Ugly listings bad for business
Realtor Notebook
By Teresa Boardman, Thursday, November 6, 2008.
Photo courtesy Teresa BoardmanI recently had lunch with a past client, and we had an interesting conversation about Realtors and real estate companies.
Like most consumers, my lunch date believes that real estate companies sell real estate. I set him straight on that by explaining that real estate companies do not sell any real estate at all. The agents, who are independent contractors, go out and find people who want to buy or sell houses. We do all the work and incur most of the expense.
The reason I had to set him straight on this is that I mentioned the name of a real estate company and he had a negative reaction to it. I asked him to tell me more. He said that company has signs up in his neighborhood on the worst homes he has ever seen and that the agents don't seem interested in marketing the homes.
What my client was reacting to are the for-sale signs he is seeing in front of the vacant properties and foreclosures a short distance from his home.
His impression is that the agents who list the homes don't really do anything except put signs out, and he notices that the snow doesn't get shoveled, the lawn doesn't get mowed and there are never any lights on, and the front stoop often has a pile of old newspapers or mail on it.
I explained to him that if he wants to keep our city beautiful he and his neighbors will have to take action. They can pick up any litter and call the city complaint department about the snow or grass. We have laws here, and the city doesn't care if the home is owned by an individual or a corporation -- the laws still apply, but will not be enforced until someone complains. It is the property owner's responsibility to keep up the property, not the listing agent's.
He made the remarks about the real estate company because he sees how the agents market foreclosures. In my market the only way to make a living selling foreclosures is to sell a lot of them. Some of the banks don't pay much in the way of a commission, and the homes are often priced well below the median for our area. Many are in rough shape. Banks don't seem to require that anything be done by the listing agent beyond putting up a sign and putting the home in our MLS.
If he had to choose a Realtor, he would not choose one from the company that we were talking about or any of the Realtors with that company. He is not the only one who has this kind of an attitude. We are judged by the homes our signs sit in front of and by how we market them.
When we list homes, people notice the homes and how we market them. The neighbors form opinions about us, about our company and about Realtors in general. My former client would not choose a Realtor who specializes in foreclosures to sell his home. He believes that they are not qualified to list his home, and that they would not do a good job.
I would argue that the agent is doing what is expected, and that he or she may be qualified to list any home. The truth is that banks often make lousy clients and don't understand how to sell real estate. It doesn't look that way to the neighbors. We build reputations with everything we do or don't do, and are judged by the homes we put our signs in front of, and apparently by the homes our colleagues working under the same brand put their signs in front of.
Where does this leave us, our companies and our industry when the foreclosure crisis ends?
Teresa Boardman is a broker in St. Paul, Minn., and founder of the St. Paul Real Estate blog.
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Submitted by George Farmer on November 6, 2008 - 4:23am.
Actually as a broker who has sold several hundred REO's most bank sellers require trash out, clean up, mowing, etc. They want the property to look good. However to do those tiems requires the agent to upfront pay to get these things done and then the seller will refund. The problem is if you have a lot of bank listings you can have thousands owed to you by banks some of which may be dire straits themselves these days.
Land For Sale
Submitted by Barry Cunningham on November 6, 2008 - 4:47am.
There are a couple of very interesting, and somewhat amusing statements in your article....
You wrote, "His impression is that the agents who list the homes don't really do anything except put signs out"
Teresa, lets face it, while you may be outside the norm, this is what most agents do. It's all that they know how to do and all that they are willing to do. For every Teresa Boardman there are probably 20 agents who act as your client remarked. I find it odd that you and other prominent agents don't realize this.
You wrote, "We do all the work and incur most of the expense"...agents need to be very careful in relying on this mantra. All what work and all what expense? The consumer knows that there is limited work performed by MOST agents and MOST do not spend anything to sell a home, and please...let's not bring in the tired excuses of gas and cost of "business" items. Those are items that if one can't afford then they should not be in "business".
You wrote, "agents don't seem interested in marketing the homes". This again should be obvious. Reason? MOST don't know how. They have never been taught and the follow the herd, do what he does mentality ensures the retardation of marketing efficiency. We won't even get into the fact that like stated above...they are not going to spend ANY money!
You wrote, "In my market the only way to make a living selling foreclosures is to sell a lot of them". That is a very...very..very..sad statement. If any agent, prominent or otherwise does not see the lucrative BONANZA in foreclosures and short sales, then the term "real estate professional" is an oxymoron! I won't go into it here, but if an agent can't make a five figure income PER MONTH OR MORE selling foreclosures, then they might as well as close up shop now. That is one unreal statement and it is a veritable window into the inadequacy and unpreparedness of an agent in today's real estate world!
