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Sensationalism is everywhere and it's hard to know what's real, anymore. The economy is tanking, the marketing noise is deafening, and you just don't know what tomorrow will hold. This site is dedicated to a no-hype retelling of what's working for me in real estate, business, and life. Welcome.

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Archive for Real Estate Agent News

Feb
23

Status Report – Short Sales Abound, Even in Seattle

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Wow, in the last month, I have been surprised by the number of short sale homes in the Seattle area.  I have recently started showing homes for Redfin, a low-cost, full-service real estate brokerage started by some local entrepreneurs here in Seattle. (The super-cool connection is that it was started by two guys in my high school class that I ran into last summer.)

How Does Redfin Real Estate Work?

The way it works is that clients do MLS-style neighborhood searches to find the homes they want to tour, then they sign up for a tour for free with a local neighborhood realtor.  Once they identify a home they want to put an offer on, they call the “lead agent” who negotiates the deal and handles the paperwork for them.

None of the agents work on commission, so they are free from any sales pressure.  It’s all about customer service at Redfin.  As a result of doing their own neighborhood research and using the firm, they can save about 1/3 of the commission.  Also, statistics are showing that Redfin agents negotiate better (they don’t get paid more if the buyer pays more for the house) so our buyers are getting better prices on the homes they buy, too.  All-in-all clients are saving about $10,000 when they buy a home in the $500,000 price range.

Why Real Estate Agents Don’t Like Their Buyers To Pursue Short Sales

Anyway, one thing Redfin DOESN’T support is showing or supporting transactions on short sale property.  Short sales don’t make a lot of sense to buy for the individual home owner because they take so long to negotiate.  It can take 3-6 months in many cases to pursue a short sale, and even then, you have no assurances that the bank will say yes to your offer. 

Although this long turn around time isn’t necessarily a big deal for a real estate investor, it can really slow down the average home buyer who might be looking for a personal residence sooner rather than later.   Also, most realtors don’t want their clients to be tied up waiting that long (they’d rather sell them something and make a commission sooner) especially since short sale attempts frequently don’t work out.

Realtor’s don’t like the back-and-forth of the negotiating with the bank – it’s a lot of work – and they don’t like the extended time table to close.  The hassle factor keeps many realtors and their clients AWAY from the short sale negotiations table.

 

How That Makes Short Sales A Great Opportunity For Real Estate Investors

So, what that means to us as real estate investors, is that we really don’t have as much competition for the short sale properties as we might on a regular home.  Sure, we’ll have MORE competition from other investors, like us, trying to get a good deal on the home… but that’s an opportunity, too.

If the primary buyer pool for short sale homes is investors, the home owners and the banks will have to settle for working with the lower-priced offers investors are inclined to make.

Plus, in today’s economy, there are really a lot of short sales to go around.  Many more than there have been in the past.  I was amazed when I was out showing homes this weekend, to see how many of the homes we had to scratch off our tour list because they were involved in short sales.

And THIS in SEATTLE which has historically been a very stable market.  It is still one of the strongest real estate markets in the country, so the fact that we have an abundance of short sales here, indicates to me that there are many more available elsewhere in the country.

In fact, my buddy Phil Pustejovsky has been investing in short sales for the better part of a decade and he says he’s never seen anything like this in terms of an abundance of short sales available now.  In fact, he’s got the corner on the market on his state, and is partnering up with investors from out of state so he can participate in short sale deals all across the country.

If you’re interested in partnering up with Phil, you can learn more about him and the success of the people he’s started working with here.  This is not some seminar salesman mumbo-jumbo… that’s HYPE.  Phil is not about Hype, he’s focused on HUD-1’s. 😉

How Long With The Opportunity Last?

I’ve started working with Phil to help him market his short sale business.  It’s going very well, as there is a lot of interest amongst active investors and promoters in short sales right now.

