Lead Generation Law #2…Feed the Database

LeadGenLast week I covered the first law of lead generation which is to build a database.  Law #2 states, “Feed it everyday.”   You have two options when it comes to feeding your database.  You can fill it people you have met or those you have not met.  Let’s start with those you know or have met.  This group is significant in that you probably have some kind of relationship in place with these people.  But a few things to consider here.  First, as you add these folks into your system it is important to categorize these leads into groups.  Start with the people you know really well, this includes close friends, family, neighbors, etc.  Keep it simple in terms of group names so you will know exactly who is in each group.  The next group might be people you come into regular or semi-regular contact with.  This could include people from church, your kid’s school or sports activities, heck even your Starbucks barista., dry cleaner or grocery clerk.  The next group is very important as well.  People you have done business with!  Some in real estate call this group “past clients”.  I don’t like that term because it infers I won’t do more business with them.  I just like to call them “Clients”.  We’ll talk more about this group next time, but get them into your database!  The next group for the “Met” category will be those you have met in your lead generation activities but have not yet transacted with.  These folks may not be quite ready or are in the tire kicking phase.  A very important group we will discuss more as well.  Lastly don’t forget your allied services.  Title reps, escrow officers, loan officers, etc.  They are always hitting you up for leads and you need to be doing the same!

Let’s move onto the “Not yet met” category.  This group is made of people you have spoken with but have not yet had a meeting with.  Maybe they called you on a mailing or you called them during your routine prospecting time.  This group will be HUGE!  And by that I mean in terms of sheer numbers.  You will talk to a ton of people you will never meet.  But that does not mean you can’t generate business from them!  Follow the same process for adding these folks into groups, however you will most likely use more specific group names like FSBO, expired listing, cold call, etc.  It’s important to use easy to understand group names so you have a point of reference when it’s time to contact them.

The last point I want to make, and one I will expand on later, is that the “have not met leads” will be a lot more in term of the amount of people in this category.  The way it works out for lead per sale ratio is, for every 50 have not met, who you market to 12 times, will turn into one sale.  So a lot more work here compared to the met group, but again I will go into more detail next time.  I’ll wrap up saying again, my job as the Team Leader/Chief Business Strategist at Keller Williams in La Mesa is to help you accomplish your goals.  So why not start today by reaching out to me to set up a business analysis and planning session to get you heading in the right direction?  I’ll be back next week with Law #3 and until then have a great weekend!

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Here’s a question, “Do you know the 4 laws of lead generation?”

get-trafficLead generation is at the heart of everything we do in real estate.  It is also the #1 issue agents struggle with!  I learned a long time ago that there are only four things we do in real estate that actually produce income.  Now, there are lots of other things we need to do, but you must find a way to stay focused on these four things.  They are, Lead generate, effective lead follow up, present your services and negotiate contracts.  If you spend 80% of your day in these areas then you will succeed.  So let’s break down the  four laws of lead generation.  And today I will focus on the first law.

Lead Generation Law #1: Build a database!

da·ta·base [dey-tuh-beys]
noun
1. A comprehensive collection of related data organized for convenient access, generally in a computer.

I know it sounds easy, right? But be brutally honest with yourself. Have you ever had a client use another agent after you worked with them? How good was your follow-up AFTER the close? I used to adopt the other agents client after close and market to them AS IF I was their agent. I sent them just listed/sold cards, market updates, invitations to events, etc. None of that happens unless they are in my database! OK, let’s get real. You know you can improve in this area, and I can help you.  You need to segment your database into two areas, people you know or have met with, and those you don’t know.  Using the proven model in the Keller Williams lead generation system the target number is 1,920 people in the MET category.  From there it is a simple process of communication with the big goal being 320 sales.  When is the last time you closed 320 sales?  Now, there is more to this to be sure.  And that’s where I come in.  As the Team Leader/Business Strategist at Keller Williams in La Mesa, CA, it’s my job to help you accomplish this big goal.  So why not start today by reaching out to me to set up a business analysis and planning session to get you heading in the right direction?  I’ll be back next week with Law #2 and until then have a great weekend!

Is cash really king? A case study…

Cash-Bonus-293x300So maybe you didn’t hear it here first.  And perhaps there is some trepidation as you read about how the market is picking up.  I get it.  Real estate has been hit hard the past several years.  But like a punch-drunk boxer taking a standing 8 count, the market is digging deep and finding its equilibrium. So here’s the thing…It’s back!  Like every cycle before, the housing market is cutting through and leading the economic recovery.

And if you think cash is king…think again.  In some markets nearly half of all transactions involve cash buyers, but that doesn’t really tell the whole story.  With the right agent in place you can find a great property and beat out those cash buyers.

