Brokerisms

Short Sale Conundrum

Larry McGee (The Berkshire Group, Realtors) — Sat, 14 Feb 2009 19:21:24 -0600

Perhaps I am just slow, being a broker/owner and all, but the short sale niche seems to be poorly understood by most of the stakeholders involved. Especially the offer and acceptance part. So let's work through it together:

A homeowner calls the Realtor and says "I want to sell my house". Nothing difficult so far. The homeowner indicates (sometimes not) that the payments are behind, or maybe the homeowner is on the brink of missing the first payment. While that information is important to know, it is not the first most important question, that being "What is the current market sales value of the property?".
There should be a bit of "Due Diligence" performed by the Realtor. Public records of ownership and encumbrances, and tax and assessor records should be obtained and understood. (I am amazed by how many "professionals" do not perform due diligence, but I digress.)
A market analysis should be completed. I am not advocating the one or two step approach here, just saying that a thorough market analysis must be completed before the property is exposed to potential buyers at a saleable price.
Now it can get messy. As an example, let us say that the true market value of the property is $200,000. But, the encumbrances total $225,000. Assuming there are costs to sell the property of $15,000, then the potential loss is $40,000. If the owner has $40,000 in cash to contribute, then no problem. But that is seldom the case, because in most cases the homeowner bought with little or no equity investment, or extracted the equity to buy a boat or something. So, what to do? That's easy.
Get the Bank to cover the $40,000 loss. OK, maybe that will work, if there is adequate evidence that the Bank will lose less on a "normal" sale than would be lost through a foreclosure action. The homeowner can ask the Bank, but in most cases the Bank will not respond until there is hard evidence of intent on the part of a buyer.
The hard evidence is an executed contract. The contract to buy and sell (lots of different names nationwide) is between the BUYER and the SELLER, not the BANK. If there comes a buyer that is willing to pay the market value ($200,000) the Seller must essentially beg the Bank to take the loss of $25,000, and pay the fees associated with the sale ($15,000). The Bank must be convinced that losing $40,000 now is better than losing more than $40,000 later as the result of a foreclosure action.
Understand that there is no universally accepted methodology for the Bank to process this "short sale" situation. As a matter of fact, that are thousands of methods practiced, and the rules of method change EVERY day, influenced by personal bias, corporate financial status, and government intervention. In short, there are no rules. This is impossible for the average consumer buyer to understand, and it is difficult for the average Realtor as well.
There are many (thousands in a medium size market like Denver) of homes that are worth less than what is owed on them. This IS NOT an issue unless the seller must relocate, or has a job loss with a resulting loss of ability to pay, and MUST sell thier home.
The system is woefully inadequate to process the volume of requests. Imagine a 4 lane Los Angeles freeway reduced to one lane, with no alternative routes. That is the short sale process system today, such as it is, clogged, with no one going very fast.
Most Banks (or mortgage investors) do not have the resources to continue taking loses on foreclosures and "short sales". The government programs to support the Banking industry are being used to "cover" those losses, in essence the Federal Government is supporting the revaluation of the Nations real estate.
The Buyer must be patient. For months. A buyer should not attempt to purchase a "short sale" with the expectation of a quick close. As a matter of fact, everyone involved must be patient. And, if the Bank approves the "short sale" (loss), then all involved must be prepared to move fast to accomplish the closing and transfer of ownership, because the Bank wants its money NOW!
Sellers should not be presenting offers to the Bank that have no chance of acceptance based on the reasonable market value of the property. That just clogs the system, and disappoints everyone involved.

So, let's review: the Realtor and the Seller must understand the process; the Buyers and their Realtor must be patient; the offer price must be supportable, the Bank must be able to act (accept and pay the loss), and all parties must be able to go fast at the end. There is no universal system, the rules change every day, and the Bank is not cooperative. Remember, no matter how you slice it , the Bank is losing money, and faces extinction or government takeover if loses are too great. And the person that must approve the short sale will lose their job if the Bank loses too much money.

If you still do not understand, go to: http://www.kristalsellsdenver.com/denverdwellings/ and read Kris Kraft's take on the "Short Sale" phenomenon.

Larry D. McGee Broker The Berkshire Group, Realtors 3801 E. Florida Avenue Suite 400 Denver, Colorado, 80210 US	Work: 303-513-1436 Fax: 303-953-5390 larry@tbgdenver.com http://brokerisms.theberkshiregroup.com

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An Open Letter to Mr. Obama

Larry McGee (The Berkshire Group, Realtors) — Thu, 15 Jan 2009 20:14:39 -0600

Dear Mr. Obama,

By this time next week, I and everyone else will call you "Mr. President". You are assuming an office with truly awesome power, weighty responsibilities, a nation in crises, and considerable support from a hopeful nation. While we are a generally well informed people, with high levels of education and compassion for our fellow citizens, we are also in some ways unchanged from our forefathers. We mistrust politicians, for we have been taken advantage of. We are frustrated with our personal situation, feeling put upon by unseen hands. We wish to blame others, although in most cases our ills are self prescribed. We complain much, but most of us are willing to work hard to further that which we hold dear. We wish to be saved, but have difficulty understanding what safety looks like, or just how we are to be saved.

