Real Estate Course Updates…

 Posted by at 11:25 am
Dec 152017

For those sales agents who are planning to complete the Associate Broker Course I will be teaching in Bangor, you need to “get with the program!” Thanks to my affiliation with TRELG, I’m now teaching a “blended” course. That means you need to register at least one week before the first scheduled workshop (Friday, January 12, 2018). There is some pre-work you must complete before attending each workshop, including the first one. For additional information and to register, visit The Real Estate Learning Group Website.

Similarly, if you or someone you know is planning to complete the Sales Agent Course I will be teaching in Augusta, you can’t wait until the last minute. Plan on being registered at least a week before the first scheduled workshop (Saturday, February 3, 2018).  There is some pre-work you must complete before attending each workshop, including the first. For additional information and to register, visit The Real Estate Learning Group Website.

Of course, you can always contact me if you have questions… Some questions that came up following my announcement that I was joining TRELG can be answered here! (Thanks to those who emailed or called with your congratulations!)

  • Yes, we will be offering an Associate Broker Course with the workshop portion scheduled on a weekend day.
  • A Designated Broker Course is in development and may be available this spring.
  • Thanks to those who sent congratulations and well-wishes!
  • Yes, I will continue to teach CE. (We are always interested in talking with companies interesting in hosting CE classes.)
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.

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.


Dec 152015

Jack is a longtime friend and colleague… one of the things I love about him is the way he shakes cages and challenges traditional thinking. The following piece is his Daily Investor Brief published by St Anselm College on December 14, 2015, challenging some of the traditional thinking often touted by the real estate industry.

Jack F HeadshotJust because everybody is doing it is no reason to do it! You’re allowed to be who you are and to plan your financial life as you please. “I’ll never have to cut the grass again!” is a poor reason for uprooting your life. Roots are worth a lot.

When the grass is cut by a condo association, you pay to have it done. You can pay to have your grass cut in the house in which you live. Think a little bit about the devil you know versus the one you don’t. Things change, and you may want big changes in your life at any time, but don’t let convention dictate your life.

In doing financial planning, your plan dictates your finances. If you want to fund a downsize move, so be it. Think through your goals and objectives, plusses and minuses, and then see what you can realistically finance. Your finances, of course, limit your plan, but get first things first. What do you want to do and why do you want to do it?

Many people live in the same place for many years and suffer no adverse consequences. Others have wanderlust and enjoy gypsy genes. Following children and/or grandchildren is not a bad strategy.  Think through your reasoning and then test the waters. What looks good in your imagination may not be ideal in practice. Then again, it might be far better than you ever imagined. Your reasons, whatever they may be, are the right reasons. Make sure they are your reasons.

Going home to the home you’ve lived in for forty or fifty years is not a bad place to go. Your investment in a home can also be an investment in a community. First it might be for schools. Next it could be for a religious congregation. Neighbors might become lifelong friends. All of this factors in. Next time you are cutting the grass, think about all this.

Jack Falvey is a widely published freelance business writer, contributing to Barron’s, The Wall Street Journal, and The New Hampshire Union Leader and Sunday News in the areas of sales, sales management, and marketing. He teaches professional sales and sales management at both University of Massachusetts Boston and at his alma mater, Boston College.

Falvey is currently a fellow at the New Hampshire Institute of Politics & Political Library at Saint Anselm College in Manchester, New Hampshire where he offers daily Investor Education Briefs.


Sep 122014

elephant_on_hose_400_clr_11550Hopefully, most are at least aware of the elephant standing in the room even though he’s easy to ignore. We don’t like looking at him because he represents an area that can seem confusing and make him look even bigger than he actually is.

The Federal Emergency Management Agency continues to roll out revised flood risk maps that are dramatically impacting homeowners (existing and potential) and businesses. Another reason the elephant is easy to ignore is so far only seven county’s maps have been released: Cumberland, Hancock, Knox, York, Lincoln, Waldo and Sagadahoc.

The bad news is that flood risks are changing and flood insurance premiums are dramatically affected. The good news is that there are often options and alternatives, including  subsidized and grandfathered rates which can be transferred to new owners. However, rates will still increase gradually over a period of years.

If you’ve been ignoring the flood risk elephant, it’s time to stop. A good place to start getting some basic understanding is a recent article published by the Bangor Daily News. Licensees can and should understand the issue as it relates to businesses, primary and secondary homeowners–both sellers and buyers. This is not an issue that should be reserved until closing.

Ultimately and at a basic level it’s not much different from other risks homeowners must face. There are parallels to homeowners insurance and title insurance–for licensees with clients, it’s about helping those clients manage risk. Just like other risks, another good place to start is by becoming familiar with those companies who provide the insurance necessary.

Aristotle said, “Education is an ornament in prosperity and a refuge in adversity.” You can’t lose by getting smarter!


Where can I get…?

