The reason that organic search is so powerful is because organic search does not bombard the buyer with advertising messages, it responds to the buyers personal search for the exact thing the buyer is looking to purchase. It is a totally passive advertising strategy-bringing them to you.
Why Organic Search Placement Is the Best Form of Advertising You Can Have
By Mike Parker
RISMEDIA, January 30, 2009-”The problem with advertising,” my first boss told me, “is that there are unlimited places to spend money on advertising but only limited monies to spend. Because you can’t prove to me which works best, your request for advertising dollars is denied.”
That was back in (gulp) the late 1970s, when I was a brash young salesman working for a street-savvy boss in Manhattan
As an agent or broker, you share something with the public; you are bombarded with advertising messages the moment you pick up something to read, go to a movie, turn on the TV or radio, drive to work, turn on your computer, whatever-advertising is everywhere. I think there is a new “problem with advertising” and that is that the public is getting harder to reach and harder to convince of virtually any marketing message due to advertising fatigue-we’ve all developed a defense mechanism that allows our brains to sort of surf right over these bombarding advertising campaigns in order to avoid being distracted from our efforts to accomplish our lives.
With too many messages to remember and consider, we edit them out; sort of like TIVO eliminates ads in recorded TV programs so you can view them uninterrupted, later. That’s great as a consumer, but not so great if one is an advertiser-and all agents and brokers are advertisers.
How do you get your message out there, cheaply but effectively, and assure that it will be acted upon when people go looking for a home?
The best thing is for the buyer to come to you.
Merchants spend millions to entice the consumer to visit their stores. However, it’s likely that when you want to buy anything, you choose the store to visit (regardless of how many advertising messages have been fruitlessly targeted at you) based on personal experience, a referral from a friend or family member, the convenience or proximity to where you live, or a special advertising message that seeped through to your conscious mind. Once you visit the store, the dance of sale starts. That used to be the way houses were sold, too. Today, however, the methods have changed, and consumers love the Internet as a place to find out all about whatever it is that they wish to buy.
The reason that organic search is so powerful is because organic search does not bombard the buyer with advertising messages, it responds to the buyers personal search for the exact thing the buyer is looking to purchase. It is a totally passive advertising strategy-bringing them to you.
Instead of advertising that attempts to bring the buyer into your store, you are armed with a tool that brings the buyer to you when they honestly search for what they want! No pretending, no “mixed messages,” no reluctance to be honest about what they want-no-the Internet buyer enters exactly what they want into the search engine on their browser and waits for where the search takes them to. If you have exactly what they want, 81% of the time, they will buy it from you. (It is a statistical fact that 81% of Internet buyers stick with the first agent they choose and it is also a fact that 92% of Internet home buyers find their agent through a major search engine.) 880,000,000 times every single month, a consumer types in a real estate-related search on Google-not to mention the other major search engines-trying to find that exact thing they want in the shortest possible time. You must be the agent they find and choose online, for if you aren’t, these statistics show that the person they do choose will get that business. It is far better that you are chosen, that you get the business. How do you do that?
The first step is that home buyers must be able to find you.
This is not as simple as it sounds-you need professional help, for it is what they find you under that matters and there is much competition who also wants to be found in that specialty. To be found means to be found under your specialty-not your name, not your brand-but under a description of what you do. The Internet buyer does not want to think, they want to act. Thus, they are likely to type in something like this: Antioch CA Short Sales if that is what they want to examine. (Rick and Joyce Tietz www.tietzhomes.com are on the first page of Google for that and other searches and have 17 homes in escrow right now, for example.) Because buyers can find them easily simply by asking Google where to go to learn about Antioch CA Short Sales, their pipeline is full and business is very good in this difficult climate.
Once you can be found, your ability makes you succeed.
How many times have you asked yourself: “How many homes could I sell if I could just get more buyers to contact me?” How many times have you been frustrated because you know you are a good sales agent, but you have no one to sell to right now? Why not take some control of your situation?
Here’s a short analysis Chuck Marunde wrote in an online publication recently: “Buyers are no longer pulled by the big names of real estate companies branded on billboards or on TV commercials. The dominant branding of big names that was such a major factor in the 60’s, 70’s, and 80’s has faded just as the Internet has grown. Consumer loyalty is no longer to the “branded companies.”
