Articles from Industry Experts
How to Take a Vacation When Your Clients Need You
By Steve Oxman
When was the last time you took a vacation? I mean a real one. Not just a long weekend at the pool in your backyard (with cell phone handy), a massage session at a day spa, or a quick, required trip to a family wedding. When was the last time you traveled out of the country? When was the last time your cell phone was out of range for more than a week? When was the last time you really, truly, felt refreshed and restored?
Because real estate is a service profession, and because it’s commission-based, agents tend not to take time off. But studies have shown overwhelmingly that people who take regular vacations are more productive than those who don’t. Everyone needs to turn off for a while, relax, share an adventure, have fun.
The question is: how? There’s always a seller whose listing requires attention, a buyer who needs to start a new job and find a place to live by a strict deadline, closings to attend, escrow issues to negotiate, deals to hold together and problems to solve. If you’re successful, you’re juggling many transactions at once, and there’s never going to be a 2-week period that’s appropriate “down-time.” So you need to make that time and then manage your client base. The key is proper planning.
When is the right time?
Sure, there are natural times of year when the market is slower than others, but when the market is slow your clients often need even more of your marketing expertise and attention. So don’t wait to take a vacation until the perfect time for your business; there isn’t one. Plan the vacation for the perfect time for you and your family, and then make it work for your business.
Who will fill in for me?
The first step in making sure your clients are taken care of is selecting the colleague, or colleagues who will fill in for you. You want to choose experienced folks; this is not the time for testing out the skills of a new licensee. You should do that when you’re there to back them up, not when you’re out of reach. Consider a semi-retired colleague, someone highly experienced, reliable, and a calming influence who for personal reasons hasn’t been marketing for new clients.
When do I tell my clients?
The important element here is to make sure none of your clients feel blind-sided or abandoned at inopportune moments. About 2 months out, plant the seed for prospective clients and current clients you may still be working for. That far out, have it as part of the everyday conversation, not as a formal announcement. Ask them, “Have you ever been to Cabo? I’m taking my family there in March.” Then, about a month or so out, discuss it more specifically with clients.
How do I tell my clients?
Don’t send an email announcement – “Hey, I’ll be leaving the country and won’t be reachable.” This is something that needs to be done in person and in the right context. The fact that you’re taking a vacation needs to be immediately followed by the plan of action. Example: “I want to let you know that in a month I’ll be going on vacation with my family. I believe that if all goes as planned we should be in escrow at that point. I’ve arranged for (NAME) to handle anything that comes up during this time, and I’ll make sure you get a chance to talk to (NAME) when we get closer to the time. I’m sure everything will be taken care of ...” Keep a checklist of your clients you’ve told so you make sure not to forget anyone.
Tell clients when you’ll be unavailable, not when you’ll be leaving.
This is a great tip that more agents don’t consider that addresses one of those predictable truths: the time leading up to vacation is hectic, with packing and trying to finish up any transactions on the verge of completion or break-through. If you’re leaving on the 15th of the month, tell clients you’ll be unavailable starting the 14th. That will allow you to finish what you need to do to get away, and allows you to deal only with emergency issues if they come up.
How do I hand off my transactions?
If it’s possible, introduce your replacement colleague in person to your clients. If you can’t do that, make sure the replacement calls to touch base with them within the first couple of days of your absence. Clients should feel they are being serviced, that someone is there if they need something. Make sure you leave a thorough status summary of each transaction so the colleague can consult it.
How do I minimize the cost?
You need to think of your vacation as a mid-term investment in your business. Be aware, you are sacrificing short-term income for long-term mental health. Your vacation is a priority. That said, you want to do it properly, and to minimize the costs of travel and the impact on your business.
Long-term planning is key. You can’t do this right if you’re doing it on the spur of the moment. Unlike other professionals with regular full-time jobs and vacation benefits, independent contractors need to plan vacations further out for the sake of their clients. This has the added benefit of saving you money on airfare and hotel.
How reachable should I be?
That, of course, is up to you. Your clients should feel you can be contacted in a serious emergency. I recommend providing a single person, perhaps an assistant in your office, with a detailed itinerary with hotel phone numbers. Provide your clients and colleagues with that person’s contact information, to be used if absolutely necessary.
You can also establish dates when you will check your e-mail, so you’re not required to check it every day.
And, finally, even if you’re traveling domestically, you should turn off your cell-phone for the duration.
Remember, you’re on vacation.
