Real estate - When it comes to leads, are you a leader or a follower?
Do you have a strategy to find prospects and turn them into clients and referrals? Regardless of their source, it's important to make the most of the leads that come your way. Here are seven eNeighborhoods-endorsed strategies to help you make the most of your lead management program and turn those prospects into customers and referrals!
1. Showcase your neighborhood knowledge
The Internet has whetted customer appetites for all types of real estate information. Educated buyers and sellers make the best customers, but the Web has also raised client expectations. Many consumers are proficient in finding information on their own and are no longer impressed by folders full of MLS and web page printouts.
Agents who provide relevant local information can quickly establish lasting client relationships. If you reinforce individual property information with neighborhood knowledge that interests buyers - including school, crime, housing prices and resident demographic information - you demonstrate a level of expertise few agents can match. By positioning yourself as a neighborhood expert, you avoid pinning your hopes of doing business on a single property.
2.Timing is everything
Most people end up doing business with the first real estate agent they speak to, so fast response is crucial. Research shows many people have come to expect a response from real estate agents within an hour of requesting information. Many brokerages now reward agents who respond quickly with additional leads or other incentives.
Your strategy should include a plan for both initial response and ongoing contact. For example, your goal may be to respond to phone calls within two hours and emails on the same business day.
3. Create a professional follow-up package
Many agents prefer to establish face-to-face contact as soon as possible with an introductory information package. Be sure to have both presentation and leave-behind materials ready to go. Your follow-up package may include:
- A cover letter / thank you letter recapping your initial contact
- Your resume, including professional accreditations such as REALTOR®
- Relevant reports, such as CMAs and Neighborhood Reports
- Sample marketing materials, including flyers and newsletters
4. Have a unique value proposition
All agents understand the importance of creating a unique impression, but it's more important to make prospects feel unique. After a brief introduction, top agents shift their focus to making prospects feel like the center of the universe. To convert leads to sales, personalize materials and presentations as much as possible. Put your customer's name on sample flyers and reports. For a knockout listing meeting, take a digital photo of the prospect's home beforehand and incorporate it into your presentation materials.
5. Making it mobile
Even if you don't know a Blackberry from a Bluetooth, it's important to maintain a "mobile office" for responsiveness. More than ever, it's important for brokers and agents to do their jobs - managing phone calls, customer contacts and accessing listing information - without being tethered to a desk.
It's easy for prospects on the Web to send out several requests for information, and the agent with the quickest response often wins the business. There may be a learning curve involved in adopting mobile technology, but agents who can instantly obtain current property information from a phone or PDA are a step ahead of those who need to call the office.
6. Divide and conquer
While some prospects are close to buying or selling, many are clearly in the research or evaluation stage. Some brokerages have developed separate strategies for hot leads and those with longer time horizons. Some have automated lead management systems or staff dedicated to prioritizing and distributing leads, but this task often falls to individual agents.
Regardless of who manages leads, an efficient sorting and distribution strategy can help raise conversion rates. Even in a smaller office, having a system in place can help you respond quicker and focus on more qualified leads. If you're shopping for a lead generation service, notice how lead management is handled and whether it fits the way you work.
7. Track lead quality and cost
The best lead solution for you will depend on your goals, business requirements, budget and your style of working. You may need to evaluate several lead sources and management strategies before hitting on one that's best for your individual needs.
It takes time to track the life cycle of individual leads, but it's the only way to make the most of your investment. It's certainly preferable to a lead generation strategy that underperforms your expectations. Be sure to schedule a reasonable amount of time for your evaluation period. A solution that does well initially may not perform consistently over time.
This article is an excerpt.
See the complete report, Seven secrets of turning real estate leads into clients , at http://www.58freeleads.com/report.asp
Friday, September 15, 2006
Tuesday, June 06, 2006
Interactive marketing, revisited
Like their audiences, marketers themselves are fans of the new and improved. In recent years, cross-channel pragmatism has often given way to online mania as advertisers pour money into search, e-mail and video marketing campaigns.
Any marketing professional who prowls the Net for information has seen this pattern – an indictment of traditional marketing followed by a plea to embrace interactive channels and practices. In smug articles, print ads give way to podcasts, and hoary 30-second television spots succumb to splashy Internet video advertising.
But is there really such an important distinction between traditional and interactive marketing channels? It depends how you define interaction. I like to think all effective marketing builds on a series of successful interactions. After all, regardless of what channels you’re using, your marketing message is unavoidably interacting with a number of internal and external factors.
Savvy marketers design successful interactions between people, products, brands, services and ideas. And marketers can work to identify interactions that create more successful campaigns. As you plan, consider some of the interactions that can mean the difference between success and failure. Consider how your current campaign interacts with:
Other campaigns – every marketing message exists in the context of other campaigns, past and present and future. Does your campaign build on previous campaigns, or set the stage for later ones? Does it build on the buzz established by events, other products or other companies?
Available technology – Effective interactive marketing means understanding the channels that are available and choosing the best technology to deliver your message with maximum effectiveness. Emerging channels are exciting, but few of us have unlimited technical support at our command to support and execute our marketing ideas.
Internal stakeholders – At some point, all veteran marketers have had to face the campaign killers within. It could be your management, staff, or co-workers. It could be budget or resource constraints. One of the first interactions you might design is within your own organization to obtain the buy-in or resources needed to move forward.
Current environment – Working in real estate, I learned never to serve up corporate communications without checking the current environment. Were rates headed up, or down? Had some guru made a bold forecast for the coming year? Was an annual or quarterly report on tap? What about recent activities in the courts or legislature? Your communications interact with hundreds of other messages to which your audience is exposed each day.
Competitors – What’s your positioning regarding your competition? Are you creating a series of interactions that will encourage prospects to become customers, repeat customers and referrers? What’s your competitor’s positioning regarding your customers?
A lot to think about before your interaction with customers ever begins? Perhaps, but thinking through different types of interactions at the outset could help you generate ideas and make better decisions that ultimately improve results.
Finally, what about that traditional vs. interactive debate? According to Peppers and Rogers Group, nearly 70% of all consumers today move interchangeably across online and offline channels during the buying process. Customers know what they want. If they are not behaving in a way that seems to favor online or offline channels, should you?
Like their audiences, marketers themselves are fans of the new and improved. In recent years, cross-channel pragmatism has often given way to online mania as advertisers pour money into search, e-mail and video marketing campaigns.
Any marketing professional who prowls the Net for information has seen this pattern – an indictment of traditional marketing followed by a plea to embrace interactive channels and practices. In smug articles, print ads give way to podcasts, and hoary 30-second television spots succumb to splashy Internet video advertising.
But is there really such an important distinction between traditional and interactive marketing channels? It depends how you define interaction. I like to think all effective marketing builds on a series of successful interactions. After all, regardless of what channels you’re using, your marketing message is unavoidably interacting with a number of internal and external factors.
Savvy marketers design successful interactions between people, products, brands, services and ideas. And marketers can work to identify interactions that create more successful campaigns. As you plan, consider some of the interactions that can mean the difference between success and failure. Consider how your current campaign interacts with:
Other campaigns – every marketing message exists in the context of other campaigns, past and present and future. Does your campaign build on previous campaigns, or set the stage for later ones? Does it build on the buzz established by events, other products or other companies?
Available technology – Effective interactive marketing means understanding the channels that are available and choosing the best technology to deliver your message with maximum effectiveness. Emerging channels are exciting, but few of us have unlimited technical support at our command to support and execute our marketing ideas.
Internal stakeholders – At some point, all veteran marketers have had to face the campaign killers within. It could be your management, staff, or co-workers. It could be budget or resource constraints. One of the first interactions you might design is within your own organization to obtain the buy-in or resources needed to move forward.
Current environment – Working in real estate, I learned never to serve up corporate communications without checking the current environment. Were rates headed up, or down? Had some guru made a bold forecast for the coming year? Was an annual or quarterly report on tap? What about recent activities in the courts or legislature? Your communications interact with hundreds of other messages to which your audience is exposed each day.
Competitors – What’s your positioning regarding your competition? Are you creating a series of interactions that will encourage prospects to become customers, repeat customers and referrers? What’s your competitor’s positioning regarding your customers?
A lot to think about before your interaction with customers ever begins? Perhaps, but thinking through different types of interactions at the outset could help you generate ideas and make better decisions that ultimately improve results.
Finally, what about that traditional vs. interactive debate? According to Peppers and Rogers Group, nearly 70% of all consumers today move interchangeably across online and offline channels during the buying process. Customers know what they want. If they are not behaving in a way that seems to favor online or offline channels, should you?