Consumers are loyal to themselves, and that is the way it should be. Technology has finally given the consumer what they have always wanted-the power to choose. They choose the information they view, how and when they view it, and they choose what to do with that information without interference from anyone.
Buyers are taking control, and they love it.
Maybe you won’t have 17 homes in escrow once you can be found online, but you will have a fighting chance to have prospects to sell homes to! Prospects that are looking for exactly what you sell and who entered that exact thing into their computer seeking to find you.
CompassSearch guarantees you will sell at least one home from their subscription or they must provide service for up to an additional year free, or until you make that breakthrough. Perhaps you should look into it. Rick Tietz is happy he did.
© 2009 Mike Parker Online Marketing
Mike Parker specializes in online marketing services for Realtors® and real estate professionals. Obtain a free copy of his booklet “SEO Secrets for Realtors” by writing to seosecrets@compassInternetsystems.com. It will be sent to you free and no one will call you. To request a free review of your website to determine if it can be found by Internet buyers and if it is search engine friendly, click here and it will be evaluated free.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
This month we are pleased to share with you an interesting article by Donna Lee Laue from Unique Global Estates.
Marketing of Luxury Properties in Today's World
Our world has changed...yet some things remain the same. A colleague of mine sums it up in one sentence "I used to shop with my wallet ...and now I shop with my brain". I think that this is a truism even more for the luxury consumer. In our new world, 'value' is an all important word to communicate to the luxury consumer. They are shopping for exactly what they need...a word that is quickly replacing the word want in their vocabulary. This said they still prefer to shop and look for value in a top luxury store (or website) where they are comfortable, and they will wait until their need and the value of that need come into alignment.
How does this translate to the real estate business? Consumers, now more than ever, demand the best professional to hire whether they are buying or selling their properties.
In representing a buyer, luxury consumers want to know that the professional they choose will have the experience and skills to introduce them to the exact properties that fit their wish list without wasting their time. Complete and absolute product knowledge, including local market knowledge, is essential, especially for properties that are discretely marketed (not on the MLS) - a common practice at the upper tier of real estate - and for formerly marketed properties. Once the property is identified, their representative is expected to negotiate, negotiate, negotiate on price, terms and amenities. Now more than ever competition for the loyalty of the luxury consumer is hard won by seasoned professionals.
The bar for marketing of luxury real estate has been raised and has evolved. Our research indicates that one of the first steps a seller takes in determining the right fit for a listing....is to Google the agent and to see where and at what level the agent's listings appear. Approximately 87% of all real estate sales begin on the internet; I would suggest that when the seed of the idea to sell or purchase is born in a consumer's brain, they begin their due diligence...on the internet. Once they have narrowed down the top contenders for the position, they will arrange interviews and each agent will have the opportunity to convince the seller that they are the one to get the subject property into the hands (eyes) of the consumer who is serious and can afford to purchase. I have often been quoted as saying that "It Pays to be Seen in the Right Places" and it is the number one task for the listing agent to convince the seller they have this ability and then perform. The seller will be checking.... and comparing his property's placement to comparable others on the market and informing you, their agent, of what they find . Alliances such as ours with Point 2 enable member's properties to be submitted to Unique Global Estates via a "feed" as added value.
Unique Global Estates is the largest search site in the world for properties exclusively in excess of $1M. The advertising of these properties is free to licensed real estate agents as is the membership to both agents and consumers. We offer enhanced search placement on Unique Global Estates to our Luxury Ambassador Community as well as the ability to move both Ambassadors and their specific listings to the top of the major search engines including Google. In order to participate, an agent must be both nominated as a top luxury professional and accepted. We invite you to go to www.UniqueGlobalEstates.com and select "Sign Up Now" to read the qualifications for becoming a Luxury Ambassador. We have been in existence since 2003 and are utilized by 25,000 consumer members, who are the wealth of the world and enjoy, through Unique Global Estates, a network of approximately 40,000 of the world's top luxury real estate agents.
If we can answer questions or be of service, please contact customerservice@UniqueGlobalEstates.com.
Unique Global Estates, featuring the world's largest international searchable database for estates listed exclusive over $1 million USD, is proud to announce the launch of its gold standard luxury real estate website featuring their new Luxury Ambassador program.
According to Donna Lee Laue, CEO and President of Unique Global Estates and co-founder of the Luxury Conclave, “The new website will continue to allow licensed agents to advertise their listings in excess of $1 million USD at no charge while also allowing them to connect directly with the wealthiest clientele in the world. The new site also opens the door for enhanced advertising, available to Brokerages, Developments, and those who serve the luxury market.”
