Here’s a great way to find new customers, and it costs almost nothing.  It works best if you have a pickup truck or mini-van, but that isn’t necessary.  You will be working out of your vehicle, so it is important that it be clean and nice looking, whatever it is.  Here is your investment:  Go out and buy some magnetic signs that say “New Home Sales” and your company name as required by law.  Contact local builders and tell them you are specializing in new construction sales, but would like to represent buyers.

Almost all builders (regardless of their listing agent) will be happy to supply you with floor plans, feature sheets, subdivision maps, pricing, etc. that you can put together into a three ring binder.  Now all you have to do is be driving around in those new construction neighborhoods about the time people come by to look at homes.

You are an “expert” since you have the specifics on every home, you have a builder key, and you have your sign on your vehicle telling the world you are!  So every evening (from about 4:00 to 7:00, you troll for new home buyers.  You have a mobile file cabinet with all your forms and supplies, and you can write an offer from the home or from your vehicle.

The listing company will often not appreciate your trolling for buyers in “their” neighborhood.  Tough!  You are not representing the builder, they are.  But you have every right to represent buyers of new homes.  What’s particularly cool about this strategy is that at about the same time most agents are going home from spending the day in the model home, the traffic in the neighborhood begins to pick up as buyers are cruising around after work looking for their next dream house.

You have the expertise, the key, the flashlight (if need be), and all the paperwork to make it easy.  Your lender is on call.  Nobody else is around to help them, and you just got an easy sale by being in the right place at the right time.  Plus, it’s new construction so there won’t be problems with appraisals, inspections, or unmotivated sellers.  Better yet, the prices will be higher, and your clients will be thrilled!  How cool is that?!  That’s Max-Bang!

First, for the uninitiated, let me explain the term REO.  REO stands for “Real Estate Owned”.  Talk about dumb names!  I am not aware of any real estate that is NOT owned.  Are you?  I digress.  Bad name aside, REO has come to mean real estate that is owned by the lender, after a foreclosure.  Now why couldn’t they just say “bank owned” and save us all the confusion!

OK, now that we understand the term, let’s talk about REO business as an “opportunity”.  There are really two different ways to make money on REO properties: buyer side, and listing side.  (I know, you’re thinking, DUH!)  Let’s look at each one.

I liken buyer side REO business to eating ribs.  Sounds good.  But let’s think about it.  Eating ribs is always a let down.  Sure, they’re good, but you do a lot of work for a mouthful of food.  And it’s messy too.  Reminds me of REO business on the buyer side.  If you’ve ever had the misfortune of dealing with a large asset manager on behalf of a client, you totally understand.

REO properties are managed by what is known as an asset manager.  He or she is called that because the real estate is an asset on the books of the lender.  If you were dealing with a small bank that did their own lending, managed their own loans, and then got a house back after foreclosure, it would be much different.

But today, lenders are huge.  They typically purchase traunches (bundles of similar mortgages) in the secondary market (think Wall Street).  It is common to see hundreds of millions of dollars in mortgage paper in a single traunch.  That’s important because when a mortgage goes into default and the property goes through the foreclosure process, the company managing that asset is also managing hundreds or even thousands of others at the same time.

The asset manager is not commission based, and so he has no direct interest in the sale, and is the very picture of an unmotivated seller.  And typically, he is some mid-level manager with little decision making power.  Any proposal you make will have to go to a committee.  What that means is that if you are negotiating with an asset manager on behalf of your client, you will be working many, many hours to do a single deal, if you ever complete it.

One of my favorite REO transactions (of course we hadn’t invented the term REO at the time) was a foreclosure property of about 6,000 square feet.  It was a magnificent home, but it was also much nicer than the homes around it.  I had a client that wanted it badly.  The mortgages balances on the property had the asset manager wanting about $650,000 for the home.

Over what seemed like an eternity, and was actually about a three month period, I eventually made my client’s case that the home, while very nice, was simply over built for the area.  We ultimately got the home for only $189,000.  The asset manager fought me every step of the way, and we had to go to his committee again and again.  At the end of the day, I did both sides of the work and got one side of the money.  I worked three months and made $4,536!  Woohoo!  Fortunately, it was not my only business.

