Scott LeForce's Blog

So, you’re probably wondering amidst all the good news about the economy spun from the dominate media culture, why the economy still feels bad?  Simple answer, many in the media complex don’t run businesses and they are listening to people who don’t run businesses for their sources.  What to do?

Well, if you’re like most real estate people I know; you’re working 5 times harder for less than half the income.  You’re not alone either.  You know where the vacant buildings, warehouses and retail stores are; you drive by them every day.  Just last summer a little over two-thirds of the entire industrial capacity in the US was working and in some sort of production use.  Today, that has dropped to just under 75% or about 5 points less than normal when the economy is doing well.  Don’t hear that in the news to you?

What does all this mean to your income?  It means you have to see and touch more people with your value proposition in person.  Belly to belly.  Face to face.  A prospect can’t send you to the deleted file, mail filter or trash can.  They have to talk with you at some point, hence your selling strategy and listening skills had better be ready and oiled for action. 

What advantage will I have in this scenario?  Well, most salespeople are going to be dead before they start.  Meaning they are getting ready to get ready.  They will never go anywhere.  You know who I’m talking about too.  Second, most salespeople will resist the street in favor of blast emails, wasted postage and off line gimmicks from personal promotion to refrigerator magnets.  That will account for about 93% of the competition.  7% will know this and immediately shift to the street for instant prospecting and immediate results.  Remember, even a call on a prospect that has to interest to purchase or sell is a worthwhile event.  It tells you who’s not players; sharpens your tactical skill and presents an opportunity for seeking referrals.

Those same 7 percent will communicate not only in person, but will use that offline call time to redirect their prospect to an on line resource (namely their BLOG) to keep the prospect attenuated to the needs analysis and selling points of your in person call.  Similarly, to what you do in the online world.

There is no better time to wake up and smell the pavement.

Why Knocking on Doors is Back in Fashion!
There is no question there have been hundreds of tantrums regarding the control of inventory REO agents have had in the past couple of years. Many who had those tantrums failed to create the relationships early enough to get a foothold on any meaningful accounts is the main reason. Other reasons follow – many discovered that being a rock and roll REO agent requires a lot of patient capital; extremely disciplined work standards and the fact REO agents resign themselves to server side applications that keep them at the keyboard for hours on end.
Well, times are changing and I’m going to make a short explanation of why door knocking is vogue…
Lenders statistically net more money on a Short Sale than on a REO. That is the shift that is taking place and the key to capitalizing on this requires an effort similar to what successful REO agents did; simply create the relationship before anyone else!
The only way you are going to find out who these sellers are is to find them prior to the Notice of Default (NOD) being filed. Once that happens, they are open and fair game for everyone and a new target for a litany of mail. Good old fashioned shoe leather will beat out direct mail on this one. Why? Because nothing beats a face to face call on a prospect and especially on this subject. Also, direct mail cannot ask and receive referrals like you can in person. Pretty simple.
Count on NOD’s rising too. There will still be an REO market of sorts, as a result of poor documentation of liens, uncooperative subordinate lien holders, high income sellers that don’t fit guidelines and poor yield spreads that will cause the lender to elect foreclosure over a short sale.
I mention this because rock and roll Realty World REO agents should diversify the marketing effort to accommodate short sales and polish up on using our new listing presentation materials and commence a canvassing plan without delay.
As recently as yesterday, two agents from Realty World – Delta Country in Byron, CA spent the afternoon cold calling and returned to the office with two listings! That is why door knocking is back in fashion.

Recently I’ve read some comments about the cost/benefit analysis of spending time blogging to attract customers. There is no question the publishing efforts that go into blogging require time and we all know time is money. As you probably do, I too know many offices, brokers and associate’s who don’t publish a blog at all and devote time to other activities.

With all the industry grandstanding about blogging, one might think that blogging is the only frontier for growing your business. Conferences, trade rags and the media are pouring the Kool-Aid in some instances, and in others bringing new and important business channels to accommodate the exploding tech generations. How we understand that information and deploy the perceived benefit is the trick. And we all know that publishing a blog is not the only thing to do in marketing. However, the growth of social media and the user generated content phenomenon must be addressed and a meaningful plan that fits your daily or weekly schedule is certainly in order. I hope you’ll note our new REVOLUTION Media Tours that are starting are designed will help you with this.