But the statement that really sets me off, the statement that really underscores all of which I wrote above, is where you wrote that "Banks don't seem to require that anything be done by the listing agent beyond putting up a sign and putting the home in our MLS."
That single statement, that one sentence, if believed by you and most agents, is a very good reason why the consumer is looking at real estate agents in the light that they are.
Here's why...WHO CARES what the bank REQUIRES??? If one takes a listing, bank or otherwise, the agent taking the listing should be professionally prepared to run with the bal and get that property marketed and sold quickly. If the home is "ugly" or does not show well..then clean it up! Take some friggin professional initiative.
We have agents down here in florida selling 15-20 homes per MONTH....carrying maintenance bills of $50k-$75k per month keeping the listings maintained. They are running a "BUSINESS"!!
REO's and short sales are not for the "johnny-come-lately's who think that it's an easy niche of the business. It's not. You need capital, marketing prowess and a keen sense of business accumen & structure.
We can't keep up with the demand from buyers looking to buy foreclosures. And we don't take any listings. Want to know why, becasue we MARKET and ADVERTISE. We spend about $7,500.00 per month to bring in buyers. We average about 10-15 new buyers in the pipeline PER DAY. We're thinking of doubling that budget becasuse of current inventory and projected future inventory.
It's not hard to sell a BUNCH of REO's and you can make a darn good living in the niche. The problem is MOST agents haven't a clue.
Then they run into people like your client and are somewhat surprised that the clients have that kind of outlook on real estate agents.
Unfortunately, a lot of what you wrote above underscores that outlook.
Barry Cunningham
Real Estate Radio USA
www.realestateradiousa.com/blog
Submitted by Catherine Read on November 6, 2008 - 4:47am.
This is an interesting point Teresa. There are a number of homes for sale in my neighborhood, with a number of vacant bank-owned properties mixed in. Since I walk the majority of the streets with my dog every day (and I have for years) it's interesting to see which brokers/agents have the listings. The devil is in the details, and the condition of the property as well as the condition of the sign itself contribute to the opinion we form of the agent whose name is on the sign. It may not be accurate, but it's human nature. Just like any other form of marketing or advertising, it's a reflection of the broker's brand as well as the individual agent.
Many consumers don't seem to understand that brokers don't sell houses and agents are not employees. It's a challenge for brokers in creating a "brand promise" for their companies for that very reason. Perhaps in raising the level of awareness, agents will look with a fresh perspective on how important it is to keep on top of their "neighborhood marketing presence."
Catherine S. Read
Creative Read, Inc.
Submitted by Bonnie Erickson on November 6, 2008 - 5:52am.
Barry Cunningham stated, "REO's and short sales are not for the "johnny-come-lately's who think that it's an easy niche of the business. It's not. You need capital, marketing prowess and a keen sense of business accumen & structure." I couldn't agree more.
There are several REO specialists in our market that have a "machine" established. They were there in the early '90's when I entered the business and have hired staff like crazy to keep up with the explosion in homes to sell. Most of them are more professional and well organized than the majority of agents.
I admire the business acumen required to have a full time maintenance crew, clean out crews, 24 hour emergency call person, winterizing crew, offer processing system, administrative staff for the paperwork, deep pockets to pre-pay all of the above stated crews ($$$ are reimbursed sometimes months later), and the guts to tell an asset manager that it matters not what the broker price opinion is, the house is NOT WORTH THAT MUCH because of the condition/location/decorating/season, etc. All this for a measly 2.5% of $50,000 or less?
The condition of an individual house is not the listing agent's fault. It is a function of the contract with a lender. If the lender defines that certain maintenance items be ignored (i.e., removal of debris), then that is what happens. If a listing agent has a business relationship with a lender, they get the bad houses with the good ones. That is the nature of the business, not a function of the agent's laziness. Judging the agent's expertise by where only a couple of their signs are is not seeing the whole picture.
Bonnie Erickson
Submitted by Chad Lariscy on November 6, 2008 - 6:00am.
Teresa,
Very interesting Ah-Ha! Although I work really hard to be sure that my listings are very well taken care of, I have never given much thought as to how keeping a home properly marketed visually at the home (i.e. flyers, signage, ect.) may form opinions of you by those who are neighbors, those who just drive by, and of course those who view the property.
