Jul 202017
 

Some years ago I suffered at the hand of an aggressive (abusive!) insurance salesperson. Part of his creative pitch was that he really wasn’t selling insurance. He ultimately became so obnoxious I called the state licensing department (this was not in Maine), described the situation and wondered if this individual might be violating the state licensing requirement. I was prepared for bureaucracy and a run-around so I’ll never forget the investigator’s response. “Well, if it looks like a duck, walks like a duck, and quacks like a duck, it’s probably a duck.”

The recent controversy regarding Zillow’s “instant offer” program reminded me of that experience. Among the issues being raised is “Does this instant offer program constitute brokerage and is it, therefore a licensable activity?” Of course, the debate doesn’t stop there. As more organizations and individuals have joined the fray, the questions now range from “Is this good for consumer?” to speculation that Zillow is trying to “disintermediate” (I had to look it up too) brokers and agents. Personally, I’m reminded of a high school debating class and learning that an often-used technique is “begging the issue.” Whether or not the “Instant Offer” program is good for the consumer doesn’t really determine whether or not it’s brokerage. What determines whether or not it’s brokerage requires looking at the law–not whether or not people (brokers, agents, or consumers) like it.

Somewhere between “if it looks like a duck” and an in-depth analysis of statutes and case law, we might find the answer. However, as I often say in class, “Sorry, I left my judge’s robe home so I’m not qualified to offer a ruling.” I do have a personal opinion. But here’s the thing: that personal opinion is based on the Maine Statute that defines brokerage. (Title 32, Chapter 114, §13001 2.)

But here’s the really interesting thing–in case you haven’t noticed. My opinion is based on a MAINE statute. Would it be the same if I were in any other state? As is often the case, there just might be more than one answer to this question–one reason I teach that there are always two correct answers to any question:

  1. “I don’t know.”
  2. “It depends.”

If you ask me whether or not Zillow’s program is brokerage I’ll give you both answers. “I don’t know. It depends.” I don’t know because I’m not that familiar with the program and it depends because the answer might be different depending on where I am when I answer the question.

And that leads us to something to think about.

While we can still say with some accuracy, “all real estate is local” another reality is that the business of real estate is becoming increasingly global. Anyone licensed in two different states will likely honestly admit it becomes important to remember the differences in laws and rules between those two states. Yes, there are many commonalities–but those differences can be significant. “The devil is in the details.”

It would be a keen grasp of the obvious to observe that the world is changing. Twenty years ago the technology didn’t exist for a nation-wide company to offer an “Instant Offer” program. A localized version might have been feasible, but the concern would have been (for example) “Can I legally do this in Maine?” It’s not that simple anymore.

Without creating a political discussion, I think issues like the Zillow question can make us wonder if we will come to see more federal regulation that will facilitate one answer to questions. We can, of course, debate whether or not this would be a good thing… and wonder what the motivation might be for increased federal oversight of real estate brokerage, but that somewhat begs the questions of “Where are we headed?” and “Are we sure we want to go there?”

Oh, by the way. Within 24 hours of talking to the investigator at the insurance division, I stopped hearing from the duck who was “not selling insurance.” His statement actually became true. He was not selling insurance. In fact, he was barred from selling anything resembling it in that state.  Sometimes things are pretty simple and a duck is just a duck.


A recent article posted at RIS Media raises even more questions and reports some opinions on this question.

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Jun 142017
 

“There’s no such thing as bad publicity,” is often attributed to P.T. Barnum although there’s no hard evidence he said it. There’s no doubt, however, that he was a self-promoter extraordinaire. An interesting discussion is available for those engaged in the practice of real estate brokerage–how much self-promotion of ourselves should we be doing versus promoting properties?

During one of those discussions with a student, he was quite adamant that whether we are promoting properties or ourselves, we should be using every available means at our disposal–it’s a fiduciary duty to our clients! His twist was “There’s no such thing as bad advertising.” My tongue was only slightly in my cheek when I told him that I hoped he was taping his business card on the wall of every public bathroom he used since business cards are cheap and a lot of people would see them.

