Speaking of Real Estate
News that FHA will eliminate a prepayment penalty starting next year has been widely reported. It’s a move NAR has been seeking for some time because it will relieve borrowers of a financial hit that’s entirely out of their control and also bring the agency’s policies in line with other federal agencies that backstop mortgages. Perhaps most importantly, it will align the agency’s policies with the qualified mortgage rule (QRM), which defines what the federal government considers a safe home mortgage loan.
What’s being eliminated is an interest-rate charge. For FHA borrowers that pay off their mortgage before the end of the month, the lender is allowed to charge to the borrower the interest rate costs on the loan from the day the loan is retired until the last day of the month. So, if a borrower paid off the loan on Sept. 10, the penalty would be 20 days of interest payments. That can be hundreds of dollars. Once the change takes effect, on Jan. 21, 2015, lenders will no longer be able to apply that interest charge to the borrower.
NAR continues to work with FHA on other matters. A big point right now is getting some improvement in FHA’s policies on condominium financing. It’s too difficult for many condo projects to get the stamp of approval that’s needed for people who want to buy a unit in the project to get FHA financing.
In any case, you can learn more about what NAR is doing on FHA and in other legislative, regulatory, and legal areas in the latest video in The Voice for Real Estate news series.
The Voice for Real Estate comes out twice a month to provide a quick look at the top national developments in real estate:
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You might have heard of a North Carolina firecracker named Leigh Brown, broker-owner of RE/MAX Executive Realty in Concord, N.C. Now hear her loud and clear.
When Brown joined REALTOR® Magazine earlier this year as its guest editor for the March/April edition, she lit a fire under all of us. She wrote an inspiring — if not somewhat controversial — commentary piece challenging real estate practitioners to drop the polite business front and get real with clients by being their true selves. Don’t watch your language, she said. Be your most outrageously authentic self, and clients will flock to you in appreciation for being who you are.
Well, Brown’s at it again — being outrageously authentic, that is. She posted a laugh-out-loud video on her Facebook page this week showing just how real she can be. The video, titled “Sh*t Leigh Brown Says,” promises not just to have you rolling on the floor but to give you an idea of how being honest to a fault can sometimes help you in your business. Check out the video below.
There’s a good chance the people you’re helping to buy a home will have a limited understanding of their credit score and whether they need to do anything with it before they enter the market. To help you advise your customers on the matter, we sat down with Neekia McCoy, vice president for consumer lending at REALTORS® Federal Credit Union, a division of Northwest Federal Credit Union, for some ideas.
One helpful tip is about how your customers can strengthen their score. If they have a revolving line of credit, they should make sure the unpaid balance isn’t more than 50 percent of their credit limit. If it is, getting that balance below 50 percent is a way they can see some improvement in their score quickly, McCoy says.
Another tip: If your customers are carrying a balance on a closed line of credit, that balance is hurting their credit rating, so they should try to get that balance paid off as quickly and responsibly as they can.
McCoy says the average credit score is 680. Borrowers with that score have a history of paying off their debts on time, as agreed. The range is 300 to 850, with 850 being a perfect score.
Given the importance credit scores play in borrowers’ financial plans, it makes sense for them to check the credit report available from each of the three credit reporting organizations—Equifax, Experian, and TransUnion—once a year to make sure they’re accurate. McCoy recommends checking each of the reports at least once a year and taking steps to get them corrected if an inaccuracy is found. You can suggest your customers go to annualcreditreport.com for a free check. REALTORS® Federal Credit Union has a link to the site on its website, realtorsfcu.org. Fortunately, it’s free to check each of your credit reports once a year by law.
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I don’t know about you, but I was a pretty poor college student. I lived in the dorms my freshman year, with about three feet of space between my bed and my roommate’s bed (both of which hugged either end of our tiny room). When I moved off campus my sophomore year, it was to a rickety old two-story house where I lived on the top floor with two roommates, and three others inhabited the bottom floor. The toilets clogged every week, the water pressure was awful, the gas stove never worked (but I did have the biggest bedroom — score!). My share of the rent was somewhere around $400 a month (this was in Columbia, Mo., back in the early 2000s), which I paid for by working part-time at a Barnes & Noble Café.
But many college kids today don’t have to live like I did. Now, they’re spending their ever-important college years in their very own home — paid for by mom and dad.
A recent Coldwell Banker survey spotted a new trend on college campuses where parents are buying condos, townhomes, and single-family residences for their children to live in while they attend school. Forty percent of Coldwell Banker agents report that these types of transactions have been on the rise in their areas, with some saying that their buyers are purchasing properties for kids as young as 14 years old.
OK, I admit I’m a little jealous. My mom loved me — but not that much. These parents aren’t just spoiling their snooty kids, though. They’re actually making a sound investment.
“Middle- and upper-income families are buying homes [for their college-age children] to save money on rent, and they are anticipating moderate appreciation of values while their children are in school,” says J. Parrish, GRI, who is CEO of Coldwell Banker M.M. Parrish in Gainesville, Fla., home of the University of Florida. “There is upward pressure on rental prices, and buying is often less expensive than leasing if you have cash or can qualify for financing. Parents let their children choose roommates, who pay rent to help offset the cost of ownership.”
Most often, these buyers are looking for homes for their kids with multiple bedrooms and bathrooms near campuses so they can rent extra space to other college students. But they also want the property to be suitable for themselves one day.
“We’ve seen a lot of international buyers and affluent buyers who are thinking of downsizing in the future, so they purchase a home or unit for their child to use now and will eventually move into it themselves once the child is out of school,” says Ed Feijo, a sales associate with Coldwell Banker Residential Brokerage in Cambridge, Mass. Cambridge is home of two of the most prestigious colleges in the nation: Harvard and MIT.