A lot of the techniques, like buying on terms that were big a few years ago have fallen by the wayside now… you can’t do a short sale or lease/option deal on an upside down property and still be conservative and make money, it’s just not a good idea.

This is a short sale market – that’s where things are right now.  Phil doesn’t know how long this window will last, he thinks probably just 12-24 months, but for those who are working the short sale business NOW, there is a lot of money to be made.  Phil is out there making it, and it’s very exciting to see!  (He does about one $50K short sale deal per month since he’s cherry-picking them) and he’s making another $10K/month in realtor commissions on the short sale deals that don’t pan out with the bank.

If you want to know more about his methods, you can check out his website, Short Sale Teaching.

Hope this helps!

 

Emily

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Dec
30

What Brokerage Should I Join as A New Real Estate Agent?

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I’m on the warpath again.  Yesterday marked my first post-Christmas interview with a real estate agency.

 

This time, it was Keller Williams in Bothell, who I was fairly impressed by.

 

So far, I have interviewed with or applied to the following real estate brokerage houses:

 

  1. Prudential Northwest Realty – They pay for a lot of your mailings and have a great online corporate presence and relocation business.  However, there’s a lot of expense in supporting the franchise.

  2. Edmonds Realty – This was a Mom & Pop I interviewed with last year.  They say they have great training, but they have a high (50%) commission split when you get started.
  3. Marcus & Millichap – Read about how that started and ended.  They have a great platform to provide value to sellers (namely, lots of inventory throughout the nationwide office, and a nationwide internal MLS to help clients access that inventory.  They also have a lot of 1031 buyers).  The downside is that you’re at a 50/50 split.  Also, Marcus & Millichap focuses just on investment property sales, and they don’t do any leasing.
  4. Fursse & Hall (local Mom & Pop commercial firm).  Generous split (30/70 til you reach your cap, which is also low), but they aren’t a big name and don’t have too many agents or any training.
  5. CBRE – I heard rumors that this public company was courting the big BK?  This is the 200-lb gorilla in our marketplace.  They have a lot of corporate clients and don’t focus much on working with individual Mom and Pop investors.
  6. GVA Kidder Matthews – This commercial real estate firm is big around here (Seattle) and won over a lot of converts from Marcus & Millichap.  Their big advantage?  90% commission split.  They do leasing and sales, and have a lot of signs up in my neighborhood, but they weren’t hiring when I interviewed there, so I don’t have many specifics.
  7. Zip Realty – This is a great firm if you want to be a buyer’s agent and drive people around in your car all day.  There is no out-of-pocket lead generation.  Their agents average 1 closing per month.  Only 10% of their business is on listings, they are working on getting more listings, but they are all about buyers.  Between the discounted commission and fees to the house, you would only make about $3,000 commission on the sale of a $300,000 house, though.  In my market, if I were an average agent there, I would make about $36,000 per year working full time with lots of nights and weekends, presumably.  The top agents seem to do about 3-4 closings a month, so you could make in the low 6-figures with this firm if you were good.  This is perfect for a buyers agent who wants to be in real estate full time and focus just on fulfillment and follow up, not on marketing.

    They don’t charge any desk fees here, but the commission splits are really weighted toward the house.  You’ll keep about 30% of your 3% gross buyer’s agent commission.

  8. Connect Realty – This is the MLM of real estate companies.  This one is pretty intriguing and I would probably pursue them if I just wanted to focus on being a real estate investor and have a place to hang my license for the occasional deal.  They charge $200/year as a desk fee and you are locked in at an 80% commission split (if you’re a new agent your first 5 deals are at 70% because you’ll pay a mentor 10% to work with you and help you get going).  The MLM part of it is that 15% of your commission (taken out of the 20% that you don’t get) goes to the people who brought you into the company… your “upline.”  This means that if you recruit a lot of new agents, you can profit from their deals and their commissions as well as your own.

