Apathetic Agents

I think agents are afraid to meet and interface with the public. We have been coached and trained and conditioned on how to streamline our process to get as many listings into the pipeline as possible as quickly as possible so that we’ve become very efficient. But in our haste, I think some agents are not taking the time during the listing process to slow down and educate clients. How can they be when they are adding 200 – 300 listings a year? It’s simply not possible, and it’s a disservice to our clients. Agents rarely sell their own listings, so the oversight falls on the time spent with buyers. Buyers need an education.

I just met with a new buyer couple last week. It took 2.5 hours to introduce them to the community (because we have a great community!). I believe that when you are teaching people how to do things, it has to be done at their timetable. Someone purchasing a new home is staring a major life event in the eye and is about to incur a lot of stress. There are a lot of details swirling around in their heads and I cannot be successful at coaching them through the process until they are open and receptive to learning what the process is. Unfortunately, I think many agents don’t want to take the time to read their clients in this way. It’s a shame really because if they would slow down and listen to the cues from their customer, they would have greater success and more referrals.

Visit my website at TimTaylorHomes.com and search the MLS for free!

My Assistant Says I Give Clients Too Much

I have too many answers.

And I’m not supposed to share them I guess.

We’ve been told repeatedly that we are not to be the source, but we are to be the “source of the source.”

I disagree. If we don’t provide information to help our clients, then we force them to have to now learn who is the best contractor, title company, appraiser, engineers for home inspection, etc.

Sure, you can search online to get a list of providers, but it doesn’t consistently say online who will give you good service or can match a personality to yours. We as realtors should be providing this as a service to clients. After 25 years in business, I’ve gotten pretty good at flushing out the good companies from the bad. And I get paid for helping guide my clients through a smooth, speedy and legal transaction.

I have a list of 80 professionals that I’ve worked with and recommend. I offer it to my clients and tell them that if you have a problem with ANY of them, to let me know. And it’s rare, but they do. So I know who’s good.

My opinion is that if you leave the buyer with too many decisions that quite frankly, they are ill-equipped and uneducated to make decisions about with respect to the closing timetable and the expectations of the contract, it’s highly likely that the deal will not be completed. It’s like throwing the buyer to the wolves. And how nice is that?! Am I doing my job to let them fail? No, it wastes their time and mine.

Ah, but then we have the broker question, should we take risk on behalf of our clients by recommending third-party service providers? I have to ask, “How afraid of being sued are we?” If you’ve been a professional in the business for some time, you have resources that you can trust. And if a real estate agent is still afraid of being sued, should they really be in this business anyway? Are they making decisions and giving advice in the best interest of the client — or for themselves?

My approach for my tenure has always been to train, make sound and reasonable recommendations, listen and get feedback from my clients. Meet more people. Generate good word-of-mouth. Sales beget sales and if you take care of your client, they’ll speak goodly of you in the marketplace and offer you a referral. The biggest compliment I can receive is, “He took care of everything. He was there at every step. “

I have to give the service I would expect to receive. And if that means offering a list of service providers, it’s a simple choice for me.

Please visit my website at www.timtaylorrealtor.com to view all the Central Ohio homes for sale.

Bringing People to the Table

There’s a strange phenomena going on in Cbus. Ninety-nine percent of real estate closings are happening with the buyer and sellers coming in together. On the same day, at the same time, to sign their paperwork. They look each other in the eye, share life stories while the title is dispersed and the deal is funded. All in one day.

Most of the country doesn’t do it this way. Actually, most of Ohio doesn’t even close this way. Conventional approach is escrow the closing where each party submits their documents to the title company and everyone signs at their own convenience. Central Ohio was making the move to this popular style of closing, but put the brakes on it back in November of last year. So far, no word on bringing back the escrow close and I’m just wondering – which is in the better interest for the client?

These “tabletop closings” can be confrontational – especially as of late with the extreme differential in prices. It’s all-too tempting for some to take the opportunity to place blame on the buying party for the seller’s lack of profits. In the moment, it somehow soothes the seller’s soul although it doesn’t erase the bad choices they may have made through the years borrowing against their equity. Or then there’s the seller who excitedly spews a bit too much detail about a problem they had with the AC unit a few years back, and despite costly and successful repairs, brings new concern and unease to the mind of the nervous buyer. Sometimes the situation is vulnerable and poignant for the seller. It’s just too painful for him or her to admit a failed marriage, loss of a job, or death of a family member. The torture of living in the home has become insurmountable and the reason to sell is very emotional. There’s no doubt these closings can be stressful when raw feelings share a seat at the table.