Unlike our forefathers, we have lost much of our resolve, succumbing to a combination of incomprehensible regulations and false help from government handouts. We are somewhat dazed by recent events, and like a punch-drunk prizefighter, we are wobbling aimlessly. We still have great strength, but have had the wind knocked from us.

Teddy Roosevelt once described the power of the Presidency as a "Bully Pulpit". You will soon use the power of your office, in concert with the power of our many elected representatives, to offer up many solutions and actions designed to save our national economy and address our nations other ills. But, of more importance than programs and handouts, I entreat you to please use your "Bully Pulpit" to inspire us, give us direction, tell us we are hurt but will quickly recover if we so choose.

Tell us it is good to believe in ourselves. Challenge us do great things, and tell us what those great things are. You must lead, not manage. You must spend your political capital on the nation, and not on yourself or your party, and encourage others to follow your example.

It is said by some that our nation is failing, and will never again be great. I disagree, and I believe most of America's citizens agree with me. If we do not choke to death in our bureaucracy, or unnecessarily battle the ghosts of our fears; we will use our mechanism of freedom to achieve many more great things, for many generations to come.

I wish you the very best as you assume the office,

Larry D. McGee Broker The Berkshire Group, Realtors 3801 E. Florida Avenue Suite 400 Denver, Colorado, 80210 US	Work: 303-513-1436 Fax: 303-953-5390 larry@tbgdenver.com http://brokerisms.theberkshiregroup.com

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A Billion Here, a Billion There

Larry McGee (The Berkshire Group, Realtors) — Thu, 15 Jan 2009 19:26:46 -0600

I am by nature pretty easy going. However, I am becoming increasingly angry at our governments ham handed approach to pretty much everything. I heard from a friend today that his Visa supplier, Bank of America, arbitrarily raised the interest rate on his credit card from 9 to 20% for no reason, no late payments, just did it, with no recourse. Later, I hear that B of A will receive another 15 -20 billion from the Feds for, well, I guess because they asked for it. Then I read where Fannie Mae will now be enforcing the S.A.F.E. provisions of whatever "save society from the nasty mortgage lenders" legislation, so every lender has to have a number.

I suspect I am preaching to choir here, but at some point 2 things should be obvious: 1) Uncle Sam is saving banks, not citizens: and 2) if we are to be "saved" it will be us that does the saving.

If 155 people can work together to save themselves from a sinking airplane, it seems to me that we can work together to save ourselves from stupid banks. (loaning money to pretty much anyone that asked was stupid, need I say more)

The Federal Govt's answer is more regulation for small people and loans (gifts?) to banks. There is no doubt that there was nasty stuff perpetrated by nasty lenders, etc. But the current state of panic coupled with immobilizing regulation simply makes recovery more difficult, if not impossible.

Everyone that reads this can probably vote, most of you just did, so you probably remember the names of your Senator and Congress Person. Call them. Tell them that they are making things worse, beg them to stop, and perhaps offer one suggestion: Don't pass any more legislation. Leave us alone, we will figure it out.

Larry D. McGee Broker The Berkshire Group, Realtors 3801 E. Florida Avenue Suite 400 Denver, Colorado, 80210 US	Work: 303-513-1436 Fax: 303-953-5390 larry@tbgdenver.com http://brokerisms.theberkshiregroup.com

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How Bad Was it, Really

Larry McGee (The Berkshire Group, Realtors) — Sat, 03 Jan 2009 20:31:53 -0600

Looking back at the Metropolitan Denver market over the past 2 years and performing a brief comparison, things were just not as bad as the media heads would have us believe. So here are a few quick numbers:

2007 - Total Sold Residential units -- 49,789

2008 - Total Sold Residential units -- 47,328

That is a reduction of 5% in total residential sales, which by the definitions of the Metro Denver MLS (Metrolist) includes both detached and attached dwellings. So is a 5% loss in total sales all that bad? Not really, but read on.

2007 – Average Sold Price -- $281,823

2008 - Average Sold Price -- $248,328

OK-so that latter number is a bit of an ouch, at least on the surface. An average per unit sold dollar loss of $33,500 or an approximately 12% loss of sold value. Sounds bad, right? Well, it is not good, but let’s glance below the surface a bit.

First, let’s remember what a market is. It is those things of any given commodity being offered for sale right now. And right now, in Denver, and for most of 2007, there were more low price things (residences) being offered for sale, and subsequently sold, than high priced residences. Many of those sales were bank owned or short sales. The result of those distress sales is a reduction in the average price. There are very few elective offerings and leasing has become very popular in the higher price ranges, with high end builders leasing their custom properties to pay the debt service while biding time until the financial markets begin to function. As a result, the total inventory available in the market continues to decline.

