Bottom Line

Ethics in Advertising

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Sun, 20 Apr 2008 06:01:57 -0500

Just a quick question.The popular site Trulia offers free ads, but only for licensed Real Estate Professionals. Yet there are numerous feeds they receive where they just list the name of the website that it came from, not the broker's name. I did not know that "postlets.com" was a licensed real estate broker! This is a no no under the Code of Ethics and State Law. Why aren't brokers and agents being more careful with their advertising?

I noticed one listing I clicked on and the broker was shown as "coldwellbanker.com" not a registered broker. I could however click back through the feed from coldwellbanker.com to the Coldwell Banker website, and then back to the actual brokerage information that by state law and the code of ethics should be included on all Internet advertising including the ad I originally selected on the public search page of Trulia.com.

I know that these ethical and legal violations are throughout Truliabut the biggest violator of the COE and state law is by Coldwell Banker Corporate which requires Realtor(R) membership of its brokers and agents, yet has no problem putting these Brokers and agents at risk.

I also find it patently unfair that Trulia runs blind ads for agents, but will not accept ads from FSOB sellers. This smacks of anti-trust and racketeering. Is Trulia a broker acting in a brokerage capacity? If they are just an advertising co they are doing the same thing the DOJ is going after NAR for - limiting the market place and anti-trust violations. Shame. Shame.

This is an illustration of brokers and agents not taking ownership of their listings. By sending these feeds out to Truia Coldwell Banker who is large enough that they should know better, is thumbing its nose at the law and at its brokers and agents. Brokers and agents need to stand up to these corporate criminals and gang leaders - or since this is a planned corporate policy and this type of advertising is not legal - can we call it organized crime?

People can and do sell their homes on their own all the time - without the help of a broker or salesperson. It is not fair exclude them from the advertising market while at the same time violating state law and being unethical.

Bottom Line: Just because Internet advertising is cheap and easy dosen't mean it does not have to be legal and ethical.

3/5 OF REALTORS® HAVE TROUBLE WITH MATH . . .

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Sun, 06 Apr 2008 21:26:29 -0500

The other half don't understand it at all.

So who paid off the state legislators? In every state I know of you can get every math, business math and real estate math question wrong on the state licensing exam and still pass and get your license.

That really doesn't matter unless you believe the Realtor® line "your home is your biggest investment." Well shoot, if you really believe that why do you walk around the office citing your inability to do basic real estate math and still get a real estate license as some how heroic, a badge of honor.

You wouldn't invest your retirement plan with someone who couldn't explain the difference between a Roth IRA and a defined benefit 401k plan would you? Forget about it, you wouldn't even buy a pair of shoes without asking the clerk about the quality of the workmanship, materials and durability. Why should you expect someone to list or buy with you as their agent when you lack the basic fundamental knowledge to calculate and explain the estimated cost or proceeds of the sale?

In addition to selling homes most states require a real estate license to sell vacant land, commercial real estate, manage rental properties and businesses. How can you perform half these functions without a basic understanding of real estate math?

Let me ask you . . . You just showed a house that costs $200,000. The buyers have $50,000 to put down, the taxes are $3000 per year, insurance is about $1200 per year what is the approximate monthly payment?

Duh?

What would the house rent for (here is a clue, you need local market knowledge beyond the information above to make this work)?

Say what?

How much do I save by buying a home like this instead of renting?

Come again?

What is the price point for that home for a 6% return on cash if it was rented?

What is the market rent and what price would I have to pay to break even if prices do not change?

What would my short term negative cash flow be on a financial break even?

If you can't figure out the answers to these questions, do you have any business listing or selling the house in question?

If you said yes you are a con man and you need to get out of the business.

Instead of learning the math Realtors® learn a bunch of stupid lazy meaningless catch phrases than they can't explain - but they use them like loaded guns - they are loaded phrases that say and mean nothing, but if you challenge them - or asking for more detail makes you run the risk of a long boring explanation so is it worth the effort of asking. The net effect is that by using these phrases Realtors® can cover for their financial and economic ignorance, hide their mathematical literacy and intimidate the questioner from asking any more questions on the subject. This is the opposite of full disclosure - it is a shameful and abusive way to treat the public in order to save face.

Here are a few examples of meaningless banter that most Realtors® use to avoid directly answering questions that require basic math, financial and economic knowledge to answer:

When Realtors® say	They really mean
It is the law of supply and demand . . .	Durned if I know please sign the contract and stop asking stupid questions.
Your home is your biggest investment . . .	Don't ask me I stink at math, please sign the contract
Our market has seen amazing appreciation over the last year.	I have no clue about what the market is doing, but I sure made a lot of money - please sign the contract.
This home is a great investment if you want to live here or hold it as a rental.	I am clueless about investment criterion, if you can't find a renter to pay twice the going rate you can always live there in a neighborhood you don't want - please sign the contract.
This is a great time to buy . . . or There has never been a better time to buy . . .	I can always use a few extra bucks - please sign the contract.
Real estate is local . . .	Forget what everyone else is saying please sign the contract.
The News is biased and negative so you need to not pay any attention to what they are saying . . .	If you investigated these things for yourself, you would see how little I really know, please sign the contract.
I am the area expert . . .	Don't challenge my opinions - just sign the contract

The list goes on and so does the problem. Wouldn't it be better to learn your job and become a real professional rather than offering the old razzle-dazzle?

The fact is if you can't deal with numbers how can you do a CMA? How do you manage your business? How do you work with investors? How do you work with rental properties? How do you make sure that the HUD is correct before a closing? Oh that's right, you just say "Pay no attention to the media, real estate is local, I am a local expert so take my word for it.

Sadly, with the advent with the internet and information savvy customer, that old dog won't hunt anymore. If the customers know more than you, why do they need you in the first place?

