The Recession

A Recession is a Terrible Thing to Waste

Article written by Bob McKinnon

We in real estate experience a recession every seven years on average, twelve of them since 1929. We all know this is a cyclical business yet every time we go through down turns we act surprised and hear the same sorrowful laments. Each down turn is different in nature due to compounding economic factors of the time, but the effect is the same for our industry. Recently, I heard Brian Buffini use this title phrase and it sent me reflecting on some truths of our business that may possibly help you now or in the future.

No pain no gain. Pain, if properly framed will always bring about gain. What a frustrating place to be to have lots of pain with no gain at all. We believe we are near or at the bottom of our crisis remembering real estate is always first in and first out of a recession, so let’s make sure we do not experience the pain of the last three years and miss the gain. Here are six lessons from my experience.

Expect the cycles and plan for them. This is not “rocket surgery” for crying out loud! What goes up will always come down. If we are in a recovery now knowing our trending let’s look ahead to 2017-18 and be ready. Planning ahead is what good leaders and business people do. We have an echo boom coming which will bring a whole new opportunity to our industry so do you know who they are and what they will want? As surely as it is coming it will go or geo-political events will interrupt it. OK? Think, read and be ready.

Save and develop reserves in the good times. You could not have enough cash reserved to endure a four year down turn. You can however have equities in property, building cash and loan value. You can grow and protect your credit. You can pay off as much debt in the good times and limit your spending. I believe we are entering a period of national frugality which is so smart. We realtors love to drive, wear and live in our reserves which may prove very foolish in the future when we could be turning it into equity and investments instead.

Brail the marketplace and know where it is trending. Take a Macro view of things by being active in realtor groups, reading realtor publications and attending local business or networking meetings. Reading and paying attention to the business news from reliable sources is a must. I believe there had to be an awareness, even some lack of responsibility about putting millions of people into houses with little down payment, weak appraisals and stated income loan approval that we knew would not work. When you see and feel bad business practice, know it will end and not well for anyone no matter what the temporary gain.

Realize the opportunity in any market. Many speakers remind us that the market simply is… so what difference does it make because there is opportunity in both up and down markets. Buyers or sellers market…so? In the early 80′s those who learned all inclusive trust deeds and seller financing did well in 20% + interest rates. Likewise, in the early 90′s prudent realtors did very well moving into the REO and short sale business quickly. Remember life itself (marriage, divorce, births, deaths, transfers etc) continues to drive the majority of the demand for realtors. Always have faith that real estate will continue to change hands, so seek and find the opportunity to bring more value to your marketplace. The pie gets smaller but the size of your piece is up to you.

React quickly to changing trends . I watched in horror a year into this down turn as realtors made no adjustments at all. Overhead stayed high far too long. Offices filled with new and non-productive agents. Agents were complaining about the slow down yet doing nothing at all differently except demanding more commission. REO’s were soaring and realtors made no attempt to learn the systems or make connections with lenders. Therefore a few who read the market got in early and are still there with consistent flow of business while the Johnnys come lately pound on the door wanting into a room that is already full. Some never see the changing trends but sadder yet some see it and do nothing about it. So how to you boil a frog? Don’t tell him the water is getting hotter and he will do nothing about it!

Basics will always win. Throughout my forty years in real estate I have continued to observe companies and individuals that move out ahead of the pack. I usually observe no new tricks. Sound vision and leadership; the discipline of daily execution of basic activities like recruiting, prospecting, practicing skills; innovative marketing and branding; these are the things that still win in the battle for market share. True innovation is rare, but it is there, and usually it is just a slightly different approach to some age old business and personal practices.

We have been through a very tough time that has hurt so many. I relate to that pain myself. If you are ready to move on, even grow from this experience, realize there is always gain from pain. With great respect and regard for my fellows I say, seek the gain and win the day.

Before You Show An REO!

I want to thank Rick Amdahl of Century 21 for sharing with Madison’s Keller Williams Realtors his perspective on the local REO market. Rick Amdahl is a local REO expert, having listed 314 and sold over 220 REO listings in 2009. Below is a bullet point list of aha’s and points to remember from his training.

*Rick Amdahl got into the REO niche because of the relationships he has built over the past 34 years, not by completing BPOs.

*The Buyer’s Agent needs to know the process of an REO and accept it. There is no flexibility to it.

*The REO Process Defined

• Bank sends notices of late or non-payment
  
• Bank seeks action and receives a foreclosure judgment.
  
• Original owner has a 6 month redemption period. If redemption does not occur, there is a confirmation hearing. At this point, the bank is the owner.
  
