Speaking of Real Estate
The improving U.S. economy and strengthening dollar provided a welcoming backdrop for the National Association of REALTORS®’ first foray to the major global real estate exposition known as MIPIM held this week in Cannes, Frances. More than 21,000 attendees from 93 countries have gathered to explore global investment opportunities at the trade show.
The eye-catching 1,200 square-foot NAR-U.S. Pavilion highlighted the association’s commitment to global commercial interests while raising awareness about top markets for foreign investment in the United States. The pavilion showcased three robust U.S. markets that are internationally-recognized for their success in attracting foreign investment: Miami, Chicago, and Birmingham, Ala. “There are quite a lot of connections to be made here at MIPIM,” said NAR Treasurer Mike McGrew, who is part of NAR’s delegation at the show.
Attendee Cynthia Shelton, a commercial practitioner with Colliers International from Orlando, Fla. and current Committee Liaison to the NAR Leadership Team was energized about the NAR’s presence at the show. “This is going to make the U.S.A. the place to be, to invest in even more than it is now,” she said, in an interview from a MIPIM broadcast on YouTube. “REALTORS® represent the boots on the ground. We’re hoping to bring more investors to the U.S. to invest in things like office buildings, residential developments, and retail. When investments happen, cities give credits, get more taxes, and allow us to develop better projects which helps our schools and employers.”
The wide range of countries at the show— from Belgium to Brazil— is generating considerable buzz. “Governments have invested large sums to attract attention from buyers, developers, and interested parties,” said Christopher Zoller, CRS, and 2015 residential president of the Miami Association of REALTORS®. “We are getting lots of inquiries here from people looking for investors or investments, developers or developments, small personal purchases or large scale opportunities. It is exciting to see the global scale of real estate excitement.”
The CCIM Institute has partnered with NAR at the event to showcase their education platform and the value of their prestigious professional designation. After being away for several years, participating in the MIPIM event “has given us the ability to seek out significant business relationships for our members,” said 2015 CCIM President Mark Macek. “As an organization with members in over 30 countries we look forward to using this opportunity to move CCIM forward.”
NAR’s presence at the show has broadened awareness of the role of REALTORS® in commercial and global real estate. Approximately 70,000 NAR members offer commercial brokerage and related services. An additional 283,000 members are involved in a combination of residential and commercial work.
Real estate professionals always talk about giving the homes they sell more personality. Of course, that usually comes in the form of inspired staging, bold paint jobs, and creative landscaping. Rarely do they mean it so literally as to give the house its own Twitter account and let it tweet to buyers.
But truth is stranger than fiction.
Bob the House — a three-bedroom, one-and-a-half-bath ranch in the Chicago suburb of Mount Prospect — has been tweeting about his journey on the market since October. You’ll find Bob to be a rather inspirational house, tweeting messages of positivity and hope on a regular basis, along with fanfare for the Chicago Cubs and humorous updates about his search for the right family. (“Six showings today! You like me, you really like me!”)
Here’s the open secret: It’s not really Bob who’s doing the tweeting. It’s his “handler,” Rich Burghgraef, an account executive with sales consulting firm Randolph Sterling, Inc. Burghgraef writes in a blog post that he created Bob, whose name comes from the street the house lives on, Robert Drive, as a way to get away from typical advertising tactics. It seems Bob was a hit, with showings of the home going from one or two a weekend to six and eight after the Twitter account debuted. It may have even been responsible (or at least contributory) to the ultimate happy ending, as Bob tweeted on March 1: “My new family moved in on Friday. Thank you all for taking an interest.”
“I learned long ago [that] people will buy from people they know, like, and trust,” Burghgraef writes in his blog post. “However, when you are talking about selling a house, nobody cares about the person selling the house. What buyers care about is whether the house can be their next home.”
Burghgraef says that he used Bob to make a personal connection with buyers, not just to throw marketing messages of “buy me!” at them. Bob would tweet about the school that taught him to tweet (so there’s a good school in the neighborhood!); his friend, the stop sign (safety first!); and his stepson, the swing set (don’t you see your family here?). The home’s Twitter account gave buyers a new way to “fall in love with him even before stepping in for a showing,” Burghgraef says.
“I work with a lot of newer salespeople, and one of the common frustrations they come to me with is how they lose confidence in the product or service they sell because the competition came in at a lower price,” he writes. “If you truly understand and are passionate about the fact that you have the best solution for your client, the only true competition is apathy.”
Who was Bob’s competition? It could have been the comp down the street selling for $5,000 less, Burghgraef says. But that was still no match for Bob.
“He just needed to find a different way to make you fall in love with him,” Burghgraef says.
