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Archive for January, 2008

What if buyers were never represented, but they paid the listing agent?

Sound crazy? That’s how rentals work in New York. A renter typically pays 1 month rent to the broker listing the apartment.

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  • 5 comments

    Who benefits from occupational licensing laws? The licensees, to be sure — to the detriment of the consumer

    Via Coyote Blog and Radley Balko, the Philadelphia Inquirer brings us a nice illustration of why occupational licensing laws really exist: Not to protect the consumer, but to protect the licensees from free-market competition:

    Mary Jo Pletz was really, really good at eBay. But now the former stay-at-home mother and gonzo Internet retailer fears a maximum $10 million fine for selling 10,000 toys, antiques, videos, sports memorabilia, books, tools and infant clothes on eBay without an auctioneer’s license.

    An official from the Department of State knocked on Pletz’s white-brick ranch here north of Allentown in late December 2006 and said her Internet business, D&J Virtual Consignment, was being investigated for violating state laws.

    “I was dumbfounded,” said Pletz, who led the dark-suited investigator to a side patio area, where he grilled her. “I told him I would just shut down,” she said.

    Mary Jo’s violation? Auctioneering without a license. Sound familiar? It should. It parallels the dumb stunt the Sate of Arizona tried to pull on Zillow.com, which was accused of doing real estate appraisals without a license.

    But there are consumers who need protecting, right? Oh, you bet:

    D&J Virtual Consignment had 11,000 feedback comments on eBay and 14 were negative, Pletz said, giving her a 99.9 percent satisfaction rating.

    Ebay is not just perfect Capitalism, it is Capitalism Perfected — everything that has always been implicit in free-market commercial transactions made utterly transparent by means of database management. If you are looking for the complete and irrefutable refutation of Das Kapital, you’ll find it not on but in the form of Ebay.com.

    So where’s the beef?

    Amoros, the state spokeswoman, said investigations were a “complaint-driven” process but those complaints are confidential.

    Uh huh.

    It is only possible to for you to defend occupational licensing laws by ignoring the palpable harm they do to actual consumers — higher prices for lower quality goods and services. But even then, don’t get downwind of yourself. This stuff stinks.

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  • 29 comments

    Big News: Ignore all that fine print, tear through all that red tape — Redfin.com supports Safari at last!

    Oh, wait, that’s not the big news from Redfin.com. In fact, I reported the really big news last night:

    Redfin will either make money or it won’t, and, in the long run, if it endures into a long run, it will become more like traditional real estate even as traditional real estate becomes more like Redfin.

    So here’s what’s changed, as of 12:01 am EST: Redfin agents are going to squire buyers around for free four times as much as they have in the past. No news on who’s buying lunch.

    Online real estate broker Redfin Corporation today rolled out a 75-day trial of a new home-tours policy that allows visitors to its site to arrange four Redfin-hosted home tours without paying any money up-front or making any commitment to Redfin. The first two tours would be free, and the third and fourth tours would cost $250 at closing, with any subsequent tours costing $250 in advance.

    Sounds complicated, doesn’t it? My experience is that home-buyers are not the most assiduous readers of fine print.

    There’s more:

    The new tours last two hours, and require the buyer to provide a mortgage pre-approval letter documenting her ability to buy the homes she is scheduled to visit. Redfin deducts the $250 charges for the third and fourth tours from the commission refund, which has averaged roughly $10,000 at closing. Customers who do not complete a purchase with Redfin do not pay for their third and fourth tours. Previously, Redfin only provided one free three-hour home tour, charging $250 in advance for each additional tour.

    I’m thinking there can be too much red tape even for the INTx gnomes who find Redfin appealing. What is clear is that pay-as-you-go has a less-than-ideal gnome appeal.

    I can do four houses an hour with normal buyers. I normally do 12 houses in three hours, then make the buyers stop. After 12 houses, their eyes glaze over. If we limited ourselves to two hours, that would be eight houses. Four two-hour tours would be 32 houses. This is nothing at all like the original Redfin game plan — shoving the expense of showing homes onto the listing agent. What it sounds like, truly, is traditional real estate without the traditional compensation — but with a lot of corporate chicken guano.

    But there’s even more news. Redfin is releasing a brand new version of its website software — hence the support for the Macintosh Safari web browser. As a part of this upgrade, Redfin will be updating the frequency of its MLS-based database updates in many markets. Even better:

    The new version of Redfin’s site also provides significantly more information about each listing. Prior to this release, Redfin.com already offered for each listing comprehensive photos and amenity details, precise lot outlines, county tax records, school and community information, and market value estimates from Zillow.com. With this release, Redfin also now provides for each listing:
    • a set of similar listings and recently sold properties,
    • a complete history of any price changes since the listing became active,
    • a second market value estimate from eppraisal.com,
    • local Redfin blog and message board conversations, and
    • photographic bird’s-eye views of the property.

    Redfin also now identifies users’ favorite listings with a special icon on its map interface.

    These are insanely great database marketing ideas being dragged around by an insanely stoopid (“Now Even Stoopider!”) business model.

    If you find yourself thinking about all the things your MLS system, your IDX vendor and your broker aren’t doing for you, read a little further:

    Beyond delivering data about individual listings, this release gives consumers a platform for analyzing prices in entire neighborhoods. Rather than using on-screen map boundaries to define the geographic parameters of a real estate search, Redfin.com users now can use neighborhood outlines as search boundaries, calculating median price, price per square foot and other metrics for that neighborhood.