• Property is inspected, rekeyed, secured and preserved.
  
• BPOs and appraisals are ordered.
  
• The property is listed. Depending on the bottom line, the bank will either repair the property or sell as is.
  
• Once an offer is accepted, normal contract to close period is around 30 days.
  

*Buyers need to understand that there is risk and additional work involved when buying an REO. Not all Buyers should try buying an REO!

*Once you submit an offer, it takes a minimum of three business days to get an answer. This can be frustrating for you and your buyers however there are likely several decision makers involved. In addition, Banks want as many buyers to have the opportunity to consider the property so they are less likely to respond quickly to your offer if the property was just listed. Be sure to tell your Buyer that they should anticipate waiting 3-5 business days, if not more.

*When submitting your best offer, prove your Buyer is ready, willing and able! Be sure that your buyer’s prequalification letter is clear and thorough with a reputable lender. In many cases, the bank will require your buyer to be prequalified by the bank owning the property to verify that they are able to get financing. To avoid delayed closings, many banks charge penalties of $150 / day+. Be certain your buyer can get this deal together!

*Cash buyers should be willing to put 10% non-refundable earnest money down and prove that funds are deposited and available.

*Earnest deposit should be significant to prove your buyers commitment to purchasing.

*The appliances may not be owned by the bank. Appliances are considered personal property. If appliances and or personal property is abandoned and can be valued over $500, the bank needs to go through the process of a property eviction.

*”AS IS” means, “AS IS”! The bank has little to no knowledge of the properties history. There will be no condition report. Your buyer should have the property fully inspected so that they are aware of what they are buying.

*Addendums are sent with the counter offer and are templates that shouldn’t be altered.

*Agents who list REOs must have a healthy cash flow. At times the Agent may have receivables due of well over $25,000.

*Co-broke Agents are often frustrated because…

• They ask questions that the listing agent cannot answer
  
• Are anxious to receive quick answers
  
• Treat an REO as if it were a typical transaction
  

*Email is the best way to communicate with an REO team due to the number of listings they manage and to ensure no errors are made.

Because REOs are a significant sector of Madison’s real estate market, it is important for you to learn how these transactions are different so that you and your buyer can adjust accordingly. Keller Williams Madison West will continue to offer training on REO, BPO & Short Sales. In addition, there are several online courses offered on KWConnect.

CLICK HERE to access these trainings.

 

You… on You Tube?

I think you are on this You Tube!

Did you hear the latest with Realogy? Realogy, owner of C21, Coldwell Banker, Sotheby’s & ERA cancelled all of their national conventions this year. Noted as the most vulnerable real estate company per the S&P, Realogy has had to make changes across the board to make ends meet.

I don’t wish ill will to Realogy or any of its franchises, however I think it is a really big mistake to cancel such an important event and tradition. Meanwhile, Keller William’s annual national convention is nearly SOLD OUT. There are less than 1,000 seats available, so register today!

FAMILY REUNION

When: February 20-24^th

Where: New Orleans!

Who: YOU!

For all the details visit http://familyreunion.kw.com

REGISTER NOW

 

 

 

 

 

Real Estate Training

 

Free Real Estate Training

 

Module 1: Mindset/Lead Generation        January 8th    9am-3pm

Module 2: Working with Buyers        January 22nd     9am-3pm

Module 3: Working with Sellers        February 5th     9am-3pm

Module 4: The Listing Presentation        February 19th    9am-3pm

Module 5: Advanced Lead Generation    March 5th     9am-3pm

Module 6: Negotiations &             March 19th     9am-3pm

     Contract to Close

 

Classes trained by Chariti Gent at Keller Williams – Madison West Market Center located at 3 Point Place, Madison, WI 53719.

Classes are free of charge. Materials will be provided.

Please RSVP to Jessica LeFan at jlefan@kw.com if you plan to attend.

There is important information you will need to receive before attending each session.

 

We will also be offering contracts and internet lead generation courses via webinars in the month of January and February.

If you have interest, please contact Jessica Fox at 608-662-9626 or jessicafox@kw.com for a list of classes, times and a link to participate.

 

 

 

 

 

Madison Seller’s: LIST YOUR HOME NOW!

It’s the time of the year that many Madison area home seller’s either take their homes on the market or put off listing their homes until Spring. For anyone in this position please consider the following reasons why you may be making a big mistake by waiting.

