Category: Help-U-Sell

Transaction Reporting and the New Discrepancy Report

I have been working with real estate brokers since 1984.  Prior to that I was one, so I came to the work knowing a little about their  challenges and struggles.    I usually have a pretty good idea how they think and feel and why that is the case.

With franchisors – and I have worked with many – a key issue is transaction reporting.  It is important to the franchisor that closed transactions be reported for obvious reasons:  the franchisor’s revenue stream is tied to closed transactions.  That’s why franchise agreements generally include strong language about reporting transactions (usually within 24 hours of closing) and the consequences of not doing so.

But franchisees are first and foremost, real estate brokers;  and brokers, especially in difficult economic times, can come to that point at the end of the month where they have $4,000 in bills to pay and $3,500 in the checking account.  We’ve all been there, even the biggest stars among us!   ‘ . . . Maybe I can hold off the electric bill for a couple of weeks until that two-story closes . . . ‘ the broker thinks.

Looking back over the previous weeks it occurs to the broker that, had he not reported his transactions to the franchisor and paid his Royalties as things closed, he might have made it to even at the end of the month.  This will ruminate for a period of time and sometimes . . . becomes reality.  ‘I know I’m supposed to report and pay,’ the broker thinks,’ but I just can’t spare the cash right now and besides, we’re family, they’ll understand and I’ll make it up when things improve.  It’s not like I’m not going report and pay my Royalties!’

Franchisors go through all kinds of machinations to get franchisees to report and pay.  In the old days (the ’90s), franchisors really had no idea what an office closed unless it was reported.  Reporting was essentially an honor system.  That’s why most Franchises employed staff auditors who went to each office on a regular basis to verify the books.  As a Century 21 franchisee, I was audited like clockwork every two years.  In that world, the big carrot that was used – rather effectively – to get people to report, was Awards.  The franchisor would recognize offices and agents based on gross closed income and on closed sides that had been reported.  Un-reported or un-paid transactions obviously didn’t count.  At Century 21 and all of the other franchises, the end of December and most of January was about squaring up the totals.  Offices would receive the franchisor’s count and Awards totals and then had an opportunity to get unreported transactions in before it was too late.  I can’t tell you how often, in that agent oriented world, brokers who sandbagged a few transactions would become desperate to get them in when doing so would make a difference in their top agent’s Award status!

It’s a little different today.  Information about transactions is readily available from a wide variety of sources.  A franchisor can simply monitor activity and compare it with what’s reported to know who’s reporting and who’s not.  Audits, while still necessary, don’t usually have to take place at the franchisee’s office and can often be handled at a distance, with on-site audits reserved for those suspected of serious breeches.

All of this history brings us to something new at Help-U-Sell, the Discrepancy Report.  We’ve created a set of three reminders for our members that they have unreported transactions.  They go out once a month with a request to take care of the discrepancy as soon as possible.  Consequences get serious after the third notice:  possible Notice of Default and Termination and/or on-site audit.  But  the Discrepancy Report program is a genuinely humane process that acknowledges that these things happen and provides ample time to set things right.

Help-U-Sell Royalties remain the lowest of any national brand.  We lowered them from the 7.5% we used to charge – which was in line and in some cases, below what others charged – to a flat 6% and then temporarily reduced them to 5% to help our members make it through the last few difficult years.  The 5% program is set to expire at the end of December and as yet I do not know if it will be extended into 2012.  At the same time we’ve created a top notch technology platform for our members that remains un-matched in features and effectiveness in the industry, provided uninterrupted training and networking opportunities every week,  and solid leadership in a wide variety of areas including electronic marketing, staffing and growth.  Plus (and this is big) the Help-U-Sell Brand actually means something to the American public:  savings.  Even people who have never seen a Help-U-Sell advertisement know, just from the name, that we are different and that difference often leads to a request for more information.  Add it all up and  Help-U-Sell is a bargain, not just for the consumer, but for the real estate broker who wants to grow his/her business, provide excellent service, and make a comfortable profit.

