In this final chapter entry, the blueprint for 100 deals would be incomplete without taking into account the other ways, outside of a straight-up sale, where homes may come onto the market and be part of your 100 deals. Specifically, these are the real estate specialties that may be inherent to your local area, the result of a change in economic climate, or even tailored due to your own unique interests and abilities.
Although you probably won’t rely on a specialty to succeed in real estate, there may be occasions when it’s important to balance your business with any one or more of these components on the side.
The secret is knowing your own market, inside and out; in particular the changes that are ahead or currently taking place. Then you can take a glance at the mostly economy-driven specialties, which are opportunities that you may take advantage of.
Below are the specialties that we’ve seen in the business over the last 25 years.
Homebuilding companies are putting together all the bricks-and-mortar upfront, in the hopes of making a profit when it’s time to sell. And of course, these brand new homes need a representative in the marketplace. While this is typically handled in-house by the builders own on-site sales staff – that is until they move out of the sub-division and on to the next project. In which case, many times they call in a local REALTOR® to sell the handful of homes that are left over, and many times, their model homes.
As far as this specialty goes, builders are good to work with, in any market conditions. They are great sellers. They are motivated and need to sell – even if the market is going down, they need to liquidate their property, as they can’t sit there and live in it.
Like many of the other specialties, if you decided to focus primarily on builders and selling new constructions, then you could be suffering in some of the economic times we’ve been through in the past few years – even if you worked with the biggest building company in the country. Something to bear in mind…
Ultimately, these types of builder listings could be a part of your big plan. It would likely be smaller custom home builders who you would connect with, or builders moving on that will let a local REALTOR® handle their remaining inventory to liquidate their last properties.
Builders need loans to get their work done, naturally. This arena can be difficult during a tough economy, but if you stick around, it will (eventually) come back. Nevertheless, when markets go down like this, the land values go down too, so new home prices come closer to the similarly located resale prices, narrowing the gap between the two.
We would say that there’s always a market for new home sales, because when a buyer looks at a resale home versus a new home – if those costs are aligned – there are always people who want brand new. It’s just like when they want a new car over a used car; the same is true with a house – especially one that can be customized, so they can make selections on upgrades, features and finishes.
This is another way of saying “pre-foreclosures.” Essentially, we’re contracting with the current owner of the property and helping them to find a buyer, as well as negotiating down the amount of the loan they owe on the home with the current bank.
As a ‘short sale’ owes more on their home than what the current market value will net them, if negotiated properly, the bank should discount the note on the home to somewhere consistent with current market values, and even pay for a seller’s closing costs, commissions, etc. Why do they do this? Well, the banks do this with an understanding that this process is less expensive for them than the cost of simply waiting for the seller to just let the home slide down the slippery slope into foreclosure.
There are many different nuances to short sales, which you will need to be aware of, should you take this route. However, if short sales are a big part of the market in your area, then you may decide that it’s worth becoming an expert in this niche.
As we’ve mentioned, to get to 100 deals, it’s all about knowing what is selling in your market. Should you find that 50% of the sales in your neighborhoods are short sales, then you need to know what’s selling, how to do it, and adjust your business accordingly.
We saw this situation with mortgages during the RTC crisis in the mid to late 80s, and we’re seeing this again today. This is a specialty which necessitates building some cordial ties with the banks that you will be working with, in order to get these foreclosure listings directly from them.
Asset managers are your contacts at the banks and to get them on your side, we created a tool called ForeclosureFeedback in the same vein as HomeFeedback, except ForeclosureFeedback facilitates this relationship with Asset Managers and shows them you have the necessary tools that make you an expert in handling foreclosures.
Of course, the listing presentation needs to be geared towards representing these banks, which are not as bought in emotionally as home sellers; instead it’s all business and numbers. Be ready to show them how you can help over an agent not as well versed in this area.
By giving the Asset Manager that ongoing transparency to view all of the bank’s listings with you, all on one page, they can be impressed and reassured knowing they will be able to see how many showings are taking place, the feedback of agents, and other comments that tell them specifics they might not be aware of (e.g. the plumbing is ripped out, but they wouldn’t know, as perhaps they’ve never set foot inside the foreclosed property). They can also document price changes from the feedback statistical reports and add this to their files.
In order to get these foreclosure listings, it’s imperative that you establish these relationships with the Asset Managers at the bank; otherwise, you won’t even have your foot in the door. Unlike a builder, the banks don’t have their own sales team, thus they need individual agents, too. Yet, it can be frustrating, especially if you kiss an Asset Manager’s ass for ten years, then when you hit that inevitable bump in the road they can leave you high and dry, and all your hard work can be flushed down the drain!
This is a very difficult part of the business to control. As a result, if your business is built 100% around foreclosures, you may find that the funds can be switched off immediately if you lose that relationship. Which is why we wouldn’t recommend that you rely on it; truthfully, you can’t build a real business around it, as you never know how many foreclosures you’re actually going to get. Foreclosures would be a COMPONENT of your business, not the whole enchilada.
Once you have an Asset Manager in your corner, they will handle all communication between the bank and you, as their REALTOR® representation. For each home listing, a BPO (Broker’s Price Opinion) will be filled out, which they compare to data they have of the market value of the home. The home is then inspected for condition and a value is determined based on these findings.
Sometimes the home is priced at market value or a few percent above, then this comes down every 3 days; others go 5-10% above market value and slowly creep down.
But, we counsel you, be careful not to dive in headfirst – remember you need to be a specialist in foreclosures!
Also in this chapter: Potential foreclosure pitfalls, auctions, investment properties, loan officers, escrow, specialty vs. focus, and more do’s and don’ts.
To learn more about or purchase “Blueprint for 100 Deals or More Than $1 Million Per Year in Income,” visit: http://www.blueprintfor100deals.com/.
Rick Bengson is the CEO and Co-Founder of ShowingSuite, Inc. a leading real estate productivity software company, and Co-Creator of HomeFeedback.com. Alan Shafran is the owner of The Alan Shafran Group, selling up to 175 homes per year. To learn more about “Blueprint for 100 Deals or More Than $1 Million Per Year in Income,” visit: http://www.blueprintfor100deals.com/.
Editor’s Note: “Blueprint for 100 Deals or More Than $1 Million Per Year in Income: The exact systems and technology to sell 100+ homes, every year—no matter the market,” is a new book by leading real estate industry executives Alan Shafran and Rick Bengson that outlines how to build your business as well as make more money, please more customers and improve your overall quality of life, whether you are a novice or climbing the ladder in the real estate business. This is the final segment in the 10-part series RISMedia has been running weekly excerpts highlighting the in-depth information and invaluable resources the authors have compiled in this exciting, new publication.