I am certain that some statistician in Washington will work out just how many distressed sales there were in Denver last year, or the effect on the Metropolitan Denver area’s total value of residential property, but consider that for many of those sales where a loss was sustained; it was a bank that sustained the loss. Yes, I know that every distressed property sale represents a small tragedy, and I know the banks are really covering their losses with our tax dollars, but the discussion here relates to the difference between current market value and sustainable future value. Properties in the lowest price ranges are selling rapidly in the Denver market, with competing offers in some cases, and prices are beginning to creep up in the >$200K market.

So, what is my point? Simple, if you do not have sell your home, and I mean really have to, then don’t. While there is no doubt that the local and national economy has much to do to recover the loss of monetary value, there will be many home buyers ready to buy when it does, and that will be the time to sell.

Larry D. McGee Broker The Berkshire Group, Realtors 3801 E. Florida Avenue Suite 400 Denver, Colorado, 80210 US	Work: 303-513-1436 Fax: 303-953-5390 larry@tbgdenver.com http://brokerisms.theberkshiregroup.com

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Becoming Truly Professional

Larry McGee (The Berkshire Group, Realtors) — Sun, 28 Dec 2008 13:47:40 -0600

The “license hanging wall” brokerage business is re-surging in today’s less than optimal economy. I am sure there are one or more such brokerages operating in your market. For a monthly fee of $25 or $50, those nice people that obtained their real estate license in the recent boom housing market get to keep their license active while they do whatever they have to do to survive the downturn, and maybe sell a house once in a while. The brokerage takes the monthly fee, and since there is almost zero overhead in maintaining the license, the money goes directly to the bottom line. The sharp operator can hang almost limitless numbers of licenses, and if one of the licensees actually sells something, there are additional processing fees to cover the cost of that specific overhead. It is, very simply, a money machine.

My concern here is not aimed at a brokerage’s license hanging business model, or the nice people that hang them on the wall, but it is aimed at an industry philosophy that caters to the mediocre and tolerates the incompetent. Now, before someone gets their nose out of joint, or puts their toes out there where I am liable to step on them, please understand where I am coming from. I have believed for the 30 years I have been practicing real estate brokerage that you deserved to be paid only if you gave value. It is no wonder that consumers are having difficulty paying the “professional” service fee, because consumers are questioning the value proposition offered by the brokerage industry. There is nothing professional about hanging a license on a wall waiting for easy times. (Please take a moment, leap to your Webster’s and determine the difference between “acting in a professional manner” and being a “professional”.)

It wasn’t too long ago that the National Association of Realtors was proudly crowing that NAR was the world’s largest trade association at 1.3 million members. I cannot for the life of me understand why an organization would boast about being really big unless there was a benefit to its members, but, never-the-less, there we were at 1.3 million; averaging all of 6 closings per year (that number not being mentioned in the press releases). Lately, that 1.3 million has dropped a bit, perhaps something about a difficult economy. A quick look at post WW II demographics would indicate that today's Realtor membership should be something like 850,000 if a consistent relationship between the United States population and Realtor membership were maintained. The economic rule here is – more of anything lessens the worth of the thing!

So I say-Now is our chance!

If there was ever a time to raise the bar of both licensing and NAR membership, it is now, before the economy recovers and hundreds of thousands of opportunists rush to grab a real estate license. The NAR should lobby for every state to increase the difficulty and cost of obtaining a license, while, at the same time, raise the standards of membership and make ethics complaints easier to file, and penalties for violation truly painful. This is an ideal time to improve the quality and competency of the NAR’s membership, while at the same time demonstrating to the consuming public that we are worth what we charge. I firmly believe that residential real estate brokerage will be around for some time to come; however, the practitioners are going to have to be demonstrably good at what they do.

Larry D. McGee Broker The Berkshire Group, Realtors 3801 E. Florida Avenue Suite 400 Denver, Colorado, 80210 US	Work: 303-513-1436 Fax: 303-953-5390 larry@tbgdenver.com http://brokerisms.theberkshiregroup.com

Visit Search for Denver Homes Here!

Assert Yourself in 2009

Larry McGee (The Berkshire Group, Realtors) — Mon, 22 Dec 2008 19:50:42 -0600

Over the past month I have had long private conversations with the associates in my brokerage, and many others outside my company. I continue meeting and speaking with Realtors in the Denver market, but following are what I believe are the consistent themes of those conversations:

1. All of you are questioning at some level the market and your relationship to that market, the real estate business and the long term health of your business.

2. Most of you are struggling at least a bit, and you feel alone.

3. The looming changes forecast for the structure of the industry is both shocking and a bit frightening, but most professionals understand the need and are managing the change.

4. Most everyone feels a bit isolated.

5. Everyone is getting push back from their consumer base when discussing real estate.

So here are my suggestions on meeting the market head on and thriving next year:

A. The local Denver market segment priced under $200K has become a seller’s market. (There is probably some segment of your local market functioning in some way.) As the nation recovers from a systemic shock to the entire economy, the most functional real estate market will be at the lower price range. That will be properties that are purchased by investors for rehab and flip, the flip to first time buyers, and private sellers with enough protected equity to price to compete for a sale to that first time buyer. If, which may very well happen, there is a federal program established to mandate a 4.5% mortgage interest rate, we will see a healthier market from $200K to $400K, but jumbo funds will not return at a convenience level until the overall credit markets recover.

