June 2011

Cash Buyers Continue to Dominate

For the fifth-straight month, cash buyers accounted for at least 30 percent of existing-home sales, the National Association of REALTORS® reported this week.

In May, all-cash buyers made up 30 percent of existing home sales, which compares to 25 percent in May 2010 and 12 percent two years ago, according to NAR.

Low prices from foreclosures are tempting cash buyers–who are mostly investors–and prompting them to snag deals. They’re turning many of their housing purchases into rentals and immediately finding quick profits, housing experts say.

“These are people who’re … getting back into the market because they see good value,” says Stan Humphries, Zillow chief economist.

Cash buyers tend to dominate in cities where home prices have fallen the most and foreclosures are the most prevalent. For example, in Miami-Fort Lauderdale, 63 percent of first-quarter buyers paid in cash and in Las Vegas, which consistently boasts the highest foreclosure rate, cash buyers made up nearly 50 percent of first-quarter sales, according to Zillow.com.

Without cash buyers, “we would be in much worse shape than we are,” says Jim Gillespie, CEO of Coldwell Banker Real Estate. “They recognize that this is the smartest time to buy.” Home prices are 33 percent below the peak reached in 2006.

Source: “Cash Buyers Scooping Up Homes,” USA Today (June 22, 2011)

Read More
Investors to Dominate Market for Next 2 Years

ARMs Stage a Comeback

More home buyers are being tempted again by the ultra-low rates of adjustable-rate mortgages, which have fallen to the 3 percent range. ARMs were once blamed as a contributor in sending the housing market from boom to gloom.

In the first quarter of this year, about 12 percent of the $325 billion in new mortgages made were ARMs. In the fourth quarter last year, ARMs made up 9 percent of new mortgages, reports the newsletter Inside Mortgage Finance. During the housing boom, ARMs made up 45 percent of mortgages issued in 2006.

However, near the end of housing’s heyday, many ARMs began to reset to higher rates and borrowers began to default in floods. Experts say that many borrowers who had ARMs did not fully understand the terms of their loan, causing the public to become more skittish of the adjustable-rate mortgages and their use has drop over recent years.

But ARMs are starting to gain more traction again in financing home purchases. Hybrid ARMs are catching on, in which there’s a period of three or five years where the interest rate is fixed before resetting. Experts say those tend to be good choices if you plan to sell your home in that period because you can take advantage of the low interest rates.

“If you know you will sell the home within five years, then it’s a no-brainer,” says Rick Cason, owner of Integrity Mortgage in Orlando, Fla. “But most people are unsure about what the future holds for themselves or the housing market.”

Source: “Borrowers Wade Back into Adjustable-Rate Mortgages,” The New York Times (June 21, 2011)

Happy Graduation! Here’s Your New Home

In the last year, more parents have been shopping for apartments or condos to give to their children, real estate brokers report. These parents are wanting to take advantage of the dropping real estate prices and low interest rates while also viewing the purchase as an investment, brokers say.

In New York, these lavish real estate gifts many which serve as graduation presents are often studios or small one-bedroom apartments.

“The parents see it as a long-term investment and a good place to park their money,” Barry Silverman, an executive vice president of Halstead Property, told The New York Times.

As for how the “gift” of real estate is structured, some parents buy it as a gift for their children and take advantage of tax gift exclusions, others buy it as an investment property and retain ownership, and some are buying it through a family trust or joint ownership. In some cases, the parents don’t even live in the city but are buying the apartment for themselves so when the child decides to move on, they can move in.

Richard Koenigsberg, a certified public accountant, says it’s a good time to be purchasing property as a gift because of some tax exclusions on gifts.

“We are in a remarkable period of time at the moment,” Koenigsberg says. The tax exclusion on gifts and estates has increased to $5 million from $1 million until the end of 2012. In other words, a parent can give a child as much as $5 million tax free.

“It’s a big opportunity for parents who might want to help their children,” Koenigsberg says.

Source: “The Gift Apartment From Mom and Dad,” The New York Times (June 17, 2011)

Read more:

Real Estate Gifts to Family Members? Notify IRS

Buyer’s Guide: Branding Products and Services
A strong brand can make the difference in determining which real estate pro gets the call from consumers. Here are the key concepts and solutions you’ll need for your branding efforts.
By Michael Antoniak| June 2011

In This Guide

To whom do people turn when they need help buying or selling property? Generally, it’s one of three kinds of real estate professionals: someone they’ve worked with before, a practitioner they’ve been referred to, or the one who has done the best job branding themselves and their business.

