I spent a good portion of yesterday pondering Jeff Brown's post on hyper-local farming.  (I know, I know; my ex-wife used to wonder how I was going to pay the bills too.)  In a post over on BloodhoundBlog, Jeff celebrates the vindication of an earlier thesis on hyper-local blogging - or in Jeff's case farming - by none other than Seth Godin.  I have come to the conclusion, and you can read the post and his links for yourself here, that Jeff is recommending a cat blog.

Well... maybe not a cat blog in the common sense of the term.  But look at what he is saying:

"Imagine, if you will, a blog site having more info on your neighborhood than you ever thought existed. I don't mean boring real estate stuff, as any yahoo can generate that boring crap. I'm talking about reading about your son Steve's game winning, last inning double in yesterday's Little League game - complete with pictures. Yep, each neighborhood blog would be a de facto newspaper, with all the work that goes with it."

This is not a blog about your real estate business and it surely is not a blog about all of your skills as an agent.  Giving people that information is like delivering the newspaper to their door and just about as dead.  People no longer want their news edited and parsed for them.  They would much rather go online and research their own areas of topical interest.  In the same way, few clients these days are going to be impressed with the number of closings you had last year or the number of letters after your name.  What they are interested in (what they have always been interested in) is how these things affect THEM.

People hold a very strong interest in themselves.  That is our nature and I am as guilty of it as you are.  The main message of being a 2.0 agent is realizing that your client wants it to be about them and not you.  I know many agents realized that a long time ago, but the power to market this change in the zeitgeist has been lacking.  Until now.  The reason people post pictures of their cat is because they like their cat.  You are rarely going to earn business by posting a picture of your little ball of furry fun, but you will definitely garner the interest of your prospects by posting a picture of theirs.

A true, hyper-local farming blog is really a cat blog for everyone in your community.  There are pictures of their little league stars and stories on the school art program their children entered (along with a picture or two that they forgot to take).  There is information on their neighborhood, their street and yes even their house.  Greg Swann elaborated on this in relation to Zillow and Zestifarming:

"To other Realty.bots, what matters is the listing, an ephemeral state-change in an otherwise uninteresting terrain. To Zillow, what matters is the house..."

Not just to Zillow; to clients too.  Push is a tough way to create interest, pull is a snap.  If you succeeded in the ultimate (albeit unattainable) goal of creating a cat blog for each and every person in your farm, what do you think their interest would be? The pull interest?  Do you think you would achieve top of mind status?  If you demonstrated your level of expertise (of direct, personal expertise) by giving your clients what they crave most: themselves, how many would look to you when it was time to buy or sell their home?   How close do that lofty goal does one have to get in order to own that farm? Lots of work - yes.  But imagine that level of farm ownership.  Hyper-local farming: one big cat blog. :)

How can watching a TV program make you a more successful real estate agent?  There is one reality show on right now that exemplifies referral marketing like no other.  I am talking about Survivor.  This year the producers of Survivor decided to create two teams: one comprised of fans of the show (think of them as clients) and one comprised of favorites of past shows (think of them as agents).  In almost every interaction the two teams have, the fans defer to the favorites.  They look to the favorites with an almost rock star adulation.  Why is this?  Because the favorites' perceived level of expertise is high in the fans eyes simply because the favorites have been on the show before.  That's it really.  By virtue of their (limited) previous experience they are considered experts in this game.

Here is the interesting part: there is no real difference between these two groups of people.  The favorites have some experience but they are not professional Survivors.  They have never seen this local or these particular challenges, so their only real experience is in creating strategy (which, for most of them, was wrong at least once more than it was right!)  The reason the fans defer so readily to the favorites is a perfect example of how people react to those that they perceive as having expertise.  The goal of all referral marketing is to increase your perceived level of expertise in front of your clients.  If they are already fans of yours (whether from watching you on TV or reading you on a blog) your job just got that much easier.

Blogging is all about creating your community and running for mayor.  The goal is an endless stream of referrals.  I do not know who will ultimately win this season of Survivor.  But I already know who owns the high ground.  If this game were about referrals, it would be all over but the crying.  Your tribe is speaking...

