Category Archives: Realtor.org – NAR

Posts by Sam DeBord on Realtor.org

Justify Your Existence

This post was originally published on Realtor.org:

Changes in technology are creating questions about the future roles of real estate associations, MLSs, and brokerages. As a result, REALTOR® association leaders have been increasingly focused on defining our value to members.

A good friend of mine, who was an engineer at Apple, used to recount Steve Jobs’ version of this value-seeking process. He’d walk into a room of employees and yell, “Justify your existence!”

Maniacal as his temperament was, his goal was focused and strategic. If an employee or an organization can’t succinctly state the value it creates, it won’t be able to justify its existence to its constituents.

Building Justification for REALTOR® Membership

Here in Washington, we’ve been working at the local and state level, along with NAR support, to create a framework for delivering concise messaging that sells the value of REALTOR® membership to real estate licensees. The tacit compulsion of membership for MLS access is a benefit to some markets, but every association needs a non-MLS value proposition as well.

Seattle King County REALTORS® have been working with a communications consultant and creative agency for the past two years to develop a messaging platform for REALTOR® value. Our work may be of value to other boards seeking to improve their engagement with membership, so we’d like to share it with any of our interested counterparts nationwide.

Our associations need an elevator pitch that quickly and succinctly educates members as to why they are REALTORS®. That requires boiling down all that we do into soundbites that are relevant to members.

Segmenting the Value Pitch

While a general elevator pitch for membership can be a good starting point, a more focused set of pitches segmented by audience improves engagement. Our members are diverse in their backgrounds and their roles. They’re also bombarded by advertising messages every day. Crafting narratives that specifically address each of their needs has been the focus of our rebranding (see nwrealtor.com).

segmenting the value pitch

Broker-Owners/Managers

Government affairs and political advocacy are arguably the most important roles that the REALTOR® association serves in the industry. Brokerage owners and managers usually agree. They’re focused on the big picture of a healthy real estate market for their agents.

Delivering news about legislative wins, as well as legal or political threats, is an effective way to engage to this constituency. Company owners regularly tell us that they simply want to hear about how much money we spend on advocacy, and how well we’re doing. They want us involved, and focused, on government affairs.

brokers

Example: “Through advocacy, the REALTOR® Association protects brokers and their agents from onerous financial, legislative, or legal barriers and allows them to build their businesses.”

Agents

Real estate agents, on the other hand, are much less likely to be swayed by the value of political advocacy, and I’ve found they’re often turned off by it. The engaged faithful of our REALTOR® associations are, of course, dedicated to these causes, but most agents are simply focused on sales. It’s our job as involved association leaders to keep our focus on their sales as well.

Real estate salespeople want to sell more homes and take home larger paychecks. An association has to be able to show them how we help them do that. If that’s through advocacy, it has to be directly and visibly linked to the agent’s paycheck.

Member benefits, education, and legal guidance are all services that improve an agent’s bottom line, and that’s how they need to be messaged to the member. If it makes the member more money, state succinctly how it does.

agents

Example: “Our association provides the business support tools and financial protections that allow REALTORS® to sell more homes.”

Seasoned vs. New Agents

The services we promote to our members can be focused on those who will be most likely to use them. New agents need business building education and informational support for learning the framework of the industry. We’re focusing messaging for new members on just those items.

seasoned vs new

The classes that are most valuable to them should be specifically offered to them when they join the organization. Benefits like discounted services, technical support, and a legal hotline need to be immediately promoted to new members to create the first impression of value. An explanation of the direct financial impact of our advocacy efforts on their paychecks will set the tone for their view of REALTOR® membership for the long-term.

Seasoned agents, on the other hand, may need to be reminded of these services, but are also seeking a deeper level of knowledge. They need education about expanding a successful business, building a support team, selling a business for retirement, or becoming involved in leadership.

seasoned vs new 2

Messaging to this group should be significantly different than to a brand new member. Seasoned agents are more likely to have been through an upturn-downturn cycle and be more receptive to the advocacy pitch. It will still need to be focused on their bottom line.

Selling, Not Telling

The overriding theme of the communications audit and creative agency work we’ve done is that we are a sales organization. Seattle King County REALTORS® is selling membership.

selling not tellingAssociations often fall into the mode of telling membership what we’re doing. We talk about our organizational processes. We give annual reports and committee updates. These rarely break through the rest of the marketing noise that our members are faced with every day.

