About Lauderdale County, AL

Wednesday, July 22, 2009

Ethics, Housing Bubbles, and Dishonest Folks

Yesterday, I spent the majority of my day at an orientation meeting for new members of the Shoals Area Association of Realtors. Most of those there in the meeting with me were new real estate agents, and many of whom had never even sold a property yet. I felt a little out of place. I'm in my fifth year of real estate sales, have sold many properties, and have even taken the time to go get my Broker's license. Since I am still relatively new as an agent here in the Shoals area, I had to attend the meeting. It was a nice refresher course on the National Association of REALTORS Code of Ethics. I didn't learn anything new really, but I was reminded of things that I have experienced lately where Code of Ethics training comes into play. I'm glad they teach that stuff. Believe it or not, we live in an imperfect world that is full of imperfect people. People make mistakes, and then there are some out there that will lie, cheat and steal their way to the top. As we've spent many hours planning and preparing ourselves to take in new agents in the future, I think that honesty, integrity, and traditional Christian values are extremely important in this business. I can see where it would be easy to let dollar signs go to your head and take advantage of people solely for financial gain. No paycheck is worth the price of guilt.

One of the "big ideas" I have for our company is to one day incorporate Character Training into our real estate education classes. There are far too many snakes out there willing to prey on the gullible or inattentive. Back when mortgage companies were approving people for outrageous amounts of loan money, I remember warning my clients about this on many occasions. I told them that they were going to be approved for a much larger amount than they could really afford, but that they should know exactly how much of a down payment they can make, how much of a monthly payment they can afford, and know how long they want to pay on the house, and should always STICK TO THE PLAN! Some of my clients were tempted to look at houses that were out of their price range, and so sometimes I would have to give them a reality check, and remind them of what they really want, what they really need, and what they really can afford. Many agents didn't do this with their clients, and so people unwisely bought more house than they could afford. Because of this, our country's entire economy has slipped because of it. There were many real estate agents and mortgage brokers who were either outright dishonest or overly "creative" with their financing that led to a huge housing bubble, which now we know has burst leaving the rest of us to deal with the mess. Knowing all of this, I am really nervous about starting the recruiting process. I know there are good agents out there, but the thought of getting a dud that could tarnish my company's image terrifies me. I want people to be able to trust our company's agents and know that they are looking out for what is truly in the best interest for the client, and not the agent's pocketbook. Anyone out there know of someone who shares these values? Send them my way, because I would GLADLY work side by side with them.
Joshua B. Pettus

President/Broker

Home Grown Real Estate

256.541.0491

JBPettus@gmail.com

http://www.homegrownrealestate.net/

http://homegrownrealestate.blogspot.com

Real Estate Penny-Wise and Pound Foolish

Monday, April 27, 2009

Down here in the south, we take great pride in our words. My father is no exception. He has a knack for coming up with interesting sayings. I don't know if he comes up with them on his own, or if he has a book somewhere that he periodically refers to just to keep us entertained. He has funny sayings for just about any situation, all of which are very colorful and funny. All of my siblings love to quote the one's that are the funniest and most risque. When we bought frivolous things we were "shoving money up a wild hog's end". When something is turning out to be almost impossible, its like "pushing a string". When we have gotten into deals that are going sour on us, he says that we should "forget about trying to get cheese and just get out of the trap."

I was listening to Dave Ramsey the other day on the radio. He was speaking to a caller who was worried about her father's will, which had been prepared by a discount attorney service place in Florida. Basically her dad wanted to get his will done for the cheapest amount possible. With their cheapest Last Will and Testament package, they would write exactly what you wanted to put in there as you told it to them, but would not advise you or check it to make sure that it was done legally. Her concern was that her father's assets added up to over $500,000, and she didn't know if what he had done was OK, or if she needed to do something about it. Dave's a southern guy, and so he unleashed a whole bunch of southern sayings as to what her father was doing. The most memorable was that he was being "penny-wise, but pound foolish." In other words, while trying to get it done as cheap as possible, he was neglecting the fact that there was a half million dollars worth of accumulated assets at stake. Upon his death, the family would have to spend thousands of dollars in legal fees just to get the problem solved. His advice was that when you're dealing with that much money, it is never good to go cheap. Discount services such as attorneys or real estate brokers may seem enticing, but when there are hundreds of thousands of dollars at stake, penny-wise but pound foolish definitely isn't the way to go.

