The 'unbelievable' business of real estate
Realtor Notebook
By Teresa Boardman, Thursday, August 7, 2008.
People who are in sales are taught to be positive at all times. There is a car salesperson at the local dealership who is always positive. When asked how things are going he will say, "Great!" or "Fantastic!" If asked some specific questions, like, "Did you sell any cars this weekend?" he will give an honest answer. If car sales are up -- or down -- for the month, he will recite the numbers. I like dealing with him, and enjoy talking to him, and I trust him. I have just learned not to ask how things are going, because the answer will always be the same: "Great!" or "Fantastic!"
It is the same in the real estate industry. Some of the local offices give real estate agents a kind of pep talk, and put a positive spin on the current real estate market, which is "craptastic" in my area. I hear a lot of sad stories, too, from people who are in danger of losing their homes, and deal with sellers who are in a panic because there are no offers. If asked how it is going, most agents will give a positive response. My favorite is: "Business is unbelievable." That phrase can mean anything, so I am comfortable with it.
Some will admit that the market has been better and that it isn't going so well for some but they are doing just fine. The reasons they are doing just fine usually have to do with how they run their business. They are special, and current market conditions are not having an impact on their bottom line. Meanwhile, I keep running into real estate agents in the strangest places -- like the former colleague who helped me find a battery at the local battery store where he now works full-time, and the other agent who helped with the part I needed for my Blackberry at the phone store where he now works part-time.
Being positive is a good thing. It can't hurt even in a down market, but we need to be honest, too. Some agents in my market don't bother to look at the numbers and just go with the propaganda that is handed to them at their weekly sales meeting, or the spin put on the real estate market by the local and national boards of Realtors.
I recently posted some numbers on my blog that some in the industry did not want published: the actual number of foreclosures and short-sale homes on the market. The local boards of Realtors have the ability to get the same numbers. In fact, one of the boards did get and eventually publish the numbers in a responsible, thorough way. The hesitation is probably because they don't want the general public to get the bad news. The boards exist to help Realtors, and they may have feared that bad news would be bad for business.
Foreclosures are already having a negative impact, and consumers need only to drive down the street or turn on the news. The news media tend to take the real estate news and make it as dramatic as possible. Reporting real numbers can't do any more damage than the vague generalities and sweeping, inaccurate, sensational statements made by some in the media. Facts might just be more helpful at this point.
As real estate professionals I think we need to remain positive to be professional, but I also think that we need to give consumers as much information as possible, even if it is negative. We each have a unique opportunity to educate consumers and to become a trusted source of information. We have information before the news media do. It is possible to be honest and positive at the same time, just like the car salesmen.
Teresa Boardman is a broker in St. Paul, Minn., and founder of the St. Paul Real Estate blog.
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Submitted by Alexis Eldorrado on August 7, 2008 - 4:31am.
Alexis Eldorrado
Managing Broker
www.Eldorrado.com
Submitted by Catherine Read on August 7, 2008 - 4:47am.
I think the "Stockdale Paradox" - so named by Jim Collins in his book Good to Great - sums it up nicely: "You must never confuse faith that you will prevail in the end - which you can never afford to lose - with the discipline to confront the most brutal facts of your current reality, whatever they may be." This quote is attributed to the famed POW Jim Stockdale.
Being reality based while staying positive is exactly what consumers need to hear from real estate professionals. Real estate markets are cyclical and there have been down markets before. The nature and magnitude of this financial crisis brings a different dimension to this particular cycle, but someday it will be a history lesson and a case study. We have to work together to work through it and get to the other side.
Great column as always Teresa!
Catherine S. Read
Creative Read, Inc.
Submitted by Mark Owens on August 7, 2008 - 4:51am.
It is said that sales trainer Tom Hopkins was the one who coined the answer to the age old question "How's the market?".... He trained agents to say..."UNBELIEVABLE". The perfect optimistic sounding non-answer.
I never really thought it was a very effective answer if your goal was to engage someone in a conversation in order to determine if they may be thinking about buying or selling a home. There are better, more pusuasive, and more genuine ways to use dialogue to show you are the "Go To" person to answer someone's real estate questions.
