Article from Real Estate Buyer's Councel Newsletter:
Tighter Lending Standards Good For Housing, But Will Dampen Sales
WASHINGTON, April 11, 2007 -
Tighter lending criteria and fallout from the subprime loan debacle will lead to a healthier housing market with greater assurance that owners can handle mortgage adjustments, but higher loan standards will slow the housing recovery, according to the latest forecast by the National Association of Realtors®.
David Lereah, NAR’s chief economist, said the changes are necessary for the long-term health of the housing market. “We want to people to be able to stay in their homes with mortgage terms they understand and can handle,” he said. “Simply stated, a loan with the lowest monthly payment probably isn’t in your best interests – borrowers need to understand worst-case scenarios. If you’re in a mortgage you aren’t comfortable with, now is an excellent time to refinance, if you can, with historically low rates on safer conventional loans.”
Last week, Freddie Mac reported the 30-year fixed-rate mortgage was 6.17 percent. The 30-year fixed rate should rise slowly to 6.6 percent by the end of this year, so borrowers who need to refinance should act soon.
“Tighter lending standards will dampen home sales a bit, but by less than a couple of percentage points from initial projections. We still forecast 2007 to be the fourth highest year on record for existing-home sales, and housing remains a great long-term investment,” Lereah said.
Existing-home sales are likely to total 6.34 million in 2007 and 6.52 million next year, in contrast with 6.48 million in 2006. New-home sales are seen at 904,000 this year and 935,000 in 2008, below the 1.05 million last year. Housing starts are estimated at 1.47 million in 2007 and 1.55 million next year, down from 1.80 million units in 2006.
“As home sales moderate, overall home prices will be essentially flat this year,” Lereah said. “The good news is that inventories remain well below the levels experienced during the last housing downturn in the early 1990s, and supplies are close to balance in many areas.”
The national median existing-home price will probably slip 0.7 percent to $220,300 in 2007, following a 1.0 percent rise last year. The median new-home price is projected to increase 0.4 percent to $246,200 this year, after gaining 1.8 percent in 2006. Modest growth is expected next year, with existing-home prices increasing 1.6 percent and new-home prices rising 2.0 percent.
“When you look at housing activity in 2007, especially during the first half of this year, the percentage change in median home price is being distorted as the composition of sales shifts geographically from high-cost markets to moderately priced areas, in contrast with the sales distribution a year earlier,” Lereah said. “Within given markets, most areas can expect minor price gains.”
The unemployment rate should average 4.6 percent in 2007, the same as last year. Inflation, as measured by the Consumer Price Index, is likely to decline to 2.1 percent this year, compared with 3.2 percent in 2006, while growth in the U.S. gross domestic product is forecast at 2.3 percent in 2007, down from 3.3 percent last year. Inflation-adjusted disposable personal income will probably rise 3.1 percent this year, up from a gain of 2.6 percent in 2006.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries. # # #
Existing-home sales for March will be released April 24; the Pending Home Sales Index is scheduled for May 1 and the next forecast will be May 8.
NAR at a Glance
Saturday, April 14, 2007
Thursday, April 5, 2007
Positioning Yourself for a Successful Sales Call
by Tom Ninness
You finally got the opportunity to meet with a top Realtor. You share all of the different loan programs you have available, the great staff you have, and that you are committed to excellence. You mention that you are available to do pre-qualifications over the weekends and you'll do finance flyers for the agent's open house. You pull out some of the open house flyers that you've done for some of the other agents and the agent is impressed. The meeting goes well. You leave some of the flyers and your card and promise to follow up with the agent the next week.
The next week you leave a message, then another message a couple of days later, then one on Friday to remind the agent the agent that you are available that weekend if any needs come up. After attempting another couple of times to get a hold of the agent, the agent finally calls you and says that they are happy with the current lender that they are working with and if anything changes, they will call you. What just happened?
Three's a Crowd
There are three people involved when it comes to a sales call: the prospect, yourself and the current lending provider. The power is with the current provider as he is already on the pedestal and no two objects can occupy the same space.
When we make a sales call, we can compete against price, product and service. Service has the greatest potential to differentiate yourself from your competition. The fact is: Most prospects are being underserved and your goal is to see where those areas are. The one currently in the top position tends to just sit on his pedestal with little reason to be proactive in doing more for their clients.
