Agents Should Be Careful What They Say

There I was in the midst of an all too rare real estate sales story with a positive slant when a quote segment from a local agent took the wind out of the sails.

This business story about the increase in home sales during the month of March along with a dip in housing inventory 'should' be the best possible news for current sellers as well as real estate professionals to come along in quite some time.

As much as I preach to agents that I provide either media coaching or advertising critiques or assistance for that you need to get the name out there and be a local "expert", a big part of this process is most definitely saying the right thing at the right time.

Normally, being the only agent quoted for a San Diego Union Tribune story appearing in the Business section would be a wonderful thing for a local realty agent:

https://www.utsandiego.com/news/2012/apr/17/spring-homebuying-season-heating/

However, the section about agent Clemente Casillas clearly hurts the cause. Saying, in effect, that it's too soon to tell and "could be a fluke" and revealing that Casillas had a listing on which there were "no calls" until the price was reduced were actually damaging things to say.

Bad publicity is not always better than no publicity, especially in this case. Casillas seemed to have overlooked the "message" she sent out to thousands of local home owners by those quotes.

Some of the readers are certain to "believe" that if a an agent prominent enough to be quoted in the major local newspaper is not convinced that the market is improving ("could be a fluke") that there is no reason for them to think so either. And more properties will sit for even longer.

Other readers who might be considering looking for an agent to help with a sale or purchase now are aware the Casillas carries listings which are not priced right, as evidenced by publicly admitting that there were "no calls on it" until the price came down.

In other words, this golden opportunity Casillas had to make the local real estate community AND herself look good to thousands of readers went down the drain because of a couple of quotes.

I also understand that Casillas wanted to be quoted for the story and needed to have an angle to be sure quotes were included. But they should not have been damaging ones, nor did they have to be.

All she needed to say was something like "I hope this trend is here to stay, even if it is too soon to know for sure. I can tell you that I had a listing that has been getting calls lately after a slow start."

Not to make an example out of Casillas, but the point needs to be made to other realty professionals and to current and potential home sellers. An agent is supposed to be positive and show the positive about the current market, rather than telling thousands of people it "could be a fluke". An agent is supposed to walk away from a home in which the seller wants an unrealistic price in today's market, let alone reveal that it "wasn't getting any calls".

Instead, the only positive I got from her quotes is that I'm glad she doesn't have any listings for anyone I know.

It's not what agents "think" about the current state of the housing market. It is what they are doing about it that matters.

Keeping The Statistics Straight

Another bothersome day in the struggle to gauge the real estate market. This morning's real estate "headlines" contained 2 separate stories. One about "home sales up" and another about "mortgage applications down". And both covering some of the same time period.

There are a couple of problems here. Home sales being "up" is only if compared to one year ago. Mortgage applications being "down" means that fewer people are applying for financing. That is not a reflection of how many (or how few) were turned down for a mortgage. The statistic is based on the number of applications and not the results. Hence, some will be turned down and the number of closings will be even lower.

This constant comparison of real estate sales statistics compared with one year ago or five years ago is not doing anyone any good. Well, except for those few who get paid to research these comparisons, since it keeps them employed. I have yet to learn of anyone who has attempted to purchase a home or a property based on what the market was like a year ago.

Now it appears that mortgage rates are headed back up, even though these are still rates much lower than they were a couple of years ago. Some people will panic over this, as if it spells doom. However, it reflects times of years ago when mortgage rates were at least 2% higher, yet more proerties were selling.

Meanwhile, I have been hearing the "It's becoming a sellers' market" crap coming from more and more realty agents within the past month. This is hard to swallow. If homeowners start to believe that, we'll have a flood of people looking to list their homes at much higher prices than they should be. And some agents who will go along with them in order to get the listing. If it doesn't sell, they (listing agent) don't lose out. Practically every home owner would sell if they got an outrageous enough offer.

What that does is harm the truly motivated sellers out there, already competing against the foreclosures and distressed properties dominating the market.

And what that does is keep things as stagnant as they have been for the past two years.

So help me, I had an agent in the Phoenix area tell me that the current inventory of available homes there "has dropped to 15,000" and how it signals a "sellers market" their. I have no idea how this could be, considering that if I were looking to buy in that area, there would likely be hundreds of homes to choose from in the price range I'd be looking at. Before the rest of the neighborhood decides to list their homes too. Frankly, there would need to be at least one less zero in that amount for me to even think of that being a "sellers market". I wonder how many different states one would have to research before finding 15,000 serious and qualified buyers for a home.

After all, if there were that many potential buyers in Phoenix, there wouldn't be time, or the need, for all of the meaningless statistics about home sales. Unfortunately, this isn't anybody's market at the moment.

Your New House Has Arrived?

There is both a funny and a serious side to the concept, now supposedly available for the western states, of buying a prefab house already furnished and having it delivered.

My first reaction to this was to have fun with it:


http://consumerist.com/2012/03/now-you-can-buy-an-entire-house-from-ikea-for-86500.html


Visions of convincing a bank or credit card company that it is a legitimate purchase, but how it cannot be shipped to the address on the account since it is a "new" house. Chances are the delivery people are not including hauling away the current house on the property as part of the deal. Wondering how the delivery people will find the address to bring the house, since there is no house currently on the property.

Then there are matters such as having electrical and plumbing facilities in place so that the new house can be fully functional upon installation. And in the right place at that. This doesn't even include any local ordinances and comparing the size of these prefab homes with those in the neighborhood.

Try getting conventional financing when there is no home in place to be appraised, and the price is the price, including furnishings and appliances.

