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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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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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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Jan 172017
 

A question we often hear from potential sellers is whether or not they should renovate or otherwise improve the property before selling. While there’s no one correct answer (except “it depends”), most licensees will recommend some degree of “freshening” — cosmetic improvements that might fall under the headings of staging or curb appeal.

But what about the “bigger” stuff? Should we remodel the bathroom?

Every year Remodeling Magazine reports the results of research designed to determine which projects have the greatest dollar return. The results of the most recent survey are reported on REALTOR.COM and might surprise you. While sexy renovations may help with the sale, it doesn’t necessarily mean a great increase in value. The top return was attic insulation–statistically it returns more than the cost.

We ought to bear in mind (and explain to prospective sellers) that the value of the improvement shouldn’t simply be measured in dollars, but having some data beats pulling our opinions out of the air. If you look at the chart, note also there are regional differences. Also, pay attention to what people are saying. I know when I talk with folks who are buying and selling two things that come up consistently are “energy efficiency” and “aging friendly.” It shouldn’t be a surprise to hear that in Maine where we have an aging population and some mighty cold weather.

One of the funnier questions I had a few years ago came from a young couple who wondered, “Should we remodel and add a bedroom if we’re planning to sell in ten years–will we get back the money we spend?” That’s some strategic thinking! In this case, they ultimately decided ten years living in a home with the additional bedroom would be worth spending the money–even if the long-term payback wasn’t guaranteed. There are too many “it depends” to answer the dollar question with any degree of certainty.

Seth Godin recently wrote a piece (Economics Is Messy) about the difference between value and profit. When considering the “Should I renovate…?” question, it’s an important distinction. The average dollar “return” on improvements is about 64%, making most improvements a loss if we only measure in dollars. When we look at the value we include factors like how much more salable the property becomes and how much pleasure the current owner will reap from the improvement. Those factors add value and may well offset the lack of dollar profit.

 

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Oct 252016
 

tax-1351881_1280Licensees may not be tax accountants or qualified to provide tax advice, but that doesn’t mean we can’t share resources with our clients. The United States Department of Agriculture recently released Tax Tips for Forest Landowners for the 2016 Tax Year. I’ll confess that reading it (it’s only two pages) made my eyes glaze over, but if the only thing it accomplishes is sending your client to a tax advisor, that’s probably a good thing!

A few years ago I had my small woodlot cut and would have reported the income as “ordinary income” if I hadn’t used a tax advisor. The tax savings was significant. It’s important to “know what you don’t know.”

Licensees could post this link on their website or Facebook Page or send it directly to those on your mailing list who own forest land. Obviously, you won’t be able to answer questions, but folks may appreciate the information you can provide!

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Aug 052016
 
Let's think about this.

Let’s think about this.

Since I’m not actively engaged in brokerage on a daily basis, I take some extra steps to make certain I’m keeping current with “what’s going on in the business.” I know all too well the hazards created when class content and delivery aren’t in tune with the current environment.

One of those steps is to scan the media regularly and consistently. Recently there have been some headlines regarding action taken by the CFPB (Consumer Financial Protection Bureau) that are at best misleading. One I saw this morning claimed “CFPB makes clear lenders’ ability to share closing disclosure.” Actually, the CFPB has proposed some changes to TRID (TILA-RESPA Integrated Disclosure Rule). Until those changes are adopted, nothing has changed. The original rules remain in place.

In layman’s terms, the current rules adopted last fall created a reluctance on the part of lenders to share Closing Disclosures (a detailed statement of the buyer/borrower’s costs) with third parties–including real estate licensees. I suspect this stemmed in part from a desire to protect borrowers’ privacy. That would seem to be noble goal. But it was a change that did not sit well with some licensees who had become accustomed to the lender sending the previous disclosure (called ” the HUD”) to the licensees involved in the transaction.

Under the new rule, lenders were given strong confidentiality guidelines that actually go far beyond the issue of who gets the closing disclosure. Those guidelines increased the borrowers’ confidence that information about them and their transaction would remain confidential. Nothing, however, took away the borrower’s right to share that information with others.

