These traits enable a real estate agent to understand their client’s situation and needs and to be responsive independent of their own needs or values. When unattached to the outcome, they are free to tell the truth.
Real estate agents who focus on understanding, informing, and educating their clients most often succeed in helping clients achieve their goals. These agents have incorporated the Platinum Rule, “Do unto others as they would do unto themselves”, into their professional service.
One of the exciting parts of the work is finding a home that is a perfect fit for a buyer, and succeeding in negotiating its purchase, especially if others are also bidding for the same home. The opportunity to represent a client in the sale of their home and negotiate an acceptable offer is also a most satisfying feeling. Selling residential real estate requires far more hand-holding and a much greater understanding of emotions than “selling” in other contexts. The client’s potential level of stress that accompanies change in residence and location is often quite challenging for agents. That being said, selling in any field involves successfully identifying and servicing a client’s needs.
Real Estate in California
California enjoys highly valued coastal regions with mild weather that has been historically attractive. As a result, many California real estate agents market not only to local people, but also to potential buyers from outside the state.
I work exclusively in the Los Angeles/Westside communities of Pacific Palisades, Brentwood, and Santa Monica. In 2006, the median single-family residence sales price in these areas was close to $2 million. Working in such a high-priced area requires particular emphasis on highly personal service, security and confidentiality. For example, homes rarely have a lockbox even if they are not occupied. Occasionally the identity of a buyer must be kept confidential and both buyers and sellers often insist that the sale price be confidential even within the real estate community.
In many areas of the U.S., attorneys are hired to handle the property transfer process. In southern California, however, an escrow holder handles nearly all transfers.
An escrow is an arrangement in which a disinterested third party, called an escrow holder, holds legal documents and funds on behalf of a buyer and seller, and distributes them according to the buyer’s and seller’s instructions.
People buying and selling real estate usually open an escrow for their protection and convenience. The buyer can instruct the escrow holder to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The seller can instruct the escrow holder to retain possession of the Deed until the seller’s requirements, including receipt of the purchase price, are met. Both rely on the escrow holder to carry out faithfully their agreement relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out.
An escrow is convenient for the buyer and seller because both can move forward separately but simultaneously in providing inspections, reports, loan commitments and funds, deeds and many other items, using the escrow holder as the central depositing point. If the instructions from all parties to an escrow are clearly drafted, fully detailed and mutually consistent, the escrow holder can take many actions on their behalf without further consultation. This saves time and facilitates the closing of the transaction.
The escrow holder may be an independent escrow firm, an attorney, or an escrow officer with a bank, savings and loan, or title insurance company. Real estate transactions require a tremendous amount of technical knowledge and experience in order to proceed smoothly, and the escrow holder is responsible for safeguarding and properly distributing the purchase price. Hence, escrow officers with established firms generally are trained and experienced in real estate procedures, title insurance, taxes, and deeds.
Escrow officers must also remain completely impartial throughout the entire escrow process. They normally will adopt a courteous but formal manner when dealing with parties to the escrow, keeping conversation to the matters at hand in the escrow. This behavior is meant for the benefit of all concerned, since the escrow officer must follow the instructions of both parties without bias.
Economics of Real Estate
Local economics definitely play into the real estate market. For instance, it was relatively easy for most anyone to sell a home in our area from 2000 through 2005. Multiple offers were more common, and there were frequently as many as five or more bidders. The sales rate was so high that most homes were on the market for less than two months. New agents came into the field to sell a friend or relative’s home and made a lot of money quickly. Limited-services discount real estate companies and sellers put pressure on agents to lower commissions. They could see no value in paying for a better quality agent because they could see no difference in results. Often, no advertising was needed and marketing was limited to putting a sign up and previewing the property for other agents.
By the end of 2006 the market changed. More and more houses came on the market and have stayed on the market for up to three months. Homes at higher price ranges have tended to remain unsold for more than five months. Marketing has again become essential and sales skills are far more important than they have been in almost ten years. Real estate agents are finding that the field requires much more analytic ability and time to help educate sellers about the current state of the market. This process of education helps sellers to feel more comfortable about adjusting the asking price to reflect the current marketplace conditions. Open and thorough communications are essential to retain the goodwill of clients in the changed environment so as to ensure that listings are retained long enough to get sold. In other words, the market has returned to what we used to think of as “normal.”
Learning the Ropes
Real estate skills can be acquired in a variety of ways. Attending seminars and listening to tapes or CD’s can be effective learning tools for some people. Others learn better by a one-on-one mentoring relationship with an experienced agent. Talking with willing successful agents can benefit new agents in multiple ways. There is, however, no substitute for experience — learning by doing and evaluating for further growth. It may take a new agent six months or more of six-day weeks to just learn the increasingly complex basics of real estate transactions.