However, if this is serious, there is opportunity here for consumers and for realty agents. An enterprising consumer could probably get a great deal on residential land in a lot of areas where little to nothing new is being built. Heck, a large lot might be able to hold two of these things and enable an entrepreneur to possibly live in one and rent or lease out the other. There are not many opportunities in most areas for 2 furnished and "ready to go" homes to do such a venture for less than $200,000 (although this does not include the cost of the land).

Even at one prefab house for less than $90,000 (not including the land), it seems a reasonable deal since it includes furniture and utilities, as well as the setup.

I'm wondering if a realty agent could come out with a commission on the sale of the land, and then not have to go through the hassle of issues with the prefab home, since that is a direct purchase. It would make for a much "easier" commission for agents who see this opportunity.

More importantly, it would get more people into more homes. That's what it should be all about.

Some developer or investor could do well with a 'discount' purchase of residential land, and then by filling it up with prefab housing. In and near larger cities, they could do a 10-year "lease to buy" of $1,000 per month, and likely save the "tenant/buyer" quite a bit of rent money. After the 10 years, the developer/owner pockets $120,000 (for the $86,000 home), and can then charge a "move-in" fee of thousands more. This after the depreciation of the homes and paying off on the land their group of prefab houses sits on. All without design, building, and installation costs and hassles.

Sure, the furniture company involved in these wants to find more ways to sell its items in volume. But my hope is that realty agents, investors, and unconventional lending sources will take a serious look at these opportunities. This is "easier" than dealing with foreclosures and REO's, and would help to spur the real estate market.

That part is not prefabricated.

Broker Blames Advertising For Bad Market????

As long-time readers of this blog are aware, I have spent hours sharing my thoughts of a variety of specific real estate advertisements from web sites and newspapers, and demonstrating how much room there is for improvement in most cases.

This, along with continuous questioning of why realty associations continue to publicize negative statistics about home sales instead of only taking a positive slant.

Imagine my anger and frustration when I saw this story from this afternoon about a San Diego realty firm President complaining about how regional and national web sites which use information his office, and other realty offices, provide in order to enhance their (site's) home search capabilities.

http://www.mediapost.com/publications/article/166773/arg-realty-claims-ip-theft-pulls-real-estate-list.html?edition=42796

The subject actually has the nerve to complain that this practice is partially to blame for the state of the current real estate market.

Immediately upon reading this nonsense, I offered up the following response on MediaPost, which originated this article:

+ + + + + + + + + + +
There are two sides to this story, which seems to only have covered one side. The story fails to point out how often (or seldom) some of the "other" sites update their listings and information. For example, my understanding is that Yahoo updates every week.

In addition, I have seen numerous instances where the content of a listing ad on a "national" site has differences compared to what is posted on a realty office web page or site. This story does not reflect that point of view. Furthermore, I can't believe that Mr. Abbott (who I do not know and to the best of my knowledge has not previously been a client) has the nerve to be publicly quoted that these other sites have "slowed the recovery of the housing market". He can't really think that if a potential buyer who has to enter specific criteria to search for homes in locations where his office has listings will give up if the one listing they look at is no longer available.

Having personally created more than 12,000 individual property ads during my 23 years of real estate related marketing and advertising duties, I can easily show him examples of how many realty firms do not even inspect ads they have directly placed within a variety of media and distribution sources.

All this while the very realty associations his office and its agents belong to continue to publish negative statistics about the current local housing markets. He should be asking his association people how reporting that (for example) "Local home sales were down 4.8% last month compared with a year ago" is a help to local sales. But, sure, Mr. Abbott can go ahead and blame other web sites which, so far, have been promoting information his people have created without his office or agents having to pay for it.
+ + + + + + + + + +

I have yet to check Mr. Abbott's office web site to review the listing advertisements on there, but it probably will be a fun task at some point in the near future. Considering the thousands of realty agents that love the fact that Yahoo, Trulia, and other large real estate related web sites bring themselves and their listings "free" additional publicity, there must be a reason why Abbott's advertisements are not producing any results for him and his people.

After all, he and I seem to agree that it takes better advertising and marketing of properties to improve the real estate market.

Why Can't We Trust The Big Banks?

Not only did the government bailout some larger banks by simply handing over millions of dollars and then not even making the banks accountable for it (since a percentage of it went for executive bonuses), but now more and more keeps coming out about the mess these banks have caused. And continue to cause:

http://www.reuters.com/article/2012/01/26/us-usa-housing-mortgage-reincarnation-idUSTRE80P0SJ20120126

However, those in the real estate community can't afford to sit back and wait and wait and wait to see if these banks, such as Bank of America, ever decide to get their act together.

Agents, mortgage brokers, and others who have regular contact with clients, should be alerting their current and potential clients about what can be done to keep on top of a home owner and potential home buyer's current mortgage situation.

If it were me, I would want my clients to know that I would help them to be certain that nothing like what is happening to the people profiled in the above linked article could happen to them. Then, I would make potential clients aware that I would be on the lookout for them.

Consumers need to start seeing that those within the industry are making an effort to improve current conditions regarding financing. Yet, a percentage of realty agents seem to forget about keeping in touch with past clients on matters such as this.

Paint the picture, if you are a realty agent. Suppose you do some digging, and find out a home owner is in trouble over an expired mortgage (such as happened in the article), and you alert your client and help him/her/them straighten the mess out. Can you imagine the referrals you would gain from that? Rather than imagine, start checking around.

Everyone needs to evaluate what bank or banks they do business with, mortgage or not. If the likes of Bank of America and Wells Fargo are struggling with 6 figure transactions, how much attention are they paying to your $5,000 checking account?

