Category: Marketing

Should Your Seller Do a Lease/Option – Lease/Purchase?

Disclaimer:  I am not an attorney and the ideas expressed here are those of an educated layman (me).  Rules and law governing property transactions including those mentioned here are State specific and vary from location to location.  Please do not consider this post to be ‘advice;’  and before proceeding with any property transaction seek the counsel of a qualified, local, real estate attorney.

Situation:  Your Seller has very good, even excellent credit.  He/She has never been late on their mortgage or anything else.  This is very important to them:  they’ve worked very hard over the years to budget, live within their means and meet their financial obligations.  Unfortunately they are now upside down on their house:  current market value is $225,000 and the mortgage is $250,000.  They paid $300,000 seven years ago.

Even though Short Selling has become an acceptable option for most sellers, in fact a wise choice for many, this seller just can’t go there.  But he/she wants to take advantage of the great mortgage rates and excellent deals in the marketplace right now and upgrade to a bigger house in a nicer neighborhood.  This might be a good situation for a lease/option or lease/purchase.

A Lease/Option is two things:  an Option to purchase the property on or before some date in the future, and a Lease agreement giving the Option holder possession of the property during the interim period.  The Option is usually accompanied by non-refundable Option money, which can be substantial.  The eventual purchase price for the property is either locked in at the time the Option agreement is reached OR can be ‘Market Value’ at the time the sale is eventually consummated.  In the latter case, ‘Market Value’ must be carefully defined:  is it the opinion of one appraiser?  Two?  Do we average three? or take the middle figure of the three?  And, oh, by the way:  who’s going to pay for all of these appraisals?  During the Lease period, part of the rent paid can be credited against the eventual purchase price.  The Option money, however, is only there to secure the Option:  it would be rare for any of it to apply toward purchase price.  In a Lease/Option, the purchaser is not obligated to buy the property.  If, at the end of the Option period, the buyer does not want to complete the purchase, he can either renegotiate a lease (or new sale) with the seller or move.

A Lease/Purchase is similar:  there is an agreement to purchase at a later date that is secured with cash, there is a Lease agreement governing the interim period and part of the rent may be applied toward the eventual purchase price.  But there are some differences.  First, this is not an Option situation.  The buyer is paying the seller a non-refundable fee upfront for the privilege of purchasing the property at a later date.  The purchase is not optional:  the buyer is obligated to buy or face consequences like specific performance.  Usually, in this kind of transaction, the eventual purchase price is locked down at the time the purchase agreement is ratified.  Often, the price is current market value PLUS an increment over and above.

Back in the late 70s and early ’80s we experimented with these kinds of transactions.  Back then, interest rates were spiking well into double digits.  Often the lease periods were very long and it was clear what everyone was trying to accomplish was a way around the due-on-sale clause in most mortgages.  The courts were not pleased and some sellers, buyers and agents paid dearly.  That’s another reason to get competent legal advice before proceeding here.  It was that crazy interest rate period that gave birth the first adjustable mortgages any of us had seen.  We learned to think of them as temporary financing to bridge the gap until sanity returned to the market and a refi could be done.

So, back to our Seller – the one with excellent credit and an upside down home.  You just helped a family navigate a short sale.  They are good people, no doubt, but were WAY upside down:  the home was work about 50% of what they owed!  They aren’t able to get a mortgage today but unless financial disaster strikes, will probably be in good shape in a couple of years.  They love the seller’s house and offer an Option to purchase on or before this date three years hence, secured by $10,000 (non-refundable). The eventual purchase price will be $250,000.  They’ll pay monthly rent of $2,100 on the property during the lease period and $500 of each month’s rent will apply toward the eventual purchase price (If the rental period runs the full three years, that will be $18,000 in ‘credit’ from the Seller to the Buyer).

This is attractive to the Buyer because he gets to get back into a home he loves immediately.  The $250,000 purchase price is higher than the property is worth today but he is optimistic about the economy and thinks it’s likely the property will be worth that much or more at the end of three years.  The $10,000 cash for the Option in theory will be more than offset by the credit coming back at closing.  And, if it just doesn’t work out, he doesn’t have to purchase the property.

