An all-cash offer, scheduled to close ASAP, that waives all inspections, is pretty likely to close. The maximum leveraged offer, contingent on financing, from self-employed itinerant hod carriers, scheduled to close in 120 days, attached to a sheaf of pre-closing contingencies, in a declining neighborhood with numerous drive-by shootings-not so much.

And, in the case of new home sales, the same property might cancel several times.

For this reason, it is hard to get a baseline on which to set expectations. However, having worked in large real estate organizations, franchises, and on MLS committees, it seems that given a large volume of transactions, over a period long enough to have been subject to all types of market conditions, about 25% of all contracts fail. Smaller firms with more seasoned agents tended to close about 90% of their written contracts.

That would seem to me, particularly in this market, a very worthwhile and challenging goal. Sure, one philosophy says if you throw a certain amount up onto the wall that some of it has got to stick, but I think that idea is so yesterday. No matter how much business you do, even a single cancellation takes a certain emotional toll. Better to use that psychic energy working toward more certain transactions than pushing a rock up a hill.

Many failed transactions never should have been written in the first place. But others, too many others, could have been saved by a little advanced planning.

People in our business are perennial optimists. We have to be now more than ever. But, when it comes to anything that could be torpedoed by one of “Murphy’s Laws”, as professionals, it is our duty to assume that all may not go well and prepare accordingly.

Dealing with Uncertainty

From my observations, it appears that our greatest obstacle in this market is uncertainty. Some people are in danger of losing their jobs and, as we are seeing, there is a sort of trickle down effect. This is on people’s minds whether they think they will be touched by it or not.

There is uncertainty about value. Who wants to pay more for something if they could have saved substantial money by waiting a few months, or even weeks? And, whether we want to admit it or not, there is uncertainty about our very system.

The mainstream media continues to bombard the public with a steady stream of negativity. If it bleeds it leads, they say. We must counteract that by providing factual information. The first step in building a solid foundation for closing is the initial consultation. Again, whether buyer or seller, they need to understand the bigger picture.

Elements of an initial consultation include the following:

Needs Analysis

Beyond the client’s interest in either buying or selling real estate are circumstances that are vital to the success of your closing. We need to understand their motivation and their mood. Start with a simple and disarming question, “Why are you considering making a move at this time?”

By the way, there are only a finite number of answers to that question but this, and not the real estate transaction, is the real need seeking to be met. Buying or selling real estate may not be the solution to the underlying need. If it isn’t, you’ve got one strike against closing.

Recently, I did a CMA for an urban loft. There were several others listed within the building and a couple at distressed prices. Coming to market under those circumstances isn’t likely to arrive at a fast sale. The why was to cash-in. I advised her to wait. I know many practitioners who would take that listing. Unless the seller is willing to price at market, there are too many other choices. Taking an overpriced listing in a crowded and declining market is hardly a recipe for success.

The Bigger Picture

Every generation faces challenges. The great depression, sandwiched between two world wars, impacted three decades of my father’s life. But, people had families and still needed a roof over their heads. To succeed in our business, we must be able, when appropriate, to assuage people’s apprehensions about their future.

Despite the news of the moment, there is a predictable future. We are a growing and shifting nation. In the directions we are moving, there is inadequate developed real estate to support the job growth underlying the migration. For individuals, buying property in the ten growing regions, called “Megapolitans,” the future is relatively certain.

Investors are active in the market. Not speculators, but investors. Why? Because they know demographics and there is no competition. The best value is obtained when you are the only buyer.

Demographics

Some of the most important work in analyzing future job growth and corresponding migration patterns was done by Robert E. Lang, director of the Metropolitan Institute and associate professor of Urban Affairs and Planning at Virginia Tech. Lang, working with data from the Census Bureau supported, in part, by the Brookings Institute, has identified what will be the most dramatic socio-economic shift in our nation’s history.