    And just to rub salt in your wounds:

    For the first time, users can download data to a spreadsheet for an in-depth analysis. Home buyers can use the data to prepare a comparative market analysis to estimate the value of a home.

    That’s just killer. That goes far beyond gnome appeal, since even the people who never will download the data will like knowing they can.

    Here’s the funny part: The fine print, the red tape and all the rest of the corporate chicken guano Redfin.com inflicts upon its clients is probably costing it a lot of business. The stuff they do on the Web 2.0 side of the business is right there with the best of the breed. That technology in a more profitable form factor could be a formidable business. Suddenly I like — and fear — them as a buyout candidate…

     
    Addendum: I said this in private to Redfin’s PR Goddess, Cynthia Pang, but this is not the kind of opinion that should be kept private. I’ve said more than my share of negative things about Redfin.com, but the things they’re getting right, they’re getting amazingly right. This is what I said to Cynthia:

    The back-end is getting to be very impressive. If Redfin got bought by a Coldwell Banker or a Keller Williams, it could dominate the marketplace. Of the major players, only Windermere is even close to having the stuff Redfin has.

     
    Elsewhere: Michael Arrington, Glenn Kelman, Kris Berg, Joel Burslem.

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  • 7 comments

    A Mastermind of Hucksters

    High Body Count

    1+1=3…A Mastermind Alliance. I first learned of this concept over 20 years ago during one of many telemarketing seminars I attended as a tenderfoot insurance salesman. I can’t recall which one exactly, but I’m certain the motivational speaker cashed my post-dated check—a sign up now and pay later gimmick included in the 2 week Increased Performance Guarantee.  My office buddy and Mastermind phoning partner Sam, however, bounced his post-dated check and eventually got sent to a collection agency before escaping  the business for good without ever making a nickle, or for that matter, an appointment as an insurance man.

    This was all back in a time when I truly wanted to believe that ‘No‘ meant ‘K.N.O.W; the ‘Client’ (person on a list) really needed to know more to make the ultimate buying decision; and a shoeshine and a handshake?….well shucks, “I just want to earn your business, Mr Fencestraddler.”  Somehow, even though I tried to fancy myself a believer, all the sales talk never sounded quite right coming out of my own mouth.  And even though I had long since left the business at the time, I publicly applauded the Do Not Call legislation of 2003 and all the crappy jobs and unrealized frustration it eliminated from people’s lives.

    My Sales Manager, a guy named Charlie who initially recruited me into the business, called me in for a chat one morning after three months on the job. He had a picture window above his cherry wood credenza that overlooked a dense forest preserve behind the office. His three remaining walls were plastered with ceremonial photographs, sales award plaques, and framed certificates, all about him. He had an electric shoe buffer next to his cherry wood desk and a full length mirror behind his door with a sign above that read: Would You Hire This Person?

    A few months earlier he convinced me to give the insurance business a try.  He and one of his trainees sold me a rinky dink burial policy one snowy night–a ritual in itself that lasted three solid hours and culminated with my signature and a check for the first month’s premium just as Letterman was coming on the tube and my dinner withered to ash in the oven. My ‘belief in the product,’  he said, was ‘the first requirement of a successful insurance man.’ Truthfully, I just wanted to go to bed and only wrote a check to get them out of my kitchen. I would soon thereafter coin this marathon closing technique, The David Letterman Close, as I myself went on to ruin scores of peoples’ dinners for several years to follow.

    “I planted a tree out there,”  he said, looking me straight in the eye as he thumb pointed the window behind him in a  hitchhiker motion, “for every man who came into this business and quit in his first week. I let loose a squirrel for every recruit who didn’t make it a month…”  Pause. Dead silence. Then a burst of laughter and a white, toothy smile as wide as an Iowa cornfield.

    “Congratulations Bruno,“  he said standing and thrusting a bejeweled, manicured mitt in my direction, “I’m making you a Sales Management Trainee.”

    Bruno was my anointed bull pen nickname. We all had nicknames in that office. Walkie-Talkie, Malcolm Merryweather, Icabod Crane, Sam the Sham (post memoriam). Thinking back, my would-be mentor was obviously referencing my Italian-American heritage. Likewise, Malcolm Merriweather was a soft spoken Brit and poor, gangly Icabod did resemble a young, ill dressed Abe Lincoln. Today, we could all probably sue him and the company for hurt feelings and lack of sensitivity but this was in a pre-PC (of any kind) era and nobody really gave a damn.  I personally still don’t. We were just trying not to become the next boiler room casualty.  And just to be clear, this was also coming from a future Vice President who once declared to a gender mixed assembly at a national sales meeting,

    “If you never took a dump in a ditch, 50 miles from home at the end of the day, then hell’s bells…how can you call yourself a salesman?” 

    And after that, I don’t think I ever did….call myself a salesman, that is.

    Churn ‘em and Burn ‘em

    Somewhere between  1+1=3 and the Law of Diminishing Returns lies the sweetspot of a successful real estate organization. Too small, and you can’t afford the technology. Too big, and you’re leaking revenue like a sieve. One recent study claims that 70% of all potential home owners in the Chicago market incorporated the internet somewhere in their buying process. My guess is that this number is actually higher.

