BiggerPockets

Agents Revamp Marketing Strategies

Wednesday, March 28

With the housing crisis looming overhead and technology ever busting at the seams, local real estate agents are on a mission to quash negative preconceptions and stay ahead of the real estate game, which translates into reevaluating their current business model.

For real estate agents, income is based on commission earned from buying and selling properties. Many brokerage firms target listing properties for home sellers because these listings attract buyers and increase the overall market share of the brokerage. The basic business model is listings-equals-leads, which means more profits. Traditionally, real estate agents controlled market information, hence controlling the entire home sales process. This, however, posed a problem when the housing market collapsed in 2006-2007.

Since real estate agents represented buyers and sellers in transactions, they were partly responsible for the market bubble and decline. Some agents had received kickbacks from loan officers, double ended commissions, withheld pertinent information, and promised permanent appreciation. Understandably, consumer trust and respect for real estate agents dissipated.

Long gone are the days when local real estate agents advertise their services by placing flyers on parked cars at local grocery stores, knocking door-to-door, calling strangers from a phone book, and sending mailers to random geographic farms. Today, real estate agents are discovering new ways to rebuild consumer confidence.

The surge of various communication technologies, such as Facebook, Twitter, and Google +, and other social media platforms has helped real estate agents build trust relationships. Not only can the real estate agent reveal him or herself as an holistic individual, but friends, family, and colleagues may also vouch for the integrity of the agent. Real estate agents can also highlight their expertise by building profiles on websites such as Trulia, Zillow, and ActiveRain, answering consumer questions, and receiving recommendations

Veronica Salaman, a Realtor from Keller Williams, commented on the use of social media, “It is important for your clients to feel that you are a real person.” She recommends sharing some personal interests on social media accounts and letting your personality shine through. Having first-hand experience in the short sale journey and working with distressed clients, she said that clients depend on the real estate professional to be their confidant.

With short sales accounting for 25% of home sales in California (RealtyTrac,) it is important that local agents are empathetic to the needs of their clients.  Consumers need someone to be their advocate, to guide them through the stressful process, protect them from the risks, and support them in times of need.

Despite the turbulent changes in the real estate market, the demand for honesty, loyalty, and commitment has not changed.

Options Abound As Foreclosures Flood The Market

Monday, October 10

Since the beginning of the year, foreclosure filings have teetered: offering a glimmering light with reports of decline one month, then sinking hearts with surges the next. Realty Trac, Inc., which publishes a comprehensive database of foreclosures, announced a 33 percent increase in default notices in August from the previous month. The number of foreclosures is likely to increase in the months ahead. Despite the seemingly dismal news, be encouraged. There are other options available. Don’t be a victim of the instability of the market. Pay close attention.

The recent bump is primarily attributed to lenders’ new found motivation. According to James J. Saccacio, the CEO of Realty Trac, Inc., “… lenders have become bogged down in reviewing procedures, resubmitting paperwork, and formulating legal arguments related to accusations of improper foreclosure processing.” During the mortgage lending frenzy, many lenders implemented “robo-signers” to approve and qualify borrowers neglecting to verify documents manually. Recall, too, that last year many states joined forces to pressure lenders to halt foreclosure proceedings, such as the foreclosure moratorium issued by Bank of America, due to illegal affidavits. While fraud allegations had spurred meticulous assessing of all documentation, which initially slowed down the foreclosure process, the detailed review is now complete, the paperwork is easing, and efficiency is key.

Another factor contributing to the increase in default notices is the interest rate adjustments of Option-ARM loans originated in 2006 and 2007. Some homeowners will experience a tripling in their monthly mortgage payments. Option-ARM loans are flexible financing alternatives that provide borrowers the “option” to defer interest payments, which are then applied to the balance of the loan. The side effect, however, is that negative amortization increases future interest payments. Analysts at JP Morgan Chase forecast 70 percent of Option-ARM loans to default. JP Morgan Chase, Bank of America, and Wells Fargo are the largest holders of Option-ARM loans.

For the 11th consecutive month, California home prices have dropped; short sales and foreclosures account for a majority of the transactions. Prices have declined 4.2 percent from August 2010 to August 2011. G.U. Krueger, principal economist at HousingEcon.com, a research and consulting firm, remarks, “There’s a lot of demand for distressed properties. Whatever is being offered by the banks is being sold. But, the bad news is that they are being sold at a discount and that is what’s bringing down prices.”

Before hearts begin to split down the middle or ears blow steam, consider the opportunities that are now afforded. If housing prices are decreasing, isn’t now an ideal time to purchase? Unfortunately, banks are quickly becoming an obsolete mode of lending. However, seller financing options provide potential buyers the opportunity to be homeowners. No bank needed. Another option to consider is rent-to-own programs. Filed for bankruptcy? Foreclosure? Don’t let the depressing news reports discourage you.

Like everything in life, this, too, shall pass. Don’t let it pass in vain.