Ever notice that a home sells better if you like the Sellers, like the home or just feel comfortable that everything is a good fit. I think a lot of us get into a "Bad Attitude" when we take listings just to have them even when we know they are overpriced, in unshowable condition or the Sellers are unreasonable. Deep down you know the situation is not right and all you do is beat yourself up and hate to talk to your clients. Ever notice that when these finally disappear there is a very short period of morning and you almost immediately start feeling refreshed and upbeat. Of course taking a pass on these losers is easier said than done, especially when you want some type of inventory to drive in some buyer clients.
Take a look at what this one has to say:
Stop going to war with yourself and watch peace come rolling in - for your business and your personal life.
BY KELLE SPARTA
Are you one of those practitioners who's never satisfied with their sales numbers? And no matter how hard you work, it seems like it's never enough? What's more, the slower real estate market in your community is making your job impossible, right?
If that sounds like you, then here's some advice: Stop the pity party. Your negative thoughts may be sabotaging your career and destining you to fail.
When you let a bad attitude or negative thoughts consume you, then it doesn't matter how smart, creative, talented, and knowledgeable you are; you will create bad outcomes in your career and in your life. After all, when you're wasting so much time dwelling on the bad, you never have time to focus what's good.
Case in point: Many practitioners struggle to exceed the number of houses they sold in their second year in the business. That's where their bar is set - their norm - and they can't seem to focus on anything else. When they do try something different to accelerate their sales, their comfort zone kicks in and they find a reason to slow down, or they stop working at the end of the year believing they "deserve it" for working so hard.
The result? They end up with the same production level for the year even though they were on track to do more.
Don't let your attitude slow your business down any longer. Here are seven ways you can use the power of positive thinking to turn your business around:
1. Acknowledge your negativity. Do you tell yourself the open house won't be a success before it even starts? Do you second-guess yourself before a listing presentation?One of the biggest battles in escaping the cycle of negativity is realizing and accepting that you need to improve your attitude.It's much easier to notice negative behavior in others than in yourself. Your inner thoughts are insidious things. So watch your words and thoughts - the next time you tell yourself you can't do something or that something is impossible, give it a second thought. What's the harm in thinking you can?
Here's one test if you're wondering whether a thought you're having is healthy for you or not: Consider whether if this was a permanent state of being for you (whatever the thought describes), would you be a happy person? If not, then it's a good time to re-evaluate that thought.
2. Avoid the blame game. But it's not your fault, you say? Stop trying to pin the blame on others or on a situation. When you see yourself as a victim, it gives you an excuse to say that you were right and the other person or situation was wrong. Blaming others will only cause you to dwell on a negative situation and prevent you from moving on.
3. Stop being a know-it-all. You don't always have to be right. When you're so attached to being right, you often live in fear of being wrong - which keeps you from being able to relax and just be happy. No doubt there's satisfaction in being right, but it can be an exhausting, overwhelming, and thankless job. Plus, other people are often turned off by someone who always has to be right. Accept that others can sometimes come up with an answer, too, and welcome their feedback. You'll find your thoughts are much more peaceful.
4. Find a good role model. If you're always a downer, then that's the kind of crowd you'll attract. Instead, gravitate toward people who have an upbeat, optimistic view on life. Find a business role model: Someone in real estate who has the kind of attitude that you want to have. Then, follow their lead.
5. Expect the best. Don't obsess over that one thing that isn't working in your business. If you believe that you are a 15-house a year producer, then you will never be more than that. If you believe that you don't need more than $50,000 per year, then that's all you'll ever make. Your underlying assumptions and beliefs are what create your reality. If you want to be the top salesperson in your community, don't tell yourself "that will never happen." Instead say "I will be the top salesperson." Now you're focused on making it happen, and your attitude won't get in your way.
6. Be patient. You're not going to change your attitude overnight. You need to rewire your mind to see the positive, which takes work. Constantly monitor your thoughts. You might even wear a rubber band around your wrist during your workday to give yourself a little zap whenever a negative thought enters your head.
7. Smile. One of the best ways to change a negative attitude is to start smiling more. More people report having a positive impression of a salesperson who smiles than a salesperson who has a neutral facial expression, according to psychological research. So put a smile on your face.
I don't know how many of my friends I have talked to over the last couple of months that have mentioned being in a "funk" this last couple of months. I've always found when that occurs I get back to some basics - do anything to get yourself back into the game. This beats sitting around hoping something is going to change. This article has some good ideas to get going and maybe in a new more exciting direction. Take account of all the things you have done over the years that have worked, evaluate to see if it will still work in this market and give it a try. Take some of these free seminars from the Real Estate Gurus - one idea or even if it gets you motivated it is worth the time.
This article has some good ideas:
If you keep doing the same things, you'll keep getting the same results. Here are some strategies for breaking out of your mold and trying new ways to get the job done.
BY JOHN D. MAYFIELD
Many practitioners never bother to change the way they do business on a daily basis. They stick with the tried-and-true, finding comfort in their habits. If it ain't broke, why fix it? But if you have that mind-frame, you may unintentionally be putting a lid on growing your business to new heights.
After all, time's change, customers' wants and needs change. Perhaps it's time that you change, too.
Of course, I'm not saying you should abandon the core tasks that have sustained your business over the years - tasks like staying in constant contact with your sphere of influence, prospecting expired listings and FSBOs, and hosting open houses. These activities may not be too exciting, but they are a necessary part of any real estate business plan.
However, I am suggesting that you try new ways of communicating with clients, managing your time, and marketing your skills. If you haven't yet given these four ideas a test ride, now may be the time. What's stopping you?
