To begin, I want to apologize to my regular readership for the long delay in between blog posts.  Thankfully my regular readership only consists of my wife and other close family member that I force to read my blog.  Thankfully one of the reasons for my lack of posts is the continued growth of our business, which is never a bad thing in real estate.

Apology done, I now want to turn to a bit of a pet peeve of mine in the residential real estate industry.  Before I moved into real estate several years ago, I spent about five years as a litigator for a mid-sized law firm specializing in commercial and corporate defense.  I have joked in the past that my job did not change much.  Instead of crafting motions and arguments which frame my clients' actions in the best possible light, I now craft flyers, listing sheets and similar marketing materials which frame my clients' house in the best possible light.

Though I also do quite a bit of commercial work in addition to my residential transactions, which may influence my thoughts in this area, I am constantly annoyed at the "fluff" that many agents put in the listings and marketing materials for their listings.  In my mind, when creating marketing materials and advertising a listing, my main job is to share the best aspects of my clients' home while at the same time providing necessary information to potential buyers.  Yet many agents waste valuable advertising and marketing space with phrases such as "The best house in the city" or "I'm beautiful inside" or similar phrases.  Rather than market the home effectively, I fear that the use of such terminology may actually hinder the efforts to sell the home.

I have heard that several studies have indicated that buyers react more favorably to neutral factual information when viewing homes online or from a listing sheet or flyer.  If a potential buyer feels that the listing agent is taking liberties with generic phrases of "fluff" they will actually be more inclined to move on to the next potential home.  In my experience, the best agents market and advertise their listings with:

1. Stellar photos of a properly staged home - a picture really does mean a thousand words and you can use pictures to subtly market the great features of a listing while also subtly downplaying potential concerns
2. Great factual information in flyers and the list sheet with what I consider neutral to slightly positive framing of the wording - in other words provide factual information in such a way that the reader (buyer) will consider such information to be both useful and a selling point in a home
3. No phrases or words which are "impossible to prove" - words or phrases such as best, great, your next home, look no further, etc cause potential buyers to actual feel slightly offended because in a way they are being talked down to and told that their likes or dislikes are not important

When I think about it further, this approach is not really that different from the approach that top trial lawyers take when "marketing" their clients' case to a jury.  Attorneys always try to subtly pull a jury to their side without making the jury feel as if they are being manipulated.  In fact one of the greatest mistakes many attorneys make at trial is losing a jury because they felt the lawyer "thought they were dumb" or "talked down to the jury."  Similarly real estate agents should consider this approach with the wording they use in advertising listings.  Assume that a potential buyer is a smart person with their own unique views of what they want in a home.  Then simply provided them with the information they need to see if this home might meet their interest.  Not only will your marketing materials work better, you will also notice that when you do get calls about that home they are more likely to be seriously interested in the home.  Also keep in mind that "fluffy" things, like cotton candy, usually are just filled with a bunch of air.

I had to finally sit down and address one of my pet peeves in the real estate industry, but a little background first.  I spent 5+ years in a mid-sized law firm litigating cases and negotiating various settlements in lawsuits.  I quickly learned that negotiation is an art form and not a science, but also that many different styles of negotiation can be effective.  That said, I am constantly amazed when I read the listings of some real estate agents.  They are stealing their client's money, and they don't even seem to realize it.

Some agents believe that their job is to sell their clients' home, but that is only half true.  Their job is to sell their clients' home, protect them from mistakes in the sale AND GET THEM THE MOST MONEY FOR THEIR HOME THAT THEY CAN.  So why do so many agents use phrases like the following in a listing that has been sitting too long:

"Bring All Offers", "Motivated Seller", "All Offers Considered", and my personal favorite "All Reasonable Offers Will Be Considered."

To me these lines all say the same thing, and they could have just written in the listing, "My seller is distressed, please ignore the list price and bring me a low offer!"  Think about it, why even use a list price if you are going to undercut your seller's bargaining position in such a manner.  As for the "All Reasonable Offers" statement, is that not the most redundant phrase ever invented.  Of course only reasonable offers will be considered, but by putting that in the listing you have just told me that your seller is getting distressed (or you are).