Wednesday, April 12, 2006
Paid search marketing campaigns that work
Find buyers searching for what you sell with Adwords, Google says.
Yahoo Search Marketing asks, Instead of looking for customers, what if they found you?
In the past few years, businesses of all sizes have rushed to capitalize on the benefits of paid search. The advantages are well known…low start-up costs, shorter lead times, opportunity for global reach or local targeting, and more accurate campaign tracking.
The potential benefits are clearly compelling, but what’s less obvious is how to create consistently effective paid search campaigns. Smaller and medium-sized businesses have found that do-it-yourself paid search can be difficult and time-consuming. Larger businesses that outsource have learned to be wary of search-marketing scoundrels who are better at promoting their own business than promoting yours.
That said, there’s a growing body of research and best practices for success in paid search marketing, and you shouldn’t miss out because you don’t have an extensive knowledge of the of the online channel. Many of today’s most successful search marketing campaigns developed over months, not years. With that in mind here’s a brief checklist to keep paid search advertising pointed in a profitable direction. Make sure it’s:
Action- oriented: Clearly, your primary goal is to have prospects click your ad for more information, so it’s OK to be direct. Don’t make people think too much. Include a clear call to action like “click here” or “learn more” for better results.
Attention-getting: Your online ad has only a split second to gain attention. Use attention-getting headlines and bold images to make your ad stand out. If you use Google Adwords, you’ll have the ability to test and improve your copy with as many as three versions of your ad.
Brief. The most effective online ads contain a simple, easy to understand message. Keep your ads short and to the point. Use simple, high-impact words. The place to provide additional information is on your landing page or website, not a text or banner ad.
Offer-oriented: To drive site traffic, specific offers work better than general invitations. Offering a discount, time-sensitive offer or something that’s FREE are time-tested techniques. For example, free shipping or discounts for first-time customers can drive click-thrus.
Customer-focused: In getting your message across, it’s easy to forget that customers are scanning your ad to learn how they can benefit, not to learn how great your company is. Clearly explain how your product or service solves problems, makes things easier or improves profits.
Professional: If your ad includes graphics, use a professional designer to select appropriate colors and fonts to gain attention and ensure your ad is readable. Use only high-resolution, professional images in your online ad. Quality design suggests a quality company.
Relevant: Do visitors arrive at your ad by typing in a search term? If so, try repeating the term in your ad. For example, if you want to attract visitors using the search phrase Aircraft Charters, make sure Aircraft Charters is prominently displayed in your ad – you’ll get higher click-thrus.
Going somewhere: The ad is only part of the equation that converts visitors to buyers. Make sure your ad clicks through to a page that’s relevant to your offer. If your ad offers a 10 percent discount, make it clear how visitors can get the discount instead of making them figure out what to do next. Landing pages pick up where the ad leaves off, providing specific information and next steps. Targeted landing pages generally outperform home pages when it comes to converting visitors to subscribers or buyers.
Tested. You may have heard the quip that “All opinions are useless, including this one.” The same might be said about search marketing advice. Don’t take opinions and second-hand research to heart. Learn and use the analysis tools included in your paid search account. It may be that Google skews male or Yahoo is better for consumer marketing than B2B, but you’ll never know until you test. You may even check out MIVA.com, a smaller search player that’s making a play for the #3 slot behind the big guys. Try out the conversion-tracking tools that are included in your account.
It may take a little homework on your part, but there’s no substitute for knowing which search terms are effective, what visitors are searching for, and what each click and conversion costs. The information is worthwhile not only for search marketing, but the lessons learned can then be applied to other marketing channels and campaigns.
Find buyers searching for what you sell with Adwords, Google says.
Yahoo Search Marketing asks, Instead of looking for customers, what if they found you?
In the past few years, businesses of all sizes have rushed to capitalize on the benefits of paid search. The advantages are well known…low start-up costs, shorter lead times, opportunity for global reach or local targeting, and more accurate campaign tracking.
The potential benefits are clearly compelling, but what’s less obvious is how to create consistently effective paid search campaigns. Smaller and medium-sized businesses have found that do-it-yourself paid search can be difficult and time-consuming. Larger businesses that outsource have learned to be wary of search-marketing scoundrels who are better at promoting their own business than promoting yours.
That said, there’s a growing body of research and best practices for success in paid search marketing, and you shouldn’t miss out because you don’t have an extensive knowledge of the of the online channel. Many of today’s most successful search marketing campaigns developed over months, not years. With that in mind here’s a brief checklist to keep paid search advertising pointed in a profitable direction. Make sure it’s:
Action- oriented: Clearly, your primary goal is to have prospects click your ad for more information, so it’s OK to be direct. Don’t make people think too much. Include a clear call to action like “click here” or “learn more” for better results.
Attention-getting: Your online ad has only a split second to gain attention. Use attention-getting headlines and bold images to make your ad stand out. If you use Google Adwords, you’ll have the ability to test and improve your copy with as many as three versions of your ad.
Brief. The most effective online ads contain a simple, easy to understand message. Keep your ads short and to the point. Use simple, high-impact words. The place to provide additional information is on your landing page or website, not a text or banner ad.
Offer-oriented: To drive site traffic, specific offers work better than general invitations. Offering a discount, time-sensitive offer or something that’s FREE are time-tested techniques. For example, free shipping or discounts for first-time customers can drive click-thrus.
Customer-focused: In getting your message across, it’s easy to forget that customers are scanning your ad to learn how they can benefit, not to learn how great your company is. Clearly explain how your product or service solves problems, makes things easier or improves profits.
Professional: If your ad includes graphics, use a professional designer to select appropriate colors and fonts to gain attention and ensure your ad is readable. Use only high-resolution, professional images in your online ad. Quality design suggests a quality company.
Relevant: Do visitors arrive at your ad by typing in a search term? If so, try repeating the term in your ad. For example, if you want to attract visitors using the search phrase Aircraft Charters, make sure Aircraft Charters is prominently displayed in your ad – you’ll get higher click-thrus.
Going somewhere: The ad is only part of the equation that converts visitors to buyers. Make sure your ad clicks through to a page that’s relevant to your offer. If your ad offers a 10 percent discount, make it clear how visitors can get the discount instead of making them figure out what to do next. Landing pages pick up where the ad leaves off, providing specific information and next steps. Targeted landing pages generally outperform home pages when it comes to converting visitors to subscribers or buyers.
Tested. You may have heard the quip that “All opinions are useless, including this one.” The same might be said about search marketing advice. Don’t take opinions and second-hand research to heart. Learn and use the analysis tools included in your paid search account. It may be that Google skews male or Yahoo is better for consumer marketing than B2B, but you’ll never know until you test. You may even check out MIVA.com, a smaller search player that’s making a play for the #3 slot behind the big guys. Try out the conversion-tracking tools that are included in your account.
It may take a little homework on your part, but there’s no substitute for knowing which search terms are effective, what visitors are searching for, and what each click and conversion costs. The information is worthwhile not only for search marketing, but the lessons learned can then be applied to other marketing channels and campaigns.
Sunday, March 26, 2006
The marketing mix – will podcasting pay the rent?
In the world of interactive marketing, one never has to look too far for the next big thing. One promising channel that’s become buzzworthy in the past few months is podcasting – the Internet distribution of audio or video content, usually using an RSS feed. As usual, though, standing behind the early adopters gushing with praise about a new technology, someone will have to figure out how to turn podcasting from a promising technology into a trusted marketing tool.
There seems extraordinary growth potential for podcasts in the next few years, but that's just untapped potential until podcasting novelty is replaced by podcasting utility.
Even if there's no money exchanged, the content at a minimum has to be worth the trouble to download. If I have to actively search and download, I will listen to few of them. If I can automate the downloading of a few that I'm interested in, as with an RSS feed, I'll be more likely to check them out.
Podcasting may or may not develop into a marketing channel with broad
applications, but there certainly are opportunities to deliver targeted content. I have a stack of articles on my desk that I'll get to sometime – behavioral marketing, presenting effective web seminars, how to reinstall Windows XP – if someone came along and made these into mp3s for me so I can listen to them in the car, I would be most grateful. Perhaps even to the point where I would listen to a short ad. You might even put up with a commercial if it's wrapped in sports highlights (More March Madness coming up, but first a word from Gillette’s new XtremeTrac 5-blade, now with Unibrow Control).
One interesting facet is that as more and more marketing moves to interactive channels, podcasting is sort of a one-way, more passive medium. Maybe its' just a matter of time until players have some kind of feedback button you can push to indicate yes, download the next e-book chapter, that podcast was valuable to me, or send me more information.