Where is the pain?
People are motivated by either pain or pleasure? Believe it: Most people are motivated by pain . A successful sales call's mission is to get the prospect to feel dissatisfied with their current provider and want to work with you.
By asking the right questions, I have agents admitting to me: "I never see my loan officer", "It takes awhile to get my calls returned", "I've had issues with the good faith estimate being higher and that's embarrassing", "They get me the closing figures at the last minute", and "They never give me ideas that would help my business". These are areas of service where you can stand out.
Finding Your Winning Differences
For you to become successful, you need information, knowledge and intelligence. You need to know as much as you can about all three parties involved to have a successful sales call.
When I get the opportunity to meet with a top Realtor, I do plenty of reconnaissance. If I know some of the other agents in the office, I'll ask them if they know the current loan officer servicing this agent. I also learn as much as I can about the loan officer and the company that they work for. If I don't know any agents in the office, I'll call some of the title companies in the area and see what they know about the agent and who is the current provider. Going to the agent's website will give you some additional knowledge. It's important that you understand the following:
Your strengths versus your competition's strength - you will tie or lose.
Your weaknesses versus your competitions strength - you will lose.
Your strengths versus your competitions weaknesses - YOU WIN!!
The Perfect Sales Call
Building Rapport
You start by building rapport. There is a sequence in a relationship. You have to get to know the person, from this you can learn to like the person and eventually earn the trust of the person. I usually will ask if the agent is a native to Colorado since most of us came from somewhere else. How did they get into real estate? I never talk about rates and products, as there are some products that I don't have and maybe the current loan officer prices his loans skinnier than I do. Find the common ground to begin building the relationship.
Finding the Pain
You need to get the prospect to see where they are being underserved. By raising the prospect's expectations above their current level of service, you will create the pain. A question you could ask would be, "Let me ask you a question, what is the biggest challenge in your business today?" Later, in the conversation you could ask, "When it comes to the loan officers that you work with, what are some of the short comings you see in happening in the service that they provide?"
Educate versus Selling
From Tim Sander's great book, "Love is a Killer App", Tim emphasizes that we need to give knowledge with compassion or, as I like to say it, "with no strings attached". We also have to pass the test of comfort and credibility. I like to share stories of others who are experiencing the same kind of pain in their industry. By sharing stories, the prospect will learn that you have something that the current service provider does not have.
After listening to the prospect, and sharing what we do to combat the areas that the prospect shares what their challenges are, I'll bait the prospect with a take-away. A take-away is like waving a Frisbee in front of my Australian Cattle Dog and then putting it away. They want what you have. I can say after making a point, "Well, perhaps this is not really important to you." Guess what, it is important! This technique will create a "Self-Discovery" with the prospect and they know that their pain could be eased and that pain reliever is right in front of them.
Proposing a Remedy
All good sales people know when the momentum has switched over to them. It's time to go for the win. Asking questions, such as: "What would you like to happen next?" or "When do you want to get started?" are two great questions. One agent actually said to me when I asked this question, "I don't know what I'm going to say to my current loan officer. Would you mind calling and telling him that I'm switching over to you?" I was giving myself a "high five" when this occurred. You need to have a plan in place before you leave or at least an appointment with the agent no later than 48 hours from your initial meeting. You need to keep the fire burning with the prospect.
Final Thought
To stay on top of the pedestal, you must deliver what you promise. The agent needs to see and communicate with you frequently at the beginning. This is a brand new relationship and it will take time for both of you to learn how you do your business and what your systems are.
I have been knocked off the pedestal from time to time and it doesn't feel good. If this has happened to you, consider it a learning experience and don't let this happen again. Keep bringing superior service to your agents. Stay in front of them and communicate often. I make it a point to meet face-to-face with my top agents a minimum of once a month. I'm always looking for ways to increase their business with ideas. Get in the habit of asking what "pain" are they experiencing in their business currently and see how you can ease the challenges they are currently experience.
Remember, the more information, knowledge and intelligence you know about the prospect and the current service provider, the better chance for success. Never bad- mouth your competition, as the prospect will get defensive. It was them who decided to work with the current provider and it will make them feel that they didn't make a good choice. Let the prospect make the self-discovery on their own. Finally, if you start pushing the prospect to make a decision when they are not ready, they will push back and you will lose. Sometimes, the relationship is too entrenched to get the current service provider off of the pedestal the first time. Keep the momentum going by setting up that next appointment.
