Realtor — Chance Brown's Real Estate Blog

Price Per Square Foot is Bull$hit

July 20, 2017 By Chance Leave a Comment

99% of my posts here are designed to help Realtors grow a better, more profitable business. This post is no different. However, unlike most of my posts, this one is just as applicable to the real estate consumer as it is to the real estate practitioner. Why? Because I hope it will dispel one of the most prevalent mistakes in real estate: the fallacy of price per square foot. Despite its prevailing use in valuing property by both Realtors and consumers, and its marketing appeal by certain builders…

The truth is that price per square foot is garbage and means almost nothing.

But how can it be garbage if everyone uses it, you ask? Let’s take a look, first of all, at the simple mathematics of why it is garbage and then we’ll examine why there is no practical application of the price per square foot measurement that, at the end of the day, matters. (One quick caveat: this post is not really applicable on commercial properties.)

The Simple Math

Price per square foot doesn’t hold up under the microscope of scrutiny because of simple mathematics. Whether you are selling a home and trying to figure out a sales price, buying a home and trying to see what kind of value you’re getting, or using price per square foot as a marketing technique, you are wrong. Here’s why. In an average community there is a wide range of home size, shape, and features. To take a real simple look at this, consider the following:

A one-story home costs more to build than a two-story home. As such, the price per foot on a two-story will be less than that of a one-story.
A smaller home will have a higher price per foot than a larger home. If a garage door costs $1000, you have fewer square feet to spread that cost over on a smaller home. Thus, the higher price per foot is natural.
What about upgrades, renovations, pools, etc.? An upgraded or recently renovated home should have a higher price per foot than a home that does not. How many dollars per foot does a pool cost?
A builder marketing themselves by price per foot is full of shit and you should run away. I can build a Lincoln Log home for a remarkably low price per foot, but would you want to live in it? The only world where this kind of marketing works is a world where every single builder built the exact same home with the exact same construction techniques on the exact same piece of land and the exact same features. Then price per foot would not only be applicable, but also, once again, completely useless because it’s the same thing for everyone. So, until communism sets in with the builders, price per foot is absolute nonsense.

So, based on that, taking a look at the price per square foot of a neighborhood and applying it to a single property is necessarily going to result in an incorrect value. If you’re the smallest home in the neighborhood, the value you get by using this method is almost certainly going to be low. On the other hand, if you’re the largest home in the neighborhood, you’ll be priced to high. How, then, do you correctly value a home? We’ll get to that.

The Practical Application

Ok, I admit that this is a bit of a fake news subheading. There is no real practical application of price per square foot for one reason and one reason only. Appraisers don’t use price per square foot to value residential properties. That’s really it. You can come up with whatever convoluted price per foot you want to come up with, but if you are selling a home that will be financed or buying a home using financing, it doesn’t matter what you came up with because the appraiser determining the value of that property doesn’t care and isn’t going to use it as a factor in determining the value. Don’t believe me, pick up the phone and call your lender or an appraiser. The really simple, ugly truth is that price per square foot is useless because the appraiser valuing the home isn’t going to use it to decide the value and the appraiser’s value is what gets you to the closing table. End of story.

The Solution

How, then, do you value a home you want to buy or sell? Well, if the last paragraph didn’t answer that, you use the same method as an appraiser. Appraisers look at comparable properties to value a subject property. It’s really that simple. You don’t see an appraiser using five 2,000 square foot, single-story homes to come up with a value for a 3,000 square foot, two-story home. That should be pretty common sense. Yet, time and time again I see and hear people upset with a “bad” appraisal because the price per foot doesn’t make sense. You’re right, it doesn’t make sense. Now, let’s look at comparable properties and see where the disconnect was. That makes sense.

And now for the industry-serving portion of tonight’s programming. Who can help you come up with a correct valuation? A knowledgeable Realtor, that’s who. Not a Zestimate, not a community newsletter where someone gives a range of prices and you do some math, not a builder claiming that they build three dollars a foot cheaper than their competition, and for damn sure not by looking at what your neighbor sold their home for and saying that your home is nicer and bigger. A knowledgeable Realtor will pull comparable, recent, sold data for you and put together an accurate market analysis. Ignore the price per foot fallacy, get a good valuation of your property, then buy or sell and get to the closing table without an appraisal mess to deal with.

Us vs. Them

July 6, 2017 By Chance Leave a Comment

On Monday, I was having a conversation with my business coach about some things that have happened over the past year and the ramifications of those things on the future. Specifically, we discussed how my actions, or reactions, to the events may have an effect on the future. Even when we don’t think we are involved in an impactful way in something, our limited involvement still affects our end result. But, the thing he said during that brief exchange in an hour-long phone call that stuck with me was that the difference between people who make the most of a situation and those who don’t is how they accept their role in the situation.

This afternoon, I was talking with one of my agents about an agent he knows (and we all know an agent like this one) that was all drama. She was constantly making excuses, placing blame, and putting out fires in her business and personal lives. It reminded me of a favorite quote of mine from Dan Stewart, “People who spend most of their time putting out fires are also usually the arsonist.”

The root of the issue is this: whether we admit it or not, we are responsible for what happens in our lives, period.