Every time we touch a member, it should be with a sales mindset. Each phone call reinforces value. Every e-mail subject line says, “Open me up because it will benefit your business.” Every dues billing says, “This is why you’ve chosen the value of membership.”

That mindset has been a shift for our board and our staff, but it’s one we’re embracing because it focuses us on our future viability. No matter what technological changes face our industry, if the REALTOR® association is providing clear benefits that our members can see, we’ll continue to thrive as a trade organization.

Our board has spent a lot of time and resources going through this process, but we believe it has been well worth it for our members and the organization as a whole. If your board is going through the same process or would like to engage in it, feel free to contact us. Refocusing our communications by engaging membership with segmented, sales-oriented messaging can benefit any local or state organization.

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth. He is 2016 president-elect of Seattle King County REALTORS® and vice-chairman of legislative steering for Washington REALTORS®. You can find his team at SeattleHomes.com and BellevueHomes.com.

Point of Sale Mandates for Real Estate: From Cumbersome to Destructive

This article was originally published on NAR’s Blog:
by Sam DeBord

Government entities often attempt to place additional restrictions or costs on the transaction or transfer of real estate.  While there are often good intentions involved in the creation of these “point of sale” mandates, most proposals for new or increased transactional hurdles have serious negative consequences.

Point of sale mandates are a concern not only for real estate industry professionals, but also prospective and current home owners in a community. Barriers to the transfer of real property slow down the marketplace and often reduce home owners’ equity through transactional costs. Point of sale mandates can also create overall market depreciation by increasing failed transactions.

©cohdra, 2007. Morguefile

©cohdra, 2007. Morguefile

There is a wide range of point of sale restrictions on real estate transfers across the country. Some are minor in nature, while others are significant.  Any restriction adding costs, inspections, or bureaucracy to a real estate transaction is a drag on the industry and on home owners, but the effects of some mandates are much more severe than others.

Utility Inspections

Some point of sale mandates are intended to improve the community. Sausalito, Calif., has a mandate that requires owners to inspect their sewer laterals (which connect to the street sewer lines) and repair them before selling the home. While a buyer can (and often should) have a sewer scope inspection independently, the city has created a broad mandate that is sometimes unnecessary for certain property types, ages, and situations.

Municipalities in some areas, including Seattle, require inspection of on-site sewage systems or septic tanks to ensure they meet state regulation standards for operation. This point of sale mandate, much like the sewer lateral mandate, is intended to protect the groundwater and the health of the local community, but it only applies to those home owners who are selling.

This often causes an uneven distribution of responsibility and cost. Consumers can already get their own septic inspection independently when they buy a home. The governing authority may truly believe that all sewer lines or septic systems need to be inspected regularly to promote healthy groundwater. If so, they should propose a policy for all residents’ systems to be inspected on a regular basis and let the community decide if they agree.

Full Home Inspections

Some of the most concerning mandates include some form of government-managed home inspection at the point of sale. These can create fines, repair requirements, and even loss of occupancy rights if they are not adhered to by the home owners.

In Marin County, Calif., home owners are subjected to resale inspections before they can close escrow on a sale. These inspections can call for remediation or charges for items which are not in line with current code or permitting. This often leads to current building standards being applied retroactively to work that was previously done without a permit but according to the building code as it was written at the time.

In Austin, Texas, an energy performance audit is required to be performed and delivered to the buyer before a closing. These pricey inspections must be paid for by the seller. They rate the home’s windows, insulation, ducting, HVAC equipment, and even appliances for energy efficiency and make suggestions to buyers for improvements. They can generate significant repair requests from buyers that can scuttle sales agreements.

In Berkeley, Calif., resale inspections are focused on energy improvements as well. Toilets, shower heads, faucets, water heaters, water lines, duct work, chimneys, insulation, and weather stripping are all required to meet city standards. The cost to the home owners can reach thousands of dollars in many cases.

Point Of Sale Mandates Taken To The Extreme

The Cleveland area has some of the most heavy-handed point of sale mandates that exist in the country. In at least 20 of the metro’s suburban cities, inspections must be done before selling, and in some cities even before the home owner enters into contract to sell their home. If the inspection finds code violations, they must be repaired by the home owners even if they decide not to sell.

