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Category: Realty Reality (page 1 of 16)

July 17, 2021

Buyer Agency Project: Buyer agents offer no value today.

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

“I just showed three houses this week, out in L******, and all of them had 2% co-brokerage fees.  Learn to sell, listing agents”

I read this post (paraphrased), from a former car salesman with a Florida real estate license, in a Facebook group the other day.  The irony of it was too delicious to pass up so I responded with something like this:

“It is laughable to watch an agent, who can’t sell a buyer on the value of his services, complain about the fact that his compensation is set by another real estate agent.  Sell your value to your buyer, charge a fee for the services you will provide, disclose how that buyer brokerage fee will be paid, and negotiate a contract which pays you that fee in a manner which benefits your client”.

I may have taken a snarky swipe at the original poster but I don’t remember because he deleted the thread.  Good.  I am sure the guy was just airing his frustrations but that sort of weak sauce is the last thing I would want on the internet if I were him.

Let’s talk about the REALITY of real estate brokerage in 2021:

1- While price appreciation may have slowed, the real estate market still has a supply/demand imbalance.  This means that homeowners can negotiate lower commissions to sell their homes.
2- Listing agents, with the right property, have little to no need for buyer agents today.  If it is priced at fair market value, entered properly in the MLS, and aggregated across all of the realty bots, buyers will line up to tour the home.  Thus, paying a co-brokerage fee of more than $1 seems like a giant waste of money.
3- The US Department of Justice doesn’t like this at all and the National Association of Realtors has lost any power to perpetuate the existing compensation model.  Expect buyer brokerage compensation to change.

Every time this subject comes up, buyer agents wail and grind their teeth.  The most common comments I read are “It’s so hard to work with buyers nowadays, I DESERVE to get paid more; I practically work for minimum wage”.  Read more

August 22, 2020

Ask the Broker: Are buyers really willing to overpay in this market?

by

Suburban Phoenix Real Estate Broker

Author website

I have Arizona’s Unobtainium: An unpublicized home for sale.

I’m always happy to brag about my listing prowess, and I could not be more delighted to have gotten this question in yesterday’s email. But: Even so: This is how I sell homes faster for more money.

So: A client and I are working out the details for a home that will list on October 8th, and he asked the Ask the Broker question: “Are buyers really willing to overpay in this market?”

In suburban Phoenix? Only the ones who want to buy houses. We’ve been strong since 2014 and before, very strong this year before the pandemic, strong throughout – and all the while we are benefitting hugely from the exodus from other states.

This was my answer to my investor client:

Almost everything I have sold in the past five years has sold with multiple offers, most over list, many for cash. My last listing sold the day before it was to go into the MLS, so that’s not a fair test. My last lease had many applications and the winners paid the full year’s rent in advance.

Things will change in the time we have to wait, but we still should have strong demand. We will have to appraise for financed offers, but if we get lucky, we’ll get cash buyers or waived appraisal contingencies. Not all buyers are equal in their appeal, but the poorly-qualified offers come in high, which is useful for torquing the better-qualified players.

We list on Thursday morning, just after midnight, to capitalize on the search-bot instigated weekend showings. I disclose the state of play on all offers in the private remarks in the listings, so agents always know where they stand. We want the highest/safest/soonest closing, but among highly-comparable well-qualified offers, we want to know who wants it more.

Like this, just explicit, transparent arm-twisting that only the agents can see:

Available, go and show. Priced to market. Priced to move. Seller to review offers Monday night. The state of play on offers will be documented here, as they come in. Don’t dawdle: This home should sell fast. Read more

May 11, 2020

Q: What will #Redfin and the other #iBuyers do when the market actually gets ugly? A: Discover real estate.

by

Suburban Phoenix Real Estate Broker

Author website

‘#Redfin Now, as the iBuying service is known, “performed better in a downturn than some had feared,” CEO Glenn Kelman said.’

