For his ground breaking book, "Good To Great", Jim Collins and his research team looked into just about every public company in the United States to find those companies that made the transition from good to great.  Good is the enemy of great - which is why most companies and most people never make that leap.  They are good. They are not great.  To get on Jim Collins "great list" a company had to significantly outperform the other companies in that industry for  a minimum of fifteen years.  Making the great list wasn’t going to be a fluke.  Collins first wanted to isolate the companies, then study them to find out what the great companies all had in common - which is the subject of his book.  A very interesting part of his study was also the direct comparison company chosen that had the same opportunities as the great company - but did not make the leap.  Those companies were studied, as well - to find out what they had in common.

The good to great company that made the grade in banking was Wells Fargo.  The direct comparison bank - that had the same opportunities, but did not act upon them and did not move towards greatness - was Bank of America.

Currently, Wells Fargo is the very best bank to deal with for a short sale.  The very best.  The other banks that are factually as good as, if not better than Wells (Wachovia, World Savings) are owned by Wells Fargo!

I’ve written before about Bank of America.  When it comes to short sales, from an agent’s, buyer’s or seller’s perspective, B of A / Countrywide has been, and is still currently, the absolute worst lender in the United States to deal with - and pretty much everyone in the industry knows it.

Now the good news.  A month or so ago one of the most powerful and truly influential people in real estate, Dave Liniger  assembled some top B of A executives and several United States Senators in the same room.  I think it is fantastic that Dave Liniger can contact them, tell them when and where he needs to see them and have them actually arrive.

Mr. Liniger proceeded to tell the B of A executives that their reputation - in the area of short sales was just awful.  He told them that he had about 100,000 agents with RE/Max and that he doubted very many of them would even consider directing loans to Bank of America.  He pointed out to them that if they had any hope of keeping their agent driven business they had better stop making enemies over in their short sale division.  The senators were a little surprised and dismayed at all the specifics Mr. Liniger pointed out had occurred with regard to loan modifications that never happened (after people were put on wait for six to nine months) and that the same thing was happening with short sales.

The Bank of America executives were shocked and said they had no idea such things were happening and (the good news) vowed to correct each and every one of types of behavior that Liniger had pointed out to them.  Dave Liniger is predicting that B of A short sales will soon be as easy to do as Wells Fargo short sales.

To be fair, B of A is already improving.  The loss mitigation companies they’ve hired to handle some of their short sales is not (repeat, is NOT) difficult to work with, at all.

I personally do not believe that B of A will ever consistently achieve the stellar results that Wells does.  The reason?   The executives were shocked at what Dave Liniger had to tell them - they didn’t already know.  A great executive would have not only known it was happening, they would have been able to predict it and prevent it from happening.  Great executives make it their business to know what is happening in their business.  That said, I still believe that B of A will make great strides and improve tremendously.  I want to add, I am grateful for Dave Liniger stepping up and to B of A’s top management for owning up.

Short Sales are only going to get easier!  So, THANK YOU!

I’ve personally written about B of A Short Sales before and so have many others.  I don’t know if this will get any real traction but below is an unedited (and unsolicited) email I received that was sent out to Realtors across the country.

It’s crazy. Agents are Bank of America’s biggest customer. But they treat us like dirt on short sales. It’s like we don’t matter to them at all. However, we do matter and a whole lot more than they realize. Did you know that their mortgage division is one of their largest profit generators? That means when you send them a buyer, you’re actually helping them make more money. Why are we helping them out by sending them our customers? 

Let’s simply stop sending them business. Hey, we all know they’re making money! They have enough in the bank to pay Ken Lewis seventy-one million in retirement bonuses. And now they’re paying out forty-five billion to the feds so they can hire on a new CEO. Maybe they could use that to hire on more staff to negotiate short sales. Nope! Getting a new CEO is more important than taking care of their most important customers.