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Choosing the Right Home Inspector
By Don Norman & Mitch Sudy
Do you need help when recommending the right home inspectors? In today’s real estate market, virtually every agent and broker knows the importance of recommending a home inspector to their buyers. But do you know that you could be putting yourself at risk? Even if you recommend one, two or three inspectors, giving the buyers a list of all inspectors in your area could still result in a poor inspection.
Training – Home inspection training is just as important as experience. Many “old timers” were carpenters, electricians or builders in an earlier life and learned to perform home inspections “on the job”. As a less physically demanding profession, home inspections looked like an easy transition. However, there is no single trade that qualifies someone to move into the field of home inspection without extensive training. Make sure you look for an inspector who has been professionally trained by a qualified training school such as Kaplan Professional Schools, Inspection Training Associates (www.home-inspect.com). A professionally trained inspector from a recognized training school increases the odds of a quality inspection and reduced liability.
Continuing Education – Even well trained inspectors must continually update their skills and knowledge. As an example the American Society of Home Inspectors (www.ashi.org) requires a minimum of twenty continuing education credits each year. The housing industry is always changing and it takes ongoing education to keep up. Beware of an inspector whose knowledge is “stale”. Look for an inspector who spends time and money to upgrade their training.
Insurance – Insurance is a critical part of any business operation and never more so than in the field of home inspections. Along with General Liability to cover property damage caused by the inspector and Workman’s Compensation Insurance for injury on the job, Errors & Omissions Insurance is a vital component to the protection of the client, real estate agent and home inspector. Inspectors should be able to provide you a copy of their E&O policy upon request. If a home inspector does not carry this important form of protection, scratch them from your list!
Association Membership – While not required in most states, inspectors who have made the commitment of time, training, testing and money to belong to a professional home inspection society are generally more professional and concerned with doing a great job for your buyers. An association such as ASHI requires members to follow a nationally recognized Standard of Practice, adhere to a strict Code of Ethics, maintain continuing education, pass the National Home Inspection Exam (www.homeinspectionexam.org) and complete 250 fee paid home inspections to the Standards of Practice before becoming a full member. While not guaranteeing a great home inspection, referring someone from a nationally recognized home inspection association such as ASHI increases your chances for a quality home inspection by a qualified home inspector.
A proactive approach to choosing the right home inspector is to pre-screen each inspector with a comprehensive questionnaire. Below is a sample of a recommended letter and questions to ask.
Dear Home Inspector,
I recognize that a home inspection is an invaluable part of the home buying process. Whether performing a “Listing Inspection” for a seller who’s looking to make the selling process easier by avoiding last minute challenges or a Pre-Purchase Inspection for buyers as they seek to remove contingencies, a quality home inspection provides all the vested parties with the critical information they need while reducing liability for all involved. I am looking for up to 5 inspectors to recommend to sellers/buyers. If you would like to be considered for this list, please take a moment to answer the questions below. Feel free to provide any additional information that you think is relevant to stating your qualifications.
- What formal home inspection training have you received?
- What applicable background and experience makes you a good inspector?
- Have you passed the National Home Inspector Exam or other applicable national or state examinations? (identify others)
- How many inspections have you performed?
- How many years have you been performing property inspections?
- What applicable certifications or licenses have you earned?
- What professional associations do you belong to?
- Please provide proof that you currently carry General Liability and Errors & Omission Insurance?
- Please provide a copy of your inspection agreement/contract and a sample inspection report for review?
- Do you provide the client with the inspection report in the field at the time of inspection or later following the inspection?
- Does your firm have more then one inspector and if so will the person with the qualifications, experience and licenses identified above be performing the inspection, or another inspector who works for the company?
- Is the inspector available to answer questions after the completion of the report?
- When inspecting the attic and crawlspace (when applicable) do you enter and inspect the entire area or do you limit your inspections to the view from the access opening?
- Have you had any insurance claims or lawsuits within the past 5 years? If so, please explain.
- Does your firm also make repairs to inspected properties?
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Is Your Company Meeting Its Real Estate Recruiting Goals?
by Scott Guthmann
Each month I read in the newspaper about the increase in students entering real estate schools across the country. More and more associate brokers and salespeople are getting licensed each year. Even when the real estate market is flat or declining, more recruits decide to enter the profession than in the year before. In my role with Kaplan Professional Schools, I analyze the numbers and the trend is continuing. More candidates get into the real estate business each year than the year before.
So, where do all of the new recruits go?