Downturn? Hasn’t started yet. I don’t like being the bearer of bearish news, but the shit-hammer will be obvious, when it falls.

Primus: Many, many jobs are not coming back. Vacation rentals have cratered. Notices of Default will be mailing soon. Inventory will surge, relative to demand. Prices will fall. When accrued equity has been bled away, actual foreclosures will ensue.

Secundus: The anti-profit sector (government, schools, hospitals, charities) will soon crash from lost revenue. The jobs lost are those currently buoying the coronavirus-disrupted market. Second wave of defaults/listings/foreclosures.

Tertius: Whether or not the grasshopper states get away with fleecing the ant states – note that the Republic itself is at risk from this larceny; what does that do for confidence? – cadillac pensions in the grasshopper states will be getting a haircut. Third wave of defaults/listings/foreclosures?

It took us 14 years to get from where we were in 2006 to where we are right now.

How long until we get back here?

Don’t ask Glenn Kelman. He clearly does not have a clue.

May 2, 2012

Really, What If He’s Not Wrong?

by

Realtor, Renaissance Man

Author website

A follow-up to an article on syndication I wrote just a short time ago.  Keep in mind that I’ve never even met Jim Abbott, and am not promoting his company.  But I’m listening harder now to him, and as he speaks his words continue to etch a path that I really believe warrants all of our attention.

At the end he does make a request.  In San Diego you can actually withhold syndication on a property by property basis.  On the MLS form simply check “No Syndication.”  Try it.  I discussed it yesterday with a client, and I’m listing her home without giving away all the info to you know who.  Oh, and I truly believe if buyers come to my site to learn about this property, even if they don’t want this particular home, it will greatly increase the likelihood of my working with them in the future.

Want to skin some cats, anyone?

April 2, 2012

You’re A Master Cat Skinner – The Good News and The Bad News

by

Real Estate Investments Broker

Author website

Are you the ‘go to’ guy/gal? Do you list a lotta property and do it well? Are you a leader? Though I’m sure many will say charisma is required, I beg to disagree. It never hurts, but in the end, the Lord created the ultimate equalizer to charisma:

Results.

Today, let’s have a serious discussion about what combination of approaches would slaughter what’s currently goin’ on in the national brokerage community. First, here’s my perception of the major ‘schools’ I see in operation.

Variations on the Agent-Centric brokerage model

Between us we can come up with a myriad variations. Let’s limit them to very high commission splits, and the desk fee approach.

As I’ve written before, not long ago, that the agent-centric (A-C) model is failing everywhere it’s been tried. It’s ability to fail at pretty much every level is becoming legendary, regardless of the Titantic-like practicianers now lookin’ to technology to save them. Listen guys, if buying ownership positions in title companies, lenders, and starting your own escrows isn’t prima facie evidence of the desperate reach for lifejackets, I don’t know what is.

Let’s directly compare the currently popular A-C model with what I’d open in today’s — or any — housing market.

But first, a word from the Disclosures Department.

My biz model, though it pains me to admit, would indeed work exceptionally well if completely buyer oriented, listing few if any homes. However, when compared to my model — Broker-Centric — the firm primarily based upon listing homes will annihilate the buyer based company. This isn’t theory, or even bias on my part. As anyone should readily be able to discern, it’s a matter of sixth grade arithmetic.

Also, I’m loosely basing my ‘virtual’ A-C company on a brokerage I know of in a northwestern state. The size, and commission split are the perfect example of the results one can expect when using this model.

End disclosures.

Let’s first construct a virtual company built upon the A-C model.