In the last three centuries, we have constructed more than 300 billion square feet of homes, offices, stores and factories. Lang notes that it will take just 25 years to build the next 200 billion square feet. Get ready for the mother of all booms.

According to the Lincoln Institute of Land Policy, “Megapolitan areas extend into 35 states, contain less than one-fifth of all land in the lower 48 states, but captured more than two-thirds of total U.S. population.”

CNN Money calls it “The $25 trillion land grab…” and “…a treasure map of opportunity.” Strong words for a media outlet with little expressed affection toward real estate as an investment.

Local Market Conditions

Buyers look into the marketplace and observe and endless sea of houses. Sellers see only one. Both must fully understand the breadth and depth of what is available, as well as the general nature of the local economy. This provides a great opportunity to discuss the MLS, how it works, the number of properties on the market, and the process of elimination.

Paperwork Review

This is the best time to present the contract, disclosures, and forms that will comprise the closing process. Most people aren’t able to absorb a lot of details while under the stress of making one of the biggest decisions of their lives.

Demonstrating the paperwork and explaining the role of each item will make it much easier for them to commit when the time comes. If you provide them with draft copies, they can have an opportunity to review them at their leisure and highlight anything they are uncertain about. Covering the paperwork is a great segue into the next item.

Closing Process Step-by-step

Many people become disenchanted by all of the steps and people involved in the closing process. By one estimate, there could be as many as thirty separate individuals involved; everything from the bugman to the notary. Each has a job to do and a contribution to make to the closing process. We do not always control either the demeanor or performance of many of these people and some we do not even meet.

We need to prepare our clients by providing them with a breakdown of all the players, what they do, why they do it, and when it will occur.

Milestones

Every transaction has key points. Loan approval, inspections, appraisal, title review, and pest clearance are likely milestones. Make sure the client understands the importance of these events.

Communication

Keep them in the loop. With the availability of online transaction and escrow tracking, there is a great opportunity to bring the client right into the process.

Pre-arrange communication by discussing it in the initial consultation. Don’t assume it. Ask, “When I do need to communicate with you, what is the best method to reach you?”

By thinking forward and preparing the client for the inevitable ups and downs of a real estate transaction, you can be confident that you are closing every possible transaction.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

1. Avoid being unaware of the differences between a Home Equity Loan and a Home Equity Line of Credit. It is important that you understand the differences between the two types of home equity loans so you will know which one is better for your situation. A home equity loan is paid out in one lump sum and it usually has a fixed interest rate and term. A home equity line of credit, on the other hand, can be drawn on whenever you need money, interest is paid only on the amount you borrow, and it usually has a variable interest rate. Ascertaining how you will use the funds, what type of interest rates you would prefer, and how you can afford to repay the loan will force you to research these loans very carefully and will allow you to make the best decision.

2. Avoid getting hit with unexpected fees. Most fees on home equity loans and lines of credit are unavoidable, but it is still important to know about them, so you are not surprised when you are charged with them. Common fees that are charged on a home equity loan include closing costs, points, appraisal fees, escrow fees, flood certification fees, and recording fees. Some financial institutions will also charge customers a prepayment penalty fee if they close out the account before a certain time period – typically within the first three years. Home equity lines of credit carry most of these fees as well, and they also tend to have annual fees attached to them. Being prepared for these fees will allow you to include them in your estimate of how much you can afford to borrow, so that you do not end up owing more than you had expected.

3. Avoid jumping at the offer of a high LTV ratio. The loan to value (LTV) ratio is the ratio of the amount of money you borrow through a home equity loan (or mortgage) to the value of your home. This ratio is considered high when it exceeds 80%. Sometimes, if you have outstanding credit, certain lenders who want your business will offer you a loan for an amount close to or even exceeding the amount of equity you have in your home. The interest and any fees you might be charged can take a high LTV loan above the value of your home, making the excess amount an unsecured loan, like a credit card. The interest on this amount is not tax-deductible, as the interest on home equity loans and lines of credit usually is. (Check with your tax advisor for more details.) Only borrow what you can afford – do not take more money just because it is offered to you.

