Its official:  The sub-prime mortgage meltdown has made it to prime time. Last night on Boston Legal, my favorite TV lawyer took the case of a borrower, facing foreclosure,  and negotiated a new deal with the bank.  This was entertainment pure and simple, but the point was made that borrowers and lenders have both been hurt by this mess, that neither side saw it coming and it's in the interest of both sides to make a deal.

I might add if they dont (make a deal) we are looking at an economic crisis the likes of which we havent seen since the 1930's Then it was the easy money provided by the banks in the roaring 20's that allowed "investors" to get in over their heads in the stock market on 10% margin. When the inevitable crash happened, it brought down the banks with it and we had the great depression. This time it was also easy money that fueled the boom "Investors" got in over their heads with 100% financing and the buble burst. Will this crash also bring down the banks and result in another depression? only time will tell.  but in my mind the only solution is to make a deal....either  the banks will do it on their own, or government will force it. If we let the markets correct themselves and let the chips fall where they may....its depression time.

This is the last of three posts I'm writing today inspired by Brian Larson  http://activerain.com/blogsview/279189/The-Uninteresting-Tale-of

Ive been bugged for a long time by agents that complain about the money they have lost and the time they have wasted when a transaction that seemed to be moving forward smoothly to a closing is lost. In  recent post here on Active Rain one agent said (I assume tongue in cheek) that she sent a bill to the guy that didn't show up for an appointment after she had invested 5 hours preparing.   The fact is that unless we are super salesmen most of the folks we work with don't buy. But does that mean we have lost money or wasted time?   I don't think so.  As Brian Larson said in his post we need an understanding of how co-op commissions work.

MLS compensation: Most (though by no means all) brokers get paid on a commission, often a percentage of the gross selling price, paid only when a transaction closes. The listing broker puts the listing into the MLS, offering a coop compensation (often between 2.1% and 3.0% of the gross selling price in our market - let's assume it was 2.7% on this listing). The cooperating broker earns that commission by being the procuring cause of a sale. Even though the cooperating broker may be the buyer's agent (under Minn. license law), he receives the lion's share and usually all of his compensation from the listing broker. (This is a quirk of history dating back to times when sub-agency was the common form of relationship between listing and selling broker.)

Note also that the price structure of the traditional commission factors in Steve's risks. In other words, if he works with a buyer from scratch, he is betting his efforts showing the buyer around will pay off in a coop commission. But he may get nothing if the buyer declines to buy. Presumably, he receives enough on the transactions that DO close to cover his time on ones that never come to fruition. Brokers can address this issue in other ways (with different fee structures, etc.) but doing so swims upstream against the prevailing MLS compensation approach, where the listing broker appears to pick up the tab.

I know we all know this stuff but I think we forget the fact that we get paid enough on the transactions that close to compensate us for the time and money we have spent on the ones that don't or to put in another way the money we make is enough to compensate us for risk we take......Or at least it should be.

The question for today is, what can we do to increase the reward or minimize the risk

I suggest a good place to start is to 1) prequalify, and not the kind of prequalification that's no better than a note from your mother 2) question your buyer on what they need and want in a home 3) know your market. If that means previewing every new listing ...do it. Know what has sold and for how much. Know the best deals in your market and show them...not the dogs 3) know your clients motivation and time frame. If they are the classic: "When we see the right home we'll know it, we have plenty of time" Don't waste your time 4) Develop triage systems ie  spend your time working with the 20% of  your leads that will result in 80% of your business

This is the second of three posts I'm writing today inspired by Brian Larson  http://activerain.com/blogsview/279189/The-Uninteresting-Tale-of

In his post Brian suggested that a buyer's agent brings three very valuable skills to a transaction,  Location advice, negotiation advice and closing facilitation. In my most recent post I suggested that a listing agent offers marketing advice, negotiation advice and closing facilitation to sellers

My question is this:  If a buyer or seller does not need everything that we offer than should we be willing to cut our commission to reflect that fact

For example, my buyer has identified the neighborhood he wants, and a list of three well priced homes to see, and he has a pre-approval from a local lender and a copy of his bank statement showing enough cash for the down payment  and closing costs.  He agrees to make a full price offer on one of them, if I pay half my commission toward his closing costs......Lets see....he doesn't need my location advice, or my negotiating skill, all he needs is access to the property and closing facilitation.  Why not give him the rebate?