How we react to what happens in our lives is, ultimately, what defines our success. We can choose to accept our role or responsibility for the things that happen in our lives or we can choose to place blame, deflect, and/or ignore. Our reaction can manifest itself in I/me/we/us talk or they/them/you talk. If you adopt the former, you are far more likely to learn from the situation and be better off in the long-run. On the other hand, people who adopt the latter are far more likely to be miserable, angry, and full of contempt.

The I/Me/We/Us Crowd

If we choose to take the things that happen in our lives as steps in our overall journey, we can begin to accept them and use them as growth factors. But, it is a choice, and for the big things, it’s an active (and sometimes very difficult choice). Believe me, I’ve been there when it’s really difficult to choose to make the best of things, and, yes, I have, on more than one occasion, made the wrong choice. It takes work. It takes time. If we pause for a minute when these challenges confront us and consciously make the choice to accept the responsibility for what’s happened and react in a way that moves us forward, it can become habit.

The amazing thing is that when this habit really starts to take root, it will radiate out into other parts of your life. You’ll start to see the best in almost all situations. You’ll see opportunity where you may have previously avoided a situation. You’ll become more magnetic, attracting the kinds of situations and people you want to have in your life. And you’ll live happily ever after, or something like that.

The They/Them/You Crowd

On the flip side, the other crowd is miserable, angry, stuck in their current situation or worse, and, worse than anything, oftentimes alone. Their reactions to the things around them drive people away. Nobody wants to hang out with someone who is constantly upset or miserable or just a drama queen do they? The drama of it all costs personal and professional relationships to go bad. In a world where it’s not what you know, but who you know, who wants to drive away people?

The Challenge

If you find yourself, honestly, a member of the first crowd, good for you. Keep it up. If not, I have a challenge for you. Not to get all motivational speaker on you, but this will really work. For the next 30 days, I want you to track the things you are grateful for in your life and look at one thing, each day, that you reacted to and how that reaction might have been different. You don’t have to get all fancy with it. A simple notepad will suffice. In the morning, before you start your day (even if it requires waking up a few minutes early) write down 5 things that you are thankful for. Then, in the evening, as you wind down the day and have a few minutes, write down one thing that happened that day and how you could have reacted in a way that could have propelled you forward in life. At the end of the month, you’ll not only have built a habit of gratitude, one of the most important factors in seeing life in a positive light, but you’ll have actively practiced, every day, addressing the things in your life in a way where you are looking for the best in them and the best in you. These are two very powerful tools.

Once we start to build the habit of reacting in a way that moves us forward, we can change our lives for the positive in ways we can’t imagine are possible when we are placing blame and reacting defensively. It takes effort, but like anything that requires effort, the reward is almost always worth the work.

Do For, Not To

May 30, 2017 By Chance Leave a Comment

I’ve actually been working on this post for quite a while now, but just haven’t found the right thing to tie into to make it work. Thanks to the shitstorm surrounding Zillow’s Instant Offers that has happened over the past two weeks, I owe them a bit of gratitude for helping me finish this up. The problem, up to this point, has been trying to put into words a philosophy that can be seen differently through any number of lenses without providing solid context. The aforementioned surge of paranoia about the perceived inevitability of the Zillow takeover of all things real estate has helped put some perspective in place to make the point.

To Answer The Question

Since I brought it up, no, I don’t believe that Zillow Instant Offers poses a very real threat to Realtors. No, I don’t think that Zillow has any intention of becoming a real estate broker and taking over the industry. I believe that Instant Offers is, plain and simply, a big name in the business reacting to a threat from smaller companies like Opendoor. That’s it. I’ll get to that later. That said, I would argue, given the way the platform is set up, that there is real opportunity with Instant Offers for agents that aren’t wasting time complaining about it.

The Real Problem

What the agents bitching about Zillow should be looking at, in my opinion, is why it’s happening, not who is doing it. The real problem is that the home selling and buying processes are arcane, intrusive, and, frankly, a giant pain in the ass. So, in walks an opportunity to take the time, stress, and hassle out of the equation and people like it. Is anyone really surprised? I mean, not to get all dramatic here, but it’s not a hard argument to make that our buyers and/or sellers often end up feeling like a victim by the time they get to the closing table.

For sellers, they have someone come into their house and tell them a bunch of stuff to fix. Then they have to keep it extra clean so a bunch of strangers can trample through at the time of their choosing. Then they usually have to negotiate offers. Then they get a professional inspector, that they don’t choose and have no oversight of, who comes in and tell them a bunch of stuff to fix. Then another professional, also not of their choosing, comes in and tells them if their home is really worth what the market clearly thinks it is. Then they finally, maybe, if another professional, that they also have no oversight of, hasn’t either lied or screwed something up, get to close. Oh, and they get to pay a bunch of money for this pleasure.

For buyers, they usually start looking online, often at sites that have significantly flawed data, yes, like Zillow (there, are you happy now?) for a home. Then someone tells them to go get a financial colonoscopy to make sure they can actually buy it. Don’t even get me started on how flawed the financial world is, specifically as it relates to “credit worthiness”. Then they get dragged around to look at a bunch of homes that usually results in that same feeling you get when your blind date doesn’t look anything like her online dating profile picture. Then they get to negotiate an offer, pay for the inspection, negotiate some more, pay for an appraisal, and possibly have to either negotiate some more or walk away after coming out of pocket for all of these things. Then, maybe, if the professionals they hired did their job, get to close.