Bottom Line: Perhaps instead of using mushy gut feelings and glossing over issues that matter to customers Realtors® should learn economics and maybe some math.

This is the first in a series on real estate and business math. If you want to learn more about numbers and economics, look for my next post.

MR. BAUER'S HAMMER

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Sat, 08 Sep 2007 15:58:52 -0500

Years ago before we were in real estate we lived in a rental. We were care takers for a commercial property in exchange for reduced rent. Our responsibilities were generally lawn, yard and minor exterior maintenance.

The interior maintenance was performed by the owner.

My oldest daughter was fascinated by Mr. Bauer - one of the owners who did some of the major repairs and upgrades. She would occupy herself for hours with a few pieces of wood my hammer and some nails. One day she said "Dad we need to get a good steady hammer like Mr. Bauer's - one that dosen't hit your fingers.

BANKERS BEHAVING BADLY DO YOU STILL REPRESENT YOUR SELLER?

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Tue, 04 Sep 2007 09:43:32 -0500

Dan: Hi this is Dan!

Bad Banker: Dan, this is ___________ _________ from ________ bank here in Ocala.

Dan: Great I am really glad you called. I was trying to find out what was happening with the loan for Mr. _________. As you know the property was supposed to close 60 days ago and the contract has been extended twice for 30 days each. We are supposed to close on Friday, It is Wednesday today and the selling agent just told me you had asked for another 30 day extension.

Bad Banker: That's right.

Dan: When I asked the other agent why he gave me the name of Ms. ___________ at your bank. I had called her this morning to ask about the delay and she just said your bank needed more time.

Bad Banker: That's Right.

Dan: I am sure you are aware that I told Ms. ___________ that the contracts here have a time is of the essence clause and that means that the __________ family would loose their deposit if the closing does not take place on Friday. The seller is antsy and won't extend unless the buyers double their escrow money. This is money the selling agent says they don't have. I reminded her that closings here in Ocala usually take place in 30 days or less and Friday would put us at about 105 days, another extension would bring us closer to five months in escrow, and so to ask the buyer anything I would need to have a real reason for the delay that the seller would accept. She told me she could not provide that information to me because of "confidentiality" reasons.

Bad Banker: That is right.

Dan: I explained that the copy of the contract she had signed by the buyer requires updates on loan status and requires the bank share this information when requested. I told her I would be glad to fax over a written request for this information with a copy of the contract authorizing your bank to comply. She said that made no difference, and that my sellers had two choices - 1) Give the buyers an additional 30 day extension or 2) The bank would stop work on the loan. I suggested a third choice, do what it takes to get the job done by Friday so the buyer does not loose his deposit.

Bad Banker: That is why I am calling, you don't have to worry about the mortgage.

Dan: Great you mean it is going to close Friday?

Bad Banker: No, I mean we have decided not to process the mortgage because you hurt MS. _________ feelings by suggesting she was not doing her job. I am sending a letter to the buyer and the seller explaining that your rudeness and lack of professionalism offended my employee and so the buyer must look elsewhere for a loan.

I have never been spoken to in that manner before, but maybe once or twice in my 30 years in business, and I knew that I had to do something. Some times you just have to suck it up.

Dan: I am sorry, I offended her, I would like to apologize, would you suggest I call her, come in and meet her in person or should I just send her a note?

Bad Banker: I can transfer you if you like.

Dan: Since we clearly have a misunderstanding, is it possible to do a three way with you so you can make sure I don't step out of line again.

Bad Banker: That would be fine, just hold one minute while I get her on the line . . . Hello Dan I have Ms. _________ on the line go ahead.

Dan: Hi Ms. ______________ this is Dan Homan from Coldwell Banker again, I just wanted to apologize for offending you this morning and suggesting that you had not done your job correctly. I understand that there are many hands that a mortgage application goes through, and if I even implied that you had personally not done everything in your power to process this application in the last 105 days I am deeply sorry.

Ms. _________: I accept your apology, but why were you so mean?

Dan: I am sorry; sometimes I get so involved in the zealous representation of my sellers that I forget that I am not talking to the right person. I just assumed that you represented the bank and I was voicing my disappointment with the bank, not with you. By the way did you get my fax?

Ms. __________: Yes but I did not look at it yet.

Dan: After we hung up I called the seller. As you know, since the financing contingency was not met, the first extension acknowledged that, and the second extension also included a post dated release of escrow that was signed by buyer and seller. This was done to insure that the escrow would be released to the seller on Friday if there was no closing. The fax was a copy of a letter I sent to the selling agent to forward to the buyer and to the seller stating that the seller was going to put the property back on the market on Friday at 5:00. They would hold off on claiming the escrow if they received a letter from your bank stating the reason for the delay in financing a date when the bank would without fail close - in the next 15 days. If the bank did not provide such a letter the escrow would be claimed on Monday morning.

Bad Banker: Dan this is ____________ again. I hope you don't mind my jumping in here, but that last part didn't sound like part of an apology.

Dan: It wasn't. I don't apologize for aggressively looking out for my sellers' interest in a transaction. Is there anything else I can do for you?

CLICK!

I received the letter from the bank by over night mail the next morning and the closing took place the following Wednesday.

Bottom line: Had I not looked out for my seller's interest throughout the escrow process - including contract extensions, I would have been a position of weakness when dealing with a nasty banker.

BANKERS BEHAVING BADLY

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Tue, 04 Sep 2007 09:39:49 -0500

Dan: Hi this is Dan!

Bad Banker: Dan, this is ___________ _________ from ________ bank here in Ocala.

Bad Banker: That's right.

Dan: When I asked the other agent why he gave me the name of Ms. ___________ at your bank. I had called her this morning to ask about the delay and she just said your bank needed more time.

Bad Banker: That's Right.

Bad Banker: That is right.

Bad Banker: That is why I am calling, you don't have to worry about the mortgage.