How A Hospital Can Help Chicago Home Sales

This "business" story about a hospital expansion and the jobs it will create is the type of news story which should attract the attention of savvy residential real estate agents as well as potential home sellers.


http://www.chicagotribune.com/business/breaking/chi-northwestern-memorial-hospital-to-create-jobs-20111201,0,3102625.story


Agents in the Chicago area should have their database to the point of being able to identify current and potential clients who could be interested in knowing about these potentially available jobs, and letting them know. For that matter, their entire database could be notified. People certainly remember where a solid employment lead comes from.

If I were considering or already trying to sell a home near that hospital that could fit the price range of construction workers and the other positions about to be created, I would get my agent working on making it known to the H.R. Department of that hospital within 24 hours.

Here's hoping that these ideas will be used for better marketing of real estate, instead of merely pumping out negative home price and sale statistics every couple of weeks.

Why Are Our Houses Worth More Than Last Year?

Within the past couple of days I have had several acquaintances tell me that they have received their property tax bills and are obviously both shocked and dismayed at the amounts. It seems that their property tax bills have risen.

I thought that the property tax is based on a percentage of the value of the property. It seems that the majority of properties around the country are being appraised at less than their original value, and in some cases for many thousands of dollars less.

This means it is time to ask the government how they have come up with an increase in property values. Actually, it is time to demand that government officials tell us. Here is why.

Once we receive a Government written notification that it considers our property to have increased in value over the past year, we should immediately going to the bank or mortgage banker which owns our mortgage and provide them with this U.S. Government information. After all, state government officials are a part of the same U.S. Government which bailed out several large banks after the earlier mortgage fraud and abuse. So the banks had better listen.

Since our Government claims each property is worth more than last year, this should reflect on housing prices and for the ability for almost everyone to be able to refinance their current mortgage and take advantage of these low rates. How dare these appraisers continue to act as though thousands of homes have lost value, when the U.S. Government is documenting that they have actually increased?

This is the time to take action to enable those who have faithfully paid their mortgage but have been stuck to have more options instead of punishing these people because of those who did not and cannot make their payments.

On the other hand, there could be some licensed and professional appraisers who disagree with the Government’s assessment of current property values, especially since their jobs may be on the line and their abilities questioned. If they can prove otherwise, these appraisers should be working with home owners to challenge the U.S. and state Government determinations about local property values increasing. In that event, thousands of current homeowners would see a significant reduction in their property taxes and finally have a benefit from the status of the current real estate market.

I’m waiting, but I should not be alone in doing so. Who is right about property values?

Location vs. Price

A suburban Chicago seller has only one other property competing against it. Is this a good thing or a bad thing? From an advertising and marketing standpoint, I would say some of both. The idea is to find the “good” and use that as the marketing approach.

First, let me point out that I found out about this from a local newspaper story and am not familiar with the home or its seller, nor is the listing agent a current or past client of mine.

It seems that until the past few days, there was only one million dollar home officially on the market in Lombard, a western suburb of Chicago. Now there is another. This made the newspaper because the selling family is a former lottery winner who had this home built from the winnings, and now has listed the 14 room, 4,000+ square foot home at $1.1 million.

From what I have seen, the home appears to have all of the amenities of a million dollar home. Meanwhile, the other million dollar home currently listed in Lombard (as of this writing) is much larger and is listed for more than double the price (around $2.5 million). It means that this home stands alone for being listed in this price range within this suburb.

Rather than focus on the amenities, the advertising and marketing for this listing should be focused on why a potential buyer in this price range should relocate to Lombard, whether from nearby or from a distance.

There are people with enough money to purchase a home in this price range who would probably enjoy being the “big fish in the little pond”. Unfortunately for me, I’m not an expert on living in million dollar plus homes, but find it safe to say that being in a neighborhood of them leads to some decisions being made by other homeowners and the community. Being the only one of this type would likely afford some flexibility that an owner of such a property may not be able to have in other nearby communities. The story states that the home is on one of the largest lots in the community as well.

Lombard happens to be within a half hour of other suburbs which are more affluent and have sections with million dollar homes and estates. Thus, there are factors within the general area that have proven to attract such high caliber buyers.

If I was the agent and seller, I would be researching the current reasons why buyers and residents of million dollar homes within a reasonable distance of Lombard have moved in or remained in the area. The next step is to find the benefits of Lombard in comparison. Maybe it is at least part of the school system, proximity to upscale shopping, and so forth. The most positive result(s) should be the grabber for marketing this home. A “Million dollar living even closer to xyz” type of headline. Or “The biggest lot in town is ready”.

If I was a potential buyer of a million dollar home in the suburbs of Chicago, I just might want to be made aware of a unique property in this price range, even if the location is all which is unique. If I’m interested in the specific area where the house is located, then there is likely no competition. It becomes this house, or waiting for something else to come on the market.

Of course, this property has the endless rooms, full finished basement, a movie theatre, and much more that comes with a recently built million dollar property. These are features that can be found in other communities, but is not the biggest part of the story in Lombard.

Granted, it’s still going to be a challenge to find a buyer for a house in this price range. But if marketed with a unique approach for a unique property, there is more hope.

Solving New Hampshire and Maine

The demographic makeup of the populations of both New Hampshire and Maine appears to be getting older rather than younger according to recent studies. How might this effect the real estate market?