Seth Godin, in a recent blog post, notes that marketing used to be done with care and caution, but now that getting attention (publicity) is easy and cheap, we are “like a troop of gorillas arguing over the last banana.” For those unfamiliar, the gorilla reference relates to a series of books by Jay Levinson on “Guerilla Marketing.” The premise behind the popular book series was that small businesses could compete by adopting unconventional methods of promotion. For an effective program, you didn’t need a huge budget, you just needed to have imagination, energy and time.

But you also needed to think because guerilla marketing works best when it’s targeted. Just because you can tape your business card on the walls of public bathrooms doesn’t mean you should.

Guerilla marketing is creative and fun, but it is still about building your image in a strategic manner–not just doing the quick and easy. Let me give you one example that is a personal annoyance.

Technology now makes it very easy to email information to diverse audiences and lots of people. All you need is a mailing list, right? And best of all, email is free! (That’s actually not true, but it’s a different discussion.) So a lot of folks started playing the numbers game. Some guy in Nigeria figured out that if he sent out enough emails suggesting he needed help getting his family fortune moved to the United States, some small number of people would perhaps be willing to help him.

So, yes, it does work. It works really well for the short term. But for every willing victim, there are thousands–perhaps hundreds of thousands–of people who are simply annoyed by his constant badgering and desire to take advantage of people. (Robo-calls fall into the same category when you think about it.)

For those who are using technology–email and social media–as a vehicle for promotion, it might be wise to consider the full impact of what you’re doing. I don’t maintain counts, but every week I receive at least a dozen or so “ads” from real estate licensees. These range from announcements of open houses to brochures that tie up my server because they are megabytes in size.  Some are for properties over 100 miles away. But that’s not what really bothers me.

What really bothers me is how many of these emails are in direct violation of federal law. You might find it mildly interesting that the term”CAN SPAM” is an acronym for “Controlling the Assault of Non-Solicited Pornography And Marketing.” So sending unsolicited email is considered an assault–I can relate to the term while I delete them from my inbox.  What might be more interesting is that if your marketing and advertising program includes assaulting people with email, you’re risking a $16,000 fine by the FTC for each email you send that violates the act.

We can debate the effectiveness of the act, but it is law and many people are at least mildly aware of it. So consider that sending email that does not comply is also advertising your willingness to violate the law. It’s actually not a hard law to comply with, so do a little research:

  • National Association of REALTORS® offers a number of articles and resources
  • HubSpot offers a short list of do’s and don’ts along with some FAQs
  • FTC (Federal Trade Commission) offers a compliance guide for small businesses
  • Comm100 provides some detail and unintentional entertainment by using the word “complaint” repeatedly when they mean “compliant” — an interesting error for a company specializing in communication!

What are you telling your prospects unintentionally? This really isn’t just about the law. If you find receiving SPAM annoying, you might not want to send it! And if you don’t find it annoying, remember that a lot of people do! That’s one reason the law was passed. You might just distinguish yourself by doing it right.

 

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May 042017
 

Students who’ve taken a qualifying education (licensing) course with me will likely remember the “Story of Dave.” I often tell it while we are studying contract law.

The story begins decades ago with a work friend and drinking buddy named Dave.  Following a failed marriage, Dave was actively “playing the field” by, at times it seemed, dating as many women as possible. In the course of so doing, he met a young lady named Meg. I’d noticed that I was hearing her name often. The tales of other adventures diminished. It became apparent he was quite smitten with her.

One November evening, Dave and I were enjoying several adult beverages and conversation when he commented that he’d finally decided what to get Meg for Christmas–a diamond ring. I nearly fell out of my chair and replied, “Omigod, you’re getting married?!”

Almost before the question was finished he replied vehemently that he was not getting married–he was merely giving Meg a diamond ring for Christmas.

It was, as they say, a “teachable moment.”

I suggested to Dave that we would conduct an experiment by surveying every woman in the bar who would talk to us. (Fortunately, many would if only out of idle curiosity.) The question we would ask was “If you received a diamond ring as a Christmas gift, what would you think it meant?” Of course, 100% replied with a version of the conclusion they were engaged. David offered a further explanation to several of our subjects. They remained steadfast in their opinion, shook their heads and gave him that “oh you poor guy” look.