And I’ve heard many other stories just as bad.  My point is that working buyer side REO business is way too much work for the money.  You’d be better off washing cars or flipping burgers.  And it’s thankless, because the client has no idea how much work, comparatively, goes into an REO transaction.  They just assume it is a normal transaction and you are doing what agents do.

Now let’s talk about seller side REO business.  I have a friend that owns a very large real estate firm in Atlanta.  His company has managed to win the HUD contract for northern Georgia.  In other words, he is the listing agent for all FHA foreclosure properties.  It makes him lots of money.  If you can do REO on that scale it is great business.  But let’s get real.

He has ten offices, and is a very large real estate player.  Size does matter.  Today, most asset managers are not selling one or two properties.  They typically have hundreds a month.  They require someone to be able to service the entire book of business for an area.  That means having a very large, established, brokerage.  The business is also put out for competitive bidding, so that if you are even able to qualify to bid on the business, you will likely be doing it for very little in brokerage fees.

I know of another agent who has managed to secure the REO business for a manufactured housing lender.  He has been doing that business, exclusively, for many years and making decent money.  But again, that’s all he does.  It’s his niche and he has spent years building it.

So here is my bottom line: There is opportunity doing REO business.  But it’s not the panacea that today’s gurus and coaches would have you believe it is.  And at the end of the day, it amounts to wholesale business.  There’s nothing wrong with wholesale, but why settle for wholesale when there is plenty of retail business?

I think that REO business is something you want to absolutely avoid whenever possible on the buyer side, and at least seriously consider avoiding on the listing side.  And that’s my quick answer.

Freedom…
to think, to love, to live.

Life …
whose most valued treasures
are a special gift.

Happiness …
that doesn’t come from

what we own
but from the love of
family and friends.

Thanksgiving is in…
our gratitude and attitude,
our giving and sharing,
our well being and health,
and above all our trust and belief.

Remember those separated from their families who stand in the gap in harm’s way
to insure that the blessings of Thanksgiving fill your hearts and home!

What if you could actually know the odds of selling a client’s home in 30 days… or 60 days… or 90 days?  Wouldn’t that make advising that client a lot easier?  Well now you can!  And it’s easy.

As a listing agent, one of the questions I was often asked by sellers when I was a listing their home was, “How long do you think it will take to sell my house?”  As a new agent I struggled with this, and I did a lot of research to see if I could find the formula to calculate sale probability.  Sure enough, I eventually found what I was looking for.  I needed two pieces of information to make the calculation.

First, I needed the actual DOM for the area.  Then I need the standard deviation of that DOM.  In the last installment, we discussed how you find the actual DOM for any market.  But the standard deviation of the DOM?  How do you calculate that?

The easiest way to calculate a standard deviation of the DOM is by using a spreadsheet like Excel. Pull up all the closed residential properties for your community from the last year from your MLS.  Then copy and paste that data onto a spreadsheet.  Then use the formula in Excel to compute the standard deviation for the DOM column.

If you are like most agents, by now your eyes are starting to glaze over, and your mind is going blank.  You’re probably thinking, “If I have to do all that stuff, I really don’t care about the odds!”  And because I know that’s what most agent are thinking, we designed a calculator to do the math for you.  All you need to do is type in the average DOM, then the days you want to calculate… like 30, 60, 90 etc.

I’ll give you an example.  Let’s assume the actual DOM is 240 (like it is right now in my market).  In a matter of a few clicks, here are the odds of a home selling:

• 30 days — 10.1%
• 60 days — 13.7%
• 90 days — 18.3%
• 120 days — 23.4%
• 150 days — 29.3%
• 180 days — 35.8%
• 210 days — 43.1%
• 240 days — 50.0% (Remember, this is the average DOM.)
• 270 days — 56.9%
• 300 days — 64.2%
• 330 days — 70.7%
• 360 days — 76.6%
• 390 days — 81.7%
• 420 days — 86.3%
• 450 days — 89.9%
• 480 days — 92.7%

Now let’s say that a competing agent tries to convince your client that his home can sell in a matter of days.  You can tell your client with complete certainty that the chances of selling his home in a few days are nil, and that in reality he should be prepared for at least an 80% probability.  In the example above, that means just over a year.