In my conversations with managing brokers interested in hiring and recruiting, I notice some common concerns. Most feel that it won’t be possible to fill all of their open positions with brokers making lateral moves from other firms. Therefore, most managing brokers know that they must recruit a portion of their candidates fresh from schools and interview candidates before the recruit has a real estate license. Another concern I hear from employing brokers is that companies are not able to hire as many candidates as desired and they miss recruiting targets.
Change your recruiting message and change your results
Just look at the real estate help wanted ads in your local newspaper. You will see advertisements seeking experienced or licensed brokers. The ads then promote benefits such as lower fees and/or better splits and a method to contact the managing broker. Are ads like these working? Are the candidates starting with the competition? Did the candidates find a better [financial] deal elsewhere?
According to my investigation, the answer is no. The assumption that newly licensed brokers or prospective agents shop around for a better deal is not supported by the research. Poor recruiting results are an unintended consequence of a job ad that disqualifies candidates, and a hiring process that rules out the potential applicants. Your competition is not attracting the candidates because of a logical decision by the new broker to search for a better deal. The novice broker is attracted to the enthusiasm of the hiring real estate broker and the training programs available.
Consider the profile of today’s real estate recruit
In every real estate licensing class, we give each associate broker candidate a one page survey. The survey results have been similar from state to state. What we have learned from our research could help you design a better recruiting message that will enable you to achieve your recruiting targets. Lower fees/better splits are not one of the top five reasons new brokers gave when asked why they chose one company over another.
New brokers decide which company to start with for two reasons unrelated to pay in general. They state that “their managing broker got them excited” as the top reason, and, “the company’s entry level training program got them excited” as the second biggest motivator.
If a recruiting message does not motivate a candidate to get excited about the managing broker and includes great entry level broker training provided, consider changing the message to include these two primary reasons that candidates give when they choose to enter real estate. “Career-Minded”, “experienced”, “full-time”, “licensed” phrases in ad copy eliminates qualified candidates.
Here’s the statistic: more than half of the candidates enrolled in a real estate licensing course do not plan to work full time pursuing a real estate career when starting. But, almost every licensed real estate broker I have spoken with has told me that it is simply not realistic to get into real estate unless a candidate is willing to work at least full time when starting. Are more than half of the candidates entering school being unrealistic? A simple way to double your recruiting results is to include those candidates who are looking for part time real estate opportunities. While some may not succeed in real estate over the long term, some will decide to make a bigger time commitment while planning their strategy in their new broker training. Meet this year’s recruiting goals by converting “part time” into “career-minded” or “full-time” brokers while employed as members of your team.
The number of 18 – 24 year olds choosing real estate as their chosen career has quadrupled in the last 10 years. Historically, a person has not chosen a career in real estate until after becoming a homeowner.
Today, 22% of our licensing students are 18 – 24 years old. This demographic is representing clients in a real estate transaction before owning real estate themselves. To take advantage of this trend, make sure that everyone in your company understands that you would like to interview their eighteen year old children, grandchildren, nieces & nephews to let them know about the real estate profession. Even ask about the 18 year old relatives of the clients that your company represents. It makes sense that the larger your pool of candidates, the greater your chance of recruiting success. Recruiting relatives sets up a win-win for the recruits and the veterans. When an experienced veteran has a vested interest in the success of your newest associate broker, you really do have a winning formula for future success.
Contact Kaplan Professional Schools for more information.
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Home Buyers Are Bringing Back the Inspection
By Kirstin Downey, Washington Post Staff Writer
Saturday, March 25, 2006; F12
Like spring buds, home inspections are sprouting anew all over the area.
Home inspections faded from the market from 2003 until a good way through 2005, when sellers ruled the real estate world. Estimates show that in almost half of all transactions, buyers bidding against other buyers made their offers more attractive by dropping the home-inspection contingency from their contract offers.
Sellers reveled in this, because it smoothed the way to an easier closing, with fewer messy questions about whether the roof really leaked or the electrical system was up to snuff.
Now buyers are in a stronger bargaining position and they are insisting on inspections again.
"The market has slowed down for purchases, which is really good for home inspections," said Reggie Marston, owner and president of Residential Equity Management in Springfield. Marston said he performed 28 inspections in February 2005; this February, he did 35 to 40.
"It's the best I've done in the last three years," Marston said.
Arthur Lazerow, president of Alban Home Inspection Service Inc. in Frederick, also is seeing a big increase.
Another change, he said, is that listing agents are once again attending the home inspections, rather than just the buyer, the buyer's agent and the seller. These agents are trying to deal on the spot with questions when the inspectors find structural deficiencies.
