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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=YGranted, 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!!
If your income depends upon the sale of real estate, you have no choice but to continue to mine for new business and maintain the contacts you have from previous or attempted business. These days, there is something to be said for still being around and having your doors open.
But you also need something to tell people and not sound like a recording. That is the less diplomatic way of saying "keep it fresh". One avenue that I am hearing from some, although too few, of my clients is the comparison approach.
It is still a problem that many people are right now afraid to invest in real estate. Now is the time to ask them to compare.
I can't believe I saw an advertisement that a bank actually spent money on touting a return in the 3% range on a CD for $100,000+. I would think that bank would be to embarassed to promote that yield, which is just over half of what it once was.
Now the stock market has gone haywire, and people are afraid to invest significant sums into stocks. It is possible that not all of them will actually bounce back to previous levels, even if bought at bargain basement prices.
Yet, as we all know, real estate will always be there. People don't have to have a CD or stock, or a new car or other big ticket item, but they do need a place to live, and some place to keep their working capital for the long term.
An individual or family with $100,000+ to invest in a CD could "earn" $3,000 on a CD in today's market. Suppose they purchased a parcel of land for that same $100,000. That same land could easily be worth $110,000 a year or two from now. Hopefully more.
Just an example. But if you are sitting there reading this and thinking "I know of a parcel that will be worth even more than that in 2 years!", you should finish this column and then get your contact book open and smile and dial.
Keep in mind that you are no longer selling one property vs. another property. You should be selling buying "this" property vs. investing in a CD, the stock market, or other uncertain field.
If you are not selling, but instead have capital to invest in today's marketplace, you should keep this in mind and look around for a real estate value. Land or an investment property doesn't have to be located in your neighborhood. If your real estate professional can't find anything to fit your needs, do your own research online. Watch for foreclosure auctions, properties in lower income or rural areas which can be bought in full with the amount of available capital you have, and other such opportunities. It is possible to invest in real estate without gaining another mortgage and be able to cash out at a reasonable profit in a couple years.
Personally, I'm finding it harder and harder to believe that real estate is not being marketed as a comparison investment. Here I am pointing it out to real estate professionals every day.
Meanwhile, many kudos to a developer named Jimmy Gierczyk. His latest venture received a well-deserved write up in the Chicago Sun-Times this past week.
Gierczyk has a new luxury condo and townhome development in New Buffalo, MI, which is about 2 hours from Chicago. He was able to do a successful pre-sell on several of his units. How? By putting an Amtrak station within walking distance with a train line going to and from downtown Chicago. And I mean literally putting that train station in.
He reportedly spent over $1.5 million to have a 2nd Amtrak station built near his newest development. The article quotes an Amtrak official as saying this is the only "privately built" station he knows of. The non-stop train runs will take a little more than an hour each way.
I certainly am not suggesting that every developer build a train station nearby. But I think there is more to this story.
The new Amtrak station in New Buffalo, expected to be completed by the end of this year, will be public. It is not only for residents of his development. I'm here to tell you that if I were a real estate professional in Michigan, Indiana (which sits in between New Buffalo MI and the Chicago area) or Illinois, I would be fast and furious about going for a Michigan R E license.
I would be seeking potential buyers looking to have a country or lakefront lifestyle seeking less than 2 1/2 hours of daily commuting to downtown Chicago. (I spend most of my time in Chicago and see people riding the train for longer than that round trip every day.) What a tremendous selling point!
The thing is, other than this one brilliant developer, I'm not seeing anybody else truly selling it.
