Five Do’s and Five Don’t’s for New Agents

Make Mistakes, Practice Scripts and Other Practical Advice for Rookies


This is the eleventh piece in our twelve-month Rookie Series. Don’t miss:

If you have an idea for an article, please share it with editor@aaronline.com.

Five Do’s to Build Your Career

  1. Spend some time creating a written business plan. This should include both short-term and long-term goals. Decide whether you are more driven by a specific number of sales or a desired income. Don’t worry that you don’t have all the skills yet to achieve your goals. You will learn as you go. Like the old saying goes, “If you don’t know where you’re going, how will you know when you’re there?”
  2. Make mistakes! That’s right; you are encouraged to make mistakes. That is how you will learn. Agents who are too afraid to make mistakes rarely get anything accomplished. The key to making mistakes is to use them as a learning experience. Remember what Winston Churchill said, “Success is the ability to go from failure to failure without the loss of enthusiasm.”
  3. Add everyone you know to your database – and then contact them. Having names in your database doesn’t mean a thing if they don’t hear from you on a consistent basis. The key is having a reason to contact them. Birthdays, anniversaries, sales in their neighborhood, community activities and charity events can all be a motive to touch base. They may not need your services now. You just want them to think of you when they, or someone they know, does.
  4. Practice your scripts and dialogues. It might not sound glamorous, but the sooner you know what to say, the sooner you will be comfortable in a sales situation. Tiger Woods still goes to the driving range before he tees off in a tournament, and major league baseball players still spend February and March in spring training. The more they can rehearse their “scripts,” the more they will be able to rely on them when they are “in action.”4a. Role play. Not many people like to role play, but even fewer people enjoy messing up a great opportunity because they didn’t know what to say or how to say it. You can practice all day long in front of a mirror, but until you try it with a real live person, it’s not the same. Pair up with a fellow new agent or a manager and have fun.
  1. Take time for personal and family enjoyment. It will be hard to take time off because you won’t want to miss any opportunities. But think about this: If you don’t learn to take time off now, when you’re not busy, how will you ever make time when you actually have business? Besides, when you are relaxed and doing the things you enjoy most, you’ll be surprised how much business will come to you when you’re not even looking for it. That’s what is called a “win-win” situation.

 Five Don’t’s to Build Your Career

  1. Don’t fear negotiation, welcome it. If people are willing to negotiate, that usually means they have some interest in what it is you are offering. Take a negotiation class, read books on negotiation and study your own habits and styles of negotiation. Why do you seem to “give in” or “give up” when you are negotiating for something? Remember, nobody likes to feel like they have lost, so seek common ground and work towards it.
  2. Don’t forget this is a “no” business. Welcome to the world of sales. This job isn’t about houses; it’s about people and their wants, needs and dreams. We can’t help everyone, and we can’t expect everyone to want to work with us. Don’t take it personally if people tell you no. Thank them and move on to the next person.
  3. Don’t expect to have all the answers right away.This job is always changing, so even the top agents are learning something new every day. The fact that you have your license means that you know more than the average person. If you don’t know the answer to someone’s question, admit it, tell them you will find the answer out and get back to them in a timely manner. They will appreciate your honesty.3a. Don’t act like you know everything already. People don’t like know-it-alls or name droppers. You probably don’t either. There is a fine line between being confident and being cocky.
  1. Don’t think the leads are going to come to you. You must actively pursue any and all leads you may get. That means adding them to a database and scheduling follow-up consistently. Some may come to fruition quickly, some in due time and some not at all. You just want to position yourself for the moment when the prospect is ready, willing and able to proceed.
  2. Don’t skip steps. You cannot get to a paycheck until you have had a closing. You cannot have a closing until you have made a sale. You can’t make a sale before you have a seller or buyer. You cannot get a seller or buyer without an appointment. You cannot schedule appointments if you are not talking to people. If your long-term goal is earning a comfortable income, your short-term goals must be to talk to people and schedule appointments.

This article originally appeared on BrokerAgentSocial.com.

Five Tips to Prospect like a Powerhouse Agent

Positive Ways to Adjust Your Mindset, Call List, Environment and More


rookieprospecttips

This is the eleventh piece in our twelve-month Rookie Series. Don’t miss:

If you have an idea for a rookie article for the series, please share it with editor@aaronline.com.

To be a powerhouse prospector, you must first answer this question: Why? Why do I want to do this? What is the outcome I am looking for?  My reason for doing this is ________________! If you don’t have an underlying strong desire or passion for getting on the phone each day, you either won’t do it or you won’t do it with resolve and get results. Once you determine that you really want this and are willing to do what it takes to make this work, you must address the following five things:

1. Mindset

What type of mindset do you have? What is your opinion of calling for business? Whatever it is, this determines your success more than any other tip I can give you. The right attitude when dialing is critical. Do you believe that the prospect will be rude or that maybe you are interrupting them? If you tell yourself that story, that is the result you will get. Are you completely unattached to the outcome each time you don’t set an appointment or the prospect hangs up on you? Remember, if you are making it about you, then you are bringing way too much ego to the call. It is always about the client or customer – the more you make it about them, the more you win. Consider that dialing that phone is an opportunity to help someone realize their dream of selling or buying. Your job is to consult with them, to provide them good, solid, honest advice and to ask questions that can help lead them to their desired outcome.