Lazerow said many listing agents had stopped attending inspections because buyers seldom balked at problems. Now, he said, they are standing by, vigilant.
"They know it's more difficult to sell a house; each sale is more precious," Lazerow said. "It's like they are there to guard the house."
The pricing of home inspections has changed, too. In the past, when most houses had three or four bedrooms and two baths, inspectors charged set fees for their services, perhaps $250 per inspection.
But many houses have gotten much bigger, so many inspectors now charge a set fee, but then add a premium for additional square footage over a certain base level. Some houses are so big now that home inspections take two people to perform if they want to complete the review in a single day, Marston said.
Lazerow said the pickup in the home-inspection business has been slower in coming than he would have predicted. Many real estate agents are new to the industry, and they are not accustomed to telling their customers that getting a home inspection makes sense, he said.
"They've never done a home inspection, and now they are trying to learn what it is all about," Lazerow said.
Marston said many first-time buyers need to be informed about home inspections.
"Some of these folks are like ostriches -- they want to bury their head in the sand and say, 'I hope nothing goes wrong,' " he said.
Reprinted with permission from The Washington Post, Copyright © 2006.
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What You Should Know About Mortgage Fraud
By Cliff Freeman
Mortgage fraud has been making the headlines recently, and for good reason. The FBI reports that SARs (Suspicious Activity Reports) are up 52% to 15,707 through the 2nd quarter of 2006 versus 21,994 for all of 2005. Reported mortgage fraud losses this year should easily top the $1.014 billion reported last year.
Is mortgage fraud a growing phenomenon or are there other reasons why we are seeing such an increase in the number of reported incidences? Mortgage fraud does appear to be on the increase, but the answer to the question may lie in the fact that much of the fraud that has occurred during the past several years has remained undiscovered, thanks primarily to abnormally high rates of property appreciation in some markets.
Lenders and loan servicers routinely identify fraud through random and discretionary post-purchase reviews, but the majority of fraud today is uncovered following post-foreclosure reviews, early payment defaults and loss mitigation. Lenders usually have no indication that a loan is fraudulent once it has been funded and sold on the secondary market unless there is a default. As foreclosures increase nationwide, we should expect the incidences of reported mortgage fraud to increase, especially in certain areas of white-hot markets such as California, Florida, Nevada, Arizona and even Texas as out-of-state capital flows into our state from these other states.
Mortgage fraud is pervasive and will continue to be a problem as long as lenders are making loans. Even terrorist organizations are believed to be exiting other hazardous crimes such as drug dealing in favor of mortgage fraud. The penalties for getting caught usually involve no more than a year or so in jail and a relatively small fi ne. Further, mortgage fraud can be very hard to prosecute and terrorist organizations consider the nominal penalties simply a cost of doing business. After all, they don’t have to dodge real bullets to perpetrate mortgage fraud and a year in a country club jail isn’t that high a price to pay for getting away with millions of dollars now is it?
Consider this as well—prior to September 11, 2001, white-collar crime (including mortgage fraud) was the FBI’s top priority. Today it is a lowly seventh on their list. There is, however, hope that funding will return to provide the resources needed to follow up on many of the mothballed cases before their 10-year statute of limitations passes. More states are following Georgia’s example by passing mortgage fraud laws that increase penalties and assist law enforcement with catching the crooks.
What do industry professionals need to look for in potentially fraudulent transactions? Here are the results of FNMA’s July, 2006 analysis of misrepresentations in loans originated during 2004–2005:
25%—inflated or fabricated income/employment information;
21%—credit, liabilities or identity;
18%—inflated property values/appraisals;
15%—misrepresentation of a specific fact about the property or about a comparable sale;
15%—misrepresentation of the borrower’s intent to occupy the property;
6%—misrepresentation of assets;
1%—predatory lending.
In what areas of the country are industry professionals most at risk? Below is a list of the Top 10 markets with significant misrepresentations for loans that were originated in 2004–2005:
Rank Zip City, State
1. 300 Decatur, GA
2. 303 Atlanta, GA
3. 482 Detroit, MI
4. 331 Miami, FL
5. 606 Chicago, IL
6. 330 Pompano Beach, FL
7. 752 Dallas, TX
8. 071 Newark, NJ
9. 191 Philadelphia, PA
10. 302 Jonesboro, GA
For more information on fraud prevention tools and FNMA’s findings, check out the Preventing Mortgage Fraud link on the FNMA home page, http://www.efanniemae.com.