When Dave and I finished our drinks that night I noticed he seemed a bit subdued and thoughtful. Meg was certainly not like every other woman–that’s why he was smitten by her. But he now had overwhelming evidence that she might well view his gift differently than he intended. He did not mention his planned gift again as Christmas approached.

The story demonstrates an implied contract — an agreement created by actions of the parties involved, but it is not written or spoken.  Implied contracts can be difficult to enforce but they are often considered valid. (Note that the Maine Statute of Frauds requires any contract involving the transfer of an interest in real estate to be in writing. MRS Title 33 §51) There is actually some interesting case law around engagements, engagement rings, etc. Can the ring be considered liquidated damages should the offeror fail to follow through with the marriage?

Students always want to hear the rest of the “Story of Dave.” I’ve been able to share that he did give her a diamond ring and they were married about a month after Christmas. Since we lost contact several years later, I’ve not been able to share the long-term results. Until now. Much to my surprise, my phone rang this week and it was Dave! He’d used the Internet to locate me. We did a lot of catching up. I am thrilled to report that he and Meg are still a happy couple (I don’t remember the exact year they married, but it was close to forty years ago), have three very successful adult children and enough grandchildren to keep them busy.

So we have a story with a happy ending and an example of an implied contract that worked.  We sometimes joke that marriage is the cause of most divorces… and observe that written agreements often are the cause of many disagreements. I’m delighted to have this example of an implied contract that was successful. Congratulations, Dave and Meg!

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Apr 212017
 

This a screenshot of an email I received today… and I confess I almost clicked the link, thinking I’d received the email in error.

There are several red flags:

  • The email is supposedly from Michelle Morgan at America Title, but her signature line says she’s from RE/MAX.
  • There actually is no file attached– but there are two links to click. Hovering over both links reveals they are both the same link.
  • Both links are “PHP” links. Files that have the .php extension can contain text, HTML tags, and scripts. “Scripts” make me nervous.
  • The link to download the picture is the same link as the other two. Michelle is very determined to get me to click that link.
  • Typos (sellers Disclosure should be Sellers’ Disclosure) are considered indicative of phishing and scam email.

These scammers are getting smarter every day… This one obviously has figured out that I’m somehow involved in real estate and developed an approach that plays on that. (If I had several contracts pending, I’d have been even more likely to click one of the links.) I did “Google” America Title–there is a company called “American Title.” Another ploy scammers use is to use names that are close to legitimate, hoping the victim won’t notice.

It seems to me that we can’t be too careful these days!

 

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Apr 212017
 

It takes more than fast food to stay healthy.

You’ll sometimes hear me confess, “I can over-simplify with the best of them.” But a better confession is that I make a bit of a hobby out of challenging over-simplification. So it won’t come as a surprise to those who know me that a statement made by a nationally recognized real estate “guru” got my brain working:

Where agents get in trouble is working low probability prospects for long periods of time.

On the surface, it’s a hard statement to disagree with–that’s true of most generalities. But one of the stories I relate in class is about a client I worked with for three years before a deal was completed. When we first started talking, she would have been easily labeled “low probability.” Fortunately, I wasn’t being coached by this particular guru. In fairness, he also says that we shouldn’t waste time with prospective clients unless there’s at least a 51% chance they will commit to working with us exclusively. So while I wasn’t sure how long it would take, I was quite certain I would be the agent she would work with exclusively–unless of course, I gave her a reason to go elsewhere. One reason to go elsewhere would have been to send her packing with the instruction, “Call me when you’re ready to do something.”

A key to success in this business is to balance short-term and long-term perspectives. Agents who are not committed to the business long-term must have a short-term vision. The previously mentioned guru suggests 80% of the clients we sign on should be expected to buy or sell within 30 days. Considering it often takes 30 days to go from under-contract to closing, that seems perhaps a bit optimistic.

One of my favorite questions of a prospective client is “And how long would you like it to be before you have bought (or sold) your property?” The answer to that question will not only tell a lot about the client’s motivation and expectation, it will help determine a strategy. Personally, I always tried to keep things moving just a little faster than the client expected or wanted.