2. Who Ya Gonna Call?

Do you get to the office each day and ask yourself that question? If you do, you are already behind the powerhouse agents who already know who they are calling each day. They leave a list of past clients and centers of influence on their desk before they leave the office the day before so that they have a group of calls to make as soon as they get there. They then pull up the new expireds from the day before and any for sale by owners (FSBOs) they have. Once they complete those calls, they can move to just listed just solds or calling businesses and talking real estate. Start with people you know–friends and family, past clients and centers of influence. Those calls are easier to make and will build your confidence for the more difficult calls. Once you have called four or five friends and family, move to calling expireds, FSBOs and recent listings and sales. (For help in getting these names and numbers, check out www.theredx.com.) A great rule of thumb for calling past clients and centers of influence is to take your total database and divide it by 60. (That’s the number of work days in a quarter.) Our goal is to contact this group of people once a quarter.  I have found that if you do this, 10% of them will do business with you or refer someone to you every year. If you really want to kick up your return on the time you spend dialing the phone, check out www.mojosells.com.  This is a great service that dials your prospects’ numbers for you at lightning speed, three numbers at a time, and connects you with the first person who answers. Awesome!

3. Whatcha Gonna Say?

Do you have a script you can use? You will need one for each category of calls you make. Go to www.yourcoach.com and check out some of the great free scripts we have. Here is the process for handling questions and objections: 1.  Repeat their answer. 2.  Acknowledge them – Great! Interesting! Wonderful!

  • Our job is not to tell them they are right when they may not be.
  • Our job is to not make them wrong.

3.  Ask them another question. Prospects have objections, and they have conditions. Do you know the difference? Objection – A complaint, contradiction, counter argument or challenge.  An objection is something you can respond to and possibly change the outcome. Condition – A situation, circumstance or state of affairs that we cannot change or counter. What are some conditions?

  • My husband’s transfer did not go through.
  • I lost my job.
  • I cannot move until my kids get out of school.

How do we handle these? If it is a condition we cannot do anything about it.  We cannot take a non-motivated seller and make them motivated. Objections on the other hand can be dealt with if we have the proper scripts and dialogues.

Environment

What does your environment look like? Are you making your calls from your kitchen table? Or when you walk into your office do you find your mind immediately going to everything else but making your calls? They’re called distractions, and we must eliminate all distractions if we want our prospecting to be profitable. Go to a quiet place where you don’t have anything on the wall but the scripts you are using and a mirror. The mirror helps remind you to smile while speaking. Create the workspace so that you can stand up while making your calls. If you stand up, your energy is stronger, and that energy comes through the phone. Let’s face it: the prospect doesn’t want to hear a slug on the other end of the phone. They want to hear someone who is passionate about what they are doing. Okay, your environment is perfect, and you are standing up looking at those scripts you want to use. Then you realize that you can read those scripts but have no idea how to really make them work while on that phone. Are you accepting a no when a yes may still be available? If you are, stop asking yes-and-no questions. That’s where the scripts will help you get a yes.  If you spend time practicing what you are going to say, you will feel more confident and comfortable using the scripts. Get a different practice partner for each day of the week you plan to prospect. To get a yes more often, consider how you sound when you are speaking.  Are you high pitched and shaky when you speak or do you go down at the end of your sentences? When you drop your voice down at the end of each sentence, it makes you sound more confident. Repeat the answer you get so the prospect knows you heard them and then affirm their answer. By affirming them, you are not saying they are right; you are simply giving them the right to have an opinion. Some words that affirm the prospect’s response are: Great! Wonderful! Interesting! Terrific! Ouch! Good for you!

Putting It All Together

Here are a few miscellaneous thoughts to help you with prospecting:

  • Never, never argue with them. It puts them on the defensive.
  • When should you call prospects? Three times a day:
    • First thing in the morning
    • During lunch
    • Between 4:30pm and 6:30pm
  • If you don’t reach them during the week, set aside one hour on Saturday to try again. If you cannot reach them, drop by their house.
  • How many times should you let the phone ring? Never let it ring more than three times. If it takes longer than that for the prospect to answer, they will probably be irritated.
  • How long should you hang on to the expireds if you haven’t reached them? If you have tried to reach them in the morning, the evening and on Saturday with no luck, and have dropped by, then move on to the next one.
  • Follow a posted daily schedule – from the time you reach the office until noon each day should only be for practicing your scripts, making your calls and doing hot lead follow up.
  • Before you leave the office, clear your desk and lay out the list of people you will be calling tomorrow. Remember, you have never seen them before and, unless you set an appointment, will never see them again, so don’t take it personally. They don’t.
  • Don’t get too involved in their objections. Acknowledge them and tell them you will cover that at the appointment.

Remember, there are two groups of people out there: those you know and those you don’t.  Which group is bigger?  Right, those you don’t know. In order to build a successful real estate practice, you need to regularly call those you know and daily call some that you don’t know. Strategy matters and passion rules!

Five Things You Should Know About Taxes

Audits, Education Expenses, Residence-to-Rental Conversions & More

By Marianne K. Kingman, J.D., LL.M.