I know what really goes on at work and I know most everyone’s plans are not to run to the PC everyday and publish award wining blog content about your market and its trends, price reductions, new listings, neighborhood information, etc, etc. Everyone busy knows about the escrow that is running late and the new buyers circling the block in a rental truck; the 32nd call to the bank trying to close a short-sale and trying to explain these details to a first-time homebuyer with kit gloves at 9:00 o’clock at night. Those are important matters that require immediate and personal attention. Keep in mind those activities are not marketing though.

Like in every business, you need to develop a plan that fits you and your work habit and be willing to change it a little, to be flexible to new resources. To plan, organize, staff, direct and control your real estate business requires a constant adjustment in the marketing and service activities you put yourself through. Balance. Using every resource we continue to enhance for you (blog platforms, electronic listing distribution, CMA integrations and materials, online marketing center, video services, training classes, and more.), you should experience lower costs of doing business and increased productivity. Business will work your way in concert with a meaningful activity plan that fits the ‘what really goes on at work’ for you.

Also, your participation in social media is really nothing new in concept. You’re just using a different media and new way to accomplish similar results quicker and broader. While blogs, Fan Sites, FaceBook, et al, are developing social centers. Continued participation in civic, small business, chamber and similar groups are just as important as blogging. So is using the telephone and working your direct mail and contact list. Being there is still ninety percent of it.

And that’s no Kool-Aid.

We are on a mission to rebrand at our company. That is to say the name won’t change but the experience is. From a business perspective, branding is not that different from marking the hind quarters of cattle with a hot iron. It becomes a mark or an identifier that distinguishes us from all the other players in the pasture. Yes, even when we, the real estate professionals, look pretty much the same to the consumer.

Obviously the name of the game is to leave the realization in the mind of the consumer that our real estate brokers and agents are the ultimate specialists in their market. Increasingly, almost exponentially, you’ll note the trends of this experience happening in the online world. Welcome to the new pasture.

This is the subject of a many real estate blogs these days, however by a limited number of contributors. Although growing and I suppose I’m now one of them; I’d like to put emphasis on the shift from marketing a product or service to buying a product or service.

This is important in real estate today and really deserves much more focus. Especially since branding and marketing are essentially the same thing. This becomes increasingly important as the trends from “selling” are declining. Because of culture, technology and the myriad of distractions in day to day life; most products and services are bought by the consumer nowadays and not sold to them.

The trends began when you got your first computer and entered young grasses of the Internet. Just think about the increase in online purchases you have experienced throughout the past ten Holidays without physically being in the store with a salesperson.

Now you see why we have to reposition brand. It must be online and it can’t be just a logo. Consumers are being attracted to a knowledge base and the brand makes ratification to the purchaser the product or service is that of quality.

The most successful businesses in the internet are interactive and full of recent reviews, information, pictures and video. The experience is rich. You can talk back to it, follow it, share it and have access to from a cell phone these days. And this is the territory we are rebranding.

So how is this happening? It centers on our associates understanding that personal promotion is now done online. Secondly, it is not the personal promotion the industry pundits have sold you over the past 15 years. Simply, it is solely about promoting your knowledge base of your market, not by saying you are good, but by actually showing and delivering content and information through our technology. That is the experience, which is part and parcel, to the rebrand.

We are enthusiastically creating and updating these systems for our customer, the Realty World Northern California and Nevada franchisees and their associates. If you’re not using these systems today, we invite you to come with us and discover the tall grass!

Recently I was on a camping trip with several of families and their children. Many of the kids are approaching their High School graduations’ in a year or two and naturally the subject their futures popped up now and then while talking around the camp fire.

I was pleasantly surprised to learn that a couple of the older kids were interested in retirement and saving money. Wow, these are teenagers! I was excited to talk to them about saving and the benefits that grow from starting the practice early. I told them (true story); I bought my first home before my 21st birthday from savings I had tucked away. I have to thanks my parents for making me save ten percent of my lawn mowing, stable shoveling and bus boy jobs. Admittedly, I really didn’t understand how important it was when I was a young teen, so I was fortunate.