I just finished reading another brilliant blog post by Brian Brady: the great and powerful Oz.  (He gave up his moniker as "America's Most Opinionated Mortgage Broker" a while back and now he is just "America's Mortgage Broker".  I think he needs a new nickname and "the great and powerful Oz is more than a little appropriate).  Anyway, in his post Brian says: "I make my presence known. Tony Gallegos called me "ubiquitious". Critics have called my strategy "puking all over the internet" (but placed my results in the top 20 of all real estate bloggers). "  Now this is true and I have heard him accused of "puking" all over the Internet more than once.  Here's the thing: he is absolutely doing the right thing and we should all be copying him, except that it would be pointless.  Let me explain:

The concept behind social media marketing has been called many things, but viral marketing is probably the easiest to understand.  Simply put, you want to be a virus (and I mean in that in the best possible way) that friends, family, clients and just about anybody else that comes in contact with you spreads to others.  This is the definition of generating referrals.  The question you should be asking yourself (the question we always ask ourselves when ever we start something new in business like "creating a virus") is WHY?  Why do I want people to sneeze me around to everyone else.  The answer may seem obvious: to create more business; but that misses a huge part of why social media marketing - and especially blogging - is so powerful.

The Chamber of Commerce Meeting... EXPLODED                                                                                                             Let me ask you a question: would you rather close 25% of 100 leads or 70% of 50 leads?  Again, the answer appears obvious but the power of blogging is found here.  Your posts are a grand resumé for everyone to read.  Think of it as the most successful Chamber of Commerce Networking meeting you have ever attended.  Instead of painfully coming up with small talk and trying to ever so smoothly work real estate or mortgages into a conversation about the garbage strike, you get to sit quietly while everyone in the room has a chance to learn about you in intimate detail.  Instead of fishing through your pocket for a business card and handing it out clumsily through the sweaty and the greasy wings, your information is plastered all over the walls and hanging from the moose antlers.  In one fell swoop you have not only "introduced" yourself to one heck of a lot of people, but you have communicated to them who you really are.

People do business with people they think are like them.  I will repeat that: people do business with people they think are like them.  After everyone has gotten a chance to know you, how many in the room will call you?  Not as many as if you had kept your (literary) mouth shut.  But... the ones who do are a lot more likely to do business with you.  Now that is TRUE efficiency in marketing.

DON'T Be the Disease, Be the MAYOR                                                                                                                                        So here is another question: if you do not want to be a virus and the idea of puking all over people is a tad beyond your comfort level; if you understand the Chamber of Commerce example but have no idea where your local Chamber is located, what do you do?  Or, as I pointed out in the beginning of this post: WHY do you do it?  Because you want to be the Mayor.  If you were to talk to the great and powerful Oz, he would tell you to build a community.  Build a community of raving fans that will do business with you and refer you because they see you as an expert.  I say: take that one step further.  Your goal is to build this community and then be elected their mayor!  Think of it: a community of raving fans that looks to you for leadership.  Now you are going to want to put as many people as possible into your "community", but at the same time it does you no good to add people that will never vote for you.  Those people are "dead" to your campaign and unless your community is Chicago, they can not vote.  You want people that have read your platform and agree with it.  You want people that know how you stand on the issues and agree with you.  You want people that believe in you because they see themselves in you.  Put your bumper sticker on every car and your poster on every light post IN YOUR COMMUNITY. 

Which bring us back to why copying Brian Brady would be pointless.  Your goal should be to get elected mayor of your community.  He is running for President... or great and powerful Oz, I get the two mixed up.

Remember: your job is helping people to buy and sell real estate, not writing blog posts (no matter how great the prose that drips from your fingers).  Get your platform out there, kiss a lot of babies and shake a lot of hands.  You are always campaigning and your are always working to earn your communities' support.  The reward for all that hard work is being mayor for life, which equates to a lot of transactions.  MAYORAL MARKETING.  Hit the campaign trail!!

"This is not your fault.  You were never properly trained (educated, informed).  I have the answer."  Does this sound a little formulaic?  Lately I am seeing a trend and the statement I just refrenced sums it up.