1. Start a blog.
Yadda-yadda-yadda, you've heard it all before, right? But many real estate agents are still not taking advantage of this Internet marketing tool. In fact, only 4 percent of REALTORS® have a blog, according to the NATIONAL ASSOCIATION OF REALTORS®. And that 4 percent may be taking a big bite out of your market - so start blogging.
A blog can help you drive more visitors to your Web site by providing useful real estate information to buyers and sellers on a regular basis. Here are just a few topics you can start blogging about:
Local report on the housing economy.
Value of a home warranty.
Ways to improve your credit score.
Tips for selling your home quickly and the importance of pricing correctly.
Like blogging, podcasts - which are audio files that can be downloaded onto MP3 players and iPods - are another Web tool that can help you expand your reach to buyers and sellers and show off your real estate expertise. Podcasting will require a bit more technical experience, but it's a good way to get your voice heard above your competition.
According to the Web site Engadget, Apple sold 270,000 iPhones in the first 30 hours of its release. With the craze and wave of iPod and MP3 users, many consumers will continue to use their iPods and other MP3 players to download content and information for buying and selling real estate. By providing podcasts and adding them to your Web site, consumers can visit your site on a regular basis to download your content, taking it with them on the road to listen at a later time.
3. Fit your marketing materials to your clients.
Many agents still follow the philosophy that "one size fits all" when it comes to working with their customers. But customers have different needs, wants, and buying and selling decisions and you're marketing materials should fit those concerns. For example, you're listing presentation for a for-sale-by-owner should be different than a presentation for expired listing prospects. A buyer's kit for first-time home buyers should have a different slant than a presentation for customers relocating to your area. Plus, customizing your materials to fit the types of customers you deal with on a regular basis will help you set yourself apart.
4. Use checklists and action plans.
When you take a new listing, do you have a checklist of "to do's" and "tasks" that are completed for this client? If not, you need to create a system so you can put your business on autopilot. Rather than trying to perform your marketing functions from memory (even if you've been in the business for years), institute a formal action plan of items to perform for a listing that will help you streamline your day and make you productive. Delegating tasks will be easier than ever, and customer service will improve. Don't believe me? Then try it!
Good article to make you think a little about what we are really supposed to be doing for our clients - sell their homes. In the past that was pretty much a given and our listings were leverage solely to bring us more business with either more listings or buyers. All the "Real Estate Gurus" that I have heard over the years rarely touched on how to sell the house, just how to get more listings and very rarely on getting buyers. Remember Lister's Last.
I know a few Agents and myself included that would give up half a dozen slow moving listings for some good solid buyers.
Jay
In many parts of the country, the inventory has increased and it is taking longer for homes to sell. For many who were in a very fast seller's market, these conditions are requiring a shift in strategies for them to have the success they want this year.
Are your listings sitting on the market longer? In many price ranges, if your property isn't in the bottom 25 percent, it's just going to sit there. What's an agent to do?
First and foremost, the communication with your sellers is critical to their understanding of the new marketplace dynamics. Most sellers are living with last year's expectations, i.e. that they'll get 10 percent above the last sale, whereas in many places, it may well be that they will get 10 percent less! Your ability to educate them and help them modify their expectations to the new realities will keep them loyal and appreciative of your efforts.
It is very important to avoid becoming adversarial in giving them the bad news. People get attached to their opinions and will dig their heels to defend their point of view. Instead of trying to convince them you are right and they are wrong, bring empathy and understanding into your conversations. Let them know you understand why they would think the way they are, and then say that the updated information on the market is telling us something else.
Next, show them the facts regularly. This would include a weekly or monthly CMA report, the market absorption numbers, average days on market, and the amount they are losing each month the house doesn't sell. Then let them decide. It's their house, after all. This information sometimes takes a while for them to digest, but you are planting the seeds for them to make the decision that is right for them.
This doesn't mean you have to take overpriced listings. You need to know at point this listing isn't for you, as well.
Shifting your marketing strategy is the work you need to do. Determine where are the buyers coming from? How can you reach those buyers more effectively? Is your internet strategy serving you? With over 70 percent of buyers starting there, it may be time to upgrade your website to add ways to capture more leads.
When the average time on market lengthens, it is harder to justify using low return/high cost print advertising or other advertising that isn't bringing in prospects or buyer leads. Some higher return activities include:
Open Houses. Make these events and leverage them by personally inviting neighbors or doing a neighborhood tour to share marketing costs and increase traffic.
Staging The Home can make a big difference. Make sure that when it hits the market it is spotless and shining and all repairs and clean up is done.
Advertise in small, targeted media. Determine the most likely potential buyer and put an ad in something they would read, such as a local paper or magazine for seniors.
Use a Call Capture System to differentiate yourself and double end more sales.
Lastly, monitor your beliefs! In all markets, there are still buyers buying. If you buy into a "nothing is selling" mantra, you will probably be right, but if you look at this as an opportunity to be the most creative agent in your market, you will create success.
Henry Ford reminds us, "If you think you can or think you can't, you're right." What are you thinking?
For agents used to brisk sales with multiple offers from eager buyers, a shift to a less frenzied market can be a shock. How do you regroup and get business into high gear again?
Realty Times responds:
I've long thought that the industry's concentration on sellers is a good thing, but there should always be an equal effort to cultivate buyers.
When markets change, then you have more of one than the other. If you have systems and strategies in place for both, then your business and that of your agents doesn't suffer as much.