The onerous nature of these inspections is exemplified by the city of Maple Heights’ mandate. When home owners receive their point of sale inspection report, if there are code violations, they are granted a 90-day temporary permit to occupy. The city has taken the authority to revoke the home owners’ occupancy rights if they don’t fix the violations within that time frame. Even if the sellers never received an offer from a buyer, they are required to make the repairs to the home at their own expense.

Home owners may have to fix basement floors, electrical wiring and outlets, lighting, hot water tanks, window screens, gutters, fences, or even a concrete slab with three or more cracks. There are more than 40 categories of potential violations which a city-approved inspector can call out for repairs. If sellers can’t finish the repairs before closing, they must put the money for the repairs into an escrow account managed by the city to ensure they will be done. The occupancy permit for the home is dependent upon it.

Sensible Policy For Point Of Sale

Home buyers certainly want their homes to be safe, but they need to be able to make their own decisions about asking sellers for repairs or doing repair work themselves. Some neighborhoods are full of homes built in the 1920s or earlier. These homes have many features that would be considered outdated to an inspector and inefficient by new energy standards, but are often perfectly acceptable to the buyers.

Forcing a person who has lived in a home for 50 years to upgrade all of its systems before selling to a buyer who would have been happy with its previous condition is inefficient and an overreach of authority. It creates a significant financial detriment to the participants in the transaction and to real estate values as a whole in that community.

Our focus through REALTOR® policy has been to continue to educate the public on important safety and energy concerns about their homes. We educate home buyers about energy efficiency options and costs. We implore our buyers to have home inspections and, where appropriate, specialized inspections for sewer lines, septic systems, etc. We’ve taken on the primary role in advising home buyers and sellers about the dangers of lead paint, mold, and other hazards.

We don’t need point of sale mandates from government agencies to make these ideas into costly blanket inspection requirements for all home owners. Buyers and sellers already have the opportunity to research relevant information about their homes, and make their own decisions as to what kinds of features are valuable and necessary to them.

Point of sale mandates, at their very core, are not an effective way to make policy. They put an inordinate weight on the small part of a community that happens to be selling a home that year, while others who stay in their homes for decades don’t share in the cost. We need to continue to educate our clients, as well as our politicians, that empowering home buyers and sellers to learn more about the safety and efficiency of their homes is a far better way to promote those values than adding roadblocks to the sale of their homes.

Sam DeBord is a director for Washington REALTORS® and Seattle King County REALTORS®, and managing broker with Coldwell Banker Danforth. Connect with his team, Seattle Homes Group, at SeattleHome.com and SeattleCondo.com.

5 Simple Life Hacks to Boost Experience

This article was originally published on NAR’s Blog:

Real estate rookies can really kick start their learning experience by picking up some simple shortcuts from those who’ve been selling for many years.  These are just a few of the real estate “hacks” I’ve learned over the years from seasoned practitioners that improved my experience and knowledge in simple yet effective ways.

1. Know the Concierge

Do you know every building and subdivision in your city like the back of your hand?  I’ve sold all over Seattle for many years, but there are more than 1,000 condo buildings in the metro area.  You can’t possibly know them all well.

©clarita, 2008. Morguefile

©clarita, 2008. Morguefile

If you’re going to show a buyer a condo in a building where you’re not an expert, get a boost for your experience and your image by previewing or showing up 30 minutes early to talk to the concierge. Find out where the amenities are and tour the unit, but also get the concierge’s name. When your client arrives, you can stroll in together and greet the concierge with, “Hi Tony, good to see you again, we’re headed up to see the pool.”  You’ve already done the research to be prepared for your client, so you might as well add that splash of “in-the-know” to your appearance.

Of course, the same applies to knowing the security guard at a gated community, the marina manager at a houseboat community, or any other gatekeeper to a property you intend to show.

2. Point Out the Negatives Right Away

Consumers who don’t know us aren’t sure they can fully trust us at first. With new clients, they may be concerned that your goal is to sell them whichever home you can get them into as quickly as possible.

Show them that you’re a trustworthy source of information by not focusing solely on the positive selling aspects of a home, especially at your initial meetings. By pointing out the drawbacks of the home they’re touring right away, they’ll develop trust for your opinions and realize you’re not all about the sale.

I’ve had numerous clients thank me after our very first showing, because I started out with an analysis of the home’s weaknesses instead of a sales pitch. Have you ever pointed out that “ocean breeze” sound that you can hear from the master bedroom (freeway noise)? They love it. If you let clients understand upfront that you’re there to help them buy a home, as opposed to sell them a home, they will have have long-term loyalty.