1. The Tax Credit Extension was specifically created to stimulate the fall and spring real estate market. The incentives offered are creating a vigorous real estate market. It would be silly to miss out on the opportunity. For details on the Tax Credit Extension, CLICK HERE.
   
2. The Extension has created a secondary market that has been somewhat stagnant the past year+. For the first time in a long time we are starting to see sales in higher priced property. If your home was listed and expired, you may want to give it another try with a strong Realtor.
   
3. Interest rates are still very low. Who knows what will happen after the April 30^th deadline to the Tax Extension.
   
4. People who look for a home during the Holidays are very serious buyers—who else would be out there looking at this time of year?
   
5. Serious buyers have fewer houses to choose from during the Holidays and less competition means more money for you!
   
6. January is traditionally the month for employees to begin new jobs. Since transferees can’t wait until spring to buy, you must be on the market now to capture that market.
   
7. Houses show even better when they’re decorated for the Holidays.
   
8. Since the supply of listings will dramatically increase in January (Spring Sellers), there will be less demand for your particular home. Less demand means less money for you.
   
9. Buyers are more emotional during the Holidays, so they are more likely to pay your price.
   
10. You can still be on the market and have the option to restrict showings during the actual Holidays.
    
11. The Holidays provide late winter buyers with vacation time to “window-shop” listings online—you need to be there when they are looking.
    
12. Why not? Worst case scenario is that you don’t accept an offer during the holidays. Best case is that you find a ready, willing buyer that offers you a price you can’t refuse!
    

Curious what your home’s current sale price value is? CLICK HERE for an instant calculation.

If your home were to sell, do you have your dream home picked out? CLICK HERE to view all real estate currently for sale.

 

The Extended Tax Credit

 

TAX CREDIT 2.0

Understanding the Extended Home Buyer Tax Credit

 

 

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:

• Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
• Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

 

Who Qualifies for the Extended Credit?

• First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
• Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.
• To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

 

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000. The maximum allowable credit for current homeowners is $6,500.

 

How is a Buyer’s Credit Amount Determined?

Each home buyer’s tax credit is determined by two additional factors:

• The price of the home.
  • Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.
• The buyer’s income.
  • Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009,  single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

 

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

 

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

 

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

 

ARE YOU A GOOD “MOVE UP BUYER” CANDIDATE?

 

 

Madison’s “Move Up Buyers” benefit in several ways.

• The $6,500 tax credit may be the difference maker for you to take advantage of a move up. To better understand how this tax credit works, CLICK HERE for information provided by the IRS.
• Interest rates are very low. I would be happy to connect you with a reliable lender offering the best rates and mortgage options.
• Although a seller may take a loss on the home they sell, the gain received is likely to be much greater. The illustration above is a great example.
• Many of the “Move Up Buyers” need to sell a home that is priced in the hottest price ranges for Dane County real estate sales. In fact, properly priced homes in good condition continue to sell quickly. The initial $8,000 tax credit created lots of activity and sales for homes priced under $300,000.
• On the flip side, the home purchase is in the price range that is currently suffering the most. In Dane County the following are the hardest hit price points are $400,000+. In September, the following stagnant sales occurred:

 

 

 

 

 

 

In fact, Dane County currently has over 65 months of “inventory” for homes in the luxury home price range. In the past year, only 13 homes have sold over $800,000. What a great time to buy your dream house at the bottom, before the market rebounds.

 

So, are you a good candidate to take advantage of the tax credit?

Visit our website www.KWMadisonWest.com to:

• Calculate and research what your home would sell for in today’s real estate market. You will receive two instant estimates once you enter your homes information.
• To start dream shopping for your “Move Up” dream home. Once you log in you can save all of your favorite properties and get acquainted with the market from the convenience and privacy of your computer without having multiple Realtors contacting you. This is a service I provide to all of my friends and clients. Feel free to pass this on to anyone you know that would appreciate it.

 

 

Jessica Fox, CEO

P: 608-662-9626

W: www.KWMadisonWest.com

B: www.ThrivingAgent.Wordpress.com

E: jessicafox@kw.com

REAL TRENDS NAMES KELLER WILLIAMS #1

2 Min. Tech Tip – How To Max Out Craig’s List Ads for Internet Leads

CLICK HERE to watch Jessica Fox’s 2 Minute Tech Tip: How To Max Out Craig’s List Ads for Internet Leads

Step One: Create a Craig’s List Account. Read the instructions provided at www.craigslist.com

Step Two: Write an interesting ad that does not include property address, too many photos or too much detail. You want the consumer to have to visit your hyper link which offers all the photos, property tour and details of the property. If you give them all the details up front, there is no reason for them to look further. You want them to visit the back office of your website, start surfing and capture them as a lead. The ad should have hyperlinks driving traffic to your mlsfinder.com. Once you build the specific links you want to use, you need to shorten them using bit.ly

Example of a bad ad:

123 Main Street, Madison

This 3 bedroom, 2 bath home is situated in Swan Creek Neighborhood in Fitchburg. This 3,000 square foot open concept home features a master suite, media room, formal dining, open concept kitchen to living room and generous sized bedrooms.