At a recent meeting of the Business & Industry Association of New Hampshire, Peter Francese, Director of Demographic Forecasts for the New England Economic Partnership, presented the latest trends in population swing. His statistics show that households with residents aged 65+ are expected to almost double in New Hampshire within the next 10 years, making NH the second “fastest aging” state, behind neighboring Maine, in this category. The same study projects a drop of about 30,000 NH households among the 35 – 44 age group.

This information is, or should be considered, significant information for the real estate community. Instead, so far it is lumped in with other negative statistics, and without going for solutions. It’s time for some aggressive planning and thinking in response to this.

From my viewpoint, this is potentially devastating to New Hampshire and Maine. Putting this information out there that the middle age groups are leaving these states is harmful to everyone there who owns a family style home, whether they are looking to sell right now or not. A 4-bedroom home on the same block as a school won’t sell to a retired couple in their 70’s needing to be near a care facility.

Frankly, the next study to be done should be one to determine how this came to be. Seniors have been moving to Florida, Arizona, California, and other year-round sunny and warm climates for many years. Were it not for this study, I would not have had any idea that Maine and New Hampshire are places where senior living is on the rise.

Granted, I’m not looking at senior housing, but from constantly seeing real estate advertising and marketing around the country day after day, I can tell you that I don’t recall seeing anything targeting the senior market for these areas. This tells me that people entering their 60’s or 70’s have not been made aware of this either. Instead, the years of seeing and hearing about how many people retire and move (or take over their second home) in FL, CA, AZ, and others, will keep the senior mindset in that direction.

Maine and New Hampshire’s Chambers of Commerce, developers, and real estate companies would have to spend and produce a ton of publicity to attract the attention of seniors in the Midwest and the north thinking about retiring and moving to an area with good senior care and facilities in a big hurry. Otherwise, as the seniors currently occupying these homes pass on, it’s going to be difficult to find potential buyers.

Francese’s comments to the Economic Partnership included his saying that these states need more families to move there or stay there.

This puts the challenge in the hands of the real estate professionals in those states as much as the builders and developers. And it’s not an easy challenge, especially after reading the CoreLogic report earlier this month that showed an increase in the number of “under water” homes in New Hampshire for the 2nd quarter of 2011 to more than 40,000. That amounts to about 19% of all mortgaged properties in the state.

My first step would be to look closely at the schools and the attractions in New Hampshire and Maine. Find the achievement statistics and use publicity and social marketing to promote success for students attending schools in as many areas as the statistics will make favorable. Determine which attractions, activities, and shopping areas have the most appeal to the 25 to 54 age group. Research which businesses in these areas have the most employees within that age range and promote their successes.

Instead of sitting back and letting the demographics change and further damage the economy in these areas, take action to change the trend. If those involved continue to sit back and let this happen, the area may eventually be known as “Old Hampshire”.

Build It So That They Will Come

The battle to solve the real estate market crisis continues with one of the few interesting ideas I have seen. This story is from the Milwaukee Journal. It’s about a builder who is building homes in the range of just 1,000 square feet, albeit with a garage, which would result in owning a home with cruise ship or dorm room style living. The builder’s idea is to price them at less than $100,000 new.


http://www.jsonline.com/business/128857588.html


Granted, the story is a newspaper story and not from a realty association or by anyone directly connected with the real estate industry. Yet, this is (or should be) a positive spin on a solution. I’d like to believe there are plenty of people out there who don’t want or need a lot of space and would welcome the chance to be a home owner within that price range. It might make the difference of a family or individual being able to afford a mortgage instead of renting.

Some of these homes would have multiple bedrooms, supposedly at 6 x 9 which could sleep 2 in each room.

However, this story wraps up with less than positive vibes. It goes on to say that the builder is only building two, which will go in one neighborhood in the Milwaukee area, and how the builder wants to see “if” there would be a positive response. (The opening already took place, and I do not have an indication as to whether or not it was successful.)

Even if the unveiling of these homes was successful, it is yet another instance of the “less than positive” marketing that continues throughout the real estate community. If I were marketing for Miracle homes, I would have been certain to point out that these “are the only the first two homes for this neighborhood”, and how “further expansion plans” are now in the works.

You have to act like you have a winner on your hands. That’s the first rule of promotion of a unique idea that fits a need. This isn’t just to pick on Miracle Homes, as this is the common problem with real estate marketing. Taking the “if anybody buys it, we will come” approach tells the public that you aren’t certain either. In a market where so much is uncertain in real estate.

The “wait and see if” attitude brought out in this story is way too typical, although it’s not the fault of the writer of the story. He was given the information and the interview. Sounds like the builder has been listening to too many realty agents or reading the negative statistics the agents and associations keep putting out there.

My point is that this is another version of the “Homes didn’t sell in this area last year after the tax credit ended, so they didn’t sell well again this year and we don’t know if they will next year” stuff the realty professionals have been dumping on us for a couple of years.

But in this case, it’s a solid idea. Builders across the country should be reading this story and feeling like they could expand upon the theory in most markets around the country and create a buzz. Realty agents should be lined up with potential buyers waiting to tour these smaller homes and asking about pre-ordering for their clients. Renters within 20 miles of these “first” homes should also be lining up to compare with their current apartment or unit and see if they could save money while being able to own. You have to start somewhere.

If you don’t use the opportunity to “build up” a buzz about a new property, there won’t be any reason to build up more new properties. And the market will be stuck the way it is.

Statistics Don't Sell Homes

Why are real estate agents giving potential home buyers so many reasons NOT to buy? The practice of bombarding the public with negative statistics about the real estate market instead of only focusing on positive ones is a bigger part of the problem than most people think.