Here’s the scary data. We all know that short sales save money. One study showed a 20% higher net on a short sale versus an REO. That’s a lot of money! On a $150,000 mortgage, that means a savings of $30,000. This is their Achilles heel But, they aren’t taking the losses personally. No wonder they don’t want to hire on more staff. But, it costs Uncle Sam. Let me explain.

I remember reading somewhere that 45% of BOA’s loans were owned by Uncle Sam, thru Freddie Mac or Fannie Mae. When we show the American Public that BOA is costing Uncle Sam and the taxpayers tons of money, they will be outraged. So, join me in telling them how we feel and help me get the word out on this atrocity. We can get them to hire on more staff and do a better job on the short sales. But, I need your help.

Go to my site, http://www.SSAgentAdvocate.com and sign up to stop sending your buyer’s loans to them. Do your part to help make short sales work so everyone benefits.

Sincerely,

Ben & Chris Curry - We work at KW in Gainesville, Florida

P.S. Don’t think BOA’s CEO, Ken Lewis, cares about agents. And don’t think that REOtrans is going to solve the problem either. No amount of technology is going to change the fundamental problem. They don’t have enough staff. How can negotiators even think straight when they’ve got 400 files on their desk? Would you?

REOtrans is like putting a band-aid on, when you lost your leg. Rather than take care of their most important customers, BOA think they have more important things to do. What do they consider more important than treating agents with respect? It’s paying their departing CEO seventy-one million in retirement pay and forty-five billion to the feds. Why don’t they use that money to improve their short sales?

If you think that’s outrageous, then pledge your help at http://www.SSAgentAdvocate.com .

P.P.S. Forward this e-mail to your friends. Let’s get everyone we know on board. Then, we can actually get them to change their policies. Here’s a story from one broker whose buyer got lied to by them.

"I just had the worst experience as a broker in the twenty years of selling RE. The local BOA prequalified a client of mine and gave her a prequal letter saying she was qualified for a $105,000 mortgage. I was concerned with her going to BOA  and was skeptical about them qualifying her because she had her own business and did not show a lot of income, but she had a good bit of money in their bank and I screwed up and trusted them. I tried to get her to check with another lender with no success.

Long story short,  after BOA made her pay off her car, transfer money out of CDs, having the loan processor go on vacation the day before closing without telling anyone. The final loan approval guy calls one week after the closing date to say that the Buyers ratios are over 30 points off!

I am not a mortgage broker but even I know that the first thing you check is credit and the second thing is Dept to income ratios.

The moron’s they have working for BOA allowed this poor lady to go through the expense and hassle of their loan process with Dept to income ratios that where nowhere close to being where they need to be.

They had the nerve to call her a week later to ask for a $400 fee they say she owes them for the loan process. Worst experience with a lender in 20 YEARS!" Paul. 

Pledge to stop your sending your buyer loans to them here http://www.SSAgentAdvocate.com .

Sent By: Ben & Chris Curry P.O. Box 2287, Lake City FL 32056.

If you found the above viewpoint interesting - look for my next post on the subject of Bank of America and short sales.  I think you are going to love it!

I haven’t been blogging much lately (for some months) and needed an easy one to get myself started again.  The gift to me is being able to post this here now.  The gift to you is a really (really really) cool book from Seth Godin you can download for free, here.

I think you will really like it.  I know I have.

Merry Christmas to everyone!

It’s true.  I really don’t like salespeople, I don’t like to listen to a sales pitch and anytime someone says, "I just need twenty minutes in person to explain it to you", I already know in advance that whatever it is I don’t want it.  And, for sure,  I don’t want to listen to them explain it to me.

It is also true that I have made my living on straight commission since I was 17.  I have not had a "job" or worked for wages, I’ve lived on commissions all these years.  Several times over the years people who wanted to get me to sit still for a sales pitch so they could give me a "briefing" or "enlighten me" have pointed out that my attitude on this subject would harm by business.  I don’t think so.  In fact, I believe my attitude has helped my business.