I attend a lot of seminars in my role as coach, motivator and seminar host for real estate agents.  Sometimes I go because the content sounds interesting and sometimes I go because I want to see how others are setting up and delivering their presentation.  In the past week I attended two such seminars, on very different topics, and the speakers used the same device of "not your fault, you didn't know, I can help".  One was an economic summit and the other had to do with marketing.  Yet the pitch is the same: We can and should blame others.  Brian Brady (whom most of you know from his writing - but until you have attended these talks with him personally you are only scratching the surface of his genius) commented that it "sounded like a speech in 1922 Munich but it sure played up to the crowd of real estate agents" on a humorous post of his own.

This is a sorry development for seminar hosts that are ostensibly helping attendees find their way.  It is also lazy.  What inspiration does it take to tell people what they want to hear?  Real Estate industry is in trouble? Blame the lenders.  In a more specifi post on the topic I wrote:  "I am sick and tired of the lending industry being blamed for foisting "exotic" loans on an unknowing public.  What geniuses those lenders must be, what masters of double talk, what scam artists... what balderdash".

Maybe the nanny state is what people want.  Hard for me to imagine but watching the lawsuits lately and hearing this formula in seminars leads me to that conclusion.  Apparently what we need is to abdicate our responsibilities as adults.  Then someone else can make our decisions for us.

A man walks into an ice cream store and the clerk says: "I will not serve you ice cream because you are already fat.  It is my job to protect you from your own poor decisions.  It is not your fault though, it is the advertisers that make you want ice cream.  You were never properly taught that if you eat a quart of ice cream every day it would be bad for you.  I can help.  Turn off your TV and start eating donuts instead"

There is currently a tremendous marketing opportunity to move buyers and sellers off the fence at the same time!  The recent rate drops by the Fed provide several possible outcomes.  I have discussed them before and Option 3 was more fully explored by Dan Green.  But they can be a great source for marketing material that raises your perceived expertise.  More importantly, this information can be used to move buyers AND sellers off the fence.  How is that possible?  I go into greater detail here, but as agents you simply follow the bouncing ball of fiduciary obligation:

• Each option lends itself to someone acting immediately
• We do not have a crystal ball.  The market is going to move (it always does) and it is going to benefit one group over another.
• It is this acknowledgement that gives us the edge in helping both our buyers and our sellers act now.

An agent's fiduciary obligation is to look out for their client's best interest and that interest is usually aligned with their safest one, which means minimizing risk is more important than maximizing reward.  Now look at the following two conversations:

Conversation with seller: "Mr. and Mrs. Seller, after reviewing these outcomes, I believe we should act now.  If we are wrong, the downside is you sold for less than you might have had we waited.  But if we are right and do not act, you may not sell your house at all.  By comparison, the latter is far worse to your financial position."

Conversation with buyer: "Mr. and Mrs. Buyer, after reviewing these outcomes, I believe we should act now.  If we are wrong, the downside is you paid a little more for your dream home than you might have had we waited.  But if we are right and do not act, you may never get into your home.  By comparison, the latter is far worse to your financial position."

Now the clients are impressed with your expertise (which leads to referrals); of much greater importance, however, you looked out for the best interests of both your buyers and your sellers.  Icing on the cake: you are moving twice as many clients off the fence and into action.

There is a great scene toward the end of the movie Animal House.  The Deltas have decided to wreak havoc on the Faber College Homecoming parade.  The grandstand has been destroyed, floats are running amok, people are fleeing for their very lives and there is chaos in the streets.  One of the ROTC members who has been charged with maintaining public safety (played, I believe, by Kevin Bacon in his on-screen debut) stands still amidst the whirlwind of activity that envelops him and screams at the top of his lungs: "Remain Calm!  All is Well!!"  The absolute lunacy of his reality is made hilarious by his sheer conviction.  I am amazed every time I see it.  I feel that way lately as I watch Wall Street react to Countrywide, almost imperceptibly screaming "Remain Calm! All is Well!!"

I was more than a little confused by Wall Street's reaction to Countrywide's pronouncements last October regarding a profitable 4th quarter.  I wrote about it then and I guess I am writing again with a childish "told you so."  Countrywide is underestimating their financial obligations in my humble opinion and it seems rather obvious to even the casual observer.  But as I have pointed out, main stream media is missing the real problem as well.  In a world of doom and gloom I am loathe to admit it, but these players are not doom and gloomy enough.  That is all well and good because their misjudgments serve them and it is easy for us to follow the ball when we follow the money.  More difficult to follow, however, is Wall Street's desire to play along.