There are many different types of discount real estate companies out there, with many different services that are offered. Most use an "a la carte" method of pricing where you choose from a menu the services you want, and then you pay the listed price for each individual service. What a lot of people don't realize is that you pay for this up front. That means they've already been paid whether your house sells or not. The advantage of selecting an agent that charges a commission based upon the final sales price of the house is that there is an immediate incentive to not only sell it, but to sell it for the highest price possible. So, if I don't sell your house, I don't eat. There's a lot more incentive there for me to sell it than someone who has already gotten their paycheck.

Also, there are some out there that will charge you a very low commission fee, but then you will be the one to handle all the showings and hold open houses. Most normal people don't have time to follow up with folks, arrange appointments, and even if they did, there are many laws about what one should and should not say to a buyer that could possibly get you into trouble. Some mistakes could cost you a potential buyer, and some mistakes could get you into hot water with the Federal Government.

Here are a few common myths for you to consider if you're thinking about going cheap:

Myth #1 - I can save a bunch of money if I try to sell my home For Sale By Owner.
The average For Sale By Owner selling price is 15.4% less than the average real estate agent assisted transaction sales price. Here in North Alabama, a house listed through a real estate agent sells on average for 94%-98% of the listing price. The average sales price for a FSBO is $163,000 compared with $189,000 for agent assisted sales. You may not like the idea of paying a real estate commission, but if it can help get you $26,000 more for your house, it is definitely worth the money. It may seem like a good idea to sell your house yourself, but it can easily and quickly get you in over your head. Google doesn't give real estate licenses, and finding a couple of articles there won't teach you everything you need to know about selling a house.

Myth #2 - A Discount Real Estate Company will work just as hard to get me the highest price on the sale of my home as a Full Services Broker.
A discount real estate service is competing with PRICE, not QUALITY. The discount broker is able to charge less because they do less. In other words, they want to get your home sold as quickly as possible, regardless of the price, and then move on to the next deal. How do the do less? Many expect their clients to handle all the showings, to hold open houses, while they are able to sit back and collect a commission check. So in the end, you do all the work, your house sells for less money, and the Discount Broker collects a paycheck. Doesn't sound like a very good deal to me.

I know one family who listed their house with a discount real estate company, and it sat empty with no showings, no advertising, little representation, and they had already paid this agent to sell their house. The best offer they brought to them was an owner financing contract for thousands less than what they were asking. Because of their dire situation with the property, the seller was forced to take the offer. After over a year and a half on the market, being forced to accept much less than what was asked, and only able to receive very little money down, this seller received 3 payments out of the 12 months they lived there. Obviously, this seller got exactly what he paid for. He was left to his own with no agent or advocate on his side. The seller had wasted his money on a commission hardly earned, didn't get what was expected, and instead of saving money, it ended up costing him a lot.

Myth #3 - All I need is a broker who will put my listing on the local MLS, and my house will sell.
Real estate sales is all about marketing. Its about getting your house's information in front of the right person. Its true, the local MLS is a vital tool that real estate agents and consumers can use to sell your property. It is not, however, the only tool. The real estate business is a people business. People have emotions and react according to those, not necessarily to raw data that is uploaded to the Internet. If your agent shows your house to a buyer, but your agent was rude or was perceived to be untrustworthy, you better believe that this potential buyer will not be buying your house. If a potential buyer is looking at pictures of possible houses, and your house's listing has a terrible photo, you can bet that your potential buyer is going to quickly click over to the next listing, ignoring yours altogether. It only takes one mistake to turn off a buyer.