When you can show your client, with authority, how long it will take to sell his home, he’ll inevitably respect your honesty and the fact that you know exactly what it takes to sell a home in your market, even if he doesn’t like the hard facts.  He knows that you’re not guessing, like most agents, and in fact you’re speaking with the voice of authority. Knowing your market better than any other agent will impress your clients while also giving your own confidence level a boost.

I saved the very best for last.  Of all the calculators we’ve developed, this one was the most difficult, but it’s also my favorite because it will give you information nobody else has, and that will win you the listing, time after time.  You’ll love it!  Simply put in the accurate Days on Market and the number of days to estimate, and you will instantly know the statistical probability of selling and home within that time frame. So check out our awesome calculator! And then let us know what you think of it.

But even prior to 2000 “building green” still remained outside mainstream awareness – but has that changed, and for many good reasons. Elevating the profile of “Green” has been added to the agenda of movie celebrities such as Brad Pitt and Leonardo DiCaprio, music stars like Radiohead and of course, political celebrities like former vice president Al Gore.

Closer to the home front, the U.S. Green Building Council has made great strides with the release of the first green building standards under its Leadership Energy and Environmental Design (LEED) rating system for new construction, existing building operations and commercial interiors. The USGBC also created its Certified Green Professional (CGP) designation that recognizes builders, remodelers and other industry professionals who incorporate green building principles into homes without driving up the cost of construction. The National Association of REALTORS® has also validated this growing trend when they launched their new designation aptly called “Green” for Realtors®.

With buildings accounting for large amounts of land use, energy and water consumption, and air and atmosphere alteration, it’s important that we start building new eco-cities. Here are some of the buzz words and concepts that are contributing to reducing the impact of building on human health and the world we live in:

• Advanced water conservation
• Greywater and wastewater-treatment techniques
• Lush planted terraces with parapets collecting rainwater for reuse
• Air-quality-enhancing garden filled atriums
• Photovoltaics
• Passive solar building design
• Heavily insulated walls, triple-glaze doors and windows
• Heat recovery ventilation systems
• Reduced surface area designs to minimize loss of heat
• Environmentally-controlled systems
• Reducing environmental degradation

So after years of doing very little and now after months of consultation with the American Institute of Architects comprehensive, new legislation is at last being introduced that is aimed at promoting energy efficiency in residential buildings. The bill would provide incentives to lenders and financial institutions to provide lower interest loans and other benefits to consumers who build, buy, or remodel their homes and businesses to improve their energy efficiency.

Living “green” isn’t a one-legislation-event or an all-or-nothing proposition.  It is an evolution, a growth process, and a re-thinking of our existing patterns, habits and thoughts. Above it all we must recognize that we have a responsibility to our children to take care of the place we call earth and to preserve it for future generation.

What will you do to help?

I am writing to you this week more as a public warning, or a real estate warning message if you will, than my regular message. This is something that all real estate agents and investors must be aware of in today’s marketplace.

We had a large 1031 exchange company that has declared bankruptcy in the last few weeks on the West Coast. Summit Accommodators 1031 Exchange filed bankruptcy before the end of the year with 13.6 million in assets and 27.8 million in liabilities. They are 14.2 million short in cash owed to their clients. They operate in over 8 states in the western United States.