"Our Luxury Ambassador program introduces affluent buyers and sellers to the agents most qualified to handle the sale or purchase of their estate. Luxury Ambassadors are the most experienced and connected estate agents anywhere in the world today," said Laue.
"At this level, it's a matter of trust, and more importantly, a savvy business decision to select the best agent to market and sell properties,” added Laue. “Our Luxury Ambassadors are selected by nomination only from leading lenders, title companies, and industry experts. Luxury Ambassadors qualify for our program based upon their experience, their reputation, the level of properties that they consistently represent, and their ability to provide the 'gold standard' of service that is the UGE trademark".
“By launching the World of Luxury, our new division designed specifically for the luxury agents and consumers, we’ve brought together all the necessary elements to provide information on key issues affecting luxury real estate.”
Laue's announcement coincides with the launch of the premier edition of Luxury Destination Magazine, its online publication for consumers and luxury real estate agents. Luxury Destination Magazine keeps a pulse on the real estate industry to provide informative and interesting articles about the luxury market. It also features wealthy enclaves in cities and areas worldwide and introduces the Luxury Ambassadors who are experts in these locales.
UniqueGlobalEstates.com currently showcases more than 54,000 estates above $1 million in 72 different countries.
The Luxury Conclave is an exclusive networking and educational symposium for select luxury real estate professionals, hosted by Unique Homes magazine, The Wall Street Journal, CKG International, and Unique Global Estates.
For further information, contact Kelly S. Reed, VP International Communications, kr@uniqueglobalestates.com, 415.441.1157
The Bad News Press vs. Expert Investment Information
It was our absolute pleasure to have Bernice Ross, PhD join us for our monthly Luxury Ambassador “In The Room” meeting to discuss her article “Chicken Little the Sky is Not Falling" and her research of the Shiller Index, which most news sources cite for accurate data regarding housing prices, foreclosure rates and sales statistics in the real estate market.
We believe that this information will be extremely valuable in assessing the current value of your investments as well as considerations for those who are either buying or selling real estate in today’s market.
Bernice Ross is, in our opinion, the most well respected journalist in our industry. A Master Certified Coach with over 30 years of real estate experience; Inman News called Bernice "America's top real estate coach”.
Is the bad news press we read regarding the real estate market…accurate?
Below is a re-cap of the information she shared with us during our meeting. To read more, see the recap, a spotlight on the facts, below and the articles posted separately on the UGE Luxury Press site. To access the podcast of the interview please click on the player below.
The Shiller Index:
By not including complete data, it skews the results.
Bernice went on to emphasize that looking at these numbers is like looking at a national weather report. All real estate is local… and the local market information, the inventory statistics, will be much more correct than Schiller. The consumer must look to the real estate experts (Luxury Ambassadors) for the correct local statistical information rather than lumping the Nation together.…. with partial information. Please note that UGE will be including specific regional information for domestic and international markets each month in our Luxury Destination e-Magazine - August issue will feature Texas.
FACTS
Foreclosures:
Nationally:
The meeting resulted in an “eye-opener’ experience for all of us. As mentioned in our June newsletter, the reports that we are receiving from our Luxury Ambassadors are telling a different story than what we read in the press. Offers to purchase are increasing and these offers are much more realistic. In other words, we are beginning to see that consumers are moving back towards the official “law” of real estate investing…location, location, location. Clearly the best properties will be the first to sell, and properties that are not in a good location will probably sit on the market for quite awhile, but the real estate industry reflects the fact that people must live in houses and can only be “paralyzed” for a certain amount of time.
When the “greed outweighs the fear”, and need to purchase is more important than trying to wait for total acceptance that the bottom is over, property begins to trade. It is a cycle. The absolute bottom is not celebrated by a fireworks display or a bell ringing. Information "under the radar" of the press, from the professionals on the ground should be strongly considered.
We hope that the research presented by Bernice Ross during our Luxury Ambassador meeting and her supporting articles will give our members a different perspective of the current real estate market. We also hope information made available through research and interviews with regional Luxury Ambassadors, will give perspective and guidance in your luxury real estate investing and assessment.
Ross’ books include Waging War on Real Estate’s Discounters, Real Estate Dough: Your Recipe for Real Estate Success (Summer, 2008), as well as Real Estate Dough, the Negotiation Game.