Agents Do sell homes. As our dear friend Dave Jenks explains..."Talent is over rated, Practice buiilds skill." Professional Agents Practice Diliberately to build the skills to offer the BEST service to their clients.
Thanks for the insight.
Submitted by Emily Medvec on November 6, 2008 - 6:32am.
Ugly listings bad for business? In my opinion, it is not helpful to stereotype homes or realtors in any market. For the record, not all bank owned homes or foreclosures are ugly. I represent Wachovia Mortgage FSB in New Mexico with a team I created with Prudential Santa Fe Realtors and our afflilate offices statewide. Here are two examples of how Wachovia Mortgage FSB acts as a homeowner in our community. These homes are not trashed or ugly and they qualify for a conventional mortgage. Have a look an see for yourself. By the way, they are priced to sell in 30 days and by doing so we are solving the foreclosure problem one home at a time in New Mexico and finding solutions for new buyers who now have an opportunity to move up or buy a home. Here are two homes. http://www.santafereo.com and http://www.santafedeal.com
Emily Medvec, Realtor
Prudential Santa Fe Real Estate
Best Anytime Cell 505.660.4541
www.emilymedvec.com
Submitted by Emily Medvec on November 6, 2008 - 6:40am.
Ugly Listings bad for business? Comment #2
Approximately 25% of my listings are bank owned. However, they are the listings that are getting the attention of non-bank owned or non-pre-foreclosure sellers. Yesterday, I received another inquiry from a Seller to list their home because he had been tracking my success selling these homes and he wanted his sold too. In my experience, these homes are a plus to my business and give me tremendous respect in the community as I work to solve these problems and not run away from them or even deny they exist.
I certainly recommend my peers look at these problems differently and from a new perspective of helping change the real estate landscape in their local market --- one home at a time.
Emily Medvec, Realtor
Prudential Santa Fe Real Estate
Best Anytime Cell 505.660.4541
www.emilymedvec.com
Submitted by David Curry on November 6, 2008 - 6:46am.
"We have agents down here in florida selling 15-20 homes per MONTH....carrying maintenance bills of $50k-$75k per month keeping the listings maintained. They are running a "BUSINESS"!!"
Barry- I understand that hyperbole is indeed a friend of the Realtor, but come on now. Sounds to me like running a $75k per month maintenance tab to sell 15 properties isn't good business at all. I agree that if you're a broker specializing in REO property that a little maintenance as a service is a good idea, but I think the cost of such services would run an average of $200 per month for lawn mowing and general cleaning maintenance. For a $75k budget, the Realtor would have to have 375 listings, which begs the next comment. If you have 375 listings, and you only sell 15 of those per month, it's time to find a new business.
www.genevalakefrontrealty.com/blog
Submitted by Barry Cunningham on November 6, 2008 - 7:42am.
David....with all due respect, your inexperience is showing. Please research the REO business BEFORE placing finger to keyboard.
No hyperbole here...you missed the point completely. The $75k maintenance budget isn't just spent and gone. Who would do that? LMAO!!!!
First, I did not say we carried such a maintenance load, I said there are agents down here who do. And yes, they do have literally hundreds of listings and yes they do carry $75k in maintenance expenses.
Secondly, where you SERIOUSLY err and underscore inexperience, is to wrongly assume that those expenses are not re-imbursed. LOL!!! Do you really think that someone would spend that kind of money on maintenance without the funds being reimbursable??? C'mon Dave...I literally could not stop laughing when I read your response.
Of course the bank reimburses you. However, you have to have the capital and resources to fund things on the front end. The commissions and other fees earned for the sale of the properties is in ADDITION to being reimbursed by the bank for maintenance costs.
Most agents can't and would not be able to professionally manage a significant amount of REO listings, hence, they should not be involved in this niche of the business.
Barry Cunningham
Real Estate Radio USA
www.realestateradiousa.com/blog
Submitted by Marcy Spieker on November 6, 2008 - 7:45am.
What is even worse than bank owned are the short sales where the seller takes on the attititude of "Why should I bother, I'm not getting anything out of it anyway."
We have had listings where neighbors have started calling us to complain about the condition of the property. I might add, rightfully so, the place is a sore thumb. We have been negotiated with the 2 lienholders for 4 months and the seller then included the house in a BK. Now Bank of America has stopped all negotiating, it has been since the 1st of the year since anything has been done to the property in terms of yard maintenance or home maintenance.