Personally, I never understood why this created a problem for licensees. Under the new rule, the lender would send the closing disclosure to the borrower. The borrower would, if he or she wished, contact his real estate licensee and provide a copy for review and discussion. I informally polled some of my students and, while many admitted it felt like an extra step, no one reported a serious problem with the process. In exchange for what might be seen as an extra step, the buyer/borrower received additional protections and maintained responsibility for the the process. So the campaign to change this rule feels a bit like a solution in search of a problem.

Perhaps someone can help me understand why this change is necessary. The lines of communication between a real estate licensee and his or her client should be open and frequent. We say it often, “The agent (licensee) advises, the client decides.” Why would that not apply here? The information contained in a closing disclosure belongs to the client, not the licensee. This change might actually be seen as a power grab, taking away a borrower’s right.

We sometimes hear licensees “complain” that buyers and sellers do not accept enough responsibility for what happens in a transaction and are quick to blame the licensee when things go wrong. If that’s true, does it really make sense to take this step?

I haven’t looked at the specific language of the proposed rule changes, but a summary indicates the change will include (among other things) “guidance on sharing the disclosures with various parties involved in the mortgage origination process.” It seems to me that we already have that and we might think about what we’re doing and saying if we change that guidance.

 

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Dec 252015
 

Holiday Greeting

My best days are still the ones when the phone rings early in the morning and I’m needed at school. The kids haven’t run out of things to teach me. They may be small people, but they really do have big brains and it’s fun to look ahead and imagine a world run by these future leaders.

I’ll never forget the day “Johnny”—a fourth grader with a fifty-year-old outlook—stopped by my classroom after most of the kids had left. It seems he wanted to have a “mature” conversation on a wide variety of topics. At one point he informed me, “Pre-k and kindergarten were the best years of my life.” When I asked for further explanation, he added, “Because I really didn’t have to do much.” I decided not to suggest that the best years of his life might be yet to come but they probably wouldn’t be about “not doing much.”

Have a meaningful holiday and a new year filled with health, happiness, and prosperity. It’s a busy time of the year and you probably have a lot to do, but you can still make these the best years of your life!

All the best,

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Sep 022015
 

figure_trips_custom_text_13907There’s a little girl at school who I’ve known for several years. She’s a great kid, smart, and fun. If I were allowed to have favorite students, she could qualify. The one troubling thing about her is that she often cries when she realizes she’s made a mistake, even a small one.

Today, I know how she feels. I made a mistake yesterday and missed an event I was scheduled to speak at. (Fortunately I wasn’t the only speaker!) I can say in all honesty, this is only the second time in my career I have missed a speaking or teaching assignment.

Perhaps I can balance my sadness by telling the story of the time I almost missed a teaching assignment. Actually, I didn’t totally miss it and it’s a sorta funny story. Let me explain.

I was conducting a series of supervisor training classes in conjunction with a project at a client’s site. I was on site, working in a spare office. One of the other consultants, Bill, stuck his head in the door and announced, “You know there are a bunch of supervisors waiting for you in the training room?” I immediately realized I’d forgotten I had a class scheduled and jumped up in panic.

Bill started laughing. You have to be creative and flexible in the consulting business. Bill was certainly not an exception. He motioned me to sit down and then told me the rest of his story.

“I was walking by the room and noticed them all in there… so I walked in and asked them what was going on. One of the students explained that they thought ‘Walter is punishing us…’ When I asked why, they explained that many of them had been late for the last class and they were pretty sure you were showing them how it felt by not being on time yourself.”

Now it would be great if the story ended there. But Bill had more to tell me.

“I asked them how the class usually started and they explained that they usually reviewed homework as a group. So I suggested they start without you. That way they could show you that they were learning to accept responsibility and becoming self-starters. So if I were you, I’d give it a couple more minutes, the stroll in casually and act surprised.”

I did just that.