Sure, not as big as the banks have caused by way of the mortgage crisis, but still up there on the list of reasons.

Suppose you are looking for a property, or looking to sell one right now. Let me ask you this. If you are looking to buy, is it because of a statisical comparison with past years?

(I didn't think so!)

If you are trying to sell, is it because of statistics from previous years?

(I didn't think so!)

As I review news stories and releases from around the country most every day, I am still amazed at the number of stories out there like this one from Tulsa:


http://www.tulsaworld.com/business/article.aspx?subjectid=32&articleid=20110813_32_E1_Metroa254755&rss_lnk=5


If this story focused on the fact that 913 homes sold during July in the Tulsa area and that more than 5,400 have sold there during 2011 (through July), I'd be impressed. Tulsa is not an area that has been in the business news, positively or negatively, lately. But homes are selling there.

Those are statistics the realty association should be putting out there. Maybe compare it with other cities with a similar population and demographic, and put the names of those cities in the "story" which haven't sold at that pace so far this year.

But, no. Still another realty association that finds the need to compare these sales statistics with recent years. And proceed to tell potential buyers how the market is suffering. They keep bringing up last year's tax credit as a reason for more sales during early 2010. Well, there is no more tax credit. Just how does this "help" the market today?

Obviously, it doesn't. At least it's obvious to me and to thousands of others who are trying to sell their property and move on. Again, I'll bet the reason for trying to sell now is not because of home sales statistics from 1 to 5 years ago.

Give us statistics which encourage sales and which will entice more potential buyers and help those looking to sell. How many "sellers" were able to enter a "rent to buy" agreement for their homes?

If more families could rent a home and have most of their monthly rent go toward a future purchase, it would allow more opportunities for sellers. It would allow more opportunities for individuals and families who can afford the rent, want the home owner responsibility, and can't get approved for a mortgage to do so. It would help to take some of the lowest priced homes off the market.

There are some very motivated and some very desperate sellers out there in most markets. But as long as the realty associations and news organizatons continue to bombard us all with apples and oranges negative statistics, we'll all be stuck in this rut.

What happened last year or five years ago does not impact a buyer or seller decision this week. At least it shouldn't. But knowing the number of homes in your area which have sold within the past 60 days could.

Why Turning Foreclosures To Rentals Makes Sense

How about that? A politician with an idea that makes sense.

Actually, it's an idea I suggested in this very blog months ago, but maybe this publicity can make it come to life.


http://reed.senate.gov/press/release/reed-seeks-to-convert-foreclosed-homes-into-affordable-rental-units-provide-relief-to-victims-of-housing-crisis_--


If only this had been done a couple of years ago. The idea is to take foreclosed properties and turn them into rental units. This would have given many consumers who can't afford, can't get, or don't want a mortgage the ability to live in a house instead of a cramped apartment. Maybe they'd want to buy a home down the road. Even if they don't, they would be providing monthly revenue for the bank that owns the home, instead of sitting empty.

Multiply that scene by thousands, and that probably would have provided the banks with enough money so that our elected politicians wouldn't have been dumb enough to give these banks "bailout money". Only to have some of the banks hand that money to executives for bonus money and let the housing market continue to go down the tubes. And, of course, cause the government to cut back on everything else that bank money should have gone for.

Turning foreclosures into rental properties would also take thousands of listings off the market, and leave the buyers to go after properties offered by motivated sellers. At higher prices, of course. Taking foreclosures off the market would eliminate the majority of the vastly discounted property prices and therefore increase property values once again.

For a change, something a politician wants to do makes sense, and would actually benefit consumers. If only the others could understand that, this time.

Try The International Angle

Desparate times call for desparate measures, to borrow the cliche. This real estate market is certainly as desparate as many of us have seen in our lifetimes.

Sellers shouldn't give up hope, even if their agents have. I have commented several times over the past couple of years about looking to identify the logical potential buyer for your property. Face it, if your property has been listed for weeks (or longer), chances are the one buyer you need is not local, or has not been approached with an enticing reason to act.

While doing some research for one of my clients, I came upon an interesting piece from this past weekend. It contains suggestions for Canadians about steps to take in order to purchase U.S. real estate, and explains some of the factors to consider.

Upon first reading, the article seems complicated. Then again, I don't know Canadian tax laws and how their financial dealings within the U.S. work in comparison to this country.

This brings me to an important point. Properties are not selling. Yet, too many realty agents are staying within their territory, comfort zone, and the same approach no matter what. Sellers should expect more, or start doing their own research and homework to help their property sell.

Instead of reading the constant flow of negative sales statistics and passing out business cards at the local flower show, agents should be at the library or online researching the answers to questions they have about the Canadian tax laws raised in this story. I would do that in an attempt to find out which price range(s) would be most appealing to Canadians. If I had to, I would contact a financial planner or expert I know and have him or her help me with answers.

And I would do this by this Friday, with the idea of identifying a price range and ways to make properties appeal to Canadian buyers both financially and logistically.

Why by Friday? Because I would want to place an advertisement for the coming weekend's publication, perhaps the Globe & Mail which ran this story. They would be publishing stories geared toward their target audience, which tells me they are reaching at least some affluent investors who would find the story interesting.

If those same people saw an advertisement the following week (while the original story is still fresh in their minds) it would likely draw some responses.

Presto. I could gain some Canadian buyers ready to move on one or more properties to their liking, and demonstrate the financial advantages to them. And then collect buyer commissions in the near future, while developing a network for the future.