Once I am interested in buying something I do want information: whatever facts and data I might consider important.  But notice it is whatever facts and data I might consider important.  I don’t want to be "rushed".  I want to take my time.  That amount of time might only be a few seconds, but still - I want to make my decision based on my time schedule not the schedule of someone else who needs to move things along.  I don’t want to allow someone else to fixate my attention and then evaluate the relative importance of all the various "facts" for me.  That’s my job.

The person who "only needs twenty minutes" wants to attempt to evaluate - for me - the relative importance of various data and then try to tell me what to think.  All for my own good, of course.  No thanks.  I just want the facts, all of the relevant facts and then it is my job to decide which facts are important and which ones are not so important.  To me.  Those last two words are the key.  To me.  Which facts are important to me?

I believe it is the same, most of the time, with our buyers and sellers.  In most cases we wouldn’t even be talking to them for very long if they weren’t interested in buying or selling real estate (I’m pretty sure I wouldn’t, anyway).  My job is to make sure they have all of the relevant data.  It is up to them to decide which of those data are "important".  Is it a two-story home?  Single level?  Does it have a swimming pool?  How close is the school?  How much is the house?  How much have other homes nearby sold for?  Will I evaluate those last two for them?  Absolutely.  But it is still up to them to decide if it is the home for them or - if a seller - the offer is acceptable.

There are lots of examples of this but really, I want to treat them the way I would like to be treated.  The way you would like to be treated.

I believe that the success of a rain dance has more to do with timing than the quality of the dancing.  A few short years ago the discount real estate companies were being heralded as the wave of the future.  "Traditional brokerage" was all but finished.  Game over.  Now the internet based, lower fee, more modern, forward-thinking companies would dominate the industry.

Virtually all of the real estate companies that proclaimed this the loudest are either already completely out of business or have dwindled down to the point that few think of them as much of a threat to anything (except their own stockholders).  Oh sure, a few companies are still attempting more "innovative things" but eventually the venture capital folks will pull the plug on the money hemmoraging and that will be the end of this particular round of remarkable real estate sales innovation.

What happened?

Discount companies in real estate brokerage tend to fall into one of two categories: national or regional companies funded by investors (who believe there is a scalable model) or a small, local, one-man show.  Can the one-man show survive?  Sure.  Pretty much anytime anybody puts enough of themselves into anything they can make it "work".  But those people don’t have a business - they have a job.  Usually, they can’t even afford much in the way of help, let alone have a business model that is scalable.  It seems that the proponents of "let’s charge less" to drive in lots of business often overlook the obvious fact that less means less for them and less to pay for promotion.  If you take in less you have to (without increasing your overhead by very much) take in that "less" far more often and in far more volume in order to have "enough".

So how come these companies that were charging less and thereby so successful a few short years ago are now going out of business?  Yes, it is true that all companies are having a rough go of it just now but the discount companies have been hit even harder than the traditional brokers.   Glenn Cohen, the guy who started the company that later became Foxtons, here in the U.S. had this to say, about a month ago, at Inman Real Estate Connect:

"…because in a down market people are desperate to sell, and in their mind believe — whether it’s true or not, and in some cases it very well is — that the local agent of the big brand name can do a better job for them and they’re less likely to trust the sale of their home with a discounter.

I don’t say it can’t work, and there always will be a small place, I think, for flat-fee MLS and for discount. And if you develop some best practices around it you can do really well, but frankly you can’t make a whole lot of money as a flat-fee discounter, at least the way I view the business model. So it’s not all that enticing for an entrepreneur."

Why would the consumer’s perception of what is a good real estate company or a good real estate agent change?  What causes that change?  Why can’t a discount company continue to attract the consumer when the market is "bad"?  After all, they charge so much less, don’t sellers still want to save all that money?  The correct answer?  Yes, if they believe they can.  In a long-lasting seller’s market they believe they can.  When the market turns and favors buyers then sellers stop believing that "just anybody can do it".