You finally got the opportunity to meet with a top Realtor. You share all of the different loan programs you have available, the great staff you have, and that you are committed to excellence. You mention that you are available to do pre-qualifications over the weekends and you'll do finance flyers for the agent's open house. You pull out some of the open house flyers that you've done for some of the other agents and the agent is impressed. The meeting goes well. You leave some of the flyers and your card and promise to follow up with the agent the next week.
The next week you leave a message, then another message a couple of days later, then one on Friday to remind the agent the agent that you are available that weekend if any needs come up. After attempting another couple of times to get a hold of the agent, the agent finally calls you and says that they are happy with the current lender that they are working with and if anything changes, they will call you. What just happened?
Three's a Crowd
There are three people involved when it comes to a sales call: the prospect, yourself and the current lending provider. The power is with the current provider as he is already on the pedestal and no two objects can occupy the same space.
When we make a sales call, we can compete against price, product and service. Service has the greatest potential to differentiate yourself from your competition. The fact is: Most prospects are being underserved and your goal is to see where those areas are. The one currently in the top position tends to just sit on his pedestal with little reason to be proactive in doing more for their clients.
Where is the pain?
People are motivated by either pain or pleasure? Believe it: Most people are motivated by pain . A successful sales call's mission is to get the prospect to feel dissatisfied with their current provider and want to work with you.
By asking the right questions, I have agents admitting to me: "I never see my loan officer", "It takes awhile to get my calls returned", "I've had issues with the good faith estimate being higher and that's embarrassing", "They get me the closing figures at the last minute", and "They never give me ideas that would help my business". These are areas of service where you can stand out.
Finding Your Winning Differences
For you to become successful, you need information, knowledge and intelligence. You need to know as much as you can about all three parties involved to have a successful sales call.
When I get the opportunity to meet with a top Realtor, I do plenty of reconnaissance. If I know some of the other agents in the office, I'll ask them if they know the current loan officer servicing this agent. I also learn as much as I can about the loan officer and the company that they work for. If I don't know any agents in the office, I'll call some of the title companies in the area and see what they know about the agent and who is the current provider. Going to the agent's website will give you some additional knowledge. It's important that you understand the following:
Your strengths versus your competition's strength - you will tie or lose.
Your weaknesses versus your competitions strength - you will lose.
Your strengths versus your competitions weaknesses - YOU WIN!!
The Perfect Sales Call
Building Rapport
You start by building rapport. There is a sequence in a relationship. You have to get to know the person, from this you can learn to like the person and eventually earn the trust of the person. I usually will ask if the agent is a native to Colorado since most of us came from somewhere else. How did they get into real estate? I never talk about rates and products, as there are some products that I don't have and maybe the current loan officer prices his loans skinnier than I do. Find the common ground to begin building the relationship.
Finding the Pain
You need to get the prospect to see where they are being underserved. By raising the prospect's expectations above their current level of service, you will create the pain. A question you could ask would be, "Let me ask you a question, what is the biggest challenge in your business today?" Later, in the conversation you could ask, "When it comes to the loan officers that you work with, what are some of the short comings you see in happening in the service that they provide?"
Educate versus Selling
From Tim Sander's great book, "Love is a Killer App", Tim emphasizes that we need to give knowledge with compassion or, as I like to say it, "with no strings attached". We also have to pass the test of comfort and credibility. I like to share stories of others who are experiencing the same kind of pain in their industry. By sharing stories, the prospect will learn that you have something that the current service provider does not have.
After listening to the prospect, and sharing what we do to combat the areas that the prospect shares what their challenges are, I'll bait the prospect with a take-away. A take-away is like waving a Frisbee in front of my Australian Cattle Dog and then putting it away. They want what you have. I can say after making a point, "Well, perhaps this is not really important to you." Guess what, it is important! This technique will create a "Self-Discovery" with the prospect and they know that their pain could be eased and that pain reliever is right in front of them.