If I had a large property to sell, I would probably do this personally, and then tell my realty agent I have a buyer but I'd want a commission reduction because I got that buyer on my own. Even if I don't get that consideration, I would have helped to get my property sold while others are still sitting around on the market.

Although I don't normally give away my commission generating ideas this easily, for the sake of example, here is the article I'm referring to:


http://www.theglobeandmail.com/globe-investor/personal-finance/the-ins-and-outs-of-buying-us-real-estate/article2022807/?utm_medium=Feeds%3A%20RSS%2FAtom&utm_source=Report%20On%20Business&utm_content=2022807


Keep thinking about who COULD buy your property, instead of retreading who can't or won't.

The Rent vs. Buying Debate Continues

This is about to sound like I'm contradicting some past columns, but I don't think so.

Trulia.com web site has introduced statistical research designed to show that in many large cities it is "better" to buy a home than to rent.


http://info.trulia.com/index.php?s=43&item=123


Obviously, I'm in favor of ways to get homes to start selling at a much higher pace around the country. Yet, I don't think this is a way to accomplish this. For as much as I use statistics to make a point, to enhance my enjoyment of sports, and for a variety of reasons, I also understand that there are instances where statistics need to be better qualified to make the intended point(s).

In this case, the "decision" of whether to buy or rent is not based on statistical reasoning. The plane is not equal.

Fewer and fewer potential home buyers can qualify for a mortgage these days. Even fewer have sufficient funds for enough of a down payment to purchase and then secure a mortgage. Each time either or both of those situations occur, it takes away the "rent or buy" as an actual option. If they can't afford to buy, then renting becomes the only option.

Many people already know that the current real estate market is a buyers' paradise. Yet, as our elementary school teachers would have told us in this sentence, the same market does not contain a paradise of buyers.

What the statistics in the article fail to point out is that the majority of the people are not making the choice they are basing their information on.

One of my suggested results actually reduces the distinction between renting and buying, and it would open up both avenues for years to come.

I'll say it again. Make "Rent To Buy" a major part of our vocabulary. This is a drastic measure, but the state of real estate calls for it.

Make homes currently in status as bank foreclosures available for rental only via annual (or longer) leases. The monthly "rent" payment could be used toward a purchase after 5 years if the renter so chooses. After 5 years, the bank would have been collecting the "rent" money and would know the reliability of the tenant. This, instead of sitting on an empty home not generating any revenue at all.

If investors can't buy foreclosure properties at bargain prices, it instantly raises average home prices back toward the level of "real" sellers, instead of foreclosures pulling down the prices for everybody.

And those who currently cannot get a mortgage and/or afford a down payment have instant options.

Meanwhile, apartment buildings would then need more competitive rates for shorter term leases, which would likely help the rental market.

My reason for suggesting the 5 year period before the tenant could then "buy" the home is significant. Again, those consumers who have no other options (or a choice) would be able to establish some equity without the hassle of a down payment and initial mortgage. Yet, those who do have the funds for a down payment and the credit background for a mortgage could then buy now at lower prices. It is possible that 5 years from now, those who buy now could be able to turn that profit by selling high.

This situation can be created, and for everybody's benefit. But as of now, the 'rent' vs. 'buy' consideration is still not a choice. At least 80% of the time.

Finding The Best Candidate To Buy Your House

Looking to sell a home? Know your audience!

http://community.nasdaq.com/News/2011-04/allcash-home-sales-set-record.aspx?storyid=71985

This article from NASDAQ sums up the current real estate market as well as any other I have seen over the past 2 years. Yet, I’m not showing the link because I think this is a well done article. It is shown to make an important point.

The number of first-time home buyers has declined significantly, even compared with just one year ago when the market was already in decline. As this story relates, the trend for “investors” to pay cash for lower priced properties is still on the rise. While the tighter mortgage restrictions continue to make it a challenge for more and more people to get a mortgage, the number of first-time home buyers likely won’t be rising for some time.

Those who are currently home owners and would like to upgrade or downsize to a different home are often stuck with a mortgage they can’t get out of. If they take a loss to sell, they may not be able to afford what they want instead. And on it goes.

There is an important message in the NASDAQ story. Know your audience. If you are trying to sell your home, chances are you are doing everything you can to make it “family friendly” upon showings, and probably within your agent’s outside advertising. The above referenced article should make it clear that “family friendly” is not your audience.

Now, this doesn’t mean that you don’t need the new curtains or to keep the place looking good as new. But it does mean that you need to focus on the value of your home to an investor. That is who is buying, and, as statistics show, without the agony of waiting on getting a mortgage.

The priority should be on showing your potential buyer the ways your property for sale could make he/she/them money within the next 5 years. Although I have seen only a few examples of this of late, they are too few and far between.

One 3-bedroom home that I know of for sale has a lower level “family room”. It is not a basement, has window decorations and is a separate wing on that level. It so happens that the other homes in the development are all either 2 or 3 bedrooms. A few of the other units (both 2 and 3 beds) are also for sale, and now at well below the original new construction prices. Yet, only the advertising for this home points out that it is ready as a 4-bedroom home. At most, the current or new owner could put up a partition “door” and add more privacy, giving them a 4-bedroom home for under $100 (for the partition).

An investor with cash is more likely to see the value of getting a 4-bedroom house at 3-bedroom home pricing, knowing that he/she/they will eventually have a higher profit capability.

Again, based on current trends, being ready to show a cash investor how to get a 4^th bedroom in this home is a more likely “sale” than a first-time buyer with a big family knocking on your door to see it and then trying to get a mortgage.

