Category Archives: Real Estate Practices

Foreclosure a good deal – not so much

Traditionally, the hunt for foreclosures would seem like a worthwhile pursuit for anyone looking to make a buck in a dreary real estate market. However, it is important to note that not all foreclosures are created equally.

Going back a few years with the rush of frenzied buyers who were getting into properties with little or no many down and many were buying with an option arm mortgage. You remember – those low 1% mortgages that sounded to good to be true. I can remember being in a sales meeting in one of our offices and asking if someone could tell me why anyone would take out this mortgage? The answer came quickly, to keep the payments low and that by the time the rate increased, the market would have gone up enough to cover the principal add on with enough room left over to cover closing costs return a good profit. In order to break even a 25% increase in sales price had to occur – anything less was a loss and anything more was a gain.

Those mortgages were a fantastic party until the rate adjusted and the negative amortization kicked in. Instead of increasing in values, the property values have stayed flat or come down. Most people who tried to refinance found that getting into another option arm was their only option. Faced with owing more than the property was worth, these foreclosures started to appear on the market. Now, tack on the cost to foreclose and you tell me – how good a deal is this?

A foreclosure deal is only as good as the price. No one should pay more for a foreclosure than for any other property – it’s counter intuitive – but it is happening. Forrest Gump would call this “Stupid is as Stupid does”. I would too.

Want to make a real bargain buy in a down market?

Search for properties in good areas where the current owner has equity and it is one of the 3 lowest priced properties on the market and/or are priced lower than the last sale.

Look at it this way, if you needed to sell your house in a down market and understood that the prices are going down and not up- it makes sense that you would look at the last sale and go just below that number – making sure you are among the lowest 3 comparable properties on the market in your area. If that price is below what you owe on your mortgage, you have a problem. But if you owe less than that price – you have some breathing room- and probably will sell your house. Add motivation to the equation and your house becomes a bargain buy.

You need to scour the foreclosures, just like you would scour any other inventory- just because it is a foreclosure doesn’t always make it a good deal.

 

 

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Are you So Over Newspaper Ads?

I am wondering if today, July 19, 2007 will be the day remembered as the day the real estate industry revolted against the local newspapers.

It seems the Bloomberg article yesterday started a firestorm of writing. Today Inman Blog, South Beach Condo Blog and the Real Estate Tomato all joined in the protest – and I am sure the ground swell is growing into what will be a full fledged revolt in no time at all.

I can certainly chime in here and give the spin on print advertising. We have all served the papers well with millions of dollars in advertising that has driven limited traffic and an even smaller number of sales. Only to be returned with a nice slap in the face with sensationalized reports of our over heated market rendering the pricey ads even more ineffective.

And yes, it’s frustrating, but are we really ready to let go of the security blanket of our marketing plan?

How many of our sellers still ask for those paper ads? Are our agents prepared to tell the sellers ” no” at the risk of losing the listing to someone who will gladly oblige them? We can quote the NAR stats about buyers beginning their search on the web, but do our sellers really understand that? Do our agents? How much traffic does your website really get? How many leads? What is the conversion ratio? What are you doing to maximize your SEO and google page ranking? If you can’t answer these questions, keep writing and paying for those ads- because you may be so over the newspaper, but you have no viable marketing alternative to offer.

It seems to me that we need to bring our collective industry tech IQ to slightly above room temperature and show the way. There will be no need for sweeping statements and revolts in the street – just a quiet swell of business practices to show that we do understand how to market real estate in today’s world.

What are you doing to build your real estate company’s tech IQ? Here’s a hint… how about a company blog? Not just some template web site kind of thing, but an army of agents building quality content on your website everyday.

If the local newspapers can host a listing search site enticing buyers to look for properties while reading content, why can’t we provide local content to buyers who are looking for properties? What would your local newspaper think if readers went to your real estate website to find out what’s going on in your area? Unlikely? Maybe so, we are about to find out.

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Real Estate and Baseball- Are you in the Game?

The one constant through all the years, Ray, has been baseball. America has rolled by like an army of steamrollers. Its been erased like a blackboard, rebuilt, and erased again. But, baseball has marked the time. This field, this game, is a part of our past, Ray. It reminds us of all that once was good, and could be again.” Terrance Mann,from the movie Field of DreamsField of Dreams

I love a good baseball analogy- and my favorite baseball movie is Field of Dreams. Today I am thinking about office management, so here are some tips straight from the voice from The Field of Dreams…

Build it and they will come – Think of all the preparation that goes into making a field ready for play. Look around your office- what does it say about you and your company? Is everything working and in good order? Does your office say – this is a great and productive place to work? Is the office full of activity or a place to socialize? How old are your computers? copy machines? or do you still have typewriters?? Your office decor and appearance needs to create the right first impression. If your decor and equipment is old and dated, everyone that walks in will think your company is too. Stage your office like you would stage a listing – everyday is a showing.

Ease their pain – Yes, today’s market is full of pain for your agents and their clients. Like it or not, a big part of your job is to listen to the pain and then make it better. I think the coaching part of the job is sometimes lost in the listening. Especially in today’s challenging market your agents and their clients are looking for your guidance and solutions. Are you working with your agents on their business plan? Are you helping them with pricing? Prospecting? Objection handling?

Go the Distance – Office management is a marathon and not a sprint, even when the hectic days leave you breathless. How many new initiatives have you launched? Make sure your day to day activities don’t overtake your vision of leadership. There is no relief pitcher in management, you need to make sure you save enough good stuff for extra innings.

Some other great baseball quotes…

There is no crying in baseball – Tom Hanks in A League of Their Own

Baseball is the only field of endeavor where a man can succeed three times out of ten and be considered a good performer. ~Ted Williams

That’s baseball, and it’s my game. Y’ know, you take your worries to the game, and you leave ’em there. You yell like crazy for your guys. It’s good for your lungs, gives you a lift, and nobody calls the cops. Pretty girls, lots of ’em. ~Humphrey Bogart

Things could be worse. Suppose your errors were counted and published every day, like those of a baseball player. ~Author Unknown

Progress always involves risks. You can’t steal second base and keep your foot on first. ~Frederick B. Wilcox
So, go into your office, put on your game face, ready your field and get into the game!

 

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