Also, these days you would be foolish to think that buyers only go to the local MLS searching for property. Many buyers are from out of town, and may have no clue how to get access to the property listings on the local MLS. My listings appear on the local MLS, Realtor.com, http://www.homegrownrealestate.net/, and other real estate websites, and also can be found featured on other websites like Facebook and Twitter.
Hopefully by now you can see that you really do get what you pay for. If you want to pay discount prices, you will definitely get discount service.

Joshua B. Pettus

Home Grown Real Estate

Presiden/Broker

http://www.homegrownrealestate.net

http://homegrownrealestate.blogspot.com

Tuesday, April 7, 2009

Save the Economy, Buy A House

As you all know, real estate sales have been a bit difficult within the past few months. The economy has slowed down a bit, and everyday on the news you hear terrible, fear invoking stories about this bank closing, or that guy losing his job. The news would have you believe that the world is ending. Is it really going to end? Maybe, but probably not anytime soon. What is going on in the real estate markets in North Alabama?

If you want to know the truth, things are actually improving quite a bit. In our market, winter is typically slow, and sales tend to pick up in the spring and summer, only to trail off again in the fall. This is cyclical and happens every year without fail. We are seeing a bit of improvement in real estate sales. While we certainly aren't back up to the numbers we were during the boom times of yesteryear, we aren't doing as bad as mainstream media would like you to believe. Stories of doom and gloom sell newspapers and increase ratings, but that doesn't mean that you shouldn't continue on with your life as normal.

If you've got a steady job, good credit, and money for a down payment, then for you there is no better time to buy than the market that we have right now. Why? Let's look at a few reasons:

• Have you seen interest rates lately? They're currently in the 4's. That is EXTREMELY low, and who knows where they will be tomorrow. The mortgage on my personal house has a 6.25% interest loan I got back in December 2007, and I was excited my rate was so low.
• Have you looked at the houses on the market lately? There are many sellers out there who have to sell in order to buy another house. This includes those that have already relocated because of their jobs, and have found it difficult to sell in our current market. Add to that all of the inexpensive foreclosed homes out there, and you have got yourself a bonafide Buyer's Market. If you can't find yourself a deal out there today, you've either got expensive taste, or you ain't looking.
• The economy is slower than many of us have ever seen. Want to help stimulate the economy? One of the most economy-stimulating things a consumer can do is buy a house. Think of all that goes into housing. You buy a house from someone, that person is then able to buy another house, and then that chain continues from buyer to seller, on and on and on. Then think of all the services, utilities, consumer goods that go into keeping a house up and running. Electricity, furniture, food, clothing, water, lawn mowers, internet service providers, etc. Just one person buying a house can stimulate the economy many times over when you think of how many families will be affected in that home buying chain you've started.
• "If you build it..." You've heard that before, right? Building a house includes all of the economy stimulation of normal home ownership and then multiplies it substantially. Think of all the people who you will help keep employed if you build a house. The plumbers, the builders, the carpenters (no, not Karen), the surveyors, electricians, and the list goes on and on.

So, there you have it. Want to really save the world? Buy a house. Want to REALLY save it? Build one.

Home Grown Real Estate: Helping You Save the World. Buy, Sell, Remodel, or Build with us today!

Joshua B. Pettus

Home Grown Real Estate

President/Broker

http://www.homegrownrealestate.net

http://homegrownrealestate.blogspot.com

Tuesday, March 31, 2009

Website is Up and Running!

Today, I would like to introduce to you our brand new website:

http://www.homegrownrealestate.net/


And yes, I did it myself. I worked hard on it, too. I think that for being a complete inexperienced beginner at building websites, it turned out rather nicely. I did have a quote for a website that was going to end up costing us somewhere in the neighborhood of $13,000, but I did this one for less than $1,000... and that is with paying myself hourly to build it! There are still a couple of bugs to work out (my forms still don't work), but for now it is functional enough for us to send out to the public!

Some of the highlights are that you'll find links to all of our other locations on the web at the bottom of every page, including Facebook, Twitter, and this blog! You'll also find some interesting information for buyers and sellers of real estate to consider... all written from the perspective of our current market situation. Also, you'll see before and after pictures of our previous construction jobs...some of which are pretty impressive when you see the changes that we did. And finally, you'll find information exclusively for Real estate agents looking for a new and exciting place to hang their license. It's got a lot of stuff there! So, go on and take a look around, and tell me what you think!