The Seller is intrigued but cautious.  This looks like a way to preserve their good credit and make a move as well.  The $10,000 Option money will help supplement the down payment they’ll need on the new home,  And the monthly rent is $500 more than their current mortgage payment.  The biggest concern is the Option:  what if the buyer rents for 3 years and decides NOT to buy the home.  What if the buyer gets into the home and stops making rent payments?  And so on.

The first thing you would do – and you’d probably have done it long before this situation got this far – would be to put the parties in touch with a good real estate attorney.  But having said that:  what do you think the Seller should do?  What would YOU do (as James Quinones might ask)??  Do you think this kind of strategy would appeal to some of your sellers?

Oh, by the way – there is something that I forgot t mention.  It has to do with the real estate fee.  Sometimes it is due and paid at the time the Option is agreed upon and funded.  Sometimes it is not payable until the property eventually closes. It’s a negotiation.   In our hypothetical example, the Broker’s fee will be paid by the seller at Closing.  Now:  what do you think?

New Websites – New Capabilities – And a Video Primmer

The introduction of the new Help-U-Sell Broker Website Templates on March 1 has sent everyone into a dither, trying to decide exactly how to best maximize results from the new platform.  Aesthetically, they are certainly a step up:  more modern, cleaner, easier to navigate.  But the issue is:  how do you use this magnificent new beast to lure potential customers and generate leads?

First, understand that your existing content will transfer – so if you’ve done a good job of  1. Personalizing your content 2. Locallizing your content and 3. Optimizing your content, you can rest easy that what you’ve done will not be lost.  If you haven’t done those things NOW would be a good time to get started and here’s a link to a marvelous document, ’11 Days to a Great Website’ that will walk you through that process in manageable chunks.

This is a great time to revisit what you’ve done, freshen up your content as well as your look.  Remember, the key to getting found and noticed on line is LOCAL CONTENT:  frequent references to the local marketplace, neighborhoods, even local events.  Perhaps you could build a new page or two with information about upcoming events or planned development.  One of the best ways to ‘get local’ is to create custom searches by neighborhood or area or even type of property.  Tony Tramontano in Sarasota can help you create custom searches like  ‘Apache Springs Homes For Sale’ or ‘Downtown Highrise Homes for Sale’ and then embed buttons for the searches in your home page.

The thing that most people seem to be jazzed about right now is the use of Video in your website.  Understand, just as Dorothy had the ability all along to go home, just by clicking her heals, you, too have had the ability to create and embed video in your website.  We seem to be at some kind of watershed or something now, though, and everybody is working on it and doing it.  Good idea!  I’ve had so many conversations this week about how to produce website video that now I’d like to give you a very thin (but still helpful, I hope):

Primmer for Creating Video for your Website

1.  Budget a little money – you’re going to need some equipment.  While the onboard camera on your laptop might be good enough, the built in microphone almost certainly will not.  You might try using the laptop camera, but go to radio shack (or Frys if you want a better selection) and buy a lapel mic.  Also get an extension cord so that you can use the mic 6 – 10 feet away from the computer.  Your laptop should have a mic in jack, probably right in front that you can plug into.  The only trick will be to tell what ever software you use to record that you want to use THAT mic, not the one that’s built into the computer.

2.  If you’re not going to use your laptop camera – and you might get better results if you don’t – you’ll need to shop for a video camera, too.  When I do video, I use a stand-alone webcam, the Logitec Pro 9,000.  It’s got a high quality Carl Zeis lens and even has a decent built in mic (though you will still get that amateurish room ambiance with it).  I attach it to the top of my laptop and use the screen for my notes or script.  Of course, when using this webcam, I also use a lapel mic and plug it in just as described in step 1.  The other camera option is to buy an actual video camera but here is the key:  the camera MUST have a jack for an external microphone, and that’s pretty rare.  To my limited knowledge, NOBODY has come up with an onboard mic that will give you good enough quality to make the impression you want to make.  An external mic is essential (how many times can I say that?).  And, by the way, while I’ve had good results using my Logitec USB webcam with a separate lapel mic, my results using a video camera and plugging in an external mic into the computer have been . . . not so good.  I think it’s too much data for a typical computer to handle all at once.