Summit is not the only 1031 company in the US that has run into financial problems. Most people including real estate agents assumed that Summit deposited the funds in bank accounts insured by the federal government. This is the practice of most 1031 accommodators, but not all accommodators. Also, there are no government requirements or oversight agency or regulations to insure they do protect the clients’ money through depositing the money in a federally insured account. The 1031 accommodation industry operates largely unregulated. Summit was loaning money to Inland Capital, some 13.7 million, which in turn loaned on speculative real estate development. With the turn in this real estate market, Inland Capital clients cannot repay the loans to Inland Capital. Thus Inland can not pay Summit and Summit can not pay the people that entrusted money to them in a 1031 exchange. Many of the principles in the Inland Capital organization are the same as Summit 1031 Exchange. The result of this mess is a lot of people who are at risk of not getting their money; capital gains taxable liability since the money is not there, and purchase transactions that won’t close because there are no funds.

The action we need to take as a real estate agent or investor is to be sure you know the company that is holding your money or your client’s money. Be clear about where the funds are held and what type of protection you have in the event of a problem. What is the company’s philosophy of “escrowed” funds?

Finally while I do not pine for more government intervention I do think that the consumers are not protected in most states because of a lack of rules and regulations with regard to the 1031 accommodations. Most states have zero regulations and rules. We, in the real estate industry, are regulated more on earnest money deposits that are held for 30-45 days than the 1031 accommodations are on large precede deposits that they hold for 180 days. That seems to be contrary to logic. We need to band together as in industry of professionals and get involved in this public safety issue. We need to require out legislatures to enact laws that protect the public and require safe guards, regulations, standards and even potentially licensing of this industry.

I appreciate any support that you can give us in this battle. You can rest assured that I am personally doing everything I can to move this issue forward. I have talked with many people in the industry in the last week raising awareness of this issue. I have had discussions with my local and state Presidents of the real estate boards. I have talked to the real estate commissioner in my home state of Oregon. I have called the President of NAR to express my concern for this issue. If we all take some action together we can better protect the clients that we care about and serve.

Our readiness to take the easy bait makes us like the wolves that are hunted above the Arctic Circle. The wolf hunter dips a sharp knife in blood and freezes it.  He repeats this over and over until the knife is thick with layers of frozen blood that attracts the wolves’ keen sense of smell. They begin to lick the knife, working themselves into a frenzied rage to find fresh blood.  Eventually, they succeed, taking their passion for the knife even higher. What they fail to realize is that the fresh blood is actually their own. They bleed to death from their own actions.

 As salespeople, if we buy into the myth of a prospecting-free sales system, failing to learn sound prospecting approaches and abandoning the need to continually develop new leads, we risk ending up like the wolf – chasing false promises and endangering our livelihood in the real estate business. Webster defines prospecting as “seeking a potential customer, seeking with a vision of success.”  Notice there’s nothing in that definition about waiting or hoping. The definition revolves around action being taken by the salesperson, starting with the word “seeking.” Prospecting involves finding people to do business with. The other key phrase is “with a vision of success.” Prospecting requires positive expectations. It requires a positive-results mindset, in part to overcome the influences of all the other agents who don’t prospect, don’t value prospecting, and stand by to negatively influence your vision and expectation of success.   

As a new Realtor in 1991, I joined an office full of experienced agents who were doing well. I knew that to succeed I needed to prospect. I didn’t know much more than that, but I understood the value of prospecting based on the results I’d experienced in my previous sales jobs.

 I’d come into the office at 7:00 a.m. and by 8:00 I’d be talking to expired listings, FSBOs, people within my sphere of influence, whoever I could reach on the phone. The snickering from the other offices didn’t escape my notice, nor did it redirect my efforts. The laughing died down within six months when my listings and sales put me on top-performing lists – and it stopped altogether when I made over six figures in my first year in the business. I became the number one agent in that office after my third year in the business. And my commitment to prospecting hasn’t stopped yet. 

 What Prospecting Is: 

 ·        Calling past clients   

 ·        Calling people in your sphere of influence

 ·        Calling expired listings        

 ·        Calling FSBOs         

 ·        Cold calling for listings and sales   

 ·        Knocking on doors  

 ·        Hosting open houses      

 ·        Calling absentee owners  

 ·        Cold calling from lists of names     

 What Prospecting Isn’t: 

 ·        Mailing magnets, calendars, and almost anything else

 ·        Setting up a website

 ·        Joining service organizations

 ·        Wearing your name badge

 ·        Placing magnetic signs on your car

 ·        Sponsoring a community sports team

 ·        Doing floor time

 ·        Answering e-mails

 ·        Pinning your business card on bulletin boards 

While marketing is all well and good, prospecting is the pathway to sales success.