Let’s give ’em a lotta agents, but not make it a big box setup. We’ll hire 35 full time agents. None of ’em Read more

February 13, 2012

Those Entering the Arena Daily Know the Secret To Skinnin’ Cats – And It Ain’t About Tryin’ Really Really Hard

by

Real Estate Investments Broker

Author website

What I love about our business is that there’re no points awarded for effort. With rare exceptions, it’s a heartless, merit based culture. Trying really really hard is for first time T-Ballers. Real estate owners don’t sign contracts promising to pay us for our efforts. They agree to pay when we produce 100% of the results outlined in that contract. 99% = go fish, no paycheck. The rest qualifies as ‘the dog ate my homework’ crappola. Coincidentally, this is why the vast majority of new agents make like steam and disappear in their first year or two. They found out the hard way, that in the real world, the world refusing to pay for anything less than the bargained for results, attempting never equals achievement.

Apparently, to buyers and sellers of real estate, results matter — they matter big time.

I write this post to those agents who’ve been workin’ like dogs, without much reward. Been there, lived that. I sympathize and empathize. You’ve already demonstrated what’s most lacking in our industry, a consistently OldSchool work ethic. Allow me to gently redirect your energy.

Join the Brother/Sisterhood of Gladiators — enter the arena of those who value achievement, read: results, over the culture of ‘Participation Trophies’.

There are two kinds of licensees. Those who enter the arena daily, and those who work their asses off to avoid the arena at all costs. The former generally make an excellent to elite living. The latter either struggle from year to year, or find what we often refer to as a W-2 job. The key factor in the new career is that they get paid whether they produce optimum results or not. There’s no arena involved.

In real estate, we’re more or less bounty hunters. No skinned cat, no paycheck. No exceptions.

We’re almost at the halfway point of 2012’s first quarter. If you’re able to look at your activities since January 1st in written form, do so. What percentage of your time were you either prospecting, belly to belly with a prospective client, or, like one of my mentors used to say, ‘out among ’em, talking’? Read more

August 20, 2011

Online Reputation Management for Realtors (and everyone else for that matter)

by

Rust Belt Realtor

Author website

Recently I was asked to participate on a speaker’s panel at an upcoming real estate conference in Columbus. It’s always nice to be asked to participate and I even had a disturbing but fleeting Sally Fields moment. Conventional conventions are not my thing, but I got to thinking about the subject of the panel- Online Reputation Management and while in the end I demurred, I knew I had much more to say about the subject than my share of a speaker’s panel would allow. Here then, is what I might have said about ORM in 15 minutes or less:

Online Reputation Management. Interesting concept. I know what it means, I’m just not sure it gets to the root of the problem and the problem isn’t that people can post horrible and hideous things about you online, because if you spend enough time online speaking your mind, not hiding who you are, well then girlfriend, someone, somewhere is bound to say something hideous and horrible about you. The focus should not be that you cannot control what other people say, that’s reactive thinking. The focus should be on the only thing you can control- your own thoughts and actions.

It occurs to me that once upon a time a Realtor’s reputation was theirs to control through advertising alone. They wrote smarmy or vague advertisements about being the Neighborhood Expert, and who knew any better? What were you going to do- go around to each of your neighbors for verification? “You know this guy? Is he the expert?” It’d take for friggin’ ever to get a consensus on whether or not Joe, the Friendly Neighborhood Expert (FNE), was in fact, a) Friendly, or b) an Expert, but the interwebs changed all that, sort of. I mean you can still say whatever you want about yourself, but now your clients can turn to the ultimate FNE, aka Google, and in the blink of an eye, all is revealed.

This is a good thing. It’s good for us. It’s good for our industry. But most importantly it’s good for our clients because now you really do have to Read more

March 1, 2011

Shouldn’t Sellers Invoice Listing Agents?

by

Real Estate Renaissance Man

Author website

I suppose it’s pretty rare that a seller actually hands their listing agent an invoice during the course of a listing, but it shouldn’t be. Based on what I see, the vast majority of listing agents should be billed by the seller, same as they would be by any other third party vendor. The fact that it doesn’t happen simply means most sellers don’t understand what is really going on during the course of a listing and, I’d wager, neither do most agents – or if they do they certainly haven’t informed their client.

