped with mostly negative publicity about the industry. They don't want to sell at what they perceive as too low of a price in order to attract buyers more quickly.

Personally, I am not showing these links each week as an insult to the industry. My point is that there is far too little positive publicity geared toward generating buyer and seller activity.

http://www.wibw.com/localnews/headlines/30823619.html

http://www.bakersfield.com/102/story/576637.html

http://seattletimes.nwsource.com/html/businesstechnology/2008263348_redfin14.html?syndication=rss

http://www.idahopress.com/?id=14959

http://www.roanoke.com/news/roanoke/wb/180055

Don't Stop Short

I've been hearing it all week from realty agents and mortgage lenders. Now it seems the banks are, understandably, waiting for their government money to help bail out the mortgage crisis. However, this is not without short term effects.

Some of the investors ready to cash in on a bargain have lost out to even lower offers on homes entering foreclosure. Now that it appears the banks will receive additional funding, some of these banks are rejecting the "even lower" offers because they will soon be able to sell for even more with government funding.

This means that for right now, the "short sale" is again a thing of the past in many instances.

Regaining the public's trust

Finally, this week not all of the home sales publicity has been a total negative. But it is more than just the news that needs to be addressed.

In my position of working with realty agents and mortgage lenders around the country on a variety of advertising and marketing campaigns, I also hear my fair share from consumers, and do my best to apply their input and feedback to my clients and via this blog.

Frankly, if the mortgage rates and home prices both dropped tomorrow and the stock market went back to normal, the realty agents would still face an image challenge from potential buyers and sellers. The trust still isn't there like it should be.

Let me illustrate my point. After I read this recent article about the Denver housing market, I read the reader comments below. I have no idea who these people are and had not seen this publication in recent memory, but those commenting echo what I have been hearing even more in recent weeks.

Those of you who are realty agents should take note of the comment about how they don't believe that a Realtor will find them a bargain deal because it would net him or her a lower commission.

http://www.9news.com/rss/article.aspx?storyid=101352

This week, the problem is that everyone is "waiting to see what happens". With everyone waiting, nothing is going to happen.

If you are a potential home buyer, whether looking for a bargain or with a serious need to move ASAP, you shouldn't be waiting for anything. If I was looking for a bargain or for an investment right now, I would put a reasonable offer on the table with a deadline of one week to accept or to negotiate. I would want to get my "bargain" before the majority finds out "what happens".

If you are a realty agent, I'd be all over my buyers and contacting buyer agents about my fairly priced and most motivated listings. I would be asking potential buyers about moving their money from the stock market to real estate ASAP. A 3 bedroom Colonial style house with a yard and basement is going to be there for years to come. The company they own stock in that plummeted by 25% in the past week may not be there in six months. Waiting to see "what happens" could cost them a lot more than the downpayment on a "permanent" piece of real estate.

If you are a mortgage lender, you should be advertising to have local home owners contact you to review their current status. Get them help, whether showing them about downsizing to a smaller home to maintain affordable payments, referring them to a credit restoral service, or possible refinancing to consolidate expenses.

The longer you wait to see what will happen, the longer nothing happens for you. Here's hoping that changes............

How to prepare to sell your home.........

This is most definitely a buyers' market. Not to sound like a continuous loop recording, but I keep seeing the negative instead of the positives about the current real estate market. And the negative "news" continues to come from within the industry. I can't figure it out.

http://www.chron.com/disp/story.mpl/business/6017926.html

http://wbztv.com/local/home.sales.condo.2.823598.html

http://www.courier-journal.com/apps/pbcs.dll/article?AID=/20080923/BUSINESS/80923011 http://www.news-daily.com/Main.asp?
SectionID=2&SubSectionID=2&ArticleID=25227

http://www.jsonline.com/story/index.aspx?id=798582

http://www.buffalonews.com/cityregion/northernsuburbs/story/446045.html

Home owners and potential home buyers don't care about the statistics compared with a month ago, a year ago, or a decade ago.

Of course, I get asked by my clients about ways to combat this. I thought I'd pass some along here. Please let me know what you think, and pass along some ideas. But I am going to present them for home buyers.