Case in point, I got a call from a couple asking me for help selling their home because their current agent was not working hard for them.  I talked to them briefly, explaining that I would review their listing and provide a few pieces of legal advice until their current listing expired or was cancelled.  The first thing I told them when I saw a copy of their agent's marketing and listing materials was that the only offer they would get would be a low-ball offer because of their agent's use of one of the above phrases, and I explained why this would occur.

Two days later they called back and told me that they got an offer, and it was remarkably close to what I told them I would offer if I had clients looking to buy the house.  And my offer was low, very low.  They were quite shocked to hear that such phrases were used by a lot of agents when marketing a home.

In my opinion, when you have a distressed seller or a home that is not moving there is only one proper way to communicate to potential buyers...BY REDUCING THE PRICE.  Pricing itself is a form of negotiation, but does not give away vital information that can be used once an offer is made.  If you have a seller that needs to move a poperty fast, then structure an arranged price reduction of a certain percentage every week or two.  Eventually you will find the price point where the property will sell quickly, and it will almost always be a higher figure than if you tell agents to submit a low offer using one of the phrases above.  At the very least you will have more control of the negotiation and will not have given away your most important negotiating points.  Thus instead of undercutting your own list price and in effect telling buyers to ignore it, you use the list price to communicate that a sale will be advantageous to a buyer because the price has been reduced compared to the typical market value of the home.

Here is an example of price communication in negotiations.  I currently have a listing for 18 acres of land priced at $990,000.  When I received an offer of $700,000 on the land I talked to the owner and determined that if we countered at $850,000 we would likely arrive at a figure of $800,000 for the contract price.  Sure enough, when we countered at $850,000 we received a second counter at the $800,000 figure.  My client asked how I knew that we would end up at $800,000.  I admitted that not all negotiations are that predictable, but explained how pricing and price negotiations are a form of communication and that experienced agents or attorneys learn to pick up a feel for where a negotiation will end up.

Hopefully many of the agents that use these types of phrases in a listing are simply inexperienced or poorly trained.  Just keep in mind that unless your client is a charity, giving away money will be severely frowned upon.  Further, some people just should not give a buyer the shirt off the seller's back.  It just isn't pretty.

The number of real estate investors that decide to purchase their first investment property without a plan of action in place is staggering.  It seems that every week or so you hear a story about an investment property that has been foreclosed upon or placed under short-sale status.  Real estate investing, however, is no different than any other type of investing.  It requires forethought, proper planning, and discipline to achieve the desired goals.  This article provides a simple yet proven effective plan for a beginning real estate investor wishing to invest for the long term to grow their initial investment into a sizable investment portfolio.

The real estate market can be compared in many ways to the stock market.  Like in the stock market, your initial goal should be to buy low without exposing yourself to too much risk.  Unlike the stock market, real estate is more stable as the value of the land underlying the property does not fluctuate as much or as quickly as stocks or similar investments available through Wall Street.  As a beginning investor, it should be a goal to find one initial property that can be purchased for at least 20% below typical market value.  This is often where people make their first mistake.  Instead of researching the market to find a good deal they either buy the first property that they like, or they fail to buy any property because they set unreasonable goals such as a property with a 40% discount.

The first step in any real estate investment plan has absolutely nothing to do with real estate, but rather solid financial planning and risk avoidance.  To be sure that a property will cash-flow immediately and to avoid risk in your first investment purchase, I always suggest a minimum of 15% cash, with a preference of 20% to 25% cash down to purchase the first property.  Though many investment vehicles can be used to purchase property at 5% or 10% down, this drastically increases the risk of being unable to achieve income on the property because rents are fairly stable and do not account for highly leveraged properties.  Also, don't get sucked in by the latest 0% down investment craze.  Many of these so-called investor gurus are just selling you a fantasy.  Very few people have the credit to get a true 0% down investment property, and even fewer can find one that will cash flow with this much leverage.  This is a huge mistake that many first time investors make.  They purchase a property with high leverage (which can be a good thing as your portfolio grows), but are unable to get high enough rents to cover the mortgage and expenses of owning the property.  Thus I believe a safe bet is to set a goal of paying 20% down on your first property and then adjusting the price range of homes or multi-family units you investigate based upon your available cash, and also leaving an additional $2,000 to $5,000 or so set aside for cleaning and improvements necessary to get the property ready for lease.  If you wish to invest in real estate, but do not yet have the ability to put 20% down then you should simply look for a partner and have each put down 10%.  You will have to share the profits, but will not have to save as much money at the outset.  Once you have determined the amount of cash you can invest in your first property, the next step is to find an appropriate investment property.