Being aware of these mistakes and knowing how to avoid them will certainly get you on the road to becoming a wise home equity loan shopper.

SOURCE: Informa Research Services, Inc.

For more information, visit www.informars.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Coldwell Banker Unleashes Seller Focused Lead Generator

Personal Retriever Seller Services ? An Agent?s Best Friend

By Beth Bresnahan

The new millennium has brought to light the one constant within the real estate industry ?Change. New business models are blooming and dotting the real estate industry landscape only to add more potential competition for traditional brokers.

Today?s techno-savvy home buyers? and sellers? needs are more complex, and although the increased pace of the real estate industry is a welcomed exhilaration for some, the frenzy has left many brokers and agents “dog-tired.”

Perhaps Coldwell Banker Real Estate Corporation (Coldwell Banker?) is onto something in recently announcing the Coldwell Banker Personal Retriever? Seller Services program, now ready to assist affiliates by attracting sellers and “fetching” just the right sales associate to help them.

Old Dog, New Trick

It appears coldwellbanker.com?s four-legged, house-hunter Internet icon is wearing an additional hat in its daily job responsibilities. Originally trained to work exclusively for buyers, the Coldwell Banker Personal Retriever service was launched in 1997 as an online-friendly search tool programmed to “sniff” out and e-mail property information, interest rates and comparable home sales data for buyers on a regular basis. Today, there are more than 200,000 registered users, which amounts to approximately 40,000 e-mails a day.

Now the pup is also charged with assisting sellers ? by fetching comparable sales information, listing presentations and marketing proposals from Coldwell Banker sales associates for review online, on their own time, 24/7, in the privacy of their own home.

Alex Perriello, president and CEO of Coldwell Banker, says that the new Seller Service responsibilities assigned to the Coldwell Banker Personal Retriever system are based upon a year of consumer research and feedback from their 3,000-office network. “The industry has done a good job using technology to address buyer?s needs, but the Coldwell Banker Personal Retriever Seller Services program will be the first comprehensive, online seller services tool offered by a national real estate organization.”

Through this branded program, Coldwell Banker sales associates post a detailed profile of themselves on coldwellbanker.com, permitting potential home sellers to search for, request and review a sales associate?s qualifications, listing presentation and marketing proposal online. The online tool also allows visitors to request a professional Certified Market Analysis (CMA) and ongoing e-mails on area home sales. All of this information is provided for free ? on behalf of a local Coldwell Banker sales associate ? and delivered right to the fingers of Coldwell Banker customers by a new millennium version of “Ole? Yeller.”

Seller Services Program Offers Value to the Sales Associate

Coldwell Banker sales associates view the program as a high-tech farming tool, allowing them to “virtually” introduce themselves to a larger prospect list via the Internet. The Coldwell Banker Personal Retriever Seller Services program is designed to speak to a changing consumer and address their technology needs. Ultimately the program will publish a detailed profile of a Coldwell Banker sales associate, up front, to the customer ? providing that associate with a strategic advantage when sellers are considering competing real estate brands and agents to list their house.

According to the National Association of Realtors? (NAR), 74% of home sellers will entertain only one listing presentation before selecting an agent* In addition, 51% of all consumers contact a Realtor? based solely upon a friend?s recommendation, or past experience*.

“This suggests a void of critical information necessary for the consumer to make an informed decision about choosing the best-suited real estate professional to sell their home,” says Perriello. “Recommendations should certainly be taken into consideration, but they should be measured against important qualifications like an agent?s experience, specialty, marketing plan and his/her proposal addressing the needs of an individual consumer and his/her specific property.”

