It's all greek to me! - Kansas City real estate

Paying a commission on added closing costs... should we?

Ron, Parker & Carmen Byron — Fri, 09 Mar 2007 18:23:00 GMT

Hello!

I just sold a home where the buyer wanted closing costs paid through the mortgage (very common in our market). Let's say the agreed upon sales price was $100,000 and the buyer wanted $3000 in closing. I simply add the $3000 to the negotiated sales price and have a new one of $103,000

Now, here is the issue. There are certain agents in the office that believe that you should base the commission on the full $103,000 instead of the $100,000

I do not think that's right, I believe that the commission should be only based on the sales price that would have existed without the wrapped on closing costs. The way I see it, my seller is doing the buyer a favor in allowing that to occur and shouldn't be charged a commission on the additional money. Besides the seller would actually lose slightly more money as the commission would dig into their net ever because of the amount charged on the $3000.

I know it isn't much charged to the seller, I just don't think it's right.

What about you?

Parker Byron
www.johnsoncounty.com
Kansas City Real Estate

When does negotiating become lying and does it matter?

Ron, Parker & Carmen Byron — Mon, 05 Mar 2007 23:03:00 GMT

I'd take a bet that each and every one of us (with rare exception) has been in a situation where you are working with a buyer and present an offer to purchase to the listing agent and get the following response:"I have another contract coming in - make your best offer".

There has been at least 1 occassion where it became clear to me that the listing agent was outright lying.

Now... is this OK? As agents we do have a fiduciary responsibility to our clients, we do want to get them the best deal... does that entail negotiating to the point of lying (assuming it's legal)? Do we owe our fellow agents certain ethical minimums over our responsibility to our clients? Can we even distinguish the line between negotiations and lying?

Have you ever said "This is as much as the buyer will pay" knowing that isn't true? I have. Is that any more or less worse than using the "Another contract is coming in" strategy?

I'm not sure where to draw the line, or even if we should draw the line. Personally I have not used the "Another contract is coming" technique as I feel it crosses an imaginary ethical line.

Am I crazy? Do I owe my client more ferocity in negotiations? I can say that ticking off the cooperating agents isn't a good way to smooth negotiations... agents kill deals as well.

What do you think folks?

Parker Byron
Kansas City Real Estate
www.JohnsonCounty.com

Using percentages in our business - accurate?

Ron, Parker & Carmen Byron — Sun, 04 Mar 2007 05:11:00 GMT

I got to thinking about an issue today (mistake number one) dealing with quoting percentages. I think if you were to ask any agent on this system for the percentage of agents that do 80%, 90% or even 95% of the business you'd get an answer, and it would probably be a little different from each. Can I honestly say that I KNOW that percentage (can you)? No, I can't (if you can I want the link for my listing presentation). In fact, I've never seen it written down or referenced by any credible institution that actually researches statistics...

I'm not saying that it isn't true... but it got me thinking...

How many times have I blurted out a percentage to a client/prospect based on no more than conjecture or 'I heard it through the grapevine' proofs? I've heard that 50% of newly licensed agents in our market quit in the first 12 months and then it goes to 75% by month 24. I've been searching for those stats and can find nothing of the sort... in fact I'm not even sure what source I got that from. How many other 'statistics' have I quoted without evidence?

I'm coming to the conclusion that if I want to quote percentages I need to have legitimate supporting proof or my words are unethical... (that's right, I know I could be wrong but I pretend not to be - that's unethical). I do believe, however, that I can say things like "I believe that a majority of..." or "It's been my experience that almost none..." and so on. I shouldn't be saying 76.5% unless I know within reason that it's 76.5% (+- whatever the authority says). Taking this into account I can reword my statement above to "It's my understanding, from experience, that a good number of new licensed agents quit in the first year, and then many more by the end of year 2"

I see two options in my life (these are for me personally, take from this what you may). 1. Never quote percentages unless I know them to be reasonably accurate. 2. Use vague generalities based on experience and be sure to disclose that what I am sharing is conjecture.

I've always believe that once I realize a personal truth, as I believe I have above, that I have an obligation to act accordingly. In other words, I can't in good faith continue to quote percentages and pretend I never considered or researched this subject without being guilty of unethical behaviour.

What do you ladies and gentlemen think? Is there a place to get statistics that is easy to find and reliable? Maybe I'm the one in the dark and there's an easy resource, I hope so!

Parker Byron
Kansas City Real Estate
www.JohnsonCounty.com

Who are you anyway? Agents living in the past...