An effort is under way in the Senate to renew legislation that spares underwater homeowners from having to pay income tax on mortgage debt forgiven by a lender, one of the chief supporters of the tax-relief provision told a group of politically active REALTORS® during NAR’s Federal Policy Conference in Washington.“I can’t make sense of anyone having to pay tax on income they never see,” Sen. Dean Heller (R-Nev.) said at NAR’s Federal Policy Conference.
Speaking on Feb. 5, Sen. Dean Heller (R-Nev.) said he is working with Sen. Debbie Stabenow (D-Mich.) to again extend a provision that Congress renewed for 2014, which lapsed on December 31. The Heller legislation, the Mortgage Forgiveness Tax Relief Act, would exempt forgiven mortgage debt from taxation through the end of 2016.
Heller and Stabenow are both members of the tax-writing Senate Finance Committee. Heller is also chairman of the Senate Banking, Housing and Urban Affairs Committee’s Subcommittee on Economic Policy.
Although he didn’t give a timetable for when the Senate might move forward on the measure, Heller indicated that he considers passing such a bill a priority and would like to see it happen quickly. He said that as a lawmaker from Nevada—which was particularly hard-hit by the housing downturn several years ago and has yet to fully recover—he especially aware of the severe impact falling home prices can have on home owners.
“I can’t make sense of anyone having to pay tax on income they never see,” Heller said.
Heller also said he thinks a deal on broader changes to the tax code is “within our reach,” although Hill staffers who spoke at the conference indicated that fundamental divisions over the issue between Republican lawmakers and President Obama will make achieving progress hard, particularly if the sides do not find common ground by late 2015.
One way the government could move ahead on tax reform is to reach an agreement on how to modify taxes on corporations, which Republicans on Capitol Hill and Obama agree should be a priority. The White House and Congress are further apart when it comes to the way the tax code treats individuals, because Obama has proposed raising taxes on the highest earners—a non-starter for Republicans, analysts say.
A key concern for some lawmakers, however, is that tinkering with corporate taxes without also providing relief to individuals would be unfair to small business owners such as real estate professionals, who often operate their businesses as limited liability companies (LLCs) or S corporations, meaning that income they generate passes through to their owners, who pay tax on it at their individual rate.
The days of filling out the HUD-1 settlement form and getting a Good Faith Estimate (GFE) from the lender are winding down. On August 1, those two forms are going away. The Truth in Lending Act (TILA) disclosure form is going away, too. Replacing them are two new forms: the Closing Disclosure and the Loan Estimate. You can familiarize yourself with these new forms on the website of the Consumer Financial Protection Bureau (CFPB), which has taken over administration of the Real Estate Settlement Procedures Act (RESPA) from HUD. Just go to CFPB.gov and type in the name of the forms in the search box.
There are also new rules for the closing procedure. One rule requires all forms to be ready three days prior to closing. NAR is recommending you actually get everything ready seven days prior to closing, so when you go into the three-day period, you don’t have to make any changes. Because making changes as the clock winds down comes with a cumbersome set of hurdles.
What this means is, you and the other settlement service providers, including the lender and title agent, are under the gun to get everything squared away earlier than you have to today. And the buyers and sellers have to be cooperative as well, because if last-minute changes are made, a new three-day waiting period kicks in, at least in some cases.
The good news is, you have until August 1 to get familiar with the new forms and learn about the new closing procedures, and NAR is hosting a series of webinars on the topic. To learn when the next one is, go to Realtor.org/respa.
The video above, with Ken Trepeta of NAR Government Affairs, provides a concise overview of what to expect and also shares some tips on how to decrease the likelihood of snags in this new environment.
The CFPB’s goal in making these changes is to increase transparency for consumers. Start your education process by accessing the 5-minute video.
The dollar is strengthening, so you would expect institutional real estate investors from outside the U.S. to hesitate before buying here. But that’s not happening, because the relative stability of the U.S. economy and commercial real estate markets offsets the higher buying costs. That’s one of the takeaways from Scaling New Heights, a 2015 commercial real estate outlook from NAR, Deloitte, and Real Estate Research Corporation/Situs, which the groups released February 5.
What’s more, big buyers from outside the U.S. aren’t just looking at properties in New York, L.A., Washington, and Miami; they’re looking at properties throughout the U.S., including secondary markets.
That means buyers from London or Toronto might be interested in your apartment or office property in Omaha or Indianapolis. What investors are looking for, says George Ratiu, NAR’s manager of quantitative and commercial research, is higher yield, and they can often get that more readily in secondary markets than they can in the big markets.
If you have commercial properties in even smaller, “tertiary” markets, your buyers will probably be mainly from the area or region, as they always have been, Ratiu says.
