Melanie's Blog

Technology in 3.5 Hours --the Smorgasbord Approach

Melanie McLane (The Melanie Group) — Fri, 27 Nov 2009 14:51:08 -0600

I wanted a fresh new topic for 3.5 hours of CE in my home state. Many agents won't take designation courses (even the one day electives) and most shy away from anything involving a test, like online courses. Yet, everywhere I go, agents are hungry about technology. And the disparity among agents is breathtaking. In one room you can have the person who is totally technologically proficient, who blogs, has a personal website, a smart phone (and knows how to use it) and is doing business online, sitting next to a person who still struggles with getting info out of the online MLS (but won't admit it). I've been saying for years that technology is the new dividing line-kind of like literacy was in the early 1900's. In that era, a fair number of Americans were illiterate-they couldn't read and write. Of course, that limited their job opportunities and earning capacity. Today, it is whether or not you are technologically literate or not. As I fine-tune the course, for its first run, I find it will be completely like a "100s of items!" smorgasbord-there is so much stuff, and so little time. But one thing I hope to impress on my students. The best reason for innovation with technology is because it will help you work smarter, not harder, and enhance your business and earning potential. The worse reason is to buy something just because someone else has it. As with everything in real estate, the crucial question is: "Does it work for you, and your business?"

Stay tuned-I'll bring you back what the students say.

"Dollars and Sense(c)"

Melanie McLane (The Melanie Group) — Fri, 18 Sep 2009 09:22:25 -0500

I just completed my first presentation of one of my new classes: "Financing, Dollars and Sense©". When you are a trainer, you pay a lot of attention to the faces of the people in your audience. I'm constantly scanning their faces for: confusion, boredom, disbelief, and best of all, the "Aha!" expression. In the first run I had virtually no boredom that I could see (a good day!) lots of "Aha!" and some combinations of confusion and disbelief. In this course, the disbelief became a clear "I never knew that, Yipes!".

            The response pleased me, because it means, to me, that I'm on the right track with this course. My contention for quite a long time has been that real estate agents have shifted the entire financing part of the transaction to the lenders. The reasoning used is: "Well, the buyers have to have a pre-approval letter, anyway." Or "The lender can do this better/quicker than I can", etc. The problem is that we are now reaping the bitter fruits of that harvest. A recent Wall Street Journal article stated that approximately 1/3 of the sales in July, nationwide, were short sales or foreclosures. We all know now how we got into this mess-too many loans made to too many unqualified buyers; unscrupulous lenders, who, knowing that the loan would be sold, did not hesitate to make a loan that had slim to no chance of being repaid; stupid buyers who didn't understand what they were getting into; greedy buyers who thought that the inflation in real estate prices would last forever-I could go on and on, but I won't.

            Let's get back to my point-which is financing is part of the transaction that the agent should be closely involved with from start to finish. This matters even more if you have chosen to represent the buyer as a client. I use the word client in the sense used by the NAR Code of Ethics, and as is generally understood in the context of agency: a client is a consumer you are now representing. Once you make a consumer a client, (as opposed to a customer), you pick up, in virtually all states, fiduciary duties to that person. Those fiduciary duties include, usually, advocating on behalf of your client, protecting them from foreseeable risk and harm, etc.

            When I started in real estate, in the mid to late 1970's, we always financially qualified buyers before showing them homes. Period, end of sentence and end of discussion. My first brokerage was the family owned business; and my Mom told me: "Don't waste your time if they can't afford to buy; and don't show them things they can't afford, because then what they can afford will disappoint them." Good advice then; good advice now. Did it work? Absolutely! Last year, I had an encounter with a former client I had sold a house to 30 years ago. She said to me: "I never forgot what you told us when we bought our first house. You told us to look at the payments, and our budget, and to make sure that the mortgage payments would not strap us so much that we wouldn't have money to go out for pizza, go play golf, and go on vacation. We took your advice, and I'm so glad you did." I live for that kind of remark!