B. You are not alone. If you feel that way, call 1, 2 or 3 of your compatriots and have a meet up. At The Berkshire Group, we are having weekly meetings on marketing, dialog, solutions and investor programs, with more such gatherings to come. These meetings are associate, not management inspired.

C. Much of the real estate industry is discussing or acting on "no office" operating models. The discussion is no longer about the purpose and need for office space, the discussion is turning to company culture, purpose and value delivery.

D. That feeling of isolation. Read and act on "B" above.

E. Sign up and read Inman News. There is at least one topic a day that is of interest to the consumer that owns a home or wants to buy one. Take that topic and share it with 5 people in your consumer base. That means you will have to call on the phone, knock on a door, text message, or in some way initiate a 2-way conversation with a possible buyer, seller, or referral source 5 times every day.

I am off now to call 5 people. There were some interesting things on today’s Inman News to chat about.

The Marketing of Barack Obama - Part 2

Larry McGee (The Berkshire Group, Realtors) — Sat, 29 Nov 2008 23:46:04 -0600

Read Part 1 first.

One of the most amazing things about Barack Obama’s political career is just how short that career is. First elected to the Illinois Senate in 1996, he managed not to engage in controversial issues, or at least not very many. He lost a run for United States Congress in 2000, but started campaigning for the United States Senate in July of 2002 and by early 2004 he was competing against 6 other Democrats in pursuit of the not yet vacant seat in the United States Senate. It is important to note that the incumbent Republican, and the most likely Democratic candidate both declined to run, leaving the way open for a contentious primary. Then, his strongest competitor caught a case of domestic abuse, and Mr. Obama found himself the winner of the Democratic primary.

The leading Republican was later forced to drop out, continuing the dirty domestic life theme; after which the state Republican Central Committee brought in a ringer from another state to do battle with the Democratic candidate. That was a Republican misstep, and Barack was elected to the United States Senate with 70% of the votes.

So what can we take from this admittedly thumb-nail sketch of Barack Obama’s Senate campaign? The first really important thing is that he did not quit. Defeated in 2000, he was organizing a run for the Senate just 2 years later. Seems simple enough, just don’t quit. He also found some really good help, hiring David Axelrod to organize his campaign for the Senate.

Most Realtors® have heard this before, but it bears repeating here, hire really good help. And it is important to note that Barack began organizing his campaign long before he knew for certain that the office would be open; so, start running your race before there are others running. Many a race is won by preempting the competition. Make sure you have allies, even in a sales business. Naively ignoring relationship building (networking) because it feels like an imposition or is playing politics does not a career make.

Barack Obama is a world class orator; most Realtors® avoid scripts and dialog. Those people that paid attention to Mr. Obama’s speeches early on realized that he was better with a script than off the cuff, but he improved toward the end because he became familiar with the many various scripts. Projecting authoritative dialog on demand is a key for success in any people oriented experience like politics or sales. Consider how many votes were likely cast because Barack Obama sounded good. It worked for him, it will work for you. Practice your dialogs.

And, the most important marketing lesson learned so far is – do not be concerned with competition. We are all competing, all of the time, so get on with it. Prepare well, attend to your image, know what to say, and ask often for what you want. It worked for the President-elect; it will probably work for you.

There is a certain consensus that Barack Obama started running for the Presidency as soon as he arrived in Washington. Delivering the keynote speech at the Democratic Convention certainly helped his positioning, and the most obvious Democratic candidate did not enjoy universal popularity. There was no clear front runner for the Republican nomination, and, although the sitting President was suffering a decline in prestige, the national economy was still upright. The lesson to be learned is that chance favors the prepared mind. Making sure you are ready before an opportunity is better than trying to prepare as opportunity is passing by. So, in sales, practice your presentations, be familiar with your market, stay ahead with your training, and don’t get caught with an empty tank. Luck, timing, and circumstance plays a role in all human endeavors, however, if one is not prepared for the favorable circumstance, then one loses the opportunity.

he nitty-gritty of an election is money. Fund raising is critically important to the success of a political campaign. Without accepting any Federal money, Barack Obama’s campaign collected over a quarter of a billion dollars to finance his campaign. How did that happen? The answer is Silicon Valley and the employment of sales networking systems. For the whole story, go to www.theatlantic.com/doc/200806/obama-finance, but for our purposes it is enough to know that incremental donations from an enormous group of donors made the big difference, using systems geared for widespread contact and relentless repetition. And, for reasons of ignorance or arrogance, Hillary Clinton simply did not embrace the techie fund raising method, or the tech entrepreneurs that drove the tech bus. Mr. Obama’s youthful advisers quickly connected with the moneyed tech folks in Northern California, and the money started rolling in.