 Posted by at 7:27 am
Jun 032014
"You are going to pay me, darn it!"

“You are going to pay me, darn it!”

Fortunately, I’m able to see the humor in this question–I get it at least once a year from a do-it-yourself buyer or seller. “Where can I get a blank purchase and sale form that will protect my interests if I don’t want a broker involved?”

I usually manage NOT to answer, “Gee, I can’t answer that since you don’t want a broker involved and I am one.”

It’s a really tempting answer.

Why do we get requests like this, anyway? We’re quick to explain that some people simply “don’t want to pay a commission.” We’re quick to judge but slow to answer the questions that are hidden in that objection.

Coincidentally, I happened on an article that raised the question “Why do real estate agents still exist?” Using the over-worked (but applicable) analogy to travel agents, the article offered several reasons. Ironically, most of the answers were about agents, not customers or clients. One answer was that agents still exist because the Internet is making it possible for them to be more productive. A true statement, certainly, but also a bit self-serving and not particularly helpful to a buyer or seller.

I liked the question more than the answers. So let me ask my readers, “Why do real estate agents (licensees) still exist?” Don’t tell me it’s because we have the blank forms or the MLS, please. In fact, I’d like you to pretend you’re being asked the question by someone who doesn’t know much about the business of real estate. What are you going to do for me that I can’t do for myself given all the information at my disposal on the Internet?

If you think it’s an easy question to answer, you’re probably not trying hard enough. So let’s upgrade the question and pretend it’s being asked by someone who’s bought and sold property a dozen times over the past few years. What is your value to someone in that category? What can you do for that person that he or she can’t do?

Your assignment is to come up with a list of at least five to seven contributions (benefits) you can provide to that person that he or she can’t get anywhere else. Some generalities are okay, but specifics are a lot more powerful. A hint might be that it’s likely to be less about what you have to offer and more about what the buyer or seller needs in today’s economy and environment. The reason you need at least five to seven is simple–if your prospective client is (for example) a marketing and sales expert, your marketing program diminishes in value and importance.

If you want extra credit for the assignment, find somebody who will challenge your reasons and assumptions and maybe even argue with you. While this (arguing) is not a great technique to use with prospective clients, it can certainly sharpen your thinking.

And if you want bonus points and a sticker, answer this question: Why will real estate agents exist ten years from now?






Railroads and Real Estate

 Posted by at 8:58 am
Apr 192014

walking_on_tracksOne more thing to think about… are you involved in a transaction where access to the property involves a railroad crossing? According to the Maine Department of Transportation, unless there is deeded access, the property owner must have permission and an agreement with the railroad owner to cross. In the absence of this agreement the landowner could actually be considered guilty of trespass.

As with all rights of way and easements, this is not a particularly simple topic. Much of the information you’ll need can be found by downloading a pdf file from the website. Note these requirements apply not only to active crossings… you’ll want to consult an attorney who is familiar with the topic.


The 200 Letter Revisited

 Posted by at 7:22 am
Feb 042014

mailbox receiptFor those who don’t know, the 200 letter was for years a standard practice assigned to newly licensed agents. Many agencies would help promote the new licensee with a press release to the local newspaper and require the licensee to develop a mailing list of 200 people, then send those people a letter announcing his or her new role as a sales agent with ABC Realty.

There was nothing particularly sacred about 2oo–although there has been some research done indicating that most people do, in fact, know at least 200 people beyond a nod and a smile. You’re supposed to include everyone you can think of… your doctor, auto mechanic,  pet sitter, etc.

This does not exactly qualify as “targeted marketing” until you realize that we are in a relationship business. Fortunately (or unfortunately, in some cases) for many people considering a real estate transaction, they will first think “Who do I know?” and if they can’t come up with a name, they’ll start to ask their friends. (You’d think the question would be “Who’s the best in this business?” but it isn’t.) For the 200 letter  this suggests we include two business cards–“one for you and one for a friend” along with the hope of reaching upwards of 400 people.

Personally, I think it’s still a valid approach to getting started. It’s admittedly gotten expensive–mailing 200 letters is going to cost close to $100 just in postage. But that’s still a small investment in your future business. Some of the factors that “make it work” are not “cheaping out” when printing the letter and cards, writing a letter that makes a strong impression, and some degree of repetition or reinforcement. It’s not just about getting started if it’s done correctly.

An alumnus of a sales agent class once contacted me because she was having trouble with her 200 letter. It seems she couldn’t come up with 200 names of people she knew and she wondered if she might contact her 600 Facebook friends and request their mailing address. I replied that I doubted many would send her their address and suggested she put more energy into thinking about people she knew outside of social media. If you have a name and town, you can often dig out the address with some Internet research.

