Category: Help-U-Sell

Exotic Dancers, Real Estate Agents and Minimum Wage

Earlier this month, Bloomberg reported that a U.S. District Judge ruled that exotic dancers at Rick’s Club in New York are entitled to minimum wage.  The decision came on the heels of a class action lawsuit filed on behalf of 1,900 dancers whose only compensation had been the tips they received from customers.

The Plaintiffs’ lawyer said the ruling “makes clear that employers cannot pass their statutory duties to pay wages on to their customers and gain an unfair advantage in the marketplace while their employees go without guaranteed or long-term benefits such as Social Security.”

As usually happens when I read a story about exotic dancers (or almost anything else), I thought about the real estate business (!).

You know real estate, don’t you?  It’s that business that thousands of people enter every year when what they really wanted to do doesn’t pan out. They become ‘Independent Contractors’ (which is what Rick’s Club considered its dancers to be) and only get paid when they bring in a commission.  The business model is a little like Avon or Amway or Herbalife where the number of people you recruit is more important to success than the amount of product you sell.  In real estate almost anyone who has a license can go to ‘work’ for almost any broker whether they ever produce or not because, hey, they’re not costing the broker anything, are they?

The end result of this idiotic business model is awful productivity.  The average real estate agent sold fewer than 8 homes in 2012 and made about $34,900 gross (before business expenses).

Can you imagine how quickly the whole industry would turn around if brokers were forced to pay their agents minimum wage?  Massive staff cuts would occur across the board.  Century 21’s sales force would shrink by 70% and all of those people would get letters from the Unemployment Office informing them that as Independent Contractors they are not eligible for benefits.  Keller Williams would have a big company-wide picnic to say goodbye to half of its agents (a picnic because they have such a family-like culture).  Re/Max would shrink to a dozen offices nationwide because there would be no independent contractor agents left to rent desks.

Nothing much would change at Help-U-Sell, though.  Our business model (which, HELLO, is completely different than the rest of the industry), makes it impossible for us to maintain non-productive agents already.  An agent doing industry average production in a Help-U-Sell office is costing the broker a king’s ransom in blown leads and lost business.  So we’re already lean and mean.

Funny thing:  that bit about an agent doing average agent production in a Help-U-Sell office costing the broker a ton of cash?  That’s true in the other guys’ offices too.  It’s just that they don’t pay attention to that kind of stuff.  Like the Herbalife people, they believe their success is dependent on one thing:  how many agents they can stuff into their offices.  Productivity doesn’t matter.  What counts is bodies.

Prior to the downturn, Help-U-Sell had a very carefully conceived salary model in place.  It worked beautifully . . . when the market was somewhat normal.  When the business went off the cliff, however, much of what worked so well stopped functioning.  Almost everyone went into survival mode, abandoned the salary model and cut back on staff.  One notable exception was Patrick Wood, owner/broker of Help-U-Sell Prestige Properties in Chino Hills, CA.  He continues to run his office on a modified salary model and, coincidentally, has ranked in the top 5 of all Help-U-Sell brokers for years.

I have been pretty tongue-in-cheek in this post . . . except for the parts about Help-U-Sell: that was quite serious.  But let’s remember that the IRS has been after the real estate industry for years.  They’d like to see the Independent Contractor status of agents get tossed and it’s only been the flexed muscle of the National Association of REALTORS that’s kept it from happening.  If that kind of change did occur, many real estate brokers would simply shut down.  They couldn’t make their business model work with that additional constraint.  The survivors?  They’d do something the industry has historically NOT done very well:  they’d adapt.  And after a little shake out time, the industry would be better, the consumer would be better served and real estate would start to be an occupation people choose, not just fall back on.

Testimonials: How to Get Them and Why They Work

There are four key components of Help-U-Sell Marketing.  The four components work together to deliver our consumer message, which is:

We’re Here, People Use Us, It Works, and They Save

Ha!  I bet you thought our consumer message was ‘Sell Fast, Save Thousands,’ but it’s not!  That’s a slogan, and a darn good one too.

The message is the association we want consumers to make subconsciously whenever they see our logo. Our marketing should teach them who we are (a real estate company), how we are different (we save them money), and that other people in the local market have successfully used our service.

