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Real Estate’s Best Days are Ahead

“Reports of my death are greatly exaggerated,” So quipped Mark Twain after hearing his demise had been published in the New York Times. The same might be said today about the real estate industry. A lot of hullabaloo has been making its way through the web these days - the end of brands, numbered days for independent agents, consumers ready to do it on their own. Trouble is, it’s mostly punditry that supports these assertions. Certainly, real estate brokerage is under a lot of pressure to produce profits, cut costs and improve customer satisfaction these days. Even more likely is the potential for the industry to further downsize, eliminate waste and fracture between awaygrossly inefficient organizational structures and innovative models. But dead?Methinks some people doth protest too much.

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Surprise! REALTORS Missed the Housing Bottom

What one phrase has done more damage to the housing industry - consumer and practitioner alike - in the last two years? “I’m waiting for the bottom.” Buyers have been sitting on the sidelines, waiting for prices to hit their lows. Those REALTORS who didn’t just quit (200,000-plus of them did) similarly stuck their heads in the sand, waiting for everything to just blow over. “When the market changes,” was the favorite phrase of meetings, workshops, articles and convention speakers. A few out there - the Harneys, the Stavers, even yours truly - continued to plead for sanity. Nobody has ever called the bottom of anything on time: from Tulips to Tech, market bottoms have consistently eluded all of the experts. So it should come as no surprise that the REALTORS missed the housing bottom this time as well.

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37 Ways to Market a Listing

It’s been said that price is the most important factor in the sale of a home. If that’s true, then why spend all that time, effort and money marketing AND why have a class called 37 Ways to Market Your Listings? Exposure. That’s right Exposure. No matter how well priced a home is, if nobody sees it, it becomes the proverbial tree in the forest that falls to the ears of no one. This class will give you 37 ideas for gaining exposure for your listings in today’s marketplace. More than that, we will discuss the importance of marketing in the listing process as well as ways to separate the marketing presentation from the pricing presentation.

Highlights of this marketing session include:

• What Sellers want!
• Your TWO presentations
• Then NEED for Exposure
• What Buyers are looking for?
• Targeted marketing techniques
• Discover Relevant marketing practices

Meet Rich Sands, Senior Instructor at Matthew Ferrara & Company and former Director of Education, Coldwell Banker Colorado as he takes you through an online marketing session to generate awareness for your listings.

Webinar Tuition: $49.99

Register today and reserve your seat now:

• July 9th: 1:00pm - 2:00pm EST
• July 22nd: 12:00pm - 1:00pm EST

The Rest of the Listing Presentation

These days, too many brokers are winding down the clock to bankruptcy, with lots of help from their sellers. Too much misplaced blame has been on buyers of late. Other than foreclosures, we have not looked hard enough at sellers’ contribution to the inventory problem. And sellers are a problem. Too many brokers have trapped themselves with “list to live” strategies that have achieved anything but. No genius is necessary to see how holding a commodity for ten, twelve or twenty-four months, then selling after multiple price reductions, isn’t a business plan. It’s a going-out-of-business plan. No matter how large the commission, it’s barely enough to get out of debtor’s jail free. With record amounts of listing inventory still clogging the marketplace, REALTORS have no choice but to start doing the rest of the listing presentation with their sellers.

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That’s (Bleeping) Awesome!

Think back to the last time you used a really great product or service. Perhaps it was your first encounter with an iPod, which buried forever the notion that you’d “click” a fast-forward button or “insert” a compact disc into something. Maybe it was the experience of sliding open a new Google G1 cell phone that caused your face to light up along with the touch screen. Recently, it was the all-wheel-drive system on my Acura RL. The day started out rainy and gray, but I was determined not to let it wear me down. Even with a light drizzle, I opened the sunroof and blasted the radio, and pushed the throttle to a fun-even-without-the-sun pace. The RL is one heck of a ride, so much fun, sometimes, that you frequently look in the side mirrors to see if it has wings. Of course, with that kind of power, it’s a good thing the navigation computer reminds you that your exit is coming up in a quarter of a mile. Usually, I wish it would tell me a half-mile in advance, especially when I’m driving at Star-Trek speeds. No matter, however, because even if you hit the exit curve at a “you’re gonna be in trouble” speed, the all-wheel drive system kicks in and takes you ’round the bend tighter than a roller coaster. It was one of those product moments that makes you yell, “That’s (Bleeping) Awesome!”