3. Keys in the Back Pocket

This one is a bit silly, but still practical. Have you ever arrived at the fifth house on an eight home tour and found an extra set of house keys in your possession? Buyer tours can be complex, and sometimes agents make the mistake of setting keys down or putting them away quickly when they’re trying to pay attention to their clients. It rarely happens, but when it does it’s an embarrassing and time consuming mistake.

You’ll probably never drive away with someone else’s keys if they’re in your back pocket and you have to sit on them. Even better, put the whole key compartment from the keybox in your back pocket if it fits. It will be a constant reminder that the house isn’t secure until you’ve put it back, and even the most distracted agent won’t be able to sit on it and drive away (apologies to those whose fashion style doesn’t permit the use of pockets).

4. Spend Time Investing in Your Local REALTOR® Board

Think you know what’s happening in your local real estate market? Working with buyers and sellers is just the tip of the iceberg. Listen in on a meeting of your local board’s government affairs, business practices, or MLS issues meetings. You’ll realize how much more is going on behind the scenes.

Understanding the big picture issues of real estate that your REALTOR® board is dealing with every day will build your knowledge quickly. Joining a committee can give you the extra confidence and subject material to discuss these kinds of topics with clients. You can show them that you have unique industry knowledge as well as the ability to sell their homes.

Consumers view any management title you hold with your REALTOR® board as a sign that you’re a leader in the community, and you can climb that ladder quickly if you’re willing to put in the time.

5. Suit Up

Appropriate business attire can vary widely in real estate. If you’re comfortable and successful in your business already, you can wear whatever you like. If you’re newer to the business and hoping to look more experienced, though, don’t give in to the ego trip that says, “I’m going to look how I always look and people can take me for who I am.” This isn’t your high school drama club, it’s a tough business where the majority of agents aren’t particularly successful. Consumers want to play with a winner, and if you look and act like someone who is successful, they will be more inclined to believe you are.

If you know that your image will improve with more professional business attire, then buck up and wear it like your income depends on it–because it does. This doesn’t mean you need to go buy the latest sports car and Armani suit. Just don’t give in to the laziness that says, “I’ll clean out my car next week,” or “I don’t feel like putting on a jacket today.” To this day I wear a suit to every initial meeting with a client, no matter their age or style.  You’re always safer overdressed than underdressed.

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth, and a state director for Washington REALTORS®. You can find his team at SeattleHome.com and SeattleCondo.com.

REALTOR® Recruiting and Retention: The Non-MLS Value Proposition

This article was originally published on Realtor.org:
by Sam DeBord

Compulsion is the crutch that lulls our organization’s recruiting and retention capabilities to sleep. When real estate licensees are compelled to be members of a REALTOR® association because of their need for MLS services, we often fail to aggressively sell them on the broad spectrum of REALTOR® benefits, most of which lie outside of the MLS sphere.

The MLS is integral to our members’ businesses, and will continue to be important to our industry. Legal, financial, and technological shifts have significantly changed its role over time, though, and we should be prepared for the inevitability of future changes.

As a member of Washington REALTORS® and Seattle King County REALTORS® Board of Directors, I believe the long-term danger for REALTOR® associations is in resting on a value proposition that relies almost singularly on the benefits of compulsory MLS membership. Building apps and services that complement the MLS can reinforce the board/MLS’s value, but without member appreciation for non-MLS benefits, a REALTOR® board is putting all of its eggs in one basket.

The organization’s reputation has to be built on more than just transactional services.

Political advocacy, legal protection, corporate partnership benefits, and education are all services that can and should be relayed to members regularly to create a more consistent and broad picture of the value derived from membership.

the measure of membershipNAR has made a significant investment this year to define the REALTOR® Value Proposition, and our local boards nationwide could benefit greatly by sharing our successful strategies with one another. YPN members who serve on their local or state REALTOR® board, take note: More collaboration between REALTOR® boards could streamline the identification of the most effective messaging strategies to be leveraged in membership-building campaigns across the country.

I’ve had the opportunity to chair a communications task force for Seattle King County REALTORS®, and we’d like to share our first steps in reinventing our value proposition.  Our president, executive committee, staff, and creative agencies have been working for over a year to audit our communications and messaging strategies. This is our first concrete value proposition piece, which going out this week to members alongside the annual dues invoice.