Yep, can’t imagine why someone would want to avoid that, can you?

Disruption is Coming

When Barack Obama received the Democratic nomination for President of the United States, there was no such thing as an iPhone. Let that sink in for a second. Now, today, you go through separation anxiety if the damn thing is in the other room for five minutes. The world is changing quickly around us. Uber is quickly killing the cab and black car industries, without owning a single vehicle. Airbnb is the largest hotel operator in the world, without owning real estate. Cable companies are clinging on for dear life because of streaming media. Newspapers are closing left and right because of our need for everything on-demand. Expedia, and others like it, killed travel agents. The list goes on and continues to grow industry by industry. If you don’t believe that change is coming to real estate, please keep believing the way you do so I can take your clients when you aren’t in business anymore. Disruption is coming, and you should be ready, open-minded, and willing to identify where it might be coming from and take advantage.

Do For, Not To

So, because I’ve been waiting a really long time to get to the point these days, here it is. The industries I listed above all have one thing in common (except, maybe, newspapers, but I can make the argument both ways). They are all true service industries. I say “true” because they don’t actually sell a tangible product. Realtors like to fancy themselves as a service industry, but the truth of the matter is that we sell a tangible, consumer good. For most professionals in the industry, service may be what sets them apart from their competitors, but their consumer is still purchasing a brick and mortar product.

How, and when, we begin to see disruption in the consumer goods industry is still to be seen. We are seeing disruption in how the products are delivered, but not really in the products themselves, except in the electronics industry. Companies like Amazon, HelloFresh, and Shipt are dramatically changing the way we take possession of the things we buy, but aren’t fundamentally changing the actual products. I would argue that Zillow Instant Offers and Opendoor are in the same category. They are changing the delivery mechanism, but not the product.

I believe that it is the responsibility of the Realtors in the market, the real professionals, to drive the change needed in this industry on behalf of our consumers and clients. In the scenarios above describing the home buying and selling processes, nearly every step of the way, the client has something being done to them. It is time to change the thinking of the industry to a do for, not to mentality. Yes, of course I mean in the way you service your client. You should already be doing that. More importantly, though, is that we make the process a do for, not to process. Opendoor and Instant Offers are doing that for the people willing to accept their terms. If we want to have a say in how this goes down, then we need to stop running in fear of a make-believe enemy, stop the industry infighting over who controls data, and have a real discussion, with our clients involved, on how to make this process something that people actually want to be a part of when buying and selling real estate. Think about it, we would be the very first industry that didn’t have disruption done to them, but took it upon themselves to do it for them and their end-user!

And, as a side note for anyone in association leadership that might be reading this, no, we don’t need 17 committees and Presidential Advisory Groups to get this done.

Thoughts on the Search for a New NAR CEO

May 19, 2017 By Chance 1 Comment

Dale Stinton, the CEO of the National Association of Realtors, is retiring at year’s end. After 36 years of service to the largest trade association in the United States, 12 of those as CEO, I’d say he deserves it. Whether you are a fan of his or not, I believe that Dale deserves a round of thanks from the membership. Anyone who can deal with a bunch of Realtors day in and day out for 36 years has earned my respect.

And so now the search is on for a suitable replacement. With that search has come every theory and though process on choosing the successor that you can possibly imagine Some of them are great and some of them make you question how the person putting that theory forward puts pants on in the morning, much less runs a successful, international real estate company. So, I thought I’d weigh in for the 19 of you that regularly read this and share my thoughts on what I think the National Association of Realtors should be doing, what I hope the new CEO brings to the table, and why some of the talk around the “type of person” the successor is scares the crap out of me for the future of the association.

NAR’s Core Competencies

I know that I am not alone in my bewilderment at some of the things NAR tries to do. On the other hand, some things that NAR does couldn’t be done better by anyone else, in my opinion. Here’s what I don’t need. I don’t need NAR to be my bank or my university or anything else like that. If they want to do something like that under the Member Benefits department and it costs zero dollars for a dues paying member, I am ok with it, but otherwise, no thank you.

There are four things that I believe NAR should be primarily focused on every single day for every single member. They are simple, or so it would seem, and the good news is that NAR is already above average to great in three of the four.