Ron, Parker & Carmen Byron — Fri, 02 Mar 2007 17:41:00 GMT

Have you ever run into the situation where you've met an agent that you work with or are cooperating with, etc. and they give you their card. The card has a photo on it... but you can't for the life of you figure out who it's a photo of. You stare at the card for a while trying to figure it out when suddenly you realize that it's a photo from 20 years ago! They haven't looked like that since high school!

Why is this a problem? When I send out all my materials it has my photo on it (a very current one). I want to make sure that people actually recognize me from those photos. If someone looks at it and realizes that it's a photo from a different era they may see this as a lie... not a good way to start a relationship. Let's not live in the past (I used to be an NCAA athlete, but I'm certainly not now - should my photo be of me then?). I also use this same theory on the online dating site I use... don't pretend to be someone else. It works for that, why not real estate?

Consider that I have just lost 47 pounds and even though my photo is less than 6 months old I am going to get a new one and update my signs and business cards. Note: Had I gained 47 pounds I would be under the same obligation - don't deny who you are.

Food for thought!

Parker Byron
Kansas City Real Estate
www.JohnsonCounty.com

Buyer's Agents - Third party vendors... sign a non-compete?

Ron, Parker & Carmen Byron — Thu, 01 Mar 2007 02:35:00 GMT

Recently I was working with an investor client who flips properties. We had a 3rd party vendor (foundation repair) come look to provide a quote for the work needed to be done. We never received the quote and then found out that within the following 48hours that the person (or company) made an offer and it was accepted on that same property!!!

I am pretty well convinced at this point to always have a vendor sign a non-compete for each property that we involve their services on... I don't want to lose another sale due to unethical behaviour of a vendor.

Next issue, I have buyer's agents and have never required any non-compete agreements. Some of my competition does require that. My philosophy is that I don't want to create an adversarial relationship at the point I have an agent that wants to leave. Historically I have had a number of agents come back once they realized the 'grass isn't greener'. Note: I control all technology on the team (12 year network engineer)... when an agent decides to leave I have their accounts shut down virtually instantly. I will provide them only with a copy of the data they personally own. I also forward all their email to another buyer's agent...not the agent that has left.

So what do you think:

1. Require non-compete agreements for all 3rd party vendors (including home inspectors)?
2. Require non-compete agreements for buyer's agents?

Thanks!

Parker Byron
Kansas City Real Estate
www.JohnsonCounty.com

Myths about designations, experience and ethics.

Ron, Parker & Carmen Byron — Sun, 25 Feb 2007 23:10:00 GMT

I have a couple of gripes I want to air out about our fellow agents...these are opinions by the way... like them or not! :)

1. Myth: Designations with certain national associations make an agent (or person in general) ethical.

Agents have been claiming that because they took an oath to be ethical, fair, etc. that they are somehow magically turned into an ethical person... give me a break! Designations DO NOT make the person. I work with agents every day that shouldn't have a license but carry designations that claim they are fair and ethical. I also work with agents every day that have been and will always be ethical and fair. No designation or oath creates or denies that truth.

Result: Ethics courses (and I mean more than one) should be required to obtain a real estate license. Failure of ethics tests alone should deny a license. Note: having 1 tiny chapter amongst your license course does not count. Also, an ethics and license law refresher should be required for each license renewal (not sure about your state, forgive me if you already do some of these things).

2. Myth: Experience makes an agent better than new ones.

Result: 20 years of mistakes does not make a good agent. 2 years of doing the right thing does. I don't give much credence to number of years in the business... I need to know that the agent I am working with can admit mistakes and grow. Taking things personally kills deals. The value of an agent should be measured by their results (ethical behaviour for example) and not solely on the years in the business. Before I get slammed with replies, there is some value to experience, but it is not the ONLY thing.

3. Myth: It shouldn't be so hard to get a license

I completely disagree with this idea. In my opinion it should be considerably more difficult. I truly believe that the more educated agents we have in our business the better it should be for all of us. Not to mention it would weed out the ones who don't take this business seriously... real estate is not a hobby, it is a career. If you want or expect this business to be easy you may want to consider a career change. (I'm not thinking I'm making many friends right now) :)

I truly believe that the education required to obtain a real estate license should be the equivalent of one semester of college (not saying college like courses, only that it should take that many hours). Did you know that there are states where you can get a license in under 40 hours... and there are states that require more than 100? This doesn't make sense, let's make a stand - it shouldn't be easy.

We complain every day about how we are treated like lowly sales people. How do we fix that? We start acting like educated professional with strong ethical behaviour. How do we do that? More education... make it more difficult to get a license... unethical individuals are usually looking for the quick buck with a minimal investment - let's take that away from them!