The annual bill is the single piece of communication between boards and members that will be delivered without fail. We’ve added our benefits brochure this year, with the front giving a quick visual highlight of most concrete REALTOR® tools available from NAR, the state board, and local board. The back side highlights timely advocacy issues and the specific financial ramifications for the member’s bottom line.

This is the most poignant moment to clarify member benefits. Educating members on the wide range of protections and services we provide should happen year-round, but we should be especially vocal on the day that we ask our members to recommit another year of financing for the organization which supports their businesses.

The impetus for Seattle King County REALTORS® to create this kind of messaging was greater than most boards would have – our regional MLS is not REALTOR®-owned.  Our local licensees have to find enough value in non-MLS services to justify REALTOR® membership. Despite that challenge, our board continues to retain the majority of local full-time agents within our membership, and our members do the bulk of the total sales in our market.

This kind of messaging, with a few local tweaks, should be applicable to nearly any board and a great complement to those providing MLS services as well.  We will be redesigning our entire platform of communication this year to make certain we’re contacting our members with timely, engaging, and useful information every chance we get.  We’ll be sharing more as the process moves along, and we’d invite you to invest in the development of the REALTOR® Value Proposition by sharing your most successful communications campaigns as well.

Sam DeBord is a director for Washington REALTORS® and Seattle King County REALTORS®, and managing broker with Coldwell Banker Danforth. Connect with his team, Seattle Homes Group, at SeattleHome.com and SeattleCondo.com.

Make Home Valuation Systems Work to Your Advantage

This article was originally published on Realtor.org:

Online home valuations have a rocky history.  From automated valuation models (AVMs) used in lending during the mortgage boom to consumer-focused products like Zillow’s Zestimate, the accuracy of these valuations has always been an issue for real estate professionals.  Despite online valuations’ inability to consistently provide an accurate home value on an individual basis, one thing is clear:  They’re very popular.

While the misinformation creates fairly regular confusion for consumers, the regular annoyance to many real estate professionals has simply become an opportunity for others. Consumers gravitate to online valuations in droves, so many professionals are starting to offer their own versions.

There are plenty of online valuation tools for agents and brokers available, and although they’re not a brand new concept, the number of companies offering them is growing.  The simplest versions are standalone websites that do just one thing: get home sellers to enter their address and contact information, and deliver them an estimated value report.

Companies sell these websites directly to agents, and provide some training and networking online with other users to learn to drive traffic to them.  We tested the product from Home Value Leads in California. Facebook ads and Google pay-per-click campaigns are used to attract home sellers who are curious about their home’s value. The sellers click on an ad about home prices in their neighborhood, fill in their address and contact info, and receive their value report. The agent can follow up to explain the inaccuracies that are inherent in an online valuation and offer a personalized follow-up or CMA to better educate the consumer.

Full-service website vendors are integrating the home valuation tools as well. The most recent one we tested was from Real Geeks in Hawaii.  Customers simply add it to their current Real Geeks website with a call-to-action asking sellers “What’s Your Home Worth?”  They can also drive traffic with paid ads. The same follow-up and personalized explanation with a consumer makes the process educational for the home owner and valuable for the agent. It’s tied in to the back-end of the agent’s current website, so the leads from sellers and buyers exist in the same database.

While it might seem like a simple form on a website could generate the same leads, the simplicity and single focus of encouraging a user to enter their address is the beauty behind these products. Conversion rates are far higher on these tools than when simply asking a user to fill out a form on a regular website. They’re built to prod each user along to the next step, and they do it well. Even without all contact information, simply getting an address from a consumer might be reason to send a postcard to the homeowner who might be thinking of selling.

Many of us roll our eyes when we hear “But Zillow says my house is worth X.” It’s a professional annoyance, but if we’re honest about it, it’s a genius marketing tactic. These new tools create an opportunity to get past being frustrated with the tactic, and to use it yourself to create some new customer contacts. With consumers now on your website, you can start the education process about home values right away.

Sam DeBord is a state director for Washington REALTORS®, and managing broker with Coldwell Banker Danforth. Connect with his team, Seattle Homes Group, at SeattleHome.com and SeattleCondo.com.

Do We Need Real Estate Tax Incentives?