The four components of the consumer message are:

  • Pictures and descriptions of homes For Sale – our listings
  • Sold and Saved’s
  • An Easy Way or Smarter Way bulleted list of how we work
  • And Testimonials

These components work together to make the point . . . powerfully.  Really:  if any one of these items is missing, the marketing is weakened . . . and we start looking like every other generic real estate company!

Testimonials are key.  They give the reassurance a potential customer needs that this somewhat strange real estate company that promises savings actually works.  They calm skepticism to the point that most consumers will pick up the phone and ask that magic question:  ‘What do you do?’

30 years ago we asked for pen and paper testimonials.  It was a cumbersome process but yielded a concrete item that could be fanned out on a desk during a listing consultation or proudly displayed in the reception area of the office.  A little later came email.  Both of these methods required the client to sit down and compose a note from scratch.  Today there are much easier ways to get a testimonial.

Both Trulia and Zillow have an online review area where a consumer can rate their agent and comment on their experience.  It’s very easy to orchestrate:  you simply log on to your agent account and send a link to the survey site to your customer.  And you absolutely SHOULD do this with every satisfied seller or buyer because visitors to those large property portals rely on these reviews when deciding which agent to call.

Increasingly consumers are turning to Yelp to make local buying decisions, and your reviews there can also be helpful.

You want good reviews on all of these sites, but you don’t want to make the process difficult for your clients by having them go to three of four different places to give you a testimonial.  I mean:  some will happily do it, but it is asking a lot.  Instead, spread your testimonials around.  Once you have five or six in one place, ask your next five or six customers to go to another place.  I don’t know that having more than half a dozen really good reviews on Zillow or Trulia makes a huge difference:  six should be sufficient.  Once you have decent coverage on the third party sites, you can start to collect testimonials yourself.

Survey Monkey (surveymonkey.com) offers a free platform for building a survey form for collecting testimonials and reviews.  You make up your own questions and the Monkey can accommodate multiple-choice, ratings, text and other forms of input.  I’d suggest keeping your survey simple.  In fact, mimicking the review form that is on Zillow is probably fine.  Once you’ve setup your survey, you can send a link to it to all of your customers and start collecting their testimonials.

And then what do you do with them?  Put them in every piece of marketing you do.  Rotate them through your website, your blog and your Facebook page.  Read through them when you are having a rough week.  Call the testimonial source and thank them for their kind words and for the privilege of working with them.

If you’d like to see excellent use of Testimonials, check this out. 

Remember what Don Taylor taught us:  the most powerful form of advertising is word-of-mouth.  You want your business to be so refreshingly different and so consumer friendly that everyone you work with goes on to spread good rumors about you.  The testimonial is a powerful twist on word-of-mouth advertising.  Get them.  Use them.

PS:  Robbie is building a testimonial gathering mechanism in OMS that should be functioning in the next several months.

 

Flashback: What Consumers Wanted and What They Want Now

I got licensed back in the Pleistocene Era, when dinosaurs roamed the earth:  1976.

Consumers had very little information about real estate, and it wasn’t just MLS-type property information they were lacking.  We had five or six television stations (channels in the UHF range – above channel 12 – were just starting to appear) and so what became a major source of information for many was just getting cranked up.  FM radio was mostly college stations and public broadcasting — AM was king — but there was no news or talk radio.  Not only was there no Internet, there were no PCs.  Information traveled at the speed of sludge and John Q Public had a very limited understanding about real estate and about many other things.

REALTORS held the keys to the kingdom:  the MLS.  The only way consumers got to information about property for sale was through us.  And though there were a few FSBOs, most were willing to pay traditional percentage commissions to gain access to the information.   Funny, though:  with an average sale price of $65,000, a commission of $3,600 — though relatively big — didn’t irritate as much as today, when selling the same house for 2013 dollars would probably cost in the neighborhood of $15,000.

Sellers expected us to do everything.  They wanted to sign the listing agreement and disappear back into their lives, letting their agents take over the process and magically produce a ready willing and able buyer.  I spent much of my agent-time keeping my sellers (buyers too) informed about the process:  what’s coming next, what to expect, what problems might come up and how we’d deal with them, etc.  They were so grateful to have my understanding of how real estate worked at their disposal.