The easiest way to quickly find a property at a discount is to find a competent Realtor® in your investment area that can scour the market for distressed properties, foreclosures, short sales, etc. and knows which areas in the investment area tend to have a good outlook for future growth and property appreciation.  In the Dallas area market I tend to focus on foreclosures and short sales in the northern suburbs of Dallas where the homes are only a few years old (see blog http://activerain.com/blogsview/39816/-Almost-New-Homes).  New homes undergo an interesting phenomenon after purchase where they actually go down in value temporarily because of the competition of the home builder, until gradually appreciating over a 3 to 5 year period as the subdivision is finished out.  Thus if I can find an almost new home sold in foreclosure I can find a double discount for both the builder competition and the fact that it is a foreclosure and may need cleaning up and some updating.  Multi-family units can also have good potential (duplex, triplex, fourplex or even apartments), but they tend to be more expensive and attract the more savvy investors who already have a larger portfolio and available cash.  For this reason, I would suggest starting with a simple single family home with at least 3 beds and 2 baths.

Now that you have found one or two distressed properties that can be purchased at at least a 20% discount over what they would typically be worth, it is time to run the numbers.  Have your mortgage or financial advisor give you an estimate of costs associated with the note on the property.  The figure should include the monthly principal and interest payment, the monthly escrow for taxes (always use an escrow for taxes with investments), and the monthly escrow for insurance on the property (there should not be any mortgage insurance because you are putting 20% down).  Then add in typical expenses in the area for non-tenant paid utilities and other recurring expenses.  I always suggest that the owner plan on paying for the lawn maintenance and increasing the rent accordingly as tenants are notoriously poor at keeping the landscaping of a home in good shape.  Perhaps the most important number is the potential rental rate of the property.  Have your Realtor® run the lease rates and give you a range of price per square foot in the area (for example $0.58 to $0.67 per square foot).  Then assume that you will lease it at the lower end of the price range in order to get a conservative estimate (in the above example about $0.60 per square foot is a conservative figure).

Once you have all the numbers you need it is time to investigate the income potential on the property.  Let's assume that you have found a 2,000 square foot home worth $130,000 that can be purchased for $100,000.  The discount (30/130 = 23%) is more than 20% and the home is only two years old and in good repair.  You have $30,000 in cash that you have set aside to invest.  Costs to clean the home and repair minor items will be about $500.  You learn that the principal and interest and escrow payment will be right at $800 a month (an easy number for this example but may not be a real figure).  In addition to the mortgage you expect to pay $50 per month for lawn maintenance, and have set aside an additional $50 per month for other maintenance.  Thus total costs are budgeted at $900 per month.  The rents are assumed to be $1,200 per month at $0.60 per square foot.  Thus you have estimated income of about $300 per month, which is good.  Keep in mind that you also need to run the figures yearly because of the fact that tenants will move every year or two and you will miss out on at least one month's rent.  I typically suggest that clients assume two months rent every year will not be achieved because of a previous tenant moving out not renting for one month, added the costs to repair and clean for the next tenant.  Thus you have rents of 1,200 x 10 which is $12,000 per year less expenses of 900 x 12 = 10,800.  You then have a very conservative yearly estimate of $1,200 in income over expenses.  This is actually a good figure because you will likely not lose two months rent every year and overall you are receiving a return of at least $1,200 per year on a $20,500 investment (not too mention property appreciation fees which are discussed next).

The main reason that investing in real estate can be so effective is that you can receive regular income from a property while that same property gradually appreciates.  In the Dallas area we typically see a steady 3 to 4% appreciation rate over a four or five year period.  Because you have purchased a newer home in a growing area at a discount, however, you can potentially achieve an even higher rate of return.  This brings us to the next step of our investment plan, the sale (or exchange) of the initial property.  Assuming that your initial investment of $30,000 is all you ever intend to dedicate to real estate investing you can still grow it into a large portfolio over time.