We can, of course, debate whether or not she should have a “600 Facebook Post.” But before we jump on Facebook (the good news is the bad news–it’s easy) let’s get a good solid list of people we know. Maybe you can’t come up with 200–there’s a message for you in that. As part of your business plan, you’re going to want to start thinking about how you will network and make contacts. Remember, this is a relationship business. The more people you know, the more prospects you have.

Just don’t be obnoxious about making those friends, please. Years ago I knew an agent (not from this area) who would clip newspaper obituaries. She would at least wait until the body was cold before sending a letter “Sorry for your loss… if your personal situation suggests it might be time for a change, I’d love to talk with you about listing your home for sale…” No, I am not making this up. Yes, there are better ways of meeting people.

(If you’ve taken a class with me, you’ve probably heard me describe “undertaker agents” — those who drive buyers around until they either buy a house or die. The above example represents the other side of the transaction. The seller undertaker agent waits until someone dies to start a relationship.)

One of the failings of the 200 letter is in its name–it’s one letter to 200 people. Why not have a plan that increases those numbers? “I’ll send a 200 letter announcing my new career. Six months from now I’ll have met another (pick the number–50?) people so I’ll send a 250 letter with some market updates and a reminder that my business is growing…” To be really sophisticated, collect the email addresses of these people and consider how email might support the program. The 200 letter is really about starting (or altering) a relationship on a professional level. The wise licensee recognizes the need to nurture that relationship on an ongoing basis.

I hear a lot of complaints from licensees about the lack of loyalty in our business–usually after they’ve driven by a friend’s home and seen a competing for sale sign on the lawn. One of the reasons it happens is we’re not reminding them we’re in the business and we’re not giving them reasons to turn to us when the need arises. What’s your plan for doing that?




Scam Alert!

 Posted by at 4:20 pm
Oct 292012

The Maine Association of REALTORS recently issued a scam alert to its members. Apparently inquires are being made via emails to the listing brokers of fairly pricey properties. All were from buyers from other countries stating that they had found their dream home online, had viewed all the pictures, and wanted to buy the home sight unseen. The emails were well written and sounded legitimate.

MAR warns that while these may be legitimate, they also could constitute a scam. Certainly buyers from other countries buy homes in Maine. What raises suspicion is the fact there have been a number of these inquiries around the state following the same pattern. Following up, slowly, carefully, and gently with the purported buyers is urged.

Previous scams have earned the trust of the agent prior to a request for account information into which to send their money. In previous scams there also has occasionally been a check or a wire issued with a reques for “change.” The original check or wire then turns out to be bogus. Or, they simply gain the account information and raid the account.

While this latest round of inquiries been addressed to licensees, it is entirely possible people who are trying to sell their own home could become a target. Be a little suspicious!


Escalation Clause in Offer?

 Posted by at 7:49 am
Oct 232012

Every so often an idea will surface that sounds good at first, but deserves some critical thinking. A recent question from a student regarding an “escalation clause” in an offer to purchase serves as an example.

The student’s client had been advised to insert an escalation clause into her offer. For those unfamiliar with the concept, the escalation clause states that the buyer will offer $1000 (for example)  above any other offer the seller receives. The buyer (hopefully) “caps” this with a specific amount. The buyer was tempted to do this because she is in a “bidding war” with multiple offers being made on the property she wants to purchase. This approach might at first glance seem to guarantee she will “win” the war.

As the student correctly analyzed, a fundmental problem with this is it could require the seller’s agent to reveal terms of competing offers. Under Maine License Law and Rule, this would not be permitted without the permission of those other buyers.

Another interesting twist on this: what would happen if two buyers used the same escalation clause?

But beyond that and more importantly, it’s simply bad strategy.

If the buyer uses an escalation clause to effectively tell the seller “I will pay $1000 more than any offer you receive up to $100,000,” an astute seller would either negotiate accordingly or simply respond, “I’ll accept your offer of $100,000.” The seller is under no obligation to justify his or her offer based on receiving other offers.

One of the discussions I often have with buyers is that while negotiation is part of the process, we need to remember this is about purchasing a property–not about proving who is the best negotiator. In the example we are using, the buyer has established what the property is worth to him or her and announced it to the seller. Why not just offer what the property is worth right at the start?

Reverse the situation and it becomes obvious this is an ill-advised tactic. I do not know too many sellers who would inform a buyer, “The lowest offer I will accept is $100,000, but if you’d like to make a higher offer I’ll take that one.” An escalation clause with a cap equates to “The highest I will go, but if you’d like to accept less, I’ll do that.”

Even when there are multiple offers on the same property, this is not truly a “bidding war” because we are not conducting an auction. We simply have several buyers competing to purchase the same property. Also, the seller is under no obligation to accept the offer with the highest price–he or she might well consider accepting an offer with a lower price but better terms. For that matter, the seller is under no legal obligation to accept any of the offers.

If you are buying or selling property, ask the agent representing you to review all of the options both parties have in the negotiating process and remember what you are trying to accomplish.