 

Example of a good ad:

Ideal For Those Who Entertain!

For anyone who loves to entertain, this is the perfect house. Features include parade home inspired media room and wet bar, billiards room, large spacious open concept feel throughout. This large home offers three bedrooms and multiple baths. To view this home call Joe Schmoe at 608-000-0000 or visit www.bit.ly.co for a full property tour.

If this home isn’t exactly what you are looking for, feel free to visit my website to search all real estate currently for sale at www.joeschmoerealtor.com

Looking for a foreclosure or short sale to buy? Visit www.bit.lyshorsales.com for a full list.

(In this example, the links are moot… however, you should get the point!)

 

Step Three: Repost every other day. Consider having multiple ads (different of course) for each property so you can repost more regularly.

 

If this sounds great, but you don’t have the time to do this – call Jessica Fox and she can connect you with Virtual Assistants that post for $10 and repost for $5.

Jessica Fox – jessicafox@kw.com

Keller Williams Realty

608-662-9626

 

 

The Importance of “The Office”

As the Manager / CEO of Keller Williams Realty, I am well aware of the challenges Madison area real estate agents face. The current economic uncertainties, challenging real estate transactions and unique issues that agents are facing are enough to pollute an Agent’s mindset. And because of that, it is critical that real estate agents surround themselves with good.

I am proud to say that the Keller Williams Madison West office is one of the best places on earth for a real estate agent to prosper. And it starts with our office culture. It is a real relief to be surrounded by fellow agents that help, support and genuinely like you! It is rewarding to watch my Agents “walk the walk”. They are constantly providing support and advice to one another; not with the intention to ‘get something for it’. By giving to each other, they get so much. The camaraderie that exists in our office cannot be bought. It exists simply because our culture and standards support it.

My staff live by the same philosophy of giving. The staff works for the Agents, the Agents don’t work for company. This is a novel concept that few real estate firms believe in. I think that is a real shame because the Agents are my customers!

We offer our Agents what they need to thrive in this real estate market. Beyond environment, we offer relevant and timely training. Supported by www.KellerWilliamsUniversity.com and our 24/7 Online University www.KWConnect.com, we can provide an agent what they need in a ‘ just in time’ learning format. We also offer a minimum of 6 trainings per week which cover transactional issues, contracts, best practices, short sales, clever lead generation ideas and technology support & training. As a trainer and eternal student I don’t believe in “death by training” but rather “learning for earnings sake”.

Lastly, we have a lot of FUN. Today is our 4^th Annual Chili Cook Off & Halloween Costume Party. This tradition has many great photos to tell the story of the fun we have and will continue to have. I may not truly be Wonder Woman, but I promise all of my Keller Williams Madison West Agents that I will do all in my power to make the office a place they can come to… to get whatever they need to prosper!

-Jessica Fox, CEO Keller Williams Madison West

Our New Agents Are 15X More Successful!

The results are in. Newly licensed Realtors that join Keller Williams Realty Madison West are 15X more successful! After tracking stats of all new licensees and their sales for the past year, we have proof that our training and coaching make all the difference. To schedule a confidential one-on-one business consultation with one of our coaches, contact Jessica Fox or Chariti Gent at Keller Williams Madison West. This business consultation is free and is certain to improve your results and bottom line.

We have also improved our scheduling software to be certain we are giving our new licensees all the time and support that they need.

To begin your scheduling, simply use the following steps (it’s really easy!):

1. Go to www.riseproductivitycoaching.com.
2. Click on “Check Availability”.
3. You will access www.timedriver.com, our automated scheduler.
4. Click “Check Availability”.
5. A dialog box “Select a Day and Time” will appear. Click on the date that you would like to schedule.
6. Click on your preferred time that’s available ON THAT DAY. If a time you prefer is not available on the day, you will need to choose a different day and time.
   
7. A dialog box “Provide Information” will appear. Fill in the fields and click NEXT.
8. A dialog box “Review and Submit Appointment Request” will appear. Click SUBMIT. You will receive email confirmation of your appointment within minutes.