Dan: Great you mean it is going to close Friday?

I have never been spoken to in that manner before, but maybe once or twice in my 30 years in business, and I knew that I had to do something. Some times you just have to suck it up.

Dan: I am sorry, I offended her, I would like to apologize, would you suggest I call her, come in and meet her in person or should I just send her a note?

Bad Banker: I can transfer you if you like.

Dan: Since we clearly have a misunderstanding, is it possible to do a three way with you so you can make sure I don't step out of line again.

Bad Banker: That would be fine, just hold one minute while I get her on the line . . . Hello Dan I have Ms. _________ on the line go ahead.

Ms. _________: I accept your apology, but why were you so mean?

Ms. __________: Yes but I did not look at it yet.

Bad Banker: Dan this is ____________ again. I hope you don't mind my jumping in here, but that last part didn't sound like part of an apology.

Dan: It wasn't. I don't apologize for aggressively looking out for my sellers' interest in a transaction. Is there anything else I can do for you?

CLICK!

I received the letter from the bank by over night mail the next morning and the closing took place the following Wednesday.

Ocala Marion County market report for August 2007

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Sat, 01 Sep 2007 21:27:10 -0500

Property values are declining, in fact, they will be in a free fall over the next few months - after we look at the numbers we will take a look at the storm on the horizon. There are more options for the serious buyer than ever before. Two years ago sellers faced competition from only a few other homes on the market in their subdivision. Now, savvy buyers are re evaluating their options as builders have made major changes in their pricing, that have put major pressure on the resale market. For an urgent update, please see my post NEWS-FLASH-OCALA-REAL ESTATE MARKET LOOSES 30% IN ONE DAY . . .

Less closings. Last year, there were 5487 closings in Marion County - or about 15 per day for the whole year. This year, through August 31 there were 2711 houses sold, or only 11 per day. Last year same period, January 1- August 31, there were 3900 or almost 16 per day - about a 30% decrease in homes sold.

More homes on the market. As of August 31, the MLS shows 7624 homes available - almost a 683 day supply of available homes that is almost 23 months required to sell all the available homes if no new homes are listed for sale. That is almost 2 Years, repeat 2 Years of available homes on the market.

More home listings expiring. From January 1, 2007 through August 31, 2007, 8917 listings home expired. That is 3.3 listings expiring for every home that sells. Less than One in three homes listed will actually sell.

Currently there are 7624 properties on the market and 448 properties pending (under contract).

Bottom Line? The rest of 2007 into 2008 is going to be rough no brutal. Sellers need now more than ever to have a professional Realtor® representing them that understands our changing market and who can show you the correct price for your home. Right now price is the key issue in achieving a successful sale. If your property is priced right it will sell.

Please feel free to contact me with your questions.

NEWS FLASH OCALA REAL ESTATE MARKET LOOSES 30% IN ONE DAY . . .

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Sat, 01 Sep 2007 21:11:32 -0500

. . . AND MOST AGENTS DON'T KNOW IT! Worse yet they probably won't figure it out until their listings begin to expire with no showings.

My wife went into the office today and was greeted by some dramatic news: Pulte Homes has cut the price of their Fore Ranch community by over 30% in one day!

One of the agents in our office who does a lot of work in that community received an advance email from someone in the Pulte sales office of a possible 25% reduction, but today as the news was made official that it was closer to 30%. tHIS WAS IN BOTH THEIR FAMILY AND 55+ COMMUNITIES. This move places many existing home owners in that subdivision with conventional mortgages - even those who had put 20% down - upside down in their mortgages

This is going to devastate the entire Ocala resale market. Spec homes that were reasonably priced are in one day 30% over priced and now don't have a snowball's chance of selling. Other resale homes are now in the same boat over night they are drastically overpriced. It may not be evident over night, but the ripple effect is going to be staggering if you don't lower the selling price of the chances of selling your Ocala home will drop exponentially every day.

My wife and I have already called all our sellers and told them that if they need to sell they need to consider a series of step down price reductions over the next 6 weeks, before all the other agents in town catch on to what is happening and panic sets in.

Are we over reacting? I think not! Agents are still taking over priced listings watching them expire and scratching their heads wondering why. Desperate times call for desperate measures.

Sadly, this means that when the dust settles in a few months and the trend has taken over our whole county that the only sellers that won't be upside down in their mortgages are the ones who put down more than 30% and bought more than 5 years ago.

End of the world? I think not. I am just glad I don't hold the mortgages in this town.

BUSY AGENTS MAY NOT BE THE BEST AGENTS

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Mon, 06 Aug 2007 11:56:55 -0500

About three years ago we moved from New York to Ocala. My wife Sara stayed behind to finish the sale and closing on our home and I did the advance work in Florida, finding a broker to work for, getting my license and learning the market area. What I am going to let you in on is how I found my way around Ocala, and learned the various subdivisions and neighborhoods in town.

My wife Sara had remained back in NY to close our house there (we had a home in Ocala under contract) and I had to get started. After signing up for the pre-licensing class my job after finding a broker to work for was to learn the new territory. What did I do?

I called several real estate brokerages in town. I knew I was not a serious buyer, nor was I qualified (one home under contract for sale, another under contract for purchase). I worked strictly on a "don't ask don't tell" policy. I did mention that I was a Realtor® in NY, but no one even asked me if I was licensed, or seeking a license in Florida.

Amazingly enough, based on the information that I had a home in NY under contract, five agents loaded me in their cars and toured the town with me. I was treated to coffee, soda pop, ice cream and lunch. Even though I had a home under contract in Ocala, not one of the agents asked me if I was working with another agent! No one asked if I was qualified for a mortgage. Only one asked about the home I was selling.

Did I feel guilty? Kind of.

Would I do it again? To be honest, yeah.