If I had a true motivation to sell my home today, I would do my homework before calling my realty agent. First, I would look in the local paper and online for similar local homes for sale based on the features I will be offering. That is so important. I would read every description carefully, and compare it with what I will have to offer. Then I would consider what "buzz words" I could add.

For example, my home right now is within walking distance of 2 bus lines and a commuter train line. With gas prices being what they are, my pitch might just start with "close to train and bus" ahead of "3 bedrooms....." and the rest. My home also just had zero water come in following an 8 inch deluge of rain during the mid-September storms that drenched much of the nation. Yet, some streets were closed within a mile of where I live due to standing water. You had better believe I want that highlighted. Pets are allowed where I live and that was also a consideration in purchasing the home years ago. Yet, other than some of my clients, I very rarely see "Pets OK" in an advertisement or description of an available home.

Frankly, not enough realty agents consider these points when marketing a specific property. I could let it slip years ago, but not in this market. And in my role as a motivated seller (for the purpose of this example), I am taking charge.

Once I list my "weapons", such as proximity to schools and transportation, pets, less likely to flood, near shopping and expressway, pets, and the like, THEN I find and compare descriptions and prices on homes with similar features in my area.

Let's say that 3 bedroom homes within 5 miles of mine are all listed between $300,000 and $375,000. Then I know my range. Next, I compare my "weapons". This is where marketing comes into play. I might not know that 3 other homes nearby are pet friendly, didn't flood, and are also near the train and bus lines, because it isn't in the advertised description of the property. My mission is to make that the fault of the listing agent for not pointing out every strength possible.

But that factors into my price strategy. A potential buyer looking in that price range (or higher) knows to look at more than one price vs. another. To put it another way, I can appeal to a potential buyer by getting them to see that my home will enable them to house their pets and walk to the train or bus. In the long run, that should be worth $2,000 more than a similar house that doesn't offer those benefits. That is just an example, but my point is to use every weapon about your house and show potential buyers the added value.

Think about when you go into a convenience store to get a soft drink. You can get a 12 oz. drink for 89 cents. But you can get a 20 oz. drink for 99 cents. You are getting over one-third more for merely an extra dime. You see the value and think the 89 cents drink isn't worth it. But in fact, you really are spending 10% more than you need to in order to get your drink. Keep that in mind when you are setting an asking price for your house.

Keep in mind that the other homes in the area are already priced to include the agent commission. So you don't need to add any more than necessary.

Now that I have an idea of what I would sell for and have done my own local research, THEN I would contact my agent. But I would not just ask him/her/them to come over and list the home. I would ask them to show me some of the other properties in the area as if I am a buyer. And I would spend a couple of hours going to see those homes. Then I would see how the other potential sellers are staging and presenting their home, and hear the listing agent point out the major weapons for that home.

After that, I present my 'weapons' to my agent, review what was learned and observed during my tour of other available homes, and get down to business. I then request the selling weapons that I want pointed out and why I should get $360,000 (example) for the home.

If my agent does the "let's list it for $390,000 and go down to $360,000" routine, I would refuse. Just as an agent should walk away from a listing from an unreasonable seller, I think a seller should only work with a reasonable agent. It goes both ways. At least it should.

The idea is to show that my home is worth $4,000 more than a similar home down the block and show the reasons why. If my agent can't do that, I'll find somebody who will.

Granted, I have 20 years of experience working with agents and lenders on advertising and marketing over the years, but I really did personally use this 2 years ago for some relatives with a property to sell. I found a similar property a block away that was listed for more money and then found two features "my" property had that were better. Sure enough, my relatives got an offer higher than the other home nearby was listed for at the time. Frankly, too many agents out there would react by pricing my relatives' home for a few thousand LESS than the other home. Therein lies the problem.

If you are seriously ready to sell your home, find your weapons, then find your agent.

Stop the madness

I'll swear it is getting even worse. Realty professionals and mortgage lenders tell me every day how challenging the market is. Yet, the realty associations and boards seem to be leading the way in publishing the negative news.

The more they tell people about the decline in home sales, the more they help consumers to lose interest in buying. If this were "my" association, I'd be at every meeting asking questions.