You spent a lot of time with buyers just narrowing the field of their wants and needs.  They needed to see lots of houses to get down to the style, size and location of the perfect house for them and so showing 15, 20, 30 houses over the course of several weekends was not unusual.  They had no way of ‘seeing’ property unless you put them in the car, drove them over and escorted them through.  The best buyer was always the transferee, who often came with home buying assistance from their employer and usually had a very limited time to find the perfect home.  With the transferee you had the chance of meeting a buyer on Friday and writing an offer for them on Sunday — and that was reason to celebrate!

Today, consumers have ALL the information at their fingertips.  The listing information they can view online is almost identical to what we can see, and tools like Listingbook, Zillow and Trulia make it possible for them to easily manage their own home search process . . . until they need a door opened.  More than that, consumers today can get information about every step of the home buying and selling process by typing a search string in Google.  The air waves — radio, television and Internet — are loaded with information about property transactions and there are whole television channels devoted to real estate.

Sellers look to us to plug them into the marketing resources that exist:  MLS, our website, syndication to as many other aggregators as possible.  They also look to us to spread the word about their property locally and to promote it to our Sphere of Influence.  The goal is the same as it’s always been:  exposure.  Today, because the paths to exposure are so well developed, the task is more management of marketing than creation of marketing.

More than exposure, Sellers today look to us to solve their property problem.  Whether they’re upside down, facing foreclosure or just trying to hang on to as much of their equity as possible, our role is to help them map a course that gets them as close to their goals as possible.  Today that often means minimizing the pain.  Really:  150 years ago, when I was selling real estate, simply dropping the new listing in MLS and letting the industry find a buyer in a reasonable period of time was fine.  Everybody moved and everybody was happy.  Today it’s much more about using your knowledge to accomplish the best possible outcome for your clients, and your knowledge has to always be growing.  That’s why, as James Brown said, it’s important that we all stay in school!

Buyers want to do much of their searching on their own.  They want to spend hours on the Internet looking at listings, saving and eliminating them.  They want to drive by before deciding whether they want to see the inside.  They don’t want to be held captive in the back seat of your car while you show them house after inappropriate house.  The value we can bring to them is in giving them the best tools to help them do that self-directed searching, making it easy for them to get quick answers when they need them, and in anticipating problems before they occur.  I keep saying this:  Listingbook is your best friend when it comes to doing all of these things.

The job of REALTOR today is very different than it used to be.  It’s not that we DO LESS than we used to do, it’s that our clients DO MORE.  It’s also that the job has become more specialized and focused.  The one thing that hasn’t changed is the way ordinary real estate brokers charge for their services.    That’s still stuck in the Pleistocene Era.  The tough market of the last few years is like an Ice Age and as with all Ice Ages, the end result will be extinction for certain species.  Not to worry.  As the ice recedes, newer, better, stronger, more adaptable species emerge and dominate.  That’s us.

The Ineffective Realtor (or what to do when your agent sucks)

You are a home seller and you’ve become entangled with an ineffective real estate agent or broker.  The relationship started out well enough and you had high hopes that it would result in a successful transaction but now things are . . . off track.  What should you do?  Without giving legal advice  (I’m not an attorney, and truth is:  what you legally can do varies from State to State) I’d like to explore this for a few paragraphs.

First, let’s get clear on what constitutes poor performance on the part of a listing agent and office.  The logical answer would be:  no activity, no offers.  It would be logical, but it wouldn’t necessarily be correct.  You have to dig a little deeper.  Why is there no activity?  Why are there no offers?  Here’s a great truth:  agents and brokers don’t just pull showings and offers out of their hats.  They have to have a marketable product and the product attracts potential buyers.  Agents and brokers orchestrate exposure for their listings and those that are marketable are shown and eventually sell.  So, the real question is:  did your agent advise you about the marketability of your home?

What does that mean?  Marketability?  Here’s a short list:

  • Is it located in an area into which people are interested in  buying?
  • Does it look inviting from the street?
  • Does it show well on the inside?
  • Is it properly priced?
  • Is it fully and easily available to be shown on a continuous basis?