If you have an idea for a rookie article for the series, please share it with editor@aaronline.com.

The information below is for your reference. Remember: Always recommend that your clients seek competent tax counsel when considering issues that may affect their tax liability

1. First-Time Homebuyer Credit

If your client claims the credit on their 2009 or 2010 original or amended tax return, they cannot file electronically. In addition, they must attach the following documentation regarding their main home as applicable: a copy of their settlement statement showing all parties’ names and signatures, the property address, the contract sales price and the date of purchase. Their settlement statement typically is their properly executed HUD-1. The IRS encourages the buyer to sign the settlement statement prior to attaching it to the tax return.

If the date purchased is after 04/30/10 and before 07/01/10 and they entered into a binding contract before 05/01/10 to purchase the home before 07/01/10, attach a copy of the pages from a signed contract to make a purchase showing all parties’ names and signatures, the property address, the purchase price and the date of the contract.

If they are claiming the credit as a long-time resident of the same main home, attach copies of one of the following: mortgage interest statements, property tax records or homeowner’s insurance records. These records should be for five consecutive years of the eight-year period ending on the purchase date of the new main home.

2. Social Security Tax Exemption and Credit

The 6.2% Employer Social Security Tax exemption applies to previously unemployed individuals hired after 02/03/10 who have worked less than 40 hours during the 60-day period prior to employment and whose 2010 earned wages after 03/18/10 and before 01/01/11 do not exceed $106,800.

A $20,000 assistant hired on 05/01/10 saves an employer about $800 in taxes. Delaying the hiring until 09/01/10 would reduce the savings to about $400.

Employers will receive an income tax credit, which is either $1,000 for each qualifying worker hired after 02/03/10 and employed for at least 52 consecutive weeks or 6.2% of wages paid to the assistant over the 52-week period, whichever is less. Wages during the last 26 weeks must be at least 80% of wages paid for the first 26 weeks. Any new hire must certify by signed affidavit that they have not been previously employed for more than 40 hours during the prior 60-day period.

Neither the exemption nor credit is permitted if a person is hired to replace another employee unless such other employee is separated from employment voluntarily or for cause.

3. Personal Residence Conversion into Rental Creates Loss

A taxpayer purchased a home in Phoenix in 2005 for $250,000. $50,000 represented the cost of the land. They lived in the home until 2008 when they moved out of state. Rather than sell the house, they converted it to a rental property. The property’s fair market value (FMV), including the land, on its conversion to rental property was $150,000. The basis for depreciation in 2008 is $100,000—the FMV excluding land at the time of conversion—since it is less than the original purchase cost excluding land (or $250,000 less $50,000).

In 2009, the taxpayer sold the property for $125,000.
Original purchase cost: $250,000
FMV on conversion date: $150,000
Depreciation since conversion date: $7,272
Basis for tax loss: $150,000 minus $7,272 or $142,728
Basis for tax gain: $250,000 minus $7,272 or $242,728
Sale price: $125,000
Tax loss: $142,728 minus $125,000 or $17,728

The taxpayer has an allowable tax loss of $17,728 because the value of the property continued to fall after the conversion date.

4. IRS Audit Representation and Other Options

The Internal Revenue Service (“IRS”) accepts most federal income tax returns as filed; however, the IRS audits some returns for accuracy. IRS auditors are instructed to close audits within 28 months of the date that the taxpayer filed their 2009 tax return or the date it was due, 04/15/10, whichever is later. The IRS legally has until 04/15/13 to conduct an audit.

The taxpayer does not have to accept an audit report findings. The report can be appealed by sending a letter to the IRS within 30 days after the receipt of the audit report. The taxpayer can also file a petition in tax court if the appeal fails. A REALTOR® should consult with a competent tax attorney or CPA for help .

An installment agreement can be a reasonable payment option for those taxpayers who cannot resolve their tax debt immediately. Installment agreements allow for the full payment of the tax debt in smaller amounts. A taxpayer still qualifies for an installment agreement if they owe more than $25,000 in combined tax, penalties and interest; however, a Form 433-F will need to be completed.

The IRS has been known to accept considerably less than the amount owed on a tax bill if the taxpayer qualifies for something known as an Offer in Compromise (“OIC”). Submitting an OIC to the IRS is a formal process. One starts by completing IRS Form 656.

There is no legal right to have a valid tax bill reduced by the IRS. It is entirely a matter of the IRS’ discretion. Most OICs submitted are rejected by the IRS. The taxpayer does have the right to take a rejected OIC through the appeals process.

5. Tax Credit for Educational Expenses

The Hope credit for tax years beginning in 2009 or 2010 is amended. The modified credit is referred to as the American Opportunity Tax Credit. The credit is up to $2,500 per eligible student per year for qualified tuition and related expenses, such as books and equipment, for each of the first four years of the student’s post-secondary education in a degree or certificate program, which includes training to be a real estate agent. The modified credit rate is 100% of the first $2,000 of qualified expenses and 25% of the next $2,000.

The qualified tuition and related expenses must be incurred on behalf of the taxpayer, his spouse or dependent. The credit is available with respect to an individual student for four years, provided he has not completed the first four years of post-secondary education before the beginning of the fourth tax year. The credit is phased-out for taxpayers with modified adjusted gross income between $80,000 and $90,000—or $160,000 and $180,000 for joint filers.