Brand the R – This is the one area where NAR would rate a zero to me. I believe that they have utterly failed to not only differentiate between real estate agent and Realtor, but to show the value of the Realtor to the consumer. I listed this number one because I believe it is the most important thing NAR should be doing and they aren’t doing it. When both Zillow and Realtor.com have better advertising, you have failed. But when the Canadian Association of Realtors has better ads, you should just be embarrassed of yourself. (Seriously though, if you haven’t watched some of the CAR ads, they are great.)
Advocate – NAR does a great job, in my opinion, of advocating at the federal, state, and local levels for the consumer and for the Realtor. It’s one of the things that they could do a better job publicizing to both the members and the public as a value to both. I’ve written about politics more than enough on this site, so I won’t go too deep here. I am writing this on a plane back from D.C. and the NAR Mid-Year Conference and Legislative Visits and can tell you, at least for the people representing Houston, that they not only know and listen to their local Realtors, but they know our issues. They know our issues, because instead of partisan politics, our issues support and protect all Americans regardless of their political leanings.
Educate – Again, NAR does great with this. Are there opportunities for improvement, sure, but overall I think that NAR does a great job offering excellent educational resources to their members. Whether the members take advantage of those or not is on them, but they are there.
Defend the Code – What I really wanted to write as the heading of this section is Defend the Code with Extreme Prejudice, but it just didn’t fit the flow. I want NAR and their state and local associations and the state regulatory bodies to begin working together to shred licenses of dead weight, garbage agents that are killing our brand. I know it won’t happen, but between drastically increasing the number of hours needed for license renewal and faster, stricter enforcement of the Code of Ethics and state regulations (by each state’s commission/regulatory agency) I believe we could start to weed out bad agents and brokers quickly.

The One Characteristic I Want in a New CEO

If you’ve never read my post called Realtor Tastes A Lot Like Travel Agent, it would probably help with the point I am about to make. I am a firm believer that if Realtors are going to remain a viable part of the American Dream then there must be a paradigm shift in the mentality of agents, MLS boards, and associations at every level. The bottom line is this: If we as a body are going to assume that our value is derived from having valuable information instead of providing value information, we will lose. Don’t believe me? When was the last time you had a client ask you about their Zestimate? Whether you want to believe it or not, the Zestimate, and Zillow for that matter, are relevant because the Realtor community continues to fail to provide the consumer with what they want without having to ask for it. The Zestimate is right as long as we don’t make it as easy for a consumer to get an estimate of what their home is worth.

The new CEO of NAR must understand this, embrace it with everything that they have, and drive the change needed to protect this industry for the future. They must force board consolidation in a big way. They must force local and state associations to create and aggressively market consumer-facing websites that include search, sold data (if allowed by law), VOWs, AVMs, and anything else that puts the local Realtor in the seat of the value provider, not Zillow, Realtor.com, Trulia, or any other aggregator. That’s it. That’s the number one thing I want to see in a candidate for CEO of NAR. Number one with a bullet.

On a quick side note, it would also be cool to see a member-oriented CEO. We’ve been without that since at least 2005.

What Scares Me

Between the recent T3 conference where a panel was convened, to published posts and articles, to the talk around happy hours at Mid-Year, I keep hearing something that, quite frankly, scares the shit out of me. The conversation somehow turns to something along the lines of “The new CEO should be a _______”. Insert woman, minority, young person, industry outsider, or whatever descriptive you can imagine. My personal opinion is that line of thinking is extremely dangerous. It’s going to be hard enough to find the right person without narrowing the pool. Personally, I don’t care if the person is 100 years or 35, male or female, black, white, or blue. I want the right person in place to lead the organization where it needs to go for the next 10-20 years. If someone on the selection committee or whoever it is that is going to narrow this thing down is operating with an agenda to have type x or type y of person be the next CEO, then they need to be removed immediately.

That’s it. 1234 words to tell you that I think the next CEO should be the right person for the job. You’re welcome. You’re never getting this time back.

Content is King, Kinda

May 7, 2017 By Chance 1 Comment

A couple of weeks ago I published a blog post lamenting the poor or, more often, non-existent follow-up practices of most agents by offering the option of using political advocacy as an opportunity for providing resourceful, topical content to clients and prospects. This week, as I started planning out my post, I ran into what some people might consider a little bit of writer’s block. So, I went back to the topic of follow-up for agents and the one thing I hear most when coaching my agents.

What do I send to a client or prospect? How do I do it without being annoying or invasive?

Coming up with consistent, relevant, topical content is tough. There’s no doubt about it. I’m a huge fan of both Chris Smith of Curaytor and Dan Stewart of Happy Grasshopper. I think that both of them are truly experts in not only putting together plans for quality content, but more importantly, in my opinion, understanding the psychology of agents, clients, and prospects. This understanding of the way agents and the public think allow them to formulate and fabricate follow-up programs and content, whether original or curated that can be game changers for agents. They are truly content kings, and if you’re interested, available for hire to help you with your marketing.

So, I’d like to take a few minutes and discuss content in general and then discuss why it may or may not be important.

In my opinion, here are the 3 C’s of Content, because I’m clever like that:

1) Curated

Curated content is non-original content that can come from any number of sources. It could come from social media, the news, other people’s blog posts, and/or just about any source you can imagine. For example, last week in our local market there were news stories from several outlets about how the calculation of people’s credit scores would be changing towards the end of the year as FICO adopted a new scoring system. This would be a great story to send to clients. It’s topical for real estate, it’s relevant to just about anyone in your database, and it sets you apart as a resource to your clients and prospects.