I can see you nodding ‘yes’ as you read each of those bullets, but stop for a moment.  Think back to the Listing Consultation.  Do you remember the price range your agent/broker recommended?  Did you price within that range?  Or did you insist on a few thousand more?  If so, that’s probably the problem:  price.  If you overpriced against the recommendations of your agent, don’t blame the agent when the house isn’t shown.  If you want to blame your agent for something, blame them for taking an overpriced listing!

And what about that availability thing?  Do you have a lockbox on your property? And is the house available to be shown with or without an appointment?  Those are the homes that are shown the most (assuming they are priced properly) because they are easy to show.  I realize there are often very good reasons why some homes may not have a lockbox, may require an appointment 24 hours in advance, but those good reasons don’t negate the fact that each time you add a showing restriction . . . you restrict the number of showings you will get.

Usually, when listed sellers complain about their agents/brokers, a little digging reveals that the seller didn’t take the agent’s advice about pricing, marketing, staging or showing availability, and that’s why activity is slow.  If there is an agent problem here, it is that the agent didn’t go back again and again to make the point that the price needed adjusting or the house needed to be staged or the showing restriction lifted.

But if you did follow the recommendations of your agent at time of listing and you are still not being shown, before you blow a gasket, find out how long it takes to sell a home like yours in your general vicinity today.  Is it 60 days?  or 160?  Do listed homes in your area have anniversaries before they sell?  Really:  if your market is sloooowww and you need to sell fast, don’t blame your agent; reduce your price.

I know:  I’m putting a lot of this back on the sellers’ shoulders.  I’m making it sound as if the only problem with any listing is the seller, not the agent.  And that’s not really true.  Agents screw up too.  How?

Not exposing the property.  This is rare today.  Any listing put into the MLS is almost always automatically syndicated out to dozens of Internet real estate portals and that’s the best possible exposure.  But, in addition, is your agent making it easy to get information on the property?  Is s/he keeping the flyer box filled?  Is there a QR code on or near the sign?  Is there a recorded information number?  How about a virtual tour? Does somebody answer the phone when the number on the sign is called?

Not following up with regular market updates.  Real estate markets shift.  Sometimes rapidly.  Two months ago, here in my San Diego market, homes were selling in days with multiple offers.  Buyers were paying more than asking prices and waiving appraisal contingencies.  Since then, two things have happened:  interest rates have risen a full percent and potential sellers, intrigued by the feverish activity, have jumped to put their homes on the market.  End result?  Today things are a lot slower.  Your agent should be talking to you once a month or so about changes in your marketplace and how they affect your listing.

Not communicating.  As an agent (a long time ago), I hated to call my listed sellers when there was really nothing to report.  If I’d done everything I could, If the property was properly priced and the marketing was working but we still had no activity – that’s when it was so hard to pick up the phone and make the call.  But that’s the most important time for an agent to call.  You, the seller, have to know that your agent is on the job and concerned about your home selling project.  If you’re not being talked to at least once a week . . . well, that’s a problem.

Not knowing their business.  There’s no substitute for experience and in real estate it is measured in numbers of closed transactions.  Each one adds to an agent’s knowledge of how to make transactions work.  If your agent does not have that depth of experience s/he may not be equipped to handle the inevitable problems that arise during a transaction.  Interestingly, it’s not the new agent you need to be cautious about:  they are usually closely supervised by a savvy broker.  It’s the average agent who’s been in the business for several years and bumps along at 6 – 10 deals a year.  That’s enough production that their brokers assume they know what they’re doing, but their knowledge base can’t compare with agents doing, say, 20 transactions a year.

Charging a stupid percentage based commission.  And that’s exactly what they are:  stupid. They make no sense at all.  A broker charging 5% or 6% or 10% is operating in the real estate dark ages and charging you way more than you need to spend to sell your house.  Find a broker who charges a reasonable flat fee and who allows for the possibility that you may find the buyer yourself (and charges less in that event).  How do you find that modern broker?  Go HERE.

That’s an incomplete list.  I am sure there are other ways in which agents let sellers down.  But what do you do if you are on the receiving end of this kind of poor service?