If I'm ticking you off or making you say "darn right" then I have accomplished my goal. Agents are joining the business every year at younger and younger ages, I was 21 straight out of college and that is getting more and more common. Look out folks... it's time to embrace change, accept that this business is getting harder to compete in, not easier and if you don't stay on top of the business and treat folks fairly you might as well hang up your hat.

Ahhhhhh... I feel better now! Bring on the responses, I can take it!

Parker Byron
Kansas City Real Estate
www.JohnsonCounty.com

Evolution of listing presentations

Ron, Parker & Carmen Byron — Fri, 23 Feb 2007 23:50:00 GMT

1995: The Internet was a baby, my listing presentation was largely verbal, no book - some scripting some improvisation.

1998: The Internet was a revolution, my listing presentation was now in a book and I was starting to go electronic with it. As always: Some script, some improv.

1997: My listing presentation was totally on an electronic presentation on a bulky laptop with a small screen (Astound software presentation as I recall) - no more book, but still a bunch of improvisation. The Internet was now eating most of the freetime of the world population.

2001: My presentation is now on a smaller, lighter, larger screen laptop. I have supplemental information on our website to include pieces I could send via email. Parents were now looking for a 12 step program to ween their children off of the Internet.

2005: My presentation was transferring back to a book, but was still part of an electronic presentation. Much of my presentation was available via the website through online registrations and automatic WORD or PDF documents sent to email. The Internet was a part of everyone's life, including my grandmother!

2007: I am no longer using a laptop for my presentations, I have reverted to the book (including the Point2Agent information). I still have quite a bit left on the Internet and require registration for more. Now I am reconsidering going back to a laptop/book presentation.

I seem to have moved backward in time in some ways and forward in others...

How are the rest of you handling your presentations? Books? Internet? PDF via email? Etc. Etc.

What's working for you?

Parker Byron
Kansas City Real Estate
www.JohnsonCounty.com

Closing gifts... waste of time and money?

Ron, Parker & Carmen Byron — Fri, 23 Feb 2007 01:41:00 GMT

Historically we have given some kind of closing gift to our clients. In the last few years we have been giving out a very nice Mont Blanc pen. There are occassions where I want them to give ME a closing gift, but that's a different topic.

For the last year or so we have stopped giving out closing gifts and as far as I know it hasn't made any difference in our business (we consistently sell 120 to 140 homes each year).

Are we to believe that our clients 'expect' a closing gift and to not give one is an offense to them worthy of losing our licenses? :)

Not giving out this gift saves me around $150 per closing (more than $15,000 per year)... am I losing referrals? Who knows! Can that really be tracked?

What do you guys/gals think?

Parker Byron
Kansas City Real Estate
www.JohnsonCounty.com

N.I.M.B.Y. = Fear is the quickest way to failure

Ron, Parker & Carmen Byron — Tue, 13 Feb 2007 20:24:00 GMT

What on earth is NIMBY? Not In My Back Yard!

New ideas, new concepts, things that are proven to work... I hear over and over "That won't work in my market"

Well, if you honestly believe that, then it won't ... you make your own destiny. I remember a time when I first introduced my parents to computers (Commodore Vic 20 - one of the first PC's to come on the market). In no way could my folks see any potential for such a device... even after a year of two when we could use a word processor on our Tandy... such a thing couldn't work for our industry, right? How about the Internet... crazy, it'll never work, right? Email? You must be insane!

Now technology has taken us amazing places and my parents are ready to be on the cutting edge, excitied to find out how we can leverage this amazing thing.

Some more NIMBY: If you believe that you'll never produce more than 100 transaction per year... you won't! "I can't do that, not in my market... such and such has all the business, I can't beat him/her/them"

I attend top producer seminars every year (Howard Brinton) and there isn't a star there that has that mindset. Get rid of negative thoughts, don't believe in glass ceilings! In my second year in the business my team of 3 broke 100 transactions in a single year... I didn't know you couldn't! My 3 person team now produces around 35 Million in closed transactions every year. Now that I've said that, it's time to change my perception... we WILL produce more than 50 million in a single year by the end of 2008. I truly believe that and it WILL happen.

Set goals, realistic ones, and believe you can reach them and you will. Explore the ideas that the other agents swear won't work in your market... you'll be surprised!

Open your mind, it's amazing what can happen!

Parker Byron
Kansas City Real Estate
www.JohnsonCounty.com

We can be our own worst enemies!