Then next time I plug my player back into my laptop, my preferences are sent back to the podcasters. Or maybe there's no rush for that...
Overall I think it's very positive that this form of new media marketing is accessible to nearly anyone who wants to create a podcast. Certainly, consumer-controlled media is an exciting trend and there's a lot of home-grown content out there that's much richer and more original than what's generally available from commercial radio.
There is a possible downside if personalization is carried too far. One day soon, as you're motoring down the highway, you may hear a podcast from your spouse reminding you to pick up orange juice and warning you not to speed.
In the world of interactive marketing, one never has to look too far for the next big thing. One promising channel that’s become buzzworthy in the past few months is podcasting – the Internet distribution of audio or video content, usually using an RSS feed. As usual, though, standing behind the early adopters gushing with praise about a new technology, someone will have to figure out how to turn podcasting from a promising technology into a trusted marketing tool.
There seems extraordinary growth potential for podcasts in the next few years, but that's just untapped potential until podcasting novelty is replaced by podcasting utility.
Even if there's no money exchanged, the content at a minimum has to be worth the trouble to download. If I have to actively search and download, I will listen to few of them. If I can automate the downloading of a few that I'm interested in, as with an RSS feed, I'll be more likely to check them out.
Podcasting may or may not develop into a marketing channel with broad
applications, but there certainly are opportunities to deliver targeted content. I have a stack of articles on my desk that I'll get to sometime – behavioral marketing, presenting effective web seminars, how to reinstall Windows XP – if someone came along and made these into mp3s for me so I can listen to them in the car, I would be most grateful. Perhaps even to the point where I would listen to a short ad. You might even put up with a commercial if it's wrapped in sports highlights (More March Madness coming up, but first a word from Gillette’s new XtremeTrac 5-blade, now with Unibrow Control).
One interesting facet is that as more and more marketing moves to interactive channels, podcasting is sort of a one-way, more passive medium. Maybe its' just a matter of time until players have some kind of feedback button you can push to indicate yes, download the next e-book chapter, that podcast was valuable to me, or send me more information.
Then next time I plug my player back into my laptop, my preferences are sent back to the podcasters. Or maybe there's no rush for that...
Overall I think it's very positive that this form of new media marketing is accessible to nearly anyone who wants to create a podcast. Certainly, consumer-controlled media is an exciting trend and there's a lot of home-grown content out there that's much richer and more original than what's generally available from commercial radio.
There is a possible downside if personalization is carried too far. One day soon, as you're motoring down the highway, you may hear a podcast from your spouse reminding you to pick up orange juice and warning you not to speed.
Monday, March 20, 2006
Writing Web copy that counts
For some marketing communicators, making the transition from print to online media is like packing for a trip to destinations unknown. Before you venture, it's important to know what to bring, what to leave behind and something about the online culture. For example, long lines of text and certain typefaces don't belong online, but strong headlines and tight, benefit-oriented writing are always welcome. Here are some guidelines to help you create online copy that counts:
1. Know the reader's goals, your goals and how they successfully come together.
Looking at many corporate Web sites is like peering through the wrong end of a telescope. Content that's focused on the company's vision, history, or organizational structure is of little value to most readers. If you can't draw a direct connection between organizational goals and your readers' goals, your content is probably off the mark. It may help to outline the audience needs, your solutions and the successful outcome you're promising. Then write the story so your reader is the star and the company, products and services are supporting players.
2. Clearly define your success criteria.
Writers who begin with vague goals achieve marginal results. Your purpose may be general, such as building brand awareness, but it's likely that you want readers to take some action as a result. Broad goals such as building brand recognition can often be measured by more specific results - capturing 100 new e-mail addresses, 25 requests for additional information or 10 new orders.
3. People don't read online, they scan.
Keep in mind that many people won't read all of your copy, and some won't read it at all. Many will scan your pages to for something eye-catching and move on if it's not there. Take the time to craft an attention-getting headline and use subheads and bulleted lists to break up blocks of text and move readers onward. Think in terms of "chunking" information because people may begin reading at the beginning, middle or end.
4. Edit mercilessly.
Usability guru Jakob Nielson says that reading from a computer screen takes 25 percent longer than reading from a printed page. He recommends giving online readers about 50 percent less text than print readers. Listen to Jakob. Think of your words and sentences as individual workers, each with a specific role in creating successful copy. If it's not the best word or sentence or it's not bolstering your message's effectiveness, it's fired!
5. Let your words do the work.
Identify the strongest benefits of your product or service and present them in clear, convincing language. Don't try to grab attention with loud colors, excessive bolding, capitalization or punctuation. In addition to compromising your credibility, it makes for a spotty, unattractive page on the reader's computer screen. As F. Scott Fitzgerald said, overusing exclamation points is like laughing at your own jokes.
6. What is it? What's in it for me? What's my next step?
Readers should be able to answer these three questions about your product or service after reading your copy once. Answer these important questions quickly and clearly, without excess verbiage. Also answer another one if it's appropriate for your campaign - How much does it cost?
7. First the horse, then the cart.
Have you written to share ideas and insights, change behaviors and build relationships...or to close a single sale? In writing copy for Web sites and e-mail, many marketers make the mistake of trying to jump from introduction to sale too quickly. Building customer trust is a powerful, but fragile process. Asking for a sale before you have clearly established trust and demonstrated value is a sure way to alienate potential customers. Know where your readers are in the process, set realistic goals and target your words accordingly.
For some marketing communicators, making the transition from print to online media is like packing for a trip to destinations unknown. Before you venture, it's important to know what to bring, what to leave behind and something about the online culture. For example, long lines of text and certain typefaces don't belong online, but strong headlines and tight, benefit-oriented writing are always welcome. Here are some guidelines to help you create online copy that counts:
1. Know the reader's goals, your goals and how they successfully come together.
Looking at many corporate Web sites is like peering through the wrong end of a telescope. Content that's focused on the company's vision, history, or organizational structure is of little value to most readers. If you can't draw a direct connection between organizational goals and your readers' goals, your content is probably off the mark. It may help to outline the audience needs, your solutions and the successful outcome you're promising. Then write the story so your reader is the star and the company, products and services are supporting players.
2. Clearly define your success criteria.
Writers who begin with vague goals achieve marginal results. Your purpose may be general, such as building brand awareness, but it's likely that you want readers to take some action as a result. Broad goals such as building brand recognition can often be measured by more specific results - capturing 100 new e-mail addresses, 25 requests for additional information or 10 new orders.
3. People don't read online, they scan.
Keep in mind that many people won't read all of your copy, and some won't read it at all. Many will scan your pages to for something eye-catching and move on if it's not there. Take the time to craft an attention-getting headline and use subheads and bulleted lists to break up blocks of text and move readers onward. Think in terms of "chunking" information because people may begin reading at the beginning, middle or end.
4. Edit mercilessly.
Usability guru Jakob Nielson says that reading from a computer screen takes 25 percent longer than reading from a printed page. He recommends giving online readers about 50 percent less text than print readers. Listen to Jakob. Think of your words and sentences as individual workers, each with a specific role in creating successful copy. If it's not the best word or sentence or it's not bolstering your message's effectiveness, it's fired!
5. Let your words do the work.
Identify the strongest benefits of your product or service and present them in clear, convincing language. Don't try to grab attention with loud colors, excessive bolding, capitalization or punctuation. In addition to compromising your credibility, it makes for a spotty, unattractive page on the reader's computer screen. As F. Scott Fitzgerald said, overusing exclamation points is like laughing at your own jokes.
6. What is it? What's in it for me? What's my next step?
Readers should be able to answer these three questions about your product or service after reading your copy once. Answer these important questions quickly and clearly, without excess verbiage. Also answer another one if it's appropriate for your campaign - How much does it cost?
7. First the horse, then the cart.
Have you written to share ideas and insights, change behaviors and build relationships...or to close a single sale? In writing copy for Web sites and e-mail, many marketers make the mistake of trying to jump from introduction to sale too quickly. Building customer trust is a powerful, but fragile process. Asking for a sale before you have clearly established trust and demonstrated value is a sure way to alienate potential customers. Know where your readers are in the process, set realistic goals and target your words accordingly.