Right now, you're putting a lot of marketing dollars, time and effort into homes that simply aren't moving, so it's time to regroup.
The first thing you have to do is educate your agents about the mindset of buyers in a changing market. Why do they take a herdlike attitude toward piling into or pulling out of a market. If they understand this, they'll better understand what buyers' needs are and you can help your agents develop services that will appeal to them.
The beautiful part is you can cultivate buyers without harming your business with your sellers because buyers are what your sellers want you to deliver!
So you have two areas you need to focus upon: bringing buyers into your brokerage and serving your sellers. Here's how to pull it off.
Buyers
Nearly two-thirds of buyers use the Internet to view listings, learn about the home buying process and meet service providers. What this means is that buyers are getting their information from other sources than you.
You need to intercept them first. Here are some ways to do that:
Start holding monthly or weekly educational seminars for homebuyers. Arrange speakers such as mortgage loan officers and title company representatives to explain borrowing and closing processes. Rotate your top agents (the ones who enjoy speaking or do this yourself) to explain where the market stands and where they can find good buys. Charge a fee for the seminar that is refundable if the buyer uses one of your agents to buy a home.
Arrange tours of specific neighborhoods where you have lots of listings. You'll get more play in the paper if your tours are coordinated efforts that include several homes. Selling a neighborhood is a fresh new way to get buyers interested in homes. It also is a way to make your advertising stand out from your competition, who may still be advertising homes in block ads. Getting several homes featured in one advertorial also gives you more bang for the buck.
Invite interior designers and remodelers to participate in "remodeling" seminars so you can educate buyers about buying properties that need updates. This also will help your sellers because it will demystify the remodeling process for buyers who want bargain homes but are afraid of the time and costs of remodelling an existing home.
Start using your seminars and neighborhood tours as selling points for your sellers. In a listing presentation, worried sellers know that a buyer's market could take a long time to find the right buyer at the right price. Show them your seminar/home tour schedule and they will know you are actively trying to cultivate buyers to bring to their homes.
Start an investor program where interested agents "mentor" investors through their first purchase. Invite mortgage brokers to explain the difference between mortgage loans for investors and those for homesteaders. Again, this is a program that could appeal to sellers at the listing appointment level, as they will see you are doing creative things to bring buyers into your brokerage.
Add property management services to your brokerage. If you don't already have property management services, now's the time to incorporate them. The reality is that some homes aren't going to sell, but might be candidates for rentals. You can train your agents to offer property management services to sellers in the event that their home doesn't sell by the date they wish. Getting the mortgage covered with some chance for a little profit might help some sellers.
Your Agents
Your buyers' programs won't be successful unless you get your agents on board, and the ways to do that is to remind them that their job is to put people in homes. That means renters as well as buyers. Look at it as a way to fish further upstream. If most renters become buyers at some point, wouldn't you like to be the agent(s) they use?
Also, last year over one-third of the homes sold in the U.S. were sold to non-occupying owners -- investors and second-home buyers. Second, a huge number of homebuyers purchased homes with exotic loans such as interest only loans. The MBA says that half the loans that are outstanding today were originated in the last three to five years.
What that should tell you is that you have a large number of homeowners who are at risk. They've either refinanced and used up their equity, or they haven't been in their homes long enough to build sufficient equity to sell without bringing money to the table. If they need to move to another home, they're in trouble.
No longer can you put a listing into the MLS and hope it sells. You have to have multiple strategies to help sellers in this position from helping them rent their homes to cultivating buyers for their homes.
Adding property management is simply being able to provide a different suite of services to the seller.
Bring in trainers and support staff that can help teach and show your agents how to include property management services in their bag of tricks. They need to know mortgages and strategies, such as 1031 exchanges, and they need to know how to work with HUD, Fannie Mae and Freddie Mac on foreclosures. They need to know how to educate sellers to keep their homes out of foreclosure.
Explain that housing rental commissions can be quite lucrative. In most markets homes rent for approximately one percent of market value per 12-month contract. On a $100,000 house, your brokerage would collect $1000 annually for every year the rental contract renews, plus you would be making monthly management fees. Just to be conservative, let's say to collect rents, deal with problems such as repairs or evictions, you collect an additional monthly property management fee of $50. That's $1600 annually, which is certainly better than nothing.
If you were to sell the same house at 6 percent, you would collect $6000, which is hard to pass up, but let's look at the worse case scenario. Half the proceeds may go to another brokerage as cooperation. Now you're down to $3,000. Thirty-five percent may go to a relocation company or lead generation company. Now you're down to $1,950. That's only $350 more if you sold the home than if you rented it for the seller, not counting the revenues that could come in if the seller listed the home as a rental year after year.
Help your agents understand that markets are constantly changing but a buyer's market doesn't have to mean that you'll make less money. You just make money differently. You'll stay busy because you will do the things that are necessary to adjust to the present, while your competition may still be rooted in wishing and hoping things would change back to the way they were.
I think sometimes we forget we are all running a business, one that sells or markets big ticket items. Our Broker, CEO or VP of Something is not running it us. Good business practices and smart marketing payoff in tough times for Microsoft and individual Realtors.
As the old adage goes, "All good things must come to an end."
Yes, the real estate market that boomed for the past several years is slowing to more regular, consistent pace. Mortgage rates are rising. Prices are cooling. Buyers are no longer racing each other to open houses.
But there's no need for wringing your hands and wailing. Sure, some practitioners who didn't have their heart in the business will drop out or find it too hard to compete in a more challenging environment.
However, as anyone who has worked in the real estate business during a slowdown can attest, there's always demand for skilled real estate practitioners. After all, people don't stop buying and selling just because the market cools.