You generally should assume that any investment property should be held at least four or five years before sale or exchange in order to achieve the desired property appreciation.  In my suggestion, let's assume that the builder finishes the subdivision after three years and that at that time the property could be sold for about $135,000.  You counsel with your Realtor® and decide to hold it for two more years to take advantage of the property appreciation experienced in this nice recently completed subdivision.  At the end of two more years the property is worth $160,000 (not outside the realm of possibility considering that it was really worth $130,000 five years before if not for the fact that it was distressed.  Thus you can sell the home for $60,000 more than you paid for it, and have equity of $75,000 because you have paid on the note for five years or more.  So we should sell it, take the $75,000 and invest in another property, right?  Wrong!!!.  Instead you want to transfer this property with $75,000 in untapped equity and turn it into a property or properties worth $320,000 in a qualified 1031 Exchange (see my blog on 1031 Exchanges at http://activerain.com/blogsview/31532/How-to-Turn-Apples).

Federal tax law allows an investor to take our property worth $160,000 and exchange it for one or more properties worth up to 200% of the market value (or $320,000) without having to pay any capital gains tax.  Thus we can use the $75,000 in equity to purchase two properties worth a total of $320,000 without having to pay any taxes.  Basically you put the original property on the market, sell it for $160,000 and give the proceeds of sale less related fees and expenses to a qualified 1031 Trustee.  You then have a set time period to identify and purchase your next investment properties without have to pay any capital gains tax.  In this next step, my suggestion is that you purchase two properties with the equity you have available.  After fees and expenses associated with sale lets assume you have $65,000 left to invest into our two homes.  Again we will put down 20% on each home (or $32,500 for each).  Thus our $32,500 per home can purchase two homes for $162,500 each or $325,000 total.  You now know the price ranges you are looking in and can follow the above steps to purchase two homes up to $320,000 without having to pay any taxes.

Over time you can see the brilliance of this type of investment strategy.  We have taken an initial investment of about $25,000 to $30,000 and turned it into two properties worth about $300,000 without paying capital gains tax in only five years (and with about $60,000 or more in equity).  Assume that four years later you decide to sell both properties after a period of high property appreciation.  At that point you can sell both for $450,000 because you purchased them at a good discount and you have a whopping $200,000 or more in equity accumulated in only 9 years.  You can then take this equity and use it to purchase a portfolio of properties worth 200% of $450,000 or $900,000 (and still put 15% to 20% down on each to allow for good cash flow).  Thus over a longer period of time you can take your initial $30,000 investment into a portfolio of investment properties that include single and multi-family units without ever having to pay capital gains tax.  In a little over ten years if you are conservative in your budgeting and smart about which properties to purchase and sell you can turn your $30,000 initial investment into properties worth over $1,000,000 and equity of $200,000 or more, and over a longer period of time you can set aside a sizeable retirement package of high cash yield properties.

I wanted to take a moment and let the rest of the Rainers know a success story brought about because of this wonderful network on ActiveRain.  I posted a blog a while back about the basic rules of a 1031 Exchange.  I tend to work with a lot of investors, and with my background in finance and law I have a little knowledge of the inner workings of the tax code and like-kind exchanges and simply decided to post a brief article that I and others could use as a quick reference in a 1031 Exchange.

Little did I know, however, the importance of this relatively minor article.  Several weeks later I received an e-mail from my ActiveRain profile from an investor.  The investor had simply done a search on 1031 Exchanges, found my article and profile, and wanted me to assist him on the identification and purchase end of a 1031 Exchange on his investment property.  Ultimately once he sells his current properties and then we use the equity to purchase up to 200% of the value in exchanged properties in the North Dallas corridor, it will end up with between $1M and $2M in purchases of investments in multi-family and single family residences, including distressed properties like foreclosures and short sales.

I am sure that my story is one of many successes brought about by the ingenuity and tireless efforts of the people that created this wonderful network.  Do not forget to do your part by participating and you will be well rewarded for the help and insights that you provide others.  Who knows, maybe the Rain will hit your area next and you will be the one needing the umbrella...

Last spring I put together a database of out-of-state owners of property in the Plano, Frisco and McKinney areas of North Dallas.  I got a good response from the letter with several new investor clients, and a future listing from a client that decided it was best to wait a couple of more years before selling based upon his tax situation and the potential for a later deferment through a qualified 1031 Like-Kind Exchange.  I had no idea, however, that a simple introductory letter would be so long-lived.