    Traffic to our company website has been off the charts these past two months while actual contracts I personally have in Attorney Review waiting to Close have increased only slightly from this same period last winter. I’m falling behind in my response time as I’m still  trying to tweak my follow-up system, show my listings, drive around buyers and occasionally post my thoughts to whoever may be reading my blogs. It is suddenly very obvious that technology is my new business partner and the only way to get to the magical third dimension in the Mastermind equation is to wrap both arms, both legs, and my entire mind around it and make damn sure it doesn’t quit on me like poor, unsuccessful Sam did back in 1986.  Actually, I resented him being called a ‘Sham‘ after he left and mentioned as much to the boss. Everyone was a ‘bum’ who didn’t make it in the insurance business, according to Charlie. 

    “Not everyone is cut out for sales,” I told him after enduring one particularly long tirade about low producers and agency attrition in general.  After all, I was a Sales Management Trainee and had my own thoughts about dumps and ditches. “Sam just lacked a system, but he wasn’t a bad person.”

    “Forget about Sam the Sham. You need to worry about Bruno and Mrs Bruno” he replied, brushing me back like the 9th inning closer he was hired to be. The dude drove a Silver Shadow and had a condo in the Bahamas. What can I say…

    I receive a hundred or so new registrants a month from our company site and a half-dozen more from my Chicago weblog link. Clearly, many registrants never return to the site after the first visit and many more return but never acknowledge my follow-up efforts. More than a handful each month of the remainder will initiate communication  and welcome correspondence while one or two of these will ultimately become Clients and either purchase or list with me.  After two solid years of working this system my back flow of names and web address non-responders number in the thousands.

    My point is, I never have to make an actual telephone call to the prospect until the interest level is high and the need for my services, requested. I get pinged on my PDA every time someone logs on the site and this occurs a couple dozen times a day, almost everyday.  There is little confusion as to who is and who isn’t a Client anymore. Everything is trackable on the backside and I while I have little or no time for non-responders, I can still send out a blast of new listings on a quarterly basis and keep my name floating around cyberspace for future reference. I’m able to assist one or two lingering buyers a year from this type of drip campaign.

    So instead of a boiler room full of telephones, a shoe box stuffed with lead cards, and reams of pre-paid phone lists, I have three super fast computers, an  8GB iPhone, three blogging  platforms and access to company and personal websites that attract several hundred clicks a day in tandem.  Instead of print and stamp advertising,  a garage full of holiday calendars, and a basement full of magnets (although I could always find use for  a couple hundred of those Russell Shaw banana postcards) I have a Google presence that pretty much tells the world who I am, what I look like, and how I can be reached.

    On a side note and just out of sheer curiosity,  I Googled good old Charlie the ditch dumper last week to see what was shaking back in the Medieval Age of churning and burning policyholders. Survey said…’Nada.’  ’0′ results…

    Unlike the Budd Fox cold calling days of the 1980s, I am no longer a disembodied voice on the phone pestering your secretary or interupting your supper.  I’m asleep every night when Letterman comes on and I don’t have to earn your business or convert your NO to KNOW at your kitchen table. I still have to sell real estate, however and I’m still working on the math of my own Mastermind Alliance, but the future is finally before me and all I have to do is figure out which buttons to push. I still drink a cup of coffee though, for every real estate agent who quits in the first year and say a prayer of thanks everytime a phone rings at suppertime…and it’s not me on the other end.

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  • 6 comments

    Obeo, Baby, where have you been all my life? Why should buyers stop at virtually moving in their furniture when they can virtually redecorate — inside and outside — as well?

    We are too much misled, surely. Too much miscounseled, misdirected, misinformed. Too many of the people we turn to for advice on selling homes don’t actually sell homes themselves — never have — and, in consequence, too often, they are too much mistaken.

    Consider that 2006 was to have been the Year of the Real Estate Video — except it wasn’t. Nor was 2007. And nor, neither, will be 2008. Video is useful for telling stories and for communicating personality. In expert hands it can be an incomparable tool for conveying arcane or abstract ideas. As a real estate marketing tool, it is at best a role-player — and most often — owing to crappy production values and even crappier pre-planning — it serves more as a detriment than a benefit to the marketing of a home.

    Good photography, by contrast, is the real estate marketing tool of the millennium. Houses sit still, and what buyers want, more than anything, are scads of detail-rich images that also sit still — so they can examine, repeatedly, every last one of those details.

    We will sometimes do video in a role-playing way for our listings, but the second most popular feature on our web sites, after the photographs, is the interactive floorplan. Buyers love to see exactly how their furniture is going to fit into the home — and the more they commit their minds to the home, the more committed they are to buying it. The scientific name for this intricate process is: Salesmanship.

    For years now, we have dreamed of an even more fun, more engaging, more interactive tool to put on our sites: Virtual redecorating. Change the paint. Change the flooring. Change the cabinets and countertops. “You almost love this home, folks, and you haven’t even liked anything else. What can you do to make this place your own?” The name for this again? Oh, yes. Salesmanship.

    And guess what? It’s here. Obeo, about whom I knew nothing until this morning, has solved the virtual tour problem in a way I not only don’t hate, but actually like. And they have given me virtual redecorating, which I absolutely love.