This last seller’s market was the longest one in history.  We’ve never had a seller’s market that lasted that long before.  Historically, about two-thirds of the time it is a buyer’s market and about one-third of the time it is a seller’s market.  The "natural" seller’s market was winding down just about the time the dot.com bust happened in the stock market.  Then all of that stock market money started chasing real estate and what should have been a buyer’s market turned into a red-hot seller’s market.  This was further fueled by Wall Street criminals (like the kind at Bear Stearns) who created and caused the sub-prime mess (and cheated French, Chinese and German bankers out of hundreds of billions of dollars).  A direct result of this was that more discount real estate companies came into existence and survived than at any time in history. 

To someone who just recently arrived it did look like the game had changed and the "traditional broker" was going the way of the buffalo.  If only that seller’s market would last forever.  But it didn’t.  They never do.  Which is the "problem" that discount real estate companies have.  They thrive in a seller’s market and can’t survive well (or at all)  in a buyer’s market.  When it is easy to sell any house the value of a Realtor’s knowledge - in the eyes of the public - goes down.  Way down.  It doesn’t take much to "become a Realtor".  When anyone can "become one" and anyone can sell a house there is extreme downward pressure on commissions and most agents are seen as a "commodity" by the public.  Which agent can we hire for the least amount of money (as they are all the same, producing the same result) becomes a common viewpoint from which agents are viewed by sellers.

When the market shifts and there are more sellers than buyers (and this will always eventually occur) it is no longer true that "anyone can do it".  Few of the agents who came for the gold rush stay and even many of the old-timers head for greener pastures (as in another line of work) all agents are no longer seen as a commodity.  In fact, some are now perceived again as a fiduciary.  It is almost impossible for a company that based their entire marketing campaign on "we do it for less" to later be perceived this way.  To the exact degree that they were successful with their "we do it for less" message - they will continue to be  be stuck with that tag and perceived as "we do it for less" when what the seller now believes is "I need more".  Oddly, most individual agents (if they have their eyes open) can turn on a dime and change with the times, it is companies that are stuck.  It is companies that ran national PR and advertising campaigns.  When it comes to marketing, most agents seldom rise much above mailing postcards to a geographic farm.

The Wall Street types, the investment bankers, the marketing geniuses, the brilliant entrepreneurs who (every time there is a prolonged seller’s market) come out of the woodwork and start their "takeover of the real estate industry" uniformly achieve all of their success only during a seller’s market.  Their dance worked.  They were brilliant.  Then.

This will all happen again.  It might look just a little different next time but it will still be the same thing.  If you’re young enough you will get to see it again a couple of times. 

Remember this post or bookmark it.

Let’s talk about commissions.  Realtor to Realtor.  We do it everyday with potential customers.  Reporters can ask us how much we charge and then print our answers for other agents to read.  You can call any real estate office and simply ask them or just look on their website (if they are willing to put their fees there as most discount companies are - and I am, as well).  Would it be okay if you read how much another agent or company charges but not okay if you heard them physically say it? 

A few years ago when I was speaking at Sell-A-Bration, in front of a few hundred people - which I will be again in a few days - I mentioned commissions and several people started openly protesting that I could not keep talking about it or they would have to leave the room.  I patiently explained that I was not breaking any law, violating the spirit of any law or doing anything wrong.  In fact, I was doing something very right: I was helping fellow agents to see that they didn’t need to "match commissions" with the limited service companies (the we-do-nothing-for-less-crowd), that there were services they provided and skills that every single person in the room possessed that factually mattered; that the running dog press had "their story" prior to "researching the article" and that ingesting a steady diet of poison would make anybody sick.

A few morons continued to loudly bray that if I did not stop talking about commissions they would leave the room.  Fortunately for me the main entrance to that room was to my immediate left and was a very large opening.  So it was quite easy for me to gesture towards that doorway so someone that unobservant wouldn’t have any difficulty finding their way out.  Two or three people got up and left.  Several of the CRS instructors in the audience had also tried to explain that there was nothing I was saying (including how much my fees were) that violated any law.

