THE FAIRFIELD VINE

The phrase “death rattle” is not a pleasant one, however, it may describe the current state of print advertising, specifically, as it relates to real estate. Print advertising has been the main venue of real estate advertising for many years. For some papers, it accounts for 30% of newspaper ad revenue. Brokers have historically relied upon print to market homes and create a presence for their company in the market. Agents loved print from a promotional standpoint, sellers loved seeing their homes and buyers frequently relied upon it at the early stages of their home search. The most recent National Association of Realtors (NAR) statistics point out the severe decline in readership of print and the expediential growth in the internet. According to the 2007 NAR Profile of Home Buyers and Sellers:

• 84% of recent home buyers used the Internet in their search, up from 80 percent in 2006. Those statistics indicate that of the 84% of buyers who used the Internet, 99% of them found it to be a useful resource.
• Of the 51% of people who look in newspaper ads, about half of them found the ads a useful tool.
• Only 31% of buyers even used them, and of those, only 34% of them found home books to be useful.

At the heart of this evolution are the changing habits of our consumers (buyers and sellers). Our consumers want to see multiple photos, video tours, the latest listing information, mortgage payments for the listing and mapping. They want it to be interactive based upon their profile, lightning fast, global and real time. Print doesn’t accommodate any of those consumer needs.

In meetings with many local newspaper publishers to renegotiate our print advertising contracts, it’s clear that they are either in denial about the value of print or are hoping that brokers will continue to ignore how buyers are searching. They are sheepishly willing to admit their print revenue dollars are declining, and are scrambling for ways to recapture their revenue through on-line venues. In some cases, they don’t even have a web strategy or know how to go about it. In one negotiation, a publisher attempted to entice us with additional print venues, stating the standard line in publishing…”But, your competition is here.” 

There was a recent announcement and significant blow to print media when the century-old L.A.Times ceased to print its weekly real estate section. Staffing and production cuts are being made to offset a “continuing slide in advertising revenue”, according to the newspaper.

So, they need us (really our revenue) but haven’t figured out exactly how to provide the value. While they are thinking of how to do that, real estate brokers are smartly adjusting their strategies. The leaders in the industry are tracking their consumer habits, and understand that “marketing” versus “advertising” is necessary. They are quickly establishing aggressive internet strategies and beginning to shift marketing dollars to the web. They also have specific plans in place to reduce print significantly and take control of the change.

Like anything else, it’s a process and things will evolve with time. In this case, the evolution is happening rapidly and the prognosis is not good for print. Our consumers are demanding more interactive ways to get involved in the real estate process. If newspapers don’t adjust to the change they will go the same way of travel agents. Remember them?

Real estate companies have been offering potential recruits hefty packages to come on board. Reliable sources are saying that sign on bonuses range from $5000 to $250,000. Yes, that is ¼ of one million dollars, to entice agents to consider their company. They are also offering high, fixed (and unearned splits) for 2-3 years. The same package can also include 30,000 pieces of direct mail, up to $1500/month for assistant payment, building out space, and logo development incorrectly referred to as “branding”. In return for these hefty packages, they are requiring agents to place liens against their personal property and signing 2-3 year contracts stating that the agent will return all of the money should they decide to leave prior to the expiration of their contract. We are also hearing that they are trying to move contracts to 3-5 years to ensure you stay there and they can get past their break even point for revenue. Signing a contract to stay, turns your wonderful “independent contractor” status to “indentured servitude”. This flies in the face of why you probably entered this business. They are not offering these packages because they like you or they think they can grow your business. They are offering these to build instant market share. They just want you to keep doing what you have been doing for years without them.

Companies that lure agents with these incredible packages either don’t have a lot to offer or they don’t believe they have a lot to offer. From a broader perspective, I wouldn’t affiliate with a company that is giving away their equity (and financial stability), through inflated splits, high sign on bonuses, and other big perks. The average agent commission split for financially-healthy real estate company is 65%. The remaining 35% is a gross, not net, number for profit. From the 35% “profit” comes mortgages on the office buildings, technology, insurance, staff, supplies, advertising, marketing, telephones, light, heat, power, maps, yard signs…you get my point. The margins on profit are slim and getting slimmer as the cost of doing business continues to increase. In a "normal market", if a company is left with a few percentage points of profit, how can they offer these over-inflated packages? This is how: They find other small, yet significant ways to charge their current agent base. Adding these small fees helps them offset the huge losses they are taking on the recruiting front. Once you agree to the package, you then become one of the people that gets thrown into the bucket and gets charged these fees.