    Here’s my very own kitchen, with almost all of the frou-frou, girly stuff gone:

    This rocks, period. I like some things I look at, and I pretty much hate everything else. We’re getting Obeo. This is a category-killer product — even though the virtual tour category is already all but exclusively populated by the undead. Virtual redecorating will sell real estate — the repeated commitment of action upon the home becomes an active resolution to commit to the home — and that’s the only reason for bothering with any of this stuff.

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  • 12 comments

    In The Business Of Personal Relationships, Database Marketing Is More Effective Than SEO Marketing

    Two years ago, NAR told us that 74% of people begin their home search online.  What they didn’t tell us, however, what percentage of those people write paper with the agent on whose site they began said search.

    This omission is an important one.  Just because a person starts online doesn’t mean he finishes there.  If you’ve researched a product at multiple Web sites before making the actual purchase, you understand what I mean.

    Every store except the last one was just a borrowed encyclopedia.

    Click-throughs from a search engines are not “leads” and that’s why the NAR statistic is misleading.  Until a reader engages the author personally, the click-through is only that.

    A Web site visitor that registers for free search, free reports, or free seminars is not your client.  He is a window-shopper taking home free samples.  He’s a client when he signs, and never before.

    Today, the Federal Reserve will do something to the Fed Funds Rate and if history is an indicator, my Web site traffic will quadruple.  It happens every time.  It’s because I’m so high on Google for the term “fed funds rate mortgage“. 

    Of the traffic from Google, not a single person will reach out to me for a “personal question” about their mortgage.  Again, history is my indicator.  I am the source of information of for a lot of people and that suits me fine.

    Knowing that my clients would care about the same information, I have a planned email to my database that will do three things:

    1. Explain that the cut in Fed Funds Rate will likely cause mortgage rates to rise
    2. Introduce them to the concept of “why the Fed is taking a shower”
    3. Point them back to my Web site for a full explanation of the “shower” analogy

    This email to my database will generate new business.  Once more, history is my indicator. 

    The last time I saw this was when I sent my “stick people in houses” video on the same day the Fed dropped rates 0.750% out of nowhere.  The email generated much more business for my team than did placing high on Google’s page rank.

    When you’re in the business of personal relationships, effective database marketing is far more productive than search engine marketing.  The calls from my database are warm leads; Google’s leads are algorithmically cold.

    I’m going prove that again at 2:15 P.M. ET today.

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  • 20 comments

    I hear rumors all the time

    But I rarely blog about them.

    This builder’s going out of business. This one’s filing bankruptcy. This one has plenty of cash on hand. This broker’s dipping into their equity line. This lender’s leaving the business. This agent has a second job.

    It’s a real estate blogger’s responsibility – ethically (at least per NAR and common sense), and one assumes legally, to present the best, most accurate information possible. I do this for two reasons –

    1) I want readers, potential clients, the general public and my peers to respect my opinion and my credibility.
    2) I don’t want to get sued.
    3) I really, really don’t want to get sued.

    Builders and companies frequently sometimes do file bankruptcy, having sheltered and protected their assets appropriately, and then re-open under a different name. It’s a fact of doing business.

    I trade on my credibility – with my clients and potential clients, my fellow Realtors, builders, developers, the public and the media. Damaging that credibility – even by an infinitesimal amount – is not an option.

    When on a panel at Inman Connect about blogging, someone asked how I handle writing about local builders and developments, whether I criticize them (in comparison to Jonathan Butler’s excellent Brooklyn blog, which is all about neighborhood and property reviews – and much, much more).

    The dilemma is this – step into the world of investigative blogging that might impede one’s ability to do business locally, or write a great piece that might make news and generate conversation – yet alienate those with whom one does business?

    I choose to maintain the delicate balance that exists between being a Realtor – a buyer’s agent advocating for my clients’ best interests, a listing agent representing sellers – and the blogger/journalist whose foray into biting investigative journalism/expose could terminate my real estate career. Getting sued could turn out to be the least of my worries if I were to become persona non grata to the community in which I have strived to excel.

    Sellsius have the legal primer, summed up with this (all bloggers should read this post):

    Bloggers should be careful to couch all writing as opinion, double check sources and watch it when it comes to private figures. A general disclaimer on all posts may not be a bad idea. Or you can play it safe and just call someone a “dumb ass“.

    Sure I’m a real estate blogger, and that helps me make a living; but I’m a Realtor first. (actually, father and husband come first and second)

    Finding out the finances of the builder might be sound due diligence for clients seeking to purchase new construction; publishing that to my blog is an entirely different matter.

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    HELOCs Frozen: Preserving American Homeownership

    Preserving the American Dream is a position paper authored by John Dugan, Comptroller of the Currency. “Preserving American Home Ownership” is the “initiative” rumored to be pondered by Countrywide Home Loans, IndyMac Bank, and Washington Mutual.

    N.B.: The following is rumor; something that was “heard on the street”.

    Jeffrey Smith reported, two weeks ago, that Countrywide is freezing some home equity lines of credit. The wholesale lending reps and escrow officers, in my own little network, were buzzing about the possibility of such an action from Countrywide, WaMu, and IndyMac.