Curated content is perfectly fine for any agent out there. I find that curated content is awesome for social media, but certainly has a place in more traditional follow-up media like mass or programmed email. You could use several curated articles in a monthly newsletter setting or just a scheduled “touching base” email. The only real negative to curated content is if you’re trying to use your content to drive SEO to your site. It just won’t work as well. Which brings us to…

2) Created

Created content is totally your original content. You create the content, publish it to your website/blog/whatever and then link your email topics and social media posts to that content. Created content really gives you the opportunity to showcase your skills and expertise. However, the big drawback to created content is the time and effort it takes. Trust me, writing this blog, even just once a week, can be a drag to come up with good content and present it in a readable format. If you’ll recall, the second sentence of this particular post was lamenting my writer’s block before it turned it into the absolute gold you’re reading right now!

That being said, I am extremely particular about my content and create it almost exclusively for my follow-up. About the only time that I use curated content in my marketing or follow-up is on social media. For most everyone else that isn’t a total control freak on this stuff, I think a healthy mix of curated and created content is a pretty solid plan. There is, however, never a time for…

3) Crap

That’s right, there’s never a time for crap content. What is crap content, you ask? Crap content is stuff like the garbage HouseLogic content that NAR provides for you as part of your membership. Here’s a bunch of completely generic articles that don’t really pertain to anyone at all and are going to bore the shit out of your clients so much that they’ll unsubscribe from your list and you’ll never get a referral again. That’s crap. That’s a do to, not for action. Your goal with follow-up, and everything else, should be to do for, not to. I don’t care to see your dancing leprechaun on St. Patrick’s Day or some cheesy ghost gif on Halloween. That’s total garbage and I already have like 50 other assholes sending me that crap every holiday. Don’t do crap content.

Why Content Matters

It may seem like a pretty simple answer, but it really goes beyond the surface. The simple answer is because you need to be doing follow-up and if you’re going to send stuff out it might as well be relatively decent. But the truth of the matter is that your regularly scheduled, consistent follow-up is going to be the thing in front of your clients’ eyes more than anything else. As such, it is probably your number one brand extension. So, if you’re sending canned crap content, people are going to think of you in similar terms. If you’re sending resourceful, personalized, topical and relevant content, you will be seen in the same light. If your goal is to be the resource to your clients and prospects on all things real estate, then be that in your service, in your marketing, and damn sure in your follow-up.

Why Content Might Not Matter At All

On the other hand, it totally might not matter at all. As I’ve lamented on here more than once, Realtors, in general, do a horrible job at follow-up, if they even follow-up at all. Just about every measured and measurable statistic on Realtor communication, follow-up, etc. clearly shows that next to none is the norm in the industry. So, at the end of the day, maybe just sending something at all is enough. I mean, I’d much rather see a really cool video clip of how they turn the Chicago River green on St. Paddy’s than your dancing leprechaun, but, hey, if you’re the only one sending it to me at least I got something. The fact that you are doing anything is better than probably 90% of your competitors. So, while I’d certainly love to see you send something that isn’t crap, your crappy message is better than nothing.

So, I guess the bottom line, 1000 words after my writer’s block lifted, is that if you aren’t doing follow-up or CRM touches or social media marketing, please start. No, seriously, stop reading this and start right now. If you don’t have a CRM and aren’t using it you aren’t running a business set for continued growth. If you are, good job! If you’re sending crappy content, that’s ok for now, but promise me you’ll work on curated and created content. You don’t have to be an expert writer to create and you don’t have to spend hours scouring every inch of the interwebs to find good curated content.

Political Advocacy as a Lead Generation Tool

April 21, 2017 By Chance 1 Comment

A couple of weeks ago I was having lunch with a thought leader in the real estate industry when the conversation went down a rabbit hole on the subject of follow-up from Realtors to their clients. Better said, the conversation turned to how crappy Realtors are at follow-up. Either it doesn’t happen at all, unfortunately, or the follow-up usually is generic and uninteresting at best. Then, somehow, that segued into a political discussion, which isn’t all that unusual when we chat. It occurred to us, during the political discourse, that maybe there is a place for politics in Realtor follow-up.

I know what you’re probably thinking. We’re crazy. Politics and religion are the two things you’re supposed to avoid, right? Wrong, at least in our opinion. Here is a summary of our thoughts and why we believe that not only is it ok to talk politics with clients, but it should be an imperative for Realtors who care about their clients, the industry, and their future in it.

“The punishment of wise men who refuse to take part in the affairs of government is to live under the government of unwise men.” – Plato

First, let’s talk about politics in real estate. I’ve written about it here before because I do truly believe, in the words of our PAC Director, that “if real estate is your profession, politics is your business.” There is no other organized group, certainly not one with over a million members, that advocates at the national, state, and local levels for protection of private property rights, the promotion of home ownership, and the future of the real estate industry. Realtors are it, the only ones standing between a powerful government and a single home owner. Think about that for a minute and let it sink in. So, if Realtors are interested in providing value to their clients in an effort to combat the reputation that they just open doors and go to happy hours, why wouldn’t they use this information to their advantage? (For the record, if you are a Realtor or affiliate member of a Realtor association and aren’t investing in your PAC, you should really reconsider that.)

From a macro level, there is one glaring problem with our PAC. We raise a significant amount of money to fund our initiatives and endorse candidates that support our mission. That’s great. We even vote on fairly regular basis, kinda. But what we don’t do is use our grassroots abilities to motivate more people to vote. As a Trustee of TREPAC, I can tell you that I have had this exact conversation with elected officials. The money is great. The fact that Realtors are involved in the process is great. The inability for Realtors to take that influence and turn out the vote amongst our clients and communities is in manager-speak, “an area for improvement”.