This article was originally published on Realtor.org:

The U.S. tax code includes multiple incentives for buying and owning real estate. The mortgage interest deduction and property tax deduction are just a couple of the incentives that have come under fire in new “tax reform” plans for their purported special treatment of the real estate industry and home owners.

Do we really need tax deductions for real estate? In short, no. We don’t need them at all. We also don’t technically need government-incentivized public schools, roadways, or infrastructure for businesses. And yet, we find ways in our balancing act of budget spending and revenue to make room for them. There’s a reason for that.

The tax code in the United States, as imperfect as it is, was designed to encourage behavior that is good for the country. We don’t tax purely to attain a certain level of assets in a treasury account. We choose to tax certain activities at lower rates to spur economic growth. We spend those tax revenues on the kinds of programs that create a healthy atmosphere for further growth: an educated populace, safe transportation, viable communities in which to do business, and a stable, secure country.

If a taxpayer’s behavior improves the country’s health via increased economic activity, we support it through the tax code. We allow deductions for student loan debt, for having children (social security revenues are dependent on a growing population), for buying health insurance, and for business expenses. If an activity contributes positively to the standard of living for Americans, our tax code does, and must continue to, make that activity affordable through tax incentives.

No matter what stripe our politicians bear, they almost universally accept the notion that we’re all better off when the economy is booming, tax receipts are increasing, and our citizens’ net worth is rising. Real estate accounts for around 15 percent of our GDP. It’s one of the biggest drivers of consumer purchases nationally and excise taxes locally. Every single home purchase drives tens of thousands of dollars in related economic activity. Real estate’s ability to spur economic activity is unmatched.

We could spend a lot of time extolling homeownership’s impact on the stability of communities, schools, and families. These are all important. For fiscal discussion purposes, though, we need not go past the dollars and cents. Real estate activity has led us out of every economic downturn in recent history, and it is on its way to doing so again today. Incentivizing real estate sales and homeownership has a net positive effect on jobs, on communities, and on tax revenues in the long-term.

Do we really need tax incentives for real estate? We don’t need them any more than we need to be economically prosperous. The choice to keep those incentives or not is ours, and the answer seems obvious.

The REALTOR® Value Proposition: Do You Have an Elevator Pitch?

This article was originally published on Realtor.org:
by Sam DeBord

This week I’m in Washington, D.C., for the REALTOR® Party Conference & Expo, and it got me thinking: Some of the most interesting committees I’ve worked with lately have focused on a range of issues surrounding the value proposition for the REALTOR® brand. From a communications audit at our local board to a state/NAR combined idea building project, the question of member value has been at the forefront. Those of us who are heavily involved with our boards already understand the great value of our membership, but explaining it in a way that engages the average member isn’t an easy task.

There seem to be three main steps to create a scalable value proposition outreach, and some tempting pitfalls within each:

1. Identify and define those services that members currently value, or those that would hold value if the members were aware of them. Don’t assume you know, or hope that you know what members value. Measure it through surveys, interviews, or focus groups.

2. Craft the message that conveys that value in a sound bite – an elevator pitch, in effect. Don’t attempt to force everything you’d like members to know into this message, it needs to be brief and catered specifically to their business bottom line. Only tell them what will sell them.

3. Find the tactics and delivery mechanisms that will allow you to spread the message effectively. Don’t try new avenues because they’re flashy, or stick to old ones because they’re easy. Measure your response or engagement rates from past messaging in different media, and focus on those that drive ROI.

Most of us who have given a pitch about REALTOR® membership know that members will understand the value if we have enough time to explain the depth of the advocacy and industry support we provide. We also know that we rarely get a lot of time. The grumble in the office about paying annual dues can be retorted with a quick reminder of a recent legislative victory that saved the member an entire paycheck. Coming from a position of “putting out fires,” though, isn’t as effective as proactively driving a public relations value campaign within membership.

One of the interesting components of creating a value proposition is the geographic differentiation between boards. Some locations have a majority of local brokerages in their membership, which creates plenty of incentives for licensees to join the board. Most have REALTOR®-owned MLSs which are obvious enticements to membership. We also know, though, that there are REALTOR® boards in cities whose MLSs are broker-owned, and those associations thrive as well. The brokers and agents in those locations are finding value in the REALTOR® organization even though it doesn’t provide an MLS. Issues advocacy, legal guidance, professional standards, and education are often the services cited as most valuable by members in these non-REALTOR® MLS locations.