That doesn't mean that you can thrive by doing business the same way you were a year ago, or even a month ago. Rookies and industry veterans alike must sharpen their skills, reconnect with the consumer, and - as my favorite chef, Emeril, would say - "kick it up a notch."
To stay at the top of the game in your changing market, follow these 10 tips:
Focus on relationship-building. Work hard on developing customer relationships that will provide you with downstream business for years to come. Although we are light years advanced from 10 years ago when it comes to database management and communicating with clients, real estate is as much of a relationship business today as it ever was.
Work an extensive mailing list. Even if your business slows down a bit, don't stop contacting prospects and past clients, either by e-mail or snail mail. Plan to make 12 contacts per year for everyone on the list. Build your list to 1,000 or more and watch that list generate 10-15 transactions additional yearly.
Invest in marketing. Reinvest 20 percent to 30 percent of your gross revenue on personal marketing and advertising that will get new clients and customers to come to you. Your message could emphasize your experience working with buyers and sellers in tough situations.
Use technology to your advantage. Take a look at the technology that you are using to communicate with clients and co-workers, organize your business, and manage each transaction. Evaluate whether it makes sense to upgrade your tech tools to boost your efficiency and deliver a higher level of customer service. However, don't let technology stand in for face-to-face meetings and networking.
Make sure the price is right. Become masterful at pricing right the first time. Don't add to the problem of oversupply and increased absorption rates. Every time a home is priced to "expire," you increase the number of FSBOs on the market. How? When a listing expires, it's not uncommon for the owner to get mad at the whole real estate profession. They might just try selling on their own the next time around.
Welcomes objections for what they are. Don't get mad at objections. Instead, recognize them as valuable market signals and become masterful at handling them in a relaxed, but serious way. Learn from what buyers and sellers are telling you. For example, if a seller objects to a list price you suggest, maybe that means you must do a better job at educating clients on market conditions. Also, know what the most common buyer objections are and practice your response so you are confident and prepared to respond.
Strengthen your community ties. Build your community involvement in a variety of ways: little league sponsorship, networking groups, charity events, volunteering as a big sister/brother, and so on. The more you're out there and visible in the neighborhood, the more opportunities you create to reinforce your expertise as the local real estate expert, ask for business, and get referrals.
Embrace continuing education. The market keeps changing, and you must know how to change with it. Stay up to date on new technology, risk management, and hot marketing techniques. Participate in every educational opportunity that comes along. While it is keenly important not to be one of those agents who is forever getting ready to get ready, it is critical to "sharpen your axe" when it comes to staying ahead.
Hire a coach. Invest in the single most effective thing you can do to rouse the superstar within. A good coach aligns his or her goals with yours and is there for you every step of the way. By learning from an outside expert, you can refine your business plan, respond to challenges, and open your eyes to opportunities that you may not have otherwise seen. That's an asset worth its weight in gold.
Don't just sit there! When all is said and done, there will never come a time when sitting on one's haunches or doing things "the old way" will be an acceptable way to do business. Make it your mission to adapt to changes and be open to new ideas to propel your business.
This article talks about getting into a new mindset - there are buyers and actually a lot of sellers out there really needing our help at this time. The buyers have more to choose from and need our help in weeding out the crap. Obviously the sellers in many markets need all the help they can get. Comment someone made this week - "Would you rather have it be 1982 with 18% interest rates".
We are still in the best business in the world and have the freedom of being the captain of our own ship!!
Admit it. You kind of hoped it would last forever: rising prices, multiple offers for every listing, selling times measured in days or even hours.
After five years of record breaking sales, today's shifting markets may come as a relief.
But it's also a little scary, especially for practitioners in those limited number of markets where prices are falling significantly. Let's be clear: Most markets are a far cry from depressed, especially when compared with 1982, when the 17 plus percent rate on a 30 year fixed mortgage and a 13.8 month supply of homes combined with a slow economy to make the perfect housing storm.
Still, it's definitely a different world. In some markets, consumers appear to be taking a momentary breather from housing while they consider the future direction of home prices and interest rates. Real estate salespeople in some parts of the country are confronting a selling environment that's different from the one they faced even six months ago, and many aren't sure how to shift gears.
"Now may be the best time to buy a home," says Jim Colhoun, Prudential California Realty, Lafayette, Calif.
"There's a whole crop of people in the industry now who've never experienced a normal market, let alone a down market," says Chris Pollinger, a broker and in-house sales coach for RE/MAX Real Estate Services in Newport Beach, Calif. "They think listing a house on the MLS and selling it 48 hours later after receiving multiple offers is normal."
"People are starting to panic a little bit because suddenly the market forces they've been relying on for the past few years have changed," says Sean Conlon, founder and partner of Century 21 Sussex & Reilly in Chicago. "But there's still business to be had out there. Salespeople just have to approach it in a different way."
Recently REALTOR® Magazine talked to a number of salespeople who are doing just that recognizing that every market offers opportunities. These go-getters are jumping right into the new reality; some are even having their best year ever.
Get buyers off the fence
Perhaps the most important new dynamic is the power shift that has occurred between buyers and sellers. The ramifications of this shift reverberate through almost every area of a salesperson's business.
"Over the past few years, you didn't worry about finding buyers. You assumed they would come if you had listings," says Louisa Enz, ABR®, a broker with Stark Co., REALTORS®, in Madison, Wis. Today, however, it's more of a buyer's market. According to National Association of REALTORS® research, the monthly supply of home inventories rose from 4.9 months in October 2005 to 7.3 months in November 2006. Extensive media coverage of the housing bust has also created a wait-till-it's-cheaper mentality among some buyers.