Again, without trying, here are stories I have come across while checking the industry news within the past 24 hours:

http://www.2theadvocate.com/news/business/28403244.html
http://www.bizjournals.com/sacramento/stories/2008/09/15/daily28.html?ana=from_rss
http://www.fresnobee.com/updates/story/868334.html
http://www.bizjournals.com/columbus/stories/2008/09/15/focus1.html?ana=from_rss
http://news.rgj.com/apps/pbcs.dll/article?AID=/20080914/BIZ/809140326

So how do these stories make me want to contact a realty agent today?

Where are the challenges of the market coming from?

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!

Keep Marketing During Challenging Times !!

I continue to contact at least 300 potential clients every week, regardless of market conditions. Realty agents on mortgage brokers should continue to market their individual ideas and capabilities to as many potential clients as possible, and not fall victim to the statistics game.

Keep in mind the old joke that "38% of statistics are meaningless". It's how you use them. Coke & Pepsi both have plenty of geographic and demographic places to tout themselves as "#1". CNN and Fox News both claim to be the most watched, and in certain age groups, they each are. It is not what you advertise and market - it is HOW you advertise and market.

Last week a read the statistics for May 2008 about the drop in home sales in the Dallas area since one year ago. I went past them, actually, and saw that 5,088 homes sold just in the Dallas Metroplex within the month of May. To my way of thinking, that was cause to call 100 mortgage lenders in the Dallas area to let them know that "more than 5,000 homes in the area have sold within the past 60 days, and that is over 5,000 mortgages". Yet, many of the lenders I spoke with continue to tell me to "call when the market picks up because I don't have any money now". Obviously, they stopped reading after the "home sales are down...." part of the story.

You need to use information to your advantage, along with some creativity. This week started with IndyMac Bank in the headlines, and not good ones. Another large bank in serious trouble.

For as much as outside advertising and marketing helps, you can use news such as the above to your advantage in your weekly or monthly contacts. Realty agents should be calling their investor type clients to remind them that with more banks now in trouble (you) could help them find the best deal on a bank owned property. Mortgage lenders should be calling past and potential clients to let them know they have more funding options than the bigger banks that are being shut down, even with so many great deals out there right now.

Desperate times call for creative measures. (That's my personal saying!) Let's use builders and developers as an example. Many builders continue to force their internal mortgage company on buyers. Some of those same ones have not been Realtor friendly. That was then. Now that buyers aren't lining the streets to enter a model home, the time is right to make contact.

Centex is now offering "special bonuses" for realty agents. And what does a builder's own mortgage company do if a potential buyer doesn't qualify? They could lose a much sought after sale. What if you could bring them and/or qualify a buyer they can't?

It also amazes me that I am not seeing advertising or marketing from realty offices and lenders to encourage downsizing. Gas prices are now the biggest concern for most of us. Some people live in fear of making their mortgage for the coming month.

Instead of sitting there waiting for rates to drop so you can think about advertising for refinance clients, your time could be used to seek and find more viable options for current and open potential clients. Don't forget that for your sales and refinance clients, you have their information about where they work and what their payments are.

Let's say you handled the purchase for John & Mary 3 years ago on a 2 bedroom $300,000 house 20 miles from where John works. John & Mary aren't likely to refinance at today's rates, as it wouldn't make sense. So instead of saying "next!" do a little research.

What if you found a $225,000 house with 2 bedrooms and similar amenities that was 5 miles from John's work? (And don't think it would not be as good of a property - given the home buyer's market in many areas!) John would save 30 miles per day (over 1 gallon of gas each day - and around $100 per month at today's outrageous gas prices). And the lower mortgage on the "new" house would save them at least $200 per month additional. Presto! There is a way to save John & Mary at least $300 per month and take advantage of the buyer's market. Even if John & Mary tell you "no thanks", you will have impressed them with your creativity and knowledge of the market. They won't forget that when they are ready to say "YES!" in the future.

It is your creativity that can win you more business. One of my most creative clients within the past couple of years include a mortgage lender advertising a loan program benefitting public service professionals. That is hitting a niche market, both for now and the future. Another set up a separate loan office down the street from a new development, advertised himself as the lender specialist for that plot, and got the most loans of any mortgage broker when the development finally sold out.

It is a big country out there. The more creative ideas you share with me, the more business we can all generate.