You say you are not into fund raising? Duh! How about raising funds for you, a most noble cause indeed? Are you really tech capable? Most Realtors® still have the five page static website they paid someone to throw on the web in 2002. If you are reading this, your tech skills are most likely ahead of the pack, but are you really making money from your efforts? If not, consider why not, and determine what you must do to have people jumping on board your bandwagon, begging you to help them buy or sell real estate. With the campaigns early link of fund raising and marketing technology, it was a short step to social media. Most of the early tech donors were social media junkies, already communicating on Facebook or Linked-in. Mr. Obama’s experience as a community organizer helped him see quickly the obvious advantage of accessing the on-line community. The Obama campaign gathered many of the very developers of the new media revolution and put them to work providing everything from ring tones to site widgets. Text messaging, Twitter, www.My.BarackObama.com , listserv’s, and affinity groups, everything new media had to offer was put to work in the campaign.

So, how about you? Blog lately? Are you Linked-in? How many people follow you on Twitter? Just as the then new media of television helped John Kennedy win the White House in 1960, Barack Obama employed the new media of social networking to electrify his supporters and virally recruit new ones, while at the same time inviting a flood of money to support the effort. So there you have it. Simple really, especially in hindsight. To be successful in marketing you must prepare well, network with like minded people, have a plan, engage good help, and take advantage of the latest technology to broaden your opportunity.

Oh, yes, ther is one more thing. You must want to succeed. It is said that Mr. Obama is ambitious. As long as his moral compass is on an even keel, I have no problem with ambition. If you do not have a burning desire to succeed, it is very difficult to do so.

The will to succeed trumps all else.

The Marketing of Barack

Larry McGee (The Berkshire Group, Realtors) — Fri, 28 Nov 2008 21:44:49 -0600

First and foremost, this post is not about politics, and certainly not about the President-Elect’s political point of view, his policies, or the policies of the Democratic Party. The election is over, the results are in, and we shall all sally forth to face whatever will be the daily events that are destined to become part of our collective national history. There are, however, lessons to be learned from Mr. Obama’s campaign that may be instructive to Realtors®, or to any individual or company that would like to realize success from their marketing efforts.

Let us start with the name. Barack Obama. He stopped using his nick name Barry during his first few years of college. While he most probably was not considering the Presidency at that time, he definitely wanted to take advantage of a name that was unique in the culture of American colleges of the time. Like most all of us at that age, he wanted to be at least a little different, to establish his identity. So, look at your name, or the name of your company. Is it unique, or does it have a heritage? Or is it too common to be memorable. From my company’s name, The Berkshire Group, we get the word “The” signifying that it is the only Berkshire that matters. “Berkshire”, with a strong first syllable and soft second syllable, is both melodic and evokes a sense of England heritage, which is accurate, since County Berkshire is just west of London, England. And of course “Group” to say that there are a number of us, offering the strength and presence that come from numbers. You may not want to change your name, but you certainly may want to create a unique symbol that identifies you as somehow special and unique in a sea of Realtors®.

Barack worked at obtaining a first class education. With a B.A. in political science from Columbia, and a J.D. from Harvard, the soon to be 44th President punched the right educational tickets to provide a firm basis for a future of high achievement. So, how about you? While a J.D. from Harvard is not absolutely necessary to achieve top line results as a Realtor®, learning more about the vast industry we call real estate cannot hurt. And being President of the Harvard Law Review most likely provided a great boost in self confidence, useful when running for office.

As a Broker for many years, I have observed that a good basic education for real estate sales success is in Psychology or Communication, with a minor in Business. Whatever the formal college basis, it makes very good sense to add training in the specialties. CCIM, CIPS, CRB, CRS, and ALC are all acronyms for serious and focused training in one of the many aspects of real estate. If you are not educationally prepared to be successful, it is much harder to be so. It is also true that few successful sales people achieve that success with a measure of self- confidence. From where do you obtain your conviction, the inner strength that projects your aura of confidence? Always have your well of confidence at hand, because sales and politics call for resolve, authority, and a belief in one’s self.

President-elect Obama became involved in community activities, with much apparent success. His commitment and work with community activities created credibility, provided tremendous networking opportunities, and gave him a grass roots understanding of organizational skills that would prove useful during a political campaign. He learned the skill of influencing people to do things because they want to, and not because he wanted them to. And that is a handy skill both in politics and sales. Become involved with the people you expect to serve. Show up and be passionate about their something, but only if it is also your something. If you do not regularly meet people, demonstrate you care about them and their passions, and become genuinely involved in those passions, it is very difficult to achieve success in sales. And it must be real. Most people can recognize a faker. Your network is the people you meet and care about, and the people they know.

Barack Obama traveled. He had the good fortune to develop a world view while growing up, and as a young man traveled to Europe and Kenya. As a United States Senator, he made official trips to Europe and Central Asia. Seeing how people live in other places provides a breadth of understanding that cannot be obtained from books. You certainly do not have to embrace how other people live, or agree with their beliefs and lifestyle, but it is useful in both politics and sales to understand why they believe and live that way.

Where have you been? While it is true that traveling the world is both expensive and difficult, it might be somewhat instructive to at least hop in your car and travel across town. Get out of your comfort zone and your routine and expose yourself to the what, why and how of the daily lives of other folks. Eat food not on the normal diet, look at culture unfamiliar and become comfortable in being with people not like you. Most Realtors® are very good at this, because discrimination is not only illegal, it doesn’t pay very well.