For buyers, of course, this is good news. "The paradox is that now may be the best time to buy a home," says Jim Colhoun, sales associate of Prudential California Realty in Lafayette, an East Bay suburb of San Francisco; Colhoun's 2006 sales numbers are ahead of last year's. "The fundamentals increased inventory, more room to negotiate, low interest rates - are actually very good for buyers right now."
NAR is getting this message out to consumers through its "Buy Now" advertising campaign, which was launched in November 2006.
So far, buyer traffic open houses, walk-ins, and ad inquiries remains down, say practitioners. But that doesn't mean there's no business. "You have to know your market and what's happening there," says Stephen Johnson, GRI, broker-owner of Dealers Real Estate and Land Office Inc. in St. Francis, Minn., a suburb of Minneapolis. "Even in a slowdown, housing in some communities sells faster than in others. You have to find those areas and focus on them."
An active market right now is buyers who've been ignored or overlooked in the past few years," says Pollinger. "For instance, first-time buyers and people who have had some credit problems in the past but have worked to overcome them are great targets. They're ready to buy. And now you can talk frankly to sellers about making some concessions to make those deals happen."
According to Traci Smith, president and owner of Century 21 Smith & Associates in San Antonio, "Now is a great time to call people in apartment complexes and offer to do a rent-versus-buy analysis for them." Driven by empty nesters and Gen Y's, apartment demand has increased steadily for the last 13 quarters (through October 2006), according to the National Multi Housing Council. Typically as demand rises so do rents. So the results of such an analysis will be more positive than any time in recent years.
If you can't sell renters a house, maybe you can rent them their next apartment. Salesperson Marsha Cook of South Beach Investment Realty Inc. in Miami has developed a lucrative side business as a rental agent. "I rent luxury properties in the South Beach area that start at about $2,600 a month and go much higher. The commission rate is usually about 5 percent. I just picked up a commission check for $600. If you can do a couple of those deals a month, it's a big help," she says. Cook, who started selling real estate two years ago, says she finds rental work considerably easier than selling homes because there's no mortgage approval step involved.
Another readily accessible pool of buyers in the current market is more experienced real estate investors. Talk of a bust has scared off the come-lately investors, but "when the market slows down," says Smith, "it's a spectacular opportunity to pick up discounted properties."
The investor boom is also being driven by demographic trends. "There are a lot of baby boomers who are starting to inherit money from their parents' estates. They want to invest it wisely, and real estate, historically, has been a very good investment," says Pollinger.
"I've got probably 11 investors I'm working with right now," says Cindy Brandt-Buroker, a sales associate with Prudential One, REALTORS®, in Troy, Ohio. "Most are looking for HUD [U.S. Department of Housing and Urban Development] houses they can fix up and flip. Investors are usually much easier to deal with than regular buyers because it's basically a numbers game. It really comes down to, ‘Here's the house; this is what I'm going to put into it; this is what I need to get out of it; can I get it?' "
Pick and chose your listings
As days-on-market stats have risen, especially in some formerly hot markets, such as the East and West coasts, listings aren't exactly hard to find today. In fact, many salespeople say they're making some tough decisions about which listings to accept and which to pass up.
"It's very expensive to have listings today," says Cook. "Longer selling times mean much higher advertising costs."
Says Johnson: "I limit the number of listings I carry to about eight today because I know what it takes in terms of time and money to market them."
Some salespeople say they'd rather sit out the first listing round entirely. "If you don't get a particular listing the first time because you're honest with the seller about the price, just wait until it expires. It might be best to get it the second time around because that's when the sellers are more realistic about price and selling time," says Enz.
An upside to this situation is that commissions actually seem to be strengthening. "In the past few years," says Pollinger, "salespeople often had a hard time justifying their commission because in many cases they had a listing for only two or three weeks. Now, however, commissions are going up because of the dynamics of the market."
Use creative financing for sellers
Salespeople are also dealing with increasing numbers of "upside-down" sellers today that is, sellers who owe more on their mortgages than they can reasonably expect to make on a sale. Having the skills to make the numbers add up for a seller can get you a listing and a sales price that fits the market.
"There's a lot of pain out there with sellers right now," says Glenn Bill, co-owner of Century 21 at the Crossing in Indianapolis.
Sometimes the best advice a salesperson can offer an upside-down seller is, don't move stay put for another year or so until the market recovers.
In other cases, it's possible to balance the old sale with a new one. "What sometimes happens is that an upside-down seller will go to a builder and say, ‘I want to buy a new house, but I'm upside-down $5,000 or $6,000 on my old house,'" says Bill. "The builder then comes up with an incentive - maybe he agrees to pay the salesperson's commission to cover the difference."
Of course, sometimes matters have progressed beyond such relatively painless solutions to foreclosures and preforeclosures, both of which represent significant opportunities for salespeople.
There's a crucial difference between the two: The former involves working with banks to dispose of properties they have acquired as a result of mortgage defaults. The latter involves striking a deal between a seller and a mortgage company that allows the seller to walk away from the property before foreclosure.
Brandt-Buroker had been doing foreclosure sales for a while when she decided to get more aggressive about it about a year and a half ago and hired a buyer's agent and an REO specialist to concentrate on that segment. "It's a steady source of listings and one of the main reasons I beat my 2005 numbers last year," she says. With foreclosures and delinquencies on the rise, this niche will probably offer business growth opportunities during 2007.