Buyers: I know all the personal questions selling agents ask can be annoying, but, if you work with an agent who does not have the professionalism up front, please remember that the reason they are too busy to answer your call is that they are working with someone who is just wasting their time.

ONLY GOD CAN MAKE A TREE

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Wed, 18 Jul 2007 12:04:22 -0500

In our office there is one agent who is particularly negative. There is always something wrong. Her glass isn't half empty; it has been bone dry for years even ask her.

There is another fellow who is the eternal optimist. No matter how big the cloud he always sees the silver lining his glass isn't half full, he drinks from a pitcher.

This is a story of one of their choice accidental encounters. The other morning Ms. Negativity came in to the office and we asked her how she was doing.

"Terrible, the storm over the weekend had lightning, and it struck the ground between my house and my neighbor's and left a big hole in the ground. I don't know what to do"

With out skipping a beat our positive friend said "you can always plant a tree."

I guess you had to be there to really appreciate this, but I hope it brightened your day.

Always look for the opportunities that present themselves to you and be prepared to take advantage of them when they come.

ARE YOU ANY BETTER THAN THE PHONE COMPANY?

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Wed, 11 Jul 2007 13:20:07 -0500

Just before thanksgiving we had a home built. Just before moving in I had to make arrangements for utilities. The big decision was the television, Internet and telephone service. I priced individual and bundled service from the local cable monopoly that serviced our new neighborhood, then I called the phone company. They checked my record and told me that I could continue the same package I presently had for just $45 per month plus a $55 fee for installation.

The problem was I was paying them $85 for the same service at my present address about half a mile away from the address for my new service. Why? There was a change in rates about a year and a half earlier. I had been paying $40 per month more than my neighbors for a year and a half. Was I a valued customer? I didn't feel like one. Had we not bought a new home, I would never have known, but once I found out, I was hurt and angry. Is this how they rewarded my loyalty?

We got our phone and Internet through the cable company instead - first they were cheaper when we took a package deal, second the phone company had ripped me off.

Haven't you felt the same way at some time in your life? Perhaps you were the one paying twice what others were paying for hotel while on vacation, and only found out after the room was paid for and you were chatting with other guests around the pool. Did it make you mad or feel taken advantage of?

Perhaps you subscribed to your favorite magazine, only to find out you were paying more for the same product than your friends. Here you subscribed for 20 years and you are paying more than everyone else.

What about real estate? How do you treat your clients as far as your commission is concerned? Do you ask all your potential clients for $85 knowing that if they push you hard enough that you will take $45? Forget that you are cheating yourself your family and your future - what about your clients who paid full price? When the folks you charged $85 talked to the folks you charged $65 and $45 are there going to be hard feelings?

To avoid client discontent there are several things you should do:

Determine what you actually do to get a listing sold, and how much your services are worth to consumers.
Hold to your guns. If clients aren't willing to pay what you are worth it is either because you have an over inflated concept of your value or you didn't clearly explain the value of the service you provide in a way that positions you above and beyond your competition in their minds - usually it is the latter.
If you say you are going to do something, do it.

Bottom line: Customer service. Don't act like the phone company or you won't get referrals.

I KNOW WHERE WE CAN GET THE MONEY!

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Mon, 02 Jul 2007 11:29:32 -0500

My first listing and sale in the business was a short sale - I double ended it. Since then I have done quite a few - it is a lot of work for the money. You never know what is going to happen until the checks are given out at the closing table. I am sure you have had to shave your commission more than once just to get a deal to close to close. All the type of service most licensees wouldn't be willing to handle properly.

This home was scheduled to be auctioned off on the Tuesday after Thanksgiving - a real bummer for any family to be homeless for the holidays. I finally found a buyer and we had a firm closing date of the Friday after Thanksgiving.

I had done a lot of work, I put negotiated with the banks. I got the bank holding the second to take a haircut for about $25,000, and the banker for the second mortgage said "since we are taking a hit, please make sure there is $1,000 to 2,000 left so the sellers at least have something for Christmas." I found an attorney who would handle the closing for $600 as a favor to me - as long as I did all the work and negotiating.

This is one of the occasions where the buyer was an investor, and had little regard for Realtors®. He went by the home without my knowledge and got the sellers to switch to an attorney who he knew who would give them a "better deal. The better deal it turns out was a fee of $2400, which I did not find out about until the closing. As part of the fee, the attorney was going to do it all himself and not involve me, the Realtor®. As you can guess, not only was there no money for Christmas - something I had gone over with the sellers when I presented the offer, but the sellers were now about $250 short. At the closing table the sellers were hurt and angry. They said they would walk if they had to pay. With that the attorney for the buyer said "I know where we can get the money." The sad part is that the seller's new attorney had taken a bad situation and made it worse by stealing their Christmas and making me look like the thief.

To make a long story short that was the first and only time I unilaterally cut my commission at the closing table. I also did my part made sure that their family had a Christmas to remember. At the time I was too new to the business to even ask the attorney for the seller to step to the plate and do the right thing for his clients. At issue is keeping control of your transactions. If you do your job you should be paid what was agreed on. If you need to adjust, everyone involved should participate we are all professionals and deserve to be paid.

HOW DO I KNOW YOU ARE NOT GOING TO . . . ?

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Mon, 02 Jul 2007 10:03:09 -0500

Fill in the blank. You have heard it thousands of times from prospective sellers, and even from some buyers. At that most agents say "Um . . . er . . . uh . . ." and scramble for a quick response like "because my company is the biggest - best - largest - most active . . . most productive . . . "

This is one of the best questions sellers or buyers can ask. It tells you so much about them and their perspective on the real estate transaction.