“The Coldwell Banker? Personal Retriever? Seller Services system allows our sales associates to demonstrate their qualifications to potential customers in a no-pressure setting,” says Perriello. “Many of our sales associates have developed an expertise in different facets of real estate. We believe this new initiative will better match sellers with the right Coldwell Banker expert ? be it a Previews? luxury property specialist or relocation expert. If Coldwell Banker affiliates can provide consumers with better information, systematically, on the customers? terms ? they will be recognized for it, and their business will grow as a result of this advantage.”

Given that agents? listing presentations are the source of their business, providing them with one online, “shows the confidence that Coldwell Banker has in its network of 72,000 sales associates and the company?s 94-year heritage and expertise,” says Perriello. Through this new initiative, Coldwell Banker proves that it can do what the industry often thought could not be achieved: Leverage the benefits and efficiencies of the Internet to help its affiliates excel.

Perriello is confident about the service now; he has a proven commodity on his hands. Back in 1997, when the Coldwell Banker Personal Retriever service was originally launched to buyers, only 36% of American households owned a personal computer** and almost 75% of Realtors didn?t have Internet access at work*. In 1995, while many were downplaying the Internet?s role in the industry, Perriello notes that Coldwell Banker was working diligently to premiere as the first real estate brand to post a national Web site ? positioning themselves as a tech-savvy company before it was popular to do so by committing a wealth of resources online, and frankly their reputation as well.

Since 1997, as acceptance of the Internet has escalated, coldwellbanker.com has maintained leadership among the top real estate Web sites and been recognized by publications like Forbes, CIO, Realty Times and other industry trade experts. The site now attracts about three million user sessions a month and generates about 100,000 leads a year to Coldwell Banker affiliates ? and Personal Retriever fetches for over 200,000 registered users.

Coldwellbanker.com is not the only part of the Coldwell Banker system that has matured over the last three years; the Coldwell Banker affiliate network has experienced dramatic growth as well. In 1997, Coldwell Banker? supported 52,000 sales associates. Today, 72,000 sales associates are doing business in over 3,000 Coldwell Banker offices around the globe.

The Coldwell Banker Commercial? division, a separate business unit of Coldwell Banker Real Estate Corporation, was re-launched in 1997 and has been involved in 16,000 transactions and almost $4 billion dollars in sales volume in its third year of operations. Today, the Coldwell Banker Commercial division has grown to nearly 400 offices worldwide and more than 3,000 plus sales associates.

“The growth that we have experienced has been tremendous,” says Jerry Andersen, president of the Coldwell Banker Commercial division. “We are one of the largest commercial real estate franchisers in the world with offices throughout North America, Europe, the Middle East, the Caribbean, China, Singapore and Central America.”

Future of Real Estate: Balancing Technology and Human Interaction

It should come as no surprise that the leader of such an innovative company would have strong convictions about the direction of the business. Talking about the future of real estate seems to be a passion that Perriello is not afraid to share. In his 24 years in real estate, he has seen a lot of change ? and initiated much himself. “Our Coldwell Banker Personal Retriever Seller Services program and all of our efforts to ?webify? our business, for that matter, are only half of the equation. The future belongs to real estate companies who offer consumers a combination of extensive online information, professional sales associates who can respond to the human side of the transaction and a healthy bundling of value-added programs that enhance the real estate experience ? like the Coldwell Banker ConciergeSM program.”

The Coldwell Banker Concierge program was also launched on Perriello?s watch (in 1998) and is now available to consumers at 83% of Coldwell Banker franchisees and through www.coldwellbanker.com. Designed to build and maintain relationships between customers and sales associates, the program offers consumers centralized assistance with many services home owners need before, during and even after the sale and allows Coldwell Banker sales associates to focus on the business of real estate. “Real estate is no longer about buying and selling houses; it is about helping customers select, purchase and enjoy their home, until they are ready to beginning the process again,” Perriello says.

The abundance of information, value-added services and technology tools that provide Coldwell Banker affiliates with a competitive advantage are only part of the equation for success. “Without our team of professional sales associates, none of our tools would make a difference,” says Perriello. “They represent the Coldwell Banker brand in the community, are experts in the local market and are masters at generating business.”