Nine tips for first-time homebuyers
It seems that everyone loves a good real estate story. The media is filled with reports about soaring property values and home owners of modest means becoming instant millionaires when they sell. As a result, many first time home buyers, afraid of missing out, will rush into buying decisions and achieve less-than-spectacular results. As a first time buyer, your biggest challenge is to balance livability and profitability in a way that makes sense for you and your family. Remember, you are buying a home first and an investment second. Of course, there’s no foolproof formula for buyer success, but there are steps you can take to stack the odds in your favor:
Tip 1: Don’t bet on market timing
If you’re waiting for prices to drop in places like Southern California, Washington D.C. or Miami, you may be waiting a very long time. In regions that are built out with limited room to expand, it’s not realistic to assume property values will fall dramatically. Of course, prices in the nation’s super-heated residential markets (much of California, Nassau-Suffolk Counties in New York, South Florida) should cool down at some point, but there’s no guarantee that higher interest rates won’t eat up any savings from a price correction. If your personal circumstances say it’s time to buy, high prices alone shouldn’t keep you on the sidelines. Current interest rates are still historically low, so you may consider locking in a mortgage before rates head north. Even in booming markets, there are good deals for those willing to devote some time and energy to finding them.
Tip 2: Leverage free and low-cost resources
There’s an abundance of free and low-cost resources for homebuyers on the Web. A Web search can turn up helpful articles, buyer guides, online tools and purchase/ refinance calculators. Keep an eye out for helpful tools like step-by-step guides and checklists to help organize your search. Some Web sites now offer online tools to help you estimate home prices and search for undervalued properties. Many offers on the Web for free property valuations actually are come-ons from real estate brokers looking for seller listings, so check first to see what strings are attached.
Tip 3: Check out the new models
Real estate’s old guard seems to be under assault at every turn today as traditional brokers battle competition from discount and Web-based brokers. Today, buyers have more options than ever before. You can use a full-service broker, discount broker or buy without a broker. To make buying more affordable, consider the homebuyer rebate programs that are becoming more popular. Rebates can help offset closing costs, which are a real obstacle for many first-time buyers. Be aware that some states currently ban real estate rebates all together, and others limit rebates to credits applied to closing costs. Rebate fans around the nation are keeping a close eye on Kentucky, as the Justice Department recently sued the Kentucky Real Estate Commission for violating antitrust laws. Kentucky is one of 15 states that ban or limit real estate rebates.
Tip 4: Lock in a realistic budget
To save time and trouble, first time buyers should have a realistic budget in mind before they shop for homes. One way to determine how much house you can afford is to get “pre-approved” by a lender. Pre-approval means you know exactly how much of a loan you’ll qualify for, so you can limit your search to homes in the right price range. Pre-approval also boosts your credibility and negotiation position with sellers. Most lenders will offer pre-approval as a no-obligation free service, in hopes of winning your business.
Tip 5: Buying — personal decision, business transaction
The Department of Housing and Urban Development (HUD) advises home buyers to create a wish list to help focus priorities. That way, you’ll remember that a spectacular foyer is nice-to-have, but safety and services are essential. Having clear goals will help keep you from getting carried away with emotional factors. Sellers who love their homes tend to ask too much, and buyers who fall in love can end up overpaying. With a little research, you can get can get an objective estimate of property value to make sure the seller has set a fair asking price. There are tools and resources on the Web to help you better understand home valuations.
Tip 6: Don’t let closing costs surprise you
Once you understand the buying process, you should understand and budget for transaction costs. In addition to your down payment, buyers pay most of the closing costs when purchasing a home, including things like inspection fees, title insurance, taxes and more. Closing fees can add up to 5-7 percent of purchase price, and must be paid before you get the keys. Your lender can provide what’s called a “good faith” estimate of your closing costs. Most closing costs are not negotiable but some are. When you’re comparing lenders, don’t be shy…ask which fees are negotiable, then ask if any discounts are available. Finally, be cautious about “no-cost” closing promotions because the lender may be simply passing on the costs in the form of a higher interest rate.
Tip 7: Build a support team
Buying a home is a big investment and a big decision, but you don’t have to go it alone. Remember, at each step of the way, there are people and resources to help you. Use the Internet and ask friends for referrals. Don’t be afraid to pick up the phone and call real estate professionals, mortgage providers, title companies and insurers to ask questions. These professionals should be good resources to help you learn more about home buying, because they want to earn your business. If they are not helpful, then you have also learned something important…that they don’t deserve your business.
Tip 8: Clean up your credit
Low credit ratings mean that buyers won't qualify for the best available interest rates and fees, which could mean considerable extra expense each month for the life of the loan. Most financial institutions today offer risk-based lending – lower credit risk for lenders means better mortgage deals for customers. Credit reports frequently contain inaccurate information, which can hurt a buyer’s purchasing power. First-time buyers should check their credit scores and fix any problems before applying for financing.
Tip 9: Begin with the end in mind
Author Stephen Covey’s advice for effective living also applies to effective home buying. Resale may not your primary consideration, but it’s an important factor. Can you buy in an up-and-coming neighborhood or region? How is the “commutability” from your new home to local employers? How good are the local schools? A few queries to your favorite search engine will turn up free or inexpensive school rating services. Also be on the lookout for outdated features when you buy. If the those small closets and harvest gold appliances seem out of step now, you can bet that they won’t look any better to prospective buyers in a few years.
Reinventing Real Estate, Part 1:
For decades, the real estate world turned in a predictable manner. The roles of buyers, sellers and real estate professionals were fairly well defined and transactions followed a predictable path of yard signs, newspaper ads, open houses and miles of paperwork.
Recently, online and empowered consumers have changed the game. Real estate professionals now face issues similar to the ones that have transformed the retail, personal finance and travel planning industries. As technology advances and new business models evolve, the real estate industry has begun to transform itself from providing traditional, carefully controlled “agent-centric” transactions to new “consumer-centric” practices. The following is a look at some of the recent industry trends and how buyers, sellers and investors can expect to benefit. The “Five Ds” that are driving change in real estate are:
1. Disruption – Over the past 10 years, the Internet has matured into a powerful platform for delivering real estate information, forever changing the interaction between buyers, sellers and real estate professionals.
2. Displacement – The popularity and acceptance of self-service and consumer-direct business models is being felt by real estate professionals, who are striving to develop attractive new offerings for Web-savvy consumers.
3. Demanding consumers – You now have more real estate knowledge, tools and resources at your fingertips than ever before. More savvy consumers tend to be more independent and demanding.
4. Downward pressure - Traditional real estate commissions of 5-6 percent of a property’s sales price are facing downward pressure.
5. Developing alternatives – The real estate industry is transforming itself to provide targeted services and exciting new options that add value for consumers. Disruption
“We are going to see our industry go through dramatic transformation via the Internet and consolidation of agents and companies.” – eRealty Times Columnist Dirk Zeller
Some industry observers have adopted Harvard Business School professor Clayton Christensen’s term “disruptive technology” to explain recent developments in real estate. Though it’s easy to point to the World Wide Web and advancing technology as the main changes in real estate, that’s only part of what’s shaking things up. Essentially, the real cause of disruption is not just technology, but technology-enabled real estate consumers.
Web-enabled consumers
According to the National Association of Realtors (NAR), more than 72 percent of homebuyers now begin their home search online. The popularity of online real estate ads surpassed newspaper property listings back in 2001, and the gap is widening. Less than one percent of buyers first learned about the home they purchased on the Internet in 1995, while in 2004, that number passed 20 percent.
According to a California Association of Realtors (CAR) survey, 97 percent of respondents said the Web helped them understand the buying process better and 100 percent said using the Web helped them understand home values better. Web-enabled homebuyers like you are taking a more active role in researching homes and neighborhoods. You also now spend less time with real estate professionals once you have completed your research. Internet homebuyers also used the Web effectively to filter out properties that did not interest them, visiting 6.1 homes on average versus 15.4 for traditional buyers.
Today, you can view photos and detailed information for hundreds of properties in the time it used to take to visit a single one. And the Web provides much more opportunity than simply moving print listings online. The growing availability of residential high-speed Internet connections has boosted the popularity of virtual tours and interactive maps, providing consumers with powerful and flexible visual search tools.
In addition to making home searches easier, automated valuation model (AVM) software is making a big impact in how properties are evaluated. AVMs, which generate valuation estimates by analyzing and comparing property information data, are becoming increasingly sophisticated and accurate. While not considered a substitute for human appraisals, AVMs are gaining popularity because they are inexpensive, easy to use and produce valuation estimates in minutes. Now AVMs, used extensively in electronic mortgage approval processing during the recent refinancing boom, are becoming available on real-estate Websites aimed at consumers. This is a significant development for independent sellers, who often find it challenging to price their properties correctly when selling on their own.