“These buyers are thinking of long-term investments,” adds Feijo, who says he’s seen a 10 percent increase in the market share for these types of buyers in the last five years. “The style and price of the homes they purchase vary, depending on their budget. We’re seeing them purchase one-bed condos close to the schools to more upscale properties to eventually transition into themselves after the children leave.”
But they are sometimes vacation homes for the parents, too. “Many parents also want the benefit of a place to stay while visiting their children and attending football games,” says Nancy Massey, ABR, an agent with Coldwell Banker Townside, REALTORS®, in Blacksburg, Va. (home of the Virginia Tech Hokies). “They want a clean, quiet, comfortable place not just for their children but for themselves.”
Still, other buyers are thinking of these properties as true investment opportunities. They’re buying for their kids, but they’re planning to make money off the property once their kids graduate and move out. Several real estate practitioners say that a good chunk of the parents buying homes for their children are paying in cash and plan to rent the places out for the long-term.
“Many of the parents have never purchased an investment property before, and this will be the only one they own, typically,” says Cherry Ruffino, GRI, a broker with Coldwell Banker United, REALTORS®, in College Station, Texas (Texas A&M University). She says that about 30 percent of her business this year has come from parents buying homes for their college kids. “Some of the properties will cycle back into the market after the student graduates, but many [parents] keep them as investment properties to rent to future students.”
Feijo agreed, saying that most of his clients are “holding the properties for long-term investment purposes.”
Because college towns tend to be “sound real estate markets,” it makes sense for parents with the financial means to invest in property there, says Budge Huskey, president and CEO of Coldwell Banker.
“When you have the presence of a major college or university, you often see a quality health care system, stable job market, and a constant flow of people moving in and out,” Huskey says. “More parents are recognizing this as a smart real estate opportunity. Rental housing is often tight and may not meet parental expectations. In addition, as rental rates are rising dramatically, some view this strategy as a way to lock into a predictable housing-expense budget.”
Togetherness was clearly the watchword for NAR’s 2014 Leadership Summit.
Every August, incoming state and local REALTOR® association presidents from around the country and their association staff executives get together in Chicago to address major industry challenges.
At this year’s summit, Aug. 18-19, NAR President-elect Chris Polychron set the tone with his opening remarks, forcefully asserting REALTORS®’ role as the first point of contact in a real estate transaction. Polychron garnered huge applause while repeatedly asking the audience of 1,500, “Are you with me?” Later, audience members participated in a collaborative songwriting project, creating a song with the lyrics, “We have the knowledge. We are your voice. I’m a REALTOR®, your No. 1 choice.” The following day, a panel of top industry executives echoed Polychron’s sentiments, reminding the audience that the cooperative model built by REALTORS® is the envy of the world.
Polychron emphasized the critical importance of protecting the integrity of listing information online, and asked for the help of the board presidents, MLS professionals, and association executives to take on the challenges of the day.
“We are in this together. We are the group who can get this job done,” he told the crowd assembled at the Sheraton Hotel and Towers on the banks of the Chicago River. “There is no ivory tower. We can’t afford to have any distance between our national leadership and state and local leadership.”
At Tuesday’s industry panel, moderator Stefan Swanepoel asked real estate executives Ron Peltier, Alex Perriello, Helen Hanna Casey, and Hugh Kelly to offer a frank look from the top. The executives said work was needed both to reduce industry fractionalization—and to change media perceptions.
On the latter point, Peltier was particularly vociferous. “Why is every question about what’s going on in the real estate business talking about what Zillow and Trulia are doing?” asked Peltier, chairman and CEO of HomeServices of America Inc. “They’re not in the real estate business!”
Alex Perriello, president and CEO of Realogy Franchise Group, directed brokers in the audience to take the technological bull by the horns. While many complain about the way their listings look on third-party sites, he said, they often don’t do enough to differentiate their own site to optimize the presentation of listings.
“Why not have a hundred more photos, and a video tour? It’s a great opportunity,” Perriello said.
Perriello added that differentiation should also extend to the franchise level. He says that real estate associates and companies considering a partnership with Realogy are often encouraged by many the tools the franchise provides.
“They have to feel better off with us than without us, [and] the value proposition continues to change with technology,” Perriello said. “Once you get everyone on a common platform, innovation becomes a lot easier.”
Talk of a common platform quickly segued into a discussion of how many MLSs each of the large brokers had to join—and each of the panelists, at some point in the discussion, expressed support for MLS consolidation.
“It certainly makes sense for MLSs to start consolidating,” Peltier said. He suggested several smaller MLSs from the same region could partner to create “a consumer site that does not pick winners and losers,” referring potential clients back to the listing broker’s site.
Perriello caused a stir in the audience when he suggested that MLS consolidation should happen “through acquisition,” with larger MLSs taking over smaller ones that aren’t able to adapt.
“It is an exit strategy for some of them,” he said. “People won’t voluntarily say, ‘Well I think we’ll just close up shop.’”
Perriello reminded brokers that they can leverage a history of cooperation that real estate professionals in other countries can only dream of.
“The majority of brokers around the world do not have the benefits of MLS,” he said. “Competitors don’t even talk to each other much less cooperate with each other.”
Hugh Kelly, CRE, chair of NAR affiliate the Counselors of Real Estate, encouraged attendees to think deeply about how they can help energize human capital in their organizations. “Data is not knowledge… [and] what REALTORS® have to contribute is knowledge,” he said. “At its root, real estate is a people business…. We need to think about how we can most effectively organize intellectual capital.”
Brokers can benefit immensely in the knowledge department through greater association involvement, said Casey, president of Howard Hanna Real Estate Services. As the chair of the 2014 Large Firm Involvement Advisory Board, Casey said she’s able to tap into industry news well ahead of her colleagues.
“It amazes me continually when my local board sends me something I knew about two months ago,” Casey said. “All of us benefit from the committees we’ve served on… There should be a system where we share this.”