But just life would have it, tabletop closings have a way of drawing out their share of delightful human rapport as well. If the negotiations have been amenable, the buyer and seller have a rare opportunity to meet one another. It’s in these brief shared moments that a glimpse of commonality is exchanged. The older couple has raised their family in this home. If only the walls could talk of the many moments that have enveloped this family in love. The man usually drags his heels on downsizing but the wife eventually wins out on the practicality of a smaller home. They share the table for a short amount of time with a young couple, eager to start their own family in this same dwelling. It’s as if each are looking in a mirror to one another’s history, and there is comfort for both that the right decision has been made to enter into this sale. They share dreams and stories over the closing and a bond is created over what could otherwise be a cold transaction.

If it’s not obvious to you, I rather like the tabletop closings. But I am in real estate because I enjoy working with people and all the characters and whimsy that they bring. I don’t subscribe to the commoditization of the trade, I think it takes us further away from the humanity of it all. I believe in personal service and going the extra mile for my customers. In fact, one of my favorite transactions was helping a couple who had a large barky Belgium sheepdog with lots and lots of fur. The couple struggled with the barking habits of their beloved dog and no longer felt welcome in their neighborhood so they sought my help to find a new, more dog-friendly environment. I showed them a beautiful home with a large yard which they instantly loved, (and so did their dog). But the true test was when I introduced the dog to the neighbor dog who shared a fence with the property for sale. Not only were both dogs fast friends, the buyer was long-time friends with the neighbor’s significant other. Everyone and everydog was thrilled.

And that’s what happens when we let people into real estate.

Be sure to visit my webpages: www.homes-columbus.com and www.timtaylorrealtor.com for all current listings in Central Ohio.

Give it a rest RESPA

RESPA  – the Real Estate Settlement Procedures Act – standardizes closing costs and settlement procedures. It is a HUD (Housing and Urban Development) consumer protection statute designed to help homebuyers be better shoppers during the home buying process. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services.

If RESPA were that simple, things would be fine. But January ushered in a new wave of RESPA laws designed with the intent to allow the consumer to easily compare their settlement charges on their Good Faith Estimate to their HUD-1 Statement. Sounds acceptable on its surface but what it’s actually done is that is has added a layer of paperwork and time commitment only compounding the confusion and lengthy delays surrounding our ever-increasing closing procedures. The paperwork is confusing. There’s no room to make quick decisions. And title companies are still not getting information to buyers before closing.

The intent of RESPA was to protect the consumer from real estate salespeople and other support services (like banks, title companies, etc.) from packaging and forcing additional services upon the consumer that they didn’t actually need, they didn’t have a choice to say no, and then would be overcharged for those services. It’s a valid concern, but in this day and age, I think consumers are smart and will shop for their services.

In my opinion, RESPA is a whole set of laws based on a different time. The consumer still needs to be protected but I think the responsibility should be rightly placed on the front end during the realtor certification process. Better training and accountability practices wouldn’t require such convoluted systems for each and every sale. RESPA now becomes an obstacle because we have to continually explain our fees throughout the sales process, which just breeds skepticism and doubt among consumers already overwhelmed in the sales process.

Commissions are going down, overhead is going up. The mere presence of RESPA implies that realtors charge fees consumers don’t need. For example, fees after the sale. RESPA does not approve of these additional fees and labels it as “commission,” despite the fact that it has nothing to do with the transaction. The consumer is just not seeing added value from using a realtor and this doesn’t help when we have legitimate recommendations for additional services to benefit their home sale or purchase. Consumers need to know the importance of the experience and connections that a realtor brings to the deal. While the intention is sound, compliance with RESPA is creating more raised eyebrows and distrust throughout the transaction which doesn’t necessarily benefit the client in the end.

Tax credit still available for members of the military

Great news about the tax credit! It’s still available for those who serve our country. Read on for information from the IRS and a link for additional information:

Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.

• Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.
• In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community. This relief applies where a home is sold or stops being the taxpayer’s principal residence after Dec. 31, 2008, in connection with government orders received by the individual (or the individual’s spouse) for qualified official extended duty service. The credit is still allowable even if this happens during the year of purchase. Qualified official extended duty is any period of extended duty while serving at a place of duty at least 50 miles away from the taxpayer’s principal residence (whether inside or outside the U.S.) or while residing under government orders in government quarters. Extended duty is defined as any period of duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.

