Category: The Industry

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.

Flashback Friday: Charging Less, Making More

The ability to go into the marketplace with a financially attractive offer for consumers AND walk away from the transaction with more dollars than your more traditional counterparts is at the heart of Help-U-Sell’s appeal to brokers.

Think like an ordinary broker for a moment:

  • The success of the office is built on one thing:  your ability to attract and retain productive agents.
  • Your primary tool in accomplishing this is commission split — you know to be successful you need agents and to get them, you’ll need to pay well.
  • Unfortunately, the health of your bottom line is dependent on how many commission dollars you retain after splitting with your agents.

Put all of that in a hat and shake it up and you’ve got  . . . a mess!  Your formula for success is at war with itself! No wonder ordinary real estate offices suffer from embarrassingly low profitability if they make a profit at all (despite the fact that consumers think they’re paid way too much!).

Help-U-Sell takes dynamite to all of that nonsense.  First thing we do is demystify the listing process.  We toss out the notion that personality is what sellers buy when they list their property for sale.  Bunk! we say.  Listing is a logical thing.  If you present a system with a track record of success for a fee that is reasonable, most people jump at it.  Instead of two hour marathons where traditional agents warble on about how wonderful they are, listing presentations become simple, short and matter-of-fact:  here’s what we do, here’s what you do and this is what it costs.  Listing is so easy in Help-U-Sell that, well . . . even a Broker could do it.  That’s why we take the listing side of the business out of the agents’ hands.

We believe the listing side of the business belongs to the company, and the broker or an assistant (that’s different than an agent) takes all listings.  The agent’s role is on the buyer side, where we can afford to split commissions.  But, since we create all the leads for our buyer agents through our large number of listings and the power of our well-conceived marketing, we don’t have to give away the farm to get and keep salespeople.  We’re not asking them to call on FSBOS or Expireds, to knock doors or make cold calls to find listings.  We’re not asking them to master a slick listing presentation or memorize responses to two dozen common seller objections.  We just want them to take the prospects we’ve created and find them a property.   Good agents thrive at Help-U-Sell.

Back to the listing side;  here’s how the dollars break down:

Here’s where the ‘yeah-buts’ start to echo from the mouths of ordinary agents:

Yeah-but, with no listing agent the seller is getting less than full service!

Says who?  Full service is getting the property sold for the greatest walk-away dollars in the right time frame — and we do that every day.

Yeah-but, you get what you pay for!  When you list with me I’m going to actively market your property until it’s sold!

Um, let’s see . . . ‘actively market‘ . . . I guess that means put a sign in yard and a listing in the MLS, which then syndicates to a couple dozen Internet sites, right?  In my experience that’s what ordinary agents do when they get a listing.  In my Help-U-Sell office, we have a comprehensive marketing plan (that includes all of that and much more), orchestrated, monitored and constantly improved by . . . ME.  It’s not just a bunch of agents running around willy-nilly, making it up as they go along on every listing they take.

I could go on with the ‘yeah-buts,‘ but we try to keep these posts to a ten minute read or less.

We are a very proud group, and rightfully so.  We’ve taken the fluff and snake oil out of selling real estate and converted the process to logical systems that get results.  We’ve done it in a way that saves consumers thousands of dollars and makes our brokers a nice profit.  Who could ask for anything more?

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.  

Flashback Friday: Equity In The Name

(This is from early 2010, though I changed a date reference in the 5th paragraph because, hey!  What was true then is just as true today!  Consumers seek us out because our offer is superior, because they will get great service and save thousands.  They stick with us because we are good people and we get the job done.  In the ordinary real estate world, where everybody pretty much has the same consumer offer, the only differentiator is personality:  who is most likable and magnetic.  That’s fine, but if you build a business on that you don’t have much to sell when it’s time to move on.) 

New Help-U-Sell brokers sometimes stew way too much about their DBA.  They want to come up with the perfect name, the one that expresses who they are;  the one that will kick their marketing effectiveness up another notch.  Is Help-U-Sell Superior Homes better than Help-U-Sell Apex Properties?

Truth is:  the consumer could not care less.

And that’s one of the fundamental strengths of the Help-U-Sell system.  Think about it:

An ordinary broker, running an ordinary agent-oriented office, is building . . . very little, really.  His business is driven by the personalities of his agents and the relationships they develop.  There is no unique consumer offering that draws people to the company.

In 2013, very few people call ABC Realty and say, ‘Hey, ABC, come list my house.’  No.  They call up Sally who happens to work at ABC and say, ‘Hey, Sally, come list my house.’  And you know what?  When Sally goes down the street to go to work for XYZ, they’ll call her there too.

So when that ordinary broker decides it’s time to cash in and move on, when he attempts to employ his Exit Strategy, he finds he has little to sell.  The value of his company is a gamble at best.  All a buyer gets is the chance to keep the agents who have done the business and the chance to keep the listings and clientele they have amassed.  And it’s a fair bet that at least some of those agents will not like the change and take the opportunity to move on down the line.

It’s so different at Help-U-Sell.   We have a business model and a consumer offering that people seek out.  Every day, people call Help-U-Sell and say, ‘Come list my house.’   When the Help-U-Sell broker decides it’s time to move on, he has a business to sell that can continue to function after he is gone.  The buyer is getting an established enterprise and the transition from one owner to the other will likely be invisible to the consumer.  The DBA becomes irrelevant:  it’s Help-U-Sell that matters.

But, ‘Oh!’ you say, ‘Real Estate has always been a business built on personal relationships!  People want to work with . . . people, not systems!’

That’s absolutely true.  But most people are also interested in saving money and they will often investigate their alternatives before even working with a pal.  That’s when they discover that we’re people too! Yup, underneath the neat system that gets results and saves money is a group of really good, competent, likable people.

That’s why so many of our established brokers enjoy great repeat and referral business.  Oh, the savings remains a driving factor, but it’s the personal relationship that turns satisfied customers into raving fans and keeps them coming back again and again.

I’m not seriously suggesting this, but I really don’t think it would make one whit of difference if you chose ‘Umm’ as your DBA:  Help-U-Sell Umm Realty.  Or maybe Help-U-Sell Acme, Ace or ABBA.  What matters is that first part, the part that consumers recognize as leading to savings.

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