            In that time period, Fannie Mae stuck to its original ratios of debt to income-the lower end ratio of 28% for PITI (Principal, Interest, Taxes and Insurance) and the higher end ratio of 36% for all debt. Nowadays, FHA has more liberal ratios (33% & 43%) and many conventional lenders will stretch the upper end ratio, for borrowers with ‘excellent credit' to 50%. But when I walked my students through the math, they were stunned (some of them). Some of them were nodding and were already there. One student related being fired by a new home builder for telling buyers they could not afford that particular home. Another employee of the builder sold it to them, and they went into foreclosure within a year. Is that the American Dream, or is that a nightmare?

            You see, when you walk through the math, here's what you understand: first of all the ratios are based on gross income, not net income; and you can only live on your net. Even when you tinker with the numbers by having the borrowers adjust their withholding,(in most places, buying a house is roughly equal to two standard deductions, or two kids) in order to increase their net pay, the stretched mortgages and the higher ratios do not leave a lot of money for all the other things consumers have to have, or want to have: food, clothing, car insurance, life insurance, car maintenance, house maintenance, utilities, personal items (gym, hair, nails), vacation, entertainment, medical expenses, tuition for soccer camp, pets, gifts, and maybe even savings!

            My students had some real eye opening moments when we ran through the difference both term and interest rate make to amortization. Many of them had never done the math for a bi-weekly payment. We looked at a real amortization schedule and talked about how our clients could pre-pay a mortgage by simply adding next month's principal. At the end of the class, most of them said they had learned a lot and intended to be more of the process with their buyers. That's my goal: to have agents understand the process, understand the numbers, and be able to show their buyers exactly what the numbers are. Many buyers who are taken through the numbers will say: "The lender is willing to loan us $XXX,XXX, but, you know, we really aren't comfortable with a payment that high." If more of that had happened in the mid 90's to the mid 2000's, we might not be where we are today!

            I'll be offering a version of this course at the Ohio Association of REALTORS® Convention, the 20-21^st of this month in Columbus, Ohio, and I'll be also offering this course all over Pennsylvania. To contact me, email me at: Melanie@TheMelanieGroup.com

Little League Baseball--and So Much More!

Melanie McLane (The Melanie Group) — Sun, 16 Aug 2009 16:27:22 -0500

It's that magical two weeks we get here in Lycoming County, PA, specifically in South Williamsport, once a year, when the Little League World Series is played in Lamade Stadium. This event brings visitors from all over the world. I live in Lycoming County, southwest of Williamsport, in a little town called Jersey Shore--nowhere NEAR New Jersey or the shore...but that's the subject of another blog. First of all, if you are coming to my county for the Little League World Series--Welcome! I consider myself privileged to live in one of the most beautiful spots on earth (IMHO) Like most of Pennsylvania, Lycoming County has lots of farmland. We also have beautiful mountains, the West Branch of the Susquehanna River, and numerous streams, including the world famous Pine Creek. We don't usually have lots of people--our total population is under 130,000. In the rural townships, wildlife outnumbers human beings...and that's okay. You don't have to wait for the series to come here--but if you have, there's plenty to do. Bring your bicycle! If you don't have one, you can rent one, but in Jersey Shore (my hometown), 14 miles from Williamsport, is the terminus of one of the best Rail/Trails in the United States. It follows the Pine Creek Gorge north to Pennsylvania's Grand Canyon, in Wellsboro. Along the way, you'll see bald eagles (you bike or hike through one of their nesting areas), deer, bear, and yes, some of us have spotted mountain lions (despite assurances from DCNR that this animal no longer exists in PA). Bring your canoe, kayak, or flat bottomed boat. A wet summer has stream levels unusually high for August--so you can enjoy water sports--even if you just get an inner tube and float in one of our creeks. Trout fishing is pretty much over (water is too warm) but local fishermen are going for bass. If little boats scare you, take a ride on the Hiawatha Riverboat, which goes up and down the Susquehanna. Details are available at the Tourism Visitor's Center, located at 210 William Street, Williamsport, or by calling 1-800-358-9900. If you like to shop, just a little further west of Jersey Shore, in the Village of Woolrich is--you guessed it--the original Woolrich Store. Buy your "Pennsylvania Tuxedo" (a hunter's jacket and matching pants, in black and red plaid wool) or any of many other great items. We have some great restaurants--skip the chains and get the good local stuff. In Williamsport, I would recommend Franco's, on Fourth St., or the Bullfrog Brewery, also on Fourth St. In South Williamsport, don't miss the Bridge Tavern. If you venture up Pine Creek, try the Venture Inn, just above Jersey Shore on Route 44, or the Manor Hotel, in Slate Run, PA, off 414. There's also the Waterville Hotel, along 44 in Waterville. In my town of Jersey Shore, find the Tiadaughton Inn or Santino's Restaurant. For breakfast in Jersey Shore, nothing beats the Crest. If you are looking to find a getaway, check with our friends Gene and Irene Feerrar, who run Happy Acres Campground. It is more than a campground--they have fully furnished cottages to rent. Find them at www.happyacresresort.info and tell them Jim and Mel sent you. We have a saying here: "Once you get your feet wet in Pine Creek, you'll always come back!" My husband Jim, specializes in the Pine Creek Valley (I specialize in teaching REALTORS) To know about real estate in the valley, check out his web site, for up to date information on all the listings. Find him at www.pinecreekvalleyhomes.com. We hope to see you in our beautiful part of the world.