Mr. Obama read. And he wrote. As President of the Law Review, he had to become not only a good reader, but a critical one as well. His first book, Dreams of My Father, was published in 1995. Are you reading? Local events, real estate news, Inman, Seth Godin, Tom Peters, social networking sites, novels, The Economist, National Geographic, something, anything to make your mind work and stay fresh. While you or I may not be ready to write a book, we can all blog. We can write notes to our clients. We can e-mail our friends and social network. If you don’t have the skills, go take a class in creative writing. Do something! Now!

The ancient Greeks first offered that all of us as individuals are a composite of our personal associations, the places we have visited, and that which we have studied, or more simply: people, places, and books. Those bedrock items of humanity are also the basis for a successful career in politics and sales. Tomorrow, we will take the basics and add the marketing tools that proved to be too much for both Hillary and John to overcome.

Waiting at the Check Stand

Larry McGee (The Berkshire Group, Realtors) — Mon, 24 Nov 2008 20:51:24 -0600

I suspect I share a certain pet peeve with most folks. You find yourself in need of a “thing”, and you pop on by your local retailer for the “thing”. You navigate through the self-help system, perhaps even receiving assistance from a smiling clerk wearing the appropriate retailer vest. You find the “thing”, and probably a few “things” you weren’t looking for, and make your way to the Disney influenced Check Stand. There you find many other people, with their “things” in hand, waiting in line for the lone, not smiling, checkout person; wearing the appropriate vest of course; overwhelmed by the steady stream of customers with “things” they want to pay for.

Let us sum up: the drive to the retailer takes 10 minutes, you spent 10 minutes finding your “thing”, and it takes 30 minutes to actually pay for the “thing”. I have to believe that retailers stay awake at night, determining the profit and loss differentials of one checkout clerk verses how many people walk out in frustration, leaving their “thing” behind. On the other hand, I have noticed that few people actually abandon their “thing”. Rather, the whole long line of customers stands there, getting frustrated and sometimes downright angry about having to WAIT TO PAY!

Like I said, a pet peeve.

So, right here in Denver, we have an escrow closing company that makes home buyers wait to check out (close) on their REO purchase. The operation is owned by a legal firm that specializes (surprise) in foreclosure actions for the financial and securities industry (The Bank). (Most likely, there is a similar operation in your neck of the woods.) That same legal bunch also owns a title agency that provides the title insurance on behalf of “The Bank”. Not there is anything really wrong with the legal firm operating this group of businesses in concert, except they have NO concern for the consumer. Zip, nada, none! Knowing that these rather slick operators are lawyers, I am relatively certain that their concern is for their client, “The Bank”, and their job is to close the sale at the least possible cost to the Bank, while protecting “The Bank’s” legal position. From a strictly legal point of view, there is nothing wrong with that position. And, I am pretty sure the position of “The Bank”, transmitted to their agents (lawyers, Realtors®, escrow providers, Et al.), is something like “we got screwed taking this house back, the buyers are getting a great deal, and so who cares if we don’t offer great service”. And most buyers, and their Realtors® and lenders, live with it. And get angry and frustrated at a system that plainly does not care a whit about the guy and gal on “Main Street”, U.S. of A.

Well, that is the problem. “The Banks” made loans they should not have made; to people that really could not afford to buy the houses they bought; so that “The Banks” could realize an inflated profit on the loan. High profit, high risk. And, when the market did what market’s do, they got whacked, along with their “clients”, both the investors and borrowers. Well, maybe sort of whacked. That sound of hooves you hear is the horse carrying everybody’s rich Uncle, riding to the rescue with billions in “bailout” dollars for those selfsame “Banks”. But for crying out loud, put a few more resources at the Check Stand. “The Banks” may want to put a few clerks in front of their present clients, “the borrowers” and figure out how to stop (or at least slow down) the foreclosure virus. And “The Banks”, and all their agents, should be treating the REO buyers like royalty. After all, the buyers are taking the REO’s off “The Banks” books, and giving “The Bank” cash in return.

With Uncle Sam underwriting the losses, it occurs to me that the only folks really suffering in frustration are the people on “Main Street”. You know who I mean, the people that got kicked out of their homes by “The Banks”, and the other people that are waiting in line to buy the REO’s from these same “Banks”. Is it any wonder that the American People are frustrated, angry and scared?

The Security of Relevance

Larry McGee (The Berkshire Group, Realtors) — Sat, 22 Nov 2008 20:52:01 -0600

On November 21, I submitted a post to Active Rain in which I dropped the term “security of relevance” in the accounting of a job loss. That concept raised a few curious questions, so I will expound in this post.

Most of us human bipeds come equipped with egos, ids, and a bunch more of those psychological tags that allow us to identify ourselves as individuals with a purpose in the greater scheme of things. As we grow into adults, most of us actually begin to feel we are somehow important, or relevant, to other bipeds. We begin to think that other bipeds like and love us for what we think and do. We educate ourselves to add competency to our relevance, to become employable, to have purpose and gain the satisfaction of accomplishment, and of course to have automobile and mortgage payments.