3.  Lighting becomes the next big issue, and the good new is:  bright sunlight is good.  If you have a nice window in the room in which you are shooting and it’s a sunny day, you should be fine.  But for darker places or night time work, you’re going to need lights.  You can find really good deals on fairly substantial lights online, but you’re not building a studio.  Instead, I’d suggest you simply play with the lighting you can find around your office or home.  I’ve even done video using clip-on lights I bought at Home Depot with high wattage bulbs.  You want to use lighting to eliminate shadows on the wall behind you and across your face.

4.  As you set up, experiment with video aspect ratio.  Today everybody is shooting in HD size:  16:9. It’s a rectangular frame.  But the old-style square frame might be better suited to your video.  If you are going to be looking into (or through) the camera and talking, you  probably don’t need that wide view that takes in lots of blank wall on either side of you.  So look in your recording software for an ‘aspect ratio’ setting and see what looks best.

5.  If you are using your laptop camera or an external USB camera (like my Logitec), it will come with software for recording and this will be fine.  If you’re using a stand-alone video camera, you’ll be recording right onto the camera’s media (whatever it is) and then transferring it to your computer for editing.

6.  I have tons of editing software:  Adobe Premiere, Pinnacle Studio Ultimate, Adobe Visual Communicator, Camtasia (which is more for screen captures) and even more.  You don’t need any of that stuff.  Go online and download a copy of Windows Live Movie Maker. Bring your video into it and do what little editing you’re going to do right there.  You’ll certainly want to add a title up front and probably a caption under your face identifying you . . . maybe even a phone number at the end.  You can do all of that quickly and easily in Movie Maker and can even create fades at the beginning and end.  Actually, you can do a lot more, but since we’re talking about short video clips – 1 – 2 minutes, max – you’re going to do them in one take, so cutting, splicing and all that harder stuff will not be necessary.

7.  A note about music:  it can be nice playing softly in the background, but it shouldn’t be playing on your boom box when you record yourself.  If you want, add music in the editing phase.  You’ll pull it into Movie Maker and attach it to the video right there.  BUT:  DO NOT PULL IN THE MUSIC FROM YOUR FAVORITE CD.  It’s copy protected and you will be inviting a heap of hurt if you do it.  I have software that generates royalty free music and even will create pieces that are exactly as long as I want.  But you can also do a little web surfing for ‘Royalty Free Music’ and will find quite a bit.  Of course if your video is short and sharp enough you  probably don’t need any music at all.

7.  Probably the most important thing you need to do is GET COMFORTABLE.  Remember:  few are really going to remember the details of what you’re saying.  What they will remember is how they felt about you and how you made them feel.  So, no matter what the script, you want to look comfortable, engaging, friendly and professional.  The only way you’re going to get to that place is by practice, practice and more practice.  When you make your first few videos, set aside a couple of hours for recording, even if it’s just a 90 second piece.  You’ll want to shoot it over and over and over again.  Pretty soon, you won’t be looking at your notes.  Pretty soon you’ll be speaking your words with sincerity rather than reading them off a screen.  And here’s a little content tip:  I know you love what you’re doing and you’re very passionate about it.  That’s good – it’s your excitement and passion that will make people want to work with you.  But when you are genuinely passionate about what you do, there is also a tendency to excitedly tell everything there is to know about it.  That would be a big mistake.  Your script should be no more than 2 minutes in length and less would be better.  You should simply hit the highpoints:  You are a set fee realtor.  That means big savings.  It also means full service and powerful marketing.  You’ve been in the business for x years and helped x consumers save approximately x dollars.  and so on.

8.  I know this all sounds complicated, but it’s not.  It does require an investment of time and money, though and as always, you have to ask yourself, ‘is this the highest and best use of my time?’  So before you go do all of this, investigate what resources exist to do the production of your video(s) locally.  It may be cost effective to go into a studio or have a crew come to you for a few hours, rather than spend a few days trying to figure all of this out.  You might even find a film or television program at your local University, Community College or High School where you could get your video done inexpensively.

Here’s your checklist:

1. Decide if you’re going to shoot it yourself or have a professional do it for you.

2. Regardless what you decide in , script it, keep it short and practice, practice, practice.

3.  If you’re producing it yourself, decide which camera you’re going to use.

4.  Find an external lapel mic that will work with your video camera or computer.

5.  Choose the software you will use to record your video.

6.  Choose the software you will use to edit your video (probably Windows Live Movie Maker).

7.  Make a decision about background music and if it’s a yes, find royalty free tracks.

8.  Practice and rehearse until you look comfortable on camera. That’s the most important thing.

And FINALLY:  If you’re not on Tech Time next Tuesday (9am Pacific time) you better have a good reason!  We’ll be going through the easy migration process of getting your new site live.  As of now there are six brave souls who have done it.  Next Tuesday you’ll get a real time course in how to do it, too.