Her contact information:
Bernice Ross, Ph.D. MCC
Bernice@RealEstateCoach.com
(512) 263-2985
www.realestatecoach.com
As referred to in Unique Global Estates July 17 Luxury Market Watch Newsletter:
Chicken Little, the Sky Is Not Falling! (Part 1 of 2)
“Real estate prices are plummeting!” “Foreclosures are at an all time high!” “Prices predicted to decline another 20 to 30 percent!”—these are the headlines that we face daily. It’s no wonder that there’s a crisis in consumer confidence. The truth of the matter is that the sky is not falling. In fact, contrary to what the press is reporting, real estate prices are stabilizing, and in a wide number of areas they are actually showing signs of improving.
The S&P/ Case-Shiller index is the gold (scare) standard these days for those who report on the housing market. News agencies began using this index about two years ago rather than the indices provided by OFHEO (the Office of Federal Housing Enterprise Oversight) and NAR. These same news sources often fail to report the numbers provided by major companies such as Realogy.
If each of these resources came to the same conclusion about the market, there would be no issue. The challenge is that NAR, OFHEO, and Realogy all reach the same conclusion: prices are down nationally less than one percent and, in many areas, prices are actually increasing.
In contrast, the most recent numbers from the S&P/Case-Shiller Index (reported on April 29, 2008) reach a very different conclusion:
“Data through February 2008…show declines in the prices of existing single family homes across the United States…The 10-City Composite posted a new record low annual decline of 13.6 percent and the 20-City Composite recorded an annual decline of 12.7 percent.”
“There is no sign of a bottom in the numbers,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Prices of single family homes continue to drop across the nation. All 20 metro areas were in the red for February-over-January reading. In addition, 19 of 20 MSAs (Metropolitan Statistical Areas) are reporting negative annual returns. The monthly data show that every one of the MSAs has now declined every month since September 2007, marking six consecutive months.”
Now compare these numbers to those reported on April 22, 2008 by OFHEO. The OFHEO “Monthly Price Change Estimates for the U.S. and Census Divisions from January 2008 to February 2008” drew the following conclusions:
1. Overall U.S. prices were UP 0.6 percent.
2. Regions reporting increases include the Pacific (0.3 percent), West North Central (1.3 percent), West South Central (0.7 percent), East North Central (1.6 percent), East South Central (1.2 percent), New England (2.2 percent), and Middle Atlantic (0.1 percent.)
3. Only two regions reported declines (Mountain -0.6 percent) and South Atlantic (-0.2 percent).
In other words, a whopping 77 percent of the areas in the U.S. reported a price increase in January 08 – February 08! The S&P/Case-Shiller Index, in contrast, concludes that 95 percent of the MSA’s reported negative returns. Of course, there’s no mystery as to which of these two reports have been in the press.
What accounts for this difference? Both the S&P/Case-Shiller Index and the OFHEO index use “repeat valuations.” In other words, to be included in the calculations, a property must sell twice. The difference in the two sets of sales prices is the basis for each index. OFHEO’s sales price data only includes homes that have conforming mortgages. The Case-Shiller Index covers property sales with both conforming and jumbo mortgages.
Andrew Leventis (June, 2007) attributes part of the difference to the fact that OFHEO “does not lend additional weight to more expensive homes; each pair of home valuations is given equal weight in the index estimation, regardless of the price level of the home.” In contrast, Case-Shiller applies a “weighting” formula before it calculates it data. The challenge with making decisions about how to “weight” certain factors introduces human judgment into the equation and dramatically increases the probability for creating errors.
NAR and Realogy, using a different approach from OFHEO and S&P/Case-Shiller, arrive at essentially the same conclusion as OFHEO, i.e. that the average price of homes in the U.S. was down less than one percent. Their approach is to total up of all the sales, divide by the number of units, and then calculate the arithmetic average (mean) as well as the median. In stark contrast to the S&P/Case-Shiller approach, the technique that NAR and Realogy use includes all properties and is more objective.
From a scientific point of view, when two sets of data produce conflicting results, you look to other sources and/or methodologies to see which data set is supported. In this case, the NAR and Realogy data supports the OFHEO data. It’s the S&P/Case-Shiller index that lacks corroboration from other sources.
Unfortunately, the press almost universally quotes the S&P/Case-Shiller Index and yet, it may be the least accurate housing price index. Next week’s column explains why.