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Points of Perception

Peter Drucker noted that when the general perception of a situation switches from “the glass is half full” to the “glass is half-empty,” major innovative opportunities were possible. The change in perception usually starts with the consumer, not the industry. It rarely reflects a real change in the facts, more than what the facts have come to mean to the consumers. For example, today represents the best time in fifty years to purchase a home. The stars are perfectly aligned to purchase low, borrow low and maintain low monthly costs. Most consumers would be long-term winners with a real estate purchase today. Yet the perception of real estate in general has become “half empty” in the minds of both buyers and sellers. Consumers no longer associate real estate with happy thoughts, even if they recognize it as a sound financial investment. That perception change is profound. And it’s keeping them on the sidelines. What can the real estate industry do, then, when even if we lead the consumer to half-empty glasses of water, we cannot make them drink?
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The Dangers of Housing Inflation

It’s true that I’ve never agreed with the National Association of REALTOR’S Chief Economist Lawrence Yun. It’s nothing personal; but it’s everything professional. I just don’t understand why today’s economists can’t figure out why inflation is bad. Of all of the complexities of economics, inflation is pretty much the easiest to understand. We’re not trying to figure out the reasons for irrational exuberance or call the bottom on the stock market. Inflation is simply the slow and steady erosion of a currency’s value. And with a devalued currency comes devalued everything. Including housing. Yet for some reason, NAR’s chief money-thinker is still wishy-washy on whether inflation - triggered by 3 trillion stimulus dollars - would be good or bad for home ownership. I guess it depends on whether you want to turn American into a banana republic or not.

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Who Moved My Maze?

Fans of Spencer Johnson’s book will recognize the theme in today’s column: Something has definitely moved in today’s real estate industry. For decades, the industry built by Baby Boomers for Baby Boomers has essentially run the same race through the maze, finding the cheese almost every time. Periodically, the cheese was moved or a wrong turn was taken, but never very far and never a dead end. Usually, within months, the industry figured out how to navigate new turns and once fattened themselves again on the rediscovered cheese. Yet could a recession have pose a different problem to this “re-routing strategy” for managing change?

What happens to an industry when it isn’t just the cheese that has been moved but the entire maze?

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No Wonder Consumers are Confused about Real Estate

Why is it impossible for anyone - REALTORS, banks, media or economists - to accurately describe what is going on in the marketplace? If buyers are going to feel confident about moving back into the market, we should expect all of these groups to be providing clear, verifiable market facts that back up the “best time to buy” sloganism thrown at consumers. Yet most of the punditry has left consumers - especially skeptical Gen X’ers and impressionable Gen Y’ers - more confused than ever. And with a few trillion extra dollars sloshing around the economy and gas prices already moving higher nationwide, time is running out to make the clear-minded case that, by next year, real estate will be back to a “bad” investment once inflation roars back. Subtract the free-Federal-money for first-timers and add in a few million FHA loans that are about to default, and we’re actually on the verge of destroying the near-historic affordability levels once again.

Instead we’re left with “pay no attention to the man behind the curtain” proclamations from questionable analysts, partial data, a local appraiser and a journalist. We’d probably be better assessing market conditions with a Barney-Frank-roll-of-the-dice.

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The Bully Pulpit versus the Housing Industry

Yesterday, President Obama announced he was prepared to break the law. After blaming the senior debt bondholders of Chrysler for pushing the company into Chapter 11, he sanctioned a plan to abrogate their covenants and force them to take pennies on their loaned dollar. No matter that their bonds were secured by the company’s assets. The rights of “speculators” are easily swept aside in populist frenzies. Notice how the President didn’t blink a teleprompter-eye when he stood with the union workers, the families and the communities - while transferring to them 55% control of the company assets. American lenders filled with American workers who loaned American savings to Chrysler for decades were expected to simply take massive losses. Apparently it’s no longer American to repay one’s debts. The Bully Pulpit declared “needs” more important than “rights.” And since mere mortals barely understand all this financial jargon, especially  REALTORS, the rule of law was quietly killed. Contracts, it seems, aren’t worth the paper they’re written on in America.

REALTORS had better beware.

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Surprises in the Spring Real Estate Market

Like many other aspects of this recession, the spring real estate market is creating some surprises for the industry. On the one hand, buyers are starting to move off the sidelines, enticed by low mortgage rates and rising home affordability. This nice surprise offers real estate agents an opportunity to move some inventory and create cash flow after a seriously difficult winter market. And while the recent increase in activity is welcome weather, some not-so-nice surprises are springing up with the season. Read more

Real Estate Renaissance: Focus on Opportunities

There’s a paradox in today’s housing industry: The real estate marketplace is showing signs of potential, but the real estate business is still falling apart. Home affordability is the best in decades; mortgage rates the lowest in modern times. Sellers and buyers are starting to get it. Yet after hundreds of thousands of REALTORS have left the industry, the news continues to be about bankruptcies, layoffs and implosions at brokerages nationwide. Agents are demoralized; managers are shaken; brokers sweating. This, even at a time when online operational costs such as marketing have plummeted and technology-driven success stories are soaring. Why, then, is the industry stuck in the mud? Perhaps it’s because we’re focused on the problems - and not the opportunities.

Peter Drucker, the management guru whose works inspire the consulting ideas at Matthew Ferrara & Company, once said: “Unless there is a true catastrophe, problems are not discussed in management meetings until opportunities have been analyzed and properly dealt with.” In part because of their risk management orientation, [managers] are exceptionally good at detailing why a new initiative will not work. This includes both employee and customer issues.” Read more

The Other Broken Real Estate Market

Everyone knows about the 90/10 rule: 90% of the business is done by about 10% of REALTORS. Translated to a consumer experience, this means that most buyers and sellers have about a 1-in-10 chance of getting the “best performing” agent to sell their home or represent them in a purchase. Even a generous assessment of the business - quartiled for the top 25% of agents who generate more than $200,000 in commissions annually - leave the underperforming-bottom 75% of the business to muck up the works. And while banks, lenders, Fannie, Freddie, Frank and Dodd all share some blame for causing the current crisis, could it be that the “other” broken real estate market is the soft-underbelly of the brokerage industry itself?