Marianne K. Kingman received her J.D. from Boston University School of Law in 1997 and her LL.M. degree in taxation from the University of Washington School of Law. In 2005, she began the tax services firm of Kingman Winslow, LLC, the only tax services firm in the nation to specialize exclusively on real estate agents and brokers for their tax accounting needs.

Five Things You Should Know About Real Estate Appraisals

The Appraiser’s Race from Request to Report


When an Appraisal Management Company (AMC) calls an appraiser to prepare a report, a stopwatch starts in the race from receiving the order to the finalized appraisal report. First, one appraiser is played against another for the lowest fee and fastest turn time. Once the order is assigned, the appraiser must inspect, measure, quantify and photograph the subject property, gather data, drive by the comparable sales, analyze and cross check all information. A multi-page document is reviewed from each lender to make sure their unique requirements are met.And the clock is ticking. The appraiser begins preparing a 20- to 30-page appraisal report. In the meantime, this report has to move into the flow of other reports being prepared in the office. Within hours, the appraiser is barraged with phone calls, emails and faxes from the AMC wanting to know when the property will be inspected, when will they have the report and why haven’t they received the report yet.Welcome to the world of the real estate appraiser and the race that ensues from request to report. How do we get to the finished product? What steps do we need to take and what are the pitfalls and issues appraisers and real estate agents need to avoid? Following are five things real estate agents should be aware of about the appraisal process:

1. Good, accurate data is critical to the appraisal process. Gathering accurate information about a property to be appraised, along with the market data to be used in the analysis, is critical. The agent is an important part of the process. The appraiser needs the agent’s knowledge about properties that have sold so that appropriate adjustments can be made to sales used in the report. If an appraiser calls for clarification of data, please take the time to assist in verifying the information. If the report will be used in a purchase, the appraiser is required to review the purchase agreement. Get a readable contract signed by both the seller and buyer to the appraiser.

Appraiser Licensing RequirementsBecause of the complexity and liability involved in estimating the value of real estate, the Arizona Board of Appraisal has the following requirements to become a certified appraiser:

Certified Residential Appraisal: 200-hour appraisal course; 21 semester credit hours of college or associate degree; 15-hour USPAP course; 2,500 hours of supervised training in appraisal preparation within 24 months; pass state examination. Requires 28 hours of continuing education every two years.

Certified General Appraisal: 300-hour appraisal course; 30 semester credit hours of college or bachelors degree; 15-hour USPAP course; 3,000 hours of supervised training in appraisal preparation within 30 months; pass state examination. Requires 28 hours of continuing education every two years.

2. The appraiser is working for a specific client. Therefore, information about an appraisal and the value estimate are confidential to that client. It does not matter who paid for or ordered the appraisal, the information is the property of the client. For example, if the appraisal is prepared for a lender, any information about the appraisal would have to come from the lender. If the report was prepared for a seller to help estimate the selling price of the property, the report belongs to the seller.

3. The appraiser is independent and is not an advocate of any party in the appraisal process. Be careful of comments that might be interpreted as pressure on the appraiser to arrive at a given value. Any coercion that pushes value in any way is against the law.

4. An appraiser determines the square footage of a house using American National Standards Institute (ANSI) standards. The livable area of a house is based on exterior foundation measurements. Some other standards are: areas below 5’ of headroom are not included in the square footage; any area that is accessed by going outside or through a garage, etc., is not included in the livable area and is valued separately; upper story areas must be accessed by stairs that meet code; livable area must have a permanent source of heat; at least half of a room must have a ceiling of 7’ or higher. FNMA standards require that the basement area be split out and valued separately from above-grade livable area.

5. It has become very common for real estate agents and builders to estimate the value of houses based on the livable area of the house (sale price divided by livable area) in a given neighborhood. If the homes are all identical or very similar, this might be usable. However, most times, this is not the case. This method of establishing value fails to take into account many variables, such as lot value, quality, condition, various amenities, car storage, outbuildings, design and other differences between homes. This method of estimating value can be very misleading and, in most cases, is not a reliable indicator of value.

According to the experts, three people are involved when fraud occurs in lending practices and/or establishing value for property: the real estate agent, the appraiser and the lender. Whether these three parties knowingly or unknowingly perform their duties in an unprofessional way, the outcome can involve fraud. Many real estate agents, appraisers and lenders are working hard to improve the integrity of our professions and regain the trust of the public.

Rookie Series: Five Things You Should Know About Escrow and Title

From Disputes over Earnest Money to the Settlement Statement and Beyond


1. Who Regulates Escrow And Title? 

Lines 89-91 of the AAR Residential Resale Real Estate Purchase Contract (AAR Resale Contract) read:  “The Escrow Company employed by the parties to carry out the terms of this Contract shall be:________________ “ESCROW/TITLE COMPANY”

In the above contract language, you see the words ESCROW/TITLE COMPANY.  In Arizona, most of the time the escrow and title services are completed by the same company.  Do you know which Arizona government agencies regulate the fees that escrow/title companies may charge in Arizona?  Escrow rates are regulated by the Arizona Department of Financial Institutions, while title insurance rates are regulated by the Arizona Department of Insurance.  Both of these government bodies periodically audit the files of escrow/title companies in Arizona to see if they are complying with state regulations.  So when a real estate agent asks an escrow company to reduce their fees on a short sale, they may not be able to because of state regulation.