Promising that you will make a lot of money and not have to do any hard work is impossible. They lull you into a false sense of security which is serious business for you. It ultimately affects your business and livelihood. Here some things to consider when being courted by a company:

• Why would any real estate company feel compelled to offer such packages to get agents to make a transition?
• Why would the owner of the company give away the equity in the company to you…equity that has taken years to build? What’s in it for them?
• What value, other than the package, do they have for you on a day-to-day basis?
• What support do they have in place for you to service your clients? (Remember them?)
• What business development coaching do they offer you to help you grow your business?
• If they made you promises, are they ALL in writing?
• What happens if you get there the first week and don’t like the environment? What happens if you want to leave? Do you owe them the bonus? Do you owe them anything else? Are you now bound for many years?
• How do they help you reach your goals?
• Is the Manager someone who is going to help you grow your business? What systems do they already have in place?
• Have you been allowed to "bond" with the Manager of the office or are you being courted by their corporate people who you will never see again and haven't sold real estate for decades, if ever.
• What other fees have they not disclosed to you that would help them balance out your package?
• How fair is it to offer a package to you coming in when the agents that have been there for many years are held to the split schedule, roll backs and agent expenses? The shoe will be on the other foot soon with agents coming in behind you.
• What is the office environment like with the unfair system? Do you think it is happy? Do you think it's a trusting environment? Not likely if unfair and hefty packages are being offered to those coming in. Don’t expect any team support from your fellow agents. They all will know why and how you came on board.
• What happens when your contract expires? Do they allow you to renegotiate? Not likely to the extent that you could when you were just a glimmer in their eye. You have now priced yourself out of the market, because no logical-thinking company would continue to give away their company equity. Companies need to balance profit so they can reinvest in their company and stay financially sound. They are counting on your fear of making another transition and hoping you stay well beyond your heavily-bonused contract time, when they can actually make money from you.

Think through any outlandish offer you may get. It may be the latest “gimmick” or "slight of hand" from that company. Recruiting is getting more aggressive and outrageous, but it’s the time to take a step back and make sound, long-term business decisions for your growth. Don’t get “taken” by promise to make a lot of money and build your ego. Your long-term vision should include a solid business plan with the tools, guidance and support of a fair company that values your clients.

We all think we are sound business people and can evaluate how to best run our business. In building our business, we want to spend our money in the areas that will have the greatest impact. As a Manager or Agent in any office, we have seen that call-ins from print advertising are not what they used to be. However, we have seen that other venues do still attract potential customers to inquire about our listings. Since over 84% of all buyers begin their search on the internet, we should all focus on online avenues to expose our listings. Interest/readership in print is in serious decline and will continue to deteriorate. Allen Dalton, from Realtor.com cited these statistics highlighting the ineffectiveness of print. It definitely supports the thought of redirecting our resources. This is powerful stuff in understanding the direction of many real estate companies and agents that personally promote themselves.

I have the fortune of speaking to many people each day. It's fascinating to see the agents that continue to be successful by focusing on the positives in the market. We all have challenges in life. Those who properly frame the challenges and work on solutions tend to be happy and successful. I found some great ideas (below) and thought it was appropriate for the real estate market and dealing with our own worst enemy in some cases: ourselves.

As we think, so we become.
We can enrich our interior monologue. We can seek the company of people who inspire us with a loving approach to life. We can absorb the written thoughts of writers who encourage our positive emotions. We can decide to be cheerful and optimistic, just for today.
Whom would you rather be around - someone who chronically complains and talks about what a mess everything is, or someone who finds joy and delight in watching the antics of two squirrels in a tree? You are your constant companion. Your own company can be a pleasure or a drag, depending on the thoughts and feelings you permit to linger in your consciousness.
Sort out your thoughts, getting rid of those that depress your spirit. Continue a daily mental housecleaning so that residues of resentment and discouragement are not allowed to accumulate. We need an infusion of the kind of thinking that nurtures the person we want to become…..we become what we think . Source Unknown.

For those in down markets, there is light at the end of the tunnel SO, hang in there! This is courtesy of one of our top Prudential agents, Lonnie Shapiro. She is a true example of postive thinking! Lonnie can be reached @ http://www.lonnieshapiro.com/ or http://www.ridgefieldhouses.com/

Alice: “Would you tell me, please, which way I ought to go from here?

Cheshire Cat: “That depends a good deal on where you want to get to.”

Alice: “I don’t much care where.”

Cheshire Cat: “Then it doesn’t matter which way you go.”

Alice in Wonderland, by Lewis Carroll

Which way?