Here’s a question every seller should ask their listing agent: “Why are you going to put up a For Sale sign in my front yard?” Standard answer: “A sign is just one part of my ‘Handy-Dandy, Super-Duper, 24 Point, 7 Step, Maximum Sales Price Marketing Plan’ or HDSD-24/7-MSM Plan… which I offer to all my clients completely free of charge.” (The standard answer is impressive, wouldn’t you agree? We agents are very creative indeed.). Of course, given the use of internet these days, I suggest to you, dear reader, that most For Sale signs are more directional than informational, but let’s not split hairs. Okay, so the sign is a part of the marketing plan. Next question by an informed home seller: “If that sign is part of your plan to market my house, why doesn’t it mention anything about my actual, you know… house?”

This is old Greg Swann stuff, but I’m rehashing because it needs to be taken further. There are actually two correct reasons for placing a sign in someone’s front yard:

  1. Sell the actual home. (The primary objective from a fiduciary standpoint.)
  2. Attract future home sellers from the neighborhood. (Secondary objective, but a legitimate expectation of work well done.)

So why is it then, that the vast majority of signs fail both of these objectives? Because they are designed with a different purpose altogether; they are designed to advertise the brokerage (hence the uniform colors, logos, big brokerage name and phone number). To a smaller degree, they are also designed to advertise a brokerage’s presence in a neighborhood Read more

January 17, 2011

Sharks – Pilot Fish – Dinosaurs – And Wishful Thinking

by

Real Estate Investments Broker

Author website

Don’t ya love it when a new way to call something old catches on? Smallish independent real estate brokerages are now often referred to as ‘indies’. Due to lower operating expenses, more agents working at home, and a perceived technology gap the size of the Grand Canyon, they’ll be an important factor in the death of the so-called BigBox (BB) mega-brokerages. In essence, by being meaner, leaner, and effectively leveraging their edge in all things hi-tech — the dinosaurs die the death of a thousand cuts.

And Al Gore invented the internet.

Been hearin’ this for so long I was shocked earlier this month when the phone at the 250 agent Keller Williams office was answered when I called. 🙂 I consider the lead recruiter of that office, a longtime friend, a legit superstar. Also, I’ve known their new Designated Broker since the late 90s or so. When I spoke with ‘Jane’ the recruiter, she laughed at the thought of indies sending her company to the boneyard.

In fact, in her firm’s experience, they’re the ones who’ve not only ended several indie firms’ existence, but absorbed them into the cavernous BigBox operation — often swallowing them whole. Indie owners don’t like hearing that, but it’s a fact about which I no longer become amazed, as it happens too often these days.

Much of the discussion on this topic is skewed by, what are in my opinion, false premises, wishful thinking, and putting the emphasis on the wrong syl-LA-ble much of the time. GM didn’t go off the rails cuz they’re too big, or that other, smaller, more tech-savvy carmakers beat them. They simply didn’t make cars as well as most of their competition.

The false premises used for arguing the imminent demise of the BBs is their ponderous nature, hiring practices, low tech approach, basic inefficiency, and out of control operating expenses. Paradoxically, those are merely the result of the real reason some BBs won’t be with us soon, if they don’t change their ways.

It’s the business model, not the size.

Those who insist on hiring newbies by the gross, while paying so-called Read more

December 10, 2010

Knowing The Difference Between The Sizzle And The Steak

by

Real Estate Investments Broker

Author website

Let’s begin by agreeing on the proposition saying those who try to live on sizzle, not steak, end up losing weight, till, in the end, they’re dead. Sizzle in many contexts can be fun, sexy, interesting, even impressive, but never substantive. In sports, sizzle is often lookin’ spectacular while seldom winning. The strikeout pitcher who barely wins more than he loses. The .300 hitter, 40 homer, 100+ RBI guy who hits below the Mendoza line with men in scoring position, with most of his homers and RBI coming when his team is eight runs ahead or hopelessly behind.

Sizzle ain’t results.