2. What Does the AAR Resale Contract Say About Escrow? 

Line 89 of the AAR Resale Contract reads, “This Contract shall be used as escrow instructions.”  So the AAR Resale Contract is the escrow instructions.  Escrow instructions instruct the escrow company how to carry out the terms and conditions of the contract.  Be sure to give escrow a copy of any addenda that the buyer and seller execute during the transaction because addenda become part of the contract, and the contract is the escrow instructions.

3.  What Does the AAR Resale Contract Say about the Commitment for Title Insurance?

When escrow officers receive an executed purchase contract, they open escrow using the information from the contract.  They then order the Commitment for Title Insurance from their title department.  When the Commitment for Title Insurance is completed, it is sent out.  This document is the escrow/title company’s commitment to insure the title of the property subject to exceptions and requirements listed in the commitment.  Lines 98-99 of the contract read: “Buyer shall have five (5) days after receipt of the Title Commitment and after receipt of notice of any subsequent exceptions to provide notice to Seller of any items disapproved.”


4. What Does the AAR Resale Contract Say about Escrow Disputes Between the Buyer and Seller? 
Let’s look at an example of something the buyer may disapprove that may be listed in the commitment:  Your buyer wants to purchase a home that does not have a pool but has a large backyard because they want to put in a large custom pool.  You show your buyer a home with a large backyard and no pool, you write a contract and the contract gets accepted.  But your buyer may not be able to put in a pool.  Why?  There could be a recorded easement listed in the commitment that will not allow for a pool.  This easement would be considered an exceptionin the commitment.   Better to read the commitment within the allowed five days of receiving it and cancel the contract, rather then discovering the exception at a later date.  Legend has it that an out-of-state buyer did purchase a very expensive property with a large backyard, and when they went to put in a pool, they could not because of an easement exceptionin the title policy.

Lines 116-118 read: “Release of Earnest Money: In the event of a dispute between Buyer and Seller regarding any Earnest Money deposited with Escrow Company, Buyer and Seller authorize Escrow Company to release Earnest Money pursuant to the terms and conditions of this Contract in its sole and absolute discretion.”  In a dispute, the AAR Resale Contract gives the escrow company decision-making power over who will receive the earnest money.

If a dispute arises, escrow will review the reasons from both parties as to why they should receive the earnest money.   Escrow will ask for documentation of the delivery and receipt of notices.  Lines 348-351 of the contract address notices. Escrow will attempt to determine if these reasons line up with the AAR Resale Contract.  To protect your client, it is important for new agents to understand how the nine sections of the AAR Resale Contract work, how to write clear and concise contract language, when and how to execute a cure period notice, and how to document their file. 

This is the Ninth piece in our Rookie Agent Series. Don’t miss:

If you have an idea for a rookie article for the series, please share it witheditor@aaronline.com.

Occasionally the decision on who should receive the earnest money is difficult to make.  When this happens, escrow may suggest mutual written instructions executed by both parties defining how to disburse the earnest money or the escrow company may suggest the buyer and seller go to mediation per lines 283-292 of the contract.

5. Why Should New Agents Become Familiar with the Settlement Statement or HUD-1?

The escrow officer completes the HUD-1, which shows the costs associated with the closing of a resale transaction.  It shows how much money the buyer will need to bring in to close escrow.  It shows how much money the seller will receive.  It shows how much the short sale lender will net.  Information to complete the HUD-1 comes from the AAR Resale Contract, from the lender instructions if the buyer is getting a loan, and from the filed escrow and title insurance rates.  If it is a short sale, escrow needs a copy of the Short Sale Agreement Notice from the lender.=

Sometimes there are conflicting instructions.  For example, let’s say the AAR Resale Contract has the seller paying $7,500 of the buyer’s closing costs and prepaids, but the lender instructions will only allow the seller to pay up to $5,000.  When a conflict like this occurs, escrow will work to resolve the situation and often needs the help of the real estate agent and the lender.

Track Your Success

Want to Grow? Here Are Five Areas You Need to Watch


Most agents want to be successful, but few agents have the time and patience it takes to analyze their business strategies. But if you spend more time working “on” your business and not just “in” your business, the rewards are immediately evident. The process starts with tracking your successes and analyzing your failures. Performance that is measured improves. Just the act of tracking raises your awareness and creates a better result. Here are five stats you need to know to streamline your business and increase your profitability.Act your wage. Do you know your “billable hours” for the average listing or sale? If you can’t quantify your expenses in terms of time spent, how do you know if a transaction has been profitable? Keep track of your time in terms of your annual income goals. Use an accounting system that allows you to show the hours spent on a particular transaction. If you don’t value your time, neither will clients. Keep in mind that if your hourly wage is $50, it is foolish to do menial jobs that you could hire someone to do at $10 an hour.Focus on time management, an Achilles heel. Managing your time is managing yourself. Where you “spend” your time has a direct and significant impact on the results you want to create. I have watched agents add $50 to $200 an hour to their value in less than a year by simply focusing their attention on those activities that have high return value. Try this. Measure your time for one week by these three activities:

  • Directly produces income – buyer and listing presentations, proactive prospecting, showings, proactive open houses, follow-up on leads
  • Indirectly produces income – doing farm mailings, creating marketing pieces, reviewing websites, reading and analyzing statistics, writing for your blog or social networking site
  • Supports income production – attending meetings and skill-based classes, meeting repair people and inspectors, practicing scripts, previewing properties, doing bookkeeping and record keeping

Most agents spend less than one hour per day on income-producing activities. Plan your time to spend at least three hours per workday doing income-producing activities and watch the income soar.