Building your brand is a multifaceted undertaking: creating a persona, promoting it at every opportunity, and meeting and surpassing expectations you’ve shaped about why people should entrust their real estate transaction to you. It’s part personal marketing and part positioning — and all about delivering services. After all, every licensed competitor in your area has access to the same inventory. An effective branding campaign differentiates you as the first person who comes to mind when people think real estate.

Specs That Matter for Real Estate

What makes a great brand?

Play consumer for a minute: When the subject is real estate companies, which one comes to mind?

There’s likely a distinctive logo with specific colors, and maybe a tagline defining that company or its approach. Branding starts with visual symbols, but is really about attaching positive perceptions to them. What those symbols represent — and the associated consumer expectations and experiences — make the brand.

For the real estate professional, the branding challenge is to set yourself apart from everyone else offering a comparable mix of services. Your “brand” can be your name, a flashy logo, catchy tagline, or some unique specialty. It’s the marketplace ID for you and what you do.

Think about who you are and services you provide that most others can’t and build around that. It might be defined by a market area, a particular type of property you handle, or your target clients. It can play off your name, your team, or the location of your office. Whatever you choose as your brand, it should be uniquely associated with you.

An effective brand-building campaign runs on and offline, from a prospect’s initial encounter through follow-up long after a successful transaction. Establishing your brand requires a broad-based, far-reaching effort. The key is consistency in message and delivery — the more visible your brand, the greater the chance people will remember you.

Feature that in signs, on your vehicles, Web site, social networks blogs, business cards, stations — everything you do to promote awareness and attract business. Then, back it up. If you bill yourself as the neighborhood expert, demonstrate that with Web content and blog entries. If your focus is the upscale market, your clothes, car, and equipment should project that. If you’re the relocation expert, make sure you’re the source for information about everything in the area.

The Budget section of this guide outlines some tools and services that can be used to build, establish, and promote your brand. Each provides you with a way to get your brand in front of clients and prospects, and remind them why they should call you.

Ultimately, your brand is only a symbol, though, albeit one that invites action and can generate calls. It’s the follow-through, the relationships you establish, and whether or not you deliver on all your brand promises that will make or break your business.

Brand Building 101

Focus: Step back and assess the services you and your competitors provide. What’s unique about you? Who are your target consumers? What value can you offer others aren’t providing? Is your market a particular type of home or area? Define your services, expertise, and goals, then start building your brand around those.

Create an identity: Effective brand symbols — the logo, tagline, and even color scheme — are easily recognized and recalled. These should establish some positive association with you. Don’t skimp here: If you doubt your artistic and creative abilities, entrust this to a professional service.

Promote you: Approach this as a personal effort to promote you, your services, and your personal contact information. Build your brand around a company that’s not yours, and you’ll have to start all over if you ever move on.

Mount a campaign: Your brand won’t be built overnight, but rather over time, as people learn to connect you and the symbols you’ve chosen to represent yourself with a positive experience. The more visible that symbol, the faster that process.

Take it everywhere: Signs for the yard or office are starting points. Cars and trucks can be transformed into mobile billboards with vehicle wraps. Premiums like refrigerator magnets and key chains imprinted with your logo serve as constant reminders of you and your services. Everything should point back to your Web site as the portal for local information about your business and listings. And when you’re marketing online, be sure that your brand extends beyond your business’ site. Social networking and blogs can be especially effective, as can automated electronic newsletters, which get your branding out there with minimum effort.

Get involved: The value of community involvement cannot be overstated. Sports and event sponsorship, charity donations, and volunteerism provide opportunities to show your logo and represent you as a caring member of the community.

Make short-term goals and long-range gains: In summation, use every tool and opportunity to establish your brand. It’s the cumulative effect of all these efforts that will transfer a logo into the symbol you can proudly stand behind and prosper.


Collateral: In marketing, the support materials used to promote a brand, product, or service, such as flyers, brochures, presentations, and Web content.

Niche: That segment of the total market a brand focuses on. For instance, one real estate professional could choose the niche luxury homes in the area, while another concentrates on vacation properties and rentals. Identifying your niche is an important early step in brand development.

Personal brand: The brand associated with an individual rather than a company or team. In real estate, establishing your personal brand can be especially critical. Over the course of their careers many real estate professionals will provide similar services to clients while associated with a succession of brokerages or franchises.