My Month as "Ask the Expert"

Melanie McLane (The Melanie Group) — Fri, 01 May 2009 09:08:51 -0500

I just finished my month as the "Ask the Expert" for REBAC. Since I am also an appraiser, valuation questions were my assigned topic. First of all, I have to say it was so much fun I'd do it again -in a heartbeat! Second of all, I was very impressed by both the thoughtful questions I received and the obvious genuine desire on the part of agents to understand pricing and valuation, and do it right.

There were some themes that several questions returned to, so I'm going to recap here (not word for word), one of the major issues, in an effort to help both sides of this aisle-the agents and the appraisers.

Without a doubt, one of the number one myths some agents have is that appraisers don't ‘count' finished area below grade. We most certainly do! The big issue is an understanding of Fannie Mae guidelines. When I teach anything to do with financing or appraising to agents, I always refer to Fannie Mae as the ‘eight hundred pound gorilla'. That's because it is-in the sense that most residential mortgages are going to be done to Fannie Mae guidelines. The application will be taken on a Fannie Mae form; the borrower will meet Fannie Mae Guidelines; the appraiser will be asked to complete a Fannie Mae Appraisal Form (including, these days, the troublesome 1004MC) and the appraisal must be done to Fannie Mae Guidelines. Fannie Mae has always had the same position on square footage: the appraiser is to measure the exterior of the house above grade to calculate the living area. All of this area must be totally above grade. So, if the house is a split, or a bi-level, or another local term you use for a home where part of the living area is below grade-it doesn't count-in the above grade living area. It does count as "finished area below grade". This usually gets the ‘but what if' questions, as in: "What if the house is walk out at the rear?" Answer: "What is the front like? In the typical walk out at rear house, the opposite side is either completely or partially below grade, depending upon the grade of the lot. This particular issue causes a lot of ill will between appraisers and agents. Here's the agent side, possibly learned at the feet of the broker: "We are selling finished square footage, so count it all and put it in the MLS. Don't measure the house, that is too risky!" My answer: "Hello????? You are competent enough to take and pass a real estate test and you don't think you can measure the outside of a house? Get a grip!" Furthermore-by ‘counting' all the square footage and putting it into the MLS that way, you create false information for an appraiser. Furthermore, if you took that 30 x 40 house with a finished basement, and called it a 2400 square foot house, not a 1200 square foot house, and compounded your error by developing a CMA by comparing this 1200 square foot house (with a finished basement) to houses that really have 2400 square feet (above grade), you will get the wrong answer. That's math, folks. If you start with a flawed assumption, you get a wrong answer. Here's the appraiser side (hold on to your hats, I'm paraphrasing many, many appraisers (I teach them as well) and they aren't tactful): "These @#$%^*+ agents don't know a $#@% thing! They can't measure a house to save their lives, and everything they have in the MLS is wrong! How can we do our job if they keep putting the wrong data into MLS?"