During my years as a consultant to companies, one of the oft-discussed factors discussed was “client-readiness.” There’s really no difference in the practice of real estate–every transaction is made up of a series of decisions–some are tougher than others. Very often the decisions we think are easy are difficult for the client. And sometimes the ones we think are easy can be difficult. Client-readiness is about the client being intellectually and emotionally ready to make the required decision. Whether it’s consulting or real estate an important part of our task is to help those clients become ready. We need a plan, but we also need to understand that we can’t force that readiness.

That’s why it’s important to have a good mix of clients who are in various states of readiness. We can put some structure on it. Buy or make one of those grid-type calendars. List all your clients (and near clients) down one side and then project when they will buy or sell. I’ll use a monthly example.

(Hopefully you have more than six clients and prospects–this is just an example!) What you’re actually doing here is comparable to project planning. You can beef it up by using letters or codes to indicate key steps in the transaction, starting with your first contact through closing.

The process will help you keep some balance in your business. I can assure you that I did not book three days of showing appointments when I first met my three-year client. She would have enjoyed it, but she wasn’t ready for it. (We did look at a couple of houses, but our goal was for her to get a sense of what she might be prepared to buy… one of the early issues was the responsibilities of home ownership truly petrified her. As a result, she was focused on buying a “cheap” house and the minimizing the financial commitment believing that was a low-risk strategy. There was truly a long learning curve for her.)

By the way, if it’s not apparent this chart gets made in pencil because you’ll be changing it regularly as your client’s change. All the chart does is help you decide how and where to invest your time. “Invest” is an important word, because you want to make the decision based on the anticipated return. Showing a buyer who isn’t ready to make a decision 18 properties will not make him any more ready–it may have quite the opposite effect. Conversely, brushing off a buyer who seems reticent may result in a missed opportunity.

While it might seem tempting to go only for clients with high probably and fast closes, what that means is you are constantly on the run trying to grab every “hot” opportunity. An interesting question that too often goes unasked is “What is the ideal number of clients to have?” It can be hard to answer, but thinking about it is important. What you need is a balance of clients at various stages of the process. It’s called “keeping the pipeline full.”  We can make it a numbers game, but there’s some art involved.  It can be simple, but not always easy.

One of my very good friends likes to say, “I’m always working; I just don’t always know when I’m going to get paid.” He’s also someone who works smart–he knows that it’s important to pay attention to everything and everyone. I experienced that first hand when I received a call from a prospective real estate client. He explained that he called me because “You’ve been a substitute teacher at the school and my daughter really likes you so I think I will too.” Who would think that a sixth grader would qualify as a potential real client, albeit indirectly?

I once had a licensee brag that she had 60 listings. I wanted to ask how she managed them. Being a numbers kind of guy, I immediately did this math in my head: If she’s spending 20 minutes per week on each of those listings (staying in touch with the seller, advertising, making sure information stays current…) that’s twenty hours per week. Did I mention she also works with buyers?  That’s not a pipeline–it’s a raging flood. I suppose dumping as much as you can is a valid business strategy, but if we’re going to work smarter instead of harder (and longer) we really need to manage our business.

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Postponements Galore!

 Posted by at 12:30 pm
Mar 132017
 

It’s tempting just to suggest that anything for Tuesday and Wednesday is probably postponed! But for those who haven’t heard:

  • The ERA Career Mixer (I was scheduled to speak) has been rescheduled to Thursday, March 16–same time, same place.
  • The Bangor Board of REALTORS® membership meeting and continuing education course has been rescheduled to Tuesday, April 18–same time, same place.

At least one of those two days might be a good day to curl up with a book–bonus points if it’s educational and relates to real estate!

 

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Mar 082017
 

The following article is reprinted with permission from “State News Updates” — an e-newsletter from Representative Paul Stearns, District 119.

Foreclosure Diversion Program

The Foreclosure Diversion Program (FDP) in the Maine courts gives lenders and homeowners in foreclosure a chance to explore other options and work out their differences.  In mediation, both parties, with the help of a neutral mediator, talk about whether it is possible to avoid a foreclosure on the property.  Some other options include a loan modification or short sale.

