Rich Dad Poor Dad author Richard Kiyosaki uses the example of a sale at the local supermarket to illustrate a common investor mistake - focusing on price movements instead of value. He notes that if a supermarket held a "25% off everything in the store" sale, the store would be packed.
But when prices plunge in the stock market or real estate market, many investors hear the bad news and head for the sidelines until prices begin climbing again. In any market, it's important to consider value along with price. Supply and demand dictates that real estate values are easier to find in slow periods and become harder to find when markets heat up.
So what’s lasting value? Here’s a list of homebuyers’ most sought-after features, according to the NAR:
If you have looked in the past and not found these features in your price range, it may be time to check again, while properties are “on sale.” Be sure to consider features that will make homes more valuable in the future, such as energy-efficient construction and appliances and shorter commuting times. Features like water or mountain views, good schools, recreation opportunities and unique architecture never go out of style.
Get eNeighborhoods’ Now's the Time to Buy Free Special Report today.
For veteran copywriters and content providers, it's always gratifying to see research highlighting the effectiveness of text copy to attract online visitors, persuade them to take action, and ultimately drive sales. Text copy will always be a key driver in marketing and sales, but in the evolving online, multi-platform world, it's no longer sufficient to seek comfort in the "content is king" credo and write on.
Why? For all types of marketers, the true north of actionable content has always been to make it relevant and deliver it to the right audience at the right time. These same principles apply across platforms, whether content is distributed through Weblogs, streaming media or podcasts.
But as people become more sophisticated and diverse in the types of content they consume, the application of simple rules becomes more difficult. Is your content breaking news or old news? If you're not sure, here are six tricks to ensure your content retains its regal status:
Mind your medium: Today people have the opportunity to interact with more types of media than ever before. Your message could be delivered through an animated billboard, podcast or a branded desktop application. You probably wouldn't send the same content to a senior corporate executive and a 19-year-old gamer. But many organizations will try to reach both target audiences with the same marketing channel. While television may reach both parties, it may not be the most effective way to reach either one. It's said that more than $50 billion is spent annually on television advertising, but young males may spend more time playing video games.
In your eyepath: Eye-tracking is an increasingly popular way evaluate web pages because eye movements provide insights into the human thought processes that cannot be derived from surveys and self-reporting. On a very practical level, eye-tracking has confirmed things like scanning behavior and "banner blindness" in web users. Although studies have underscored the relative importance of text versus graphic content, they have also shown that people habitually scan rather than read, skipping large portions of text on every page they visit. Use color, bolding, bullets and subheads to break up copy so it can be easily scanned.
Target your list: Direct response diva Lois Geller champions a quick formula to identify the components of success in direct marketing campaigns: The offer and list are each responsible for 40 percent of campaign success, with creatives accounting for the remaining 20 percent. You may have extremely relevant and valuable content, but if it's sent to the wrong list, you won't make a connection. The best practices of direct response marketing have been developed for more than a century, and they still provide valuable direction in the 2.0 world.
Remember the offer: All the persuasive and elegantly written copy in the world can't make up for the wrong offer at the wrong time. If your campaign is underperforming, and you’re fairly certain you are sending the right creative to the right audience, then you probably have the wrong offer. There aren't that many moving parts... time to test some different offers to see what's most attractive. If this offer-list-creative trio is beginning to sound like the old CLUE board game (Mr. Mustard in the conservatory with the candlestick), it should. Put the three together in the right combination and you've found the killer (marketing campaign).
Keep it in order: It sounds basic, but a quick survey of print ads, emails or web pages will yield plenty of examples of putting the cart before the horse. The problem of ordering your message becomes more difficult as technology provides people with more and more control over how they consume media. In many cases, a solution is pitched before a compelling business problem is outlined. In others, the proposed solution may follow the problem too closely. Especially in more expensive or complex sales, let your content and campaign establish relationship with successive degrees of involvement. Print, broadcast or interactive, the right content in the wrong order is a recipe for mediocre results.
Consider the source: While telling your own story is an essential skill for marketers, sometimes it's better to let someone else take the podium. A great rule of thumb from Marketing Experiments is to back up your own claims with data, while leaving qualitative praise for your product to customer testimonials. The same can be said for online credibility indicators such as seals and certificates. Placing the Verisign logo or Better Business Bureau seal next to your checkout form is probably simpler and more effective than creating a long explanation of why prospects should trust you with their credit cards. And if you can get Steve Jobs, Seth Godin or Guy Kawasaki to say anything at all about your product, that would help too.