When the horse dies, get off it. When something isn’t working, working harder at it won’t make it any better. Sending farm mail out? If it didn’t return any business, quit it. Are you calling past clients so often they served you with a restraining order? Ease up; it isn’t working. Judge all of your activities in terms of the closed business they produce. Try different things. This is a different market.

Leverage your expenses. Try approaching vendors and offering them less for their product or service. An amazing number will say yes. Keep in mind that your marketing should be an investment and not an expense. Learn to do more with less. Quit buying gadgets and systems you won’t use. Put that money into marketing and learning.

Keep it together. Have one place to keep it all. A central tracking system, either a book or software, allows you to organize a list of closed transactions, the source of that business, the dates opened and closed, the commission you received plus the number of hours you worked to obtain and close that business. Also keep all marketing materials, scripts that work for you, expenses, lead generation sources and the conversion ratio of those leads and sources.

I talk to agents every day that say they will be happy when the market returns to normal. But what if this market is the new normal? If you keep your stats and know your market, you’ll do just fine.

Five Questions to Ask a Loan Officer

Tips for Rookies as They Develop Their Network of Trusted Partners

One of the first things you will want to do in your first year in the business is to develop a network of lenders that you know and trust. Developing a go-to relationship with a lender or small handful of lenders is going to be a key to your overall success as an agent.Remember: Having multiple lenders that you have a relationship with will reduce your business risk in case something happens to one of them. Especially in today’s market, “life happens.” If you rely only on one lender, you may find yourself without a trusted advisor should something happen to that particular lender.When interviewing lenders to become a trusted referral partner, here are five simple questions to ask that will help you know what you really want to know, which is: Can I trust my clients with this person?

 


When Do You Answer Your Phone?
You might be surprised by the wide variety of answers you will get to this question. The important thing about the answer is not whatever the loan officer answers, but if the answer is what you are looking for. If they tell you that they are available on a 24/7 basis, when you need them on Saturday at 9am and they don’t answer, that is a problem. But if they tell you that they only answer during “normal business hours,” then you know what to expect.How Long Does It Take to Get a Loan Status Report?
When you send a client to speak with a loan officer, how long does it take for the loan officer to pre-qualify the client and issue a loan status report? Again, this is more about expectations. If the loan officer tells you “next day,” you know what to expect. If they tell you 20 minutes, then you also know what to expect.How Many Loans Do You Fund Each Month?
This will give you an idea of how active the loan officer is. There is no right or wrong answer, but you will want to have an idea of how busy they are so that you can understand the world they live in a little bit better. A loan officer who funds 30 loans a month has an entirely different job/life than a loan officer who funds 2 loans a month—and neither one is necessarily better than the other.How Long Have You Been in the Business?
This will give you a good idea of what kind of experience they have. Don’t let them just say “five years.” Have them explain about their experience at different companies, what types of job descriptions they had, and what they did and didn’t like about each one.How Long Are You Going to Be in the Business?
Leave the most surprising question for last. By asking the loan officer this question, you will be able to find out rather quickly whether or not it is a relationship that makes business sense to invest in. What good is a great loan officer if he leaves the business for some reason? Save this question for last—and make sure you read the loan officer’s body language when you first ask it. Many times their body language will say it all, regardless of what they actually “say.”And if the loan officers tell you that over the last few years they haven’t thought about getting out of the business completely? I will bet you a Diet Pepsi they are lying.

Five Things You Should Know about Home Inspections

An Experienced Inspector Answers Common Questions Your Clients May Ask

By Randy West


Your buyer  may ask you to recommend a home inspector. Your sellers may want details about the process when they hear that a home inspector is coming to visit. So it’s important for you to have some understanding of the home inspection profession. Here are answers to common questions your clients may ask.

Are home inspectors regulated in Arizona?

Home inspectors have been regulated by the Arizona Board of Technical Registration (BTR) since 2001. The requirements to be a Certified Home Inspector (CHI) in Arizona are more stringent than most other states. An applicant is required to complete 80 hours of education at an approved school, pass the National Home Inspector Exam and perform 30 parallel (training) inspections with a CHI. The applicant produces a report for each parallel inspection, and the reports are reviewed by the CHI. The applicant also maintains a log of these inspections signed off by the supervising CHI. Finally, the applicant submits a completed inspection report to BTR, which ensures it complies with the Standards of Professional Practice. Upon approval, the new CHI must provide the board with a home inspector bond or proof of errors and omissions insurance. Because home inspectors are often alone in a home, applicants must also submit a fingerprint card for an FBI background check.