 

 

 

 

 

 

 

Five Timely Truths

  1. When consumers want information about residential real estate today, they go to Zillow.com.  I say that because my Brokers tell me Zillow consistently produces quality leads.  Trulia comes in a (usually) distant second.  Realtor.com is not even on the map.
  2. Data mining and manipulation of real estate information has progressed so far and so fast that 95% of the people in the industry have no idea how to use it.  Ok:  maybe that’s a little hyperbole.  But I am impressed that the data guys are to the point of predicting buy and sell behavior via algorithms and so much more.  They have taken their business way out there and the rank and file Realtor – who is still trying to figure out how to resize their prom picture so they can use it on their business card – has no clue.  The good news is that the 5% (or 15%) who do have the desire and the smarts to use this new information will survive to be the next generation Realtor.
  3. Virtual companies (at the moment) suck.  I encountered yet another that has one broker in one city, holding licenses and ‘managing’ hundreds of salespeople all over the State.   While I believe that systems and technology may make it possible to supervise transaction activity at a distance,  it hasn’t yet evolved to where a Broker might watch an agent with a buyer or seller or to allow a Manager to casually overhear a phone conversation.  The Broker’s duty to supervise becomes a ‘wink, wink, nudge, nudge,’ item.  But the real downside – at least today – is that these companies have become an alternative for non-productive agents who otherwise would probably get out of the business.  For a small fee they can continue to be ‘active’ and do 3 or 4 deals a year.
  4. By devoting themselves to the preservation of the Status Quo, by fighting tooth and nail every step of the way to keep information out of the hands of consumers, by not insisting on production standards for members, Realtor Groups (NAR and it’s affiliated State and Local Boards and Associations) have made themselves largely irrelevant.  It’s probably too late to wake up and realize that things will NEVER be the way they used to be, that real estate reality has changed, and changed significantly.  The next generation real estate professional is not at a meeting at the Board of Realtors.  He/She is online, networking and discovering the tools that will enable them to do more transactions and provide better service.
  5. Help-U-Sell, with proprietary technology that we created, own and control,  is the only national brand positioned to lead the industry into the new tech-efficient real estate age while preserving a razor focus on the needs of the consumer.  We’ve always been a consumer-centric company and now we can bring that focus to bear in a leaner, more efficient, tech-driven industry.  Every time I go to a real estate trade show I get tickled when people tout the latest and greatest tech innovation (Mobil phone websites, QR codes, map searches, online lead management, syndication and on and on)  . . . and it’s all stuff we’ve had for a couple of years.

 

Scratching My Head . . . A Little

The CAR Expo in San Jose has been a success for Help-U-Sell.  Our booth was big and impressive – well located, too. We had substantial conversations with a number of people, and I believe everyone in attendance knows we are here and ready to roll. 

Having said that, I am also coming away with an unanticipated impression. 

We are here to grow the network.  We know the future of real estate is young, aggressive tech savvy agents and brokers with vision and a hunger for entrepreneurial growth.  My impression – and I know:  I am committing REALTOR Blasphemy – is that they are not here.  Most of the people I’ve seen and talked to in the exhibit hall are seriously older (not a bad thing; I’m 60), and far less in touch with technology than their much younger buyers. 

We’ve had one person click on the QR code at our booth and had numerous others point and ask, ‘What’s that?’

Trying to explain the benefits of having a SmartPhone optimized website has met with blank stares. 

It’s not so much that the people who are here don’t look and sound like our target. . . it’s that our target seems conspicuously absent.  If I were a Martian REALTOR, just come down to earth to observe this convention, I would conclude that the California Association of REALTORS is a club for the semi-retired. 

My guess is that the people we want to reach are somewhere else:  Inman, Agent Re-Boot . . . something like that. 

I have to say:  I am so proud of Help-U-Sell.  It is very clear to me that we are the class act at this show.  We have the tools and systems, we are sharp and we are full of energy.  So many others just seem . . .tired. 

While most of our reception has been very positive, we have had a few comical encounters with traditional agents and brokers who see us as the enemy.  Three behaviors I have observed:

1.  Walking the aisle until the Help-U-Sell logo is spotted out of the right corner of the eye . . . then the head turns immediately to the left and the pace quickens.

2.  Drifting along, all smiles and then, when the booth is recognized, appearing to have smelled something bad . . . and my favorite,

3.  Walking a straight line and, upon arriving at our booth cutting a quick arc as far away from it as possible, as if getting too close might result in catching some form of plague. 