Proposing a Remedy
All good sales people know when the momentum has switched over to them. It's time to go for the win. Asking questions, such as: "What would you like to happen next?" or "When do you want to get started?" are two great questions. One agent actually said to me when I asked this question, "I don't know what I'm going to say to my current loan officer. Would you mind calling and telling him that I'm switching over to you?" I was giving myself a "high five" when this occurred. You need to have a plan in place before you leave or at least an appointment with the agent no later than 48 hours from your initial meeting. You need to keep the fire burning with the prospect.
Final Thought
To stay on top of the pedestal, you must deliver what you promise. The agent needs to see and communicate with you frequently at the beginning. This is a brand new relationship and it will take time for both of you to learn how you do your business and what your systems are.
I have been knocked off the pedestal from time to time and it doesn't feel good. If this has happened to you, consider it a learning experience and don't let this happen again. Keep bringing superior service to your agents. Stay in front of them and communicate often. I make it a point to meet face-to-face with my top agents a minimum of once a month. I'm always looking for ways to increase their business with ideas. Get in the habit of asking what "pain" are they experiencing in their business currently and see how you can ease the challenges they are currently experience.
Remember, the more information, knowledge and intelligence you know about the prospect and the current service provider, the better chance for success. Never bad- mouth your competition, as the prospect will get defensive. It was them who decided to work with the current provider and it will make them feel that they didn't make a good choice. Let the prospect make the self-discovery on their own. Finally, if you start pushing the prospect to make a decision when they are not ready, they will push back and you will lose. Sometimes, the relationship is too entrenched to get the current service provider off of the pedestal the first time. Keep the momentum going by setting up that next appointment.
7 Tips to Radically Update Your Home (And Not Lose Money!!!)
by Eric Bramlett
Everyone loves to update their homes, and if you live in an older home in an appreciating neighborhood, it can be a fantastic investment. There are some pitfalls to avoid, which can cost a homeowner quite a bit of money because of no return on investment. However, it's better to focus on what TO do and stay the course.
1. Raise the Roof!!!
Not literally, but gut the attic, and raise the ceiling in, at least, the living room. Older homes typically have 8 foot ceilings, and it's one of the first characteristics that buyers notice. It's relatively inexpensive, when you compare your return on investment, to demolish the ceilings of your older home and sheetrock over your new, vaulted ceiling. It's amazing how much larger and lighter your home will feel.
2. Knock Down Walls
Literally, knock down as many walls as you can and still retain the integrity of the home, and the NECESSARY separation of rooms. If you compare older homes to newer homes, you'll notice that older homes are typically "choppy" while newer homes feel "open and flow well." This is due to "line of sight." Newer homes opt for less separation in rooms. You can create this same feeling by demolishing a half-wall that separates your kitchen from the living room or knocking down the wall between the living room and dining room to create one grand room. You'll be AMAZED at the difference it makes.
3. Overhaul Your Kitchen and/or Master Bathroom
These are the two rooms in the house that you can ALMOST go overboard and still get your money back when you sell the home. Refinish or replace the cabinetry, put in new tile and sinks - even install a new, stand-up shower! When (or if) you put your home on the market, you should see a GREAT return on investment.
4. Add a Master Bathroom
The 1-Bathroom houses from the 1970's and earlier are now obsolete. Americans have decided that we like a private bathroom for ourselves and another bathroom for our guests and children. While 90% of the house additions are bad ideas because they don't flow well or create poorly usable space, a master bathroom addition is a fantastic way to add more square footage, and more value to your home. Make SURE that your builder ties in the new slab to the old, and make sure that the addition is done properly. A poorly designed or executed addition never adds value - most buyers immediately imagine demolishing the work.
5. Xeriscape Your Lawn
It's trendy, it's cheap - it should be a go! Your homes curb appeal is the first thing that buyers notice, and it's how buyers decide whether or not they'll "click on your house" online to further investigate the interior. You can xeriscape a ¼ acre lot for around $3000, and you'll more than make up for that when your home goes on the market. Furthermore, it's environmentally & fiscally responsible. Stop wasting water!
6. Paint!!!
It's fairly obvious, but painting your home modern, neutral colors makes a HUGE difference in the appearance of the home. And when you factor in the cost - roughly $0.75/s.f. - it would be a HUGE mistake to forego painting your home when you decide it's time to modernize it. If you're planning on staying in the home for some time, paint it whatever colors you wish, but plan on repainting right before it's time to put it up for sale. If you plan on updating your home in order to sell it, go with neutral colors so that it will appeal to the widest audience.