My clients don't always like to hear it, even if they appreciate it. More than ever in today's economy, it takes an extra and a different type of effort to sell a high end or investment property, whether residential or commercial. The days of "here it is, come and buy it" are long gone.One of the networking sites I frequent had a post from a realty agent I do not know and had never contacted before to the best of my knowledge. He basically announced that the property is for sale and linked to its web site as well as to another version of the listing on a commercial property listing service. This is for a waterfront restaurant and property in Rhode Island, with the web site he gave being WaterfireDining.com. My curiousity got the best of me. In better times (as in a few years ago) I did extensive market research to prepare brochures and presentations on a waterfront restaurant in Indiana, and a family owned restaurant in Wisconsin, among others. And this Rhode Island property is priced higher than those I have worked on. I decided to visit the site as if I were a potential investor. I don't often quote myself in an article, but in this case, it gets my point across. This agent asked for comments, so after visiting the links he gave, here is what I replied with: "Don - the site and the listing impressed me but didn't "sell" me on why it would be a good investment. (OK - I'm not an investor and don't play one on TV, but I do point these things out to realty agents who are already my marketing clients.) So far I want to eat there rather than buy the place, and that isn't your intention. There is nothing to show a potential buyer why he/she/they should spend over $2,000,000 on this property. Why is it a "former" restaurant? That would potentially scare me off before I would contact you about it. I could go away thinking it has been closed for years and you are still another agent trying to unload an overblown listing. Or, I could come away thinking that it just closed due to insufficient financing in a challenging economic time and that someone could get a good deal if they open it again by the end of the year. And if I had over $2,000,000 for an investment, I'll think the worst of an opportunity. And all the photos in the world don't answer that important question for me. Also, it is located near a major college campus. But is it a place that students go and hang out? Unless I know it is, the proximity to campus doesn't necessarily sell me on this as a good investment. If the students do not frequent the place, the location could be more of a negative than a positive. But I don't know either way. This looks to be another instance where "reasons and benefits" should come before the pictures, bells, and whistles. The site and the listing do not tell me why I should invest in the property."
In other words, I only got part of the overall picture. That part I can understand, but my entire point is that I got the "wrong" part.This, like thousands of others, is an investment property. Potential buyers are not going to compare it to other restaurants or buildings. They are going to compare it with other potential investments. The potential buyer for this property may not care if it is waterfront, in a college town, or in the middle of a swamp near New Orelans. That potential buyer wants to know, first and foremost, how he/she/they can serve their purpose by purchasing the property. That purpose could be specific to wanting to own a restaurant, expanding a college town or coastal restaurant concept, starting a family run business, a plan to establish and then re-sell in five years for a hefty profit, or as a tax shelter to pour some money into "improvements" for.Yet, the majority of the points raised in the previous paragraph were not addressed. I'm sure that those of you who are realty agents are saying to yourself "Of course not, that's why you need to contact me!". And that's where I come back with my explanation that times have changed. If I am considering an investment of more than $2 million, I am just as likely to say "next!" and look for another possibility as I am to contact the agent and have to give out information before I can get answers to what really are qualifying questions.If I really was a potential investor in this property, a visual presentation (and I consider a dedicated web site to be one of them) needs to start me up with more important information.The presentation needs to answer the questions that an investor or investment group of this magnitude needs answered. Like the questions I raised in my response to Don the agent.Then, if I am still interested, I'm sure I'd be impressed by the pictures.Now, I'm sure that Don and many other agents I talk to want to tell me that this disappoints them because by doing it the way I suggest they will not be contacted by as many potential buyers.I disagree. This is not just another condo in a 20 year old development. This is a serious investment property. As an investor of this magnitude, I would be well versed enough to take note that a realty agent has started off by targeting the most important factors. Even if he/she did not target my specific needs, I might still be tempted to contact him or her. Why? Because it would come across that this person understands the marketplace and likely could address my specific need. Or know enough to refer me to someone who does.Sell the sizzle, and not the steak. At this level of investment needed, market the property and not the agent. Let me assure you that I am not here to attack agent Don or the property one bit. This is what I would tell him if he were my client. But I will also tell you that in the first 6 days of Don's post about this property, mine remains the only response, and I haven't heard from Don about it either. And the property is still for sale.