“It’s a very great power we all have together,” Casey added. “We have to be supportive of each other.”
For its part, the audience was equally tuned in to both the need for change and the ability to partner up to accomplish it. During the panel, Swanepoel asked audience members to text their responses to two survey questions. Seventy-one percent of the respondents agreed that “REALTOR® associations and MLS organizations are at a tipping point,” and 86 percent voted in favor of the idea that “the people in this room, by working together, can make a difference.”
Realtor.com® has had its ups and downs this year as it works to reclaim its once-top spot as the go-to site for consumers. While its traffic has grown 18 percent over the past year, the site faces some stiff competition and an evolving industry landscape.
In response, parent company Move Inc. has launched an aggressive “Accuracy Matters” campaign, and senior executives were on hand at the National Association of REALTORS®’ Leadership Summit in Chicago with a message for REALTORS®: Work with us as we move forward.
At the summit, an annual gathering of incoming state and local association presidents and executive staff, Steve Berkowitz, CEO of Move, and Russ Cofano, the company’s senior vice president of industry relations, implored REALTORS® to get more involved in helping shape the future of realtor.com®.
“We need your help to look forward and not backward,” Cofano said. “What has happened in the past doesn’t really matter. What matters is what we do from here.
“The one thing we know about this industry is that change is constant. If we’re going to keep moving along that process, we need dialogue with you. We need you to tell us what you need.”
Berkowitz also said that realtor.com® would be stepping up its efforts to communicate to state and local associations so they can, in turn, communicate its message to members.
“We want every REALTOR® to know what’s true and not true about our site, and we’re looking to you to deliver that message,” Berkowitz said. “We want dialogue, and when things aren’t going right, we need you to tell us and we’ll try and fix them.”
Monday’s session included a Q&A segment. These were some of the topics covered:
Realtor.com®’s Top Priorities
- Branding: “One of the things we need to do is help consumers understand who you all are before they meet you,” Berkowitz said. “That first cocktail-party conversation doesn’t happen at a cocktail party anymore.” Berkowitz added that realtor.com® is focused on communicating to consumers the level of professional integrity, training, and development it takes to be a REALTOR®. “If two agents came in the room and laid down business cards, and one had an ‘R’ on it and the other didn’t, we want the consumer to know why they should choose the one with the ‘R’ on it,” he said.
- Data: “Big data exists in our business as a thought but not a reality,” Cofano said. “Data is fragmented, and until we find a clearinghouse for all that data in one place, this industry will never be able to reap the rewards of that data.” Berkowitz said he envisions realtor.com® as that clearinghouse, adding that “if you have a single pipeline with all that data coming through, you can control it more.” He touted the industry standards that realtor.com® abides by — which its competitors do not — and said the site is focused on making all its content as accurate as possible.
- User experience: Berkowitz and Cofano acknowledged that competitor sites have a user-friendly product attracting a lot of eyeballs and said realtor.com® needs to jazz up its site. “Calling some of our competitors ‘entertainment sites’ is not necessarily derogation to them,” Cofano said. “We have to make [realtor.com®] more fun.”
At one point, an audience member asked Berkowitz about the fees for enhanced listings.
“Realtor.com® was set up as a for-profit business, and we’re looking for the best way to make money so we can go out and spend money to build a brand,” Berkowitz said. When pressed to explain why advertising on realtor.com® is more beneficial than advertising on other sites, Berkowitz said that besides adhering to industry standards — such as not accepting FSBO listings or competitors’ ads adjacent to agent listings — realtor.com® is rolling out new agent profiles that will allow agents and brokers to be more prominent on their pages. The new profiles will allow practitioners to highlight information such as transaction data, team info, and client recommendations.
“We’re helping the consumer to trust you before they meet you,” Berkowitz said.
Realtor.com®’s agent-search tool pilot, which ended last year after a brief trial in two markets, is now in a new phase and has a new name: AgentDiscovery. Berkowitz said it’s clear consumers want this deeper information about agents’ experience and service. When the new tool rolls out, agents will have control over how to present their information in context.
Berkowitz acknowledged the feedback to last year’s pilot test of the search tool, then dubbed AgentMatch. “We’re respectful of your wishes. We’ve learned, and we continue to learn” as the company moves toward delivering the kind of rich search experience consumers are demanding, he said.
We’ve been writing a bit about how investors are beginning to retreat from the market, with mega-investors’ bulk-buying sprees on the decline and a larger portion of cash sales being attributed to individual home buyers. (You’ll want to check out the upcoming September/October issue of REALTOR® Magazine to find out how that’s affecting sales around the country.)
Here’s the thing: That may be true — on the books. But off the MLS, there may still be a healthy number of investment purchases that never get reported to the public.
When we had our guest editor, Vernice Ross, GRI, PMN, owner of Ross & Ross Realty in San Diego, in town for a visit last week, she told us that in her market, pocket listings — those that are not advertised on the MLS — are becoming very prevalent. But not all the off-MLS transactions are for high-end properties: More and more pocket listings are distressed properties under $300,000 or $500,000, a price range that is still attractive to investors, Ross said.
“Investors are buying their product a different way now,” she added.
As pocket listings become more popular in certain areas of the country — particularly in California — they have been thought of as primarily a facet of the luxury market. High-end property owners have tended to make up a larger portion of pocket listings because they have an interest in reducing the buyer foot traffic through their homes for privacy reasons or to cut down on looky-loos who aren’t serious about buying.
But more distressed owners who are underwater on their mortgages and in danger of foreclosure are choosing to go the pocket-listing route, Ross said.
“Somebody who is losing their property and they have a notice of default, they may not want all their peers to know,” she said. “They could be embarrassed about the sale. So they may be choosing not to put their home on the MLS for that reason.”