Today Countrywide announced that they were in fact unprofitable in the fourth quarter (which must have come as a bit of a shock to those that bid their stock up last quarter) .  This was in direct contradiction to their public estimates.  It now seems even more reasonable to conclude that Countrywide's set asides are woefully inadequate, yet their stock today was... up.  "Remain Calm!  All is Well!!"

Last night 60 Minutes aired a piece on the mortgage crisis and how foreclosures have impacted communities like Stockton, CA.  I reviewed this show and I have commented on it more in depth here.  My question for the Active Rainers is this:  Are there some people that just do not deserve to own a home?

In the 60 Minutes piece entitled House of Cards, two couple are interviewed.  The first couple is going to lose their home because they cannot afford the new, higher rate.  When asked if they understood that the rate would go up when the took out the loan and signed the docs they said no.  They didn't really read anything.  They told the lender what payment they could afford and so they are "surprised" now that the loan has done exactly what it said it would do.  Not being present at the time the loan was sold to this couple I can not say if the adjustable rate nature was explained to them or not.  In any case, they did not care too much about anything but getting into the home they wanted.  When asked by the host how they could take such risk with the biggest investment of their lives, they responded that they "didn't really think about it that way."

The second couple can still afford their payments.  They have just decided that they are not going to make the payment anymore.  "Why pay a $3200 payment on a 1200 square foot home?"  Apparently 1200 square feet was fine when they purchased, but now it is underperforming.  The host directly said to them: "... but that's (making the payments) what you agreed to do when you bought the house."  To which the borrower replied "fine, if the value is going up; the value is going down.  It makes no sense to ... pay."  Can you imagine going through life with such a self-centered view of the world?

I repeat my opening question: Aren't there some people that just do not deserve to own a home?

Last week I suggested to the Realtors I speak with each week that our theme be "A Great 2008", but we need to remember that more than just attitude is needed.  This is the time to talk about skills and confidence as well.  I often note that being a Realtor is similar to racing a triathlon: it is an endurance event, not a sprint.

To become a better runner is relatively straight forward: run more.  The same can be said for the bike.  While there are techniques and drills that will certainly help, the thing you can do that will have the most impact is bike more.  Swimming, on the other hand, is a bit counter-intuitive.  When you come back to swimming and you want to improve, more is not better.  Water is much denser than air so it magnifies mistakes in technique or mechanics.  If you want to improve your swimming you back down on the yardage and do more technique work, more drills.  If you simply swim more you only become a poor swimmer that can swim for a long time.

The last few years of real estate have been a lot like running.  If you wanted to earn more money you simply worked more hours.  But last year the market began to change.  It became more resistant and problems of technique or mechanics were magnified.  Now is the time to back down some of the hours (I know how counter-intuitive that sounds) and work on your skills: dialogues, drip campaigns, marketing systems and so on.

In a triathlon a good swimmer will do well some of the time, and a good cyclist will do well some of the time and a good runner will do well some of the time.  But those that quickly recognize and react to transitions are the ones who consistantly find their way to the winner's podium.

There has been a lot of discussion in the press regarding the mortgage industry and foreclosures.  But in all of those discussions I have yet to see an accurate representation of what has happened (which is not much) and what is coming (which is another story entirely).  Our own local paper, The San Diego Union Tribune, has had a ball with the foreclosure mess.  Their headlines and articles have contibuted greatly to the problem in my opinion.  Lately, however, the have begun to (inadvertently) help us and I discuss that here.  Still, they continue to miss the boat... or more accurately: the iceberg.  The sub-prime issue is only what we currently see; the real problem, Option Arms, lurks just below the surface - and it is the size of Countrywide and Washington Mutual plus many more.  The US Mortgage ship Titanic be warned: "Iceberg dead ahead!"