    More on this rumor as it develops. Today, it’s just a rumor. I think it’s comical the Countrywide won’t do anything without a PR/Marketing twist to it (as a marketer, I love it). It is rumored that the CFC initiative will be “Preserving American Home Ownership”

    UPDATE:  While I haven’t confirmed the rumor with Countrywide, there is one disenfranchised Countrywide borrower, getting pummeled by the bubbleheads on a Yahoo message board.

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    Want to learn how to sniff out bias in the mainstream media? Follow your nose — all the way to Yosemite

    John Cook fingered this mash note to Redfin.com in Forbes Magazine. More of the same four-legs-good, two-legs-bad crap we expect from the mainstream media, but it’s short enough that the bias is almost too obvious.

    Consider the attributions for quotes:

    • “says Kelman, 37″
    • “Kelman says.”
    • “one Redfin representative wrote recently”
    • “read another posting”
    • “says Steven Del Bianco”

    These are all people of whom the writer approves.

    But you can’t write a morality play without a villain, so take note of this item, quoted in full:

    “In our area the consumer is savvy enough to know that they want value and a high-quality agent,” sniffs Gary Bulanti, a Realtor with Alain Pinel Realtors in Menlo Park, Calif.

    Did you sniff out that “sniffs”? Kelman says, then says again. Redfin’s minions write and post. Even investors in past failed discount brokerages get to have their “say,” as it were. But if you are anti-Redfin in even the smallest way, you sniff — you bloated, soul-sucking, counter-revolutionary pig!

    It’s all one, really. Redfin will either make money or it won’t, and, in the long run, if it endures into a long run, it will become more like traditional real estate even as traditional real estate becomes more like Redfin.

    But just stop for a moment to take account of this:

    In a national forest near Yosemite National Park someone affixed fake Redfin bumper stickers to signs, trees and rocks to make the company look like a shameless promoter and defiler of the environment. After Redfin staffers removed the stickers, which they have never used to pitch the Seattle company, the trickster started tossing the signs, attached to weights, into branches of sequoias.

    First we have some some kind of demented, Edward Abbee-like monkey-wrenching counter-revolutionary pig of a Realtor, who traipses off from densely-populated Seattle to a national frolicking forest to smear Redfin. And then we have a yellow school-bus full of happy, happy Redfinions — red caps, blue kerchiefs, khaki tunics and cargo shorts — racing off to that same forest to repair this horrendous damage to the natural world, praying all the while to Gaia to heal the deeper wound. On the way home they sing Kum Ba Ya and tell implausible stories about customer service.

    Now that’s propaganda!

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  • 14 comments

    Joe and Marge

    In a classic Bawld Guy moment, Jeff Brown reminded us recently that hard work, not a magic formula nor even an ability to predict five out of six Power Ball numbers, is what makes a successful real estate career. All of the motivational seminars in the free world can not replace the experience of one real-life transaction. The fanciest widgets and the sexiest web site flash intros will never replace feet on the ground. Technological applications augment a solid business plan built on fundamentals; they do not replace it. We work in real estate, and there is a reason it is called “work.”

    Jeff mentioned that he started his career converting For Sale By Owners (FSBOs). I always suspected we were twins. Just for fun, I thought I would share the story of my first transaction. We all remember our first – with a lot of fondness and more than a little humility. This is just a little walk down memory lane self-indulgence on my part but, if a few more people follow suit and share their “firsts,” we might start to connect the dots for the newer agents. I suspect we will see a common thread of tenacity and drive, stuff that can’t really be taught or learned.

    Make no mistake. For the new agent wanting to jump-start a real estate career, this is a difficult market. But then, they all are. The first thing that will strike you is that your new career laughs in the face of the supply and demand laws of nature. There are more real estate agents than there are left-over casseroles needing a shave in my refrigerator right now, and certainly more agents than there are potential customers. This is survival of the fittest, and in the virtual Plinko game that is your office, within seconds of your arrival, every single one of your fellow agents will be plotting to throw you under a bus.

    What distinguishes the working agent from the non-working agent is “work.”  A fundamental ingredient of this work is a “client” who wishes to buy or sell a home. Ideally, this “client” is not themselves a licensed real estate agent, which means that your potential customer base actually consists of twelve people in Your State.

    So, your real work as an agent begins with your first customer. My first customer was Joe and Marge. (Actually, Joe and Marge were two people, but they lived in the same house, so I can only count them once. It’s a real estate thing.) This is a story of youthful exuberance, naiveté, misfortune, and unimaginable bravery in the face of adversity, but enough about Joe and Marge.

    This is really the tale of how I weaseled my way into the home and hearts of an unsuspecting couple who needed to sell. I will begin at the end. I listed and eventually sold their home. The fact that my first transaction was a listing rather than a buyer sale was in itself unique. Listings are the Holy Grail of real estate, listings provide advertising opportunity, and listings breed more listings, kind of like bunnies. Buyers don’t generally allow you to place a sign in their front yard announcing, “Represented by Kris!!” Your only hope with buyers is that they will share your story with their friends, or, in some cases, your only hope is that they won’t. Sure, a buyer may become a seller some day, but you could be the day shift hostess at Walmart my then. Better to get the listings coming out of the gate.