All that being said...With the mortgage crisis, bank closings, the Housing Rescue and Foreclosure Prevention Act, massive inventory of homes on the market, unreasonable seller asking prices, Mold, Radon,Cat urine, Buyer defaults, and Bret Favre leaving Green Bay...NOW when someone say "How's the Market?" the absolute best and most truthful answer is UNBELIEVABLE!
Submitted by Michael Taylor on August 7, 2008 - 5:00am.
"As real estate professionals I think we need to remain positive to be professional, but I also think that we need to give consumers as much information as possible, even if it is negative."
I think this sums it up perfectly. If we just keep push that crap propaganda and don't educate the consumers and give them the truth you have absolutely no credibility. Consumers are too smart and too savvy to just accept lame propaganda.
Indianapolis Homes | Fishers homes for sale
Submitted by Karen Rice on August 7, 2008 - 5:11am.
Teresa, I always look forward to your articles.
I do agree that the public should get an honest answer. It does nobody any good to be dishonest, even with the best of intentions.
One thing that would help the market in *my* area: I wish agents would stop taking overpriced listings that will just sit on the market and make everyone think the market is worse than it is.
I know each area is different and agents from other parts of the US have a different story to tell. It's so local.
Northeast PA / Pike & Wayne County Real Estate Agent
Lake Wallenpaupack Real Estate Website
Submitted by Alexis Eldorrado on August 7, 2008 - 5:11am.
Teresa,
Your article is so true and so timely. I for one am always the positive voice in any matter. I have to admit, however, that over the last year I have been telling clients about the realities of the market. At times I would even question whether I was being negative which runs cross grain to my entire personality and thought process.
As a client hesitated over mortgage payment numbers, I told him, "If you are not comfortable with these numbers, then don't buy the condo." I could see where the loan officer and developer's representative were taking him, and it had nothing to do with what he could afford. I actually felt relieved for him and for myself when he processed what I told him and he backed out.
Just recently on a rental, I told someone to make sure the owner was not in foreclosure. An attorney I know just got an eviction notice because his landlord was in foreclosure. This is not being negative, but as you stated, we know before the media does what is going on in the marketplace and have a moral obligation to tell our clients. Honesty has always served us well. The one thing we can always hold on to is our integrity. That's really all we have. Just being honest with consumers in today's market is being positive. Let them know all of the realities.
In terms of my real estate brokerage business, I am downsizing dramatically. In hindsight, I should have done it sooner. The Chicago real estate market has always been conservative, so it took a little longer to hit here. We are actually moving our office to a smaller site but it will serve us well as it is in the prime area where we sell a lot of Chicago condos. The size will be smaller, the location better, and our agents and clients will get the same good service from us. We cut our staff in half, and the other half, including myself, are picking up the slack.
I am a former federal employee, 9 years, and was just perusing career opportunities in my old agency, of which they are now hiring greatly for 2007-2009 being that many baby boomers are retiring. With the downsizing and the Chicago real estate market being conservative, however, we will be okay.
My concern is that the Great Depression started like this. I have seen reference to the Great Depression frequently as of late. My parents lived through it and spoke of it often. My mother always said what saved her was the fact that she had a job. There is a big ripple effect when the real estate industry is affected my economic conditions. It affects the financial health of the entire country.
We are a small independent Chicago real estate brokerage company and two of the Big Three firms recently chatted with me about buying me out. We mastered the Internet and that has kept us alive. We respect the big firms, which is how our team was built, but we love being a boutique firm. We are very gifted electornically and with marketing. We love getting things done, including contracts and signatures, quickly and efficiently. Due to our size, we can make changes quickly which keeps us one step ahead in the Chicago condos and homes marketplace. Everyone needs an edge and a way to keep moving forward.
Your article was so insightful and just so on pulse with what is going on in today's market. I will be visiting your blog often.
On a positive note, everything is cyclical, and this too shall past. Everyone, brokers and consumers, just need to use wisdom and patience.
Alexis Eldorrado
Eldorrado Chicago Real Estate
www.Eldorrado.com
Submitted by Lenn Harley on August 7, 2008 - 5:46am.
Of course foreclosures are having an impact by downward pressure on prices. Why not see the positives in that?
I don't believe we need to be positive or negative. We can simply deal with facts.
Facts are what facts are.