Skins: Protective covers for consumer electronics devices like smartphones and notebooks that can be imprinted with any message or graphic, including a brand logo.

Tagline: A brief, easily recalled sentence or phrase that sums up the brand and what it offers.

Target market: Those buyers or sellers you want to reach through your marketing efforts. They could be living in a specific ZIP code, for example, or match a certain demographic profile.

What Others Are Saying

“The Community Center”

In the half-year since sales associate Amie Stewart of HomeSmart Realty in Phoenix launched the My Life At Lakewood Web site, it’s become a virtual gathering place for people interested in what’s going in the Arizona neighborhood.

“We’ve gotten a reputation as the go-to people about the area, exactly what we were trying to achieve,” Stewart says. She and her partner in The A Team decided the community Web site could be an effective tool for keeping their name before residents in their target market.

“We thought the best way to brand ourselves would be to focus on one area,” she says. “It’s helped with our farming. We’re now working closely with the local homeowner association and we’ve got businesses in the area as sponsors who are also helping promote the site,” she says. “We’re giving something valuable to the community and they seem to appreciate that.”

“Being Your Brand”

As soon as Linda Craft acquired her real estate license more than 20 years ago, she started building her brand. “You’ve got to decide what you want your brand to be, and for me, that was to be seen as a professional, the person people recognize and want representing them. I started with a bright red color to contrast with my naturally blond hair and a black Infiniti Q45 with a vanity plate and the tagline ‘Make Offer.’”

Today, as broker-owner of Linda Craft and Team, REALTORS®, in Raleigh, N.C., those core elements remain integral to the campaign that has established her as the most readily identifiable real estate professional in the area. Her red logo and name are fixtures on signs and a fleet of vehicles, at community events, and as an official sponsor of the Carolina Hurricanes hockey team.

“The things we do offline bring us recognition,” Craft says. “But it’s what we do online, thorough Internet marketing, where we make money.”

Craft’s Web site, as well as her blogs, videos, and Facebook and Linked-in pages and profiles are all developed and managed by Dakno Real Estate Marketing Services. Wherever she’s found on the Web, there’s a consistent look featuring her picture, logo, and contact information.

“Branding without building strong personal relationships is nothing,” she says. “People may recognize you because of your logo or picture, but they will remember you because of what you did and how you helped them.”

“Domain Name Says It All”

Visitors to LuxuryLakeHome know where The Perry Team, broker-owners of RE/MAX Grand Lake in Grove, Okla., put their emphasis. The site immediately identifies the pair as “Your Grand Lake Professionals” and local real estate experts.

Their branding and Web site is managed through the Number1Expert marketing system from Dominion Enterprises. “We don’t have a specific logo or photo like some teams,” says Victoria Perry, partner with her husband Chuck in the small company. “Everything we do is designed to get people to our Web site where they can start searching for property and learn about our services.” The domain name conveys their specialty and is featured in all their signage and ads.

When she expands her branding efforts in the near future, she’ll draw on the experience of others. “One advantage to being with RE/MAX is you’ve got a network for talking with other real estate professionals about what’s worked for them,” she explains. “They’re very supportive and eager to share what they’ve learned and show how they do it. It’s a fabulous benefit of being associated with a major brand.”

Michael Antoniak is a journalist and technology expert with a focus on real estate applications. He also writes about real estate technology at his blog, RealTechTools, and has published an e-book on Essential Technology for Mobile Professionals. He can be contacted at antoniak@dtccom.net.

Helping Soldiers Come Home


Whether it’s a friend, loved one, or complete stranger, you can make a difference in your community by helping veterans and their families when they return from combat or other stressful situations related to their military service. Here’s how.
By Kelle Sparta| June 2011


One of the things that I talk to real estate professionals about all the time is the need to have significance in the lives of consumers beyond the transaction. People don’t live in a bubble. Transactions happen for a variety of reasons, and those reasons play heavily into the process.

What I want to address here is the military family — and particularly those who have a loved one returning from war.


I grew up as a military brat and then married a Navy man, so I spent much of the first part of my life steeped in military culture on base after base, moving every year or two. As such, I have extensive experience with that culture. Also, when I started my real estate career, many of the people I worked with were members of the Navy and Coast Guard.


As a child, I didn’t realize the significance of my mother’s work in the military, but as a military wife, I was proud to “hold down the fort” while my husband was at sea. Make no mistake, the families of military veterans serve their country as much as the veterans themselves. They live a solitary existence with brief periods of connection with their partner or parent — always living with the fear that their loved one may not come home.