Sigh! We have some issues here folks. And, we need each other. I personally am both of you-I'm an active agent, and an active appraiser-and an instructor, to boot, so I get to hear your unvarnished opinions of each other. Here's the deal, folks. Agents, you need appraisers. Without loan approval, we don't have closings; without closings, we don't get paid. Getting approvals, followed by closings and commissions, is a good thing. Appraisers need you for information that you may not put in the MLS. I constantly tell appraisers you are often the first group to feel the tremors of a changing market-you are ‘on the ground'. Appraisers, you need agents. As I just pointed out, they can be wonderful sources of information that may not be in the MLS. I have discovered a changing market through discussions with agents, as well as the ‘real reason' a house didn't sell-which can be anything from a strong cat smell to an uncooperative seller. Without agents selling houses, we are stuck with non-brokered sales, and those things are nightmares to use as comps because of the problems verifying the data. So, here's my proposal: agents-can you start trying to measure houses-and get it right? Report below grade area as below grade-the appraisers promise they will ‘count it'. Appraisers, educate the agents in your area about how you come up with adjustments and why. Use the ‘better information' I hope you will soon get to do your work, so that loans will close, agents will have commissions, you will have fees, and comps. After all folks, at the end of the day-we are all REALTORS®--or at least I hope you are.

Know When To Hold 'em...and Know When to Walk Away

Melanie McLane (The Melanie Group) — Wed, 08 Apr 2009 11:01:37 -0500

As the line from the song "The Gambler" says, you have to ‘know when to hold ‘em, know when to fold ‘em, and know when to walk away". That is truer than ever about real estate and listings. I am primarily a real estate educator, but I also continue to list and sell, working as a team with my husband, so I can keep my hand in the market and know what is going on. I talk to agents everywhere I teach; in March alone, I taught in Texas, Pennsylvania, Tennessee, South Carolina and Florida. Everywhere, I'm pretty much hearing the same thing: agents are working harder than ever before; buyers are pickier and looking at more houses; financing is an ever-moving target, and getting harder all the time. On the other side of the equation, we have sellers....and we have sellers. My husband and I have encounters with three different sellers since the beginning of the year that we applied the words of the song to-and we walked away. In this market, with the time we are investing in our clients, our deals and the problems, there simply isn't time to invest in the unrealistic seller.

Seller #1 owns a lot in our beautiful Pine Creek Valley, here in North Central Pennsylvania. It has awesome creek frontage, and gorgeous views. It is also flood way, which (by the way) is way worse than flood plain. Flood plain you can build on; flood way you cannot build on-under any circumstances, due to federal regulations. Seller #1's opening comments to me in our first conversation were: "This isn't a property that Joe-Six-Pack is going to buy. It will take a special person. And, I'm not local, but you are and you know how to get around those regulations so someone could build there." Well, I am local, but I don't have any formulas for getting around a federal regulation. Seller #1 had his lot listed last summer with another company-which had not indicated on the MLS sheet the status as flood way-they had simply said: "Check with zoning officer". At the beginning of the year, we had made a pledge to ourselves that we would not take seriously overpriced listings. Seller #1 thinks his lot is worth about $130,000 more than we think it is worth. We told him that. He said he had had an offer within $20,000 of his asking price, but had rejected it. We said to him: "You should have taken that!" We said to each other: "Two fools met-one for offering that much and another one for rejecting it!"

Seller #2 came to my husband via a referral. The person making the referral is a close personal friend of the seller, and apparently agreed with her estimate of her market value, based on "it's what I have in it." Well, in Appraisal 101, I teach students that cost does not equal value. In addition to her highly inflated opinion of her value (she wanted $200,000 more than any recent sales in her neighborhood, and her house is not larger or nicer, and neither is her lot), she had lots of friends ‘advising' her on how to sell her property. Despite her agreement that most buyers would not be local (again, she is in our second home market), she demanded weekly insertions of picture ads in both local papers. Newspaper advertising, as we all know, doesn't do anything except keep some sellers happy-which is a poor reason for any agent to do it. Jim had stressed to her the numerous websites we market our properties on and our results from our marketing program. From there, she had opinions about everything from sign placement to what the MLS sheet should say. And, some of her suggestions were not just bizarre, but misleading. We don't mislead when we advertise and market properties. On top of all that, she was beyond high maintenance-after one short week, it was obvious she thought she was the only client Jim had and deserved at least two phone calls daily. I'm all for keeping in touch with clients, but I'm not a babysitter. Jim had felt compelled to take this listing; he turned it over to the broker and said: "I don't know if you can make her happy, but I know I can't." The broker decided he couldn't either-so she's out there-with her price, her ideas, and her needs-and the other agents in our market are welcome to her.