Visit the IRS website for additional information.

Saving trees

I’ve been seeing a lot of movies. I like movies, it’s my guilty pleasure. And I say guilty because these days it seems that you need a separate investment account just to foot the bill. In 1970, the average cost for admission to a movie was $1.55! Nowadays, you can expect to pay $8.00-8.50 for matinees, $ 9.00-9.50 after 4:00PM, $11.50-$13.50 for 3-D.  With $ 6.00-12.00 for a drink and popcorn, my pastime is getting expensive. If the flick is a flop, it’s become a financial loss as well as a waste of time.

We are all sensitive to how much things cost today. Since we’re taking a walk down memory lane, I remember years ago when it was en vogue to decide that we were going to eliminate paper in real estate offices. Ironically ever since that time, we have doubled the use of paper.

I think I know why. Let me give you an example:

I recently had a cash closing. It took 10 minutes. I’m not kidding, TEN.

My next closing was an FHA closing with a plethora of loan documents. It took 45 minutes to close. Break that down to 25 minutes to have an attorney explain all the documentation to the buyer (thankfully he was there to speed up the process or it could rightfully have taken the better part of the day), and then TWENTY minutes to make COPIES.

Most consumers don’t even read the documents (which is exactly why so many people entered unwittingly into foreclosure) that we so diligently churn through our Xerox machines. But we’re not the only fall guy, real estate isn’t alone with the threat of endangering the trees. Here’s a great analysis from a financial advisory office.  They estimate an average office could save some incredible coin with a change in practices. Imagine what would happen if we found it fashionable to work towards that paperless office again?

If I wanted to kill some time I could campaign to have all cash closings as a simpler way to reduce paper consumption, but let’s face it, that would be a career limiting move in this economy. I do believe that time would be better spent at the movies.

No more tax credit, now there’s Seller credit?

There’s a new program being pitched by one of my national competitors which you may have heard about recently. They are offering to “extend the home buyer’s tax credit.” Sort of. Basically their sellers will offer up to a 3% credit (maximum value of $8,000) to buyers when they purchase their home.

Well, let’s think about this for a minute. Where is this extra $8,000 coming from? Someone’s paying it and it’s not the brokerage firm. Most likely their participating sellers will be maintaining their selling prices at artificially higher prices in order to pay the 3% credit of up to $8,000. At which point I have to ask, why bother? Let’s stop playing games and just price the house at an appropriate level!

More importantly, I have to think that their buyers are going to run into a problem when attempt to secure financing.   Unlike the previous national program (which was paid toward closing costs), this new program is going to be labeled a “seller concession” meaning that the lender will reduce the “acquisition” value “dollar for dollar.” Translation, their buyers that are obtaining the financing are going to have to bring an additional $8,000 at closing, just to buy the house. This is out of pocket money, it cannot be rolled into the loan because it is over and above the value of the house. Poor buyer has to have $8,000 more than they would have had they not taken the promotion.   

What do you think? Is this something to replace government stimulus? In my opinion, no. House values are house values. Short sales, foreclosures, tax credits of $6500 or $8000, and low interest rates all occurred and we were barely able to pull buyers into the market.

It was rough but now (insert angels singing) we’re thankfully meeting our traditional and seasonal buyers and sellers. The ones who need to make a move at the end of school and before the beginning of the next year. We love you!

Regardless of the educational calendar, it is time for consumers to ask if their housing needs are not being met. If so, it is truly a great time to purchase a home. The adjustable rate is 3.75 percent – I don’t believe the banks can go lower. We have lots of affordably priced housing available.  The thing we need now is buyer confidence. Tricking them isn’t the way to gain it.

Here’s a link to someone else who shares my sentiments:

http://www.walletpop.com/blog/2010/04/27/coldwell-bankers-new-promo-extends-home-buyers-tax-credit-n/

Flicks and food for fodder

I’ve been blogging for a few weeks now, but I think it’s time I heard from you. And let me just sweeten the deal. I’m giving away two prize packages of free movie tickets and food for two people — just for answering the following two questions:

1.       What was your best real estate experience and why?

2.       What was your worst real estate experience and why?

Winners will be drawn at random from comments in this blog. For each comment that addresses one of the questions above, you’ll receive one entry in the drawing. And if you subscribe to my blog, you get an additional bonus entry. Contest ends May 5th.