When I walked into the room, one of the students was standing at the flipchart recording the group’s answers while another student was facilitating a discussion of the homework. After that portion of the class was over, I thanked the self-appointed leaders and continued with the rest of the class as if I’d actually planned it that way. We “debriefed” the process and decided to rotate the responsibility among the students for the homework discussion during future classes.

Thanks to Bill’s quick thinking we truly made lemonade from a lemon. My reputation remained intact, the students learned something, and future classes were actually improved.

Unfortunately, I haven’t come up with a similar solution for this time. I suppose I could call Bill to see if he has any ideas, but it’s probably too late. Due to distance and time there was no way I could make it by the time I received the phone call asking where I was. It didn’t occur to me to cry, but I did (and do) feel really bad.

Today I’m trying to remember some of the things I say to my young friend when she cries. “Making mistakes is okay… sometimes what you think is a mistake isn’t… we can learn from our mistakes…” Ultimately, it is about perspective, right?

The shared story happened about thirty years ago. So if I can go another thirty years without forgetting a teaching or speaking assignment, I guess that’s not a bad record, really.

Wait! I didn’t actually miss that class thirty years ago–I was just late. So if I can go this long before I miss another teaching or speaking assignment, that will be a pretty good record. And I’ll also be really old!

 

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Aug 302015
 

anxious_scared_figure_400_clr_8434According to a recent study by Redfin, buyer’s worries have changed slightly. Of course, that makes sense because we all know the market changes constantly. Last year (2014) buyers were most worried about inventory. This year “prices” are in the number one spot. Actually, the worry seems to be more about prices rising and affordability becoming an issue.

Some will suggest that reflects an improving market with good news for sellers. Others will suggest it buyers are showing a lack of confidence in the general economy.

According to the survey of 3,500 buyers, the top five worries this year are:

  1. Prices (prices are rising or too high)
  2. Competition from other buyers
  3. Inventory (there aren’t enough houses to choose from)
  4. Selling my current home first
  5. Having enough for a downpayment

You might find it interesting to compare that with the top five worries last year. It will not take too much creativity to support your current opinion of the state of the market and the direction it’s taking. But you’ll have to rationalize some things. For example, the fourth worry of buyers last year was that mortgage rates might rise before they could buy–that didn’t make the list this year. Another concern last year that didn’t make the list for 2015 was “fatigue” — referring to buyers finding the process difficult and tiring.

Most know that all generalities are false. In this case, that’s especially true because “worries” are very personal. So while how those 3500 people felt is mildly interesting, real estate licensees should be much more focused on a much smaller number–the number of clients you are working with.

You want to know a lot about your client. Most of those things are basic and concrete. The questions you ask probably include things like, “What is your price range?” and “How many bedrooms?” and “How much land?”

Those are certainly important conversations. But why not ask “What are you worried about?” Some will say, “Nothing,” partly because they are overwhelmed with excitement and haven’t thought about the concerns. It might be tempting to accept that answer. But aren’t there some things a buyer should be worried about?

One of the saddest listings I ever took involved a couple in the middle of a divorce. The short version of their story was they visited Maine and fell in love with our great state. They spent the last few days of their vacation finding a real estate licensee and then a house. It was a very smooth and speedy transaction–their agent handled “everything” while they went home to pack. The realities started showing up after they were settled in their new home. One spouse was forced to return to their home state to find employment that wasn’t available in the vacation area they’d bought. The other found work, but it involved a long commute with resulting childcare and expense issues. Thus began the breakdown of the family. The home they purchased was not an “easy sell” so by the time they realized their mistake, the market was not in their favor.

A little “worrying” during the process might have made a world of difference in the outcome. Personally, I think the licensee who represented them in the purchase should have noticed there were some things they weren’t worried about and raised some of the issues they weren’t seeing.

Of course, licensees also find themselves representing worriers. Folks in the real estate business like to focus on “making it easy” and “getting to closing.” If that’s the case, remember that it’s easier to smooth the road if you locate the bumps and potholes. No matter how you cut it, a discussion of worries with clients (buyer or seller) just makes sense.

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