The Power of Zillow – The Power of Inventory

Hey!  Take a look at this:

That’s the first page of results of a search on Zillow for homes for sale in Chino Hills, CA.  Do you see the Help-U-Sell logo over on the right?  Yep.  It appears six times!  Six of the first nine listings are Patrick Wood’s!  Patrick is, of course, our franchisee in Chino Hills and he’s done about as good a job establishing the brand in his community as anyone this side of Don Taylor.  What do you think a consumer, looking for real estate in this town, who does what consumers today do (go to Zillow.com) thinks when they see this?  The compounding effect is remarkable!  The logo to the side of the listing is one of the benefits of becoming a ‘Premiere Agent’ with Zillow.  Of course, the main reason Brokers and Agents upgrade to Premiere is to have their contact information appear next to the listings of non-Premiere agents, but that’s really of minor importance to Patrick.  He gets HUGE bang for the buck from the display of the logo because he has a ton of listings! This is always true in our business:  the broker with lots of listings gets lots of leads.

This is why most of Help-U-Sell marketing is directed to potential Sellers.  If we do a good job of building inventory with our superior offer to Sellers, we’ll have all the Buyer leads we could ever want.

I don’t hear it much anymore, but there was a time when I’d occasionally hear a broker complain that they weren’t getting any leads from their website.  My reply was always the same:  ‘How many listings do you have in inventory?’  I’d usually hear something like ‘three’ or ‘five’ or ‘I’m down to two.’  They didn’t have a website problem, they had an inventory problem.  Solve the inventory problem and the leads will flow.

I mentioned that Patrick Wood has done a superb job of establishing the Brand in Chino Hills.  I want to share something else from him.  It’s a little bit of community involvement, of giving back, that really works:

That’s Patrick’s son in one of the uniforms his dad bought for the team. Once again:  same logo, prominently displayed.

Now, some Help-U-Sell purists might question the prominence Patrick gives to his own name.  I mean, one of the beauties of Help-U-Sell is that it is a system that works.  Unlike ordinary real estate businesses, it is not dependent on personality for success.  When we go out to establish the brand, we establish Help-U-Sell, not any individual.  Yet here, Patrick is branding himself just as he is Help-U-Sell.  He’s done this for eight years and today he IS Help-U-Sell in Chino Hills.  Ken Kopcho in Santa Maria, CA has done something similar with his ‘Ken Sells’ identity and website.  There’s nothing wrong with this.  If there is a negative, it is that branding yourself probably diminishes the value of your business on the open market.  If you were trying to sell a business that was built as much around YOU as around your Brand, the assumption is that it would collapse when you walked away.  An established Brand – especially one like ours, that’s built on replicatable systems – should be in a much better position to survive an ownership change.

ON A COMPLETELY DIFFERENT NOTE . . .

Tomorrow, Google’s new privacy policy goes into effect.  This is a logical change that probably won’t upset too many people (although some have been screaming about it for weeks).  What they’re going to do is pool all of your profile information from all Google owned products to create one master profile with all of your information in one place.  By pooling your profiles into one, they’ll have more comprehensive information about you and will be better able to serve up advertising that is apt to appeal to you.  In addition to the information you’ve provided to, say, Google+, YouTube, Blogger, etc., they will also pool your browsing history.  Again, it helps them know what advertising to serve you.

Don Gross of CNN had a pretty good piece about the change and you can read it here.  At the end of the article, he presents a handful of easy things you can to to improve your privacy in this new Google world.  I found it helpful enough to reproduce it here:

Here are a few tips on how to keep your data a little more private on some of Google’s most popular features.

Don’t sign in

This is the easiest and most effective tip.

Many of Google’s services — most notably search, YouTube and Maps — don’t require you to sign in to use them. If you’re not logged in, via Gmail or Google+, for example, Google doesn’t know who you are and can’t add data to your profile.