Many bipeds believe they work to gain the medium of exchange, the dollar in this United States, and that is certainly true. The dollar brings with it the ability to buy much of what Abraham Maslow referred to in his “hierarchy of human needs”; namely food, clothing and shelter (and leather seats in most Realtor®-mobiles). So when a human biped becomes unemployed, a certain rip occurs in the fabric of the “hierarchy”. The threat of loss of shelter (ones home), loss of food, and loss of those leather seats is disturbing. There is an almost immediate and somewhat frantic effort to replace the job, or otherwise gain a stream of income to keep the basics, not to mention the luxuries, of the biped’s life in place.

There is, however, a loss that is equal to or even greater than loss of income, and that is loss of relevance. The suddenly unemployed person no longer has purpose. The reason to get out of bed is gone. The feelings of satisfaction that come from a job well done are gone. The camaraderie of working with other people with common purpose is gone. The purpose of education and years of experience is gone. The unemployed biped has lost the “security of relevance”. For most normal people, depression becomes part of their daily life.

Over 10 million Americans are now unemployed. 2.8 million of those Americans became unemployed in the past 12 months, negatively impacting much of the population of the United States. The unemployment rate is 6.5% at this moment. Those people have lost not only their income, but possibly their home and other basic needs, and they have most especially lost their relevancy. They are not needed. And they are most definitely not happy. Many Americans today feel adrift in a sea of negative news, with no coherent plan or leadership to provide confidence and direction. I believe the outgoing and incoming political leadership of this country need to work together to inspire confidence in the general population. I would urge them to do that now.

Larry McGee owns a Denver real estate brokerage.

The Effect of the Cause

Larry McGee (The Berkshire Group, Realtors) — Sat, 22 Nov 2008 13:31:57 -0600

Midday Friday, I was informed that an expected closing had fallen. One of my associates, the listing agent, received a call from the buyer’s agent with the very sad news that the buyer had been laid off from his job this morning, an hour after his wife had completed the final walk through for the scheduled 1:00 P.M. closing. Fallen sales are always disappointing, particularly so in the present economic climate, but this one got me to thinking about the effects of this one fallen sale.

Consider that the buyer got of bed today with high hopes, enjoying the adrenalin rush that comes from the anticipation of securing a new home. He had a job as he started the day, and I am sure that he and his wife were happy and pleased with how life was treating them. For those two unfortunate people, their day did not end anything like it started. In a few short hours they lost the security of income, the security of shelter, and the security of relevance.

It gets worse. The seller had made plans to move to a short term rental. The seller had to unwind the lease on his quarters, recover his deposit, and cancel the movers. The movers lost the income associated with moving the seller to new quarters. The owner of the rental property has to find a new tenant. The buyers lender had to cancel a mortgage loan, loosing not only the income (lenders have bills too), but the time devoted to the effort. The cost of the appraisal, inspections, title insurance commitment, and other miscellaneous fees suddenly had no value. Time spent by all the parties, lenders, title insurance employees, the Realtors (they also have bills to pay), and who knows who else, produced no benefit. The seller has to again expose his property to a less than stellar market and find a new buyer. The buyer has to find employment, stabilize his life, and hopefully try again to buy a home in the future. I could go on with the ripple effects, but you get the picture.

When we are talking about statistics, it just isn’t very personal. When some economists are speaking about the overdue need for a correction, I can only assume they are speaking with tenured professorships in hand, because when you are watching the correction happen to people you know, it gets your attention. And it is happening often, to many nice people, all over the country. The finger pointing and postmortem discussions are important, and necessary, as we restructure the economy to avoid this sort of meltdown in the future. I suspect, however, that most of us get it by now. Let's get started on the recovery.

Memo to the President –elect and the sitting President: Get together. Get on the same page, or at least in the same hymnal, about a plan. The citizens of the United States are facing the crises of a lifetime, and deserve the best from both of you . Right now. Mr. Obama, the great orator, needs to offer definitive assurance to the entire country that there is a plan, a direction, a unified agreement as to what must be done to restore confidence in ourselves. It might be a nice touch if Obama and Bush could share a podium and speak with one voice. If things don't get better very soon, it is just possible that Mr. Obama may inherit an economy that won't have any money to tax. While it is true that we can only have one President at a time, nowhere is it written that we cannot have two leaders at the same time. Gentlemen, get the housing market functional again. There is no end of plans offered to make that market viable, just pick one.

Then, when we are feeling better about our prospects, and only then, should we begin the debate about how to fix all of the other things that ail us.

Selling Simplified

Larry McGee (The Berkshire Group, Realtors) — Tue, 18 Nov 2008 22:42:26 -0600

In late October I attended the Rocky Mountain Chapter of the Council of Real Estate Brokerage Managers (CRB) meeting at the Broadmoor Hotel, where I received my “thank you very much” award for serving as 2007-2008 chapter President. Beyond that much appreciated pleasantry , the small but vociferous group of leaders present brainstormed ideas on just how to make the Rocky Mountain CRB useful to the managing brokers. One particularly good idea, which became a theme, was to have speakers from outside the industry speak to us about how to better do the things we do. Great concept, and we will make that happen in 2009.