Ron, Parker & Carmen Byron — Tue, 13 Feb 2007 01:29:00 GMT

Just yesterday I received an offer at 9:30pm and it was written up to expire at midnight!

Now, I can understand that in a very fast market it is critical for a Buyer's Agent to get a response back as soon as possible to protect your buyer... but after 9:30 on a Sunday? I write up offers all the time with short expirations, but I make sure it is realistic for the seller... after all, upsetting someone by pushing too hard is a terrible mistake.

I can't help but think that the buyer's agent must have known better (I hope) --- but obviously didn't explain the situation well. I strongly believe that a proper explanation about the delicate balance of negotiations would have resulted in the buyer giving us until at least the next day by noon. Long story short we decided to counter but not until the next day. It turns out the buyer wasn't in a big hurry and the deal went together.

Here's another way we sabotage ourselves and the deals we are negotiating: Taking things personally! The process of negotiation is not an attack on the character of the cooperating agent, I promise! Keeping a cool head puts deals together... if you stay calm, so do your clients.

Agents need to remember to respect ourselves as an industry. I like to take Christmas off, yet I was pushed into negotiating an offer late on Christmas Eve... I'm greatful for the business, don't get me wrong... but we've got to give to ourselves a little break once in a while!

Let's be friends not enemies!

Parker Byron
Kansas City Real Estate
www.JohnsonCounty.com

Using math to win and keep clients!

Ron, Parker & Carmen Byron — Sun, 11 Feb 2007 04:41:00 GMT

Caution: Short Math Content to Follow - It could save a deal!

Do you remember the concept of the Least Common Denominator in math class (a.k.a. LCD) ?

Here's a refresher (there's a point to this): Quite simply it is the smallest whole number (not a fraction) that two numbers have in common that can be divided into them. (I have a degree in Mathematics - perfect transition into real estate right?)

Okey dokey... what on earth does that have to do with real estate?

Here's how I like to compare that... Whenever I create a marketing piece, website content or explain concepts and services to my clients I always have to assume that I am dealing with the LCD ... the person that is most difficult to explain things to and has the hardest time understanding. (It's much nicer to use the phrase "least common denominator" or LCD than certain alternatives which I am sure you are thinking).

If I can reach the LCD, then I can reach anyone!

I have a tendency to over complicate my explanations (which I may have done earlier in the post)... so I have to make an effort to simplify my materials. For instance... I have a very strong understanding of agency and contracts and it is really easy to talk over the heads of my clients - which can get me into trouble!

I have found the best solution to this problem is to find someone who knows absolutely nothing about what I am doing and test everything on them (marketing materials, listing presentations, etc.). I tell them specifically to act as confused as possible about what I am saying until I have to break it down to the easiest possible explanations to understand.

For example, we can never assume that potential clients understand Buyer Agency. If you make that assumption then you'll be mad at yourself when you find out that your "potential client" bought a home with another agent and you have no legs to stand on because you didn't get a buyer agency agreement! The solution could be as simple as explaining that "This is how I get paid!" ... If you spend an hour talking over their heads in legalese and don't mention important points in plain English then you may have been wasting your time. If they understand what it means to you and them, it should be much easier to get signatures (on all kinds of paperwork).

Quite simply: Assume people don't have a clue and explain it so that they can understand. I guess I could have said that earlier :)

Parker Byron
Kansas City Real Estate
www.JohnsonCounty.com

We don't need no stinkin badges... or do we?

Ron, Parker & Carmen Byron — Wed, 07 Feb 2007 22:25:00 GMT

Just yesterday my mother and I (she's a part of my team) were having a conversation about name badges while on our nightly walk (we're on a weight loss crusade)...badges aren't the most invigorating topic but it brought up an interesting point.

It used to be that the majority of real estate agents wore name badges...12 years ago when I started that seemed to be the case. What about today? My mother is of the opinion that name badges still have value and we should be wearing them on a regular basis.

I happen to disagree... the way I see it the only time I'd even be interested in wearing a name badge would be at a convention with other agents or an awards ceremony. Whenever I do wear a name badge I get the feeling that after I meet with a client I need to get back to my job pumping gas. (No offense to the gainfully employed gas pumping individuals reading this blog).

I don't use printed MLS books anymore (horrible flash back) and I'm not interested in wearing a name badge either. I brand my face and name in everything I print/publish. Not to mention, name badges don't look good with my suit.

Mom doesn't give a specific argument, she just thinks we should wear them.

Feedback? Dare you try to convince me otherwise? :)

Parker Byron
Kansas City Real Estate
www.JohnsonCounty.com