It’s hard to be part of the military structure. It is often disorienting — especially when your spouse or parent is on long deployments. The homecoming is tearful — both in joy for the reunion and grief for the lost time together and the knowledge that the service member will be leaving again eventually. And it’s often a challenge because lives have to be adjusted and adapted to accommodate the service member’s return. But when military personnel are coming home after combat, it is especially hard to help them return because of the chasm between their experiences and those of the families at home.


The Importance of Both Sides Being Heard
One of the challenges that my husband and I experienced as a young military couple was this mutual sense of not having our experiences heard and understood. He felt that he had it bad because he couldn’t see me and the people at home. I thought that it was easier for him to be on the submarine because it was a new and complete environment with nothing missing, whereas my life had a big husband-shaped hole in it that I had to fill.


This was a point of contention for us. He felt unheard and so did I. Given how young we were, both were probably true. The fact is, both sides go through difficult times. It’s important to make room for both to hear about the others’ experiences without making the mistake that we made of comparing who had it worse.


What You Can Do

I went to a symposium at Harvard University last month on the topic of how to help war veterans reintegrate into life at home. After listening to the talk, I realized that the military isn’t doing enough to help. After her presentation, I spoke with Paula J. Caplan, Ph.D., author of When Johnny and Jane Come Marching Home: How All of Us Can Help Veterans, and interviewed her on how we as real estate professionals can help spread the word to our communities about this important topic. She gave me some very specific ideas on how to help the veterans integrate back into life at home. I hope you’ll share this information with your clients, friends, and family members. Everyone needs to know these things — military families especially. It is the least we can do to support those who served our country so valiantly.


Advice for Families


It’s Hard — and It’s Not Your Fault
In my discussion with Caplan, she said of veterans returning home, “You should be getting vast amounts of help from the military and the VA — but you’re not. Don’t think that if it’s difficult, it’s your fault. Because it’s not.”


Caplan encourages the public to think about the fact that the military spends weeks getting the service members ready for war — running them through boot camp exercises designed to create a new cultural reality that will help the service member survive in this harsh new environment. But when they come home, there is no equivalent training that helps them to reintegrate into civilian culture again. They are expected to just figure it out on their own. And it is the service members and their families that suffer.


The key to readjustment is communication. This allows everyone to understand what happened during the time they were apart. Family members and military personnel are not going to be able to fully understand each other’s experiences, but they can compassionately listen to each other with the goal of creating a new shared experience of love, trust, and support together. In having this conversation, you can invite each other into a place where your separate experiences can be added into a shared memory.


Advice for Everyone


Don’t ask intrusive, insensitive questions (e.g., “Did you kill anybody?”) And don’t make assumptions about what the service member’s experience was like in the military or about coming home. People handle it very differently. Be a listening ear rather than an adviser, judge, or evaluator.


One of the best ways to invite a conversation is to make space for it. Set aside time when you’ll talk with the service member. You might open a conversation with a question Caplan suggested in her book: “I am an American, so I take some responsibility for what happened to you, and frankly, I will feel better if telling me what you went through is helpful to you.” If it’s a friend or a family member, I might try something along the lines of “How was it for you over there?”


As Caplan wrote in her book, “The best thing that you can do is to make it safe for the vet to talk and hear himself or herself talk. You do this by not saying much and by not saying things that are judgmental or pushy and by not giving advice. Giving advice, especially early on, can destroy the listener’s sense of being understood. Most vets will be quick to recognize a person who is respectful and focused on listening and understanding their story and their perspective. Remember that trust develops gradually as one feels understood. And at some point, it may be all right to ask questions, but it is crucial first for the vet to feel listened to for a long time without feeling rushed, and what they need to say first must be the priority. Feeling understood helps a person strengthen their sense of who they are, so it is good to let who they are emerge in the way it tends to come from the speaker. Related to this, do not try to get the vet’s whole story or even one of the stories all at once and in coherent form. To push for that can overwhelm the teller.”


Caplan also reminds us to remember that the feelings that are coming up may be ones that the service member doesn’t have a name for or isn’t comfortable expressing. She says to allow them to find their own way in their own time.


Holding Space

Holding space for someone to speak is about allowing the entire conversation to be about them — what they say, what they don’t say, and the silences while they think and feel their way through the memories. Patience and an openness to receive and accept whatever they have to offer is the ideal way to create that safety zone. In short, it’s simple: Love them back home.