 In my next post Im going to examine the risk vs reward ratio and why our fees seem so high to  buyers and sellers  and then suggest ways to limit one while increasing the other

This is the first of three posts inspired by Brian Larson's post...The Uninteresting Tale of Salesman Steve?   

In his post Brian does an excellent job outlining what a buyer's agent brings (or should bring)  to a real estate transaction. Secifically:

Value the broker brings to the buyer: I think a real estate broker has great value   to bring to a buyer in a transaction. I see the value as breaking into three phases:

1. Location advice: I can't imagine anyone better than a real estate broker to help me find the right property, based on my needs. The best ones have a detailed knowledge and understanding of human psychology and the real estate market.
2. Negotiation advice: Market understanding and negotiation skills are essential to a successful contract negotiation.
3. Closing facilitation: Brokers know better than most the problems that can crop up between acceptance of a purchase agreement and closing - title problems, financing problems, etc. Resolving these problems is essential to getting the transaction wrapped up.

Brian's post got me to wondering what value a listing agent bring to a seller in a transaction.

It seems to me that there are three items here as well

•1)      Marketing advice including access to the mls

•2)      Negotiation advice including pricing advice

•3)      Closing facilitation

My question is this.......am I missing something?   What do you as a listing agent bring to the table to justify your commission? Is there anything else that dosen't fit into one of the above three categories. And while we are at it, Is there anything a buyers broker does or should do that Brian missed?

I will be following this with two more posts, inspired by Brian Larson; one titled Commission Discounts or Buyer Rebates and the other Risk vs Reward; How can Real Estate agents limit one and maximize the other.

I'm new to active rain and this is just my second post. I've spent my time here reading the work of others and commenting on it, and learning the unwritten "rules" of the active rain community. One thing I've noticed is that one shouldn't say anything negative in the comments to another's post; even if you disagree.  Comments seem reserved for a pat on the back or perhaps adding something to the discussion, but nothing negative.

I also see a lot of complaints about negativity in the media as if the bad news doesn't exist; or if it does perhaps we can ignore it

Here are the first two paragraphs from a report by the Florida Association of Realtors

ORLANDO, Fla. - Nov. 21, 2007 - In third quarter 2007, Florida's housing sector in many markets continued to report high inventory levels of homes for sale, median prices edging down and sales activity levels that reflect the impact of mortgage disruptions and tighter lending standards.

Statewide, sales of single-family existing homes totaled 31,910 during the three-month period, a decrease of 29 percent compared to 44,776 homes sold during the same time a year earlier, according to the Florida Association of Realtors® (FAR).

Perhaps things are better where you are but for me this is bad news that can't be ignored. We can pretend that it's something other than what it is, but that won't change the facts.

It is possible to do business in a down market. People still need to live somewhere, houses are being bought and sold, perhaps not in the numbers we got used to a few years ago but there is business being done.  

Rather than pretend the bad news doesn't exist and continue doing what we have been doing, I suggest we need to develop a plan to deal with it. It's time to be working on a business plan for 2008  and the first step is an accurate appraisal of where you are today, bad news and all.  I will be looking for ways to increase my market share and looking to new or under served markets....How about you?

This post is my first post to Active Rain. It is prompted by a featured post   http://activerain.com/blogsview/261158/How-to-Dress-for

The subject of that post is How to dress for success in real estate. The question in that post was:  how to dress for the photo in an Active Rain profile to make the best first impression possible.

I want to speak to first impressions also. It is my belief that the way we write also can make an impression. Some Active Rainers write in a style much like the way they talk, laid back and casual, some are more formal. Some of us, me included have done so little creative writing in our lives; that we are still trying to find our style. Be assured however, that your writing style will make an impression and it will be a bad impression if you don't use correct  grammar and spelling.

My pet peeve is the the use of "hear", when you mean "here" or "their" instead of "there" In the post I referred to above the author used "meat"  instead of "meet"

"....to meat a client..."    In my younger days I used to go to a "meat market"  to meet women. ...not something I do anymore and not the impression I want to leave with someone reading my blog

To paraphrase the author... The way we write  in a  blog could be even more important then what we  say when we meet a client - on a blog you may not get a second chance.

My advice is proof read your work before you hit the submit button. A spell checker is not enough

Am I being too picky or do I have a point?