Though Ross said she chooses not to get involved with pocket listings herself, she’s had experience with clients who don’t want their distressed sale to be public knowledge. She represented a seller once who was about to lose her house and was going through a short sale. The home was advertised on the MLS and was eventually listed on Auction.com, garnering 50 offers. But the owner refused to put a for-sale sign in her front yard because she didn’t want her neighbors to know about her situation.
With more lower-priced homes that are attractive to investors being sold off the MLS, that translates to investor activity that is flying under the radar. So while it may outwardly appear that investor activity has been on the decline, that may not really be the reality in some markets like San Diego, Ross said. She added that some agents may have investor clients that they bring directly to a distressed home owner, encouraging a sale without publicly marketing the home.
Of course, all this means more unrest in the real estate community, Ross said. Pocket listings have been very controversial because if the property is not marketed to the widest audience possible, it can be difficult to judge whether the seller is getting the best price possible. Agents who do pocket listings run the risk of not serving their clients as best as they could if they put the listings on the MLS.
“As a REALTOR®, when I see a pocket listing, I immediately think [the agent] is double-ending the deal,” Ross said.
Pocket listings have become so pervasive in Ross’s state that the California Association of REALTORS® added a disclosure form to listing agreements that requires sellers requesting pocket listings to sign off saying that their agent explained the risks of marketing off the MLS.
Today, REALTORS® in 103 metro areas received an e-mail asking them to participate in this year’s Cost vs. Value survey. The results will be used in the 2015 Cost vs. Value Report, which provides metro-specific cost estimates and resale values for 36 remodeling projects – from siding replacement to a major upscale kitchen remodel.
It takes time to complete — I’d estimate 15-20 minutes if you’re carefully considering the value of each project — but I urge you to take the survey if you live in one of the metro areas covered. Here’s why:
- The survey is a great opportunity to demonstrate real insights from REALTORS®. The Cost vs. Value report is recognized and widely quoted by media outlets around the country. Today, there are websites galore trying to attract the attention of people who are thinking about remodeling. The survey enables REALTORS® to demonstrate the knowledge that comes from being immersed in the market every day.
- We need your participation in order to include your market in the report. Although recent studies have downplayed the importance of high survey response rates, we would like to have at least 100 responses in each of metro area covered. If we don’t get enough responses in your area, we can’t include your market in the report.
- You could win a $500 gift card. REALTORS® who are eligible, who complete the current Cost vs. Value survey on or before midnight October 15, 2014, and who provide complete registration information will be entered in a drawing. Four grand prizes of $500 each will be awarded. Read the official rules.
Every remodel is different. The character of the neighborhood, the existing condition of the home, the quality of the materials and work, the “competition,” and general market conditions all play a factor in determining the value of a remodeling job. But the Cost vs. Value Report is a great conversation starter for reaching out to prospects, it’s a tool buyers can use as they compare homes for sale, and it’s a resource for your clients who are considering how to get their home ready for a sale in three to five years.
If you’re ready to take the survey, here’s a link: http://www.specpan.com/costvalue
Before you start, you’ll be asked for an email address. This ensures that you’re entered into the prize drawing and enables you to save and resume a survey that you don’t complete in one sitting. Your information won’t be shared with any organizations or parties other than those responsible for the production of the 2015 Cost vs. Value Report.
Here are the 103 markets we’re surveying:
- Akron, OH
- Albany, NY
- Albuquerque, NM
- Allentown, PA
- Atlanta, GA
- Augusta, GA
- Austin, TX
- Bakersfield, CA
- Baltimore, MD
- Baton Rouge, LA
- Birmingham, AL
- Boise, ID
- Boston, MA
- Bridgeport, CT
- Buffalo, NY
- Chapel Hill, NC
- Charleston, SC
- Charlotte, NC
- Chattanooga, TN
- Chicago, IL
- Cincinnati, OH
- Cleveland, OH
- Colorado Springs,
- Columbia, SC
- Columbus, OHDallas, TX
- Dayton, OH
- Daytona Beach, FL
- Denver, CO
- Des Moines, IA
- Detroit, MI
- El Paso, TX
- Fort Myers, FL
- Fresno, CA
- Grand Rapids, MI
- Greenville, SC
- Greensboro, NC
- Harrisburg, PA
- Hartford, CT
- Honolulu, HI
- Houston, TX
- Indianapolis, IN
- Jackson, MS
- Jacksonville, FL
- Kansas City, MO
- Knoxville, TN
- Lancaster, PA
- Las Vegas, NV
- Little Rock, AR
- Los Angeles, CA
- Louisville, KY
- Madison, WI
- McAllen, TX
- Memphis, TN
- Miami, FL
- Milwaukee, WI
- Minneapolis, MN
- Nashville, TN
- New Haven, CT
- New Orleans, LA
- New York, NY
- Ogden, UT
- Oklahoma City, OK
- Omaha, NE
- Orlando, FL
- Philadelphia, PA
- Phoenix, AZ
- Pittsburgh, PA
- Portland, ME
- Portland, OR
- Providence, RI
- Raleigh, NC
- Richmond, VA
- Riverside, CA
- Rochester, NY
- Sacramento, CA
- Salt Lake City, UT
- San Antonio, TX
- San Diego, CA
- San Francisco, CA
- San Jose, CA
- Santa Rosa, CA
- Sarasota, FL
- Scranton, PA
- Seattle, WA
- Spokane, WA
- Springfield, MA
- St. Louis, MO
- Stockton, CA
- Syracuse, NY
- Tampa, FL
- Titusville, FL
- Toledo, OH
- Tucson, AZ
- Tulsa, OK
- Ventura, CA
- Virginia Beach, VA
- Washington, DC
- Wichita, KS
- Winston-Salem, NC
- Winter Haven, FL
- Worcester, MA
- Youngstown, OH
Cost vs. Value is a registered trademark of Hanley Wood LLC. Questions about the survey? Post your comments and questions here, or send an email to email@example.com.