Working for an established broker can provide new agents with support and information. The effective “teaching broker” can reframe complex situations to focus the agent on the positive side. This serves to empower their salespeople and by showing their appreciation and displaying confidence in their abilities, they help shape an effective productive agent. They are aware that most consistently successful agents seem have certain qualities in common. They present a feeling of confidence, a willingness to do what it takes to serve the client’s needs, a genuine liking of people, adaptable nature, and a non-attachment to the outcome.
Establishing Name Recognition
The first step a real estate agent must take is getting his or her name out to potential clients. This may require extensive marketing and advertising in a wide range of print and online publications. Periodic direct mailings to the community to educate and inform property owners of current market trends can provide the agent with increased exposure.
Many top agents offer a wide range of free information and services, such as helping an owner to “stage” the home so it will show at its best during marketing. Offering referrals of qualified people in a variety of trades can be very helpful to potential clients. Some agents join local organizations and service clubs thus becoming more involved and networked into the community. In my case, I have published nearly one hundred newspaper articles and columns over the years, which has given me an opportunity to serve as a real estate educator for our community.
In addition, it helps for real estate agents to stand out from the rest of the pack. For instance, in my area, I am the only agent who takes out a full-color half-page ad in the local weekly newspaper. I also offer free consultations about remodeling instead of selling, and recommend resources for plans and construction. In addition, fewer than 10 percent of the agents in our market have an assistant while my team includes three experienced, licensed agents who specialize in different aspects of the work.
Successful Client Relationships
There are five key elements to developing and maintaining successful client relationships that is critical in residential real estate. First, real estate agents must display a sincere interest in the client, a true “service mentality.” Second, agents must have the integrity to tell the truth, and to encourage the client to do so as well. Agents must have a patient and dedicated willingness to commit to and do whatever it takes to get the job done as professionally as possible. On a more emotional level, expressing a truly upbeat mental attitude that the glass is always half full helps the client to keep a positive perspective. And, finally, real estate agents must be diligently careful of all the “little things”, the details in all aspects of the relationship, in order to become and remain successful.
The Three “Golden Principles”
I think to be successful in residential real estate anywhere and at any time, an agent must follow a few essential principles or concepts. These are so basic that they are probably equally as vital to success in most other professions as well. Although each is a separate vital component, they also work together in an effort to achieve the fullest possible result.
The three “golden principles” are: attitude, enthusiasm and service. Though service is most important, one’s “attitude” must be positive or else whatever services are rendered will be qualitatively affected. Similarly, if there is little or no passion or enthusiasm for the services done, the quality will be diminished proportionately.
If an agent has a “glass half-empty” perspective of life, it will impact how he or she approaches the entire selling or buying process and may tend to attract like-minded clients. The belief that “buyers are liars” can develop because of insufficient questioning to find out what is truly important to a buyer and the reasons for it. A negative attitude can develop after a few clients end up buying through another agent who was more interested or skillful in providing more effective consultative services at the start. Those who have such negative attitudes tend to create self-fulfilling events to correspond, even as they make the effort to provide what they think is the best professional service.
Agents who approach life with a more positive attitude will view problems as challenges, not obstacles. They will be able to help their clients focus on various potential solutions, not merely on all the aspects of the problem and what it could lead to. Agents prefer working with other positive-minded agents and many top producers identify the other agents’ attitudes as the basis or cause of problems during a sales transaction. Both sellers and buyers will naturally gravitate toward agents who express a sense of humor and a positive approach to their work.
Enthusiasm is an essential ingredient in the pursuit of success in this field. Without it, there is no passion behind the work and thus much less positive energy is generated in the process. Even if an agent works hard to be of service but their heart is not fully in it, the work will be “hard” and they will have much less success.
When I began as a real estate agent, I knew the importance of a positive mental attitude, but knew little about the service side of the field. It was my unbounded enthusiasm that quickly led to a successful beginning primarily working with buyers, and over a period of several years, I began to learn and practice the skills necessary for effectively serving sellers. My slogan since 1994 became: “The secret of success is enthusiasm!”
A “service mentality” is at the core of great success in real estate. Agents are seriously handicapped when their primary motivation to be in this field is to make “easy” money. The very best reason to choose residential real estate as a profession is to fulfill the opportunity to be of great service. This is accomplished through being present and available to clients, by being generous in spirit and willing to really listen and understand what is in their best interest, and by being unattached to the outcome as it applies to you no matter how a situation does or does not work out.