As a baseball purist and a lifetime member of the OldSchool in real estate, I appreciate sizzle, but get pretty damn agitated at those given more or less equal standing with big time producers, based upon a buncha glitter and multi-colored smoke.

As Exhibit A I offer Nolan Ryan

He’s a first ballot Hall of Famer. He threw the ball harder than Zeus threw lightning bolts. He struck out every third person on the planet earth. He threw eleventeen no-hitters. Then there were the stoopid number of 1-hitters. That’s what we purists call sizzle. I’ve done extensive research, and no-hitters still count as only one win. Strikeouts? Apparently they’re the same as all other outs. The winning team in any given game must get the other guys out 27 times in a nine inning game. The rules say an out’s an out. Go figure.

27 years in the major leagues, and he barely wins more games than he loses — 52.6%. He was the Dale Carnegie of pitchers, as he never met a hitter he didn’t walk. Try almost 5.25 every nine innings. If as a hitter you faced him more than five times, he walked you at least once.

His claim to fame from where I stand, is that his freak of nature body, combined with his superb work ethic and his luck with health and injuries, allowed him to pile up pretty much every stat but the one that mattered: Far more wins than losses.

Compare Ryan to Sandy Koufax. The Read more

November 7, 2010

In which I find more focus and dump the hocus pocus

by

Rust Belt Realtor

Author website

Disclaimer: If your business is humming along, I doubt you will get much useful information from this post, however, please do feel free to share any productivity hints in the comment section. Thanks!

I made a public commitment, and so I thought I share where I was and where I’m going. To Jeff Brown: I have yet to do one single 6 hour prospecting day. Haven’t done one. I’ve gotten to the point where I can do 3 hours most days of the work week, but even that isn’t consistent, so that’s still a goal, and I’m still committed to hitting that goal, and I will, but it’s a tough one for me. Which brings me to my first point: Real estate is not an instant gratification business. And the church says, “Duh!” Right. Old-timers are laughing their arses off right about now and I am too. I really like instant gratification, but unfortunately, I can’t use it to pay bills, so if you are seduced by that, as I often am, be careful. Don’t lie to yourself about what is “working”.

Working requires thoughtful planning and focus. If you want to brainstorm an idea, give me a call, drop me an email. I am very very good at brainstorming. Making a goal, making a commitment to that goal, doing the basics, this focus comes less naturally to me, but that’s where the money is so that’s what I’m learning to do.  Know thyself: Hands down, best thing I’ve done to help me focus was to secure a private office. I had been “working” out of a desk in our family room. Oh, I know, my broker supplies a desk at the office, I could use that but my stuff is at home. Unfortunately, so are our dogs, our cats, our kids, the laundry, food, you get the point. Here’s my solution: My broker owns our office building and this being the Rust Belt circa 2010, we have a few Read more

October 15, 2010

The $100,000 a Year Agent – How That Can Be You

by

Real Estate Investments Broker

Author website

My company’s checks have a typo on them. I’ve left it uncorrected for years, in order to remind me of my lean beginnings. The company name is on the first line, followed by what should be Jeff Brown — Broker on the second line. Instead, it says, Jeff Brown — Broke. No, really, it does. Hardly anyone notices. In fact, we’re in the year’s last quarter and nobody has said anything this year. I think a couple people told me about it last year.

Every time I write a check it’s the first thing I notice. Much like muscle memory, the first picture that pops up is me, grabbin’ a commission check, (with much blonde hair blowin’ in the wind) and runnin’ down to deposit it in the bank. Back in those days, if it wasn’t for the backbone of the real estate industry, the working wife, I wouldn’t be where I am today.

Real estate is, as I was told before California informed me I’d passed my first license test, the highest paid hard work, and the lowest paid easy work around. I’ve found that to be true, but not all-inclusive. As I’ve said a few times recently, .150 hitters can work as hard as they want, but if it’s not at the right things, nothing changes.