Looking ahead, expect financing to be more widely available this year than in the previous few years. That’s because all the major sources of financing are back: pension funds, commercial banks, institutional investors, even commercial mortgage backed securities (CMBS), which virtually disappeared during the recession. Today they account for about 30 percent of financing.
Despite the improved availability of money, you still have to have a performing asset to get financing at the best terms, as you would expect.
All in all, it’s a good time to be in commercial real estate, because the momentum is on the upswing.
Learn more about the findings in the video with NAR analyst George Ratiu.
Leigh Brown, ABR, CIPS, broker-owner of RE/MAX Executive Realty in Concord, N.C., has become known as the video queen. So it seemed to make sense that she was leading a session at Real Estate Connect in New York on Friday titled “How I Use Video to Sell Houses.” There was just one problem.
“I don’t use videos to sell houses,” Brown said. “I use videos to sell myself.”
Many agents think of video as a more dynamic way of showcasing their listings, but really, they should be using it to showcase themselves — their personality, their expertise, the people they are, Brown said. Instead of focusing on creating video home tours, consider creating video tutorials on how to buy or sell, or just to give your opinion on market conditions.
“Here’s the thing, you are the product,” Brown said. “I’m the one people come to to ask how to sell a house.” She gave an example where focusing the camera on herself instead of a house pays off: “I want my sellers to understand that it means nothing that they have wire shelving in their linen closets.” A video focusing on the home itself won’t explain that, so it makes more sense for her to make a video of herself explaining the concept to viewers.
“Sellers hire me because they’ve watched all of my videos and they know what I’m about,” Brown said. “They come to me because they want someone who’s engaging. They know what to expect when they come to me.”
Check out some of Brown’s videos below.
With foreign buyers snapping up $92.2 billion worth of U.S. real estate between April 2013 and March 2014, according to the National Association of REALTORS®’ 2014 Profile of International Home Buying Activity, it’s obvious that there’s huge opportunity in the global market. But how do you reach buyers living in other countries?
Luckily, it wasn’t hard to find advice at the Real Estate Connect conference this week, hosted in New York, which is a top city for international buyers. Agents from some of New York’s biggest brokerages offered their top tips for getting introduced to buyers from around the world and becoming their go-to agent for buying U.S. real estate.
- Either learn another language or hire a translator. Before attempting to market to international buyers, you need to have a good understanding of where they come from. “Trust doesn’t come easily in other cultures,” said Nikki Field, associate broker at Sotheby’s International Realty, whose international business grew from 17 percent a few years ago to 76 percent last year. “People here generally believe you are who you say you are, but you have to earn people’s trust in other countries.” A big step in that direction is taking language classes so you can speak to them in their language. Asians are a big home-buying sector in New York, so Field takes Chinese-language courses at The City University of New York. “But if you don’t speak another language, it’s not the end of the world,” added Maria Babaev, CIPS, CRS, associate broker at Douglas Elliman Real Estate. “You can hire a translator. But it’s important that you do something to show you’re trying to connect to their way of life.”
- Advertise experiences that speak to your international knowledge. Field writes in her marketing materials that she’s trained in the Chinese language at CUNY. You can also use familial connections in other countries or any past experience abroad in your marketing. Nora Ariffin, associate broker at Halstead Property, has family in Singapore and travels there at least twice a year, which she notes on her company profile, along with stints living in Europe and South Africa.
- Get on a plane and go. There’s no substitute for face-to-face interaction, so if you want to reach international buyers — go to them, Field said. Take trips to the countries where you want to find buyers, and once you’re there, get in with the real estate crowd. “Research the companies in the cities you visit, and go and introduce yourself to the agents working there,” Ariffin said. “When I go to Singapore, I bring materials for some of my best listings with me, and I can pass them on to agents who may have interested clients.” It also gives you a chance to show your knowledge and become known as the go-to agent for your market.
- Build a network of people who work in other global industries. Babaev has gotten to know wealth management advisors, immigration lawyers, and certified public accountants, all of whom have international clients. “These people can pass my information along to their clients when they’re looking for real estate here,” Babaev said. The more people you know who touch other people around the world, the more you become part of the international community, she said.
- Be a real estate advisor, not an agent. Once you’ve begun making contact with international buyers, don’t just focus on selling to them. Help them make decisions for the people they know, too — even if you aren’t the agent who facilitates the deal. “I want to know where every single one of their family members lives,” Field says. “So if a client tells me his son is moving to London and wants to know whether he’d be better off renting a flat or buying one, I can give him my opinion regardless of whether I get a commission off it. What that does is it lets him know that I am truly international, that I know markets everywhere. So when he’s ready to make a move here, he’ll know who to call.”