But to take a little more direct action …

Removing your Google search history

Eva Galperin of the Electronic Frontier Foundation has compiled a step-by-step guide to deleting and disabling your Web History, which includes the searches you’ve done and sites you’ve visited.

It’s pretty quick and easy:

— Sign in to your Google account

— Go to www.google.com/history

— Click “Remove all Web History”

— Click “OK”

As the EFF notes, deleting your history will not prevent Google from using the information internally. But it will limit the amount of time that it’s fully accessible. After 18 months, the data will become anonymous again and won’t be used as part of your profile.

Six tips to protect your search privacy (from the EFF)

Clearing your YouTube history

Similarly, users may want to remove their history on YouTube. That’s also pretty quick and easy.

— Sign in on Google’s main page

— Click on “YouTube” in the toolbar at the top of the page

— On the right of the page, click your user name and select “Video Manager”

— Click “History” on the left of the page and then “Clear Viewing History”

— Refresh the page and then click “Pause Viewing History”

— You can clear your searches on YouTube by going back and choosing “Clear Search History” and doing the same steps.

Clearing your browsing history on Google Chrome

— Click on the “wrench” icon at the far right of your toolbar

— Select “Tools”

— Select “Clear browsing data”

— In the dialogue box that appears, click the “clear browsing data” box (there are other options you may want to use as well)

— Select “Beginning of Time” to clear your entire browsing history

— Click “clear browsing history”

Gmail Chat

When you start a chat with someone, you can make the conversation “off the record.” Off-the-record chats will not be stored in your chat history or the history of the person with whom you’re talking. All chats with that person will remain off the record until you change the status. To go off the record:

— Click the “Actions” link at the top right of the chat window

— Scroll down to “Go off the record.” Both you and your chat partner will see that the chat has been taken off the record.

What are Google’s other products?

Obviously, anything with “Google” in its name counts. But the Web giant owns other products that might not be so obvious to some folks.

— Gmail. Yes, the “G” is for Google.

— YouTube. Google bought the Web’s leading video site in 2006

— Picasa. The online photo sharing site became Google’s in 2004

— Blogger. The blog publishing tool has been Google’s since 2003.

— FeedBurner. A management tool for bloggers and managing RSS feeds. Google bought it in 2007.

— Orkut. Google’s original social-networking site isn’t big in the U.S. But it’s one of the most popular sites in India and Brazil.

— Android. Yes, you probably know this. But just for the record, Google owns the most popular smartphone operating system.

 

 

Platinum Edge and the Clarity of the Brand

We at Help-U-Sell have a second brand, reserved for upper end properties, Platinum Edge.  Platinum Edge has its own logo, and colors (purple and gold), and is occasionally used by a handful of Help-U-Sell brokers.  I was on my way out of Help-U-Sell when the sub-brand was devised and was only peripherally privy to the conversation that led to its birth.  Now, half a dozen years later, I’m looking at it and wondering, ‘What in the world were we thinking?’

We have Help-U-Sell:  an already well-established brand.  By well-established I mean that most consumers have heard of us and many have an inkling that we are somehow different than ordinary real estate practitioners. That is HUGE.  Really:  establishing brand recognition is a very tough task that usually takes years.  The good news is: once you have it, it tends to stay with you.  (For more about this, read ‘Marketing Warfare’ by Ries and Trout. )

To trade the power of that wonderfully distinct brand for something that is completely unknown by the consuming public seems misguided at best, even cavalier.

I know the history.  A group of our old Regional Directors got together and decided that the Help-U-Sell brand was a turn-off for high end homeowners.  It seemed to them that the reason we had little presence in the lofty price ranges was that those homeowners were, um, what’s the word?  Oh, yes:  embarrassed to have the Help-U-Sell sign in their yard!  They didn’t want the neighbors to know they wanted to save money, don’t you see?  And somehow, by simply changing the sign and the name they’d flock to us to save thousands on the sale of thier McMansions.

I guess that must have resonated in 2005.  A lot of stupid stuff did.  And hats off to Infinium for NOT re-inventing the Regional Director mess when they took control of Help-U-Sell at the end of 2008.  Today we function quite well without that extra barrier between the franchisor and the franchisee.