To participate in mediation, a homeowner must live in the home, and the property must have no more than four (4) units.  When a qualified homeowner in foreclosure requests mediation, the case enters the FDP.  Homeowners attend an informational session, where a judge explains the court process and a housing counselor or legal services attorney explains more about working with lenders to modify loans.  The homeowner attends the first mediation session on the same day.

At mediation, the homeowner(s) and their attorney(s), if they are represented, meet with the lender and the lender’s attorney.  A mediator is present to help the parties to make sure that everyone is heard and that important issues are discussed.  The mediator submits a report about the mediation to the court.  Sometimes parties return at a later date for another mediation session.

How Do I ask for mediation?

All requests for mediation must be in writing and given or sent to the court clerk.  A copy of the request must also be given or sent to the attorney for the lender.  Homeowners can request mediation by using the one-page Answer form attached to the foreclosure complaint, by filing an Answer without the form, or by writing a letter to the court to ask for mediation.

How Do I prepare for mediation?

Homeowners can call the Bureau of Consumer Credit Protection’s foreclosure hotline:  1-888-664-2569 to discuss the situation, to find a housing counselor, or to be directed to legal assistance.  In addition, the best preparation is to decide on your goals.  Do you want to stay in the house?  Do you have money to pay for it?  Lenders can best prepare for mediation by knowing the status of the loan, having all documentation of the loan in order, and by bringing any forms required for review of the loan to mediation, even if the forms were previously provided with the complaint.  Lenders should know what options for loan modification apply in each situation and should have obtained a reasonable fair market value of the property.

What is the benefit of mediation?

Parties have a chance to talk with each other in an informal setting.  The mediator is impartial and is trained to help parties discuss issues and explore options.  New ideas for settlement may come up at mediation that neither party knew were possible before meeting.  Parties make the decisions.  The mediator does not decide your case.  Because of the communication established in mediation, many foreclosure cases are dismissed.  More than half of the foreclosure cases mediated in the FDP from 2010 through 2015 were dismissed.

How Do I contact the Foreclosure Diversion Program staff?

If you have questions or suggestions about the Foreclosure Diversion Program, please contact:  Laura Pearlman, the Foreclosure Diversion Program Manager at (207) 822-0706 or by email, FDMP@courts.maine.gov.

How Do I contact a Foreclosure Mediator?

All Foreclosure Diversion Program mediators are independent contractors to the Judicial Branch.  Their names appear here by consent.


Operation of the Foreclosure Diversion Program is governed by: 14 M.R.S. §6321-A and Maine Rule of Civil Procedure 93.

For more information, click here.

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Feb 282017
 

Dagnabbit! I can’t make things work!

Imagine your buyer client calling you in panic or frustration because the lights in their new home keep going on and off… the garage door is opening by itself… and the thermostat refuses to affect the temperature of the house. Would your first instinct be to suspect the house is haunted? (Bonus point available–that’s called a stigmatized property. Is that a required disclosure in Maine?)

Well, there might just be another explanation and an item for you to add to your closing checklist. (You do have one, right?)  Here’s a link to a recent article in USA Today reporting how “As the Internet of Things finds itself into houses via connected devices, more and more homes contain hot new tech gadgets that can all too easily become unlocked digital backdoors.”

In non-technical language, if the seller forgets to reprogram his smartphone, he could end up opening the garage door of the home he sold.

Speaking of closing checklists,  the article includes a link to a one-page “smarthome checklist” created by the Online Trust Alliance. It’s not exactly free of technical terms but is definitely worth a look. Sorry if it makes your head hurt! Those with kids have access to technical support with this language and these devices.

Seriously, there are some potential issues here to think about–including what electronics “go with the house” and what programming changes need to happen when a property changes hands.

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Let’s Make Learning Fun

 Posted by at 8:07 am
Feb 262017
 

Teachers are, I think, students just by nature of the profession.  But in this case, I became a student both officially and formally by completing an online course offered by STEDI (Substitute Teacher Division, Utah State University) titled “Advanced Classroom Management.”