Anyway, if you have kids or grandkids, yesterday is the best time to start instilling the discipline of saving and teaching the power of compounding. Every kid should have a Roth individual retirement account (IRA). Don’t question the wisdom of starting to early as your kids might. The earlier the better. To open one, a child must have some type of earned income however. The annual contribution to is limited to the amount they earn during the year or $5,000.00 in 2009 (whichever is less).

Children of real estate brokers and agents can have good jobs too! My daughter helps her mother with mailers, wrapping client gifts, gathering information, filing, and the like. As she became a little older, she answers the phone and makes appointments and even helps out at open houses.

As graduation season closes and summer job season opens; now is certainly the best time to give and teach these valuable life lessons.

I recently had the opportunity to spend a day with the “chiefs” of several large real estate companies in a well appointed and quiet conference room.  Before the day began we had the pleasure of having dinner together the evening before and enjoying some of California’s Cabernet, loosing up for an open exchange of ideas, need, wants, threats, you get the idea.

Since the topic of the meeting was centered on new services for real estate brokerage operations, a litany of needs soon began to flow quickly as the session progressed.  Technology seemed to be the dominate centerpiece.  During the meeting I found myself having to bite my tongue as I listened to what so many wanted in their tech tool box. 

I was so excited to learn that we have and continue to enhance our technology based tools that accomplish the goals our competition is seeking and some are not sure what is over the horizon at all.  By lunch (with little reading between the lines), I became more confident about our franchisees positioning for success in this new market and information and consumer driven age.  Our technology investment directly supports the real estate business enterprise model of this time.  

Don’t read this the wrong way either; these companies are very well established and run by broker/owners that have years of experience and several of them have invested millions into their operations and they work smart.  Seemed like all had heavy brick and mortar expenses and technology that resembled patchwork at best or off-the-shelf basic online tools that run as separate applications, and a few that might integrate with high levels of technical knowhow.  

The bottom line here is that our integrated systems for brokers and associates provide outstanding efficiencies in terms of operational, marketing and advertising procedures at less cost while simultaneously creating an increasing amount of new listings and sales through growing amount of online channels and consumer oriented propositions.  

Lunch was served in the conference room and we continued to talk and enjoy a good spread.  I sat and thought to myself about the true value of our programs and our franchisees success.  Now more than any other, I knew that if they use our systems to compete they wouldn’t be eaten for lunch.   I’m not sure the others felt that way.

With all the news and activity swirling around the basin of the foreclosure basin; it is important to consult sellers who are contemplating a short-sale appropriately. First, there maybe legal and tax consequences that may affect them and you should always refer a seller to their lawyer or accountant on before going any further in the process to discover potential problems.

Secondly, (this is for buyers or sellers) short sales generally are not, well, short. They can take substantially longer than one might have the patience or time for. Sometimes as much as three to four times longer to close than a traditional transaction does. This will certainly have a material weight on your decision process too.

Candidates for a short sale will be scrutinized by the bank thoroughly. There has to be substantial proof of hardship to get a principal reduction off the original note, which really means one simply can’t make the payments at all and thus can’t perform to pay the loan.

The bank will require tax returns, pay stubs, W-2’s, bank and investment statements (both current and a history), they want to make sure money has not been moved recently that could have paid the debt.

Typically, if there is a forgiveness of principal versus a foreclosure the credit report won’t be damaged as bad, however it will suffer from remarks that would show a future lender that there was a history of repayment problems. This obviously becomes problematic in seeking financing in the future.

The last important piece of the short sale puzzle is the Tax Man. In 2007 there was a revision to the tax code that basically said there would be no tax on any debt forgiveness. This is primarily for the seller of a primary residence though. In cases involving an investment or vacation home there are more hoops to jump through. The IRS demands that you prove complete insolvency before they will consider letting the tax go.

These are critical points we think you should be aware of before advising anyone contemplating a short sale.