Share This Message

As an American and a former military dependent, I hope you will make an effort to reach out to military personnel. You don’t have to be family or friends with the service member. You can talk to one of the veterans on the street or in an American Veterans group. You can start the conversation with a “thank you for your service.” Whether you believed in the reasons for a war or not, those people did their duty for their country. They put themselves in harm’s way because our government asked them to. The least we can do is offer them space to tell the story of what they experienced.


For more ideas, check out Chapter 6 of Caplan’s book, in which she offers ideas on how to find a vet to talk to, which questions to ask, and common problems that arise and what to do about them. Also, if you’re interested in reading some of the stories told by veterans and others involved in the wars in Iraq and Afghanistan, there are free PDFs of many of their accounts available at The Veteran’s Book Project.



Kelle Sparta is the author ofThe Consultative Real Estate Agent: Building Relationships that Create Loyal

More Lawmakers Fight 20% Down Payment

A proposed 20 percent down payment rule for qualified residential mortgages is too high, argues a growing group of lawmakers in the House of Representatives.

Late last week, about 240 lawmakers in the House sent a second letter to federal regulators urging them to lower the down payment rule on QRMs. Last month, about 150 lawmakers had signed a letter urging the same.

“The resultant reduction in demand for housing, due to an overly burdensome government dictate, would only add to the challenges the housing market faces, and could threaten a full-fledged economic recovery from years to come,” the most recent letter reads.

The 20 percent down payment rule arises from an effort of several federal agencies that have been trying to urge more responsible lending and borrowing. The agencies created a proposed risk-retention regulation under the Dodd-Frank Wall Street reform law, which requires lenders that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is considered a safe mortgage or a “qualified residential mortgage.” (FHA and VA mortgages would be exempt.)

QRMs would be exempt from the 5 percent credit requirement but would have to meet certain guidelines, such as the proposed 20 percent down payment requirement. Borrowers with less than 20 percent down could then be forced to pay higher fees and interest rates.

A 20 percent down payment requirement would cause more first-time buyers to flee from the already fragile housing market, analysts at Capital Economics say.

The National Association of REALTORS® also has been an outspoken critic of the proposal, saying that a 20 percent down payment requirement would jeopardize a housing recovery.

Source: “More Lawmakers Join Major Push to Reduce QRM Down Payment,” HousingWire (June 20, 2011)

Billionaires Favor ‘Trophy’ Properties

When it comes to real estate, billionaires spare no expense. (An exception being Facebook billionaire Mark Zuckerberg, whose recent $7 million Palo Alto purchase is modest by most billionaires’ standards).

For many billionaires, buying mega mansions is the norm and outfitting these lavish estates with fancy upgrades, everything from wine cellars and museums to even its own on-site power plants.

“A lot of people will buy a $30 million ocean front mansion, tear it down, and start all over again,” says Alan Fiocchi, founder of AlchemyRED, a company that project manages extensive remodeling of multi-million dollar estates.

For example, hedge fund billionaire David Tepper tore down the $43.5 million Sagaponack home he purchased last year and plans to build a house double the size on the now empty lot.

In 2004, real estate mogul Donald Trump spent more than $40 million on an oceanfront estate in Palm Beach, Fla., adding gold and diamond fixtures and a 50-car garage to upgrade the property to his liking.

Industrial billionaire Ira Rennert’s $200 million home in Sagaponack, N.Y., is considered one of the nation’s largest single-family homes at 43,031 square feet. The estate features 29 bedrooms and 39 bathrooms, three dining rooms, three swimming pools in a row, a 164-seat screening theater, and even an on-premise power plant.

And Russian venture capital billionaire Yuri Milner recently made headlines earlier this year when he purchased a 25,000-square foot second-home estate in Silicon Valley for $100 million–the highest known price ever paid for a single-family home in the U.S. The estate features indoor and outdoor pools, a ballroom, tennis courts, and a wine cellar.

“When I think of a trophy property selling or something unusual entering the market that gets a lot of attention it … actually pulls more inventory out onto the market … and other properties that may be considered competing in this price point come out of the woodwork because the selling of them is optional,” says Jonathan Miller, chief executive of Miller Samuel Inc, a New York City-based real estate appraisal company.

View a slideshow at Forbes.com of some of these billionaire mansions.

Source: “Be it Ever so Not Humble: Billionaires’ Mansions,” Forbes (June 19, 2011)

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