    What also made my first transaction unique was that Joe and Marge were initially FSBOs. FSBOs by their very nature are distrusting of agents. They like control, they firmly believe they can do the job themselves and better, and they will always know more than you do, even when they do not. Despite this, the Agent Needing to Eat can find some opportunity in the failed-FSBO-as-potential-client arena.

    If I had possessed any formal training whatsoever, I would have never found myself at their kitchen table this weekday evening. I would have been holding an Open House for a successful Listing Agent, I would have been forcing my newly printed business cards into the clinched fists of my “Sphere of Influence” (formerly known as Friends), or I would have been addressing postcards with the much-anticipated Recipe of the Month to unsuspecting neighbors (October = Bologna Shapes with Mayonnaise Dipping Sauce). Yet, I was unshackled by the encumbrances of actual, practical knowledge. My two-week training program at the Rock Solid Brokerage corporate offices had not yet begun, but I needed to eat. So, I picked up the newspaper classified section. (In those days, we had things called “newspapers” which were made from paper stock of tree origin). It was the beginning of what would be a grueling day at the office. I made one phone call.

    “Hello, this is Kris from Rock Solid Brokerage. I see your home is for sale. I specialize in Your Neighborhood (I think I sort of know where it is) and might have a buyer who is interested in Your Home (perhaps in August, 2015 if I am not working at Jamba Juice by then). Are you cooperating with agents who bring the buyer, and might I be able to stop by to preview the property?”

    This is where the clouds parted and the angels sang, albeit off-key. “We are actually thinking about listing with an agent”, Marge confided. “Perfect!” I shouted, jumping through the phone and giving ol’ Marge a big bear hug. “Why don’t I come by and give you my Marketing Plan and preview your home at the same time? We could kill two birds with one stone!”

    How prophetic. My birds agreed to meet with me.

    Now, at this point in my long, illustrious career, it is important to remember that I have NO Marketing Plan. I have no plan at all. So, I fill my briefcase with a package of listing forms which are as familiar to me as the blueprints for Hubble Telescope, and I fill in the air space with random company promotional propaganda leaflets pulled from the shelves of the Rock Solid resource room, one of which undoubtedly involved step-by-step instructions for replacing the toner in the office copy machine. With my remaining free hand, I grab all arbitrary office items within reach (and which I believe included a two-hole punch and a desk lamp) so as not to look unprepared, and I head for the door.

    With the help of my “stuff”, and much to the chagrin of Joe and Marge, I was able to stretch my visit into a painful, three-hour presentation. I spent two hours ogling over their most special of special homes, while I wisely devoted the remaining hour to discussing pricing, the reputation of my company, and the inherent dangers of continuing the photocopying process with a depleted toner supply. Stocking-clad limbs wrapped firmly around one leg of the casual dinette, I refused to budge. When their attempts at feigning death still failed to send me home, Joe and Marge, motivated by the need for dinner, oxygen and sleep, at last surrendered. “She seems like a nice enough girl, Joe, and I just don’t want to go through this again”. Ha! Put that in your testimonial book!

    I returned to the office with a listing contract that looked like we had all prepared it with a box of crayons while wearing coordinating oven mitts. Perhaps that opposable thumb came in handy after all! Eventually, I had to return to rewrite the contract properly, but I had the job. I have since looked back and done the math; this first job resulted in eight subsequent transactions as a direct result of that one yard sign. And, don’t feel sorry for Joe and Marge. They got fabulous representation and results. I worked my hiney off. They were all I had, and I had nothing else to do.

    If there is a moral to my story, it is this. If you are new in the business, go ahead and attend the classes. Learn the stuff in the office training manuals and get motivated. Then, get off your butt, and go find your Joe and Marge.

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  • 19 comments

    Principles of Flight and Real Estate — Getting Off the Ground

    I’ve seen in the real estate business the rough equivalent of what my grandma saw in her lifetime with flight. Born in 1909 she saw in real time the embryonic stage of flight. The first successful flight was only six years before her birth. 60 short years later she watched, on a ‘machine’ not in existence until she’d been married and had four children (three on her front porch), American men land on the moon and come back safely.

    Think of where real estate brokerage was 40 years ago. I’d compare it to the planes used in World War I. The MLS existed, but was in book/magazine form delivered by truck, supplemented thrice weekly on paper held together by staples. The establishment of farms for Heaven’s sake, was a huge break through! Knock on the same doors every month? Why would anyone do that on purpose?

    There were no teams, not even the biggest thinkers created teams, even in the ’70′s. (at least that I can recall) The team itself was another development thought by most as staggeringly forward thinking. My father didn’t use for sale signs and he was thought of as a maverick. :) We’ve seen the rise of franchises which came like a herd of buffaloes in the ’70′s. Some still exist, most don’t, but the franchise has remained as a significant player.

    The first time i heard of an agent being paid a 70% commission split by their broker I thought it was a joke. It was real. It was the beginning of what we see today. 100% commission offices with ‘desk’ fees. In-house service companies — title, lenders, escrow, etc. The shift from the broker/owner being the god of all things to the producing agent should have been predictable. The tail wagging the dog is at least in part why we’re here today. Most high producing agents would fall flat on their faces if they’d been forced to open their own companies. But that’s another post altogether.

    Where exactly is here?