The Right Agent

I read a blog recently that questioned the value of relationships between agents.  I’m here to tell you firsthand that it matters…A LOT!  Working with an agent who is not only well-connected, but also well-respected, can make the offer, negotiation, acceptance, and closing details go much smoother.  It’s like anything else really.  Why do we shop at certain stores?  Why do we take our cars to a certain mechanic?  In many cases it’s because of the relationships we have with the people there. You also must work with an agent who knows what you want…and knows the local market you are interested in better than anyone else.  In addition to knowing what’s available, and that’s not much these days, they need to know what’s under contract and if there are circumstances that may cause it to fall out.  Again, relationships and connections.

Case Study Part 1:  On St. Patrick’s Day we met with a client who expressed an interest in buying a property.  After a short discussion about their needs, I ran an MLS search and found only 4 homes that were active on the market and met their criteria.  Now, because we constantly monitor the market and talk with other agents, I knew there were 2 other homes under contract that also fit their needs.  I called the agents and guess what?  One of them just cancelled escrow and was going back on the market that evening.  I called the buyers, met them an hour later, and wrote the offer.

timing-is-everythingTiming is Everything

We’ve all heard this expression.  But you must understand that timing can be the key to beating out the cash offer.  Here’s the reality of cash offers.  They usually come from investors and what do investors want?  The best deal (lowest price) possible.  So all things being equal when it comes to price, the terms you offer, along with the timing, can make all the difference.  And it’s not just about taking the home in “as-is” condition.  A great strategy should include the best terms and timing important to the seller.

Case Study Part 2:  Back to our St. Patrick’s Day buyers.  Since I had a good relationship with the listing agent I was able to ask some questions about why the home fell out of escrow, and what were the important issues facing the seller.  I was informed the seller had just moved to an assisted living facility and was concerned about her children having time to come in from out-of-town and being able to get her belongings out.  Simple fix.  We offered to give them extra time after closing to handle this…at no cost to them.  Piece of mind goes a long way!  I also discovered the seller wanted to close ASAP.  Again, an easy fix as we offered to close on their time frame.  As you can see it’s really just about communication and a meeting of the minds.  Thing is buyers have to come to grips with the fact that this is a seller’s market and sometimes that takes losing out on a few places to get it.  The right agent and strategy around timing and terms makes a world of difference.

The Right Terms

Every buyer has their own set of circumstances.  So I want to remind you that you should do what you feel is best when it comes to your situation.  But you need to think about what you can, and cannot, live with and how can you make your offer the most appealing to the seller.  Here are some common terms buyers offer up:

  • Closing time frame
  • Inspection time frame
  • Appraisal and loan contingency removal
  • Who pays for title, escrow, repairs, warranty, etc
  • Deposit amount

Agents tend to draft offers based on local custom.  What happens is they often use a “Contract Template” with the same default settings.  Real estate is not cookie cutter and you should discuss with your agent what you can do differently to make your offer stand out.  If that also matches up with terms and timing the seller has mentioned, you could be the winning bidder.  You may want to offer to close faster, or pay for things like warranties and termite reports vs. having the seller pay for them.  Make it as easy as possible for the seller to accept your offer.

Case Study Part 3:  After talking with the agent we knew why the property had fallen out of contract, when the seller wanted to close, how much time they needed after closing to remove personal belongings, what they did not want to pay for, and who the agent liked to use for services such as title and escrow.  We also knew there were competing offers and one was cash.  After considering all this and reviewing the sellers counter offer, and speaking with their lender, the buyer decided to make it easy for the seller to accept their offer.  They came in a little higher than their initial offer, increased their deposit, agreed to take the home in “As-Is” condition, and offered the seller even more time after closing to clean the place out.  The end result?  Cash is not always king!

   

The Top 3 Real Estate Deal Breakers…

Deal or no deal?  When it comes to real estate there is only one thing that really matters…Closing!  It’s what all the players want and strive toward.  Everyone wants to close!  The trick, of course, is to navigate the many pitfalls along the way so everyone gets what they want.  After nearly 20 years of practicing real estate, I have seen lots of things that complicate transactions and cause escrow to fall apart.  However, there are 3 things that almost always kill a deal.  And here they are!