The ironic part is we still have a buyer wanting to buy at an extremely fair price and can't get anyone willing sign off on the purchase contract
It is a problem for all, especially the neighbors who want to sell a house in the same vicinity.
Marcy Spieker
Seattle, WA
Submitted by Robin Taylor Roth, PhD, CMQ/OE on November 6, 2008 - 10:41am.
Teresa ...
Your headlines certainly do get people's attention, and then the content frequently spurs lots of comments. This is great!
Although I have not handled any REOs, myself, I have driven by many such listings, and what Teresa says is true - about the impression neglected properties make. I've had very similar visceral reactions as the individual with whom Teresa was speaking. Were I to accept REO listings, I'd get an upfront agreement from the bank to permit me to look after the 'curb appeal' aspects of the property, with an agreement that they would reimburse me within a reasonable timeframe (e.g., 2 weeks).
I'd also assemble a stable of reliable service companies who would routinely care for the lawn, weeding, leaf collection, snow, trash pickup, etc., of my properties, as long as I maintained the listing. Their job would be to add these properties to their care-for roster, so that I would not have to do so.
Depending on the interior condition, I might also arrange for the house to be thoroughly cleaned and even have some rooms painted - if they're truly awful.
REOs should not be neglected, or they will never sell. And, as Teresa said, your own reputation and the reputation of your company will suffer from the same neglect.
Robin Taylor Roth
Senior Director, eLearning
Century 21 Canada Limited Partnership
Submitted by David Curry on November 6, 2008 - 11:33am.
My Dear Barry-
If you define inexperience in real estate as 13 years of full time real estate sales, then yes, I am inexperienced. I feel lucky to know so little about the way REO brokers operate. The market that I work has experienced very few foreclosures, and I'm hopeful that trend will continue. It would be rare to have as many as 10 REO homes on the market at any given time, so the scope of the REO business is indeed something I am not familiar with. Your post eluded to the idea that the brokers were successful because they were funding massive maintenance budgets, which seems pointless to mention if they are indeed being reimbursed by the banks. Note for your future posts, LMAO and LOL are best not used by adults in any format. Best of wishes on your radio show.
www.genevalakefrontrealty.com/blog
Submitted by Barry Cunningham on November 6, 2008 - 12:32pm.
No David, unfortunately I don't define experience in that manner. Chronological time on the job is meaningless in this discussion. You obviously have spent the bulk of that time outsode the realm of REO's and distressed properties. Doesn't make you a bad guy...just misinformed.
My post did not "elude" (sic) to anything. I was quite direct. In order for one to outlay such capital they would indeed need to have it available. In that regard, to fund that kind of operation one would more than likely need to be somewhat successful in their business. Just the overall management of resources would indicate such a prowess.
You however are seriously in need of a drink or some time off. In any event, have a great day and I'm sorry but your last comment actually made me laugh harder.
C'ya! (you do know what that means don't you?)
Barry Cunningham
Real Estate Radio USA
www.realestateradiousa.com/blog
Submitted by Michael Espiritu on November 6, 2008 - 3:50pm.
Man, some of these posts do show how a lot of agents have no clue about REO listings. $75,000 outlay (which the bank reimburses) to close 15-20 deals a month is actually a good return on investment. That's a $180,000 year income if those listings are at $200,000.I'm sure in Florida that is on the low price range.
$200,000 x 3% =$6,000. $6,000
$6,000 x 15 listings=$90,000
$90,000-$75,000=$15,000/month
$15,000 x 12 months = $180,000/year
Whoever thinks that maintaining a property is about $200/ month is living in FantasyLand. if the property is in good condition then of course your cost will be minimal. What if the property has a pool that needs to be drained $$$, what if the A/C and all copper wiring has been stolen $$$, what if there are holes in the walls,carpet damage,broken windows and appliances missing $$$? REO's are not for the faint of heart or those that do not have the cash to do the repairs.
In Southern California REO's dominate the market and if you ignore this niche market good luck keeping food on the table. Because you are not familiar w/ a certian market do not assume that said particular market ia a waste or there is no need to understand it because it's not in your area...Y E T! It is coming to a town near you!
Barry has been brutal in his posts but he is correct about his market and what it entails to be succesful at it.
I love ugly houses and any house will sell if it's priced right!I will list ugly houses all day long. One man's ugly could be the only thing a client could afford at the time! When I see an ugly house listed I do not look down on the agent or brokerage, I want to know why I didn't get the listing!
Michael Espiritu
Broker
Copeland Wealth Management/CWM Real Estate
So Cal
Submitted by Cheryl Hanron on November 6, 2008 - 3:57pm.