Seller #3 had had an appraisal on a property he inherited which has outstanding curb appeal. We agreed last fall to try it at ‘his price' which was about 30% over appraised value. We had a lot of initial activity, then nothing. We had a wonderful virtual tour slide show with over 30 photos on it. Interested parties told us they would not make offers, because they didn't want to insult the seller. I ran Google analytics on our websites and showed him the hits, telling him: "7000 hits and no appointments is a reaction to price". The house although lovely, is simply overpriced. He took it off for the winter. Spring came and I updated him-in the price range his home is in, we have an eighteen month supply. I suggested he get realistic about the price; he had tried it higher, but it hadn't worked. He now says he is ‘going to try another agent' because it just ‘wasn't in the newspaper enough'. Go, with my blessing. I don't have the time and energy to deal with sellers who won't be realistic. Ads in the newspaper aren't going to sell houses, not in 2009. Aspirational prices are not going to bring offers in a market glutted with so much inventory. A few months ago, I read a survey where property owners were asked two questions: "Have real estate prices declined in your neighborhood/market?" and "Has your house declined in value?" Amazingly, a high percentage said: "Yes" to the first question but "No" to the second one. Folks, this is like attending your 30^th high school reunion and deciding that all those other people have aged, but not you! Tough times call for tough agents. I listed a property yesterday-at a good price. I'm pretty confident I can sell it for the owners. I plan aggressive Internet marketing, and other things which work for this type of property-but not much newspaper advertising-because it isn't working. I have a listing appointment this afternoon. This seller was previously listed with an ‘Aspirational price' with another broker. If she won't be realistic, I'm walking away. After all, you have to know when to walk away.

Travels of a Real Estate Trainer

Melanie McLane (The Melanie Group) — Mon, 09 Mar 2009 11:40:57 -0500

I'm having a busy month, having started in Nashville, TN, then on to San Antonio.

I'm in the San Antonio airport now, heading to Harrisburg, where I'll do York, Harrisburg and York and then head home. At the end of the month, I head south to South Carolina, then on to Naples Florida for the RSPS Symposium. Here's the great thing about my job: I get to meet awesome REALTORS® all over the country, travel and see new places and new people. Here's the awful thing about my job: flying (no longer fun at all) and some hotels and restaurants along the way.

The other great thing is that when you train, you learn. My students are always giving me information, and things to think about and add to what I'm doing. In Nashville, I did the new Green Core Course from NAR, and then the one day Green Residential Elective. Nashville has great REALTORS® and wonderful staff-a special thanks to Judy Ransom at GNAR and her assistant Donna for all they did to make me so comfortable. Nashville also has some really cool green things going on in real estate, and REALTORS® who are eager to learn and adapt.

In San Antonio, I got to be at the ERA Annual Convention, teaching eBuyer. I love eBuyer; in part because my friend Amy Chorew and I re-wrote it for REBAC, so I think (immodestly, I guess) that it is a great course. My husband doesn't always get to come with me, but he did come to San Antonio, because neither of us had ever been here and wanted to see the great city with the Riverwalk and the Alamo. It didn't disappoint at all; we ate dinner our last night in town at the Chart House Restaurant, on top of the tower (it's a rotating restaurant, very cool). We did the riverboat ride and it was a good trip. Students and ERA were awesome. Only negatives: Sigh! Why do hotels like the Hyatt, which charge an arm and a leg for the room, then add on an Internet access charge? Tacky, tacky, tacky! Plus, the hotel restaurant had terribly slow service and very high prices. We went once and didn't go back.

