Richard Foster, RRG, CREN, ABR, ABRM

I can not count the signs of agents that take listings for homes that will NEVER SELL...

Now I know all the rhetoric, how they will finally drop the price or they will get the sign calls and convert those to buyers, etc etc etc...

What are these agents doing for these clients? As this market retreats further and further their clients are losing value every day. It is the job of an agent to protect their clients needs first and foremost, and to endure the public is served before they are. Can you say this is good business or good business practice? Is this good service or a service for the agent?

Tell your clients the truth, show them the reality, help them understand... It is worth it in the long run and you will look in the mirror better. Besides I spend an average of $500 to $1000 for each listing because I actually do marketing, are these agents? or is it just a paste in the MLS, plant a sign in the yard, and then PREY???

The simple answer is YOU DON'T !!!

That's right, I said it, you don't tell them their home is worth less, if you do you become apart of the message. If you are the message or even the messenger, you are going to be held accountable for the information. I am a firm believer that you need to learn the fine art of showing your client the information and letting them figure it out.

There is an old saying, YOU CAN LEAD A HORSE TO WATER, BUT YOU CAN'T MAKE THEM DRINK...

If you attempt to take the glass out of the cabinet, poor the water, and bring it to the table, most clients are going to get very upset because they already know where the glasses are, and if they wanted the water they would have go it themselves. How does this translate to the subject at hand? You need to show them the glass, show them the water, describe the temperature, and explain how refreshing the water is... Before you are done the client will ask you for the drink and you will not even have lead them to it.

What I do is I take all sellers on a tour of their own area. I show them all the homes:

1. That have FAILED to sell (Expired or Withdrawn) and explain how much they were asking (this is powerful)

2. I next show them the homes that did sell and explain how they compare to the sellers home.

3. Last I show them all the homes that are currently on the market they have to compete with.

Now I know that you all say well we review all that at their table with the CMA we do... I say...

SO WHAT???

Those are just numbers on a page, but a picture is worth a thousand words, and a picture in their own area is worth a fair listing price.

Richard

DISCLOSURE, this blog is to open conversation only. Some of my recommendations are to "stir the pot" and get us talking as a group. So don't get mad and write flame mails to me...

***** BLOG *****

What is wrong with our industry??? When our parents purchased their homes the minimum down required was 20% and the number of people that defaulted was few and far between. Now we have gone to 100% financing and we wonder why people are walking away from the homes...

HINT:

THEY HAVE NOTHING TO LOSE

Because people have nothing invested they can just walk away and it has to stop. I think that the FHA loans should not be raised to 3.5% down it should be 5 or 10% down required. And then it should be for people that have NO DEBT LOAD. We as a group (Buyers, REALTORS, and Lenders) have pushed the limits too far and it is time to fix it...

AUH, But now may not be the time... The foreclosure rate for these homes was under 10% of all "high risk" loans that was written. What if we left the regulations as they were, and let the market absorb the bulk of the excess inventory, and THEN FIX THE PROBLEM??? I say when we have sold enough to reach a normal supply and demand driven market, then create the restrictions that fix the market.

• NO MORE Seller Contribution Grants (i.e. Nehemiah or Ameridream)
• No gifted funds of any type regardless of source.
• Minimum CASH down payment 5% cash from the BUYER ONLY
• ALL LOANS without 20% down from buyer should require PMI

Major Rule Changes that should be implemented for the industry.

• If a lender (or any broker associated with the loan) violates ANY lending rules, disclosures, or terms of law, the loan in question is VOID and the loan is 100% FORGIVEN. If the lenders are held to that high of a standard, the lenders would ensure that the people they hire to do loans would follow ALL of the rules because they would have a lot to lose if they failed to.
• Real Estate agents should be FORBIDDEN by law from being employed by ANY other company. A Real Estate agent should only be allowed to work in that profession full time and no other. There are far too many "part time" agents that are not educated, do not keep up with rule changes, and do not have a clue of current market conditions. By making only full time agents, the quality will rise to the top or the fakers will get out of the business.
• Lenders (brokers, agents, originators, underwriters) and Real Estate (brokers and agents) should all be fully state licensed (if not already required). The minimum training should be extreme (like 1000 plus hours). The fee to get the license should be in the $5,000 to $10,000 and it should take two years to get the license in the first place. CE should be a minimum of 40 hours a YEAR to maintain the license.
• ALL PMI should be run by the government ONLY - Why??? Because the government is stuck saving the system when it all goes bad. The PMI system should be a version of the same insurance like FDIC for the banking industry. With a secure insurance system the lending communities will be protected and loans will be easier to obtain and interest rates reasonable..

LET THE CONVERSATIONS BEGIN....

OK, I have gone on and on about the problems, now the solution. It is simple, REALTORS are rated the worse profession in almost every survey because of a lack of training. We only pay $2000 and 120 hours and we are good to go...

It should be a three part process... Part one Pre-License should be collage level classes and should be a minimum of 1000 to 2000 hours of actual classroom training that includes:

• Basic Business Practices
• Accounting
• Agency
• Laws (ALL STATE AND NATIONAL)
• Contracts (reading, writing, and understanding them)
• Negotiation
• Finance
• Customer Education
• Advertising
• Fair Housing
• REO-SHORT SALES-LOAN MODIFICATIONS
• Tax Issues (Local to Federal)
• Commercial and Land, not just Residential

Part two should be a permitted internship. Appraisers are required to do a one to two year internship with a fully licensed appraiser to ensure they understand the business, so should Real Estate Agents. Agents should have to intern a minimum of a year and a minimum of say 30 transactions. During this time the prospective agent should not be allowed to commit the client to ANYTHING without the review of their mentor signing off.

Part three is continuing education should be 40 hours a YEAR and should cover things that are relevant to the industry and there should be testing to make sure you understood the material before credit is issued for the CE class. EDUCATION is the key, if we starting training the people in the field and those coming into the field we will have much less errors and much less problems with bad representation.

There are too many HACKS in our business, and why not, it only costs about $1500 a year to maintain. If you sell one $200,000 at an average commission of 3% (no anti trust issue here, just an AVERAGE, don't freak people)... You only need to sell one home every four years to break even.

There are far too many people doing this part time and half hearted. Here in Las Vegas it has gotten so bad that you no longer even need a drivers license when you get stopped by the police... That's right, no drivers license required anymore... When the cops pull you over they ask to see your REAL ESTATE LICENSE... Why??? Because not everyone has a drivers license!!! If you are a card dealer, cocktail waitress, bartender, or valet parker you too can be a REALTOR...

The problem is that if you do not do this full time you can not be well informed, you have no clue of the inventory, no clue of fair value pricing, forget being well trained, and you have no shot of knowing your stuff... So you are a HACK when it comes to representing your clients, doing the industry harm and doing your clients a major disservice because for you it is all about the commission not the client.

For a professional REALTOR, the goal is customer service, our commissions come with the fact that we take care of our clients and we get the long term referrals. For the part time agent it is all about the $$$$...

I say it should cost an average of two sales a year just to pay for your license for one year. So then all the part timers would bail out of the business because it would no longer be profitable to them. When they bail (and that would be 70 to 80%) the business they are doing would come to the rest of us. We would have more business then we know what to do with. The few of us that remained would have customers chasing us to give us the business, not the other way around..

I say instead of $1500 a year (between license fees and MLS dues), it should be $10,000 a year... Let a part timer pay that!!!