This can be extremely time consuming, which is why the majority of agents across he nation do not do it yet.  They don’t have the time, the energy or the staff to keep these updated frequently.  But I know who does…your Virtual Assistant!  (Seriously, if you’re not utilizing the services of a Real Estate Virtual Assistant by now for all your real estate support service needs, than you need to look into partnering with one now – if only just to manage your Craigslist postings on your behalf.)

There are a couple of ways to manage your Craigslist postings, you can either enter them directly into the post listing form on Craigslist every time, and upload your pictures manually – which produces a text like line ad feel, with the images showing below your ad, or you can use a service like Postlets (there are other similar services out there, do a search at Google) to enter your listings into, which produces an html flyer-like ad with the images embedded.

The method that I prefer when working in Craigslist for my real estate professional clients, is to enter the listings into Postlets.  This then lets me upload the photos and then copy and paste the html code that it generates for me over into Craigslist to create a nice professional brochure looking listing, these ads definitely get more attention from Craigslist visitors.  Another added benefit of creating the listing in Postlets first, is that they automatically submit your listing to Google Base, Oodle /Backpage, HotPads, Vast, Properazzi, DotHomes and other sites as well.  To their credit, Postlet listings can be created for various property types including: Real Estate for Sale (both Commercial and Residential), Real Estate Rentals (commercial, residential and vacation), and if you’re looking to upgrade to a greener ride, you can even list vehicles for sale via a Postlet listing.

I’m not saying it’s easy, I’m saying it’s profitable and worth the effort…and if that effort is expended by your Real Estate Virtual Assistant,  freeing up your time so that you can get back to selling properties, all the better!  To find a Virtual Assistant that specializes in Real Estate Support Services, contact me directly via the form at the right or through my website (see author profile), or head over to the Virtual Assistant Chamber of Commerce and fill out an RFP request to have qualified Virtual Assistants contact you directly.

Look out, Realtor.com…Craigslist is in town!

Wesley, my son, does all that and more for me.  He causes me to really evaluate and question the most important skills, abilities, attitudes, and actions that must be undertaken to create greater success.

Most of us look at success as a very complex combination of skills, abilities, attitudes, and actions joined together in a magical or secret formula to achieve grand results.  Recently, in evaluating success, I realized that one thing reigns supreme.  It struck me that if I could instill that one thing in Wesley in his lifetime, his success in anything was assured.  That one thing is discipline.

Discipline is the fundamental building block that most people utilize to achieve greater success in life.  Once you have acquired the skill of discipline, it doesn’t matter what the economy is doing or what business you are in, your success is within reach at all times.  You possess the most important tool to help you through the storms and changes of life. 

Discipline is a crucial missing piece for many people.  I believe that, because our country has become so prosperous, we take the need for discipline for granted.  Older people in our society remember the sacrifices they had to make to achieve a greater measure of success.

People like myself, who were born in the 1960’s and beyond, have grown up in a vacuum compared to older generations.  We are far too removed from the World War I generation, Depression generation, World War II generation, and even the Korean War generation.  Those generations needed discipline just to survive.  In modern day America, you don’t need discipline to survive.  We have slowed the train down, so undisciplined people can stay on the train.  Discipline is the “secret weapon” of successful people.  It is the one big tool that separates them from all others.

If we can control and discipline three key areas of our life, we can control and discipline anything.  These three areas are the toughest for most people to discipline themselves to take control of:

1. Our Finances:

I meet too many high production salespeople who can’t control their money.  Their hands are like a colander with lots of holes . . . the money just runs right through, and it all runs out.  In the end, it’s not what you gross – it’s what you net.  It’s not what you make – it’s what you keep.