These are the minimum requirements, but as in most regulated professions, there can be a large difference between individual inspectors. A contractor friend says he cringes every time he hears a contractor defend poor workmanship by stating it’s built to code— “built to code” is basically the worst home you can legally build. Most contractors build homes that exceed the building codes, and similarly most home inspectors produce reports that exceed the minimum standards.

What kind of report and information will I receive?

All home inspectors must provide a written report to the client that is in compliance with the Standards of Professional Practice for Arizona home inspectors. These standards explain what a home inspector has to do and what an inspector does not have to do. You can obtain copies of these standards to share with your clients from a local home inspector, from the BTR website (btr.state.arizona.us) or from the Arizona chapter of the American Society of Home Inspectors (800-723-2790).
There are two main types of inspection reports. A checklist report is a “carbon-copy” style report filled out with a pen and separated into three or four copies. Checklist reports are easy to prepare, so the advantages include quicker delivery of the report (usually on site) and a lower inspection fee. Narrative reports are prepared with a computer and usually include digital pictures. These take longer to prepare but usually provide more detailed information. Some inspectors can produce a narrative report on site, but many deliver the report the next day. Narrative reports are frequently emailed to the client and REALTOR®. Some inspectors provide a password to download a report off their website. There are also some hybrid reports (for example, checklist-type reports that are prepared on a computer).

How much does a home inspection cost?

Home inspection fees vary from area to area and from inspector to inspector. Many home inspectors have fees based on square footage. Some companies charge extra for an older home, a home with a crawlspace or a home with other features that take longer to inspect. Some companies offer additional inspections, such as a swimming pool inspection, for additional fees. Call a few inspectors to find an average in your area.

How do I find a good inspector?

An obvious way is to ask how long they have been an inspector, how many pre-purchase inspections they have completed and what type of report they deliver. Another way is to ask about any affiliations or organizations the inspector belongs to. There are independent home inspector organizations that have strict requirements for membership, such as NAHI and ASHI. ASHI, the American Society of Home Inspectors, is the largest and oldest non-profit home inspector organization. A certified member of ASHI has performed at least 250 home inspections, abides by the ASHI Standards of Practice and Code of Ethics and has continuing education requirements.

Should I attend the inspection?

Most home inspectors welcome the client to attend the entire inspection. I prefer that the client meet me at the end of the inspection. I do this for two reasons. First, I’m responsible for the home while I’m on site, and I don’t want the clients at the home until I can give them my undivided attention. Once when I was on the roof, I saw the clients arrive in a minivan filled with children, grandchildren, grandparents, neighbors and a few hitchhikers. Before I could get off the roof, all 47 of them walked through the mud and into the occupied home. None of them removed their shoes, and it took me a couple hours to clean up the mess.
Second, I can’t always explain everything until I’m completely finished. The attic and crawlspace are the last places I inspect, and often the most important. Until I’ve been there, I may not be able to tell you what caused that stain, what that valve is for or why there’s no airflow at the master bedroom furnace vent.

Home inspectors must have an inspection agreement signed by the client before delivery of the report. Only the client can sign the agreement unless the REALTOR® has a specific power of attorney. (A listing agreement or buyer’s agent agreement is not a power of attorney.) My agreement gives me permission to share the report with the client’s REALTOR®. Clients can sign the agreement at the inspection, but most inspectors prefer that the client receive the agreement ahead of time and review it. Email has made this easier. I provide REALTORS® with a blank copy of my agreement so they can fill in the address, client’s name and so forth. I suggest you get agreements from all the home inspectors you recommend.
Randy West has owned Professional Building Consultants in Prescott since 1993. He has performed over 6000 home inspections. He is an Arizona Certified Home Inspector and a Certified Member of ASHI. Randy is past president of the Arizona chapter of ASHI and serves on the Enforcement Advisory Committee and Home Inspector Rules and Standards Committee at the Arizona Board of Technical Registration.

Five Lessons on Social Media

All I Really Need to Know (About Social Media) I Learned in Kindergarten

 

It’s true! Yes, there is always more to learn, but you were probably taught what you generally need to know about social media in kindergarten.Share (almost) everything. 
Be yourself! Social media is all about attraction marketing. It is personal. People follow, friend, connect with or even fan you because they want to get to know you better. Engage people by commenting on posts and blogs, replying to tweets, participating in forums, instant messaging and more. Be genuine and transparent, but do not forget to protect your security. This lesson comes with a caveat: DO NOT share compromising information about yourself, your clients, your transactions, etc.Play fair. 
Playing fair means playing by all the rules. As REALTORS®, we have laws, our national code of ethics and standards of practice, Fair Housing laws and even Arizona advertising guidelines that govern our actions. These ALL apply online. The only difference between an online conversation and a conversation IRL (in real life) is that online, everyone can hear it (because it is in print and published). Remember that the virtual world is part of the real world and be sure to follow all the rules.Don’t hit people. 
Be nice. If you don’t have anything nice to say, don’t say anything! Would you say that to a person IRL? Think before you share, tweet or otherwise transmit and then do so with the golden or platinum rule. The platinum rule is to treat other people how THEY want to be treated. Don’t hit people up for business right away. Remember that spam is spam. You must have at least a minimal level of contact before marketing directly to someone. (Note: It is okay to “poke” on Facebook.)Clean up your own mess. 
If it is in your space, you are responsible for it. Last year NAR made some significant changes to the code of ethics detailed in this NAR Special News Report dated May 16, 2009:“Standard of Practice 15-2 was amended and a new Standard of Practice was approved to strengthen members’ obligations to refrain from making false or misleading statements about competitors, including in use of social media tools. The new amendment includes the duty to publish a clarification about, or to remove statements made by, others on electronic media the REALTOR® controls once the REALTOR® knows the statement is false or misleading. For example, if you’re publishing a blog and someone posts a false or misleading comment about a fellow REALTOR® on it, it’s your duty to remove the post or publish a clarification when you become aware of it.”Consider taking this a step further to include any comments that may be viewed as a Fair Housing violation, anti-trust violation, etc.