The MLS goes public
“In real estate, MLS data sits at the apex of the change, specifically the MLS information that is pushed to the Internet every minute of the day.” – Bradley Inman, Publisher of Inman News
Once an exclusive tool for real estate professionals, the multiple listing service (MLS) has in recent years become a very public platform for real estate listings. The MLS is the nation’s most comprehensive database of properties for sale – four out of five homes sold in the United States are listed on the MLS. MLS properties are available to agents and brokers worldwide, and are now accessible via consumer Web sites such as Realtor.com, WSJ.com, Excite, Netscape, AOL and MSN. MLS listings also appear on local, regional and national brokerage Websites through Internet Data Exchange (IDX) agreements that allow participating Realtors to share listings and display them to consumers. Even though only licensed realtors can list property on the MLS, the system has begun to figure prominently for the $110 billion independent seller (for-sale-by-owner or FSBO) market. About 13 percent of real estate sales are now FSBO, conducted without a broker’s assistance.
Type “flat fee MLS” into any major search engine, and you’ll see dozens of real estate professionals willing to list your property in the MLS for a fee. If you are willing to pay a commission of 2-3 percent, you can attract the attention of thousands of agents who will show your property to prospective buyers. You can then reduce the cost of the sale to about half a traditional 5-6 percent sales commission, plus the cost of the MLS listing. If you find an independent buyer working without an agent, you could make a sale with no commission at all and pay only an MLS listing flat fee. Displacement
Currently, about 2.4 million real estate licensees operate nationally, according to the Association of Real Estate License Law officials. The NAR has more than one million members, up from about 760,000 members five years ago. Many real estate professionals and industry observers expect a significant decline in this number because some tasks traditionally performed by agents and brokers can now be done more quickly and easily by Web-enabled consumers.
“Historically the fundamental driver of the real estate industry was the control of information. The real estate agent and the real estate office were the only sources of comprehensive information on which properties were for sale and those who might be interested in buying them. With this control revenues were practically guaranteed.
Moreover, because this exclusive control was akin to a monopoly by virtue of the multiple listing service (MLS) any firm of any size could serve the customer equally well. As a result, the number of real estate companies grew without regard to market efficiencies.
Simply put, the traditional model is too inflexible. Consumers are seriously questioning the value of a real estate agent. They frequently feel that many of the traditional tasks undertaken by the agents are now either no longer required or can be done by the consumer themselves.”
– Swanepoel & Tuccillo, Real Estate Confronts Profitability
The quotes above, from a popular report on emerging real estate business models and dwindling profit margins, highlight a number of issues traditional real estate professionals are now facing. And if the real estate industry has grown historically without regard to market efficiencies, the issue has only been compounded since 2001, as new agents signed on in droves, lured by low interest rates and skyrocketing home prices in many areas. It’s likely that the number of traditional real estate agents will decline, while new types of real estate jobs will be created to deliver value to Web-savvy customers.
NEXT in Part 2 of 2: - Demanding Consumers, Downward Pressure and Developing Alternatives
Reinventing real estate, Part 2
Demanding consumers
“Internet buyers tend to be better informed on market conditions and better prepared to act on the home they want when they start working with a realtor. Luckily for realtors, these changes don’t necessarily hurt, as long as they are able to adjust to the new relationship and realize that the new-style buyers value speed and efficiency over guidance when finding a home.”
– E-marketer, Internet Home Buyers Changing the House Rules
Thanks to the Internet and other technological innovations, more real estate information is freely available than ever before. As a result, consumers are demanding new choices, improved services, faster transactions and lower prices. According to a recent NAR survey, the number of sellers stating that they didn’t want to pay a sales commission fee rose from 46 percent in 2003 to 61 percent in 2004. In 2004, 23 percent of Florida home sellers opted to sell independently without an agent, up from 14 percent in 2003 and nearly double the 14 percent national average, according to Planet Realtor.
And Web-enabled consumers are demanding a high digital IQ when working with real estate professionals. In addition to being well-versed on their own industry-specific technology, real estate professionals now are expected to utilize laptops, mobile phones, digital cameras, personal digital assistants and global positioning systems to keep pace with Internet buyers and sellers.
Downward pressure
“If consumers are going to do their own home-shopping online, they expect to save some money, just as they would for using the self-service lane. That's why they are susceptible to online discount brokers and the new affinity companies that are promoting lower commissions if only the consumers will use their agents. These business models promote the idea to consumers that they ought to be paying less money in commissions.”
Realty Times Columnist Blanche Evans
Traditional real estate commissions, typically around six percent of a home’s selling price, are facing downward pressure from consumers and competition. Some consumers claim traditional real estate commissions don’t reflect:
- Today’s home prices. Years ago, when median-priced homes sold for $25,000, real estate commissions were typically five percent, or $1,250. Today, with South Florida median home prices around $300,000, the cost of a six percent full-service real estate commission becomes $18,000. Some brokers even charge additional fees to cover administrative costs. When you consider that today’s average homeowner sells a home every five to seven years, real estate commissions can dramatically impact your personal savings and net worth.
- Owner equity. When selling properties, most homeowners calculate the cost of selling as a portion of sales price, though the commissions are paid out of owner equity. (Equity is the difference between the value of your property and amount of mortgages owed.) Consider this example: You decide to sell a property for $250,000 in which you hold 10 percent equity, or $25,000. After paying a six percent commission of $15,000, you are left with $10,000 before any applicable closing costs. In this example, the $15,000 commission is six percent of the selling price, but 60 percent of the $25,000 equity.
- Services performed. Under today’s commission structure, selling a $100,000 house at six percent typically costs $6,000, while selling a $500,000 house costs $30,000. Does selling the more expensive home really require five times more effort? Your cost is the same whether the agent spends one hour or 100 hours marketing your home. This is one reason many real estate consumers find fee-for-service real estate so appealing. Developing alternatives
“Consumers want what they want, when they want it and will gravitate to the most cost-effective source to obtain it. Why? Because our "one-size-fits-all" approach to working with sellers and buyers is archaic and won't allow consumers to access various segments of help they need in a timely fashion. That's why .com Web start-ups are finding a receptive audience in real estate consumers and why for-sale-by-owners are burgeoning.”
Julie Garton-Good, Author of “Real Estate a la Carte: Selecting the Services You Need, Paying What They’re Worth”
Until recently, you have had few practical alternatives to the traditional full-service, full-commission real estate transaction with a broker. Most sellers paid a single commission fee for a full range of real estate services, whether they needed them or not. Now traditional real estate agencies face the challenge of identifying new services that have value to today’s sophisticated online and empowered consumers.
One result is an “unbundling” of traditional one-size-fits-all real estate services for consumers who want more control over real estate transactions and their associated costs. If you’re willing to take on some tasks traditionally performed by agents and brokers, you could receive lower transaction costs. You might benefit from the following emerging alternatives:
Fee-for-services
“Consumers want assistance from real estate professionals, but don’t want to pay for it in the form of traditional commissions,” says a la Carte real estate Pioneer Julie Garton-Good. Garton-Good has been preaching the fee-for-services gospel for more than 20 years. As the name implies, you can choose which tasks you feel comfortable performing and hire qualified real estate professionals to do the rest. Many traditional real estate brokerages are beginning to offer a more menu-based service plan. For example, you may not mind listing your home and holding open houses, but you may want assistance with contracts and closings.
One-stop shopping
In response to dwindling margins and the rising costs of technology and lead generation, some real estate companies are attempting to combine traditional and Web-based services to provide consumers a single source for all their real estate needs. One-stop shopping sites generally provide or partner with lenders, insurers, title companies, real estate attorneys and others to facilitate all aspects of buying and selling. In addition, some sites are adding home-improvement and related services to stay in touch with consumers between buying and selling transactions.
Web-based discounters
Although many Web-based real estate companies flamed out in the dotcom era, scores of new companies have emerged to take their place. By offering targeted services such as flat-fee MLS listings, buyer rebates and AVM tools, these sites are appealing to independent buyers and sellers who prefer to take a more active role in transactions. In addition to listings, some sites also offer how-to articles and advice for those who choose to go it alone. Tradition + technology + turbulence = opportunities
So, given the trends, changes and ongoing industry evolution, what can independent buyers, sellers and investors expect in this new era of real estate?
• The Web and other technologies will continue to evolve and transform the $1.3 trillion real-estate industry. Technology will continue to reduce the time, expense and complexity of manual processes, and increasingly sophisticated search and valuation tools will play a more strategic role.