Working with Sellers
Working with a seller involves understanding the seller’s specific situation, needs and priorities. This requires counseling, asking numerous questions, and designing and implementing a marketing program that most likely will meet those needs and priorities. Agents need to have the integrity to tell their clients the truth about values in the marketplace and whatever changes would enhance the perceived value of their home. The agent is responsible for providing any other information that would enable the client to make better decisions.
It is essential that the agent gives their clients regular feedback after showings, including any suggestions that might quickly address new issues brought out by other agents. They should be present during key showings and any property inspections or appraisals and inform the seller of everything that may be of material significance. It is important that the agent endeavor to minimize any potential issues by working harmoniously with the other agent in the transaction. In representing a seller, the responsible agent will consistently provide new options, suggest solutions, and generally be creative in approaching every detail or challenge that may arise.
In northern California, most properties are pre-inspected before marketing. Some agents in our area encourage their sellers to have the property pre-inspected before doing any showings. They recommend making copies of all reports available to prospective buyers before an offer is written. They use the same caliber of inspector as most buyers’ agents would suggest, and about half the time the buyers elect to not have another inspection done. In California, all residential sales have been essentially “as is” for several years, with the buyer accepting the property in its current condition. “As is” however does not preclude a buyer’s opportunity to do full property investigations, nor does it relieve the seller from doing required state and local mandated retrofitting.
As a result of buyer’s inspections a significant number of escrows are terminated with the “fall-out ratio” being more than 25 percent as of early 2007. By doing pre-inspections and generally being pro-active, I have been able to reduce this to less than 10 percent. If a buyer chooses to have another inspection done, or elects to have supplemental inspections done of such items as chimney or sewer lines, and such further investigations bring new findings to light, at least there are far fewer surprises to deal with since the buyer already has essentially entered into the contract knowing many of the condition details.
Setting the price for a listing is a delicate issue. While many real estate agents take a strong position on pricing, others allow the seller to set the price. They provide data to give a proper perspective of the current market and often propose a range of different list prices they might choose, based on the data. In most cases, the ideal price point is between 2 and 3 percent above where the home will most likely sell.
Most top real estate agents provide widespread exposure for all their listings, both in print and on-line media. They take many digital photos of each listing and then tweak the best images to enhance every positive aspect of the home and property. In addition to advertising the properties in local newspapers and publications, some Realtors offer “Featured Home” positions on Realtor.com. Some top Realtors are willing to send community-wide direct mailings of glossy full-color large post cards. As the personal touch is always important, agents find great success through intensive one-on-one networking with fellow agents who have shown their listings in the past or are working with potential buyers that may be a good fit.
There has been a continuing increase in the complexity of the legal, environmental, emotional and transactional aspects of buying and selling real estate. It is therefore increasingly essential that every agent develop a set of systems and checklists to keep track of the details of each listing and escrow. Success or failure of the transaction or relationship often hinges on some small detail. A full team approach can help to insure that the client is continually well served. For example, I have a full time escrow coordinator, a marketing specialist and a buyer’s specialist to provide my clients with the highest quality care.
Many real estate agents hold open houses for properties they represent. Prior to the open house, sellers are counseled to maximize the home’s visual appeal by freshening up its appearance, removing clutter, cleaning windows, etc. Agents typically advertise open house announcements in the local newspaper and alert brokers through early notice in the Multiple Listing Service (MLS). The open house provides the agent with the opportunity to meet prospective buyers and make available information about the property and data to verify its value. They may also have printed information about the community and “Offer Guidelines” to begin the negotiation process.
The most effective agents continue to keep the seller informed about market activity, on-line viewings, and any general trends that may affect current values. Then if a listing has had very few showings in a few weeks, or if it has had several first showings but no second showings and the agent suggests that the price may need to be adjusted, they may meet with less resistance. Indeed, it has been my experience that if a property has no offers after two or three months, the property is probably priced at least 5 percent higher than the market value.
A resourceful listing agent will encourage other agents with potential clients to make an offer if the property has not received offers as fast at the seller had hoped. The agent will then encourage the seller to at least work with that offer and try to improve it by providing comparable sales information to the potential buyer. This may help the buyer understand the pricing and result in a contract. Agents can also inform other buyers who had shown interest but did not make an offer of any price adjustments.
Working with Buyers
Successful agents provide buyers with as much information as possible. Unlike the limited- services discount agents, well- seasoned local experts can negotiate and network more effectively with a greater likelihood of a lower purchase price. This alone may well offset any discount or rebate. They consistently communicate any new listings that meet the buyer’s needs and provide comparable sales data to educate the clients about values.