First:  when you list, get an agreement in writing that enables you to cancel your listing if you are unhappy.  Be fair.  Allow your broker a reasonable time after notification of your dissatisfaction to remedy the situation:  a few days.  And don’t think this kind of agreement enables you to ax your broker and negotiate directly with a buyer or to whimsically flip to a different broker with a shinier business card.

Second:  call your agent and set up a meeting to talk about the problem.  Give them a reasonable time – again, a few days – to fix it.

Third: call your BROKER (the person for whom the agent works) and set up a meeting to discuss the problem.  Your agent is representing the broker and if s/he is not performing in a way that will have you crowing about the great service you received, the broker is going to want to know about it.

Finally:  seek legal advice. That means an attorney who specializes in real estate.  When you list your home for sale with a real estate broker, you sign a listing agreement – which is a legally binding contract. Often they cannot be unilaterally cancelled.  If you were to ‘fire’ your broker and then sell your house through another broker, you might be liable for two commissions!  A good local real estate attorney can advise you and may be able to get you out of a bad situation.

But make that attorney option the last resort.  Talk, talk, talk to your agent and broker first.  The real estate business is built on the referrals of happy clients and an unhappy client can do big damage to a company’s reputation.  Most brokers would rather do whatever it takes to make you happy than have you become a fountain of negative talk in the neighborhood.

How Long Must I Wait to Buy After a Short Sale?

Homeowners are breathing a little easier today.  Point your ear out your front door and listen: you may hear a sigh of relief!  Prices are rising – like crazy in some places – and fewer homeowners are upside down on their mortgages.  Today’s real estate market is no longer about ‘how much am I losing?’ but rather about ‘how much equity am I building?’  Almost anyone who bought a home in the past year is probably grinning from ear to ear!

But what about those who didn’t make it through the downturn?  What about those who lost their equity, found themselves upside down and, suddenly, needing to sell?  They pretty much had four options:

  • Move and let the  home go to Foreclosure
  • Negotiate a Short Sale with the lender
  • Forget about selling and rent the house
  • Sell and write a check at closing to the lender for the shortfall

Thankfully, not too many people opted for that last option – though it did happen in situations where the shortfall was small and the need to sell great.  And those who successfully rented their property are probably enjoying a nice increase in value now.  People who chose Short Sale or went to Foreclosure, however, have the same question:  how long before I can buy again?

First, understand that the answer is a moving target:  it has shifted over time and probably will continue to shift.  There are also no hard and fast answers as different lenders have different policies and some lenders will bend a bit if interest rates and discount points are high enough.  However, today, the following is typical:

To get a Conventional Loan after a Short Sale:

  • Two-year wait with a 20 percent down payment
  • Four-year wait with a 10 percent down payment
  • Seven-year wait with less than 10 percent down payment
  • Conventional lenders usually look for a FICO score in the 680 range after a Short Sale

To get an FHA Loan after a Short Sale:

  • Three-year waiting period from the Short Sale closing date
  • Home buyers can get a mortgage with as little as 3.5 percent down

Eligible Veterans can get a VA Loan after a Short Sale:

  • Two -year wait from the Short Sale closing date
  • Can still get in with no money down

There is one snafu that seems to be occurring regularly as former Short Sale-rs apply for new mortgages.  Sometimes the Short Sale lender reports the sale incorrectly to the credit bureaus as a Foreclosure.  This can be a big problem as most borrowers with a Foreclosure on their credit reports must wait seven years before becoming eligible for Conventional Mortgages.

If your last sale was a Short Sale, it is important to keep all of your paperwork from that transaction handy in case you have to prove that it wasn’t a Foreclosure.  It’s also not a bad idea to access your credit report before you begin the buying process to see how the Short Sale was reported.

August 19 Update:  FHA just announced new guidelines that will enable some borrowers with a short sale on their credit history to get back into the market in as little as 12 months.  The new rule requires documentation of an economic event precipitating the short sale – something like loss of a job – and demonstration of significant recovery from the event, i.e. 12 months of clean credit history.   Those with a foreclosure (instead of a short sale) must wait 3 years before obtaining and FHA insured mortgage.  

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