• Free and low-cost real estate resources will continue to be available and even multiply on the Web. In real estate, knowledge truly is power. Consumers will try to use their power to gain more control of the real estate process and subsequently expect to be compensated in the form of reduced and fee-for-service commissions.
• The role of traditional real estate brokerages will evolve as Web-enabled consumers become more knowledgeable. This likely will trigger some restructuring and consolidation of traditional brokerages, but will also drive the development of innovative new practices targeting online and empowered consumers. Real estate professionals will focus more on promoting their local knowledge and industry expertise, while consumers will perform some buying and selling tasks on their own.
• Traditional real estate commissions and profitability levels will continue to face downward pressure from various sources. The future will be profitable for brokerages that are able to extend their core expertise of neighborhood and industry knowledge into flexible new consumer-centric offerings.
• The traditional high-touch, full-service real estate agency is evolving, not disappearing. Real estate professionals who provide exceptional service and value to their customers will always be in demand.
You now can find more real estate knowledge, tools and resources on the Web than ever before, enabling you to buy and sell with increased confidence. For real estate professionals, reinventing the industry means making hard decisions, changing processes and managing new opportunities. But for consumers, reinvention in real estate is a winner, hands-down.
You don't get what you deserve
… you get what you negotiate for.
A well-worn cliché? Perhaps. True, definitely -- especially in real estate transactions.
Many buyers and sellers put in countless hours carefully searching properties or preparing their homes for sale, only to see their sweet deals vanish at the negotiating table. Even if you’re not an experienced negotiator, there are steps you can take to improve results whether you’re buying or selling property. Negotiation doesn’t need to be a confrontational process if you set priorities, plan ahead and stay focused on issues, not personalities.
By far the largest expense related to traditional real estate transactions is the agent/brokers' commission, and independent buyers and sellers should take advantage of this fact. Without the “overhead” of a 5-6 percent commission, both buyer and seller have a little more flexibility to come to an agreement that’s acceptable to both parties. Here are some negotiation tips for independent buyers and sellers.
Seller negotiating tips:
Set realistic priorities before you start.
When selling, be sure to outline realistic goals before negotiations begin. If you’ve decided that you need to sell your home for at least $250,000, expect to have very different negotiations than if your goal is to sell within 30 days. If money is your primary concern, be prepared to turn down some offers as you wait for the right buyer. If time is more important to you than money, be sure to include some flexibility in your asking price.
Ultimately, the market sets the price.
Set your price too high and your house may sit on the market, becoming less attractive to buyers (some sources estimate a monthly decline of 1.5 percent). Price too low and you’ve got less room to negotiate and may be leaving money on the table. Homekeys.net Members can quickly obtain an objective estimate of property value using our online valuation tool before listing. Another option is to hire a professional property appraiser prior to listing. You may find the cost of either option to be modest compared to making an expensive mistake in your selling price.
Take inventory and take advantage.
Typically, property sales include anything that’s installed or built in to the home. If you’ve got appliances, furniture or fixtures you’re willing to part with, you may be able to entice prospective buyers by including them in the deal. Would buyers be interested in your BBQ grill or pool equipment? It can’t hurt to ask.
Buyer negotiating tips:
Clean up your credit
A great way to strengthen your case as a buyer is to demonstrate excellent credit. The time to check credit is well before negotiations begin so you can square away problems. Many credit issues are not difficult to fix and can be straightened out fairly quickly. Here’s how to check your credit.
Get pre-approved, not just pre-qualified
Pre-approval is another way to flex your buyer muscles because it lets you demonstrate to a prospective seller that your lender is prepared to give you a loan. Many sellers will choose a lower offer from a pre-approved buyer over a higher one from one who hasn’t been pre-approved. Pre-approval is free and can prevent that worst-of-all situation where a buyer successfully negotiates the purchase of his or her dream home and then cannot complete the purchase when financing falls through. Get pre-approved today.
Look for areas other than price.
Even though independent sellers can avoid some or all commission costs, there are still other fees that might apply: property and termite inspections, escrow or attorney's fees, a title search, insurance costs and applicable taxes. Even if sellers don’t offer much flexibility on asking price, they may be more willing to make a deal with buyers who offer to share the costs of necessary repairs or transaction expenses.
Be prepared to compromise.
Approaching negotiations with a confrontational “win-at-all-costs” attitude is unlikely to yield positive results. Many professionals who teach negotiation skills to executives say a more realistic goal is to find a mutually beneficial solution in which both parties can “win.” This means being aware that you may have to sacrifice something to reach agreement at some point. In this case, be sure to identify in advance what you will and will not give up to ensure you’re happy with the deal in the long term.
Back up your offer
When offering to buy a property, you don’t have to explain how you arrived at a particular dollar amount. But you may fare better in negotiations if you have some objective basis, such as examining comparable sales. If you're a Member, try Homekeys' ValueKey valuation tool for an objective estimate of value. If you’ve got a substantial down payment that you’re ready to put into escrow, now’s the time to mention it.
All participants in a negotiation should be prepared to walk away from unacceptable terms. You may be reluctant to give up after all the time you’ve invested in the buying or selling process, but emotionally tense negotiations can sometimes benefit from a cooling-off period. Walking away (or watching the other party walk away) may be uncomfortable, but it is always preferable to accepting terms you can’t live with.
Finally, remember that there’s often value in being direct. Don’t be afraid to ask questions to learn more about the other person’s concerns and objectives. “What do you need from me right now?” “What’s making you uncomfortable?” “It seems we are stuck on this particular issue. Can we set it aside for a moment and see if there is somewhere else we can gain agreement?” Questions like these can help signal your good faith and may help to restart negotiations that become bogged down in details.
… you get what you negotiate for.
A well-worn cliché? Perhaps. True, definitely -- especially in real estate transactions.
Many buyers and sellers put in countless hours carefully searching properties or preparing their homes for sale, only to see their sweet deals vanish at the negotiating table. Even if you’re not an experienced negotiator, there are steps you can take to improve results whether you’re buying or selling property. Negotiation doesn’t need to be a confrontational process if you set priorities, plan ahead and stay focused on issues, not personalities.
By far the largest expense related to traditional real estate transactions is the agent/brokers' commission, and independent buyers and sellers should take advantage of this fact. Without the “overhead” of a 5-6 percent commission, both buyer and seller have a little more flexibility to come to an agreement that’s acceptable to both parties. Here are some negotiation tips for independent buyers and sellers.
Seller negotiating tips:
Set realistic priorities before you start.
When selling, be sure to outline realistic goals before negotiations begin. If you’ve decided that you need to sell your home for at least $250,000, expect to have very different negotiations than if your goal is to sell within 30 days. If money is your primary concern, be prepared to turn down some offers as you wait for the right buyer. If time is more important to you than money, be sure to include some flexibility in your asking price.
Ultimately, the market sets the price.
Set your price too high and your house may sit on the market, becoming less attractive to buyers (some sources estimate a monthly decline of 1.5 percent). Price too low and you’ve got less room to negotiate and may be leaving money on the table. Homekeys.net Members can quickly obtain an objective estimate of property value using our online valuation tool before listing. Another option is to hire a professional property appraiser prior to listing. You may find the cost of either option to be modest compared to making an expensive mistake in your selling price.
Take inventory and take advantage.
Typically, property sales include anything that’s installed or built in to the home. If you’ve got appliances, furniture or fixtures you’re willing to part with, you may be able to entice prospective buyers by including them in the deal. Would buyers be interested in your BBQ grill or pool equipment? It can’t hurt to ask.
Buyer negotiating tips:
Clean up your credit
A great way to strengthen your case as a buyer is to demonstrate excellent credit. The time to check credit is well before negotiations begin so you can square away problems. Many credit issues are not difficult to fix and can be straightened out fairly quickly. Here’s how to check your credit.
Get pre-approved, not just pre-qualified
Pre-approval is another way to flex your buyer muscles because it lets you demonstrate to a prospective seller that your lender is prepared to give you a loan. Many sellers will choose a lower offer from a pre-approved buyer over a higher one from one who hasn’t been pre-approved. Pre-approval is free and can prevent that worst-of-all situation where a buyer successfully negotiates the purchase of his or her dream home and then cannot complete the purchase when financing falls through. Get pre-approved today.
Look for areas other than price.
Even though independent sellers can avoid some or all commission costs, there are still other fees that might apply: property and termite inspections, escrow or attorney's fees, a title search, insurance costs and applicable taxes. Even if sellers don’t offer much flexibility on asking price, they may be more willing to make a deal with buyers who offer to share the costs of necessary repairs or transaction expenses.
Be prepared to compromise.