    It’s business models we’d of laughed at 40 years ago. Marketing not hinted at on TV shows predicting crazy future developments. We now see super-teams. Teams so large and productive they suck the air out of many areas with their lion’s share of production. That’s not a knock, it’s a fact of life. The Russell Shaws and Kris/Steve Bergs of the world have arrived at the top of the hill through the age old combination of brains and hard work, making use of streamlined systems. More power to them. They are also the ones with the cajones, pardon the expression.

    There’s one thing that hasn’t changed since my dad first received his agent’s license back in 1959.

    When expertise and results matter to the client, nothing else will do.

    Said more plainly — nothing, not effort, not will, not technology, will ever replace results.

    With all the talk about where to market, how to market, and to whom we should be marketing, the reason for all the chatter remains what it was 40 years ago.

    Getting ourselves in a room with a prospect in need of what we have to offer is what makes one a success if done consistently. This fact of life seems to get lost in all the mumbo jumbo of website this, and blogging that, and the myriad choices there are now in marketing. Please don’t misread me. I have a website and a blog. Those aren’t what matters though.

    What matters most is what you’re doing to get your fanny in a room with a prospect’s fanny. The extent you’re successful in making that happen on a regular basis, predicts whether you’ll have a good year, regardless of the times. (everything being relative of course)

    I was taught as a teenager the more folks I talked to, the more appointments I’d get. The more appointments I got, the more listings and sales I’d have. So on my first day ever, I arrived at the office. It was a sunny October San Diego morning, and I began calling FSBOs out of the paper. That night I proudly announced I’d obtained my first ever lisitng. It took six hours to get my first (albeit worthless) listing.

    Roughly 15 calls resulted in three appointments, and one listing. Go figure.

    What’s missing in the real estate world today? In my opinion it’s hard work doing what produces results. I’m not saying all the agents failing today aren’t working hard. I think most of them worked real hard — at avoiding what would’ve produced results.

    There’s obviously dozens of ways to skin the cat. And if you’ll pause to ponder a bit, you’ll realize nobody every asks you how you skinned the cat until they find out if you skinned it in the first place. Those leaving the business, and those about to, haven’t been skinning many cats lately.

    It’s my belief that an agent using 1985 technology would kick the ass of 90% of today’s worthless pieces of crap out there today. Harsh? No doubt. (Don’t ask Russell Shaw his opinion of that statement if you don’t want his answer.) But you’re already nodding your head in agreement. Ask agents who’ve managed to survive in both ages. They’ll tell you I’m correct. The million dollar question of course is why?

    And here’s the million dollar answer.

    Because they refuse to work hard at the things they don’t like doing. Agents don’t like failure. And a large dose of failure is what you’re in for with prospecting. It can be done the 21st century way, or the dinosaur way. It matters not. When it’s avoided like the plague, income becomes a figment of the agent’s imagination. It would be laughable if it wasn’t so sad.

    Real estate is some of the highest paid hard work and some of the lowest paid easy work in the business world today. It’s always been so.

    Agents waste time fiddling with various forms of hi-tech. Their predecessors fiddled with 3 X 5 cards. In other words, they both avoided doing what had to be done to succeed. Meanwhile, an 18 year old kid, 90 days out of high school, listed a property in the first six hours spent as a licensee. Back then I had a hard time spelling real estate if you spotted me all the vowels. Still, the principles worked.

    Pick a method of prospecting — any method. Hi-tech, low-tech, no-tech. Do it all day every day until you find yourself in a room with a prospect in need of what you have to offer. Keep doing it until you have too many prospects to allow all day prospecting.

    This isn’t rocket science.

    Making $2,000 a month or $200,000 a month doesn’t matter. What matters is what the latter is doing that the former won’t — work very hard doing what needs doing — talking to suspects and prospects until you’ve converted your share into paying clients. The amount of income is directly proportionate to not only your method and efficiency, but how hard you actually work.

    I contend when agents stop painting their planes, and topping off the tanks, their incomes will take off. The average agent reading this knows they’ve been doing anything else but what will produce results. They continue to search in vain for the magic formula that will bring folks waltzing into their office asking where to sign.

    Flight went from the Wright brothers to the Apollo Program in six short decades. Everything changed except for the principles that made flight possible in the first place. Lift overcoming weight and thrust defeating drag are what makes flight possible.

    Talking to the most prospects possible is what makes one agent successful while the so called hard working agent down the street starves. Most hard working agents work hard at avoiding the work that matters. They’d rather fail at real estate than face somebody who might tell them to go away.

    Marketing surely matters, but it won’t make a hill of beans difference for those who haven’t figured out what makes the damn plane fly.

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  • 34 comments

    JohnMcCain2008 is now following your updates on Twitter.

    Good grief. Tell him to stop.

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  • 5 comments

    Write more

    Selling your home is a big deal; as many verbose real estate bloggers will attest, people are willing to read a lot to learn abut the process. I hate to kiss up to my new host here at Bloodhound, but I would wager that a good long-scroll “who I am and how I work” sections are much more valuable than three paragraph essays that above average agents have on their websites. Heck, a multi-page “who I am and how I work” about page was the most effective for SEOMoz (seriously – long), an SEO (and stuff) company. And deciding to buy a subscription to SEOmoz is a much smaller than deciding to buy a home.