Can’t wait to hear all the great stories!

Pulling back the curtain

I just finished the “What Would Google Do’ book by Jeff Jarvis (a very slow read), and he admitted that he was angry at some real estate agents in his past and that they were paid 6% of the sale.  His question was, “What did a Realtor add to the transaction worth that much money?” 

I can’t speak for his experience, but a very good Realtor makes the home sale process go smoothly.  For most families, the sale of their home is the single largest financial transaction of their lives.  Huge stress surrounds their home sale/purchase.  Financial, psychological, social, marital, health and work related problems are not unusual.  The life experience, business and real estate skill sets, people skills and generosity of spirit necessary to work with others through such a difficult process is rare.  Most real estate sales people are not talented in some or all of these specialties and it can show up at the worst of times and only make the home buying process a more painful experience.  Yet the public (and some authors) would try to lump all Realtors into a pay structure where one size fits us all.  As we all have a state issued license we must all provide essentially the same services, right?  What difference could years of experience, education and training make? 

Let me pull back the curtain and define how I get paid and maybe it will clarify why this attitude upsets me.

The average Realtor in the United States earns “gross commissions” averaging $38,000.  I often have done better, but not always.  Again, on average, it takes just more than 11 home sales per year to earn that $38,000 in gross commission.  However, during the past several years, over 42% of the local Board of Realtors sold only 4 homes or less.  I personally sold 25 homes in 2009, but it was possibly the worst year I’ve ever had and the worst year of record in Central Ohio.

Let’s break it down even further to a per home calculation:

• On the average sale in our area is about $160,000,
• The gross commission at 6% is $9,600. 
• On the closing statement it says the Seller pays the entire fee, but like many Seller costs, half or 3% of this cost is really paid to benefit the Buyer (it is paid to the Buyer’s agent). 
• As I am a Buyer’s agent 65% of the time, my gross commission is really $4,800.00. A nice number if I got to keep it, but now my Broker cuts up the pie. 
• 3% of my gross commission ($144) is paid to Broker for a franchise fee and $89 is taken as a technology fee (the cost of connecting to my Brokers website/branding). 
• So now we’re down to $4,567. 
• But after a typical “split” with my Broker it leaves 50% or $2,283.  Still a sizeable sum. 
• Now my favorite Uncle Sam takes his piece of the pie.  Approximately 40% considering Federal, State and City taxes.  I’m down to $1,370. 
• Now I pay my bills:

1. Insurance: health, auto, & liability
2. auto costs for 28,000 miles per year, car payment, fuel & maintenance
3. communication costs: cell phone, fax line & internet access @  home & office
4. office supplies: postage, paper, envelopes, photos, toner, keys, etc.
5. not to mention computer repairs
6. home staging materials & lighting
7. board fees: local, state and national
8. marketing costs: Realtor.com, HomeGain, Google, Bing, local print media
9. and finally educational costs: classes, books, conventions and trade shows 

With business costs of approximately 70% per dollar earned I have now $411 left. 

In Jeff Jarvis’s world where agents should negotiate a lower percentage commission, I beg the question, if an agent is willing to reduce “their” pay significantly on the hope of finally making a sale, will they really do everything possible to reach their client’s goals?  I have to believe that if you expect mediocre real estate services, a sure fire way to get them is to pay your agent as little as possible.  However, if exceptional real estate services and an above average financial outcome is a more attractive goal, employing experienced, skilled, and professional specialists and paying them accordingly will definitely increase your likelihood of success. In other words, you get what you pay for.

Just a thought!

My 15 minutes of fame!

I was contacted by Patrick Preston from Channel 4 (NBC) to offer an opinion on the market with regards to the expiring “Tax Credit”.  He has used me before as an expert in the Upper Arlington and Northwest Columbus residential real estate market.  This time I could not meet him to be on camera so I sent him to one of my listings to interview my Sellers.  He did interview them, but used my quote.  I said “We expect the market to dip a bit right after April 30, 2010 as the Tax Credit expires.”  I then suggested that I saw, “An improving market heading into later May and continuing during our usual Summer sales season.  Maybe not as good as the pre-recession boom, but certainly better than last year.”

Autographs anyone? Ha, ha…