I work with Buyers and I am finding it very hard to "Sell Homes".
We have listing agents and companies who seem to have come out of nowhere, don't maintain signs or inventory. Calls go unanswered, or lists of directions are included in the MLS with instructions of offers to be faxed to undisclosed numbers and warnings that if their lenders is not used, they will not submit your offer.
I am old fashion, I like to know whom I am dealing with and whom I am exposing my buyers='s confidential information to. Any suggestions?
Submitted by Cheryl Hanron on November 6, 2008 - 3:58pm.
I work with Buyers and I am finding it very hard to "Sell Homes".
We have listing agents and companies who seem to have come out of nowhere, don't maintain signs or inventory. Calls go unanswered, or lists of directions are included in the MLS with instructions of offers to be faxed to undisclosed numbers and warnings that if their lenders is not used, they will not submit your offer.
I am old fashion, I like to know whom I am dealing with and whom I am exposing my buyers='s confidential information to. Any suggestions?
Submitted by Michael Espiritu on November 6, 2008 - 4:19pm.
Cheryl,
On my listings I require all offers to have the following:
-Purchase Agreement- Hopefully signed in the right spots by all parties
-Pre-Qualification Letter
-Copy of Deposit Check
-Copy of Front Page of Credit Report-FICO's
-Proof of Funds
I hope that you would be wise enough to black out SSN's and account numbers when you send these items???
Cross-qualification is standard practice w/ the caveat that the buyer does not have to use that particular lender. If an agent is not submitting offers he is violating his fiduciary duty and is braeking the law by saying you can only use one poarticular lender. That is a major violation and could be viewed as discriminatory.
Banks and the listing agent want the most-qualified, solid buyers so you can ensure the smoothest transaction possible.
What "confidential information" are you sending?
Buyers are the key in this particular cyclewe are in currently. They are more work but if you have a motivated, qualified buyer work them until you find them what they want. You cannot be all things to all people. Concentrate on a certain segment and specialze in that area. You will prove your value more as a specialist than as a broad- based, across the board, run-of-the-mill agent.
Michael Espiritu
Broker
Copeland Wealth Management/ CWM Real Estate
SoCal
Submitted by Michael Espiritu on November 6, 2008 - 4:26pm.
I usually spell very well but in reviewing my last post I spelled "breaking" and "particular" incorrectly.Oops!
Submitted by Barry Cunningham on November 6, 2008 - 9:14pm.
Hey Michael...you are spot on, most don't understand this arena.
I have to clarify something in your scenario above that I think some are not understanding and it's important to get right:
you wrote.."Man, some of these posts do show how a lot of agents have no clue about REO listings. $75,000 outlay (which the bank reimburses) to close 15-20 deals a month is actually a good return on investment. That's a $180,000 year income if those listings are at $200,000.I'm sure in Florida that is on the low price range.
$200,000 x 3% =$6,000. $6,000
$6,000 x 15 listings=$90,000
$90,000-$75,000=$15,000/month
$15,000 x 12 months = $180,000/year"
This is actually not correct. Yes, you are right, our home prices are a bit higher, but let's use your numbers.
$200,000 x 3% = $6,000.00 (correct)
$6,000.00 x 15 closings per month = $90,000 (Correct)
But where you err is in deducting the outlay in expenses. The agents I am referring to are grossing those commissions as shown, BUT you do NOT deduct the maintenance and management funds expended. This is in ADDITION to the reimbursement of expenses and management fees.
The 90k is the commission AND the agent gets her $75k outlay back as well.
Trust me, REO disposal is VERY lucrative. As Dave above called it hyperbole he will never believe this but it's true...we interviewed an agent up in the Washington/ Baltimore market who has 2,500 REO listings. No typo....2,500!!!
It's not that I am seeking to be brutal, but it is absolutely obvious that many agents were not prepared for what was forecast and instead of getting themselves prepared for what is still likely to be a foreclosure driven market, we get articles like this that do not, in my opinion, speak to the heart of the matter.
I respect Teresa and she is a prominent agent and quite successful, however this is a niche which requires a LOT of unique specialization that most agents simply do not have and worse yet, most are unwilling to learn.
I suggestt hat brokers police their agents and if they are not adequately prepared to market AND manage distressed properties, then they should not take such listings.
Yeah, I know..wishful thinking!
Barry Cunningham
Real Estate Radio USA
www.realestateradiousa.com/blog