Before I went into real estate my wife and I had a liquidation company in NY. We did on site liquidations of household items - in short Tag Sales and Estate sales. By the way, if you think it is a problem dealing with over priced listings, try a whole house full - 2-3 thousand items, I guess that is why I am willing to turn down the majority of sellers in real estate who want to list over priced. On a two day sale, the sick feeling in the pit of your stomach when nothing sold the first day, knowing you have only one more day to go is miserable. Compound this by three to six months and four to five angry sellers and you can see why so many people drop out of the business.

Let's get back on point. This question came up all the time in the tag sale business and it revealed a tremendous amount about the seller's personality, motivation, and concerns. "How do I know you are not going to under price everything just to get rid of it?" Or "how do I know you are going to give me an accurate accounting and not keep some of the money for yourself?" My observations were when someone had a question about me and the way I work, it was really an issue about them and how they work. I took notes and found that the only ones who asked me about cheating them cheated me, they stole my tables and fixtures, they sold things before the sale after I had priced them and did not compensate me, etc. The best way I found to deal with this was to ignore the question and make a note of what is important to the seller.

Back on to real estate. If a seller asks "how do I know you are going to . . . ?" The best way to deal with this is to ignore the question, identify their concern answer it and move on. Try this answer "You don't." Read it over and over again and memorize it. Then address the issue with a general statement like "I can tell you that I review my listings weekly to make sure that . . . , in this rapidly changing market what works today might not work a month from now." And move on back to closing the client.

Let's put this to work in a couple of examples:

How do I know you are not giving my house away at this price?

You don't. I can tell you that I review my listings weekly to make sure that they are priced as competitively as possible. In this rapidly changing market what works today might not work a month from now. I counted five ceiling fans; do they all stay with the home?

How do I know you are not going to just run one ad in the newspaper and stop advertising all together?

You don't. I can tell you that I review my listings weekly to make sure that they are receiving the best exposure for the market conditions at the time through print, internet and promotion to other agents. In this rapidly changing market what works today might not work a month from now. You said you were leaving the washer and dryer, correct?

Simple isn't it. This one technique will help you project confidence, avoid going on the defensive and allow you to move to the close. Try it the next time the question comes up.

SELL? TO WHO??????????

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Sun, 24 Jun 2007 13:10:28 -0500

The first fundamental of investing is value. Value or market value of an investment is the most basic concept of investing. Value is what a willing buyer will pay.

I remember back in 1974 I was a freshman in college and one of the courses I took was Investment 101. This course focused on the stock market, but Surprise, Surprise, Surprise, the same fundamental rules apply to all investing. Investors need to understand several things before they shell out the cash, regardless of the type of investment.

In my investment class the professor told a story of a newbie stock investor who saw a penny stock in the paper - the price 2 cents per share. This legend in his own mind bought 10,000 shares at a cost of $200.00. The next day he saw in the paper that the stock had gone up to 5 cents per share. He called his broker and said lets buy 100,000 shares for $5000. The order was placed, the next day the investor saw the price had gone up to $1 per share. He decided to go all in on this winner. He called his broker and said lets buy another 50,000 shares, he cashed in on his home equity line of credit to do it. The next day the stock was at $5 per share. He called his broker and shouted "Sell it all!" The broker asked "To who?"

The point being the newbie was the one who was single-handedly driving up the price and no one saw enough value to buy his investment at the price he paid.

This is just the jam some armature real estate investors are in now. They have mortgaged the farm pushed all in only to find these great investments are worth less than they paid. Many actually have their principal residences on the line because they borrowed against them for the down payment their fantasy of "financial freedom."

About a month ago money magazine reported that there were about 2.3 million vacant spec homes on the market nationwide, with only about 175,000 of them in builder inventory. This is a problem that won't go away over night, as the estimates of resale homes this year nationwide is somewhere around 6 million. In our MLS for Ocala Marion County about 20% of the listings are vacant on lock box spec homes. In this slow market builders are becoming more competitive as well, offering free upgrades and lowering prices as well in order to boost their sales.

In one subdivision a builder sold some 3000 square foot homes for $249k, investors bought them and while they were trying to sell them for $289k, the builder started selling them new with upgrades for $229k. Yikes!!!!!!!!!!

Sadly, many of these spec homes were purchased with more than 100% financing if you count the home equity taken from personal residences used for down payment and closing costs. Many of these fine folk are weeks or months away from financial devastation, because even if they could find renters the rents wouldn't cover the mortgage payments on the new home, let alone the equity loan they took from their first home to make the purchase.

I believe the technical term for this is a train wreck. But it could be avoided if armature the investors had just taken a step back and looked at common business sense. Would you pay for a ticket to a Yankee Game, buy a load of hot dogs inside for $5 each, carry them to the parking lot after the game when the dogs are getting cold and the buns are getting crusty and try to sell them for $10 each? Particularly when the 7-11 across the street is selling fresh hot dogs, with your choice of toppings at 2 for $2 with a big gulp thrown in for good measure?

Bottom Line: Before you invest know the fundamentals.

Ocala Marion County market report for May

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Sun, 24 Jun 2007 13:03:17 -0500

Property values are declining, the key thought now is buyer options. There are more options for the serious buyer than ever before. Two years ago sellers faced competition from only a few other homes on the market in their subdivision. Now, savvy buyers are expanding their searches north to Gainesville and south to Orlando to comparison shop making the market more price sensitive than ever.

Less closings. Last year, there were 5487 closings in Marion County - or about 15 per day for the whole year. This year, through May 31 there were 1804 or only 12 per day. Last year same period, January 1- May 31, there were 2942 or almost 20 per day - about a 28% decrease in homes sold.

More homes on the market. As of June 24, the MLS shows 7391 homes available - almost a 619 day supply of available homes that is over 20 months required to sell all the available homes if no new homes are listed for sale.

More home listings expiring. From January 1, 2007 through May 31, 2007 11292 listings home expired. That is 6.25 listings expiring for every home that sells. Less than One in seven homes listed will actually sell.