Lenn Harley
Broker
Homefinders.com
http://www.homefinders.com
Submitted by Mack Perry on August 7, 2008 - 6:18am.
I attended a class where the instructor told us, when asked how business is tell them "I'm having the time of my life." Like the "unbelievable" this can mean any number of things.
Once again you have hit the nail on the head, remaining positive is one thing, but I'll stake my reputation on honesty.
Mack Perry
http://www.mackperryhomes.com
Submitted by Dru Bloomfield on August 7, 2008 - 7:21am.
"Interesting" is another neutral word to use about our times.
In all markets, there is an upside and downside, and it depends on the person's perspective, as to their viewpoint. Presenting factual information is really the best way that we, as real estate professionals, can assist our clients, whether they see a down market or an opportunity.
Dru Bloomfield
John Hall & Associates
www.AtHomeInScottsdale.com
Submitted by Gregory Bain on August 7, 2008 - 7:59am.
I missed that office meeting where we were suppose to declare business as: "Great!" or "Fantastic!"
But, I did attend the one where the broke declared the business as "unbelievable!" So, none of his agents were telling a lie. Of course, he didn't like it much when I made it sound like something from the Jerry Seinfeld sitcom. Mia Cupla!
Perception? After the loss of many listings, my perspective is like that of Colonel Jessep in the movie A Few Good Men when he told Tom Cruise, "You can't handle the Truth."
But, I have saved myself alot of time and money by not chasing after homes that won't sell at the demented prices others are willing to tell the home owners the property is worth.
Gregory Bain, ABR, SRES
Realtor Associate
NJHomes@Ask4Greg.com
Submitted by Sally Lapides on August 7, 2008 - 8:33am.
of course we have to put a positive spin on the market, our livelihoods depend on it, but misrepresenting the market conditions is a great dis-service to our clients, but there are pockets of optimistic activity: downward pressure on sales has resulted in a 20% increase in sales for mulitfamilies in the second quater in my market, and this same downward pressure has resulted in a great number of good homes for under $250,000, in 2005, first time buyers were looking at a $300,000 entry price. There is still a ton of inventory, and worries in the job sector and the overall economy will continue to stall the recovery, but all this talk of imimnent doom and gloom is only encouraging more people to walk away from their mortgages if they are under water, not because they can't continue to pay, but simply because they can.
www.realestateinsight.com
Submitted by Commercial Mortgage Loans - Privately Funded - MasterPlan Capital LLC on August 7, 2008 - 8:56am.
Do not make the mistake of thinking that the clients are unaware of how dire the real estate market is. If they own a TV they know it’s bad. It is not the job of the agent to reiterate all the bad news just to make sure that the public gets it.
Don’t talk about what the markets will do or how buyers are acting. You can’t control those things. Talk about what you will do, better than others, in the face of the current challenges in today’s market.
MasterPlan Capital LLC
Commercial Real Estate Investment Bankers
Commercial Mortgage Loans - Online at: http://www.masterplancapital.com - Equity Financing - Asset Management - EZ Application - Quick Answers - Fast Closings - Professional Service.
Submitted by Jason Brown on August 7, 2008 - 10:15am.
When another agent asks me "how's business?
My response is " Not as well as I would like it to be" - with a big smile. Because that is the truth.
When an non agent asks me "how is the market?"
My response is: "Its great for some people and not so great for others. Its really good for buyers and very challenging for sellers." - with a big smile. Because that is the truth.
Submitted by Bernice Edelman on August 7, 2008 - 1:06pm.
I agree with you "Business is unbelievable."
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Preston Hollow Homes & Real Estate
Submitted by Gina Gardner on August 7, 2008 - 1:56pm.
Credibility seems to be a lost commodity in real estate and mortgage lending. Realtors were crowing "It's a great time to buy!" right up to the second the market crashed. Doesn't look so prescient in retrospect.
Now I talk to LOs and business is unfailingly "booming." Right. When US News did a poll on the most and least respected professions real estate didn't come out too well. What's wrong with the truth -- that there is a lot of change in the market, which brings on both risk and opportunity? And that a knowledgeable professional can help you take advantage of it?
What's wrong with an industry shakeout that will allow the good to get stronger and better and the rest to go find another way to make a living? When people ask my husband (an established LO) how business is, he smiles and says "I'm still here!"