Are your agents “in the fold”? Are they part of a larger goal or culture? Do they feel a sense of ownership and pride in the company you run? Or are they detached operators who are just waiting to be scooped up by your competitor?
The correlation between salesperson retention and forming a strong brokerage culture was touted strongly among RISMedia’s Power Broker Roundable panelists last week during the National Association of REALTORS®’ Broker Summit in Atlanta.
“What agents want is a culture that treats them honestly and fairly — and trains them,” says Terry Hankner, president of Cincinnati-based Comey & Shepherd, REALTORS®.
But how do you put a concept such as culture-building into actionable tasks?
Hankner told attendees to start by determining what type of culture currently exists at your brokerage. She characterized the “Comey culture” as “open and participatory,” where everything is shared with agents, including every line item in the company budget. And when they hire new people, they only take on about one out of every 10 agent applicants. They hire to their culture, and she recommends others do the same. Last year, Hankner brought 31 new agents into her company’s five offices. She gets a report each month on how those new agents are adding to the company’s bottom line. The first time a newbie gets a sale, she’s on the phone congratulating them.
Jack O’Conner, broker-owner and founder of The Denver 100, says you can’t build a relationship with someone unless you’re getting some face time with them. That’s why he says it’s important for brokers or managers to meet with each and every salesperson at least once a month.
“If you don’t see your people, they’re probably on their way out,” O’Conner says. “Figure out how you’re going to divide up your people, and talk to every person every month. You’ll know more about your company by talking to them than you will from e-mail or from a suggestion box.“
Hankner says training programs are also key to agent retention. Comey & Shepherd uses the Ninja Selling system with in-house coaches. On Monday mornings, her trainers/managers go over an agenda with specific guidelines for what agents should be doing that week. Every agent who signs a training commitment letter gets a 5 percent bump in their commission structure, she says.
Kevin Levent, president of Better Homes & Gardens Metro Brokers in Atlanta, says the top reason some agents come to their firm is also the biggest factor making others decide to go elsewhere: the company’s mandatory training program. “We were repelling the exact people we didn’t want to attract,” he says. “Culture is the most important thing in your company because it binds human beings.”
Levent says his company’s current agents refer 95 percent of the new salespeople they hire. They’ve built a culture where seasoned salespeople help new agents as mentors.
First impressions do matter, says David Boehmig, president and founder of Atlanta Fine Homes Sotheby’s International Realty. Most of Boehmig’s recruits are experienced agents, and if initial agent interactions don’t mesh with their office culture, they won’t take them on, he says.
Lastly, retention goes hand-in-hand with engagement. O’Conner provides his salespeople with activities where they can connect with their own sphere of influence. Twelve times a year, the brokerage hosts special events where agents can invite their clients, such as a day where home owners can go through comparables themselves and price their own home, an event on improving a home’s value by 35 percent, and social events like a jazz night, wine tasting, and a Colorado Rockies day.
Read more about building a strong brokerage culture in our Broker-to-Broker article, “Create a Winning Brokerage Culture.”
In 1991, the National Association of REALTORS® made an “office of the future” video predicting what kinds of space-age technologies would change the home buying and selling process by the year 2000.
Did NAR get the fashion wrong? Yes. (Is NAR really known for its fashion sense?) But how far off was the video, really?
Today we have AT&T Digital Life (the home automation mentioned in the video), Skype (video calls), thumb drives (mini discs), MLS with photos (home tour line drawings), smart appliances (“Microsoft Maytag software”), Siri (talking cars), and GPS (car navigation systems). “And they’re still going to need an agent – they got that right, too,” Coile said.
So this video begs the question: What does the next decade hold for the real estate industry?
“I’m no expert on this stuff. I’m a broker; I sell houses,” Coile said. But after doing some research and observing trends in his own real estate business, Coile came up with his predictions for the next technology shifts on the horizon:
- Big data: Data is everywhere. You’re supplying retailers with your spending profile and shopping habits on a daily basis — and you might not even know it. From your grocery store club cards to your online searches, businesses are gathering data about you. Target, for example, made headlines when the company sent maternity and baby product coupons to a teenager before her father knew she was pregnant. “Data is all around us,” Coile said. When it comes to real estate, there are already apps like SmartZip that use data to predict when someone is likely to sell.
- iBeacons: These transmitters send signals to smartphones and are largely used for “proximity marketing.” For example, a retailer could send a coupon to your phone when you walk into a store. “Could you imagine putting beacons out at open houses?” Coile asked.
- Wearable tech: Google Glass already exists, albeit in its early stages, and Smartwatches, which provide access to e-mail, calendar alerts, news updates, social media accounts, and maps — from your wrist — were all the rage at the 2014 Consumer Electronic Show.
- Augmented reality: This technology overlays data on an image or view of the physical world. You can see this in apps like Homesnap, which uses a phone’s camera and internal GPS to give the user data on a home. Champion Realty has an augmented reality app called X-Ray Vision that allows the user to point a smartphone camera at a listing from the street to see photos and specs of the house. “These apps are actually not that expensive [to create] and are worthwhile,” Coile said.
- Drones: Amazon is requesting permission from the FAA to use drones to deliver products under 5 pounds. With warehouses in many metropolitan areas through the country, Amazon is already within close proximity to their customers. And the company says 86 percent of its shipments are 5 pounds or less, so drone deliveries would be a game-changer. “Amazon has geared up their system; they’re just waiting for FAA to get on board,” Coile says. Drones can travel 45-50 MPH and carry an HD camera. There are even GPS-synched drones that can follow a beacon hooked to your wrist, for example. Drones for real estate? “They’re going to come, but it’s going to take a while,” Coile said. The FAA recently put the ix-nay on drones in real estate, stating in June that real estate professionals could be subject to FAA’s safety and designated airspace enforcement. But NAR is currently working with the FAA to expedite the development of rules that would allow real estate professionals to use drone technology to market properties in the future.