Approaching negotiations with a confrontational “win-at-all-costs” attitude is unlikely to yield positive results. Many professionals who teach negotiation skills to executives say a more realistic goal is to find a mutually beneficial solution in which both parties can “win.” This means being aware that you may have to sacrifice something to reach agreement at some point. In this case, be sure to identify in advance what you will and will not give up to ensure you’re happy with the deal in the long term.
Back up your offer
When offering to buy a property, you don’t have to explain how you arrived at a particular dollar amount. But you may fare better in negotiations if you have some objective basis, such as examining comparable sales. If you're a Member, try Homekeys' ValueKey valuation tool for an objective estimate of value. If you’ve got a substantial down payment that you’re ready to put into escrow, now’s the time to mention it.
All participants in a negotiation should be prepared to walk away from unacceptable terms. You may be reluctant to give up after all the time you’ve invested in the buying or selling process, but emotionally tense negotiations can sometimes benefit from a cooling-off period. Walking away (or watching the other party walk away) may be uncomfortable, but it is always preferable to accepting terms you can’t live with.
Finally, remember that there’s often value in being direct. Don’t be afraid to ask questions to learn more about the other person’s concerns and objectives. “What do you need from me right now?” “What’s making you uncomfortable?” “It seems we are stuck on this particular issue. Can we set it aside for a moment and see if there is somewhere else we can gain agreement?” Questions like these can help signal your good faith and may help to restart negotiations that become bogged down in details.
How Home Buyer Rebates Work
By : Charles Warnock
In today�s tight housing market, many buyers are looking for ways to stretch their dollars far enough to make that dream home a reality. One little-known strategy that�s gaining popularity with consumers is the home buyer rebate. At the same time, rebates have become a hot-button legal issue for the traditional real estate industry and the U.S. Justice Department�s Antitrust Division.
Buyer rebates are loved by consumers, at least those who know about them, because they can make getting into a home more affordable. More and more so-called non-traditional real estate companies �� those offering alternatives to full-service, full-commission brokers � are offering to share their paydays with buyers. At the same time, many traditional brokers around the nation are trying to block rebates because they threaten fat margins with price competition in the form of commission discounts.
Since buyers pay the lion�s share of closing costs in addition to down payments, many are interested in receiving rebates to ease the cash crunch of moving into a new home. This can be a real advantage for buyers who have a solid income and credit history, but little cash up front.
In this case, the term �rebate� is little confusing because home buyers are not getting a portion of their cash outlay back. The buyer representative (agent, broker or both) is rebating a portion of his or her commission back to the buyer.
The rebate process seems confusing to some buyers because it runs counter to the common belief that home buyers don�t pay real estate commissions. In fact, commission costs are passed on to buyers as part of the home�s sales price. Buyer-agents typically are paid half the standard 5-6 percent of sales price commission. That money doesn�t come from thin air�chances are that the sellers have factored commission into their price. When traditional listing agents tell sellers not to stress over commissions, because they can recover the costs through a higher sales price, someone is paying the freight.
So how do home buyer rebates work, and what�s in it for you?
- In traditional real estate transactions, buyer representatives and seller representatives typically share commissions of 5 to 6 percent. Selling brokers usually offer half this commission to a broker who brings them a buyer. As an incentive to drum up business, some brokers now offer to rebate a portion of their buyer-representative commission to home buyers. For example, suppose you buy a $400,000 home on which the seller pays a six percent commission. The buyer and seller representatives split the $24,000 commission evenly. In this case, a one percent rebate means that the buyer representative receives $12,000 from which they pocket $8,000 and �rebate� $4,000 back to the buyer.
- Buyer rebates generally depend on the home�s sales price, total amount of commission and the commission split. Some rebates may be advertised as a percentage of the buyer-representatives commission. In the example above, the rebate is $4,000, or about 33 percent of the $12,000 buyer-side commission. Other companies offer fixed-amount buyer rebates, such as $1,000 in cash or a $1,000 gift certificate.
Homebuyer rebates: To ban or not to ban?
At the same time consumers are looking to rebates to help relieve the high cost of home buying, traditional real estate brokers are trying � and succeeding in some cases � to prevent their use. Broker lobbying groups around the nation, concerned about price competition and downward pressure on commissions, have successfully lobbied lawmakers in 10 states to make home buyer rebates illegal. Four more states limit home buyer rebates to credits at closing. Fortunately for Florida buyers enduring record-setting home prices, rebates remain legal in the Sunshine State.
Industry watchers recently have looked to the state of Kentucky to see where the rebate debate might lead. In March, the U.S. Department of Justice sued that state�s Real Estate Commission, alleging that its rebate ban violated antitrust laws. The DOJ investigation alleged that Kentucky�s rebate ban may cost consumers �several thousand dollars� extra for each real estate transaction. In July, rebate fans received a victory when the DOJ and the Kentucky Real Estate Commission reached an agreement permitting rebates in that state.
If you�re shopping for a rebate, get the facts:
Some points to keep in mind if you are a home buyer looking to take advantage of rebates:
- Shop around. Some rebate programs included other buyer services, such as contract preparation or review, or escrow services. Even in a sellers� market, buyers have some leverage. After you have established the rebate amount, ask what else is in the package to help simplify your purchase and control transaction costs.
- Consider your tax picture. Getting a rebate in the form of funds applied to closing can be double-win because that money may go untaxed when applied to closing costs. If the rebate or a portion of the rebate is not available until after closing, it may need to be reported as taxable income. Of course, this isn�t an issue if you have plans for your rebate other than closing costs. Be sure to consult your tax advisor for this and other tax consequences of home buying.
- Rebates won�t be available on many homes, including sale-by-owner homes and some homes sold by discount brokers. That�s because in these cases, the traditional commission percentage and split � from which the rebate is derived � doesn�t apply. Some real estate companies don�t offer buyer-agent commissions, and owners selling their own homes probably are doing so to avoid commissions.
Finally, check to see if rebates are legal in your state. Money Magazine�s 2005 Real Estate Guide reported that rebates were banned in Alaska, New Jersey, Kansas, Oklahoma, Rhode Island, Louisiana, South Carolina, Mississippi, West Virginia and Missouri. Rebates were reported as restricted to credits at closing in Alabama, South Dakota, Oregon and Tennessee. If rebates aren�t available in your state, you might ask your buyer agent what incentives are available. After all, for being a smart buyer in today�s challenging real estate market, you deserve some type of reward.
OK, here's an old one...
Tales of the Touareg and other adventures in branding
By: Charles Warnock
You’re not likely to see a Volkswagen in the winner’s circle at Daytona or Indianapolis. But if there were competition called the Brand-Building 500, you would find a Volkswagen in the winner’s circle, year after year. Everyone knows the touchstones of branding – creating value, consistency, visibility and loyalty. However, like auto racing, these fundamentals are easy to talk about, but a little more challenging to execute. Nearly anyone can steer a car around a track. But winning consistently against fierce competition in a variety of locations and conditions requires considerable skill.
Few companies are more skilled than Volkswagen at building customer loyalty. Owners become emotionally invested in their cars, invent pet names for them and treat them like extended family members. In addition to automobile devotees, the company has many more admirers who are fans of the brand. Their irreverent image and clever television ad campaigns speak to young buyers today with a message that’s consistent with the one used to sell Bugs to their parents 30 years ago. If you’re a hip, free-spirited kind of person who wants a car with personality, come join us. Among marketers, the company’s promotional prowess is legendary:
The last original VW Bug, forerunner of today’s modernized Beetle, rolled off the production line in 2003 – the last of 21,529,464 sold worldwide since the 1930s. In addition to dozens of Bug restoration and repair books, several compilations of VW’s popular print ads have been published.
A “Transparent Factory” in Dresden, Germany features glass walls that enable residents to witness the manufacture of VW luxury sedans. Finished vehicles are displayed in a glass tower before being delivered to their new owners.
In 1973-74, the company sold 30,000 VW “Things” – a re-badged German military vehicle that looks very much like the offspring of a jeep and a dumpster – to enthusiastic U.S. buyers.
In fact, even as Europe’s largest automaker, VW has been successful in defining a sort of exclusive club for younger, educated drivers. Many of these buyers start with a Jetta or a Beetle before moving on to the company’s more luxurious offerings.
And now comes the Touareg, VW’s entry into the luxury SUV market. Touareg is apparently a first-rate SUV with what USA Today calls “style, grace and growl.” But Touareg? Come on. Passat is an odd name, but “Touareg” sounds like something that needs calamine lotion.