    However, I don’t think this model makes a lot of sense to me as a new agent.  I need training and support, which Connect doesn’t seem to have available yet.  Perhaps if you had a supportive sponsor to bring you into the business and help you get started you could do well, but I don’t know anyone who is in this firm.

    Since agents essentially get paid to bring you into the company, it’s harder to find a lot of balanced feedback online – everyone is trying to recruit you.

  9. Keller WilliamsKeller WIlliams Realty – This is the firm I interviewed with today.  I really liked them.  You have an $18,000 yearly commission split cap and after that you’re at 100% commission.  The desk fee is only $32/month, so it’s very affordable.  They pride themselves on having extensive training.  50% of the office’s profit is split with the agents (the other 50% goes to the franchisee).

    Even though they’re not a big brand in Seattle, yet, I like what I see here.  They pride themselves on a great training program, which I think is critical.  They also encourage team building so you can work your way into a leveraged business model (e.g. hiring personal assistants, buyers agents, listing specialists, etc.).  They also have a residual income model similar to connect realty, but it seems to be much less of a focus (more the icing on the cake, than half the cake, itself).

  10. Windermere Realty – This is the big “prestigious” local player in the area.  I haven’t interviewed with them yet.  They seem to lead with the company attitude of “you need us more than we need you” when it comes to their agents, and don’t give agents much freedom to agents to market themselves prominently.
  11. Redfin – This is an online broker who pays you “by the job” – you go show a property, they give you $120.  You go let the property inspector in, they give you $50.  This is a great “part time job” or “independent contractor” model.  You can earn a little extra money with your license without needing to build a business or have marketing expenses.  This would be ideal for the person who wanted to be a freelance real estate agent.  Unfortunately, after they initially responded to my resume, I’ve called and emailed about 7 times and haven’t been able to hear back from them.

 

My conclusions as a new agent looking to choose a real estate broker:

Based on my research of the residential real estate brokerage model, I don’t see that any individual firm is able to offer sellers a distinct advantage.  (Am I wrong here, experienced agents?)  What one firm can offer you is pretty much as good as another.  When a consumer chooses to buy or sell a house, he is most often making the decision to work with an individual AGENT rather than choosing a firm.  The exception to this may be the one or two “name brand” firms that dominate a given marketplace.

What that means to me – as an agent – is that I should set up my business to be able to market MYSELF, through blogging, websites, postcards, signs, etc., rather than marketing my COMPANY first and foremost.  I should also align myself with a company that lets me keep as much revenue available as possible (low commission splits and caps) so I can reinvest in marketing myself.

 

Although most sellers choose to work with the first agent they meet, some (about 30% as I understand it) interview multiple agents.  When they choose an agent, what are they going to make the decision based on?

 

What sellers are looking for in their real estate agent:

  1. Is my house priced correctly so it will sell in the desired time frame?
  2. Is my house marketed correctly?  What investment in marketing is my agent willing to make?
  3. Communication – how often does my realtor get in touch with me?  Is she/he pleasant to deal with, return my calls, etc.
  4. Negotiations – How good is the realtor at negotiating on my behalf?
  5. Closing details – How much hassle will I have in getting the closing together?
  6. Price – Will the agent discount his/her commission?

 

What Does the Brokerage Offer That The Individual Agent Doesn’t?

When push comes to shove, most agents don’t sell their own listings any more.  The buyer and the buyer’s agent usually come through different venues – not through the listing agent.  That reduces the listing agent’s job to primarily just exposing the property, making sure it is priced correctly, and then coordinating communication to get the deal done.  As agents, we offer these services and our expertise in performing them.  Assuming we offer excellent service, the only other place for us to compete is price.  The question of whether or not to cut commissions is one that could develop into a completely separate blog post.  I don’t know the inside perspective from the realtor’s view point yet, but as a consumer, I can say the following…

 

I continue to maintain (sacrilege, I know…) that the reason so many realtors flood the marketplace is that it is such a profitable high-margin business.  Especially when realtors market themselves on the basis of availability and relationship (I’m friendly and smiley) rather than expertise, it seems that there is very little to differentiate one agent from another.  We’re ALL nice when we want your business, right?