I wish I could tell you that it was a grueling and stressful experience. Truth be told, I’d actually taken an older version of the course some years ago. So this was a bit of a review and I was able to complete the self-paced course quickly.  Being a typical adult learner, I undervalued the material–at least until I finished.

Then I remembered, sometimes the greatest value of a course is that it reinforces what you already know and increases your confidence. I use many of these techniques while teaching. They are integrated into the Substitute Teacher’s Workshop I offer in conjunction with several adult education programs. So, as the saying goes, “It’s all good.”

Students of all ages often ask, “Do we have to learn this?” I understand the question but also find it a sad one. What happened to the joy of learning?

Seth Godin recently posted some thoughts about the smoker’s lounge at the Helsinki Airport. (There’s still one there.) He observed that most smokers in the lounge didn’t look particularly happy. They had the appearance of doing something because they had to do it.  He also observed many people standing about the lounge checking their phones. They didn’t seem particularly happy either–probably for the same reason. He wondered when we are going to start building social media lounges.

One thing to like about Seth is he makes you think. I’m not sure if his post is about addiction, human nature, social media or something else.

But I do know this: Things that initially bring us pleasure can easily turn into habit and drudgery.  We continue to do them because we have to do them even though the value has diminished. That may include learning.  But when we really start to think about it, the cigarettes, phones, and I would include lessons, do not change. We change–collectively and individually.

But when we really start to think about it, the cigarettes, phones, and I would include lessons, do not change. We change–collectively and individually–how we think about things and our attitude towards them.

Let’s make learning fun.

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Feb 242017
 

One of the challenges we face in real estate courses is making certain our content is current. Come to think of it, that’s a challenge for real estate licensees as well!

There’s an old story claiming that someone once asked Albert Einstein for his phone number and he had to look it up. He supposedly remarked that “an intelligent person doesn’t store information, he knows where to find it.” That makes some sense and carries with it the importance of knowing what we don’t know so we do not give out false information. Einstein had the confidence required to admit he didn’t know the answer to what many would consider a fairly simple question.

So if I asked some number of licensees (particularly those who recently completed the sales agent or associate broker course about the Maine Nonresident Withholding Tax on real estate sales, I suspect many would give an incorrect answer because some rates changed for 2017. When Ben Franklin opined that “In this world, nothing can be said to be certain, except death and taxes,” he didn’t mean the amount would be certain–just the existence.

You’d be correct (well, nearly) if you cited the default calculation as 2.5% of the purchase price. “Nearly” is added because the withholding only applies if the sales price is $50,000 or more.

You might also remember there are some alternative calculations and that each requires a waiver from the Maine Department of Revenue. One of those calculations is based on a “small profit.” Those are the rates that have changed for 2017. With a waiver, the seller may be allowed to have the smaller of the two amounts (2.5% of the purchase price, 10.15% of the profit for residential) withheld.

If you think this is starting to get complicated, you get a sticker. Like Einstein, you may be concluding the best answer to the question “How much is the Maine Nonresident Withholding?” is “We’d better look it up.” Actually, an even better answer is “We’d better consult a tax specialist.” (If your client doesn’t have an accountant or tax advisor, like Einstein this might involve a phone book or its Internet equivalent.)

From an estimating point of view, the safe calculation is the default calculation of 2.5% of the sales price. After all, that is the most the seller will have withheld. If your client is a “do-it-yourself” type you can offer him or her the link to the Maine Revenue Services Website. It’s a very user-friendly place with lots of information and all the forms one may need. (Forms and information use the abbreviation REW-Real Estate Withholding.) Note that any request for a reduction in withholding must be made at least five days before closing.

While there’s no minimum on how helpful we should be with our clients, there may be some limitations when it comes to the amount of knowledge we have–particularly in areas such as taxes that extend beyond our area of expertise. Personally, I think a client who is a nonresident of Maine needs to know he or she may be facing at 2.5% withholding from proceeds at closing. We can and should also explain that there are alternative calculations, waivers, and exemptions and these should be discussed with a tax professional well before closing. In the interest of accuracy, perhaps “the less said, the better.”

Another option might be to provide all nonresident sellers with the Notification to Sellers of Withholding Requirement–it could become part of your listing packet and be included on your listing checklist.

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