The San Antonio airport is awesome; I'm seated on a little stool, in front of a counter, where I could plug in my computer and get free Internet. YESSSSSS! So, I can write a blog while waiting for my flight to take off. Sweet!

I'm doing appraisal classes back in PA-the appraiser in my state all have to renew their licenses by the end of June, 2009. One of the hot topics with appraisers is the new FNMA 1004MC form, which is a market conditions form. I've reviewed it; I'll be teaching it; and I think it is more problematic than it may appear. I understand why FNMA wants better information; but I don't think anyone is lining up to pay the appraiser more money for what will be significantly more work in some markets.

The end of the month, I'm off the South Carolina, again to teach appraisers. From there, I head to Naples Florida for the RSPS (Resorts and Second Property Specialists) Symposium. I'm teaching the core RSPS course, as well as offering opinions on trends in second home buying. This market has really been hit hard-on a number of fronts. First of all, second homes are totally a discretionary purchase-no one needs a second home. Second, buyers often pull their money out of the stock market to buy a second home. That's not working real well either. Third, lenders are very tight, and nothing I've been able to find in any TARP money or economic stimulus plan has anything positive for this market. These are often the affluent; they will agree that they want to ‘pay their share' but the buzz I'm hearing from other RSPS REALTORS® is that many of them feel that they are being asked to pay more than their fair share.

When (notice I said when, not if) the real estate market turns around, some of this will iron itself out. For now, I'm seeing fear and indecision on the part of many buyers. The smart REALTORS® are continuing to press on, gaining new knowledge, because they know we are also building some serious pent-up demand. Those in place who are ready when that happens will do, in my humble opinion, quite well.

Get Serious or Get Out of The Way!

Melanie McLane (The Melanie Group) — Fri, 30 Jan 2009 14:38:02 -0600

Ever wish there were ‘three strikes and you're out' in real estate? I have. This week, I heard, saw or observed three different strikes, with three different agents, and they all made me say: "Get Serious-or Get Out of the Way!"

Agent #1 is a selling agent. She had buyers who wanted to go back through a house for the third time before making a decision. The listing agent knew this, and anxiously called for a report. The reply: "I waited five minutes-they were late-they've seen that house; if they want to buy it, they will." Anyone out there want a buyer badly enough to wait for more than five minutes? I thought so!

Agent #2 is a listing agent. His MLS sheet states: "Deed restrictions; on file in office." Selling agent asked for them last week, then again early this week, then again mid-week. Selling agent explained to listing agent that his buyers are very interested but want to review these documents before signing a contract. The property has been on the market 180+ days. I'll bet the sellers want to sell it. The last word the selling agent heard, from a secretary in the listing office was: "Oh, I have to stop by the courthouse and pick those up for him. We don't have them yet." So....the documents that were on file in office were apparently on file-in the recorder's office. Sloppy real estate! Anyone out there want a saleable listing badly enough to do your homework and know what you are selling? I thought so!

Agent #3 is a listing agent. First of all, the selling agent called her and said the buyers are ready to go on a $300,000+ sale that has been pending since early December. She didn't think they could close that quickly; she thought the seller needed ‘more time' to get her stuff out (the seller moved last fall and took most of her stuff). Then, the listing agent asked about fuel oil proration. The selling agent said: "Read the contract, which my client's attorney prepared and you reviewed with your client. It does not call for fuel oil proration." The listing agent's reply: "Oh, that's my fault, I must not have gone over that with my seller. She's going to be really mad." Anyone out there who thinks that part of your job-a big part of your job, in fact, is reviewing contracts with your clients before they sign them? I thought so!

In all three situations, if and when a contract goes to closing, half the agents received compensation will have not really earned their keep. They will have done less than they should have, and in some cases, the sale will never happen, due to incompetence, laziness, or a combination of the two.