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    The Odysseus Medal: “A hopeless attempt to regain what she lost: her sense of trust and self-reliance”

    One of the benefits of The Odysseus Medal competition, for me, personally — especially since we started echoing the Long List of nominees — is that I don’t feel as much pressure to weigh in on every last thing. I’ve been writing software in my spare moments for the last two weeks, and, amazingly enough, the world spins on without me. Last week we had Roost.com launch, which I wrote about, but we also had a huge Fed rate cut and the extended coverage of the Ummel lawsuit, and I got to coast on both stories, on the strength of the great work done by other voices in the RE.net.

    And, as it works out, this week is an all-Ummel Odysseus Medal Awards post.

    We start with Glenn Kelmann, who wins The Odysseus Medal this week for “114 Pounds of Absolute Perserverance”:

    Once a buyer’s agent begins making representations about price, it seems possible for him to make negligent representations about price. This doesn’t mean an agent can’t make representations about price, and can’t be wrong when he does. He just can’t be negligently wrong, by withholding material information that a reasonable person would want to see. If the Ummels’ agent did that, he should pay for it.

    Of course, since we have no idea from our seat in the peanut gallery what really happened between Ms. Ummel and her agent, the whole debate is academic. The only undeniable fact is that the lawsuit that Ms. Ummel is pursuing, at greater cost than she is likely to recoup, must be like all other forms of revenge, a hopeless attempt to regain what she lost: her sense of trust and self-reliance.

    In this respect, the case just illustrates the perils to both parties when a client outsources her brain to a real estate agent, or a stock-broker, or anyone else trying to sell something. It is why we dislike the paternalistic mindset occasionally used to justify brokerage fees, in which talk of “hand holding” is not seen as condescending, fears about “the single biggest purchase in your life” are stoked, and agent attempts to be persuasive during tense, personal moments are seen as heroic.

    That’s messed up. It seems like most clients would prefer a partnership, carefully constructed to avoid conflicts of interest, in which agents provide information, professional judgment and support so as to empower the client to make a few big decisions: Is this the house you want? Does it have anything wrong with it that you didn’t notice? Could you get it (or one like it) for less money?

    It is still possible — though we think less likely — that the Ummels could have taken this approach and still paid as much as they did for their house, but somehow I doubt Ms. Ummel would have wasted a year of her life afterwards feeling, rightly or wrongly, like a sucker.

    The Black Pearl Award this week goes to Jay Thompson for On Buyers Suing Agents:

    Again, let me reiterate, I don’t have all the facts surrounding this suit. I sense a lot of fear in agentdom out there. Call me crazy, but this suit doesn’t scare me. Here’s why:

    1) We never make claims of future value in property. That’s just stupid. If I had a crystal ball that good, I’d be on a beach somewhere in shorts and flip-flops drinking cocktails out of a coconut.

    2) We provide (and educate on how to assess) extensive comps (recent comparable sales) before any offer is submitted.

    3) We don’t practice either dual agency nor mortgage lending. We represent one client, and leave the lending to the lending experts.

    4) We review in mind-numbing detail the terms and conditions of all contracts, addendums and disclosures.

    5) We assume nothing and document everything.

    Should agents be afraid? Not if they are doing their job. Concerned, sure. This suit seems to be entering new territory and should be watched by any real estate agent/broker. We’ll be following it, as will others, I’m sure.

    This week’s People’s Choice Award goes to Brian Brady with Watch Out! Here Comes Erin Brockovich!:

    Hypothetical TV advertisement (aired at 2:00 AM):

    Did you overpay for your home? Did your real estate agent give you bad advice?

    You may be entitled to damages under a class-action lawsuit if you bought your home between the dates of June 1, 2005 and September 30, 2007. The real estate agent, who received compensation to aggressively represent your interests, may have withheld material information about relevant market data, not limited to but including comparable sales, and current listings, in your neighborhood.

    If the value of your home rapidly decreased soon after you bought it, The Coyote Law Firm may help you recover your loss. The Coyote Law Firm has a 27-year history of representing average people, just like you, who were tricked into buying a home by unscrupulous agents. Nefarious schemes, such as your real estate agent securing financing and withholding appraisal reports, may have been the cause for your loss.

    Contact 1-811-THE-COYOTE to see if you are entitled to damages.

    As a matter of policy, I almost never let anything this short through the sieve. It’s amazingly difficult to do work that matters in so few words. But I knew when I saw this post on Friday night that it would win the Peoples’ Choice Award. Why does Brian Brady make the Short List so regularly, and with so many different posts? Because he knows what makes the frog jump, that’s why.

    If you didn’t check out this week’s nominees for The Odysseus Medal, you should.

    We have a brand new tool for promoting the long-list of Odysseus Medal nominees. The long-list will be shown in that little gizmo until the current week’s awards are announced — meaning now — and then I’ll update it with the new week’s nominees. This is link-love back from BloodhoundBlog, but my reason for building the tool is to promote the best ideas in real estate any way I can. To that end, read this post so that you can learn how to echo the long-list on your own site.

    And as always, if you bespy a thing of beauty, nominate it.

    Deadline for next week’s competition is Sunday at 12 Noon MST. You can nominate your own work or any post you admire here.

    Congratulations to the winners — and to everyone who participated.

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  • 9 comments

    The untapped powers of Street View on Google Maps

    Thanks to Matthew Hardy.

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  • 1 comment

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