Before I hear from realty agents out there, I am well aware there is a way this needs to be done. This property needs to be listed as a 3-bedroom home. Understood. But within the description and the “sales pitch” it should be clear that the easy opportunity exists to create a 4^th bedroom which would be larger than one of the upstairs bedrooms, without any room additions needed. That is targeting cash investors, and that is, at the moment, targeting who is buying.

Many homes for sale have at least one capability to increase in value with certain additions or improvements that cash investors would be interested in. A cash investor may not care about new curtains and new carpeting, which they could get for a few hundred dollars down the road when they are ready to sell. That same investor may instead notice if the property is zoned for an additional level, a pool, more parking, or whatever it may be.

Sellers should also monitor local business news. Watch for stories such as major retailers looking to open in specific cities or communities, new train or bus stations or routes, and new schools to be planned. A family, married couple, or individual probably doesn’t care about what will be built by 2016 nearby, but a savvy cash investor does. They can buy a property, hold on to it (without a mortgage to bog them down), maintain it, and be ready to put it on the market in time to be convenient to the new train station or whatever is being constructed.

Advertise the home without the “move in condition”, “near schools”, “breakfast nook”, and other sales points which target home buyers looking at 30 days from now. They either aren’t buying right now, can’t get a mortgage, or both. Advertise with any and every sales point that would cause a cash investor to see something that will be of value in 3 to 7 years. Know your audience.

Live In A Billboard?

The 'turn your house into a billboard' concept actually has some merit from a marketing standpoint.

If you haven't heard, an advertising company is looking at painting selected houses as advertising billboards for their clients, and paying each participating homeowner's mortgage for the length of the contract.

http://money.cnn.com/2011/04/05/technology/adzookie/index.htm">http://money.cnn.com/2011/04/05/technology/adzookie/index.htm>

Participants must own and live in the home, and there are some other qualifying points. But in this time of urgency in the real estate community, the thing to do is look at how this could help home sales.

I'm sure some of you are thinking "no way!" and how a home that is a billboard could make a neighborhood less attractive to potential buyers. That could be, but there are a number of positives to consider.

A homeowner having their mortgage paid for several months benefits with the opportunity to sock away a few thousand dollars. That money could be used for a home improvement, toward a down payment of a larger or smaller home in the near future, or to help pay off other debts.

Selfishly, the homeowner doesn't have to deal with an advertisement on the outside. Using my own warped logic over the years, I reason that I spend far more time looking at the inside of my home than the outside. Other people see the outside way more than I do.

Suppose you are a potential home buyer in a community where a home's exterior has been painted to become an advertisement. You would know that the "ad" home will be painted back to its original color(s) within a few months, and in fact will look BETTER at that time because of the fresh paint job. Chances are the seller(s) you approach will be more willing to reduce even further when you act like the "ad" home is a distraction to the neighborhood. Acting that way could get you an even better deal, saving you thousands of dollars, and getting a home sold within that community.

Even if people are annoyed at the "ad" home, they will be talking about it, and probably watching to see when it will be painted back. In today's real estate market, this would be a classic example of the "Any publicity is good publicity" theory of marketing.

With advertising being so omnipresent and scattered these days, having a house being an advertisement might not be any more annoying than large billboards that practically touch an expressway, advertisements in public bathrooms, on trains, buses, and everywhere else we look every day.

Let me add that I know nothing about the company planning this, am not compensated, and have no involvement in this project.

There could be positive benefits for people if this works. The real estate community needs every positive it can get. I can't paint that any clearer!

The Industry Still In Denial

It was just another day of reviewing real estate news looking for something other than the usual real estate professionals releasing negative statistics. Until I came upon a story from Springfield IL.

Of course, the story contains several negative statistics released by the local Association of Realtors. What makes this story so incredible is how the Association President blames "the weather and high gas and food prices" for the drop in home sales.

See for yourself:


http://www.sj-r.com/top-stories/x1777816246/Weather-economy-cited-in-24-3-percent-home-sales-drop



It's time to blame the Assn. President for not giving this story a much needed positive twist. If I had read that during Feburary 165 home sales were completed in the Springfield IL area, I'd could have been impressed. That month included a severe blizzard, a substantial increase in gas prices, etc. Yet, during that time, an average of more than 3 homes were sold every day. Someone could have figured maybe there are reasons to buy in that area.

It can't be that so many agents are in such denial. At least, I hope not. This is perhaps the worst case of the "You wouldn't want to buy a home here, would you?" syndrome I have seen coming from industry members.

We should all be working on solving the current problem. It is getting more serious every day. Many of those who are not afraid to purchase and can afford to can't get a mortgage. Even more can't get rid of their current property to make their next purchase.

Yet, this guy wants us to believe that if there was not a snowstorm, if gas was still at $2.40 a gallon, and the food crop was better this winter, more homes would have sold.

Not exactly a solution.

Here is it a month later. The snow is all gone. I'm still putting gas in my car, and still eating my regular meals every day. But my house still hasn't sold after more than a year on the market.

I suppose that's because of the St. Patrick's Day parades? Guess we'll find out next month.

Would Outside Incentives Help The Purchase Market?

Some realty firms and builders have stepped up efforts with offers of an incentive, often worth thousands of dollars, to buyers upon closing. The trend seems to be leaning toward the incentive being something not specific to the property.

Offering or giving an incentive to a buyer is nothing new. In the past, it might be new furniture, a big screen TV, or some sort of a services discount or gift (i.e. free maid service for 3 months).

One big difference with incentives now is that many more are offered to buyers, whereas in the past it was often incentives to realty agents who brought the successful buyer. Even though it was about 20 years ago, I still remember a time I was doing a marketing presentation at a realty association meeting in the Los Angeles area. While waiting, several agents were pitching new listings they had to the other agents in order to draw attention in a then hot market.