Of more interest to you is my happenstance discovery of a “You Tube” video on the thephoenixrealestateguy's blog site. His site featured a clip of Gary Vaynerchuk, slated to speak at Inman Connect. If he can reinvent the wine business, you can reinvent your business. Find this guy on You Tube and pay attention.

In these challenging times, I hear many Realtors® asking “what do I do to make a sale”. Here are my thoughts:

Please remember that we are in the sales business. We sell a service. Many people still want to acquire houses, and many people still need to sell them. The service we sell is the expertise to join together a buyer and a seller and effect a sale of real property. It is more difficult (but obviously not impossible) today because people are scared and concerned about the economy, politics, war, and their job. The public needs you to be reassuring and professional. Be calm, point out the plus sides, the big one being that prices are low enough to make home ownership possible for many people. Need help? Take a look at “Selling Simplified” below.

Selling Simplified-Selling is simple. Here is how it works:

1.) Find another person to talk to. (there are people everywhere, just start connecting)

2.) Ask that person about the things that matter, family, occupation, recreation, and dreams (F.O.R.D.). (if you do not care a whit about people, it is difficult to demonstrate genuine curiosity)

3.) Listen. (This is really hard. Stop talking. You are listening for clues of change)

4.) Determine if there is a need for the thing you are selling.

5.) If so, sell your thing; if not, add or make current their contact information, bid a pleasant goodbye, and find another person to talk to.

We have in our home 30 books on selling techniques, and they all boil down to that level of simplicity. Just 5 things, all 5 of which we learned before we were 6 years old. Somewhere after 6, probably by age 10 or 12, we learned about rejection. That learning experience was painful, and has screwed most of us up since then. Humans hate rejection, and we will avoid it whenever possible. We go to great lengths to find business without actually asking for it, hoping that because of our great technique, people will just line up and beg to work with us. That does not happen often enough to make a living. Rejection will not kill you (it does not feel good, but it will not kill you). Talk to people, you will find business. Really.

Back in 1998, Spencer Johnson, M.D. wrote a very cool book titled “Who Moved My Cheese”. I urge you pick up a copy and breeze through it. It is a short but valuable read. Since our cheese has been moved, both internally and externally, and is probably true that our cheese will never sit still again, you should embrace techniques to help you keep your eye on the cheese. Start with steps 1 through 5 above.

The Real Estate Market

Larry McGee (The Berkshire Group, Realtors) — Sat, 15 Nov 2008 20:15:34 -0600

We stopped taking the newspaper a few months ago. What I miss most about the daily rag is the comics, which I guess goes to show you just how valuable the daily was in my life. Oddly enough, about the same time, I stopped watching the 10 o'clock news, which is now the "all the time" news, so I am no longer in touch with the talking heads of broadcast media. So, it was a bit unusual that as I was waiting for my plane home after an out of town conference a few days ago, I was idly watching a talking head on a television in the terminal. The talking head was speaking in sad tones about the state of the economy and mentioned in passing the national real estate market having lost XXX trillions of value in the last few years. It suddenly occurred to me that the talking head did not understand the concept of a market, as he was just reading the script. So goes my inspiration for this article.

According to Webster, a market (from the Latin -mercatus), is "a meeting together of people for the purpose of trade by private purchase". Further, a market is a geographic area of demand for commodities or services. Real Estate is defined as property in buildings or land. So, a "real estate market" is "a meeting together of people in a geographic area for the purposes of purchasing buildings or land". What the media is constantly referring to as "the real estate market" is really a reference to housing data compiled from thousands of markets to present simple and reportable national averages that can be addressed in 30 or 60 second sound bites.

In the Denver area real estate market, as with most markets nationwide, there are really many "markets". Certainly there are many geographic markets, with values in neighborhoods such as Washington Park remaining steady, and values in Green Valley Ranch plummeting due to excessive foreclosures.There are new development projects such as The Landmark in Greenwood Village that are selling as fast as the builder can finish them, and other new home projects that are not selling at all. There are also markets stratified by price. Today, in Metro Denver, the price bracket of $100,000 to $200,000 is actually a sellers market, with multiple offers presented on some properties, and sales well over asking price on many bank owned homes. However, there is a glut of million dollar plus homes, with sales slowed to the level of watching grass grow. And the "real estate market" is very dependent on another market, the "monetary" or "credit" market. With the worldwide money market in complete disarray, the housing market, as well as every other market, is captive to the lack of available credit.

The "real estate market" is much too individually specific, much to complicated, and much to local to accept what the talking heads are spewing on the nightly news. If you have need to buy or sell real property, you must take time to understand the market as it applies to your specific needs. You might want to spend time with a knowledgeable Realtor® and have an extended conversation about how your specific needs relate to the "market".