Don’t take things that aren’t yours. 
Don’t take things that aren’t yours without citing your source. One of the beautiful things about social media is that you don’t have to re-invent the wheel. It is perfectly acceptable to publish someone else’s information as long as you give credit and cite your source. On Twitter this is done through retweets. Just remember plagiarism is still plagiarism online, so be sure to give credit where credit is due.

And a bonus sixth lesson:

When you go out in the world, watch out for traffic, hold hands and stick together. 
When heading out into the virtual world, keep a watch out for changes in our national and state regulations and laws. Stick together with other real estate professionals by joining professional groups online. AAR, NAR and many local associations have groups and pages on LinkedIn and Facebook. These social media groups publish an impressive amount of up-to-the-minute information.


 

Five Things You Should Know about Real Estate Market Statistics

A Savvy Blogger and Market Expert Shares Tips on Becoming the Go-To Source


Real estate market statistics are a cornerstone of any successful agent’s business. Spending time analyzing and understanding the numbers not only will ensure that you know exactly what is happening in your market, but you’ll be able to demonstrate that knowledge to your clients and prospects with incredible ease. Next time you need to show someone you know your business, need a price reduction or need a justification for your buyer’s low offer, turn to the numbers.

1. Market Statistics Make You the Expert.

What do buyers and sellers want to know? “How’s the market?” If you can answer that question with real numbers instead of a vague answer, you establish your knowledge and expertise immediately. Being able to quote a few facts about the market with actual values brings credibility to what you say and establishes your expertise. After all, if you can tell them more precisely about the local market than what they hear on the national news, then you become the go-to source for real estate knowledge.

2. People Love Market Stats. Share Them!

Even if someone isn’t actively buying or selling a home, they’re still probably keeping an eye on the real estate market—especially your past client list and sphere of influence. Market knowledge is a valuable thing, so share it! Instead of sending a recipe postcard, try a quarterly market report. If you’re farming a neighborhood, why not include some detailed market knowledge on that offer to prepare a CMA? Sending regular market updates to your sphere of influence is a fabulous, low-pressure way to remind them that you’re in real estate and that you’re the expert. It’s something they’ll not only appreciate, they’ll share it with their friends and family too.

3. Provide Context, Not Just Numbers

Just because I can see what the NASDAQ closed at today doesn’t mean I understand what that means—or know if it is going up or down. There are many sources for people to find the average sales price in a given area. If you can be the agent that answers why, then you’re not only differentiating yourself from the pack, but you’re giving them information that they can really use. Don’t just spew the average sales price and inventory levels. Tell them if those values are going up or down and why that is happening. Think about what you’re seeing in the marketplace that would affect those values: seasonal trends, changes in financing, economic changes, government incentives and so forth. Here’s an example of combining the facts with the why. Always provide an answer to WHY those statistics are what they are.

4. Numbers to Know: Average and Median Sales Price, Inventory Levels.

You don’t need to memorize a large set of market statistics every month. Even knowing just two to three values will be enough to establish your credibility and allow you to talk easily about the market. My top three figures to know are the average sales price, the median sales price and inventory levels. The average sales price will give you a general sense of home values. The median (the home price where half the sales were below that value and half were above) will help you know what price ranges are selling. Together with the average sales price, it gives you the general trend of home values. The level of inventory tells you how quickly homes are selling and if there is an over- or under-supply of homes. Generally, inventory levels (also called months of inventory or absorption rate) are calculated by dividing the number of homes for sale by the number that sold.

5. A Picture (or Graph) Is Worth a Thousand Words.

One of my favorite ways to share and explain market statistics is with charts and graphs. A simple graph of the average sales price for an area can quickly show a home seller that values have decreased sharply over the last 2 years—like this chart of sales prices in southwest Tucson. Showing a buyer a chart displaying steadily decreasing inventory levels over the past few months may give them extra incentive to make a decision now before they have fewer homes to choose from and more competition. Charts tell a whole story of the market in a single glance. They don’t have to be fancy, just easy to read at a glance. If you keep track of just a few market stats every month in a spreadsheet, eventually you’ll have an enormous resource from which you can quickly make charts and graphs.
Don’t be intimidated by statistics. Master a few basics and establish yourself as the source of real estate information for your sphere of influence.