Get eNeighborhoods’Now's the Time to Buy Free Special Report today.
No one wants to purchase a home only to see its value decline. But should you wait to buy a home until prices bottom out? A quick web search will yield a number of articles and opinions for and against timing the real estate market, but beware of those in favor of market timing who also want to sell you a how-to book or system.
Many people who have tried to time the market miss out on the chance to build equity by waiting to buy until prices rise again. The chart below shows the gradual increase – along with typical ups-and-downs – of home values over nearly 40 years. The arrows indicate market low points when home values dipped before continuing their historical rise.
The problem? Market cycles only become clear in retrospect. In the midst of a market slowdown, it’s very difficult to predict when housing prices hit their low points. In addition, this trend line represents home prices at the national level, which may be very different than housing prices in your neighborhood. Broad national indicators may lag the market by months – meaning the actual price floor would not show up in reports until weeks or months later.
The best way to protect against buying at the wrong time? Sell at the right time. In many cases you can’t control when to sell, but you should plan on keeping your home at least six or seven years. The longer you own your home, the better chance you have of building wealth and protecting yourself from the market’s ups and downs.
Getting nervous buyers off the fence is one of the toughest challenges facing real estate pros right now. People are rightfully concerned about buying a home that will drop in value in the coming months. But buying a home is a long-term investment, and there’s more to consider than the just the purchase price.
Depending on the rate and the amount financed, the price of financing can easily exceed the price of the home. In the example below, it’s easy to see how mortgage costs can exceed a home’s purchase price. What’s more, the total cost of buying a home rises more than $70,000 when interest rates rise a single percentage point.
Rates have risen in the first half of 2008, but in historical terms, mortgage financing is still a great bargain. From 1980 to today the 30-year fixed rate mortgage has ranged from more than 18 percent to less than 6 percent, says Jim Elfelt, a mortgage banker in Virginia Beach, Virginia.If you’re waiting for home prices to come down another $10,000, you may pay more in the long run if mortgage rates rise in the meantime.
For example, suppose you’re applying for a 30-year, fixed-rate $300,000 mortgage. Note how a small change in rate makes a major difference in monthly payments and overall cost:
Interest rate
Principal
Total Interest paid
Monthly Payment
Total Cost
Total Additional Cost
6%
300,000
347,515
1,799
647,515
0
6.25%
300,000
364,975
1,847
664,975
17,460
6.50%
300,000
382,633
1,896
682,633
35,118
6.75%
300,000
400,486
1,946
700,486
52,971
7%
300,000
418,527
1,996
718,527
71,012
When you’re looking for a bargain, don’t lose sight of the big picture. If you try to time the market to save a few thousand on the price of a home, you could end up with a higher monthly payment and total overall cost of home ownership.
Get eNeighborhoods’Now's the Time to Buy Free Special Report today.
Wouldn’t it be great if the government kicked in some money to help make home ownership more affordable? Because of deductions on mortgage interest and property taxes, the practical effect is that the government is subsidizing your home purchase. In fact, home ownership provides two of the best ways to reduce your tax bill.
Mortgage interest you pay can be deducted from your gross income to reduce your taxable income. For example, say you take out a $300,000 mortgage loan at 6 percent interest. You pay $18,000 a year in interest on that loan. That means your taxable income for the year is reduced by $18,000. If you’re in the 25 percent tax bracket that means a one-year tax savings of $4,500 (25 percent of $18,000).
Property taxes may also be deducted from your gross income, lowering your overall annual tax obligation. Property taxes are levied on homeowners in the United States to pay for a variety of public services. You may see local property tax rates between 1 and 2 percent of the property's current assessed value, depending on where you live. Property taxes are fully deductible on your primary home, second home or vacant land.
Speaking of tax smarts, be sure to also consult your advisor about tax breaks that may be available on the proceeds from selling your current home, and on any “points” paid when taking out a mortgage loan.
In another move to help restore confidence and stabilize the housing market, in late July President Bush signed a far-ranging housing bill into law. The legislation provides funds to shore up finance giants Fannie Mae and Freddie Mac, who guarantee a large portion of the nation’s mortgage loans. The law also provides help for troubled borrowers struggling with mortgages and tax credits for first-time homeowners.
Get eNeighborhoods’Now's the Time to Buy Free Special Report today.
In turbulent times, real estate professionals have a unique opportunity to step up and successfully guide buyers. You will be ahead of the game if you help clients separate the facts from the hype and clarify how national real conditions affect local markets. Buying a home can be stressful under the best of conditions. When you add in general anxiety and confusion about the housing market, you’re bound to have buyers waiting on the sidelines for a better day.