According to the Mortgage Bankers Association, the delinquency rate for mortgage loans on one-to-four unit residential properties stood at 4.67 percent in the third quarter of 2006, up 28 basis points from the second quarter. The percentage of foreclosures in the third quarter was 1.05 percent, up six basis points from the second quarter.
Preforeclosures, or short sales, as they're sometimes called, are somewhat more complicated. Explains Johnson, "What usually happens is that you negotiate a settlement with the mortgage holder usually a bank to prevent foreclosure."
A typical settlement is having the house appraised and asking the bank to accept that amount, even if the seller owes more on the mortgage. Most banks agree because it saves time and money by avoiding the foreclosure process. The upside for sellers is that they walk away free and clear with their credit intact.
Because both foreclosures and preforeclosures are legal actions that require public notice, newspapers and the Internet offer easy ways to look for prospects. "I call an owner facing foreclosure and offer to help sell the house first," explains Johnson. For both foreclosures and preforeclosures, commissions are about the same as for traditional sales. The one difference is that banks will sometimes guarantee some kind of minimum commission for low-end properties.
Johnson adds that "if you're not teaching your salespeople how to do short sales, you're not full service in today's market."
Hone your selling skills
No matter what kind of buyer or seller you're dealing with, however, salespeople are having to dust off selling skills and tools that fell into relative disuse during the heady days of the boom.
"Correct pricing is paramount," says Colhoun. "Two years ago, you priced something with the expectation of setting off a bidding war and possibly making a deal for $100,000 more than the asking price. Now, however, the goal is to set a realistic price that will lead to a successful negotiation with a buyer."
Some sellers are already getting more realistic in their pricing, says Enz, and even more are willing to consider a reduction after the first 60 days if they haven't had an offer.
To price it right, consider not only recent comps but also the direction the market is moving and how quickly the seller needs to dispose of a home. "Instead of doing one market analysis when you first list the home, you may have to go back to the seller every two or three weeks and say, ‘I know we priced your home at this much, but the market is changing. If you want to be competitive, we have to be more realistic about the price,'" says Smith.
And once you price it right, you'll have to do a lot more to get buyers through the door. "During the past few years, many salespeople got lazy when it came to marketing," Pollinger says. "After all, when there are only six houses on the MLS in your price range, you don't have to be a genius to get traffic through a listing. But it's a different story when there are 600."
One tactic that's suddenly back in full force is incentives. Partly this is an attempt to avoid price reductions (compounding the problem of pricing it right). Partly it's about distinguishing your listing from all others in the area.
"Everybody's trying something different," says Cook. "I've got a seller who's offering two years of free condo maintenance. Since the monthly fee is $500, it's actually a pretty substantial incentive."
"We're seeing everything from a new Ferrari at the very top end to a plasma TV at the lower end," says Pollinger. "When you do the math, it's still cheaper than dropping the price 5 percent." The current shift is also highlighting the primacy of the Internet as a marketing tool. "Print advertising is something I'm dubious about right now," says Colhoun. "In my area, it's priced out of proportion to its benefit. All my customers use the Internet, and that's where I'm directing more of my marketing efforts today."
"One of the things I do regularly is check out where my listings come up on the MLS," says Johnson. "If there are three pages of houses priced at $269,000 and I'm on page three, I may ask the seller to let me change the price to $267,000. Then the property will come up first in that price range."
Another way to get your listing noticed is to be sure your description is complete, adds Johnson. For example, if your listing is near a big employer or a great school, be sure to mention it in a way that sets the home apart.
Targeting also becomes more critical in a shift, says Smith. She uses direct mail over newspaper ads because it can be focused more closely on one group. But you can't just mail one postcard; you have to send seven or eight mailings to have an effect, says Colhoun.
Whatever niche or strategy you choose, the most important thing to remember is that "you can't panic about a slowdown," Colhoun says. "You have to have a plan in place and stick with it. Stay in touch with your clients. Make sure you're the first person they think of when it comes to serving their real estate needs."
Sidebar: A little perspective
It's hardly news to anyone who's been in the field for a while that real estate is a cyclical business. In fact, if you review the history of the industry since the 1970s, a slowdown every 10 years or so is more or less the norm.
"When I started in the business in 1991," says Stephen Johnson, GRI, broker-owner of Dealers Real Estate and Land Office Inc. in St. Francis, Minn., "the interest rate was 11 percent, and if you listed a house and it sold within six months, you felt as if you had done a good job." That's why Johnson doesn't view current market shifts with much trepidation. In fact, his past experience gives him a head start this time around. "I'm returning to some of the same methods that worked for me last time, like intensifying my marketing with more frequent direct mailings," he says.
The worst period in modern memory was undoubtedly the late 1970s and early 1980s, when interest rates soared to 17 percent and an overall economic recession gripped the country. After a record 3.986 million units sold in 1978, sales didn't reach that level again until 1996.
"The early 1980s were the toughest period I've seen," says David Short, a salesperson with Century 21 at the Crossing in Indianapolis, who began selling real estate in 1974. "We did FHA loans at 17.5 percent, but we didn't do very many of them."
In an effort to neutralize the higher rates, Short and many other salespeople relied on "creative financing techniques." One of the most popular was the land contract, whereby the seller essentially carries the financing and retains title to the house until the mortgage is paid or refinanced when rates fall. Today's relatively low interest rates don't require such extreme measures, but working with sellers to sweeten the deal with better terms or giveaways taps into the same set of techniques.