Going hand-in-hand with tech innovations is consumer convenience. Here’s what Coile said brokers will need to do today to attract tomorrow’s customers:
- Agent review sites: Are you on Yelp? Yelp = real reviews in the eyes of consumers, Coile said. Client testimonials on your website? Not so much. “They want honesty, and they want reality,” he said. “If we want to raise the standards [of our industry], we have to allow the crappy agents to get crappy ratings.”
- Shift to mobile: iPads were just invented in 2010, and smartphones haven’t been around much longer, but they’ve caused a dramatic shift in how people search for homes. According to NAR and Google’s 2013 report, “The Digital House Hunt: Consumer and Market Trends in Real Estate,” 90 percent of home buyers search online during their house hunt; 48 percent of people use a mobile device in their search; and 45 percent used the device to request more information about specific home features or real estate services. Those percentages are only going to increase in the future.
Last, Coile talked about the need for succession planning. When he started in real estate in the early 1990s, the median age of a REALTOR® was 46. Today it’s 57 (and the median age of the U.S. worker is 41). It’s up to brokers to do more to recruit younger agents and managers and to create a viable career path for the next generation.
If REALTORS® have struggled with the concept of environmentalism, it’s not because they don’t love the environment. Quite the contrary.
I spoke to NAR President Steve Brown about it back in September 2013, as he was preparing to begin his presidency. “When we sell real estate, we are selling the environment,” he said. “Who has more of a stake in passing along a clean, safe environment to future generations?”
Still, how do you tell a 90-year old client that her biggest asset has been ruled a habitat for a protected species? How do you run a stable, profitable business when your area is experiencing mega-wildfires, severe storms, or long-term drought? How do you balance your desire to be environmentally responsible with your staunch belief in property rights?
Those were the conversations taking place at NAR’s first environmental summit, July 29–30, in Washington, D.C.
NAR has standing committees that recommend policy and advise its leaders on a range of environmental issues. But for Brown, whose passion runs deep, the summit was an opportunity to take a long-range view—to consider what real estate may look like in 10–20 years and engage members in thinking about what the organization might do to get ahead of some of these issues.
For the roughly 40 participants, Day 1 of the summit was akin to a college course on environmental policy, complete with an extensive pre-conference reading list and talks by experts on water supply, energy sources and security, building science, insurance, and public opinion. Read Rob Freedman’s coverage of the day, which included a presentation by former Secretary of Homeland Security Tom Ridge.What Matters Most?
Day 2 was about priority setting. From a list of environmental issues, participants selected what they considered the most urgent issues for the industry. The top three concerns were
- Loss of property rights
- Natural disasters
- Rising energy costs
Small groups debated the role NAR might play in tackling each issue. The list of potential activities was long — from participating in community risk assessments to studying the value of energy efficiency features to facilitating “honorable retreat” from vulnerable coastal areas. One group suggested a million-member challenge encouraging REALTORS® to have their own home energy audited. Another said it was time for a national disaster insurance fund; everyone would support the fund, but those who lived in areas deemed more vulnerable to disaster would pay more. In the afternoon, small groups focused on three other issues: water, aging infrastructure, and transportation costs.
To ensure lively and informed small-group discussions, Brown built diversity into the group. There were commercial and residential practitioners, REALTORS® and association executives. Every region of the country and a range of political views were represented, and many summit attendees brought experience in dealing with environmental topics. Among the participants, for example, was William “Bill” Lucks, GRI, a commercial practitioner who served as the Delaware Association of REALTORS® representative on a state commission on sea-level change. Illinois residential practitioner Laura Stukel, who developed NAR’s Green MLS implementation guide, was there, too—as was Terrie Suit, CEO of the Virginia Association of REALTORS®. Suit was previously the Secretary of Veterans Affairs and Homeland Security for the state of Virginia and brought an insider’s view of the disaster recovery process after catastrophic weather events. Other participants included John Rosshirt, CRS, GREEN, who teaches smart-growth principles and currently chairs NAR’s Smart Growth Advisory Board; Max Gurvitch, chair of NAR’s Land Use, Property Rights, and Environment Committee; and Dan Hatfield, ALC, chairman of the Texas Association of REALTORS® and past president of the REALTORS® Land Institute.
If there were differences about the role of NAR and government, there was one point around which the room coalesced: the fundamental belief in being good stewards of the land. “We do not inherit the earth from our ancestors; we borrow it from our children” was a phrase I heard many times over the two days. There was also strong agreement on the need to balance environmental concerns against other factors, such as affordability and the rights of property owners.Playing Your Part
Whether you attended the summit or not, if environmental issues are affecting your business today or you believe they will in the future — and you want to take some measure of control — Brown’s message to you is to get involved.
1. Become educated about the challenges facing your community and learn which organizations and government agencies are already working on the issue.
2. Be aware of the programs available through the NAR. For example, since 2008, the association has offered a Green designation to teach the principles of energy efficiency and sustainability. Designees receive regular updates and are part of a Green network.
The association also operates a dynamic smart-growth program where state and local associations can turn for such services as:
- Analyses of proposed land-use ordinances and regulations
- Polling about growth issues
- Grants to support local place-making initiatives
On Common Ground, a quarterly magazine for practitioners and policymakers interested in smart growth, covers the wide spectrum of environmental issues — from alternative energy sources to transportation planning. You can peruse the full text of issues dating back to 2010 at REALTOR.org. The summer 2014 issue, “Our Environmental Future” includes articles on building for resiliency, sea-level change, green MLS, and water conservation, among other topics.
3. Lead by example. A healthy environment and a vibrant, growing economy are not mutually exclusive goals, and you can play a role in achieving both in the way you operate your business, engage in your community, and interact with and educate your clients.