Brokerages that serve their agents well, will ultimately build a reputation for serving their clients well, too.

Plus, what do agents do with all the profits that they earn in business, they plow it back into marketing… and not marketing to SERVE clients, but marketing to FIND clients.  This giant inefficiency is my primary gripe with the real estate brokerage industry.  It would go away if it was less profitable, and it would be less profitable if consumers insisted on using discount-priced agents.  While some clients use these, many believe that you get what you pay for in life, and are more comfortable going with a full-price agent.  So be it.

 

So, what it comes down to – if the well-informed consumer were really able to make an educated choice is finding an agent who is good at doing their job, and getting the best possible price for the agents services.

Hint to Clients – ask the agent if they’ll negotiate on commissions. 

Hint to Agents:  Don’t offer to negotiate on commissions – show your value and then stand firm on your price, Americans hate to negotiate, so if they’re not sold on working with you, it’s rarely because of price… find out what their other objections are. 

 

In my opinion, finding an agent “who is good” comes down to training and hard work.  As a new agent, I want a real estate broker who offers me in-depth training when I get started, and ongoing training to help me get better and better.  I don’t just want to be trained in how to get leads (this is good for ME) but how to implement systems and serve my clients better.  (This is good for THEM.)

 

In the long run, I think the best agents will choose the brokerage that allows them to serve their clients best, and make the most money.  Brokerages that serve their agents well, will ultimately build a reputation for serving their clients well, too.

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A few years back, I had the opportunity to work with my (now friend) Thomas Mangum for the first time in a real estate workshop.  He was helping a group of new investors connect with their passion and identify a niche to serve within the field of real estate investing.

I didn’t know it then, since “long tail” was not a buzz word yet, but he was helping these investors identify a niche within a niche that they could dominate and serve well.

Since that wonderful day with Thomas years ago, I’ve heard the theme of “long tail” repeated often.

I believe it is a powerful marketing strategy, no matter what your field of expertise.

What is the LONG TAIL?

To understand the basic concept behind the long tail, think of a bell curve representing consumers across the world. 

Traditionally, businesses have only been able to afford to market to the robust and beefy middle part of the bell curve – the part where the mainstream consumers hang out.  These are the people who drink Coca-Cola, eat french fries, and find stuff they want to buy at Wal-Mart. 

This is the most high-volume part of the consumer market.  It is also highly competitive.  Everyone wants to have the best fast-food franchise in town.  Everyone wants to have the best grocery store.  Why?  Because EVERYONE consumes these types of items.

In contrast, the skinny little ends of the bell curve graph don’t represent mainstream America.  The ends or “tails” of the bell curve represent the odd ducks, the ones-in-a-million, the arcane hobbyists, and the other members of deep and narrow niches to whom it has been historically too expensive to market.

Even there there are only a few people in any given obscure niche, most of us are members of some long tail or another…

These are (but aren’t JUST) the folks who wear spectacles, and hunt in bogs for rare plants and birds on the weekends.

I know people who are in the following “long tail” niche categories – Lutheran Youth Pastors in the Pacific Northwest, Acoustical Guitar Teachers in Bellevue/Mercer Island, Female Professionals Working In Commercial Real Estate in the Seattle area, Chicago-Area Backgammon Players, People Who Brew Their Own Beer At Home, etc.

Although there are not as many people in any of these niches, as there may be who are shopping for hamburgers on a given evening, they are now – given the capacities of the Internet age, potentially a lot more profitable to market to, in many cases… at least for the small business owner?

Why Does It Make Sense To Market To “Long Tail” Consumers?

Small business owners can profitably sell to “long tail” consumers because they are easier to find, and their needs are very specific and often hard to satisfy elsewhere. 