Submitted by Jed Lane on August 7, 2008 - 1:59pm.
I'm all for "you're not ready for the truth". In my market, which is bucking trends but still damamged by the credit crunch, most people aren't ready for the truth. I get at least three calls a week asking for assistance in finding deals. There are no deals in San Francisco. The residential market has remained at about a 3 to 4 month supply all year long. So when I tell them that the buying of deals is competative they don't believe.
Jed Lane GRI
Broker, Sales Manager
Star Real Estate Brokerage
http://www.FogCityGuide.com
415.425.9810
Submitted by Michael Espiritu on August 7, 2008 - 2:16pm.
I agree w/ Jason's succint comment when asked "how's business?" "Not as well as I would like it to be" and regarding market conditions-"Great for some and not so great for others".
I really don't get people trying to deceive someone w/ "Unbelievable" and let them decide what you mean. Mean what you say and say what you mean.
Spend some time on how you can improve customer service instead of mastering "double-speak".
If you don't think the public knows the state of the real estate market then you are sadly mistaken. The media is reporting what they see and they are not the cause of the mess we're in.
Why would any responsible real estate practitioner not want to know the number of foreclosures in your market? Those foreclosures directly affect the value of your listings and the price your buyers should pay for a property.
Alexis' comments about "over the last year I have been telling clients the realities of the market"So has she been untruthful to her clients prior to last year? Wow! That's an eye-opener!
There should be more motivation to your job than just a paycheck. Being able to advise a client that this may not be the time to buy for that particular client in this particular market will guarantee that the client will come back when it is time and trust the professional(you) that you truly have their best interest at heart and not your own.
The reality of the market is very clear and distorting the truth to a client is very bad business!
Michael Espiritu
Broker
Copeland Wealth Management /CWM Real Estate
SoCal
Submitted by Harrison K. Long on August 7, 2008 - 2:23pm.
Thanks for your blog note about being and staying positive during this real estate market, and I agree.
"Success Is Where Preparation Meets Opportunity". I love this Zig Ziglar line.
Harrison K. Long
Realtor & broker
Explore Properties Group, Coldwell Banker Previews NRT, Irvine, CA
949-854-7747
949-701-2515 cell
www.ExploreRealEstate.net
Submitted by Dave Haworth on August 8, 2008 - 9:38am.
Great Article and I love the fact that you fit "Craptastic" into the message.
Dave Haworth, Realtor ®
JT Village Realty
Web: www.joshuatreeagent.com
Blog: http://joshuatreeagent.wordpress.com/
Twitter: https://twitter.com/JoshuaTreeAgent
Submitted by Tom Teece on August 8, 2008 - 11:56am.
Great article, Teresa. I agree with you 100% that these times call for being positive and truthful. Alan Greenspan told the Wall Street Journal Report last week that we are witnessing a 100 year event. That could possibly mean that in his opinion our housing crisis surpasses that of the great depression of the 1930's. The truth is, this problem will not be fixed from the top down. It will only be fixed from the bottom up. Courageous positive individuals need to take action now to clear excessive inventory (1 house at a time) before pricing will normalize. The banks are failing to sell the pre-foreclosure homes. The banks are failing to auction the foreclosed homes. Because they failed to be realistic twice, the banks are flooding the market with REO's at depressed prices, sometimes lower than the short sale offers they received. I'm positive that banking reform, or at least intelligent banking management is necessary to allow us individuals to assist in liquidating problem properties from excessive inventories.
Submitted by Fred Roven on August 11, 2008 - 2:55pm.
I keep reading the stories of mortgage companies and banks seeming almost uninterested in taking offers on foreclosures and then listing property as REO for less money. After 4 months of negotiating with a first mortgage holder and coming up with what appeared to be something that could be acceptable for all involved, the second mortgage holder seems to be moving in slow motion and almost totally disinterested. I feel like screaming over what appears to be unconscious behavior. The big concern at second seems to be the offer is too low even though they can only get what first offers them since property cannot sell above amount of first mortgage holder. They have come up with their own comps for an area that has 1 property under contract out of 65 on the market and has a beautiful house on the market for less than they are saying property is worth. Only a total of 5 sales in the town this year! Who to I shake to find some common sense?