Of course, most who have stopped by have wanted to know how we work and what our plans are.  Many mentioned quality Help-U-Sell brokers in their marketplaces.  The above are just the silliness that goes along with being different (and better). 

Amazing:  could we be becoming ‘elite?’

And the Winner Is . . .

The new Banner for the Blog has been chosen.  It was close (and I almost pushed the result to my favorite, #1), but in the end Banner #2 had more votes than the others so that’s why it’s at the top of the page now.  It’s a great new look!  (To see the other contenders, scroll down to the entry entitled ‘Vote!  Vote Early! Vote Often! But Vote!’)

Tapped Out!

A little quote from NAR’s Chief Economist, Lawrence Yun:

Housing equity – housing asset value minus mortgage liability – has greatly shrunk in the painful aftermath of the housing market crash. The aggregate homeowners’ real estate equity stood at $6.1 trillion today versus $13 trillion in 2006 according to Flow of Funds data from the Federal Reserve. According to Census, there are 74 million homeowners. So on average, the average equity per homeowner in 2011 is $82,000, which is down from $170,000 in 2006. A separate Federal Reserve data from Survey of Consumer Finances showed that the median homeowner net worth to be $190,000. This larger net worth figure is due to homeowners having other assets in addition to housing equity. The median renter’s net worth was $4,000. The only good news at the moment is that the further declines appear largely over. Price measurements from NAR, Case-Shiller, Core Logic, and Federal Housing Finance Agency have all noted a slight uptick in home price in recent months.

We just don’t have the clout of equity we did five years ago; and it was clout.  I’ve seen it in franchise sales.  Five years ago an eager prospective franchisee could easily pull a second mortgage to finance a start-up business.  The equity was there and banks were falling all over themselves to lend the money.  Today that door is pretty much shut.  Most times, the equity is not there and when it is, the lenders are so difficult (and guidelines so strict) that the old equity cash-out bonanza is almost impossible.

The good news is (and there’s always good news):  It’s not that expensive to get started today.  Five years ago, retail space was very pricey and Marketing – which in Help-U-Sell was largely direct mail based – was huge.  HUS offices routinely spent $7,000 -$10,000 a month on marketing and it was mostly postcards and mailbox delivered flyers (ETMs).  Today, postcards are still an important part of the mix, but Marketing is mostly about the Internet.  While it’s not free, it’s cheap compared to mailbox stuffing.

But the drop in equity has had big implications elsewhere, too.  Small business expansion is not happening like it used to.  In fact, most real estate companies are doing the opposite: scaling back, hunkering down, closing offices, merging, and consolidating.  I talked with a Help-U-Sell broker the other day who was a little intimidated by the new mega-office in her town.  Two medium-sized companies had combined to produce the largest house of agents on the block.   I reminded her that offices consolidate in an effort to cut expenses, and it happens when neither office is making it on their own.   She used to have two competitors, each with 50 agents doing less than half a closed side a month.  Now she has one competitor with 100 agents each doing less than half a closed side a month.  She called back to say she’d run into the new consolidated broker and he wanted to know how she was doing so well.  He’d seen her listing and sales activity and was amazed that she was able to turn the numbers with her minimal staff and small location.

Now let’s get practical.  Let’s assume we have a homeowner with equity (hallelujah!).  Let’s assume this homeowner is in a $300,000 house (that used to be worth $425,000) and has a mortgage of $200,000. That’s $100,000 in equity.  The homeowner is grieving for the $125,000 he’s lost, but still needs to sell.  ABC Realty will take the listing and charge 6%:  $18,000.  But that $18,000 is 18% of the homeowner’s equity! Here’s a homeowner who already thinks he’s lost more than half his equity to the economic downturn and now some real estate broker is trying to extract 18% more!!

Thank goodness Help-U-Sell is in the equity preservation business!  If this homeowner is smart he’ll keep interviewing until he finds a HUS broker charging a low set fee of, say, $4,950.  That works out to a savings of $13,050 and the set fee is just 5% of equity, not 18%.

Yes, we’ve had a huge collective drop in equity.  We all want to hang on to as much of what we still have as possible.  Today, that means saying goodbye to high, percentage-based real estate commissions and hello to Help-U-Sell.  In addition to ‘Save the Whales!’ and ‘Save the Rain-forest!’ let us add ‘Save the Equity!’  List with Help-U-Sell.

 

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