Deal Breaker #1:  Property condition.  In California the real estate contract is set up so that each transaction is an “As-Is” sale.  Basically that means that language is included in the contract that states the buyer is buying the property in its present, as-is condition, subject to inspection rights.  The problems arise when sellers or agents don’t disclose problems or potential problems.  Preparing the buyer can save a lot of time and money down the road.  If the buyers come in with eyes wide open and have a good understanding of the property condition then the transaction can most likely move along.  Certainly there are things that the seller may not know about and that are discovered during the home inspection, but if everything the seller does know about is disclosed upfront, then the buyer is more likely to be understanding of additional concerns.  There is almost always a secondary negotiation that occurs after the physical inspection, so as a seller be prepared for that!  Don’t take it personally, every house has problems!  As a buyer don’t nickel and dime the seller!  If you are asking for repairs or credits, keep it to items that are safety and/or health issues.  The inspection is not a laundry list of upgrades for you to ask for.  It’s to get a neutral 3rd party opinion of the condition of the property.

Deal Breaker #2:  The Appraisal.  Having the appraisal come in under the agreed upon sales price has become more common over the past few years.  Short sales and foreclosures have caused appraisers to have a hard time with values.  It’s important to understand what exactly an appraisal is.  It’s an OPINION of value as of that given day.  The market is fluid and changes daily, even hourly.  A new listing coming on the market, or a sale closing the day after your appraisal will have an impact on the value of the subject property.  While there is some science involved it’s also an art.  If an appraiser is not familiar with the neighborhood that could be an issue.  After all we buy a house for more than just the house, right?  A great school district can affect value.  So can a freeway running through the backyard!  When an appraisal comes in low there are basically 3 things that can happen.  The buyer can come up with the cash for the difference.   This rarely happens in a declining market because who wants to overpay for a home?  Second a seller can lower the price to the appraised value.  This happens fairly often in these circumstances, but can be tricky if the seller is close to break even on the property.  Third, the transaction is cancelled and everyone walks away.  Not a good thing, but again it’s fairly common.

Deal Breaker #3.  Financing.  This is the key to everything…no pun intended.  Getting the loan is at the root of every successful closing.  The most important thing to consider here is to work with a lender that will tell you like it is.  The fact is either you can afford the home or you can’t.  There is no maybe.  One of my biggest pet peeves is a lender that says they can do it and then they can’t.  Tell me upfront!  I know you want the deal but not everyone can buy right now.  Do us all a favor and tell the truth!  We can handle it.  Here are some tips on financing.

  • Ask for recommendations:  Your friends, co-workers and family members may be able to recommend a good lender. Ask them if they are happy with their loan and their lender’s customer service. Whatever you do, do not settle for the first company that offers you a loan. Find a trustworthy, reliable lender that is the best fit for you.
  • Fixed-rate vs. adjustable rate: A fixed-rate mortgage has an interest rate that locked in throughout the life of the loan (usually 15 to 30 years.) On the other hand, an adjustable rate mortgage (or ARM) has interest rates that vary over the life of the loan. With an ARM, your interest rates can change every six to 12 months or even monthly. Typically, an ARM’s interest rates are tied to an economic index, such as the national mortgage rate. When rates are high, your rate will increase. When rates are low, your rate will drop.If mortgage rates are extremely low when you’re buying a home, you should probably choose a fixed rate loan. That way, your rate will be locked in at this low level for the life of your loan. On the other hand, if interest rates are very high and you think they will decrease soon, you may consider an ARM. However, this is an extremely complicated decision, so you may want to discuss your options with your real estate agent or a financial adviser.
  • Rate lock-ins: If you expect interest rates to rise in the near future, you should ask your lender for a mortgage rate lock-in when you apply for the loan. This ensures that the rate the lender offers you will stay the same for certain period of time (usually 30 to 60 days.) That way, if you buy a home within the next month or two, you’ll be guaranteed the same mortgage rates that are available today. Once you lock in your rate, ask your lender for a contract or statement including your interest rate and the amount of time the rate will stay the same.
  • Closing costs: There are countless fees and closing costs associated with mortgage loans. These fees can add up quickly and easily push you over budget. Make sure your lender provides you with a Good Faith Estimate, and take time to read all the fine print. Ask plenty of questions about any fees you don’t understand or consult an attorney for further explanation.
  • PMI: You are required to pay Private Mortgage Insurance (PMI) if your down payment on a home is less than 20 percent of the total purchase price. PMI is a type of insurance that protects the lender against the risk of your default-which is what happens if you can no longer make your monthly mortgage payments. Although the cost of PMI varies depending on your mortgage company, premiums typically run about 0.5 percent of the loan amount for the first year of the loan. PMI premiums usually decrease after the first year.
  • Get pre-approved: Once you find the perfect lender, go through the pre-approval process with them before you start your house search. When you get pre-approved, you won’t be tempted to buy a house you can’t realistically afford. Plus, when you’re ready to make an offer, pre-approval also gives you stronger negotiating leverage. If a seller knows you’ve already been approved for a loan, they’ll be more likely to take your offer seriously.