Addressing the “don’t talk politics and religion” mantra, here’s the good news. While Realtors may endorse candidates that not everyone agrees with, our issues are almost exclusively non-partisan. So, let’s focus on the issues. Lowering property taxes, supporting sensible lending practices, promoting transportation solutions, reigning in eminent domain abuses, limiting overreach from local municipalities and homeowner’s associations, and the list goes on. None of these is particularly partisan. Republican, Democrat, Independent, or Pastafarian, it would be hard to imagine a homeowner who wouldn’t like a more transparent property tax process or who wouldn’t want to make sure their local municipality doesn’t do something crazy that would affect their property value or usefulness. I think that most people will get behind the idea that we don’t need a repeat of the irresponsible lending practices that led to the financial meltdown of mid-2000’s. Alleviating traffic congestion? Check. Making sure water, electricity, and other utilities and conveniences are not only available now and into the future, but that they are affordable too? Check. So, so far I’m not hearing a lot of controversial issues here, are you? Stick to the issues.

The National Association of Realtors, your state association, and, hopefully, your local association are all involved in this process and publish talking points, issues and legislative updates, ask for Realtors to respond to calls to action on issues, get involved in local races and generally have their finger on the pulse of issues that affect you and your clients. Do you subscribe to the updates they send out? Do you know your political advisory team(s) or governmental affairs staff or volunteer leaders, PAC trustees, association staff, and/or local Realtor leaders? If the answer to these questions is no, you should get to know them. Trust me, as one of these people, we love when agents want to know what’s going on in the world of politics. Make it a point to know the issues and the people working for you on these issues.

So, how do you use this as a lead generation tool? It’s pretty simple, really. Once you know the issues, whether you have a CRM (which you should) or are just using email, your phone, or social media, pass the info you learn to your past clients and spheres of influence. If your goal is to be seen as the real estate resource to your prospects and past clients, then be resourceful. I assure you it is better than the nothing most agents don’t send out, and it is certainly better than a dancing leprechaun wishing someone a Happy St. Patrick’s Day. This kind of information is pertinent to your client, timely, and puts you in the position of expert. Encourage your clients to contact their representatives and let their voices be heard. Send out a schedule of hearings, if available, and get your base motivated to join you in protecting the American dream of homeownership. That’s truly creating a trusted relationship. Dancing leprechauns are cool and all, but building long-term, trusted relationships is way cooler.

Why Rising Mortgage Interest Rates Are Good For Realtors

March 30, 2017 By Chance Leave a Comment

Much ado has been made over the impending doom of rising mortgage interest rates as response to the Fed raising its benchmark rate this month. If I had a dollar for every “Buy now before rates get too high” post on Facebook from Realtors around the country, I wouldn’t be rich or anything, but I could buy a decent lunch or dinner. I certainly hope, for their sake, that they result in business coming their way. However, in the big scheme of things, I think it is relatively short-sighted and they would actually benefit more from the rising interest rates they think are going to be a market killer.

There, I said it. Rising mortgage interest rates are a good thing for Realtors in the long-term.

Don’t get me wrong, I’m not advocating for Carter-era rates or anything. That would be terrible and would definitely be a market killer. What I am saying is that a return to 2001-2006 rates would be a good thing, in my opinion. So, here’s my case for higher interest rates…

Higher Interest Rates Indicate a Healthier Economy

The quantitative easing that has resulted in the low Fed rates since the economic downturn began in ’07-’08 is neither sustainable nor healthy for the overall economy. The Federal Reserve should not be in the business of essentially printing money to prop up the economy. This is not intended as a political statement, but fact based on testimony from multiple Fed Chairs and members of the Board. The fact that rates are increasing is a sign that the Fed believes the economy is on the mend.

A healthy economy should be a no-brainer for a Realtor to see the benefit in, right? The healthier the economy the more jobs created. The more jobs created, the more people who can qualify for loans. The more loans qualified for, the more sales. You do the math. In most markets there is a ratio of jobs created to how the market can handle rising mortgage interest rates. For example, for every X,000 jobs created, interest rates could go up Y% without negatively affecting the housing market. If you have the interest and a state or local real estate economist, feel free to inquire about it for your market. Regardless, a healthy overall economy typically equates to a healthy real estate economy.

Higher Interest Rates Bring More Flexible Financing Options

Let’s take a total hypothetical here. If you had the option of investing in a mortgage not that paid 4% interest or in an index fund that was currently blowing through the roof, which would you choose? Exactly. That’s one of the many reasons we have been so reliant on government-sponsored entities over the past decade. For the record, if the recent downturn in the housing market didn’t teach us that reliance on government backing is bad, I don’t know what will. We bankrupted Fannie and Freddie.

As mortgage interest rates rise, private money returns to the market. Because, historically, mortgage debt is a relatively safe bet, the returns don’t have to be as sky-high as the Dow Jones these days. As private money returns to the mortgage market, more flexible and creative loan products become available, we become less reliant on government backing, and a trickle-down effect of great things happens.

