Author Archive for AREAA
- One website that you visit every day?
There are several that I visit on a daily basis… mainly Facebook, Twitter, National Mortgage News, and CNN Money. - Favorite quote?
I have two: “To whom much is given, much is expected.” “Show me your friends, and I’ll show you your future. - Fill in the blanks: I take pride in my ability to communicate and problem-solve, and I’m trying to get better at carving out more quality time for my family.
- One thing you love about your culture?
I love that it’s built on etiquette, decorum, respect and tradition. - We’ve heard claims about your athletic ability… If you didn’t pursue mortgage, which sport would you be playing professionally?
Baseball. Shortstop. And since Jeter has shortstop locked in with the Yankees, I’d probably stick to my hometown – LA Dodgers or Anaheim Angels. I’d want to be #8 or #24.
To learn more about John, read the feature article in a | r | e magazine or follow him on Twitter (@AREAAChair)
08
Jan
10
WHY MOST BUSINESS GOALS FAIL
It’s a sad fact that most business goals are never achieved. Here are just a few of the reasons why:
1. Not specific. Many of us set goals like, “Make a lot of money” or “Sell a lot of houses”. How do you know when you’ve reached these goals? Set specific goals like “Gross $180,000 in commissions” or “Sell 30 homes” which enables you to track your progress both monthly and quarterly.
2. Unrealistic. Most of us in the real estate profession are optimists otherwise we’d have a regular 9-5 job with a guaranteed paycheck. While it’s fine to be optimistic when setting goals you must also be realistic. If your goal is to gross $180,000 in a year but the most you’ve ever grossed is $80,000 is there some major change you are going to make in your business that will enable you to make such a drastic shift? Otherwise you may want to scale back your goal to perhaps $100,000.
3. No deadline. Many people have the goal of having $1 million in assets but don’t have a deadline. If you earn $50,000 a year for 20 years you would have earned $1 million but you probably have much less than that in net worth. Setting a deadline is crucial in reaching your goals and it also enables you to track your progress.
4. No accountability. Probably the biggest dream-killer is not having someone else hold you accountable for making steady progress towards the achievement of your goals. Ask your broker, office manager, friend or significant other to periodically check-in to see how you’re doing in reaching your goals.
In my next blog I’ll give you some ideas about how to develop accountability for your goals.
Best,
Michael Soon Lee, CRS, GRI
President – EthnoConnect
www.EthnoConnect.com
(800) 417-7325
17
Dec
09
PLAN NOW FOR A GREAT NEW YEAR!
If you want to have a successful 2010 it’s time to start planning NOW! Leave your fate up to the whims of the market and you’re more likely than not to miss your goal.
In a nutshell, here are the steps to planning for a successful new year:
1. Decide how much income you want to make in 2010. Don’t forget to include taxes in your earnings projection. As a self-employed worker your income tax bracket is likely to be 50% or higher so check with your tax accountant. In a 50% tax bracket you must gross $180,000 to have $90,000 to spend after taxes.
2. Look at your goal and decide if it’s realistic. While it’s perfectly fine to be optimistic, if you set $180,000 as your target and you’ve never made half that it might not be realistic.
3. Calculate the average net commission you are paid from a real estate transaction after deducting your broker’s fee and other expenses.
4. Divide your earnings goal by your average net commission which determines how many transactions you must do in 2010. For example, if you want to earn $180,000 and net $6,000 per transaction you must do 30 transactions next year. At this point you may want to reevaluate how realistic you goal is because if you’ve never even closed 20 deals in a year you may need to scale back your target.
5. Divide the number of transactions for 2010 by 12 to get the number of transactions you must close per month. In the above example you must close 2.5 transactions a month to reach your goal.
6. Put together a marketing plan with your office manager that brings you enough buyers and listings to reach your per-month transaction target. So if half of the clients you work with actually end-up buying or selling a home through you it will take 5 clients a month to hit your target income.
7. Monitor your success rate on a monthly basis and adjust as necessary.
In my next blog I’ll explain why most business goals fail…
Happy holidays,
Michael Soon Lee, CRS, GRI
President – EthnoConnect
www.EthnoConnect.com
(800) 417-7325
Whether you are the listing or selling agent on a property it behooves you to make sure that the lender’s appraisal comes in at the highest price that can be legally justified. However, Fannie Mae’s new appraisal guidelines that require lenders to select appraisers impartially can result in low property valuations.
There are a number of actions you can take to prevent this problem from occurring. First make sure that the buyer requests an appraiser from the local area. It’s not uncommon that one would be selected from several counties away. Next, provide a list of comparable sales that the appraiser may not be aware of. For instance, there may be homes with similar floor plans in a nearby development but because they were constructed by a another builder have a different plan name.
In my next post I’ll give you a couple more ways to get the highest appraisal.
Michael Soon Lee, CRS, GRI
President – EthnoConnect
www.EthnoConnect.com
(800) 417-7325
Most real estate websites are ineffective in attracting clients because they’re all about you and, frankly, buyers and sellers don’t care. They don’t care how long you’ve been in real estate or how many homes you’ve sold because they only care about one thing… that you can meet their needs.
To find out if your website is client-oriented simply print out your home page and highlight those statements that are a benefit to clients. In other words it must answer the question, “What do the features you’ve listed do for me?” For example, being in real estate for ten years learning how to solve clients’ housing needs is a benefit. Gaining valuable experience handling many different types of transactions is likewise a benefit.