7. Put in Wood Floors
You won't ALWAYS get your money out of installing wood floors. If you're in a great area, and it's time to replace the floors, look at the cost difference between tile, pergo, and wood. If your home will sell for $250k+ then forget about pergo and, if you choose tile, make sure it's not cheap tile. If the cost difference between wood and your other options is negligible, then go with wood - it appeals to the most buyers.
Updating your older home can be very fun, very rewarding, and potentially very lucrative. Older homes in established neighborhoods are ripe for updating and can draw a premium on the marketplace. Make sure and follow these guidelines, and you should see a great return on your investment.
Everyone loves to update their homes, and if you live in an older home in an appreciating neighborhood, it can be a fantastic investment. There are some pitfalls to avoid, which can cost a homeowner quite a bit of money because of no return on investment. However, it's better to focus on what TO do and stay the course.
1. Raise the Roof!!!
Not literally, but gut the attic, and raise the ceiling in, at least, the living room. Older homes typically have 8 foot ceilings, and it's one of the first characteristics that buyers notice. It's relatively inexpensive, when you compare your return on investment, to demolish the ceilings of your older home and sheetrock over your new, vaulted ceiling. It's amazing how much larger and lighter your home will feel.
2. Knock Down Walls
Literally, knock down as many walls as you can and still retain the integrity of the home, and the NECESSARY separation of rooms. If you compare older homes to newer homes, you'll notice that older homes are typically "choppy" while newer homes feel "open and flow well." This is due to "line of sight." Newer homes opt for less separation in rooms. You can create this same feeling by demolishing a half-wall that separates your kitchen from the living room or knocking down the wall between the living room and dining room to create one grand room. You'll be AMAZED at the difference it makes.
3. Overhaul Your Kitchen and/or Master Bathroom
These are the two rooms in the house that you can ALMOST go overboard and still get your money back when you sell the home. Refinish or replace the cabinetry, put in new tile and sinks - even install a new, stand-up shower! When (or if) you put your home on the market, you should see a GREAT return on investment.
4. Add a Master Bathroom
The 1-Bathroom houses from the 1970's and earlier are now obsolete. Americans have decided that we like a private bathroom for ourselves and another bathroom for our guests and children. While 90% of the house additions are bad ideas because they don't flow well or create poorly usable space, a master bathroom addition is a fantastic way to add more square footage, and more value to your home. Make SURE that your builder ties in the new slab to the old, and make sure that the addition is done properly. A poorly designed or executed addition never adds value - most buyers immediately imagine demolishing the work.
5. Xeriscape Your Lawn
It's trendy, it's cheap - it should be a go! Your homes curb appeal is the first thing that buyers notice, and it's how buyers decide whether or not they'll "click on your house" online to further investigate the interior. You can xeriscape a ¼ acre lot for around $3000, and you'll more than make up for that when your home goes on the market. Furthermore, it's environmentally & fiscally responsible. Stop wasting water!
6. Paint!!!
It's fairly obvious, but painting your home modern, neutral colors makes a HUGE difference in the appearance of the home. And when you factor in the cost - roughly $0.75/s.f. - it would be a HUGE mistake to forego painting your home when you decide it's time to modernize it. If you're planning on staying in the home for some time, paint it whatever colors you wish, but plan on repainting right before it's time to put it up for sale. If you plan on updating your home in order to sell it, go with neutral colors so that it will appeal to the widest audience.
7. Put in Wood Floors
You won't ALWAYS get your money out of installing wood floors. If you're in a great area, and it's time to replace the floors, look at the cost difference between tile, pergo, and wood. If your home will sell for $250k+ then forget about pergo and, if you choose tile, make sure it's not cheap tile. If the cost difference between wood and your other options is negligible, then go with wood - it appeals to the most buyers.
Updating your older home can be very fun, very rewarding, and potentially very lucrative. Older homes in established neighborhoods are ripe for updating and can draw a premium on the marketplace. Make sure and follow these guidelines, and you should see a great return on your investment.
Subscribe to:
Posts (Atom)