It's that time of year to ask yourself that question. Which way or direction will you be taking on your business? Have you developed a sound plan for success or are you waiting to see what happens. Unfortunately, some agents believe the term "independent contractor" relieves them of doing anything that they feel uncomfortable with or don't like doing. Having a business plan of strategy lays the groundwork for success. It doesn't always ensure success, but not having one definitely increases your odds of failing. Business plans include your goals, objectives. strategies and the tactical stuff (activities) that most of us don't like to commit to. Establishing goals it gives you focus, motivation and energy. It's exciting to reach benchmarks that you have set. It also sets expectations for yourself and holds you accountable. Business plans are fluid and can and should be adjusted during the year. Since our market and business is changing, it's even more crucial to have a plan. There will continue to be challenges in the market and even more reason to set some structure and hold yourself responsible for your business. It's up to you.

So, which way will you be going?

~Join us on for our SPRINGBOARD to SUCCESS SESSION: Wednesday, January 23rd from 6-7 p.m. on "How 2.0 Blog". Get ahead of the market and learn how to socially network through the web. This will cover the basics of blogging, so don't be intimidated by the topic. Contact me mriley@prudentialct.com or meebo me on the right to reserve your seat!~

I recently purchased software that enables me to capture my thoughts through voice-recognition. After a simple download and quick tutorial I was up and running. As I am writing this through my new software program I am fascinated by how technology has improved. The system is very intuitive and apparently accommodates for accents, including a lingering Philadelphia accent. I thought it would be great for my blogging since blogging is about capturing your thoughts on a more conversational level. So hopefully all of you that read my blog, will get the benefit of me using this improved technology.

This leads me back to the discussion of how we all need to continue to learn new things including how to do business. It's interesting watching some agents that are fearful of what's going to happen 2008. They're listening to way too many newscasts and reading way too many articles with a negative twist on the market. So, what do we need to do as an industry to report and reflect accurate information about the market? First, you should know what the accurate information is. This comes from knowing market statistics broken out by town, and specifically by neighborhood. Then, taking this information and feeding it to her clients who are also, by the way, on overload with negative information about the market. Once you see the statistics, it's clear that the market is making a simple adjustment and not in a downward spiral. The second part is understanding the ever-changing technology and being able to apply it to your business. In order to learn anything new, it's easier to break it down into manageable pieces. By prioritizing your business, and identifying what you need to learn will enable you to focus on technology tools that you will need most immediately. When you to begin to learn, your pace of learning quickens. I think it has to do with having an open mind. As the saying goes, the mind is like a parachute. It works best when open. Bottom line is that our clients are more savvy on a technology level than many agents. The traditional buyer used to be separate from the Internet buyer. The traditional buyer is now the Internet buyer. Since 84% of all buyers begin their search on the internet, are you equipped to deal with the 84% that are out there? Are you proactively trying to capture that business and when you get business, are you capable of communicating with them on their terms. Get ahead of your clients and embrace the advancing technology.

Join us for a Springboard to Success session on "Are You A Lead Generator or Lead Receiver?" This will assist you in laying the groundwork for a successful 2008. Contact Melissa Riley at mriley@prudentialct.com or meebo me on the right.

We started talking about change in the market over one year ago. The media was the first to jump on the negativity bandwagon and broad brush our market. There are no “national markets” and we are not California and we are not Florida. Barry Rosa, our SVP of New Homes and Land, also emphasizes that there are 169 markets in Connecticut and submarkets within each market. He is dead on. Single family units in Fairfield County are projected to be short only 5% from 2006. Single family median sales price is projected to be UP by 3%. We have neighborhoods that are selling well and, in some cases, still seeing multiple offers. In other neighborhoods we are seeing a build-up of listings and sluggish sales. So Barry’s statement about the submarkets is true. This is where the experienced, knowledgeable agent is worth their weight in gold. Whether representing buyers or sellers, these agents know how to effectively navigate through the market and provide the appropriate, professional counsel to their clients. Regardless of the positives in the market, the negative stories are above the fold on all newspapers and fodder for rabid news reporters. The power of the media has convinced sellers that nothing is selling and buyers to wait until the market “bottoms out”. When you look at the statistics, which are based upon FACTS, otherwise known as REALITY, it’s clear to see that the market is adjusting but it’s not in a downward spiral. All of this incorrect information creates more of challenges for REALTORS in needing to undo the effects of the media. So, the best way to combat this is to provide the facts of the market (sales, variances, median sales prices, days on market) and make sure you break it down by area. You are the expert and have the power to control your business by making sure the reality in your area is conveyed to your clients.