Higher Interest Rates Means More Moving

Again, let’s play a hypothetical game. Let’s just say that you wanted to purchase a home. You just got married and you are looking to start your new life together in your first home. Sure, you’ve talked about kids, but it’s still in the future for you. All you really need is a home for the two of you. In a 5.5%-7% interest rate environment, you buy a home for just the two of you. On the other hand, in a 3.75%-4% interest rate environment, for the same amount of monthly payment, you can go ahead and buy a larger home for when the kid or kids do come. Which do you do?

Higher interest rates keep that first-time buyer from skipping the first-time market altogether and moving straight into the move-up market. Now, that first-time buyer stays a first-time buyer and, in a few years, they become a move-up buyer. So, for the Realtor, that one transaction just turned into three if they play their cards right. Otherwise, in a low rate environment, the buyer buys a bigger home and stays there longer.

Higher Interest Rates Means More Inventory

Here in Houston, we have a serious shortage of home inventory. I know we are not alone in that condition nationwide. The example above should illustrate the point of this section. As more people move more often instead of staying in their homes longer, more inventory is available. More inventory leads to more level markets. More level markets lead to more opportunities for buyers. More level markets lead to healthier price appreciation rates instead of spiking prices. All of these are obviously good and lead us right back to our first point about a healthier overall economy.

So, there you have it. My take on why rising mortgage interest rates are good. I’d love to hear your thoughts.

Be Accountable

February 9, 2017 By Chance Leave a Comment

Being an entrepreneur often means being on a metaphorical island all by yourself. Not very many people understand how your time is pulled in a myriad of directions, employing skills (or sometimes lack thereof) that you didn’t know you had, and becoming a jack of all trades while only a master of one. It’s not unusual to see the tasks that you really need to get done get set aside in favor of whatever you feel needs to be done right this second. Naturally, as soon as you put that fire out, the next one pops up. The result is that you continue to delay the things that drive your business while you take care of minor things to keep your business running.

The problem, as I see it, is not a delegation problem or a time management problem. Too often, the things that are distracting you from accomplishing your priority tasks are things that require it be you and need to be done in a timely manner. In my opinion, this is an accountability issue. Generally speaking, unless you have a true partner, a business coach, or a mentor relationship in place, you are probably also responsible for holding yourself accountable for your actions. I think that is a problem when it comes to 99% of the people out there. It’s hard to come home after a 20 hour day and say you didn’t work hard or get things accomplished, even when you didn’t accomplish the things your business really needed for you to accomplish.

So, how do you, in a world of real distractions, set everything aside and focus only on the tasks that truly need to be accomplished?

You have to, as far as I can see it, find a way to be held accountable. The problem with that is most entrepreneurs also don’t really care for being held accountable and so they seek out someone who will act like they are holding them accountable, but really is just having a five-minute conversation with them. What the entrepreneur struggling with accountability issues needs is someone who will, legitimately and with a blow torch, hold their feet to the fire.

So, who is that person? It depends. I think there are more examples of who that person isn’t than who that person is. That person isn’t, usually, your spouse. It should never, in my opinion, be an employee. It usually isn’t your best friend, brother, sister, parent, or anyone else that either a) doesn’t understand what you’re really doing, and b) isn’t tough enough to hold you truly accountable. Frankly, I think that the best person for this job is a coach. Because they are independent, they can do or say whatever it takes to get you to do the things you need to do. Moreover, because you pay for them, you are more likely to get your money’s worth. It’s kind of like the difference between getting a gym membership and hiring a trainer.

The bottom line is this: if you’re struggling with achieving the things in your business that you need to do to be successful, I believe an accountability partner is the key to getting back on track. Try it for a few months and see if it works for you.

Book Review: The Miracle Morning for Real Estate Agents

September 26, 2016 By Chance Leave a Comment

The second book in our brokerage’s Book Club is The Miracle Morning for Real Estate Agents, an adaptation of Hal Elrod’s bestselling The Miracle Morning. On this version, he gets help from Michael Maher, Michael Reese and Jay Kinder. I swear when I ordered this for our crew I had no idea that it actually picked up the same story from our first book, Seven Levels of Communication, which I reviewed here.

Now, in fairness, while I found this book very useful, you have to take what I say here with a grain of salt. Go back and look at the time stamps on these posts. I am clearly not a morning person. If this had been named The Miracle Midnight for Real Estate Agents, it would have been perfect for me. That being said, this is a small book packed with valuable info and an easy ready because of the parable format similar to our last book.

The book revolves around a pretty simple acronym that will walk you through a very solid morning routine that is not only designed to put you in a powerful mindset for the day, but will also probably make you healthier, both mentally and physically. I can tell you that by just putting two of the items into my morning routine, I can feel the difference in how I approach the day. Oh, and it took about five minutes to do them both. Seriously, it’s that easy. Other parts of the routine I do at different times of the day and, still others, I need to work on.

Despite the fact that this story picks up after Seven Levels of Communication, I would probably recommend someone read this one first, get the routine to the habit stage of acceptance, and then read Seven Levels. I think you would be more prepared for taking on the things in Seven Levels if you were already doing the things in Miracle Morning. The mindset and attitude that will result from taking the steps in this book will make your ability to digest and execute the things from Seven Levels much easier.