Here's my point, folks: it's an ugly market out there, but those of us determined to sell real estate have an uphill battle, not with sellers and buyers, or lenders and title companies-but with our colleagues. If you are in real estate, do your job, do it well, and treat every buyer or seller like they are the most important client you have. Because they are. And if you are not willing to do your job, get out of the business and let those of us who are willing to do the job have the business. Work hard, work competently, do your job-and you will prosper

Previous Blog: Changing Places

It's the New Year (actually January is coming to a close) and we see the usual changes in real estate this time of year. Across the country, if dues are assessed on an annual basis, many agents are hanging it up. It was fun while it lasted (2000 through 2005), but lately, it's been too much like work. My take: I'm the airline attendant to these folks: "Bye-Bye". I've always said our business is no place for sissies. Yes, we had some easy times in the early part of the century, but it's more like real estate as I've known it for 30 plus years now-it's a great business, but the only place success comes before work is in the dictionary.

Along with the agents leaving the industry, we have musical chairs within the industry. This one is opening his own office; this one has left to manage a branch office, that one is changing brokers (again!). Some of this movement is healthy. Some of it is overdue. I just observed an agent make a move that will, in my opinion, better her career-wise and reputation-wise, and all I could think was: "What took you so long?" The former broker this agent worked for did not enjoy a great reputation with everyone, and she had gone as far as she could go in that company.

Another agent I know struck out on his own. I admire that, even though my experience tells me a good agent can make more money when he doesn't have to be bogged down by the day to day obligations of running a company. On the other hand, this agent was at a family-owned business, and he wasn't family. They don't say blood is thicker than water just because it's a catchy expression.

Then, there's an agent I know who has now moved to the seventh office in ten years. No matter what, no matter where, it doesn't work out for her. Personality conflicts; the broker is unfair; the advertising policies aren't right; the other agents steal her customers, etc. etc. etc. Her belief that a new office will solve all her problems is as silly as the seventh broker hiring her....or the fourth, fifth or sixth. Maybe even the third. She's the Liz Taylor of real estate offices, and she's being enabled by brokers who don't stop to ask themselves: "What do I do here at my company that is that different from the last nine companies, and will keep her happy?" Anyone can see that a new agent can make a mistake, and pick the wrong company. But to pick the wrong company six times?

The merry-go-round just keeps spinning, though. By spring, we will have more agents who have left the business, plus a fresh crop of newly licensed agents certain that being in the million dollar club means you are a millionaire. The agents that you don't always notice in this business are the consistent ones. They are the ones who list and sell, and list and sell, and keep plugging away at it. They try new things. Sometimes their brokers really annoy them, and most of the time, they roll with it. They are the backbone of many real estate offices because they aren't divas and they aren't flashes in the pan. If you are new to our business, here's my advice: find one of these agents-and emulate them! And if you are a broker, appreciate them. They don't throw tantrums, like the divas; they don't suck you dry and then leave you for your competition, like some; and they don't take an inordinate amount of time learning the business, only to decide it is way too much like work and they are going back to a ‘real job'. Cherish those agents-they are your treasure!

Changing Places

Melanie McLane (The Melanie Group) — Sun, 25 Jan 2009 19:11:13 -0600

Tolstoy and Real Estate

Melanie McLane (The Melanie Group) — Mon, 22 Dec 2008 17:19:57 -0600

Happy families are all alike; every unhappy family is unhappy in its own way.

Leo Tolstoy, Anna Karenina, Chapter 1, first line
Russian mystic & novelist (1828 - 1910)

To paraphrase, all happy real estate markets are alike; each unhappy real estate market is unhappy in

its own way. That may be a stretch, but I've been to the two biggest conventions for REALTORS® that

there are in the US during the past two months-NAR in Orlando, FLA, and Triple Play in Atlantic City New

Jersey. I was privileged to be a speaker at both conventions; I taught ABR as a pre-convention event at

NAR and two of my own courses at Triple Play. At both conventions, attendance was down...way down. And

the ‘talk in the halls' was worried. On a shuttle bus in Atlantic City, I heard one ‘seasoned' REALTOR® say

to another: "I've been through bad markets before. I lived through the late ‘70's, early 80's, when

interest rates were so high. This is different." This is different, indeed. To begin with, never have so

many duped so many out of so much money. From Madoff (the media's latest bad actor) back to the

many perpetrators of the sub-prime debacle, lots of otherwise rational, fairly intelligent people have been

cheated.