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Realtor Safety: A Few Helpful Tips
By Rebecca Ray
Always Meet at Your Office—Or Another Real Estate Office
Always ask a prospective client to meet you at your office if at all possible. Do not meet a prospect at a property. Ask the person to come to your office and introduce the prospect to your colleagues. A criminal is less likely to attack you if they know they might be identifiable. If the person refuses to travel to your office, locate a convenient real estate office and ask the broker or manager’s permission to meet your customer at their location for safety purposes. Simply practicing this ‘office first’ precaution is a proven deterrent and could save your life.
Verify Identification Before Departing
Always ask for picture ID, phone number, automobile information; make, model and license plate number. A person who is planning to do harm wants to draw as little attention as possible. If you take steps to document ID and otherwise pinpoint their identity, you may discourage an attacker from acting on their plan. Maybe even take a picture of the person if they do not supply picture ID. Although, you should be careful around anyone not willing, or able, to supply state issued identification with their picture. To comply with Fair Housing Laws, you should practice these procedures with ALL prospects regardless of charm, gender or appearance:
• Put the prospect’s personal information in a file
• Be sure the file is easy to locate—should you not return from your outing with the prospect
• Leave detailed information about where you are going with the prospect
• Tell a friend or family member where you’re going and when you expect to return • • • •
Showing Property
• Drive your own car and park on the street, as apposed to a driveway where you could easily be blocked-in
• Keep your phone with you at all times, on your belt or in your purse, so you can quickly make a 911 call
• Allow your prospect to enter each room of the property before you
• Look for escape routes as you walk through the property
• Don’t identify a property as vacant to a prospect
Take Self Defense Classes
There are many options for self-defense classes. Do a little research to find what is available in your area with a timeframe that works for you.
Here are a few places and tips to help you begin the research process:
• Local Health Clubs
• Yellow Pages under “Self-Defense”
• Ask other REALTORS®, friends, and family members if they have taken a self-defense class that they would recommend
• Some local Association of REALTORS® will be offering Safety classes
Look for a class with a broad focus, which will include information on how to recognize dangerous individuals and situations, and most importantly how to avoid them and how to react in an attack.
Good self-defense programs do not tell an individual what he or she should or should not do. A program should offer options, techniques, and a way of analyzing situations. A program may point out what usually works best in most situations, but each situation is unique and the final decision rests with the person actually confronted by the situation.
Empowerment is the goal of a good self-defense program. The individual must always be equipped and prepared to make a split second decision about their response to a given situation. There are not right or wrong responses to a criminal’s wrong doings. Please just prepare yourself as much as possible and be aware of your surroundings to help avoid dangerous situations.
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The Future of Electronic Transactions
An excerpt from “Commissions At Risk: A Real Estate Professional’s Guide to Beating Online Competition” by Danielle Babb, available from Kaplan Publishing
Because real estate and lending are both transaction-based systems, these relationships and processes will more likely be replaced with online services. While the industry has been aware of these capabilities, only bits and pieces of the process have been automated. Soon, however, packages will be released that will automate the entire transaction from “cradle to grave.” At that point, what will you offer to your clients that won’t be available online? It’s not enough to answer that question by saying “a personal touch”—many consumers don’t want it for the price.
Information technology has always taken an underlying role—obtaining loan approvals but not completing the transaction, for example.
The advent of new technology to be released in the next two years, such as e-signing and purely online loans along with standards created for these transactions to ensure every system can talk to other systems, will allow information technology to take an active role and eventually replace many brokers, agents, and other professionals in the industry such as appraisers and title companies.
Anytime there is an increased supply of a service, the price for that service drops. As Web-based services are rapidly deployed, the industry will be saturated with inexpensive services- as much as 90 percent lower—and only individuals who are ready for the transition will be able to compete.
As a real estate professional, you are keenly aware of your role and most likely the history of your industry. You must understand, however, how technology is changing the way people do business.
As individuals become increasingly comfortable with buying and selling property using online services (and this is particularly true for younger generations who have grown up with computers), the need for real estate professionals will diminish, and you will need to equip yourself with the tools to compete in this changing industry.
This has happened in other industries: The once-privy professional is replaced by information-driven Web sites, creating entire groups of professionals who no longer can compete with the convenience and inexpensive services that their new online competition provides. These professionals, especially those in the travel industry, have been so affected that they had to leave the industry because they did not prepare their businesses for the transition.
To read the next section “Worried or Not?” pick up a copy of Commissions At Risk: A Real Estate Professional’s Guide to Beating Online Competition.
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