The future services that we provide will certainly be a significant factor in how much our members appreciate our boards in the long-term. Defining the current benefits, though, in a succinct and crystal-clear fashion, is ultimately important in educating and engaging our members today.

We’re salespeople. If we can’t sell REALTOR® membership to our associates, we’re either not very good at our jobs, or we’re just not interested in trying.

If I had been sold the REALTOR® brand as a new licensee, this would have been the elevator pitch that worked for me:

“Being a REALTOR® will cost you a few hundred bucks a year. For that, you’ll receive protection: legal guidance to prevent lawsuits, governmental advocacy to safeguard your current paycheck, and legislative steering to keep bad laws from harming your local market and your future paychecks.”

“You’ll also receive business building benefits: education to expand your skill set, career guidance and tools to promote a more profitable business model, and association with the industry’s top professionals for networking, referrals, and professional development.”

“Successful people don’t step over dollars to pick up pennies. Tell me you don’t want to spend a few hundred bucks to protect and grow your business – I’ll tell you that your mindset is not going to allow you to be successful in this business.”

I’d love to hear your feedback, as different members value different services. What’s your value proposition? What elevator pitch would have gotten you off the fence as a new real estate agent? Why are you a REALTOR®?

Does Slow, Steady Growth Actually Create Real Estate Bubbles?

This article was originally published on Realtor.org:

If “a stitch in time saves nine,” does a market that corrects itself frequently save itself from over-correcting?

We’ve been told that slow and steady growth is the safest path for an investment. Real estate markets that follow a moderately increasing appreciation path are the rock-solid investments that provide safe harbor from volatile equity swings.

And yet, it’s worthwhile to examine the counter-intuitive possibility that just the opposite is true. What if markets that slowly and methodically gain steam are actually the most likely markets to eventually over-correct, creating far greater overall volatility for their investors? What if markets whose ups and downs are fairly regular actually make for a less-risky long-term environment by keeping their investors engaged?

With real estate prices in the U.S. gaining significant steam again, the talk of “the next bubble” is inevitable. Annual home price appreciation is currently above 7 percent, and the quick run-up in prices leads some to believe a sharp downturn in prices is likely to follow in the coming years. Historical statistics, on the other hand, point to another possibility.

change in home pricesLooking at simple quarterly price changes might make an average consumer see the current market as overheated and volatile. By blending the quarterly pricing reports in the first chart into one-year running averages in the second chart, though, we get a more fluid look at home pricing trends without the seasonality issues.

What you’ll see in the second chart are nominal median home prices–they haven’t been adjusted for inflation. We’re simply seeing how much home prices went up and went down over the past four decades. (Home owners making selling decisions rarely make conscious inflation-adjusted decisions about their home. The home’s price is X, the mortgage balance is Y, and the seller wants to know that the proceeds will be Z.)

There are two times during those 40 years where a downturn was so significant that it created nominal home price depreciation for a year or more.  The first was in the early 1990s, and the second was our most recent downturn that started in the late 2000s.

The rate of home price appreciation today looks a lot more like 1972 or 1976 than the two more recent price run-ups that ended in nominal depreciation.  The trend lines for the 1970s spikes were sharp, and they were followed quickly by slowdowns that didn’t put home prices into depreciation–they merely brought them back to earth for a bit before the next growth period.

The pricing growth that we saw in the 1980s, and in the 1990s/2000s, however, had a very different look.  The incremental gains in appreciation percentage were significantly smaller. These two slow-growth periods built on themselves for extended periods of time, in a way that may have allowed investors to become complacent. Home prices rose every year, and the trend had been happening for so long and so uniformly that the memory of the last correction was far behind.

Could it be that when pricing spikes and settles quickly and often, it actually creates a safer long-term environment for home owners? The short-term peaks and valleys don’t have a huge effect on the home owner who plans to stay in the same location for 10 or more years. As long as the overall trend is positive, a few good years and a few flat years are just fine.

Meanwhile, investors who bank on a constant appreciation trend may find themselves falling off the back end of the kind of slide we saw in the late 2000s. As they over-leverage and over-invest in a market that hasn’t reminded them of the regularity of average or poor returns on any investment, they may be setting themselves up for a much more painful fall in the long-term.

Are these trend lines conclusive? Hardly. Could the opposite argument be made? Certainly. The best and the worst thing about statistics is the ability of two different people to interpret them in drastically different ways.