Another problem of two decades ago was limited financing options. "In the early 1980s, there were three basic financing options: 10 percent down, 20 percent down, or cash. Today there are hundreds of different loan programs that make housing more affordable even with today's higher prices," says Sandy McReynolds, a broker-associate with RE/MAX Executives Plus in Decatur, Ill., who began selling real estate in 1973.
And while the number of sales associates might have been lower (NAR's membership in the mid-1970s was some 400,000, compared with 1.3 million today), so were the housing inventories.
"In those days, housing was scarce. If you had five or six listings, you had a boatload," recalls Short.
With a perspective only time can bring, these experienced REALTORS® see current shifts with the exception of a few hard-hit areas as manageable by comparison.
"It's just not as bad today," says Bonnie Clement, a broker-associate with Realty USA in Williamsville, N.Y., who started selling real estate in 1978. "Good houses still sell, and the ones that are priced right sell immediately."
I'd like to think the slump is getting a little better or maybe I'm just working smarter and harder in order to get new clients and business.
Realtors across the country are hurting. Housing markets are in a downward spiral. Homeowners are flocking to FSBO websites to list their own homes. Internet lead generation services are heating up the competition. And many agents are offering cut-rate commissions to survive the cutthroat market.
Realtors have to remember, however, what most retailers already know -- competing on price alone is for suckers. Start offering sellers lower commissions and you are setting yourself up for a world of hurt, both in the short-term and well into the future. Once you establish a reputation as the "cheapest agent on the block," turning that around later can be nearly impossible.
Instead of competing by offering lower commissions, find something else to compete on -- quality service, experience, and know-how. Adjust your marketing materials to highlight current market conditions and your unique ability to sell homes in a down market:
Do not sugarcoat news that the market is down. Provide facts and figures showing the current condition of the market. Let prospective clients know that other agents may try to present them with a rosier picture just to get their business.
Inform clients that according to the NAR, a home sells for 16-percent more on average when sold through a Realtor than when sold by the owners or someone less qualified. Most homeowners are unaware of this fact and may need to be reminded that you are likely to earn much more than your keep.
Highlight your experience. If you have been a Realtor for ten years, that is a big plus. Make sure your clients know the value of your experience and that you have sold homes in slow markets before.
Highlight your dedication. If you are a full-time Realtor, market yourself as a full-timer and let you clients know that selling homes is your passion. Let them know that some of the agents they talk to may be part-timers and may not be quite as responsive as you.
When you meet with prospective clients for the first time, make sure you have a marketing plan in place for their home. Highlight your three-pronged attack for selling a home in a slow market:
Pricing the property to the market. Explain why setting the right price is so important in generating interest in the property. Explain how you arrived at the asking price, and back it up with plenty of facts and figures from comparable properties.
Getting the property in tip-top condition. Explain why curb appeal is critical and why the home needs to make a great first impression. Consider putting together a team of consultants, including a home inspector and a professional stager to write up a plan of action, complete with an estimate for the work that needs to be done, and how much these improvements are going to increase the salability of the property.
Marketing the property online and off. Demonstrate to your clients your ability to get the property listing in front of as many prospective buyers as possible. Explain the access you have to MLS listings and show your client at least eight places on the Internet where you plan on marketing their property, including Craig's List and Backpage.
In a slow market, many sellers are worried that in addition to losing money due to market conditions, they stand to lose an additional 6 or 7 percent by having to pay your sales commission. Make sure they realize the benefits of using a licensed Realtor, including the following:
In addition to marketing the home to the general public, you market to other Realtors, who can show the home to their clients.
You prescreen prospects, so only the most serious prospective buyers can look at the home, and you accompany all qualified prospects as they tour the sellers' home.
You can help the sellers compare and evaluate purchase offers.
You can negotiate with the prospective buyers without tipping the sellers' hand or compromising the sellers' negotiating position.
You can handle all the details related to closing to make sure the sellers' interests are protected.
When a sluggish market and other changes in the industry heat up the competition, you have to make some adjustments in the way you present yourself to prospective clients, especially those who are in the process of considering hiring you as their listing agent. Step up to the challenge. Never simply give in and lower your commissions. Offer more value, and earn your commission.
FHA-insured home mortgages -- marginalized or squeezed out of the market during the subprime loan boom years -- are poised to roar back. And if Congress passes a compromise version of FHA reform legislation, maximum loan limits for FHA could rise immediately to $417,000 -- or even a lot higher.
Last month the House overwhelmingly approved a reform bill that would cut minimum downpayments to zero, and increase loan limits in high cost areas of California well beyond $500,000. Under the House-passed bill, FHA could insure mortgages as high as 125 percent of the median home price in a market area, or 175 percent of the conforming loan limit for Fannie Mae and Freddie Mac -- currently $417,000. In addition, the HUD Secretary could raise limits by another $100,000 if local conditions required such a move.
In effect, southern California, where FHA loan applications have been almost nonexistent in recent years, could conceivably see a new wave of jumbo FHA mortgages in the $700,000 range and beyond.
Meanwhile, the Senate Banking committee last Wednesday reported out its version of an FHA reform bill, but with much tighter loan limits - $417,000 maximum - and a 1.5 percent minimum cash downpayment, down from the current 3 percent minimum. The full Senate is expected to approve the Banking committee's bill soon, sending the FHA issue to a House-Senate conference committee to work out the differences.
What's likely to emerge in the final bill sent to the president in the coming weeks? At the very minimum, Congress is now almost certain to make FHA competitive again in high-cost markets. A $417,000 limit for California would still be well below the state's median home price in the mid-$500,000s. But it would provide potentially tens of thousands of home buyers an attractive, consumer-friendly alternative to what they've got now.