I always tell salespeople that I can easily teach them how to make another $100,000 in less than a year, but if they only net 20 cents on the dollar I haven’t really helped them that much.  We have to learn the skill of increase, coupled with the skill of discipline and control, to dramatically change our financial picture.

1. The Cleanliness of Our Home:

It takes discipline and hard work to maintain your home.  For Joan and I, the battle increased exponentially with Wesley.  Those of you with children know what a challenge this is daily.  It’s easy to let the laundry pile up, to not make the beds, to not control the kitchen.  It’s harder to have the discipline to keep the house in order.

1. Our Weight:

For many of us, controlling what we eat and how much we move daily is a tremendous battle.  I made a decision in the fall of 2003 that I was too short for my weight.  Given the low probability of an increase in height, I decided I needed to be more disciplined about my weight . . . what I ate and how much I moved.  Through regular exercise and better eating, I was able to shed twenty pounds in a few months.  Now the discipline part really kicks in on keeping it off.

Anyone who desires success must have discipline.  Success is attracted to you because of the person you become.  It comes to you due to the plan you are working and the specific actions you take to implement the plan.

It takes discipline to plan; to set the necessary time aside to evaluate the conditions; to construct the plan that takes advantage of the current conditions and skills that you possess.  You also must evaluate the weaknesses that must be addressed to increase the probability of your success.

It takes discipline to plan, and it also takes discipline to implement the plan.  Most people quit before the plan can take full root and work.  We live in a society where we all want instant success without significant effort.  If we really knew the grand future that awaits us, if we could really see it, touch it, and feel it, we would be ready to implement disciplined activity to achieve it.  In short, we would be willing to pay the price to get there.

An effective strategic plan should inject emotion and passion into you.  You should be able to feel that emotion and passion.  And that feeling, coupled with discipline, will move you to take action.  Taking action is really the goal for a successful person.

Resolve today to decide on one disciplined action you should take, and do it.  Don’t wait until tomorrow; do it today.  Don’t wait until you feel like it, because you probably never will.  Make the decision right now to do it!

Discipline is not magical; it’s merely movement . . . regularly, consistently, purposefully.  Discipline is the link between your thoughts and your accomplishments – connect them today!

History of wikis in real estate
BiggerPockets (launched in 2006) claims to be the first real estate wiki but it unfortunately closed down in May 2007 due to lack of sufficient content.  Introduced shortly therafter, and still going strong, is InmanWiki (part of InmanNews, InmanTV and InmanBlog).  

Origins of wikisWikiWikiWeb was the first site to be called a wiki. It was started by Ward Cunningham in 1994 and was based on the name of the Honolulu International Airport shuttle called “Wiki-Wiki” … in Hawaiian that means “fast.” In the early 2000s wikis were increasingly adopted in enterprise as collaborative software. Common uses included project communication, intranets and documentation; initially for technical users. In March 2007 the word wiki was added to the Oxford English Dictionary. 

New Real Estate WikiA group of us however decided that we would like to create a freestanding real estate wiki for the industry similar to Wikipedia.  Well, after months of writing and research, data gathering and editing, we launched a beta version of Real Estate Wiki two weeks ago – all 7,000 pages of it. We even wrote some 3,500 definitions and abbreviations specific to real estate (see tab at top of RealBlogging).We fully understand that to create a really awesome, comprehensive, national real estate wiki will be a constant work in progress and will need the involvement a group of many more dedicated real estate professionals.  

For that reason I would like to personally invite all co-bloggers, avid blog readers and technology lovers to go have a look at Real Estate Wiki and become actively involved. Haven’t we all at some stage been searching for some information about an association, the meaning of an acronym, the contact details for a technology vendor, an event in real estate history, an address, and the like?  Well, now we all have a central place where we can find that information or add it for others to use in the future.  

Working together Let’s collectively grow it into an unbelievable wiki that the real estate industry can be proud of and that everyone can use. Help improve existing entries and share your knowledge and expertise by posting your own entries.  

We look forward to your contributions on Real Estate Wiki.