Go local. The Internet puts today’s consumers a click away from a world of real estate information. You can’t know all the news that’s available to your clients, but you can maintain the information advantage by becoming the expert on local markets. Focus on information your clients don’t have. Local market information gathered from your experience, your MLS, and your network of local contacts is unique and provides value to your clients that other sources can’t match.
Do the math. You don’t need to be an expert in statistics, but you should know what the key numbers mean and how to explain them clearly. Numbers like days on market, units closed, list-to-sales price and pending sales can provide great insight on where your local market is headed. It’s also impressive to clients when real estate pros know how local trends stack up against national numbers.
Show and tell. Using your MLS and marketing tools such as eNeighborhoods, you can provide personalized reports that show current neighborhood information and local demographic information such as schools, crime, employment and education. Provide branded leave-behind reports and materials homebuyers can reference later. When you become the local source who can explain market conditions with current statistics and visual summaries, you gain an advantage over less-prepared agents.
Bring the bad news. Yes, prices are falling through the floor in many areas, particularly where activities like sub-prime lending, overbuilding and investor speculation occurred. The media tends to focus on areas where these abuses occur, bringing the bad news into sharp focus. You can help clients understand that falling prices in these areas are part of a natural – and necessary – market correction. As prices continue to fall, the real estate market will begin to recover as part of its normal cyclical process.
Be sure to keep your prospects and clients engaged throughout the recovery process. Changes in local sales, home prices and inventory are good indicators of your local market’s health. The national real estate market will inevitably recover, and those buyers who are on the fence now may be ready to purchase in the near future as some sunlight begins to emerge from the market’s dark clouds.
Get eNeighborhoods’Now's the Time to Buy Free Special Report today.
In recent years, the cost of buying a home in most markets has increased while the cost of renting remains flat. But it’s never a good idea to base long-term investment decisions on short-term conditions. If you decide to rent instead of purchasing a home, you may be in a bad spot if the cost of rentals in your area shoots up.
Typically, a weak housing market corresponds with a strong rental market. If the rental market is strong in your area, it may indicate weakness in the local housing market, which typically favors buyers over sellers.
When you buy a home with a fixed-rate mortgage, you can lock in a predictable monthly payment for 15 or 30 years. That means the largest part of your housing costs, principal and interest, are fixed. For some people, that stability, along with the sense of community that comes from being a homeowner, is enough to tip the scales toward home ownership.
If the monthly cost of buying vs. renting is comparable, you may consider some related factors to help you decide. When you rent, your landlord receives any appreciation and tax breaks associated with owning the property. If you plan on any significant remodeling, buying may be also preferable to renting.
Some people just don’t have the discipline to set aside money each month to save and invest. In this case, a home is more than a shelter, it acts as sort of an automatic savings account. You can build your savings in two ways:
First, each month a portion of your payment goes toward the principal to build equity in your home. In the early years of the mortgage, most of your payment goes toward interest. Over time, however, that turns around and your equity growth begins to accelerate.
Second, U.S. home prices have always appreciated over the long term. Average appreciation on a home is, 5-6 percent annually, according to the National Association of Home Builders. Over time, history has shown that owning a home is a solid financial investment despite periodic market downturns.
And wouldn’t it be great if the government kicked in some money to help make home ownership more affordable? Because of deductions on mortgage interest and property taxes, the practical effect is that the government is subsidizing your home purchase. In fact, home ownership provides two of the best ways to reduce your tax bill.
Mortgage interest you pay can be deducted from your gross income to reduce your taxable income. For example, say you take out a $300,000 mortgage loan at 6 percent interest. You pay $18,000 a year in interest on that loan. That means your taxable income for the year is reduced by $18,000. If you’re in the 25 percent tax bracket that means a one-year tax savings of $4,500 (25 percent of $18,000).
Property taxes may also be deducted from your gross income, lowering your overall annual tax obligation. Property taxes are levied on homeowners in the United States to pay for a variety of public services. You may see local property tax rates between 1 and 2 percent of the property's current assessed value, depending on where you live. Property taxes are fully deductible on your primary home, second home or vacant land.
Speaking of tax smarts for home buyers, don’t neglect the selling side of the equation. Be sure to consult your advisor about tax breaks that may be available on the proceeds from selling your current home, and on any “points” paid when taking out a mortgage loan.
Get eNeighborhoods’Now's the Time to Buy Free Special Report today.
