Jim Kouns

At last weeks' sales mtg, our broker shared excerpts from a book he had recently read called "The Fred Factor." It chronicles the first encounter the author had with his mail delivery person upon moving to a new home. The mailman, Fred, introduced himself and volunteered a series of customer service activities the author had never before encountered. Without retelling the story, suffice it to say that the author was so impressed that he wrote about his experiences in a book about outstanding customer service.

We all know companies and individuals that provide outstanding service, including real estate professionals such as ourselves. However, there are those who seem to have never gotten the message. Recently, I've had three "Fred" encounters, two negative and one positive.

Last week, I had a referral appointment to a specialist physician to investigate a chronic cough. This was my first visit to this practice and as customary, their office called in advance to remind me of the appointment. What was not customary, however, was that the caller put special emphasis on my co-pay being due at the time of the visit. Many offices have notices to this effect, but I've never had it mentioned in the reminder call. I got to the office at the proper time and after filling out the paper work, was told the Dr. was running an hour late. I told the receptionist I wouldn't wait and when she asked about rescheduling, I inquired how often the problem occurred. She would not give me a straight answer after repeated attempts and then asked if I wanted to see the practice manager. I said "yes" and she got up and disappeared to another room. I waited several minutes and when no one returned, I decided that this was a practice that routinely over scheduled to maximize income and patient care was secondary. They need to read "The Fred Factor."

Today, the car charger for my cell phone went dead. I had just purchased it from a Verizon store 2 wks. ago while vacationing in Panama City, FL, and was certain that it was still under warranty. Receipt in hand, I went to our local Verizon store in Muncie, IN to get a replacement. I was greeted (a euphemism) by a non-smiling clerk who gave a cursory glance at my receipt and said it didn't come from there so they wouldn't replace it. I know the item is covered my the manufacturer, regardless of who sold it, so I pressed the issue. She consulted an equally ungracious manager and came back with the same answer. They need to read the "Fred Factor."

After leaving the Verizon store, I called the Verizon store in Panama City and explained the problem. The clerk said "no problem." He took my information and said they'd send me a new one today. No charge, no shipping, not necessary to return the old one. He read the "Fred Factor."

It's been several years since I've delt with HUD repos, but recently I have a customer who wants to purchase one. In preparing the bid for submission, I was surprised to see that the broker's commission,advertised as 5%, is a variable entry and is subtracted from the bid price. So are concessions such as closing costs, etc. I realize that when I run a net proceeds sheet for a seller, I list the commission and any other concessions, but the parties can then negotiate. There's no negotiation with the HUD properties, the buyer pays.

As representatives of the buyer, sounds like we need to disclose that whatever we choose to enter as a commission up to the 5% max. reduces their bid accordingly. Seems like it's counter productive to deal with these properties, which in our area are usually low-end, and to go through all the hassles of getting them closed while at the same time feeling we must take a minimum fee to help our buyer-client. I'm wondering if we need to utilize buyer contracts for proper disclosure in these cases.

Thoughts?

We've all heard the old question about a glass is half empty or half full depending on whether you're an optomist or a pessimist. Wonder how many of us think about that in terms of time? As we're nearing the end of June, is your year half over or is there still half left?

The market has been slow and I've heard a lot of comments wishing the year was over so we can move on to better times. We still see the endless stories in the media about poor sales and falling prices, usually referring to CA or NV or FL, yet many in our office, here in Muncie, IN are having a great year. Our average sale prices are holding steady, inventories are down in most areas and we're looking forward to a strong second half. Interest rates are good and expected to hold at or near current levels and the economy is beginning to turn around. The investments in time and effort that I made in Jan. on marketing and planning are paying off and I'm looking forward to the balance of 2009.

Today and Fri. our office is undergoing training for Lead Router an automated lead generation and followup system being pitched by Coldwell Banker. There is no intial cost but the training is mandatory for participation in the program. Though free at the start, it looks like after a trial period, that a cost will be assessed in addition to referral fees. This got me thinking about all the fees we pay for the various "services" we receive and whether we're getting any value for our money.

As a Coldwell Banker affiliate, we pay 6% as agents and the Broker pays 2% above that. In addition, we can have an "enhanced" web page on Coldwell Banker.com for $99/yr. I'm sure that other franchises have the same or similar issues. We all get the "opportunity" to have an enhanced web page on REALTOR.com for well over a thousand dollars a year.

The cost of producing one of these enhanced web pages is in the initial programing. Once the format is established, there's virtually no incremental cost regardless of the number of participants. The sellers of these enhanced services try to convince us they are worth the price because of the potential benefits. I think they've taken a marketing lesson from the people who tell us that Bayer aspirin is different, even though it's chemical composition and strength is identical to drug store brands costing much less.

Whether it's our franchise fees or our NAR dues, we're not getting our money's worth. Our money funded the development of the basic web sites and the incremental costs are negligible. We shouldn't have to pay for them again.

This morning I read an excellent post from Richard Rector of Realty Associates in Phoenix. His premise was that the lower median home prices the media keeps harping about are the result of lack of sales at the high end rather than the fact that specific homes are selling for less. Credit issues on Jumbo loans have indeed choked off high end sales all over the country. In addition, every market has its high end, be it $250,000 homes or multi-million dollar homes and I venture all have seen reductions in sales volume.

Here in Del. Co., IN, our high end is priced above $300,000 and in a good year they account for about 3% of our unit sales. Over 85% of our sales are $150,000 and below so I look at average sale price as a more indicative reflection of activity. In the first qtr. of 2009, our average sale price was up nearly 6% over 2008, yet median sale price was down by 14%, reflecting a change in product mix rather than an overall decline in prices.

The media loves generalities and simple answers so they grab onto median price statistics and portray them as if they were universal. Unfortunately they are aided in this by the NAR and various state associations that publish statistics. Though it makes them seem authoritative, they are using our dues money to complicate our business lives. NAR and recently the IN AR should stop publishing general statistics and insist that media derive their data from local sources that accurately reflect the local nature of our business.