And now, in an unprecedented way, the government is throwing money at the problem. Big

money-and they are throwing it everywhere. Today's Wall Street Journal (12/22/2008) reports that

commercial real estate developers are now asking to be part of the bailout. It's like a wonderland out

there, and not the ‘winter wonderland' they are warbling about on the radio. Call me a simple person, but

here's what I don't get: Doesn't anyone see that all this bailout is just going on our tab? We the

taxpayers are paying to bail out, let me see: insurance, bankers, automobile manufacturers, and now,

maybe a part of the real estate industry. And in the first round, there was no accountability. Zero, zilch,

nada. I really don't get that. Whenever I've wanted to borrow money, I had to answer pointed questions,

like: "What are you going to do with it?" "How do you plan on repaying it?" "Can you afford this loan?"

Instead, we are just, I don't know, heating up the presses over at Treasury and making money to fling

around. Well, what's the point of throwing money if we aren't fixing the underlying problems? Yes, I

know, Congress is ‘reforming' the mortgage industry. And the banking industry. And Wall Street. But real

reform, in my opinion, won't happen unless or until there is a return to accountability. If every lender

made every loan as if they would never be able to sell it; if every appraiser did every appraisal as if

they'd have to buy the property back for the number they appraised it for; if every fund manager made

investments as if he'd have to cover any shortfalls out of his own pocket, we'd have accountability. And if

Congress would have to get the voters' approval to go into deficit spending-each and every time-- we'd

have accountability. Folks, we don't have accountability-we have nothing close to it. One of the things I

think we will have shortly is inflation. You can't throw this much money around an economy without getting

inflation. What does inflation do to real estate? Do you remember the seventies? It goes nuts!

And this market is different. It's different because people are scared. They are afraid they'll lose their

jobs, their houses, their cars, their pensions. They are scared because they have seen this happen to

other people-or it has already happened to them. And when the read the Internet news, or watch cable, or

pick up a newspaper, there is more doom and gloom there than they can handle. People are scared who

shouldn't be scared. Here's an example: I had an interaction with my computer tech guy last week. He

fixes computers. He's really busy. People are fixing instead of upgrading (Moi, for example!). His

significant other is a nurse anesthetist. She's got job security, because if you need surgery, I'm pretty

sure you (and the surgeon) are going to make certain you are out for it, not wide awake and fretting.

People don't stop getting sick because of the economy. For people like him, this market is awesome.

There's great inventory (in most places) and low interest rates, not to mention, in some market,

outstanding buys. Here's what else I did this fall, before the two conventions: I did state conventions, and

other courses. And everywhere I went, from New Hampshire to Colorado, I asked the agents the same

question: "Do you have outstanding buys in your market?" And everywhere I asked the question, I got

the same, resounding, answer: "Yes!" I truly believe that in five years, our clients will be saying to us:

"Why didn't you make me buy more real estate?" Now, for naysayers, here's what you are thinking: "Well,

the market hasn't bottomed out yet in my area." Or "The national media says real estate won't recover

until 2010" or "It's still too early". To which I say: "He who hesitates is lost" and I add the famous Warren

Buffet quote: "The time to be fearful is when others are greedy; the time to be greedy is when others are

fearful." Don't miss out on this opportunity-it won't last forever.

Here's my final consideration, and it is directed at you and me-the real estate professionals in the room.

Sub prime money has gotten tight, and non-existent in some places. Do you remember selling houses to

people during 2000-2005, and you were amazed that they were able to get a loan? Guess what? They lost

that house, and they are tenants again. Tenants are those wonderful people who buy a property for the

investor. Remember, real estate is the only investment someone else will buy for you. If you are in our

industry, and you possibly can do so, I urge you to buy real estate yourself. Do your homework, check it

out, but invest. My view is that real estate will lead us out of this recession, and in a big way. We are

looking at a long view, but we will, I think, have inflation coupled with fundamental appreciation that will

begin as the markets level out. We will also then have pent-up demand, which is a wonderful thing. I truly

believe the people who invest in real estate in the next two years will be very glad they did in the next ten

years.

Tolstoy and Real Estate

Melanie McLane (The Melanie Group) — Mon, 22 Dec 2008 17:18:56 -0600