Change Creates Opportunity

Coldwell Banker has changed the course of its business and marketing operations to help its affiliates do the same. Recent years have marked a dramatic transition to a virtual environment with a focus on a high-tech, high-touch consumer approach.

In order to help brokers efficiently run their businesses, Coldwell Banker will be introducing CREST, a multi-million dollar Cendant-sponsored back office technology system. CREST is designed to provide outstanding economies through a single point of entry data system. This multi-faceted program will store and consolidate data, manage and track office production and provide marketing options through a single Web-based reporting system. The system is expected to go live in first quarter of 2001.

In today?s evolving marketplace, the sales associate?s role also is evolving. Consumers are coming to them better informed, expecting a higher level of service and eager to take control of the transaction. In return, they are expecting more from a sales associate ? they want an advocate to help them disseminate information and make better, informed decisions. Adjusting to this consumer need means accepting and making sense of technology. That takes training.

Cbu.com offers brokers and sales associates the ability to become technology efficient professionals at their convenience. Launched in February 2000, the site is a virtual training facility, available 24/7, paralleling all of the classes offered at Coldwell Banker University?. In addition to technology, Coldwell Banker affiliates can become versed in many topic areas, including sales and marketing, management, legal and life skills. Cbu.com also offers sales associates accredited continuing education course work in certain locations.

To further support the success of its affiliates and enhance the customer experience, Coldwell Banker made a complete transition of its internal communications and product development systems to a virtual environment. CBNet, the Intranet site exclusive to Coldwell Banker brokers and sales associates, has evolved into the cornerstone and nucleus of all of the company?s internal marketing communications, materials, systems and tools. Coldwell Banker “virtually” did away with all company binders, pamphlets and collateral material ? transitioning all product development to an online arena only. CBNet has become the resource of choice for Coldwell Banker affiliates. Since its re-launch in February, the site has experienced growth from 11,000 user sessions a month to 84,000 today. Online chats and e-updates keep 72,000 Coldwell Banker Sales Associates in close touch with Corporate and message boards make networking only a click away. In addition, MyCBNet creates a personal portal to Coldwell Banker, allowing affiliates to customize their experience while visiting the site, and all materials can be downloaded and/or ordered through the company?s fulfillment house.

The Role of the Franchiser

Coldwell Banker knows consumers are not the only segment of the population with varying needs ? brokers also have different needs and circumstances that must be addressed in an often-daunting business environment. Coldwell Banker believes that all brokers understand the need for change in order to survive. At the same time, the company acknowledges that it is up to them to define what those changes are and how to support them.

“Simply put, a franchiser should take every measure to help its affiliates prosper. At our company, we know that it takes leadership, vision and execution in order to fulfill that responsibility,” says Perriello. “Leadership and vision go hand-in-hand. A company must understand, identify and address consumers? needs and the competitive atmosphere. Most importantly, a company must take the risk of being preemptive. One of the first things I realized in leading a company that has been successful for almost 100 years is that success comes not just from understanding the business as it is today, but anticipating the future and paving a road to where you think it?s going.”

So where will the road lead for Coldwell Banker? According to Perriello, it?s just the beginning. “By leveraging technology and enhancing customer service, expect to see the Coldwell Banker brand continue to grow its market share. It?s all about exceeding the customer?s expectations and delivering information and services to them on their terms, not ours.” Perriello says, “Our commitment to our Affiliates is to maintain our leadership position in the industry. To do so, we will continue to explore growth opportunities for them and ways to capitalize on emerging customer segments.”

So what?s in store for future initiatives? Perriello isn?t giving away any secrets.

“For now, only my dog knows,” Perriello says, pointing to a life-size golden retriever statue in his office. “And I haven?t taught him to speak yet.”

*Based on data published by the National

Association of Realtors?

**According to a U.S. Census Survey.