The summit wrapped with a promise that the discussion would continue at NAR’s annual meeting in New Orleans, Nov. 7–10. “Whatever our political beliefs, we’re all concerned about our environment,” Brown said. “The time is now to take a more active leadership role.”
Rooftops in New York are dotted with HVAC units, surrounded by webs of electrical wires and decorated with mechanical appendages, which can sometimes “photobomb” the ideal listing shot. But one photographer is willing to go a little higher to get the perfect angle.
Elizabeth Dooley of VHT Studios in New York has been dubbed an “extreme real estate photographer” because she’s willing to climb out on ledges, rooftops, and fire escapes several stories high to get the shot. From the apartment lofts of Manhattan to the townhouses of Brooklyn, Dooley has ventured up rickety water towers to shoot a skyline view and across beams in a split-level home to make sure her photos highlight the best a property has to offer.
“It’s about finding every angle, view, and unexpected advantage on the property, especially in luxury real estate in Manhattan,” says Dooley. “In today’s digital world, a first impression seen on an iPad can make the difference between crickets at an open house and a bidding war.”
Dooley shoots about five properties a day, five days a week, traveling only with her Nikon D700, 12-24mm lens, tripod, and flash; she improvises the rest.
“A lot of my clients just think I’m insane because to get a shot, I’ll need to stand up high or out on a ledge,” she says. “I was a gymnast as a kid, and it’s second nature to me to go a little further. I go beyond what other photographers do.”
She’s paid between $100 and $300 per shoot, which is a bit of a higher wage than most real estate photographers receive, simply because she works in the New York market.
Dooley has been studying photography since her high school years in Sioux City, Iowa. She moved to New York after college and worked briefly as a photo assistant before discovering her niche in real estate photography. With a natural inclination for interior design, real estate photography fulfills her interests in design, architecture, and history.
“It’s like anthropology in a way,” she says.
Because every listing has its own challenge, hiring a professional photographer is how real estate practitioners are going to maximize resale value, Dooley says. She advises salespeople to have their listing “open house-ready” before she arrives. Some may bring in a stager, but they also have to be willing to let her make rearrangements and adjustments because staging for a walk-through is different than staging for the camera.
Of course, not all listings require a high-climbing balancing act to attain a great shot. What is required is either an experienced photographer who knows how to shoot interiors, or a capable real estate pro who has invested in the appropriate gear and education for the job.
Want more photography tips? Check out REALTOR® Magazine’s latest Cameras & Video Product Guide, which explains how to hire a good photographer and outlines the exact gear you’ll need if you take on photography duties yourself.
Real estate represents a fifth of the U.S. economy, so there’s little that doesn’t impact what you do in some fashion, especially when it comes to environmental issues. Carbon levels in our air and water, how much rain we get in the arid West. what’s going to happen when hurricane season blows in again later this year. Even though these aren’t real estate issues per se, they impact the owning and transferring of real property, and that makes it NAR’s business.
That’s why President Steve Brown yesterday kicked off the association’s first environmental summit in Washington, and it’s safe to say that, if the 40 or so REALTORS® who participated came away with anything, it was a sense that all environmental issues are inter-connected and they all intersect with real estate. As Brown pointed out in his welcome message,”Under all is the land,” as the preamble to the NAR Code of Ethics states, and that makes it necessary for REALTORS® to look ahead because environmental issues are only going to grow in importance.
NAR invited REALTOR® leaders from every part of the country to participate in the meeting. Among them were the heads of NAR committees whose jurisdiction touches in some manner on environmental issues. Former U.S. Homeland Security Chief Tom Ridge and former U.S. Agriculture Secretary Dan Glickman were the keynote speakers and they shared with REALTORS® a two-pronged message: First, regardless of what one’s views are of climate change—whether it’s man-made or the result of a natural cycle–today’s climate patterns are not the patterns of yesterday, so it takes responsible leaders of goodwill to plan for and set aside resources to deal with catastrophic weather events, longer and more intense droughts, and the possibility of a rise in sea level, among other looming events.
“Regardless of what the science is showing, something’s happening,” said Ridge, who is also a former governor of Pennsylvania and served six terms Congress. “Water levels are rising, and that could be a challenge, because a third of Americans live along the coasts.”
The second part of the message was upbeat. It spoke to the resilience and innovation of the country but also the constructive engagement of groups like the REALTORS®, whom Glickman singled out for their consistent and responsible leadership on community issues.
“Our problems are reasonably solvable if people of goodwill–people like you–work through them,” said Glickman, also a former congressman. “REALTORS® have clout because you’re all key citizens in your communities. You are a very important part of the political system.”
REALTORS® at the summit heard from policy experts who are in the thick of today’s most critical environmental debates, including David Miller, a top official at the Federal Emergency Management Agency (FEMA), Ben Grumbles of the U.S. Water Alliance, and Megan Susman of EPA.
Lori Weigel, a pollster with Public Opinion Strategies, walked REALTORS® through the mixed views the public has on the environment. On the one hand, about 60 percent of people say climate change must be dealt with, but only about 10 percent think it’s important enough to deal with now.
The public is also split on whether we’re getting a straight picture on climate change from scientists. About 48 percent think scientists are being objective in their assessment of climate change risk and causes, while 43 percent say they don’t trust scientists on the issue.
Distrust in a key institution like science is a disturbing trend, Ridge and Glickman both said, because any responsible response to big issues like the environment must start from a place of trust.
Today is the second day of the summit and its focus will be hands-on. President Brown has asked the participating REALTORS® to start sifting through the mountains of information to identify where the interests of real estate lie and to put the association on the right footing for protecting home owners, buyers, sellers, and the industry as lawmakers and policymakers take on environmental issues in the years ahead.
Latest issue of NAR’s On Common Ground magazine, which looks at environmental issues.