Do we really need to answer that?

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Jim Calhoun Could Fix the Housing Industry

This video made me jump up out of my seat and cheer! Finally, a businessman who isn’t embarrassed by what he earns - and is willing to defend it in front of the mass purveyors of guilt, the Media. Every REALTOR should watch this clip and see what it looks like when someone stands up and says, Yes, dammit! I’m worth every penny! I may get paid a lot, but I create a LOT MORE value in return. We need a lot more of this kind of attitude in the industry these days - rather than the doom, gloom, hat-in-hand wimpishness that’s rotting our industry. From the inside out.

REALTORS face this kind of “you are overpaid” attack every day. From the media. From dis-intermediaries who think their fancy websites can kill the traditionally paid agent. As if there were something wrong with being paid, traditionally. And of course, we hear it from consumers sitting across the table from us. You want how much in commission? Wow, that’s a lot! Do you deserve it? Shouldn’t you charge less because my house is declining in value? And suddenly, the consumer has the upper hand, doling out guilt without the facts. And most REALTORS simply cave in.

They could learn a lot from Jim Calhoun.

What Mr Calhoun showed us in one minute is the result of years of pride of ownership. He owns his career. He earned his pay. And he did it by producing more for those he “serves” than they could have on their own. Jim certainly was rude - he even admitted it. But it’s the kind of rudeness we need a whole lot more of in real estate these days.

It is the rudeness of self respect that refuses to accept guilt for being great.

In previous blog entries, I have asked REALTORS why they don’t have the success they deserve. Some agents blame the market. Others the consumer. Brokers blame lame agents. Or the secretary. Or technology. Yet Jim Calhoun’s sixty-second outburst reminds us who is to blame for our failures. And for our successes.

And if we want to be paid what we’re worth, we have to believe we’re worth it, and be willing to say so when it counts.

The Calhoun Outburst makes a perfect business principle for overcoming much of our industry’s challenges. For example, when faced with a seller who insists we list their home at an overpriced amount, a Calhoun Outburst recommending they “get some facts” would certainly put things in perspective. Equally helpful, an Outburst telling sellers to just “shut up” when they insist we run a newspaper ad would nicely remind them who knows how to do the job: Go out and show me the newspaper ads YOU are using to find YOUR next home, Mr Seller, and then we’ll talk about using the newspaper to find a buyer for your home….

Maybe if our industry’s leaders had a few more Calhoun Outbursts, confidence in the housing sector would recover sooner, too. The next time the media claims house prices dropped another 20%” last quarter, without offering a baseline or a location, brokers and agents could “Go Calhoun” on them. Pick up the phone, call the radio and newspaper, and post on their blogs, “Like hell it did! Get some facts - because there are more than 25 major cities in America where prices are stable or rising!” It’s not all doom and gloom. But we have to learn to speak up for the facts, and loudly, Calhoun-style.

I’d even go so far to say that a few Calhoun Outbursts might work wonders inside many real estate offices. Brokers face the firing squad like Calhoun faced the media every day, especially from whiny agents who haven’t sold a thing in months. Has the agent done their homework, following up on every lead, before making claims and demands for more from their broker? Like the off-camera journalist in the video clip, many agents take for granted that the best of us - like Calhoun, and brokers - have to “sacrifice” for the sake of others. Calhoun should take a pay cut because times are tough; so brokers should spend more to generate more leads - even though the agents just throw them away. Calhoun-style Brokers need to just say, “meet me outside” and we’ll settle this once and for all.

Of course, none of this is really surprising to me. Jim Calhoun is a coach. His outburst was really a coaching moment: He was trying to teach the journalist an important lesson. His style was classic - something lacking in today’s “be nice, don’t offend, hug everyone” world. Maybe it’s time the for a little less tolerance for “say anything, do anything” antics from the media - and from non-producers in our offices? Calhoun wasn’t willing to accept guilt for being successful - especially from someone who didn’t do their job well (get the facts) in the first place. Could there be a new model here for dealing with agents who feel entitled to more of the broker’s money while simultaneously refusing to prospect or come to meetings? Hmmmm?

At the very least, the industry as a whole can learn from Calhoun: Sometimes, we need to stand up and demand a little respect for ourselves. And any journalists, agents or sellers who don’t agree can meet us outside to talk about it….

- M

Collectivist Real Estate: The Nationalization of MLS

It is the tendency of our age that many things are moving toward centralization. Like efforts to collectivize our economy, health care, school and retirement systems, similar proposals in the real estate industry tempt us to move control of our vital business data to a national system. Now REALTORS have the urge - under the guise of fixing the troubles with our industry, the “urge to merge”  threatens to undermine brokers’ local control of their companies. Ironically, an industry that insists that “all real estate is local” is actually on the march toward nationalizing its listing database.

One wonders if all that’s missing is the appointment of an MLS Czar?

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