If a client identifies a property they would like to purchase and are bidding against other buyers, they must decide about what price to offer. The agent can help them decide how much they value the home by asking at what price they would regret not buying the property. That can put into perspective the price issue. The buyer can also have concerns about factors beyond the price, such as length of escrow, remodeling issues or the condition of the property. These are important to address even before discussing price.
The most common stumbling block in closing escrow in our area is when inspections uncover problems that neither party is willing to deal with or be responsible for. Again, proactive pre-inspections are the best remedy to making the escrow as hassle-free as possible. Of course, escrows can fail to close because a buyer has second thoughts, sometimes prompted by well-meaning friends or relatives. In this situation, an effective agent endeavors to keep everyone focused on the suitability of the property for the buyers’ purpose and needs, and not lose track of the big picture when small issues arise. Occasionally a seller who provides incomplete, inadequate, or inaccurate information in the disclosures stymies buyers. This can bring up a lack of trust in the buyer and it requires the agent to have sensitivity to this kind of emotional factor while dealing with the practical specific issues to hold the escrow together.
Mistakes Agents Make
Agents who come into real estate with the intention to make a great deal of “easy” money tend to find the field difficult because their focus is on what they can get rather than on how much they can give. Those who become personally involved in real estate issues, negotiation challenges, or are so attached to their own outcome during the escrow frequently cannot keep transactions intact. They then often blame others for the failure. The individual who is not really working as a professional real estate agent in the community but only has a license to represent a family member or a friend often creates challenges for other agents. Occasionally they are not willing to be present, to put forth the effort necessary to really succeed and often stop short of the point where they could have succeeded. The agents whose marketing consists nearly entirely of putting up a sign, entering the listing into the MLS, previewing the property for other agents, and then sitting back and waiting for the buyers’ agents to do the rest are the least successful agents in a buyer’s market.
The agents who do not provide effective value and are unable or unwilling to offer superlative service seek to achieve success only on the basis of discount commissions. These agents frequently fail as enlightened consumers seek the best value rather than the lowest fee for services, especially in challenging markets.
Staying on Top
Most successful real estate agents strive to continually raise the bar in all aspects of their efforts. Their goal is to steadily grow their business. They review daily their opportunities and how they have benefited from them. Many also listen to monthly recorded interviews of top agents from different areas of the country, available through such sources as Real Estate Performance Systems, Performance Coaching and Star Power. Real estate agents who want to keep their edge read or listen to several real estate industry periodicals and books. Most subscribe to professional publications such as California Real Estate, Realtor Magazine and The Real Estate Professional.
Many also communicate regularly with a coach. Some of the most successful agents participate in monthly Mastermind group meetings to determine further goals that may be helpful to them in their business and client service. Like-minded agents in other offices or areas can form these groups where thoughts, ideas, tips, and problem solving techniques are shared. Some even belong to national real estate networking organizations and often attend company seminars to keep up with the latest thinking in real estate. Successful agents are interested in information about marketing, team systems, and client services in fields other than real estate – to apply the concepts in their own professional lives. I attend an annual three-day Mastermind retreat with twelve or thirteen of the most successful agents in the country to share marketing ideas and personal growth concepts.
Some agents share their knowledge with others. They may mentor new agents, write and/or review articles, or even teach classes in real estate classes. For my part, I teach basic principles of life to others and continue exploring ways I can better understand how and why life works as it does.
Changes in Real Estate
Over the past five to ten years, the Internet has completely altered the way real estate business is done. It affects how buyers find homes to consider and it impacts the timing and ways agents and clients communicate with each other. With email and cell phones, many details and decisions are made with vastly greater efficiency and speed. The Internet has also affected the way knowledge is shared. Buyers are far more informed, more resourceful, and becoming increasingly selective in their purchase decisions.
Another significant change is the creative forms of financing. These forms allow many first time buyers to enter into the housing market and current owners to move up in the housing market. However, the creative financing programs may become very difficult to maintain as interest rates begin to float to current market rates.
Prices are likely to stabilize for a few years, with a slight upward bias, and then will begin another phase of steady appreciation as population growth continues to produce a growing demand for housing nationwide. The real estate industry is apt to continue in consolidation mode, and larger firms will continue acquiring smaller ones that have achieved some measure of local success. Marginal-producing agents will exit from the field over the next few years as sales volume slows down during the adjustment phase.
These changes will likely continue to affect the real estate market. Agents who have not successfully adjusted to the Internet generation will continue to leave the industry. Far more of the details of marketing and transactions will be conducted via email and online platforms. Agents who are willing and able to be responsive to the pace and timing of the Internet buyers will succeed and those who find ways to maintain full and balanced on-line as well as traditional media-based marketing systems will have the greatest degree of success on behalf of sellers.