Last year I visited with Josh and Bettina Grein, Help-U-Sell Grein Group in Stafford, Virginia.  They have a good business, much of which takes place in the upper end of their marketplace, homes priced at $500,000 and up.  I asked how they were able to break into that market.  Bettina looked at me, puzzled, and finally said,  ‘Break in?  What do you mean?  . . .  That’s where people can save the most.’  Period.

I don’t think we needed Platinum Edge to sell high end properties.  I think we needed passion, pride and belief that what we have works – three things that were in rather short supply in 2005.  Consumers are psychic:  if you stand before them with doubt and trepidation, they sense it and respond accordingly . . . if you’re not proud and passionate about what you’re doing, you might as well stay home.

Today our group is like a hungry, happy pack of wolves.  They are so deeply into Help-U-Sell, into saving consumers money, into doing it differently and better that it’s almost part of their DNA.  It’s as if  a whole new species of  REALTOR is loose on the planet, a mutant strain that has evolved in response to changes in the (consumer) environment.  It’s stronger, faster, smarter, clearer and more effective.  While all the old dinosaurs in the forest are slowly turning into crude oil, this new breed is taking over.  It’s Survival of the Fittest and we’re certainly up to the challenge.  Platinum Edge?  That’s just a hat-tip to the old Tyrannosaurus we used to be, our clunky, addled, awkward, embarrassed former incarnation.  Today Help-U-Sell comes in just one color, and it’s the color of passion and love:  RED.  Let’s Hunt!

Miscellaney: Facebook Deflation, Google Glasses and the Market Segment Specialist

Today’s Help-U-Sell Power Hour was really good. It was one Wednesday I didn’t come in with all kinds of stuff to share and instead, let the group take the call where they wanted it to go.  Seems there’s a lesson in that for me: shut up!

In talking about recruiting, the concept of the Market Segment Specialist came up.  It’s an idea that hatched on our Wednesday call several months ago.  Maurine Grisso was talking about a 55+ community she’d like to break into and said she wished she could find an agent who didn’t want to work full time, who lived in that neighborhood, to be the face of her Help-U-Sell business there.  Brainstorming resulted in a job description and title.  You can read more about this HERE, and HERE.

In my daily scan of relevant tech info, I learned that Facebook is getting ready to announce a new twist on advertising.  The new ads will be larger and will offer options for more specific targeting.  The rumor is you’ll be able to advertise to the ‘Friends’ of people who ‘Like’ a particular business.   I learned about this right after I saw a graph from Chis Smith, Chief Evangelist (!) at Inman, documenting a decline in the impact of Business Pages on Facebook. In a 30 day period, ‘Likes’ of business pages are down 15%, Comments are down 19.9% and Impressions are down 24%.   It could be that we’ve hit a saturation point with Facebook marketing and are starting to turn off from it, much as we did from Groupons not too long ago.  Groupons came out of the box like a shotgun blast, but after awhile people got tired of offers (sometimes not so good) in their email and began to turn off.  In the case of Facebook, I see an opportunity to re-examine how we use this communication tool in our businesses.  In other words:  let’s get creative once again in how we use Social Media.

Then, purely for fun, I saw a piece about the glasses Google, working in conjunction with Oakley, is likely to release later this year.  You wear them, just as you would any pair of shades, but a transparent web browser appears on the lens, enabling you to surf the web while walking around.  Using Google Maps while making your way through a foreign city would be interesting, as would using Google Goggles to identify landmarks along the way. I’m not sure whether this will be immensely silly and irrelevant or very cool.  I mean:  it seems we’re already doing that with our Smart Phones;  why would we switch?  And are we inching ever closer to having our technology actually implanted into our bodies??  If so, nerd that I am, I can’t wait!

Finally, remember, it’s the 22nd of February.  There are just 7 days left in the month (it’s leap year).  That means there are just 7 days left in the Help-U-Sell Winter Warm-Up Contest.  If you want to put on a full court press here in the closing week of the event, do so by focusing on  LISTINGS.  Get as many as possible because new listings carry the greatest weight in contest results.  What do you think?  Could you take one new listing evey day for the next seven days?  What if your State was going to take away your real estate license if you didin’t?  Could you do it then?  Uh-Huh, I thought you could.  So I think you now have your assignment:  7 new listings in 7 days.  That’s 35 additional points in the contest, which could be enough to boost you into one of the money positions!  Good Luck!

Accessibility Toolbar