To say that steady growth in the rate of price appreciation is dangerous would probably be real estate heresy. It’s still worth examining the notion, though. It’s very possible that markets which make their investors feel the sting of a slow year fairly regularly, make those investors much more conscious of the reality of the environment, and make for stronger markets in general.

Sources: National Association of REALTORS®’ median home prices, S&P/Case-Shiller National Home Price Index, FHFA House Price Index, and Freddie Mac Conventional Mortgage Home Price Index.

Quick Facts You Need To Know About The Mortgage Interest Deduction

This article was originally published on Realtor.org:

When talking to associates and the public about real estate topics, it’s important to be educated on the issues that we value most as REALTORS®.  Government fiscal and tax policy can be confusing issues that many REALTORS® don’t feel they have time for. Still, anyone working in the industry is bound to strike up a conversation that leads to the current budget shortfall and potential ways to fix it.  Reducing or eliminating the Mortgage Interest Deduction is often suggested.

REALTOR® advocates need to know a few quick facts to show our clients and our communities why this deduction is so important to homeowners, families, and the country as a whole.  This infographic makes the major points that every REALTOR® should be able to recount, without getting mired in the muck of too much tax policy:

The statistics make it plainly clear how valuable the Mortgage Interest Deduction is to Americans.  Roughly three out of every four homeowners with a mortgage claims the deduction.

With an average tax deduction of $2,713, the MID is a major savings for home buyers who are investing in their futures.  Without that deduction, we’d see some significant increases in taxes for middle-class Americans.

The typical taxpayer who claims the MID is under 45 years old, married, and has children.  Their household income is under $200,000.  This is the quintessential working family that is in the process of building a nest egg for their children’s future and long-term for retirement.  Saving those tax dollars each year is encouraging them to make investments in their community.

One of the biggest concerns with proposals to change the MID would be the effect on home prices.  Values of real estate across the country would be projected to fall 15 percent if the MID were eliminated altogether.  After finally beginning to recover from the previous downturn, real estate markets would be devastated by another such a drastic drop in prices.

Real estate is one of the biggest components of the national GDP, comprising about 15 percent of the total.  Consumer spending creates jobs and economic growth, and real estate has always been a leading driver for consumer spending.  Our national economic well being is, and always has been, tied to a healthy real estate market.

As REALTORS®, we’re obligated to speak up when real estate issues are on the table.  We know better than anyone the importance that the real estate market plays in every American’s financial well-being, whether or not they own a home.  Political arguments may espouse some lofty theories, but the real-world facts support our position.

Short on Experience? Try Your Local Board

This article was originally published on Realtor.org:

One of the biggest hurdles for new REALTORS® is overcoming a lack of experience when meeting with a potential client. Motivation, marketing skills, and preparation go a long way, but they can fall flat when faced with a simple seller question:

“So, how long have you been selling real estate?”

Many REALTORS® who are fairly new to the industry are already outstanding salespeople. However, it’s still reasonable to expect a home buyer or seller to question the experience of their potential representation. The difficulty for the newer REALTOR® is that there is no way to speed up the length of time he or she has been working in the industry.

There is, however, an easy way to increase the depth of that experience. Exhibiting experience is not just about the number of years a REALTOR® has been selling homes. It’s much more about the knowledge gained during that time.

Consider two responses to our previously-mentioned home seller question:

Response 1 : “I’ve been selling homes in this neighborhood for 18 months, and have sold six homes so far this year.”

Response 2: “I’ve been serving this community as the government affairs liaison for the local REALTOR board, as well as selling homes here since 2011. I’ve helped a half-dozen clients sell so far this year, while also working on a task force that’s helping to ensure fair foreclosure practices and to secure property rights for our local homeowners.”

Which response do you think will win the seller over?

Working with a local board is the fastest way to achieve a wider range of experience, and contribute to your community at the same time. It shows potential clients that you’re trusted by the public as well as your industry associates.

The local boards are always searching for newer, younger, fresher ideas from their member base. Don’t be intimidated by the names or the experience levels of the committees. You’ll be surprised how much appreciation new members receive when they commit to more influential roles within their local organizations.

Give your local board a call, and add a title or two to your e-mail signature. Government affairs, social media, property rights, information systems, communications, education−there are a plethora of opportunities. Fast-track the depth of your experience, and you’ll quickly grow your credibility within the industry, as well as your confidence when communicating to potential clients.