Last week I received a call from an out-of-state owner of a home in Plano asking if I could evaluate his property for sale or lease.  I asked him a few questions about the property and his plans, and then got around to asking him how he got my name and number.  He told me that he received a letter from me and so I pulled up my spreadsheet that I use to send out and monitor expired letters.  I couldn't find his name and asked him if I had the address correct.  He then astonished me by saying that he had received my letter last spring and decided that he liked my information and credentials and saved it until a later date.  Then when his current tenants abandoned the lease, he called me to assist him in evaluating and either selling or leasing the home.

I had no idea that a simple introductory letter would have a shelf life of several days, let alone nearly an entire year.  This particular house is worth nearly $375,000.  Keep this in mind whenever you introduce yourself in a letter, postcard or similar vehicle.  You never know how long it will last.

I got a call the other night from my daughter's teacher and her husband.  They are selling their house and having some problems with their current agent.  At the outset everything was going okay, though their agent delayed a bit in getting the listing on MLS initially.  Since that point, however, things have been sliding downhill.  Apparently they have not seen their agent since signing the listing.  Further, it is now two months later and they are still asking for a copy of the listing contract with no response.

Several times they have called their current agent to request information about their listing or to make a suggestion, but each time they would get her voice mail and then wait for days to get a response.  They tried e-mail, but would often have to wait days to just get a response to their message.  Finally, in frustration, they began searching for another Realtor® to assist them in the sale of their property.  In the end they called me after researching other agents and reviewing web sites, listings, etc.

The sad thing is that their current agent was a friend, and also helped them purchase a house.  But in two short months, she managed to destroy their professional relationship, and to some extent perhaps even their friendship.  Why?  Because she simply failed to pick up a phone.  Maybe the phone was too heavy.  Perhaps she had chronic laryngitis for 8 weeks.  She couldn't type a e-mail message because of carpal tunnel problems in both wrists.  I know, her head must have been stuck in a space helmet with no way to remove it for two months without life-threatening surgery!  There has to be some logical explanation, right?

In the end this might just be the most expensive phone call never made.  The sellers are not difficult clients.  They were willing to drop the price based upon the competition.  They have spent time fixing up various parts of the house, and are more than willing to help with flyers and other minor parts of the listing process.  Not only does this agent stand to lose a listing, she may have already lost their respect.

Time after time, disgruntled clients share the same problem when asked why they were dissatisfied with the service provided by their agent...FAILURE TO COMMUNICATE.  Think about this with all your clients.  A simple phone call or message every week or two to update them is worth much more than the charge to your cell phone.  It might mean your entire business.

One investing trend that has really picked up speed lately involves investing in "Almost New" homes rather than new homes.  Many out of state investors have learned that maintenance and property management can be very difficult when you are not near the property, even with a great property manager.  In addition, it is much more difficult to estimate costs and expenses on older homes because huge maintenance issues occasionally occur.

For this reason, many investors turned toward investing in new homes in the size and price range for young families.  Lately, however, savvy out of state investors in the Dallas/Fort Worth area have instead turned their sites on homes that are 1 - 3 years from construction for several reasons.

One reason almost new homes have become popular is because of the amount of foreclosures occurring under the recent trend towards 100% financing and the people who purchase more home than they can really afford.  Though every foreclosure will have maintenance costs associated with it, foreclosures of homes only a few years old have usually have relatively minor repair costs associated with them.

Another reason is the pricing phenomenon that occurs in subdivisions where new homes are being built.  When a developer sells lots to a builder and begins the basic road work in a subdivision, the land values in almost every case begin to rise.  The first home built is usually the cheapest because over time construction costs rise and builders also offer incentives to overcome the headaches of living in an area where construction is occurring.  Then as more homes are built and the parks, pools, or other highlights of the subdivision are built, builders start jumping up the price.  Unfortunately, however, few people will want to purchase a home in a subdivision that is pre-owned, when they can either build a house the way they want it or can pick out a spec home that meets their approval.

For this reason, a homeowner in a subdivision that is still being built in is in constant and unfair competition with a builder in that subdivision.  The moment a contract is signed, the home becomes worth less than they paid for it.  To further complicate matters, if the owner of an almost new home is forced to sell in the off season they will also have to compete against builder specials to sell off spec homes before year end for tax purposes.