Chicken Little—the Sky Is Not Falling! (Part 2 of 2)
The Case Shiller index portrays itself as being “the leading measure of U.S. Home prices” (Standard & Poor’s Press Release, April 24, 2008). Given how much press the index receives, it may very well be the leader—the leader in inaccuracy.
Last week’s article looked at the contradictory data from OFHEO (the Office of Federal Housing Enterprise Oversight), NAR, and Realogy vs. the S&P/Case-Shiller Index. This week, we look at additional pitfalls that explain why the press should not rely exclusively on the S&P/Case-Shiller data.
1. Where’s the beef?
The S&P/Case-Shiller Index ignores huge chunks of data. Andrew Leventis (2007) in a paper comparing the OFHEO approach vs. S&P/Case-Shiller approach explained the differences in the data in the following way:
“According to the methodology materials, the S&P/Case-Shiller index does not include price data from 13 states. Market conditions in those thirteen states have, on average, been stronger than in the rest of the nation. OFHEO’s estimates indicate, for example, that three of the five fastest appreciating states in the nation (Idaho, Montana, and Wyoming) do not have representation in the S&P/Case-Shiller index…The S&P/Case-Shiller index also apparently has incomplete coverage in 29 states.”
I have to wonder how the public would feel about the “national numbers” that include no data for 26 percent of the states and only partial data for another 58 percent.
2. A bogus claim
The S&P/Case-Shiller index claims to have “100 percent coverage” in nine states. The claim of “100 percent coverage” is false. In the description of their methodology they plainly state:
“The S&P/Case-Shiller indices do not sample sale prices associated with new construction, condominiums, co-ops/apartments, multi-family dwellings, or other properties that cannot be identified as single family.”
The most extreme example of this lack of coverage and how critical is to correctly assessing the market comes from New York City. The S&P/Case-Shiller index claims that prices fell 5.6 percent during the first quarter of 2008. According to David M. Michonski, Chairman and CEO of Coldwell Banker Hunt Kennedy in New York City,
“Condominiums and coops account for 1/3 of New York City sales and 99 percent of Manhattan sales. Thus, Shiller gives the impression of reporting that prices have dropped 5.6% in a place where he does not cover 99% of the sales and where prices have not dropped but risen, substantially.”
Michonski’s claim is based upon data from Miller Samuel, a highly respected appraiser who tracks New York prices. In a summary of activity in the first quarter of 2008, Samuel reports:
“The median sales price of a Manhattan apartment was $945,276, up 13.2 percent from the prior year quarter median sales price of $825,000 and up 11.2 percent from the prior quarter median sales price of $850,000…Average price per square foot was a record $1,289 this quarter, up 20.5 percent from the prior year quarter result of $1,070 and up 9.2 percent from the prior quarter average price per square foot of $1,180... The 10.8 percent increase in year over year quarterly median sales price is the highest increase since the third quarter of 2006 when the increase was 12.7 percent.”
3. Buyers and Sellers Make “Mispricing Decisions”
According to the S&P/Case-Shiller pricing methodology:
“It is also assumed that two sale prices that make up a sale pair are imprecise, because of mispricing decisions made by homebuyers and sellers at the time of a transaction. Mispricing variance occurs because buyers and sellers have imperfect information about the value of a property. Housing is a completely heterogeneous product whose value is determined by hundreds of factors specific to individual homes…The difficulty in assigning value to each of these attributes, especially when buyers and sellers may not have complete information about each factor, means that there is significant variation in sale prices, even for the homes that appear to be very similar.”
How does the S&P/Case-Shiller approach address this challenge? They use a mathematical “weighting formula.” Yes, you read that correctly. The S&P/Case-Shiller approach asks us to believe that buyers and sellers who have actually seen the houses and the neighborhoods are less accurate in their ability to price property than the mathematical formulas from Wall Street and academia. This is absurd. Lenders don’t look to computer generated models to make lending decisions; instead they rely on those buyer and seller “mispricing decisions” (i.e. comparable sales) to determine how much they will loan on a given property.
4. Hedge your bet
Hedge funds use the S&P/Case-Shiller index to allow investors to sell real estate “short.” In other words, if you “hedge” a real estate investment, you are paid when the index declines in value. On the other hand, when prices increase, how much demand will there be for a financial instrument that reimburses you when property values decline?