Currently there are 7,391 properties on the market and 516 properties pending (under contract).

Bottom Line? The rest of 2007 into 2008 is going to be rough. Sellers need now more than ever to have a professional Realtor® representing them that understands our changing market and who can show you the correct price for your home. Right now price is the key issue in achieving a successful sale. If your property is priced right it will sell.

NO MORE THREE CARD MONTE!!!!!!!

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Sun, 24 Jun 2007 12:59:01 -0500

Man do I feel cheated.

I really enjoy active rain, both the posts I agree with and those I don't. The diversity of opinion opens the door to rich interaction. I am upset however with some posts I have seen of late that start an idea, give you just enough food for thought to make you want more, and then redirect you to their web site. I realize that I am new to active rain, and as a new member I am just learning the ropes, and if I am out of line in these comments, please let me know. Again I do not know all the "rules" but I do know AR is free for me and I do want to somehow show my appreciation accordingly by not doing things that would be considered "rude" or out of line, and strive to do that.

I know that I did post to one group and the group manager or whatever they are called sent me an email that indicated that my post was off topic. I respect that, and I do intend to stay within the guidelines of that group in the future. It is just the right thing to do. If you go to someone else's party as a guest, you eat and drink the things they put out or go hungry, you don't go digging through their refrigerator for something you like better, or bring a cooler from home just for yourself - that is flat out ill mannered and rude.

That being said, I have several beefs with posts that redirect you to another site to finish the article. Please indulge me while I list them:

First, the title was a teaser, designed to grab my attention, and you got it, you should deliver. Is that so hard of a concept? The link I followed did not even lead me to the article; I had to look for it. I can't speak for anyone else, but I hate these emails I receive from real estate schlock peddlers that direct you to a web site, and give you 27 pages of fluff and nonsense, pass over at least 10 chances to order this schlock and never explain fully what it is and how it works. While this much worse than the link I followed, I still ended up feeling the same way.

Second, I do understand the importance of SEO (Search Engine Optimization) through links and so on, but I do think that using AR in this way cheapens the community for all of us. If the first few posts I had read were like this one, I would not have joined. Fortunately, the first few posts I read were informative, entertaining and rich in content, they kept me coming back rather than driving me away.

Lastly, if you did want to direct people to your website, AR already has your contact information on the post. I know when I feel I have received value, I look to find out more about the person and what they have to say and will follow up myself. If you feel you have more value to offer, Link to it at the end of your post. If you are just using your readers as shills to get points and up your Google ranking, forget it.

My bottom line: let's take the worms off the fish hooks, and provide quality content. We have a great forum here and we need to speak out on issues we are passionate on with quality and professionalism, so that we earn the right for a second hearing by leaving our guests wanting more rather acting like scammers. I do not appreciate being used as a shill in a Three Card Monte scam just to improve someone's Google ranking.

ARE THERE ANY BROKERS OUT THERE?????????

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Thu, 21 Jun 2007 18:57:38 -0500

I am not a broker, just an agent, but I know what I see. It seems most brokers are not doing their jobs, and agents all over the country are starting to hurt because of it. As the market is slowing many agents are changing brokerages, unhappy over little things, but not able to put their finger on the problem. Perhaps you could get a clue from this.

Here is a simple test to evaluate broker performance.

Consider this scenario:

Agent A goes on a listing appointment and

A comprehensive CMA shows homes similar to the one being in consideration have sold for around $200,000 in the last three months.
The owner owns the home free and clear, or has a mortgage of less than $100,000 on the home.
Considering the declining market (similar homes sold for about $230,000 six months ago) the agent suggests a price of $195,000 and the home is listed for that amount.
60 days later the house sells for $185,000. Everyone gets paid and is happy and life goes on.

Second scenario:

Similar home, similar value.
Owner also owns home free and clear, or less than $100,000.
Agent B does a CMA and notes that the yes the recent solds came in at around $200,000, but there are 20 homes on the market and the average selling price six months ago was $230,000 and the average price of homes listed now is $240,000. Since $240,000, is the average of the competition, Agent B suggests a list price "just a little below the competition" of $235,000.
After 3 months of no showings or offers the listing expires.

Third scenario:

Similar home similar value.
Owners owe a total of $210,000 on the home, and want to clear $20,000 cash from the sale.
Agent C did not do a CMA, but, it is a nice clean house, and besides the math is easy, $210,000 for mortgage, $20,000 for the seller, $20,000 for commission and seller closing costs, and "lets add another $15,000 for negotiating room" the property is listed for $265,000.
Needless to say the listing expires with no offers, no showings and sellers who feel the agent did not do enough to get the home sold.

OK here is the test.

Who is responsible for the listings of agent B and agent C not selling.

The agents - they did not advertise enough and do enough open houses
The market - the agents have no control over the market.
The competition.
The Broker.

Let me give you a clue - who "owns" the listings under state law?

Get it now? The problem is the broker. The broker is the one who owns the listings. The problem is that the only time brokers take ownership over their listings is when an agent changes offices. "Listen Agent C, I know you are not happy here, but don't think you are going to take your listings with you, remember, under state law I own the listings."

In our market here in Ocala, Marion County, FL this morning there were 7376 active house listings. At current absorption rates, that is over 22 months of inventory if no new listings are taken. For every closed sale there are over three listings that expire. Basic laws supply and demand says this is because prices are too high . . . way too high.

The fact is that most brokers do not care about the financial devastation their agents are experiencing due to wasted advertising dollars. Since in this day and age most agents pay their own advertising, the brokers have little concern. Cost containment is not an issue, because if someone else is paying the bill you have little incentive to manage costs.