OK, so we (eNeighborhoods) release a special report about the housing market and how different the stories are. Some real estate pros simply smile and repeat the mantra that “now’s the time to buy” regardless of market conditions. These agents lack credibility.
On the other hand, media focus tends toward housing market coverage on hard-hit areas such as Florida, Arizona, Nevada and California where much of the nation’s pain is felt. This news is interesting, but unfortunately, most of these headlines and sound bites are something like hearing about an Orange Alert at the airport. It’s clear that there’s cause for concern. It’s not clear what to do about it.
That’s why real estate professionals who understand the market have a unique opportunity to step up and provide buyers with valuable guidance. If you can separate the facts from the hype and clarify how national real estate news affects the picture in your local market. Buying or selling a home can be stressful under the best of conditions. When you add in are generally anxious and confused about the market seem to be waiting on the sidelines for a better day.
The point of the special report, Now’s the Time to Buy: 10 Reasons Why ( www.eneighborhoods.com/time ), is to help real estate agents provide guidance to home buyers to help them make better decisions in today’s challenging market. The report addresses why:
- There’s no such thing as the housing market - Media reports tend to focus on bad news - Housing market indexes vary - Financing is favorable for now - Uncle Sam wants you…to be a homeowner - Buyer’s markets are difficult to time
We think it’s a fair read on reasons to buy (or not buy) a home in today’s market. Here’s the snide and actually pretty funny part. The Palm Beach Post weighs in with comments about the Special Report! We were hoping for effusive praise and perhaps some new business. But snide is OK, too. It's just real estate marketing...see the links to the right.
Hey, executive type...put down that Wall Street Journal and read this! eNeighborhoods, the nation's premier compiler of real estate related home and neighborhood information, is looking for a new leader.
eNeighborhoods delivers a comprehensive set of marketing and analytical tools to the real estate Industry. Our technology can be found on more than 4,000 desktops around the world. In 2002, eNeighborhoods became a partner in the National Association of REALTORS®' REALTOR Benefits® Program. The company provides MLS data sharing and marketing tools to top MLS organizations in the United States, Canada, and Australia. The company maintains strategic alliances with major real estate franchisers, including CENTURY 21, Coldwell Banker, ERA, EXIT Realty, GMAC, Keller Williams, Prudential, Realty Executives and RE/MAX International as well as many of the major independent brokerages. eNeighborhoods is the proud founding sponsor of NAR's Good Neighbor Awards. Now, we're seeking a new General Manager (a CEO level position) and Technology Leader.
The ordinary need not apply...here's the pitch. If you're the one, let's hear from you, or please pass this along!
General Manager - eNeighborhoods
A Division of Dominion Enterprises
eNeighborhoods (a division of Dominion Enterprises) is seeking a General Manager. The General Manager for this successful and growing operation will lead expansion of current web-based products in addition to developing and executing business plans for future products. The position will be based in Boca Raton, Florida and report to a Division President.
eNeighborhoods is the nation's premier compiler of home and neighborhood knowledge, providing marketing and data services to the real estate industry's top performers. Successful candidates for General Manager will join a dynamic team responsible for exceeding our customers' expectation and providing powerful tools to agents, brokers, MLS organizations, and franchises. General areas of responsibility will include:
Providing vision for business and securing necessary resources to achieve goals Hiring and developing a team to develop, sell and support web-based products Daily leadership, management and coaching of staff Managing financial performance, to exceed budgeted revenue and income
REQUIREMENTS AND QUALIFICATIONS INCLUDE:
Bachelor's degree or equivalent, with a minimum of 10 years experience in a leadership role Minimum expectation of 5 years successful experience hiring, managing, and developing managers Proven ability to hire, manage, and develop sales, marketing, operations, and technical staff Demonstrated success in real estate technology and online business environment Proven track record of success in growing a customer base for web-based products Success in developing and executing budgets and business plans Excellent verbal and written communication skills Highest standards of ethical business practice Deadline-driven and detail oriented, with a focus on continuous improvement
Dominion Enterprises (www.dominionenterprises.com) is a leading marketing services company serving the wide-ranging needs of many industries including real estate, apartments, specialty vehicles, employment, automotive and travel. We offer a dynamic environment, excellent growth opportunities, competitive earnings and a comprehensive benefits package including a generous 401(k). Dominion Enterprises supports a diverse workforce and is a drug-testing employer.
If you have the skills and seek a challenging growth opportunity, please send a cover letter and resume to (no calls please):
OK, time for a 30-second real estate market quiz. Quick...which is the more exciting scenario?