Here is the concept in a nutshell: Virtually all lenders use accrual based accounting (as do virtually all corporations of any business type).  Standard practice in this type of accounting is to book accounts receivable even though you have not actually received the cash.  This is, as I said, standard practice.  But what do you think might happen when this accounting standard is practiced by a lender such as Countrywide or Washington Mutual; lenders with a tremendous amount of option arms on their books?  These lenders are booking the expected income (which is to say the interest income) from all of their loans.  Yet with option arms there is a percentage of customers (in some cases I suspect a very large percentage) that are paying only the minimum payment.  "OK", says the lender, "we are not receiving the income right now, but we will eventually".  Which is fine until you look at the mortgage reset tables and recognize the vast number of loans that will be going into foreclosure in the near future.  February and March of 2008 will see more loans (in dollar amount) reset than in the first NINE months of 2007.  These will not be sub-prime, high risk loans either but rather good, strong alt-A and A-paper loans.  To the degree that these loans are option arms the lenders will have to go back and remove that part of the interest income they booked but did not receive and will now never receive.  This often results in a process on Wall Street called "restating your earnings".  If you are curious how Wall Street views companies that restate their earnings, ask the people over at New Century Mortgage... oh, that's right; you can't.  They had to declare bankruptcy about 48 hours after they restated theirs.

At the beginning of the year, I predicted here that the newspapers would start printing stories that will actually help us.  Their headlines up to now have been less than kind to the real estate market, the real estate profession and especially the real estate mortgage profession.  One might suggest that their blatant hyperbole and lack of perspective bears some responsibility for the state of affairs as they stand (I know I have suggested it...).  So you can imagine my surprise at seeing the front page of yesterday's Union Tribune.  I was genuinely excited by what they reported.  So helpful was it (once you read the entire article and work through the same old spin) that I suggest we take a copy to every client we can contact.

First and foremost, we can show them the layout, which so clearly reveals the Tribune's true intent that there is no longer plausible deniability.  Across the top of the paper in bold, over-sized headline font it reads:

Foreclosures up 353%

in S.D. County in 2007

Fed slices

key rate

to calm

markets

Now I ask you, based on these headlines, which of these articles does the Union Tribune expect - even demand -you read?  The foreclosure article, of course; yet is that even news?  They have reported on this "story" ad nauseam.  There is nothing new here and very little that could be called news.  Down in that smaller column, however, is a HUGE story.  The Fed dropped their key rate a stunning three quarters of one point; "the biggest one day reduction... on record" according to the article itself.  Not only that, but it was undertaken during an emergency meeting, called at night, on a national holiday!  This is truly historic news, with the potential for massive impact on the economy, yet in our newspaper it plays second fiddle to any story where they get to use the word foreclosure.

Within the headline story there is cause for celebration, but you have to look for it.  I have gone through and done the math and here are the talking points I would raise with my clients:

• The numbers look horrific when posted in big letters across the top of the paper, but in reality we are talking about six-tenths of one percent  (.006) of homeowners in San Diego County that are in foreclosure.  Granted, this is up from the four-tenths of one percent  (.004) previous record and if it is happening to you it is a very large problem, but overall?  Six-tenths of one percent is hardly an economic problem for the community.  It merits mention somewhere in the business section... or possibly as a human interest story in the local section.
• Between 2000 and 2005 the home values have doubled in San Diego County.  From the high two years ago the values have come down 17%.  That translates into a 66% return on your investment, which is an annual return of approximately 8% on your money... and that is only if you bought at the bottom and sold at the bottom!  If you sold previous to this year your return was higher, in some cases substantially.
• The rate of foreclosures in San Diego County was only 62% of that in the state of California.  San Diego is once again leading the way.  If you want to invest your money, this is the place to do it.
• Finally, the rate of default notices, which is a precursor to foreclosure, was up only 128% or roughly 1/3 the rate of actual foreclosure.  This should signal a significant drop in coming foreclosures, even acknowledging the fact that a higher percentage of those receiving a Notice of Default end up in foreclosure.

Overall, this article, even with its intentionally misleading graphics and promise of depression inducing gloom, delivers some much needed good news.  We just have to know where to look.  Then we need to take responsibility as professionals and show our clients.  I end with this thought:

Within every problem there lies an opportunity; the more difficult the problem, the more rewarding the opportunity.