Food for thought for brokers:

Do I know the market in my area, statistics, prices, and values?
Do I allow agents to take listings like the second scenario, knowing the home won't sell?
Do I care more about filling my full page ad in the real estate section and having it paid for by agents than I do about what those costs will do to the agents ability to continue in the business with such high overhead?
Do I review each listing that comes in for price and marketability before accepting the listing?
Do I refuse to give back listings like the third scenario and make the agent pay to advertise it to appease the seller?
Do I allow agents to take listings without a CMA in the file?
Do I review listings I think are over priced such as scenario two with the listing agent, to make sure they understand what the market and the CMA they prepared is actually saying?
In short- as a broker, do I take ownership of all my listings or do just "own" them?

WHEN A REALTOR® CROSSES STATE LINES TO BEHAVE BADLY

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Mon, 18 Jun 2007 10:05:00 -0500

One of the big selling points about being a Realtor® is that we have a "Code of Ethics" to guide our behavior in all our real estate dealings. True - except when a Realtor® crosses state or even county lines.

My market Ocala, Florida is a destination spot. It was also featured in the national media as one of the areas leading the nation in appreciation. Investors and speculators flooded in. Wow, the same people who knew not to buy a stock or bond from a puff piece in these publications were suckered in by the buss load, and bought high in hopes of selling higher.

I digress. One buyer submitted two identical contracts on a lovely pool home that was owner occupied. I was the listing agent, and the two contracts were from two other Realtors® in the area, one of which called me five minutes after faxing it to me, saying the buyer had changed his mind. The other contract was presented; we had an offer, counter offers, and more counter offers. One sticking point was the timing of certain deadlines. The original contract was a FAR BAR residential contract where time over a week is measured in calendar days. The seller wanted 15-20 for mortgage approval, the buyer wanted 30 or more. We had countered with a standard kick-out addendum which is another FAR BAR standard fill in the blanks form. On giving this to the buyer agent(in person) I was called every name in the book including "unethical" and "practicing law without a license" for "making up forms and putting the FAR logo on top of them." The other broker finally got involved and told me my sellers were being "unreasonable" which while being closer to the truth, was more accurate. The buyer's agent finally submitted a new contract on the FAR form with a 20 day mortgage approval. Of course the 20 day period on the far contract is business days, and in November, which has numerous national holidays, worked out to be one day more than 30 days on the FAR BAR contract. It took over a month and a half to get a signed contract both parties could live with.

I say that only as an example of the nonsense my poor sellers had to deal with over the entire escrow period. Every issue from home inspection, to closing was packed with the same drama. Since the buyer was from out of state, had bought the property sight unseen, and had originally submitted two contracts with two different Realtors® there was a procuring cause dispute. This was the worst escrow I have ever been part of.

The buyer delayed the closing, using a few scummy techniques, including showing up late (because he just got into town), refusing to close without doing a walk through, trying to re negotiate the price, and refusing to close if the title company didn't accept an out of state personal check for $23,000, among other things. In short he took these sellers and chomped down and did the alligator roll.

Here is the kicker. When I was talking to him and his agent I tried to remind them of their responsibilities under the contract, and the buyer let me know he was a "broker." I let him know that it should have been disclosed in the contract, he told me his license was in NY and since Florida didn't reciprocate, Florida viewed him as any other buyer. I asked "Are you a Realtor®? That should have been disclosed in the contract." He said that it didn't apply out of state brokers.

After the closing I tried to file a complaint against him and the other agents with our local board. The local board would only hear complaints against other local members and not out of state Realtors®. I had to pay $500 each if I wanted to complain about the local Realtors® and as a non member of the board in NY, I didn't have to pay a fee, but I had to show up in person at the hearing at a cost of about $1,000 for airfare, car rental and hotel. What is the big deal? Here is a copy of the contract, there was no disclosure that the buyer was a Realtor®, violation of the Code of Ethics standards of practice, case closed. Why should this kind of misbehavior cost me to complain, when it is an open and shut case? Also,by challenging these guys at their respective boards, all that would happen is selling agents would say "I only reported what the buyer let me know," and the buyer would say "I am not a Florida license, so I trusted the other Realtors® to fill out the contract correctly with all the information I gave them." They would probably walk away with warnings "be more careful next time" like there should be a next time, and I would be out $2000.

The so called Code of Ethics is nice on paper, but until it is enforced nationally it is nothing more that window dressing and a good excuse for Realtors® who behave badly to invest out of their local area, because they have impunity.

I have since received contracts from this same buyer on four of my other listings, none of which indicate that this renegade buyer is a Realtor®. If NAR and the local boards are not going to stop this behavior, who will?

My sellers were abused by unethical Realtors®. Instead of a semi secret executive meetings to raise dues without bringing it to a vote from the general membership, or blasting 60 Minutes, Redfin and Zillow, perhaps NAR should focus on insuring members comply with its core ethical values - even across state lines.

IS YOUR LISTING A FSBO?

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Mon, 18 Jun 2007 00:17:37 -0500

Let's define FSBO. For sale by owner, or should we say for sale without the assistance of a listing agent is what happens when the seller controls the whole transaction.

A FSBO seller determines his own selling price. Did you prepare a CMA, and tell your seller what price you will list for or did you list for whatever your seller wanted even though the home is more than 25% over the highest comp?

A FSBO determines what if anything he will pay an agent who finds a buyer. Did your seller negotiate your personal normal fee down to where they wanted it or did you set and hold firm on your fee?

A FSBO plans his own marketing plan. Did you set a marketing plan for your listing and tell the seller "this is what I do" or did your seller tell you when and where to advertise, when to hold open houses, etc..

Are you making the decisions on managing your listings, or are they really FSBO?

If it looks like a FSBO, acts like a FSBO and smells like a FSBO it is a FSBO.

Or am I the only one that thinks that way?

SELLER SAYS: BRING ALL OFFERS!

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Fri, 15 Jun 2007 12:07:33 -0500

I was just going through the MLS looking for homes to show this weekend, and I couldn't help but notice all the headlines on the bulletin board. They really speak a world for how agents think, and the way understand the business and their ethical responsibility. Here are a few of my favorites and my unsolicited comments.