Amazon.com is the classic example of the long-tail resource.  Of course amazon sells the best-sellering John Grisham novels and Suze Orman books, but that doesn’t set them apart.  Even airport bookstores with limited shelf space stock those tomes.  Amazon really thrives in the long tail.  It can stock books that only sell a few hundred copies a year because it has a world-wide audience coming through its “virtual doors” and looking for those books.  They don’t have to justify the shelf-space (which is always limited in a phyiscal-location retailer) that a low-volume seller would occupy.  They can sell obscure items.  And a large volume of their business is, from what I understand, comprised of the unusual or hard-to-find books, CD’s, etc.

Therefore, if you have a product, rather than trying to sell it to the masses, try selling it to a niche.  Instead of being that real estate agent who helps buyers, sellers, out-of-town transfers, military families and seniors, as well as first time home owners and new-construction builders, (e.g. All things to all people), try to be the realtor who works on helping condominim owners sell their property if it’s located in two targeted zip codes.

You CAN become the big fish in a small pond if you Self-Define your “small pond” and dominate it.  Think how much more affordable and cost-effective it would be to build a website, create a mailing campaign, or cold-call a list iwht the purpose of dominating second niche I mentioned (neighborhood condo sellers) rather than the first (everyone the eye can see…)

When you use long-tail marketing you can find your prospects more easily and recognize them when you run across them.  Even more importantly – they can recognize you because you’re speaking their language.  Everyone wants to work with an expert who is interested in “just them” rather than a “generalist” who kind of knows the area.  Be the expert, know your niche deeply, and you can win it.

More Information On How the Long Tail Works In Your Business

For further explanation of what the long tail is and how it works, I encourage you to read this article by Dr. Ken Evoy and listen to his audio interview with Chris Anderson of WIRED magazine.  Chris wrote the book on Long Tail.

 

TAKE ACTION: How can you stop trying to serve the masses and create a narrower and deeper niche for your business?  Listen to the interview and read some of Thomas’ blog for further insight on this topic! Your goal – “niche” yourself deeper into a better place in the market!

Dec
10

How To Choose the Right Real Estate Brokerage

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If you are a licensed real estate agent, I need your help!

Right now, I am struggling with a question I’m sure many newly licensed real estate agents face – Where should I hang my real estate license?

When I first decided to get my real estate license I liked the idea of being self-employed, having a good way to get out-and-about in the local real estate scene, I wanted to see more properties and MLS data to help with my investing, and I wanted to be able to make money listing properties.

Initially I decided to work as an agent with Marcus & Millichap because I love commercial real estate and I liked the idea of working business days (9-5) rather than working nights and weekends.  I did not want to give up my nights and weekends because that’s the time when I see my family.

Unfortunately, I recently decided Marcus & Millichap wasn’t going to be a fit due to the length of the work days (being out of the house from 7 AM to 7 PM was too long to be gone with a 6-month old baby at home).

 

So, now I’m stuck with that question – where should I hang my license?

My ideal real estate business model would involve blogging and online marketing via Active Rain, direct mail campaigns, and personal networking, to list and sell a few houses a year.  I know people get concerned when they see "part time" real estate agents.  My goal is to be a full time real estate expert, just not one who’s always showing homes to buyers.

I talked to one realtor named Katerina who works on short sales and luxury homes in Florida.  She suggested going with a firm that allows me to market MYSELF first, rather than the company first.  She named ReMax or Keller Williams as two firms that were strong in this regard.  She also suggested always reading the Independent Contractor agreement before deciding to move forward.

I also looked at ZIP REALTY which is an online brokerage with a very compelling model.  They have an online property-search website that collects leads and sends them to agents for free.  Agents then work these leads and get paid a discounted commission when they close.  The problem with this set-up was I didn’t want my focus to be as a buyer’s agent.  They told me that 90% of their deals are buy-side, and my understanding is that is a very labor-intensive side of the business.