Here’s a thought to ponder. In real estate there are no minor leagues. In baseball kids learn their craft there. In real estate? Gimme a break.

There was a seven year period in which I worked for one of the biggest real estate firms in all of CA. The office sported 150 agents. They had a mentor program that graduated newbies as experts in protecting the company’s ass. Their career life expectancy was almost measurable. The office manager aspired to have that program bat .150 someday. The worst kept secret ever was the real reason that program was not axed. The newbies weren’t allowed in the ‘main office population’ ’till they closed three transactions — and their split was 50%.

24 trainees X 3 deals a year, at $500,000 median price, X 3% Read more

September 15, 2010

Door knocking my way to walking the walk

by

Rust Belt Realtor

Author website

So now that it’s time to think big and act on those thoughts, I went door knocking. Oh yes I did. I have made a public commitment to prospecting, and no, I do not have an unbroken chain of red X’s, and no, I don’t feel good about that. Okay so now that we have that covered, let me tell you about door knocking.

Another Realtor and I have on occasion been partnering up for the past year. She’s just gone full time so I recently suggested that we go door knocking. Not only has she never done this, but when I suggested it, she was sure that: a) she’d hate it; b) she’d have people cuss her out and slam the door in her face; c) she’d promptly be kicked off this planet; or d) all of the above. What she didn’t count on, couldn’t believe, and was tickled to find out was, e) none of the above happened. Here’s what we learned about door knocking: The hardest part is getting started. No really. Once you set a time, drive to the neighborhood and get yo lazy booty out the car, the hard part is over, and once you knock on that first door, the rest is a cake walk down Primrose Lane.

We picked a practice neighborhood. A neighborhood that we have a listing in, giving us something to talk about, but we really wanted a neighborhood in which we wouldn’t be too horrified to make some mistakes. It’s a forgiving neighborhood that I’m familiar with. Hard-working, blue collar, friendly people who are used to door-to-door sales people. They will either open the door to be polite, or kindly tell us no thanks. Sorry BawldGuy, not one person told us to go to hell- not one! The houses are close together allowing us to quickly move on to the next house, and we went in the afternoon, 2pm, our thought being the only people home at that time are either retired or Read more

September 3, 2010

Update – Adapting To a New Reality – Some Results

by

Real Estate Investments Broker

Author website

To some in real estate brokerage, hearing the ‘R’ word — that would be results, causes them the same stress as my son’s mom felt the first time she read his lips on the mound, and didn’t like it one little bit. She didn’t buy my explanation that he was talkin’ about the umpire’s new truck. Go figure.

When agents are talkin’ about what they’re doin’ to generate business, helpin’ more clients to achieve their goals, things get quiet when some jackass wants to know how it’s workin’ out for them. In other words, has any of their prospecting or marketing, you know, produced empirical results? Are they helping more people?

I’ve been writin’ a lot lately on the changes in marketing, and strategy I’ve been implementing this year. It generally breaks down into two broad brush categories — my local market — the rest of the country.

I’ve now been back in my local market for three weeks. Cat skins are now adorning my special wall. It’s a new wall, specifically set aside exclusively for local cats. In the few weeks in which talkin’ has turned into walkin’, my firm has put $500K into escrow. Considering I’m not even outa second gear yet, $15,000 ain’t bad for the first month.

I’ve had to adapt to what I’ve described as the new normal, (don’t like sayin’ paradigm shift) in the real estate investment world. It’s gained traction big time with thinking investors who realize, in fact, we’re not in Kansas any more, and unlike Dorothy, it’s pretty unlikely we’ll return any time soon. Some of what I’ve been sayin’ the last year or so about the general real estate investment arena might be considered tough love. Still, the folks with whom I love doing business, believe what I’ve been saying is universally true.

The takeaway here is that I’ve had to adapt — many times, on many fronts in the last seven years. Not all of my changes have been successful, but the ones that failed pretty much showed me where the right path was.

I’m already thinkin’ my new office is too Read more

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