Unfortunately, after doing this exercise most agents find very few yellow highlights. Looking at your website from the client’s perspective will make it much more effective.
Michael Soon Lee, CRS, GRI
President – EthnoConnect
www.EthnoConnect.com
(800) 417-7325
Real estate clients have no idea how much work goes on behind the scenes of a real estate transaction. Unless we can proves that we earn our money they will want to cut our commissions. Here are three ways I show my clients that I earn my money:
- Make a list of 100 things you do to earn your money. Most clients have no idea how much work we do back at the office to help them buy or sell a home. I have a separate and unique list for buyers, sellers, FSBOs and expired listings.
- Show them the thickness of a closed transaction file (I like to show buyer files because they’re even thicker than most seller files) to demonstrate the amount of paperwork required in every real estate deal.
- Give each client a booklet showing what it takes to buy or sell a house including sample forms. The thicker the better and it helps to educate them about how complex real estate transactions are these day.
Michael Soon Lee, CRS, GRI
(800) 417-7325
In my last posting I explained that brokers hate commission-based compensation because it subjects them to tremendous risks. They must spend money on listings that may not sell and their agents’ precious time on buyers who may never buy which, in this economy, could easily drive them out of business.
Consumers hate real estate commissions for two major reasons. First, they don’t believe that we earn them. For some reason most home sellers believe that all we do to sell a house is put a sign on the lawn and a notice in the multiple listing service and the property magically sells and it also closes itself. On the other side of the transaction most homebuyers believe that all we do to earn our money is to drive them around, show a few houses and collect a check.
This is why I developed a list of over 100 things that I do to earn my money when working with his home sellers and another list of over 100 activities I engage in to earn my money when working with home buyers. I went to this effort because our clients just don’t realize how much work is involved behind the scenes in a real estate transaction.
The second reason consumers hate commissions is because they think we make too much money. Most have the impression that every agent gets six percent of every transaction they’re involved in. This is why I give every client a chart showing where every dollar of the commission goes and how high our expenses are.
As a result of my lists and charts my clients know that I earn every dollar I get and that I don’t get as much as they used to think. I know it’s not fair and no other profession has to justify their value to our clients but it’s a fact of life that Realtors® do. So I hope you’ll take the time to explain to every one of your clients how you earn your money and why you don’t make as much as they think.
Michael Soon Lee, CRS, GRI
President – EthnoConnect
www.EthnoConnect.com
(800) 417-7325
In my last blog I talked about alternative compensation systems in real estate. Here we’ll talk about why brokers hate commissions.
Brokers hate commissions because it subjects them to a very high risk: they could spend money and their agents’ time on a listing that doesn’t sell or with buyers who don’t buy. This could and has driven many brokers out of the business in the past couple of years.
During the hot sellers’ market of a few years ago this wasn’t much of a problem because homes sold relatively quickly usually bringing in a fairly steady and predictable stream of income to cover expenses. However, in today’s much slower buyers’ market this is rarely the case and has put a tremendous strain on broker cash flows. Too much time and money spent on homes that don’t sell or buyers who don’t buy could mean financial disaster.
This is one reason why I strongly recommend to buyers’ agents that you never work with a buyer with a signed Buyer-Broker Agreement. It’s a guaranteed way to weed out looky-loos from those who will be loyal to you. To avoid wasting valuable time, listing agents should never take an overpriced listing or work with a seller who just wants to “test the market”.
Brokers and agents would love to get paid for every hour they work. This is one of the promises of fee-for-service or real estate consulting services. This explains why there is growing interest in these and other alternative compensation concepts on the part of the real estate profession.
When I consult with brokers about how to implement their own fee-for-service system they are always amazed at how easily this concept shifts the business risk to the seller or buyer. Under fee-for-service you get paid whether or not the house sells or the buyer buys. As a result anyone who works with you on this basis is automatically motivated. It also holds the promise of reducing costs for the seller as well as the buyer.
In my next blog I’ll talk about why consumers hate real estate commissions.
Michael Soon Lee, CRS, GRI
(800) 417-7325
18
Sep
09
COMMISSION-FREE REAL ESTATE
Most brokers and agents are aware that consumers hate paying real estate commissions because they feel they are too high and that we don’t earn them. To deal with this miss perception some progressive brokers are beginning to look into alternatives to commission-based real estate models.
Since 1985 I have been helping real estate professionals develop hourly and flat fee compensation systems that they can offer clients in addition to traditional commissions. These plans have helped me get more listing appointments because they have the potential to save sellers money. This is because real estate commissions tend to be higher than necessary to compensate brokers who waste time and money on deals that don’t close.
While alternative compensation models can be attractive to both clients and brokers you’ll want to seek professional advice before implementing one. For instance, one of the most commonly requested “unbundled service” is from a seller who has found a buyer for his house and just wants a broker to write the purchase agreement. While tempting, this would be practicing law without a license because the only people who can just write a contract for a fee are licensed attorneys. Agents and brokers can only write contracts as part of a real estate transaction and how many other services in addition to writing the contract would be required to avoid this problem has yet to be determined.
However, since the real estate meltdown alternative compensation models are becoming much more popular since sellers have less equity with which to pay commissions. In my next blog I’ll talk about why brokers hate to be paid by commission as well.
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