Joshua Pettus
President, Associate Broker, and Web Master Extraordinaire
Home Grown Real Estate

http://www.homegrownrealestate.net

http://homegrownrealestate.blogspot.com

Tuesday, March 24, 2009

REALTORS Welcome, Solutions for Slow Markets Offered

Today I'd like to talk to all the real estate agents out there. You know who you are. You're probably working for some broker of some conventional real estate company. You're probably experiencing a slow real estate market right now, and you might even be to the point where you need a part time job just to make ends meet. Its tough out there right now, and I wouldn't blame you one bit if you're re-thinking your career as a real estate agent. What can I do to use the skills I already have to make some extra money? At Home Grown Real Estate, we've got some interesting propositions for you that just might help you in this slow market.

First of all, I'd like to tell you that I understand exactly where you're coming from. During college I sold real estate to pay the bills, and it seemed to be either feast or famine in those days. Some months were covered up, and some months were bone dry. These days many Real Estate Agents are experiencing more famine than feast. So I bring to you a list of solutions that Home Grown Real Estate can provide to you as you try to wade through this tough market.

Solution #1 - Profit Share for Recruiting
We've seen this one done before. Companies like Keller Williams Realty and Exit Realty are successfully turning their agents into recruiters, because when their recruit makes a sale, they get paid too! At Home Grown Real Estate, we offer exactly the same type of recruiting incentive. If you bring in someone to Home Grown Real Estate, every time that individual makes a sale, you'll get 10% of the company's portion of that commission.

So, let's do the math: You recruit Joe into the company, and Joe has a 70%/30% commission split, and he sells a house for $200,000. That means that Joe walks away from closing with $4,200, the company brings in $1,800, and of that $1,800, you get a check for $180. Now, $180 may not sound like big bucks, but if you multiply that times 5 people you've brought into the company, that's an extra $900. And an easy $900 too! All you did was invite him to come work at Home Grown Real Estate.

Solution #2 - Become a Construction Consultant
The great thing about Home Grown Real Estate is that our sister company, Harmony Building and Construction is available to do all of our repairs, remodeling, and new construction. This allows us to offer one more service to our clients and one more reason to keep in touch with them. At Home Grown Real Estate, our agents become Construction Consultants for Harmony Building and Construction as well. What this means is that you can also "sell" the construction company's services and be paid a commission for the projects that the company is awarded. Imagine that you've just sold a house to the Smiths, and they realize that its going to need a little work done to it before they can move in. You discuss with them the different repairs the house needs, fill out a work order, and our estimator will come and give them a price. If the company is awarded the job, you'll get paid 3% commission on the price of the job.

So, let's do the math. I just got us a $2,500 flooring job the other day. That means upon completion of the project and collection of payment, I will receive a check for $75. Now, $75 doesn't seem like much, but if it is a $15,000 remodel job, I'll receive a check for $450. Now, that's not bad money! Most good agents will help their clients figure out what repairs are needed to a house, and will help them select a contractor, so why not get paid for doing it? History shows that when real estate sales are down, remodels are up. Why not bring home a portion of that, too, while you're waiting for your listings to sell.

And just to be clear, this is not an illegal kickback or finding fee or anything like that. You will be a construction consultant of Harmony Building and Construction, and as such are entitled to compensation if you generate business for the company in which you work. For more information, I refer you to THIS article from the Alabama Real Estate Commission website regarding gifts, rebates, and kickbacks, particularly the final paragraph of the article.

Now, I've gone over two extra ways you can earn money aside from your own real estate sales. I know of no other real estate company that can offer you this. And the best part is, we're locally owned and operated, so if we see that one approach isn't working so well, we have the flexibility to change things as we go!

If you feel like this is the right thing for you, please speak with one of our agents or contact me if you have any questions.

Joshua Pettus
President and Associate Broker
Home Grown Real Estate

http://www.homegrownrealestate.net

http://homegrownrealestate.blogspot.com