The huge gap between the House and Senate loan ceilings will need to be bridged in the upcoming conference. There may also be pressure to raise Fannie's and Freddie's limits during Senate floor debate or through a separate bill -- opening the door to at least a temporary "jumbo" program for FHA, Fannie and Freddie.
There are some potential minefields facing conferees however: The House version of the bill contains a proposal from Financial Services committee chairman Barney Frank (D-Mass.) to tap into FHA premium revenues to help finance a new National Housing Trust Fund for affordable housing activities. Separate legislation from chairman Frank would also tap into revenues of Fannie and Freddie. The Bush administration opposes siphoning off FHA resources for the Fund, and the Senate did not include the concept in its bill.
Another sticky issue: The Senate bill prohibits "downpayment assistance" for FHA loans involving "anyone party to the transaction." That would presumably cut off dozens of nonprofit groups around the country that now provide such assistance. The House bill imposes some restrictions on downpayment assistance providers, but does not ban them.
The House bill authorizes FHA loan terms up to 40 years, but the Senate bill is silent on that issue. The Senate bill allows FHA to use "risk based pricing" on all loans where borrowers make less than a 3 percent downpayment -- a provision favored by the Bush Administration. The Senate bill has no language on the subject, but some Republicans are strongly opposed to allowing FHA to directly compete with private mortgage insurance firms for borrowers who present varying levels of default risk.
The federal agency charged with maintaining stability and public confidence in the nation's financial system can help you feel stable and confident about your home loan -- at the lowest possible cost.
"FDIC Consumer News Special Edition: 51 Ways to Save Hundreds on Loans and Credit Cards" suggests consumers consider mortgages, credit cards and other loans as not just financial services, but tangible products requiring before-you-buy scrutiny and careful use after you sign on the dotted line.
The FDIC's timely treatise offers advice on financial services from auto loans and credit cards to fraud and small business loans, and there's a heavy dose of advice on mortgages.
The information comes in the midst of a mortgage market meltdown that makes home loans tougher to land and more expensive own.
Here's how to cut costs in a number of areas.
Look for a mortgage like you shop for a car. Haggle. It's tougher to haggle today, but you can negotiate the rates and terms of a loan, especially if you comparison shop.
Go with a fixed rate even if the adjustable rate mortgage (ARM) carries a lower initial interest rate. A fixed-rate loan gives you a monthly interest-and-principal mortgage payment that won't change. That's piece of mind when other costs, including taxes, insurance and maintenance can change.
Many borrowers are discovering today what Mortgage-X.com reveals on its charts of indexes used to set interest rates -- that indexes can double, even triple quickly.
"Most of the time people don't read documents and don't get the idea that these indexes could really go up. How could you anticipate they would double so quickly?" said Warren Winsness, president of the Santa Clara County Association of Realtors in San Jose, CA.
"If you are thinking about an ARM, make sure you know how much and how often the interest rate and payment could go up before you sign on, and be comfortable that you can meet those higher monthly payments. Don't let a low teaser rate lure you in; you may be surprised later," she said.
Likewise avoid "no-doc," or "NINJA" (no income, no job or assets) mortgages that require little or no documentation of your income or assets. The extra risk the bank takes is passed onto you in the form of higher costs.
"If you have income that's easy to document, such as regular statements from your employer or a monthly Social Security payment, it's probably not worth paying extra over the long term of the loan just to save a few days during the application period," said Mira Marshall, an FDIC senior policy analyst.
Consider a loan with a shorter term, 15 instead of 30 years, 30 years instead of 40 years, provided you can afford the higher payment. Over the term of the loan you'll pay less interest.
Also consider paying off your existing mortgage sooner with extra payments earmarked for the principal each month.
"This is an easy way to pay off the loan and save thousands of dollars in interest charges without incurring the cost of refinancing," said Marshall.
Consult with a financial or tax advisor to learn the pros and cons of each approach.
Get subsidized. Look for federal government (U.S. Department of Housing and Urban Development); state government (National Council of State Housing Agencies); and local public and private (The National Association of Local Housing Finance Agencies) incentives for first-time home buyers, low- or moderate-income households and community workers (like teachers and police officers). If you are eligible, you can save on interest rates, closing costs, down payments and other terms and get some extra tax benefits, say with a Mortgage Credit Certificate.
Don't drain your equity. Equity loans -- pulled from the difference between your loan balance and the property's value -- are, by nature, equity draining loans. They can be cheaper than credit cards, signature loans and other credit but should only be used for emergencies and capital improvements -- those purchases that provide a return, including home improvements, business start ups, education, etc.
Know when refinancing a mortgage makes sense. Refinancing could be a good idea if you can get a rate that is at least one percentage point lower than your existing mortgage rate and you plan to keep the mortgage for several years. Refinancing from an ARM to a fixed-rate with a higher interest rate could also be wise if the rate on your current ARM will soon adjust up to a level higher than the rate on the refinanced fixed-rate mortgage. Again. Do the math. Know what you can afford.
Avoid fraud and come-ons. If it appears too good to be true it probably is or it soon will be. Steer clear of low teaser rates that could last only a few months and then balloon to an unaffordable level. Avoid replying to emailed and direct mail mortgage offers. Use them as comparison tools to do your own shopping. If you aren't certain about any offer, get help. Ask for referrals to help from family, friends, co-workers, professionals you've worked with and others you trust.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
The federal agency charged with maintaining stability and public confidence in the nation's financial system can help you feel stable and confident about your home loan -- at the lowest possible cost. 
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