While real estate portals like Zillow and Trulia have long had their own economists providing insights to consumers about the industry, a similar leading figure interfacing with the public has been missing from realtor.com®. Under the agreement between the National Association of REALTORS® and Move, Inc., operator of realtor.com®, the real estate site has been barred from hiring its own economist. But that changed in February, when NAR — with its own stable of economists — gave realtor.com® the green light to go on the hunt for its own economist, saying at the time that “two heads are better than one.”
And last month, the hunt ended: Realtor.com® hired Jonathan Smoke, it’s first economist in its 18-year history. Smoke, who came to realtor.com® after serving six years as chief economist, senior vice president, and other executive roles at real estate marketing firm Hanley Wood, immediately caught the eye of the media. What would he bring to the table that economists at realtor.com®’s competitors haven’t already? How would he be different? And how will his presence impact NAR, which already has powerhouse economist Lawrence Yun?
REALTOR® Magazine chatted with Smoke to find out all this and more.
REALTOR® Magazine: Why was realtor.com® an appealing choice for your next career move?
Smoke: I always have been motivated by challenges, but I also measure my success by the impact I can make on the organization and stakeholders around me. I’m in my 20th year focusing on housing, and realtor.com® and Move provide an incredible opportunity to learn, do something challenging, and also have a positive impact on the industry.
You’ll be tasked with being the public face of realtor.com®. What should its voice be?
I’m still in the learning mode to understand all of our constituents’ needs, but I know that it is critical to be authentic and capable of conveying meaning to consumers and the professionals who serve them. I believe it’s my job and my mission to promote understanding about what is going on and why.
How do you see realtor.com®’s role in the real estate industry evolving as competition with Zillow and Trulia (which Zillow is acquiring) heats up?
Part of the reason that I considered this “move to Move” is that I believe that realtor.com® is the industry. I see our role as helping all stakeholders improve the overall experience of buying and selling a home that inherently leverages REALTORS® to deliver the value only they can provide.
What information do you plan to supply to consumers that they can’t already get from competitors?
I’m just getting started surveying what we can produce, and I need to hear from consumers and REALTORS® first-hand about what is missing and needed that no company is producing today. Certainly, I will continue our unparalleled commitment to accuracy, so some of what we may provide may simply be the assurance that the metrics our audiences see are accurate and timely. A home purchase or sale is an extremely important transaction in a person’s life, so we need to ensure we’re helping consumers and the REALTORS® serving them make the best decisions by supplying the best insights possible.
There have been criticisms of the “now is the right time to buy or sell” message that many economists have touted. Do you agree with that messaging, or will you take a different approach to communicating housing data?
You will come to appreciate that I’m not your typical economist. I’m known for helping folks cut through the noise and understand what is going on. As a result, I often have different views than my counterparts.
While many economists regularly talk about housing because it’s so central to the economy, few economists actually have real, detailed data helping them to know what’s really going on. My experience has been grounded with a real-world, street mentality — but always driven by data. Two of the most important philosophies I hold dear are, first, that all housing is local — and hyper-local at that — and that behind each buying decision is a household with its own context for what’s right or best at that given time as well as for the future. And secondly, fundamentally, life drives housing. Overall market conditions can influence the volume of activity, the balance of supply and demand, and the resulting price behavior, but it’s the neighborhood level of households forming and going through life events that determine the need to buy or sell. I’ve personally never made a decision to buy or sell a home based on what the talking heads are saying, so I’m never going to presume that I can tell the entire market that they should be buying or selling.
I believe in the long-term value of owning a home, and that frames my view. I also believe in the role of the REALTOR® to counsel the buyer or seller on the current market dynamics. I’m a data geek, but I know the limitations of econometric models and valuation models and the underlying housing data on which those models are based. My mission is to create insights that help us see what is happening and what’s driving the market at macro and local levels, but ultimately it’s the role of the REALTOR® to provide counsel to the buyer or seller about the right time — in that neighborhood — for that consumer to buy or sell.
The National Association of REALTORS® has Lawrence Yun as its chief economist. How will your approach to presenting housing data be different than his?
Lawrence Yun is an incredible economist and spokesperson for the research NAR produces. I will be collaborating with Lawrence and his team to find ways to provide insights that leverage what we can see with realtor.com®, and to explore innovations to leverage the collective data we have or create together to inform consumers and REALTORS® about the housing market. I’m sure our styles of presenting data will be different, and we may have some differing opinions occasionally, but I know that working together will benefit the industry and consumers.
Where do you see the housing market going in the foreseeable future? Is there anything happening in the market that people don’t know about and should?
Overall, I see the market in recovery mode and moving into a much more normal scenario where you can make sense of what is going on by understanding local market fundamentals. But this also is a very interesting time of transition with major demographic waves combining. Incredibly tight credit conditions still exist, and that limits demand. We must pay attention to household formation, home ownership, and consumer confidence as they fuel demand, and we need to be aware of threats to housing finance. But happily, we are back in a scenario of positive job growth, home-price appreciation, and strong consumer confidence, all leading to a scenario of robust demand in the future.
What do you make of realtor.com®’s move last year to include non-REALTOR® listings in its database?
I believe it’s great for the consumer to have an even more comprehensive view of housing options on realtor.com® with the additional rental and new-home data. With a more complete consumer audience, we can create better gauges of demand and preferences, and better track how demand is shifting.
What does the term REALTOR® mean to you?
A REALTOR® is the true professional at the center of a home purchase or sale. The REALTOR® designation and the REALTOR® Code of Ethics behind that designation provide a much-needed assurance to consumers — and, indeed, to all industry stakeholders — that each transaction, each listing, and each interaction involving a REALTOR® is founded on the highest integrity. To me, an economist associated with that trademark, it means the heart of what I can analyze is truth. I couldn’t ask for a better place to seek meaning and have a positive impact.