- A man slowly walks down a flight of stairs, sometimes pausing or retracing his steps until he reaches a floor. After trudging along for while, he notices another staircase and begins ascending, occasionally pausing or taking a step back before methodically proceeding upward.
- Ignoring the safety railing, a man hurtles down a terrifically high flight of stairs. He hurries recklessly downward, dodging obstacles in his path as he goes. He suddenly cries out as he loses his footing, sails through the air, tumbles down several flights and crashes through a banister. The badly injured man is bandaged from head to toe and attached to a variety of complex medical devices that monitor his vital signs. Experts debate his condition but agree that the situation is dire and prospects for recovery are uncertain.
...and that's why more headlines say "Home values off the cliff in Phoenix, Miami and Las Vegas" than "Things aren't bad in Seattle, Portland and Charlotte." Most readers just find sensational headlines more interesting. And while they may help sell newspapers, they also scare buyers and sellers to the sidelines, though the news may be very positive for home buyers in particular.
Add public relations acumen to the long list of skills today's real estate professionals need to be successful. Real estate is a long-term investment, but it's easy to lose sight of that fact when current conditions and recovery prospects seem grim. As REAL Trends Editor Steve Murray* says:
"Rather than say ‘it is a good time to buy,' sales professionals need to present facts, figures and charts that show it clearly. The time where housing consumers took our word for this has likely come to a close."
The picture isn't all doom and gloom. Real estate pros can make a convincing case that, for many homebuyers, now is a great time to buy. But you're going to need some proof. Get listing data, neighborhood information and compile your own reports on market conditions. Be able to explain market conditions with visual summaries. Provide leave-behind reports and materials homebuyers can reference later.
So what's needed in today's market? In the form of a classified ad, it might look something like this:
Wanted: Real estate professional with public relations skills, local expertise and nerves of steel. Strong understanding of industry trends affecting buyers, sellers and homeowners. Must be able to recognize risks and opportunities inherent in shifting markets, provide candid assessments and expert guidance. Ability to troubleshoot and deliver creative solutions for skeptical consumers. Positive mindset and understanding of buyer and seller psychology required.
Who's on board?
*Author note: If you see Steve Murray on the agenda at an industry event, check him out. You can learn more about real estate market conditions in one session than reading real estate headlines for six months.
In real estate, the only constant is constant change. As we move through 2008, it's clear that the market is changing and evolving -- it never stops. But it's important to distinguish between cyclical changes, (observers expect the national housing market to remain flat for much of 2008) and permanent ones.
In short, the market will recover, but some current technologies and business practices are never coming back.
One global trend impacting real estate is the declining effectiveness of traditional mass advertising. Years ago, advertisers could reach the majority of real estate consumers through just a few channels. Radio, television, print and outdoor display ads were all real estate pros needed to promote their practices. Today, it's no longer enough to promote your services or listings through a single advertising channel and wait for the phone to ring.
In today's Web 2.0 and social media world, people get real estate information from the Internet, email, podcasts, instant messaging, video feeds, networking sites, Blogs and more. It's a challenge for real estate professionals to understand various marketing channels and be proficient in their use.
It's also a great opportunity to develop deeper, one-on-one relationships that turn prospects into clients. The real estate information today's buyers and sellers find on the Internet ranges from current and relevant to outdated and awful. This gives real estate professionals the opportunity to guide clients and provide them with the most current, relevant and local information available.
The ability to translate information overload into local market and transaction knowledge has become a required survival skill. Listing information is freely available, but that's only part of what's needed to make effective buying and selling decisions. Agents must supplement listing information with neighborhood information and understand current market conditions.
For example, in the South Florida market, agents must master the complex property tax and insurance issues that affect every real estate transaction. As industry groups push to preserve profitability and consumer interests strive to contain costs, state lawmakers struggle to come up with a viable solution. Unsure of what do to, many buyers and sellers wait on the sidelines until some type of legislative resolution is reached.
As a wise marketer once said, your personal brand is less about what you say, and more about what you do. Today's real estate consumers are not looking for a salesperson to say something. They are looking for a trusted advisor to do something - successfully guide them through increasingly complex decisions and transactions.
The market is challenging, and opportunities will be limited for real estate salespeople. But opportunities always exist for savvy agents who understand how market trends and challenges affect individual transactions. If this skill set sounds like a combination of agent, futurist, economist, insurance expert and tax attorney, welcome to real estate 08!
Charles Warnock
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