This does have a good side for buyers of new homes, if they understand that they need to wait several years before they can sell their home.  Let's use a fictitious example to show how this can work.  Take the first buyer of a home in a new subdivision that takes seven years to build out.  They buy their home for $200,000 and after the finish moving in, their home goes down in value to $180,000 because other buyers will prefer the new homes at $200,000.  In year two, the builder is still offering discounts to encourage people to live with construction in the neighborhood and they raise the price to $210,000 on new homes, but the first buyer's home is still worth only about $180,000 because it is a year old now.  In year three, the first buyer now has a two year old home competing with brand new homes in a halfway completed subdivision and other pre-owned homes as well.  It is still only worth about $185,000 for this reason.  In year four, a catastrophic hurricane hits the entire south-east coast (sound familiar?) which forces construction costs to rise in year five, but which also drives people into the area from other states.  New homes are at $225,000 while the first buyer has a home worth about $190,000 because it is now three years old competing with new homes.  The next year the costs of the hurricane really hit home and the builder raises prices to $250,000.  This forced jump because of costs benefits all the home owners and the first buyer now has a home worth about $220,000 because of the competition with the new homes.  Time progresses and by the end of year seven, the subdivision is completely built out.  The last home sold (with same plan as first built), sells for $290,000 and the first buyer now has a home six or seven years older but worth $265,000.  As the years go by the gap will close between the last home built and the first home built, and over time the first homeowner will get substantial increases in property value because of the rising costs that the builder faces and the fact that a completed subdivision is nicer than a brand new one with empty lots.

Though these numbers are simply made up to demonstrate the process, you can see that if a seller is forced to sell a new home in the first few years, the competition with other pre-owned homes and the builder can cause them to sell their property at a loss in most markets.  For investors, however, this can be a golden opportunity.  An investor can swoop in and purchase these discounted properties and then cover their costs and even produce income through rents while waiting for the finish out of a subdivision.  During the holding process, it may not even matter if they have to take some losses for a few years while waiting for the property to appreciate, depending upon the amount of equity initially invested.  Then when a subdivision is complete and new home building is not as big a competitive factor, they can sell and take advantage of all the price increases incurred by the builder raising prices and the subdivision adding amenities and landscaping.

Please keep in mind that if you are new to real estate investing there are numerous other variables that need to be considered, and that this is only one of a number of successful strategies for investing.  In Dallas/Fort Worth and North Texas market this is a common recurring them because of the state of the market, but not all real estate markets will work in the same manner.  Should you be interested in investing in a different are please be sure and talk to a local Realtor® who will better understand that particular market.  And remember, when investing, the goal is to make money, not to necessarily have the nicest or 'newest' property on the block.

When I first got into real estate I really struggled with an advertising campaign that would focus on my strengths but also address perceived weaknesses.  As an attorney I assumed most people would assume my strengths in negotiation, legal knowledge, ability to handle complex closings, and the like.

I really wanted to accentuate these perceived strengths while countering the negative assumptions of an attorney and real estate agent: namely that I might not be creative, am also male and thus not knowledge of interior design, might not be able to be trusted (though I was surprised that many actually trust me more when they learn I am an attorney), etc.  For these reasons I would to highlight my softer side, and I found that exposing my heart and making my marketing materials very personal had great effect.

The best way I found to show my strengths and also my creativity and guy-next-door appeal was to use my three daughters in funny advertisements about my business, with short statements of strengths and weaknesses included.  Below is the first jumbo postcard that I sent out to my sphere of influence, and it was received with rave reviews.  So much so that my mother (aka Nana) added a similar picture and balloon script on the back of her business card, and we even use her image like a logo for our business.

Because it was received so well, I took additional photos and created humorous messages for each with a more serious statement about a real estate related topic and our expertise.  I then set it up so that it can be sent out with a new post card every 3 weeks, month or whenever desired.  Thus whenever farming a new area we just start with the first in the series.