So there you have it.  The top 3 reasons real estate transaction fall apart.  Of course there are many other reasons things go wrong, but 9 times out of 10 one of these 3 things comes into play.  If you’d like more information you can visit my website.  For buyer info click here.  For seller info click here.  Thanks for checking in and see you soon!

I can see clearly now…My take on transparency…

When it comes to making disclosures in real estate transactions my litmus test has always been simple.  “If there is ANY question about whether to disclose something, then disclose it.”  Pretty straight forward.  Well in practice the issues are such that people can’t always be counted on to follow the same path.  A little paint here, some tile there, and voila…problem hidden…er solved.

This post is a bit different in that I am not talking about disclosures in a real estate transaction.  I’m talking about disclosures in a business relationship.  The premise is the same, “Do I know everything I need to know and have you given me all the information I need to make a good decision?”  Certainly I must take some responsibility in terms of doing my own research, etc.  But let’s face it, as much as we’d like to think it’s so, not everything on the Internet is true or searchable!  Every once in awhile you really have to dig to find something, and then it can be obviously questionable.  But what about when facts are purposely hidden?  Or the names have been changed to protect the guilty?

I guess what I’m really getting at is the attitude that some have when it comes to disclosing what they THINK we should know, instead of just coming clean with all the details.  Is not mentioning something the same as hiding it?  Would the business be where it is if the full history of all involved were fully disclosed to everyone that does business with or works for the company?  You see what happens when something is DISCOVERED vs DISCLOSED is that it sends up red flags.  Lots of them.  Especially when these issues are of a legal nature.  In the real estate business we are regulated by state licensing agencies and with that comes a greater responsibility to “Protect the public interest”.  If an agent or broker signs on to to do that, and then finds out later that vital information was withheld that could potentially jeopardize not only the business, but the client, the customer, and the license, well that just seems wrong to me.

The moral question that comes to my mind is one of what happens next?  Going forward what are the responsibilities, and maybe liabilities, that you now have to bear?  It’s like seeing your friends wife out a date with another man.  Do you tell him?  Do you confront her?  What are the consequences here?  Tough call.  But remember my litmus test…if you have any question about whether you should disclose something or not, then you do.  Period.  And it’s even more important when the other party just doesn’t get that.  In the world we live in you can’t simply get away with sweeping things under the rug.  And when it is discovered, your attitude can’t be one of, “Well geez I’m not sure how they found that out.”  You have to own it and get out front…which should have been the way you did it in the first place.  At least that’s my take.  What’s yours?

ATTENTION ALL SELLERS! Question for you…

Before I get to the question I want to outline what the big debate is all about.  This issue has been debated for years by real estate brokers and agents, and it has to do with where and how the agent you hire markets your property online.  It’s obvious the Internet has changed how we communicate, learn, connect, market, and quite frankly live!  Rules needed to be put in place to govern all that, and this is where we, as real estate practitioners, feel the pinch.

Several years ago rules were developed about how and where we could display your property.  It’s called IDX, or Internet Data Exchange.  The basic idea is, “I agree to let you display my listings on your web site, and in return I can display yours.”  Now, I can choose to not let another broker advertise my listings, but if that’s my choice then in return I cannot advertise their properties on my site.  With me so far?

Well something along the way changed the game…REALTOR.com.  Now we had this national site that displayed ALL the listings across the country for all to see.  Sounds good!  Well not quite.  The only way for REALTOR.com to make money was to up-charge agents for “enhancements” to their own data.  This rubbed people the wrong way.  Fast forward and now we have Zillow, Trulia, and countless other “3rd party syndicators” doing the same thing.  Sure they have most of the listings and all of the traffic, but they still have not come up with a way to make money other then to use the data to create advertising platforms agents have to buy to have their information on their own listings!  If you’ve ever used those sites you know that the information is not always accurate, homes listed as available aren’t, prices are wrong, etc.  That’s another issue for another post.

Recently several brokerages have made the decision not to send their listings to these large national sites.  In fact, one right here in San Diego made this announcement recently via this YouTube post:

ARG -Abbott Realty Group Announcement

This post has made the rounds and created quite the discussion.  But what escaped me in all this was one question, “What do sellers want?”  After all it’s your house, right?  When you hire a broker to sell it, what are your expectations when it comes to marketing?  Do you want your agent to expose it to as many buyers as possible?  Is having it all over the Internet what you expect and want?  To me that’s the real issue.  How do we best serve our customers?  I’d love your feedback and please take a second to take the poll.  Every real estate agent will appreciate your feedback.