How Big Data Can Help Your Tiny Real Estate Business

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Mortgage and Lending with Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, NMLS #138061 MMCD #1141

How Big Data Can Help Your Tiny Real Estate Business

 

     I'm just going to get the pitch out of the way.  The data I have available (and perhaps even more importantly, the data I know how to translate and effectively communicate to clients) can help you close more real estate transactions.  It can save you time, cut back on the amount of homes you show, and motivate your buyers like nothing else I've seen over the years (Ok...MAYBE the "you don't need any documentation and you can get however much money you want!" loans of the early 2000s were more motivating).

 

     Now that that's out of the way, here's the good stuff.  Big data can help you motivate buyers to buy - no more "we may rent another year, but you can help us with the lease".  No more "we just want to see 472 more homes to make sure this one is the right one".  No more "if the seller won't come down another $1.50 we'll just find another home".  No more "the outlet cover in the kitchen had a smudge on it, so we think the seller should give us $10,000 toward costs to make up for it".  Data gets rid of all those arguments.  Data makes sense.  It's no longer a sale, and it's no longer a negotiation - it's instead striving toward a goal, a very smart goal for many people - home ownership, with no imaginary hurdles in the way any longer.

 

     Before we go any further, I want to clear up the fact that nothing I have or do is proprietary.  I don't have any fancy algorithms, any "man behind the curtain", or any secret sauce that just showed up on the scene.  All I have is data - from NAR, from MBA, from Moodys, from MLS.  But what I AM good at, and where others fail, is I know how to understand it, know how it works in the big picture, and I know how to effectively communicate it to others.  Here's the data I share that's a game changer.  When most lenders take an application, quote a rate, and send a buyer (and their agent) out into the wilderness, I talk about:

 

Amortization

 

That is, the equity a home owner pays themself back each and every month they carry a mortgage.  Aka wealth accumulated that belongs 100% to home owners and 0% to renters.

 

Appreciation

 

"Mr home buyer, your home is going to increase in value 4.5% this year!"....whup...dee...doo.

 

"Mr home buyer, you're going to grHome appreciationow your net worth by $200,000 in the next 5 years."  Now THAT  is something to get excited about.

 

Both are the result of appreciation, but when you take the data, show that in most markets, even through the Great Recession, real estate investments are winners, and how much impact it has on net wealth and financial planning, it is EYE OPENING.  And the benefits outweigh the price haggling, the small repairs, and all the other nonsense so many home buyers mistakenly get hung up on in the home buying process.

 

The Cost of Waiting

 

Amortization and appreciation go to the home owner, not the renter.  And the first year of home ownership usually DOES lead to a loss (if you buy and sell within a year, most times you'll lose money unless you're doing a flip/rehab).  So the data points out renting for a year equates to 2 years of loss, not just 1.  

 

Improving your situation

 

"Well I'll fix my credit and then buy".  "I'll save more money down to get a better rate".  These obstacles to home ownership, more often than not, are faulty "penny wise and pound foolish" thoughts that hold people back.  Your difference in rate, or the cost of PMI, or if you have PMI or not, or if you're going FHA VS conventional more often than not pales in comparison to the amount of money earned through appreciation, amortization, and tax benefits of ownership.  

 

The Cliches

 

As real estate professionals, we've all heard that home ownership is the key to wealth in America.  We've all told someone "if you rent you pay someone else's mortgage".  These hackneyed phrases ring empty when they come from someone who gets paid only when homes sell.  

 

     With big data, we no longer sell.  The clichés now have impact.  People can SEE what their life will look like in 5 years if they buy VS if they continue to rent.  They can SEE what they're missing out on in real dollars.  They'll see first hand what's truly important.  They'll make better decisions.

 

     Data builds trust.  It's transparent.  One cliché that's true is "the numbers don't lie".  Data is objective and allows for objective analysis.  

 

     People say "the house is sexy, the mortgage isn't!".  I argue "6 figure increases in net worth is DAMN sexy!".  And that's the result of home ownership for most people.  But you have to have the data.  You have to understand it. You have to be able to effectively communicate it.  For those who take the time to invest in data and invest the time to understand it and effectively use it, the data is going to make a lot of people a lot of money.  And it's going to leave everyone else behind.

 

 

Questions about market conditions, forecasts, or the data for your market?  Reach out via our "ask an expert" tool and we can provide a completely free 15 minute demo to show you how our data can help you sell more homes and grow your business

 

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Rainmaker
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Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Having the necessary data, and then presenting it in the way to excite buyers is a huge benefit, John. 

Jul 30, 2019 08:25 AM #1
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Anna Banana Kruchten CRB, CRS 602-380-4886
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana!

Hi John Meussner exactly! Data can cover a lot of bases and make it so much easier for buyers - and our sellers - too understand what we're seeing and what's currently happening in their neighborhood. Add to that basic stuff I like to watch 'trends' in areas because I can show them - it's going up or the opposite, homes are sitting on the market, being reduced and still sitting there. I am currently seeing this going on in one of our markets. Sellers got greedy and prices are coming down. Also condition of home is indicative of selling quickly for top dollar or not.

Jul 30, 2019 11:00 AM #2
Rainmaker
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Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello John - it's not just having the right information/data but being able to effectively communicate it.  Those connections are important.  

Jul 30, 2019 11:30 AM #3
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Eleanor Thorne
Equity Resources - Cary, NC
Equity Resources 919-649-5058

John this is dead on the best way to "sell" a mortgage!

     People say "the house is sexy, the mortgage isn't!".  I argue "6 figure increases in net worth is DAMN sexy!"

I couldn't agree more!!

Jul 31, 2019 08:45 AM #4
Rainmaker
2,020,765
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Southlake, TX
Selling Homes Changing Lives

John Meussner - I love this post! I had to laugh at this liner: 

"the outlet cover in the kitchen had a smudge on it, so we think the seller should give us $10,000 toward costs to make up for it".

Recently, I was working with a Buyer. She made an offer on the first house and then got cold feet even though the Seller not only accepted the offer but offered to make any changes she wanted for free before moving in. She said no. We moved on to a few more but she always had a reason why she said no. The final straw for me was when we found what she perceived was the perfect neighborhood, exactly what she wanted, and located in between work and where her sister lived and in the center of where she shops and works out. She asked me to write up an offer but offer $15,000 LESS because SHE HAD TO PAY HIGH TAXES ! I couldn't believe her! Of course, it did explain why I was the 7th Agent. Believe it or not, the Seller said okay and if you guessed, she said no, you're right! 

I walked away from her!

Aug 15, 2019 03:35 PM #5
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John Meussner

#MortgageMadeEasy Walnut Creek, CA 484-680-4852
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