The owner of a realty office with about 12 agents got up, pitched one of his listings, and then promised "an additional $5,000 in commission on a sale from any of you who get me an offer by 5:00 PM today". Now that was "creative selling" at its best!

Of course, at that time, his purpose was to attract attention to his listing and make other agents remember it ahead of hundreds currently available within the same area. And attract attention he did. Yet, the eventual buyer of that home had no clue. The "incentive" was used effectively where it needed to be.

Recently, I have seen sellers, realty companies, and builders offering some interesting incentives to the actual buyer. These range from a pick-up truck to installing hardwood floors. Some are specific to the property, others are geared toward the buyers.

A realty company in Birmingham AL offered a 4-year tuition to the University of Alabama Birmingham Medical School (over $22,000) with the purchase of a unit in an upscale development. The Birmingham News reported there were no takers. (On a separate note, that incentive was stopped. That was dumb to stop it. They should have continued it since not many other incentives are valued at more than $20,000, and if they got a "taker" the local and national publicity it would have generated would be worth far more than the amounts paid out!)

I also saw a news story about a seller who allowed the asking price to be reduced by $2,500 per week for several weeks.

In an active real estate market, such methods make sense when the idea is to make "your" property stand out. Agents and builders want buyers to consider their property ahead of others they are looking at. Of course, this assumes there are plenty of active buyers out there.

That's the difference. Right now, thousands of dollars worth of incentives don't matter nearly as much when people who want to buy can't get a mortgage and/or can't sell their current property to guarantee a move. Unless they are the right incentives.

For many, the "right" incentive would be a buyer for their current property so that it can lead to the next sale, or being able to get better financing for a first-time buyer.

Somehow, there has to be a way for "regular" sellers to compete against the foreclosures and short sales. But first, we need for buyers to compete. Period. The fact that there continues to be so many foreclosures and short sales on the market tells me that there people are not buying, even at lower prices.

Until people and investors can start buying a serious number of properties, a big screen TV or a pick-up truck won't make a difference.

Agents - Get Your Clients Into The White House

Now that I have shared this with my valued clients, I thought I'd share something for realty agents to share with some of their buyers and sellers. Especially those with teen children.

The deadline is coming up for applications for interns - at The White House. What does this have to do with Real Estate? Nothing.

What does this have to do with your appropriate buyers, sellers, and clients? It could a lot. In this (or, for that matter, ANY) real estate market, agents need to distinguish themselves. Not just sending out newsletters and reminders which have no bearing to the local market or what he/she is all about.

Suppose you have clients with children in high school. This is a reason to call or e-mail them and suggest that (names) apply for a White House internship. This shows your clients you are thinking of specifically them. They may pursue it, they may not. But chances are they'll tell others about what you did for them.

Once you get their attention, send them this link:


http://www.whitehouse.gov/about/internships?goback=%2Egde_3571887_member_45547363


Of course, I suggest to my advertising and marketing clients that they follow back in a few weeks to ask if (name of child or children) applied. Maybe they received a response from someone at the White House! Trust me. You'll get a more favorable reaction than if you called them to ask about local home prices.

How Banks Can Turn Around The Real Estate Market

It’s one of the first marketing and public relations tips a young person learns. Do your best to turn a negative into a positive. That thought should be in big, bold letters in every banker’s office in the country.

There I was reading more less than encouraging predictions for the real estate market last night. About how the banks continue to slow down the foreclosure process, claiming it is because of the government’s mortgage modification programs. Whether or not such is really the case or if certain bank executives are too busy counting their millions in bonus money I don’t know. But I do know that this is the single most damaging element to the current real estate crisis.

Considering how the government handed over all those millions to several large banks instead of paying back thousands of specific loans, it is up to these same banks to make the sales of foreclosures the number one priority.

If you wonder why I blame the banks as I do, there is a quote from a Chief Economist at Standard & Poor’s in Banker & Tradesman saying that “The time it takes to do a foreclosure has doubled” in a story published earlier this very week. This is a lot worse than banks with one teller and 10 people in line, and our usual service gripes.

Those few consumers or investors with enough funds and/or secure enough employment to risk purchasing a residence don’t care if the next great deal is a foreclosure or a desperate seller with other motivation. They want a good deal. But if the banks are stalling the sale of foreclosures, it really means that those homes which are not under foreclosure seem “higher priced” to a potential buyer and thus less appealing.

Suppose the banks knew they should thank their lucky stars the government handed over the millions to keep them in business and got serious about helping the economy. And they made it so that homes under foreclosure were EASY to purchase and quick to close. That would entice the investors and potential buyers to get in on the best deals first, while they last.

As foreclosure homes start to sell at reduced prices, it would raise the number and percentage of available homes sold. If several homes under foreclosure in the same community were to sell within a short period of time, that would create a demand for homes in that area. Now the lowest priced homes have been purchased, and that opens it up for the most motivated sellers to adjust their pricing to be the next sale.

However, as long as the banks play the stalling game and degrade the sales of foreclosure properties, home values across the country continue to plummet and millions of current mortgages stay under water. While the banks continue to raise service fees for consumers and businesses and sitting on their foreclosures, they could be taking the lead to stimulate this economy. Here’s hoping they get the message and get aggressive about finding buyers for their properties. Quickly. Or renting them out for a monthly income. Before it’s too late for them, and for us.

Foreclosures are a negative, but I see the way to turn them into a positive.