In a business where it is easy to get frustrated, get complacent, and/or just get lazy, executing the morning ritual you find in this book is a nearly foolproof way to keep yourself focused and moving forward. I’ve said it many times, but your mindset drives your attitude which drives your success and this book will teach you how to start each and every day with a bulletproof mindset. Go read it and start implementing the steps today!

Next month’s book is Start With Why by Simon Sinek. Give it a read and let me know your thoughts.

Getting Ready to Get Ready

September 17, 2016 By Chance Leave a Comment

Have you ever found yourself facing a project to complete but, instead of starting, first you feel like you need to do some research, or get organized, or clean your office? Or maybe it was a personal goal like a diet you wanted to start, but you just need to get through this weekend first because you’re going to be out of town? Or, my personal favorite, have you ever been asked if you were ready to start doing (insert thing you’re supposed to be doing here) and simply answered no because you before you start you needed to do (insert thing you think you need to do first here).

At the end of the day, it’s all procrastination.

The question that matters for the purpose of this post, though, is why. Why are you putting off what you know you need to do, what you know you need to do? In my experience the answer generally boils down to one of two things, or sometimes both. The first is laziness and the second is a desire or need to have whatever the project is 100% perfect before unveiling it to the world. The first one is the easiest to tackle, so let’s get that out of the way.

Laziness

If you’re lazy and you know it clap your hands. Hopefully you aren’t clapping your hands right now, but some of you may be. So, without coming off as horribly rude, if you did, update your resume and get out of here. Real estate is a 24/7 hustle. Sustained success in this industry is not for the lazy. I hate to burst your bubble, but there are no overnight successes and HGTV isn’t waiting outside your testing center ready to give you a show as soon as you pass your licensing exam. Truth be told, we have enough lazy Realtors in the industry. We don’t need another one.

So, you can either get your ass up and go to work or get out of the way of those who do. The choice is yours.

Now, let’s get to the real point here.

Getting Ready to Get Ready

The idea of getting ready to get ready, or procrastinating in exchange for action is neither a new concept nor is it really unnatural. It’s why procrastination is such a problem for so many people. I mean, how many hundreds of books have been written on the subject? When you see people who seem to accomplish a great deal, it is usually not a natural thing. It’s usually a practiced skill, like any other skill. But there’s more to it than just having the initiative to tackle a project. Anyone can start on a project. The key is to finish your project, at least enough to launch it.

It Will Never Be Perfect

Do you own a smartphone? If you don’t, we need to have another discussion, but for now we will assume you do. Every couple of months I’m sure, like I do, you get a new update to the software on your phone, right? Of course you do. So, here’s the question. Why didn’t Apple or Samsung or LG or hopefully not Blackberry wait until every single aspect of their software was 100% perfect forever before releasing it? I mean, aren’t these updates just an admittance of failure?

No, of course they aren’t an admittance of failure. They’re a normal part of auditing systems and updating them for what is relevant at the time. Why then, do we feel like we have to have every aspect of a project perfect before releasing it? Our database has to be perfectly organized, classified, and every aspect of our follow-up system in place before we would even consider the idea of sending an email. We wouldn’t dream of publishing a website without every single last detail being perfectly in place. But why?

How about instead, as you organize and classify your database, you also call them? How about you put your follow-up program to work right now instead of waiting until you’ve written or created every single piece of content that will go out over the next 24 months? The bottom line is that it will never, ever be perfect. Ever. You will make adjustments as you go along or you will find yourself with the most perfect yellow pages ad of all time. In the immortal words of Nike, Just Do It!

You Don’t Know What You Need Until You Do

Until you start, you won’t really know what you need to do to finish. You can plan and scheme and dream, but until you get your hands dirty and actually start, you won’t know what you need to be able to finish. Dan Sullivan, executive coach and co-host of the popular 10X Talks podcast, calls it the 80% Principle. Based on all of the plans you make, you’ll probably be able to finish about 80% of your project. 80% is good enough. Launch it and then put the finishing touches on it. Seek counsel, audit, adjust, and continue to do so at regular intervals to ensure that your plan stays on track for the long-run.

Its A Marathon, Not A Sprint

I get it, you’re a Type A personality. I know. We all are. You’re a control freak. We all are. You feel like unless it’s ready it will make you look unprofessional. I get it. We’ve all been there. Remember, Rome wasn’t built-in a day and neither will your business be. Ten years from now you will likely look back and laugh at how much you worried over this stuff. The point is that if you never start the journey, you’ll never know. Sometimes the first step is the hardest, but, once you make it, each ensuing step becomes easier and easier.

Very Few Others Are Doing It

To wrap this up, let me drop a bit of unadulterated honesty on you. 90% of your competition isn’t doing it. Doing what you ask? Anything. Truly, they aren’t. Less than half of your competitors are using a CRM (and most probably aren’t really using one, they just pay for one), fewer than 10% use video, and the list goes on and on. Almost every statistic available on what agents do for follow-up and marketing is pretty embarrassing, really. So, as you sit there fretting over whether or not whatever you’re working on is good enough, just remember that 80% of anything is way, way better than 0% of nothing.