Ultimately, the question is whom should you believe—the academicians and Wall Street with their complex derivatives that gave us the subprime mess or NAR, the Federal Government, and the real world numbers from publicly traded real estate companies? I know whom I trust—how about you?
Her contact information:
Bernice Ross, Ph.D. MCC
Bernice@RealEstateCoach.com
(512) 263-2985
www.realestatecoach.com
FOR IMMEDIATE RELEASE:
CONTACT:
Donna Lee Laue
Unique Global Estates
415-441-1157
dll@uniqueglobalestates.com
www.uniqueglobalestates.com
On Friday, June 20th, we were pleased to have Bernice Ross, PhD, join us for our monthly "Luxury Leader" interview and Luxury Ambassador "In The Room" meeting. The purpose of our meeting was to review the "Chicken Little, The Sky is Not Falling" articles written by Bernice Ross and how her research colors the luxury real estate market.
Please see the below podcast link to hear the article in its entirety.
Additional timely articles, information and reports can be found on Bernice's website, www.RealEstateCoach.com .
The Invaluable Investor
There’s no speculation on how big this market is (over $300 billion).
By Anne Randolph, Publisher, LORE Magazine // Illustration by Jurgen Mantzke
What to do with the money you don’t want to put in the stock market? Invest in real estate. Right now is the perfect positive storm for investing:
· House prices are low
· Interest rates are still low
· Most homes for rental meet conforming guidelines for mortgages from Fannie MAE and Freddie MAC
· Rents are up in virtually every market
· More people are returning to renting or are limited to renting because they don’t have down payments or can’t afford to get a mortgage. While regularly 1 million people a year return to renting from homeownership due to things like death, divorce, job loss, health issues, etc., this year and for the next several years, that number will be closer to 3 million. Multi-family apartment development stopped when aggressive mortgage practices pulled apartment dwellers out of renting and put them in homes, so the availability of rentals is insufficient in many places for the demand.
More importantly, what financial planners don’t want you to know is that the returns can definitely be better in real estate.
For more information, go to….http://www.loremagazine.com/go/article_free.php?mp_id=315
Anne Randolph
Publisher
lore Magazine
Highlands Ranch , CO 80126-2681
303.470.7673 (Office)
303.470.7535 (Fax)
303.956.6900 ( Mobile
FOR IMMEDIATE RELEASE:
CONTACT:
Kelly Reed
Unique Global Estates
415-441-1157
kr@uniqueglobalestates.com
www.uniqueglobalestates.com
Unique Global Estates announces an ‘In the Room’ interview with Anne Randolph
<San Francisco>, <CA>, <June 12, 2008> Anne Randolph recently joined Unique Global Estates President, Donna Lee Laue, for an exclusive interview detailing her research, surveys and findings regarding the sub prime mess and how it impacts the luxury real estate market and investors. Join us for our Luxury Ambassador ‘In The Room” meeting.
We invite you to listen to the entire interview by click on the player below.
Randolph is the publisher of lore Magazine, a partner in Murray Consulting, and has a long history of consulting with Fortune 500 companies as well as Booz Allen Hamilton, the top analytical firm in the United States. She is a key speaker in the real estate industry and has been a featured speaker at The Luxury Conclave, an event we co-host with The Wall Street Journal, Unique Homes Magazine and CKG International.
Randolph’s information, as discussed during the interview and through answers to questions from our Luxury Ambassadors in attendance, detailed a grim scenario of how the sub-prime mess occurred, but presented a surprisingly hopeful picture of what the future holds and why we need not worry so much. While many believed that the sub prime situation impacted nearly 50% of the loans across the country, Randolph informed us that, in fact, only about 2.7% of the current loans in the U.S. are in trouble. This startling information presents those involved in the Luxury real estate market with more positive options. While the percentage has decreased since 2006 – 2007, she predicts if it goes up at all, it will max out at 3% and we will begin then to see a decrease again.
Purchasing. Randolph’s research indicates that we are seeing a pick up in purchasing. We concur. The information we receive from our Luxury Ambassadors is that they are seeing more offers to purchase being submitted. In other words, ‘the greed is beginning to outweigh the fear’. Trophy homes were not impacted as negatively by the “mess”, as a matter of fact this niche has experienced trading at an “over asking” multiple offer situation. Clearly the wealth of the world believes that investing in very prime, high demand location real estate is a smart use of their capital. Both Randolph’s research and ours indicate that these investors are also purchasing investment properties, in good neighborhoods and a little below market value.