Right now I’m trying to get in touch with RedFin which is another online real estate broker in the Seattle area.  It was actually started by someone I went to high school with (how cool is that?!).  Their model is a pay-by-the-job model.  Field agents there are paid a flat fee, like $125 or so, to go out and show a property, let in an inspector, do an open house, etc.  It’s good walking-around money, and might be a good way to keep my license active and get me out in the field a little more.

If you are a licensed agent – I’m curious… what do you like and dislike about your broker?  What do you wish you’d done differently when you decided where to work?  Do you have any suggestions for me?

Thanks in advance for your help!  I really appreciate it!

 

Emily

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Aug
15

Marcus & Millichap, Here I Come!

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So, the news of the week is that I have decided to hang my commercial real estate broker’s license with Marcus & Millichap.  I have had good experiences working with brokers from this firm in the past and I believe they have an excellent training program for getting new agents up and running quickly and with best practices.

Why This Real Estate Agency?

After interviewing several other commercial real estate brokerages in Seattle and Bellevue, I liked Marcus & Millichap because I believe their platform creates a lot of data that will support the property sellers’ ability to price their properties well, optimize income and minimize expenses, and anticipate changes in the market places, all so that they sell quickly and for maximum profit.  Basically – by working there, I will be able to provide a lot of value to my clients.

The company has a niche in working with primarily sellers (rather than representing buyers, tenants, landlords, etc.) and specializes in properties worth $1 – $10 Million.  In the Seattle real estate market, most buildings that fit this classification are owned by individual investors (like me!) rather than corporations, REITs, full time real estate professionals, or  institutional investors.

Since I really enjoy *connecting* with people, and being able to relate to their needs, I am looking forward to working with this type of client and being able to provide them services that *I* as an investor myself, would also appreciate.  I think that is exactly what I’ll be in the position to do with this firm.

Getting Started as A Commercial Real Estate Agent!

I start working at Marcus and Millichap at the beginning of September and my understanding is that my first task will be to choose a market area and become very familiar with it.  I’ll be driving the properties, taking pictures of them, finding out what rents are, talking to tenants, chatting with neighbors, and generally putting on my detective hat to get the lay of the land.  It should be a lot of fun and I am pretty excited.

At this point, I’m thinking I might specialize in apartment buildings in the north end of Seattle.   Why? Residential rentals are the property class I have the most experience with and the north end being where I live. :)  I’m open to changing that, though, based on where the opportunities lie.  Maybe I’ll end up working in mobile home parks, self-storage, retail strip centers, or something I haven’t even thought of yet.

The Biggest Challenge of All:

IMG_2858 The hardest part of the whole thing, I think, will be not being home with Blake all day.  Now, working from home, I get to watch him smile when he wakes up from a nap, sing to him, make funny faces at him while we eat lunch together, and smell his sweet baby scent.  I will miss that while I am working, but I know when he is older (his talking, walking toddler years seem like they’re approaching all too fast!), he won’t find it fun to idle away his afternoons sitting in his bouncy seat and watching me work from home the whole time. 

I think he will come to enjoy preschool, learn from the other kids and teachers there, and we can all treasure our time together in the evenings and on weekends when we have time to focus on each other exclusively.  Perhaps by the time that baby number two comes around, we’ll end up having Ben stay home to be with the kids and work on his writing career.  There are lots of possibilities!

So, off I go, embarking on my new career as a real estate agent.  I’m moving quickly and am ready to learn!

About Emily Cressey

Emily Cressey is a real estate investor and licensed real estate agent living in Seattle, Washington. After graduating Phi Beta Kappa with an Economics degree from UNC-Chapel Hill (Go Tarheels!) her focus has been on building business for cash flow and investing in real estate for wealth. If you have questions about real estate investing, personal finance, or would like some flat-rate, affordable advice on one of these topics. Please fill in the Contact form.