The most important thing I learned was that these images stuck with people and allowed them a topic to talk to me, even if it was not about real estate.  Every time I go to church, several people will even ask when the next post card will be, even if they don't need an agent.  Thus I was able to brand myself and hopefully create the image of both a real estate expert and also a person that people could trust and enjoy looking at homes with.  Below are several other postcards.  My hope is that others may be able to take this idea and improve on it in their own personalized ad campaign, it seemed to really work well for us.  If you do please let me know as I would love to see what others come up with.

We used this one in the late spring

This one was perfect for Easter

 This works well in the fall

We used this in the summer 

This past fall in Dallas saw the market slow markedly and inventory rise as homes sat through entire listings without selling.  Though I do not believe the slow down is permanent, rather more like it was catching its breath before a big spring, I did notice that a lot of agents neglected a key element when pricing their listings.

Any agent can do a quick CMA on a property to determine a range of values in an area or subdivision with comparable homes.  Unfortunately, however, it appears that too many agents stop at the CMA and do not price according to the CMA and the competition currently on the market.

In a strong market, pricing according to the competition is less important as the best homes simply get snatched up quicker, but there are plenty of buyers for the ones that are a little over-priced or are not as nice in terms of location, maintenance and appeal.  But when the market is more soft and becomes a buyer's market, it is essential to price according to what you are competing against and I am at a loss to explain the amount of listings I have seen recently that seem to ignore this concept.

The best way I know to both properly price a new listing and to show your client(s) your expertise is to schedule a preview of comparable homes in their area and take your clients with you.  This forces them to more objectively view the sale of their home and gives them an understanding of the market in their area and what price their property is likely to command.  It also shows them the potential impact of an immaculately maintained property during a listing versus a property that is not clean or properly staged.  After this previewing session, you should then sit down with your client(s) and determine where their home fits in the competition.  If it is far and away the nicest one available then you can price a bit above the competition as long as it stays within the reasonable range of your CMA.  If it is somewhere in the middle of the competition, then you need to encourage them to price it below the competition to encourage a buyer to purchase rather than continue looking.  If, however, it is one of the worst properties on the market, you either need to counsel them to update the home before listing or explain that a list price substantially below the competition to attract a buyer who will be willing to invest the time and money to renovate the home to a level similar to other homes in the market.

Either way, if you are a managing broker, please make sure to explain the pricing process with your new agents as it appears that many are not fully understanding that numbers pulled from the local MLS do not always explain the full story of where a property should be priced.  If you are a veteran agent, try to always make time for viewing the competition (even if you can't do it with the client(s)) instead of taking the shortcut and hoping that the average price per square foot in the area will work for this particular listing.

There is a standard assumption about any salesperson, especially in real estate, that they are outgoing, extroverted and able to talk to anybody about anything at any given time.  I never really thought about that image much until I jumped into real estate full time, but when writing my last post to my blog about the secret to a successful career in real estate (http://activerain.com/blogsview/37619/The-Secret-to-Success), I started thinking about this characterization more.

I am a third generation Realtor® and much of my family does fit the common image of an extroverted and outgoing people-person.  Take for example, my mom (who also just happens to be an interior designer and Realtor®).  She can talk to anybody about anything and loves doing so.  She is one of those personality types that nobody dislikes and with numerous friends and acquaintances.

I on the other hand tend to be a bit more introverted.  Though I enjoy people, I tend to be a bit of a thinker and sometimes like privacy and quiet when facing a difficult problem.  The more I thought about my personality, the more I realized that I did not really fit the mold of a "typical real estate agent."

I now realize that it really does not matter the type of personality you have or how you interact with others as much as your genuine understanding of other people, and a simple desire to help others.  As I investigated this discovery more I realized the numerous personality types in my own office.  Sure there tend to be more extroverted, outgoing types...it can be difficult to get started without a lot of close interpersonal relationships.  I have also noticed other extremely successful agents with different personality traits.

When I look more closely at why I got into real estate I was surprised at the answer.  Though I keep my law license and still occasionally practice law on the side, I left the full-time practice of law because I was unable to do what I wanted to do most...help others.  I turned to real estate in part because of my family background (and perhaps some prodding from God), but found another avenue where I could use my knowledge, background and experience to help people.  Thus I discovered that the true discerning trait that most real estate agents have is not an extroverted, outgoing personality, but instead the ability to relate to others with genuine (definitely not false) understanding and compassion (with a bit of an entrepreneurial spirit thrown in).