Funding. We all know that the big banks now need to carry most of the jumbo loans on their books so, as a result, they have tightened underwriting restrictions significantly. Trophy homes, when financed, are at 40-50% LTV. This contributes to difficulty in the second tier of luxury market purchasing power. What is not as broadly known is which group is impacted the most; loan limitations are specifically hindering move-up buyers who wish to put a minimum of 10% down, resulting in a slow down of that specific market ($1-2 M).
Agent Recommendations. In clarifying how best to manage during these times of lender restrictions, Randolph made it clear that an agent’s best move is to focus on finding different lenders (beyond the traditional – Bank of America, Chase, Countrywide, etc.), seeking to deal more exclusively with smaller lenders who deal best with high-end clients. As upper-tier agents, developing a team of very specific companies that lend to their audiences is necessary. In addition, she spoke to the need for greater professionalism, noting that consumers are demanding more service and those agents able to negotiate best, those who know - not just the purchase contract - but how to use the addendums to protect their clients and inform them of legal implications, those who provide guidance, will be the most sought out and likely to meet with success.
Future. In the months to come, we will see an untangling of questionable sup-prime loans; procedures will be put in place in order to re-sell the real estate involved. As the bulk of troubled loans were written in 2006 and the first three quarters of 2007, there will be a natural weaning process as time passes. Clearly there is a problem trying to determine which part of each loan has been sold to whom, and short sales are difficult to accomplish because of the complexity of trying to figure out how or who needs to sign off on a purchase agreement in a foreclosure situation. Randolph assures us that we are now and will continue to see a return to sensible financing. Clearly the banks have learned a very hard lesson and are much stricter with lending policies now that they will not be able to wholesale these bundles. Wiser agents with a seasoned team of specialty lenders are going to prevail.
Interesting note. Anne indicates that the big banks are investing in land and buildings and are in contact with international investors who are purchasing in the USA.
In closing, if you have interest in Randolph’s in-depth studies of these topics, you can purchase copies of these reports, “Consumer Tsunami”, and the “Residential Real Estate Investor” through the ‘Real Trends’ office, 303-741-1000 .
For additional information on how the sub-prime situation impacts Luxury realtors, Anne Randolph can be reached directly by emailing anne@loremagazine.com
About Unique Global Estates - Unique Global Estates is the largest search site in the world for properties exclusively in excess of $1Million USD, currently showcasing over 54,000 estates in 73 countries.
- END -
Press Release
April 18th 2008
Contact: Alf Nucifora 415-302-3988
nucifora@luxesf.com
Alpha Agents Wow the Crowd with Tales of Exploits and Secrets of Success
San Francisco: Approximately 200 San Francisco and Bay Area real estate agents primarily marketing luxury and estate properties responded enthusiastically to a panel of top producers who delivered an economic assessment of the real estate marketplace as well as “best practices” advice.
Conducted under the aegis of The Luxury Marketing Council of San Francisco (www.luxesf.com), the panel discussion featured leading broke/agents from the country’s most competitive real estate markets including:
· Sandra Baldwin, The Baldwin Team (Phoenix/Scottsdale)
· Robert Callan Jnr, McGuire Real Estate, San Francisco
· Joyce Rey, Coldwell Banker Previews international, (Los Angeles)
· Ivan Sher, Shapiro & Sher Group (Las Vegas)
During the spirited discussion that included vigorous questioning from the audience, panelists agreed that future success in approaching difficult times will demand a return to the basics where consistency and continuity of marketing effort remain important and a return to “listening to the customer” becomes imperative.
Panelists were of the opinion that the high-end market ($5 million +) will remain immune to the current downturn, and all agreed that more attention should be paid to the growing class of wealthy under-40 buyers who are entering the market in strong fashion.
The panel expressed the view that successful agents must have a passion bordering on the obsession about the business, but must work equally hard at maintaining a balance between personal needs and professional demands in an industry that is all-consuming at the rarefied levels off success and top performance.
The event, which was held at the San Francisco Design Center, the region’s leading showplace for the interior design community, was co-sponsored by Unique Global Estates, The Ritz-Carlton Club and Residences and Zephyr Real Estate. Attendees were hosted to pre-meeting cocktails at the Randolph Hein showroom.