Worship me or die
Perhaps Touareg has some poetic meaning in Slovakia, where it is built. Or perhaps the industry is simply running out of good car names. It’s a good bet that if you looked through enough sci-fi novels, you would encounter an evil warlord called Touareg the Terrible who aims to enslave a galaxy or kidnap a lovely Empress. What’s next? Ming the Mercury? The Plymouth Vader? On the other hand, a “Worship Me or Die!” ad campaign for the Touareg would be a refreshing change of pace from those friendly, self-deprecating Beetle commercials.
On the plus side, it’s a pretty safe bet that Touareg doesn’t mean “won’t go” in Spanish and won’t offend Wiccans, Jaycees or the Saharan nomads the vehicle is said to be named for. But VW could have accomplished that by calling it the Type 181, which is what the Thing was called during its hitch in the military. Perhaps Volkswagen thought that all the good rugged locale names, like Tahoe and the Santa Fe, were taken. The VW “Peoria” or “Levittowner” just wouldn’t have the same caché.
Likewise, many of the good predatory animal names are already taken. Some of the best mythical beasts, like the Thunderbird and Phoenix are also spoken for. Few people would be willing to take on a 60-month loan for a GMC Grackle, Mitsubishi Gerbil or Toyota Trout.
Perhaps automakers can enter brand partnerships with corporate sponsors, as some sports and entertainment facilities have done. The introduction of a Nissan Nike or Plymouth Viagra may not cause much of a stir at this point. With bland brands like Vitara, Spectra, Elantra and Optima becoming more common, one could assume that there are even worse nameplates yet to come. In just a few years, all the good brand names could be taken and we’ll begin to see automakers settling for second-tier names:
15: Volvo Vanilla
14.Nissan Eeyore
13. Oldsmobile Earlybird
12.Lincoln Pimpmobile
11. Chevrolet Groin
10.Kia Uvula
9. Pontiac Schmontiac
8. BMW Strudel
7. Subaru Musty
6.Honda Pretense
5. Isuzu Achoo
4. VW Vin Diesel
3. Mercury Mongrel
2. Plymouth Scrota
1. Hyundai Albundai (for drivers who are married with children)
Another possibility is for automakers to trade on the success of celebrities who have already built winning brands. I would expect that the Cadillac Sinatra would be popular with both older buyers and younger fans of the legendary singer. The Mazda Beyonce would be sleek, fun to drive, have a great sound system and a built-in celebrity endorsement. And it’s hard to imagine that a limited Elvis or Earnhardt edition of any pickup truck wouldn’t drive sales in the South.
Passat? Bless you!
Elvis and evil warlords aside, the bottom line is brand equity, and it doesn’t really matter whether Touareg is a successful sub-branding strategy. Even if individual VW models have names that sound like a sneeze or a rash, buyers seem to focus on the magic of the corporate brand.
Mere marketing mortals should probably assume that VW’s positioning, promotion and publicity formula for the Touareg is on target. The vehicle probably will garner its own cult following, and Touareg clubs, meetings and Web pages will follow. But it’s not because of the name. It’s because the company has consistently excelled in developing the awareness, recognition and loyalty necessary to build a premium brand. After all, any company that has taken the purchasing decision from “Which car should I buy?” to “Which VW should I buy?” deserves the checkered flag.
Tales of the Touareg and other adventures in branding
By: Charles Warnock
You’re not likely to see a Volkswagen in the winner’s circle at Daytona or Indianapolis. But if there were competition called the Brand-Building 500, you would find a Volkswagen in the winner’s circle, year after year. Everyone knows the touchstones of branding – creating value, consistency, visibility and loyalty. However, like auto racing, these fundamentals are easy to talk about, but a little more challenging to execute. Nearly anyone can steer a car around a track. But winning consistently against fierce competition in a variety of locations and conditions requires considerable skill.
Few companies are more skilled than Volkswagen at building customer loyalty. Owners become emotionally invested in their cars, invent pet names for them and treat them like extended family members. In addition to automobile devotees, the company has many more admirers who are fans of the brand. Their irreverent image and clever television ad campaigns speak to young buyers today with a message that’s consistent with the one used to sell Bugs to their parents 30 years ago. If you’re a hip, free-spirited kind of person who wants a car with personality, come join us. Among marketers, the company’s promotional prowess is legendary:
The last original VW Bug, forerunner of today’s modernized Beetle, rolled off the production line in 2003 – the last of 21,529,464 sold worldwide since the 1930s. In addition to dozens of Bug restoration and repair books, several compilations of VW’s popular print ads have been published.
A “Transparent Factory” in Dresden, Germany features glass walls that enable residents to witness the manufacture of VW luxury sedans. Finished vehicles are displayed in a glass tower before being delivered to their new owners.
In 1973-74, the company sold 30,000 VW “Things” – a re-badged German military vehicle that looks very much like the offspring of a jeep and a dumpster – to enthusiastic U.S. buyers.
In fact, even as Europe’s largest automaker, VW has been successful in defining a sort of exclusive club for younger, educated drivers. Many of these buyers start with a Jetta or a Beetle before moving on to the company’s more luxurious offerings.
And now comes the Touareg, VW’s entry into the luxury SUV market. Touareg is apparently a first-rate SUV with what USA Today calls “style, grace and growl.” But Touareg? Come on. Passat is an odd name, but “Touareg” sounds like something that needs calamine lotion.
Worship me or die
Perhaps Touareg has some poetic meaning in Slovakia, where it is built. Or perhaps the industry is simply running out of good car names. It’s a good bet that if you looked through enough sci-fi novels, you would encounter an evil warlord called Touareg the Terrible who aims to enslave a galaxy or kidnap a lovely Empress. What’s next? Ming the Mercury? The Plymouth Vader? On the other hand, a “Worship Me or Die!” ad campaign for the Touareg would be a refreshing change of pace from those friendly, self-deprecating Beetle commercials.
On the plus side, it’s a pretty safe bet that Touareg doesn’t mean “won’t go” in Spanish and won’t offend Wiccans, Jaycees or the Saharan nomads the vehicle is said to be named for. But VW could have accomplished that by calling it the Type 181, which is what the Thing was called during its hitch in the military. Perhaps Volkswagen thought that all the good rugged locale names, like Tahoe and the Santa Fe, were taken. The VW “Peoria” or “Levittowner” just wouldn’t have the same caché.
Likewise, many of the good predatory animal names are already taken. Some of the best mythical beasts, like the Thunderbird and Phoenix are also spoken for. Few people would be willing to take on a 60-month loan for a GMC Grackle, Mitsubishi Gerbil or Toyota Trout.
Perhaps automakers can enter brand partnerships with corporate sponsors, as some sports and entertainment facilities have done. The introduction of a Nissan Nike or Plymouth Viagra may not cause much of a stir at this point. With bland brands like Vitara, Spectra, Elantra and Optima becoming more common, one could assume that there are even worse nameplates yet to come. In just a few years, all the good brand names could be taken and we’ll begin to see automakers settling for second-tier names:
15: Volvo Vanilla
14.Nissan Eeyore
13. Oldsmobile Earlybird
12.Lincoln Pimpmobile
11. Chevrolet Groin
10.Kia Uvula
9. Pontiac Schmontiac
8. BMW Strudel
7. Subaru Musty
6.Honda Pretense
5. Isuzu Achoo
4. VW Vin Diesel
3. Mercury Mongrel
2. Plymouth Scrota
1. Hyundai Albundai (for drivers who are married with children)
Another possibility is for automakers to trade on the success of celebrities who have already built winning brands. I would expect that the Cadillac Sinatra would be popular with both older buyers and younger fans of the legendary singer. The Mazda Beyonce would be sleek, fun to drive, have a great sound system and a built-in celebrity endorsement. And it’s hard to imagine that a limited Elvis or Earnhardt edition of any pickup truck wouldn’t drive sales in the South.
Passat? Bless you!
Elvis and evil warlords aside, the bottom line is brand equity, and it doesn’t really matter whether Touareg is a successful sub-branding strategy. Even if individual VW models have names that sound like a sneeze or a rash, buyers seem to focus on the magic of the corporate brand.
Mere marketing mortals should probably assume that VW’s positioning, promotion and publicity formula for the Touareg is on target. The vehicle probably will garner its own cult following, and Touareg clubs, meetings and Web pages will follow. But it’s not because of the name. It’s because the company has consistently excelled in developing the awareness, recognition and loyalty necessary to build a premium brand. After all, any company that has taken the purchasing decision from “Which car should I buy?” to “Which VW should I buy?” deserves the checkered flag.
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