SELLER VERY EAGER TO SELL!

Really? Show us by the price. And Mr. Agent if you could get your camera out and add a few to the listing beside the one the MLS took for you in the middle of the night in a wind storm . . . oh yes and perhaps if you thought a little about the comments you could think of something better than "some rooms freshly painted."

**MUST SELL**

Even in with the slow down, the Ocala, Florida Real Estate is still selling. We are closing about 9-10 homes per day, if your seller "must sell" the two of you should get together and do what it takes to sell. You can always get the listing to sell; the question is how much are you willing to do to get it? Here is a hint: basic supply and demand economics tell the closer you move the price to $1.00 the more likely it is to sell quickly.

PRICE DROPPED $4,900.00

Now you're talking, do that another four times and it might even appraise at closing. It might also help if the refrigerator was included.

And now my favorite:

SELLER SAYS: BRING ALL OFFERS!

Gosh, that makes all the difference, I have been holding back offers for years because I enjoy playing taxi and being independently wealthy I don't need the money. Of course since I am sitting on all these offers and don't give a hoot about what the Florida Real Estate Commission says, or for that matter the Code of Ethics, but since I have so much respect for your seller, oh yes - according to your entry in the MLS - Mr. (or is it Ms.) Withheld, I am going to change my evil ways. Perhaps, there were hundreds of contracts sent to you on this property but you presented them to the wrong "Mr. and Mrs. Withheld. You need to go back to your sellers and tell them what it takes to sell their home, and what you are going to do about it instead of blaming the other agents.

The good news Is there is a talk of a MLS for buyers and I already have my headlines for bulletin board posts ready, try these on for size, you might want to use them when the buyer's MLS comes to your area:

Motivated buyer wants home 20% below market.

Buyer says bring all listings.

And my silver bullet:

Seller needs $0 down, seller paid closing cost and $20,000 cash back at close.

Gimmie Five – yeah baby!

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Tue, 12 Jun 2007 12:16:03 -0500

How many times have you seen it?

You are in the office eating the title company doughnuts and home inspector candies, and Harry Hot Shot, GRI, CRS, BOZO and let's not forget: all around nice guy, walks in. Oh by the way did I mention he was a Realtor®? No biggie, what is in a name anyway? Anyway Harry comes in high fives everyone in the office and announces his newest listing - just taken this morning! It is of course priced 25% over market, but who cares? Kudos all the way around!

Forget the fact that the home will never sell in a declining market. Forget the fact that the whole office will waste their time and gas visiting a home they will never show on office caravan. Forget the money that will be wasted on advertising this over priced turkey. And forget that if there is a stooge out there who wants to buy it, it will never appraise.

Let's focus instead on the fact that we will have a new listing in the office. The newbie agents will gain valuable experience every time they run an open house that no one comes to.

Wow! High five! Great Job!

In an industry that leads the world in turnover, Harry is a veteran - 5 years in the business. He should have prepared a CMA but that is too "old school" for Harry. Why waste the time on a CMA if you are just going to list the home for what the seller wants anyway?

Later you ask Harry why he took the listing. His answer - they have to sell, they will reduce the price later. Read between the lines - Harry knows the market value of the home, but hedges on it with the buyers, knowing that the home doesn't have a snowballs chance of selling at that price, and not telling them how hard he has to slam them for price breaks later just to take the listing. The real market value of the home will stay Harry's little secret until the time is right for him to pounce on the unsuspecting sellers.

Everyone knows that misleading sellers about the value of their home is a violation of the Code of Ethics, but Harry is a legend in the office, besides everyone does the same thing, and if anyone can get that home sold Harry can.

Oh well, time for a few more high fives and I have to get back to the coffee pot and finish our discussion about how Zillow is ruining our business with its Zestamates.

Have supra key, will travel.

Dan Homan (Dan Homan Business Consultant and Advertising Specialist) — Mon, 11 Jun 2007 12:53:20 -0500

Howdy! This is my first post on Active Rain and I look forward to many more! Actually, I found Active Rain quite by accident, and have been lurking, and posting an occasional comment or two here and there, but I have taken the plunge and decided to join.

I figured this is as good of a time as any to introduce myself, and rather than get into any heavy discussion, give you the chance to get to know me. No need to introduce my company or my background - my profile gives you that - but rather this is about what makes me tick.

I am a rules person. Ethics is not a code of rules, but a way of life for me. Once you have a group of people such as Realtors® make a list of dos and don'ts some of them are going to be self serving, and by definition unethical - ‘nuff said here, I am sure I will have some interesting posts on that topic in the future.

I love real estate and enjoy the business; it is the buyers, sellers, other Realtors®, mortgage folks, home inspectors, appraisers, etc. I can't stand. Only joking! The challenges of dealing with other people on a variety of levels in any given transaction are the real excitement of this business. I don't live for the thrill of the kill, the slam dunk, or the shut out, I just want to help people. Life is too short to play for a score card. Besides, I have $5.00 invested in my license renewal here in Florida, and so I have to be nice to people or I'm out of the business and I've lost my investment.

If you haven't guessed by now, I have a strange sense of humor - to some - but it is all a matter of perspective. While most people see the glass as half full or half empty, I am one of the few enlightened folks that sees the banana peal on the floor in front of the person carrying the glass. I guess that is called seeing the big picture.

All seriousness aside, in the future if you visit my blog looking for pictures of my listings and stories of how great my company and I am, you will be disappointed. Instead, you will be met with a series of provocative, inspiring and humorous posts all in some way dealing with the one subject that I am passionate about - ETHICAL REAL ESTATE PRACTICE (no that is not an oxymoron).

Until next time, sell one more house for me and take the family out to dinner!