What is against the law (as it should be) is PRICE FIXING.  Agreeing to all "charge a certain price".

Is it possible that someone honestly believes that I could make an announcement via a blog post (or speaking to an audience of a few hundred people) and "fix commission amounts"?  "I charge ‘X’ amount because Russell Shaw told me to"; "Once the order from Russell arrived, we couldn’t charge any less"; "All of us now charge this amount, it’s the way Russell wants it now".  Really?  If I was truly that powerful I wouldn’t waste my power on something that stupid.  And if I was going "fix commissions", I would have everyone in the country charging a lot more than me so I could get all of the business without having to try very hard.

Truth is, I am not in competition with any agents outside of my area (yes, yes, I know we really need a national MLS so all companies and agents will be free to prove they have no real knowledge or value) and I go way out of my way to help and train the agents who are here.  Customers aren’t scarce.  Regardless of what is currently happening (this day, this month, this year) I will continue to survive.  I am not afraid of any competitor, in fact, I can now see that it is because of them I have arrived at my level of competence.  Their ability to win what I wanted forced me to get better.

It does not matter to me what you charge.  Charge the amount that seems right to you (based on your area, your price range, your competition, market conditions and your ability to effectively communicate your level of value.  If you feel you must charge less because of the internet, the existence of discount companies, articles in the media, "ethical explanations" from other agents who are hell-bent on having less (for themselves and everyone else), or any other important reason to work on reduced prosperity for yourself and your fellows - I understand that nothing I am going to say or write is going to change your mind.  This is strictly for those who haven’t already gone too far down the rabbit hole.

There is an unalterable reason that discount real estate companies are having a much tougher road to hoe these days than the traditional companies they were going to replace: the fact that they are discount companies.  That’s correct, they can’t escape the fact that they positioned themselves as discount companies.  Their problem isn’t that some other discount real estate company charges even less - their problem is they are stuck being a discount company in a buyer’s market.  That is a recipe for failure.

If getting a lower fee was what the public currently actually wanted right now it would be a boom time for discount companies, yet the exact opposite is the reality.  The discount companies, both national and local (that haven’t completely gone out of business) are selling much much less than they were.  You say, "But everyone else is too" and (with the exception of REO agents) you would be correct.  But "everyone else" seems to be selling about half as much as they were during the big seller boom. The discount companies are not up that high - not even close.  Looks more like 10 - 15% of what they were doing before.  One of the top local companies in Phoenix that was at the 170 million plus range is now at the 22 million range.  One of the top national companies that used to have 14 offices here is now down to 9 and the total combined volume of those 9 offices is barely more than half of what I’m currently doing. 

Why?  Marketing.  Not "the market", MARKETING.  The marketing they did when they convinced everyone they would do it for less.  They drove that fact home and it stuck.  Their brand represents, "less cost".  And it is never going to represent anything but, "less cost".  Right now, less cost isn’t the "go button", effectiveness would be more like it.  But can’t they add to their marketing, "we’re effective"?  Sure.  And watch how effective it won’t be for them to do that.  They are positioned as lower cost.  They went out of their way to position themselves that way and they "succeeded".

In marketing it makes very little difference "how you are", it is more a matter of how "people think you are".  No one (but a fool, or an employee of theirs) would argue that McDonalds were the very best and most delicious hamburgers on earth.  But no one can dispute their phenomenal marketing prowess.  McDonalds does not simply sell more hamburgers than anyone, McDonalds sells more hamburgers than everyone.  That’s right, their total sales, are greater than all of their competitors combined.  That isn’t due to "fantastic hamburgers" - it is due to fantastic marketing.

But even big, giant, successful companies make huge mistakes in marketing.  Here is one that is currently happening:  Domino’s Pizza is taking on Subway in the sandwich arena.  Subway is number one in sandwiches.  Will Domino’s get some great mileage out of this ad campaign?  Yes.  Will they sell a lot of "Domino’s sandwiches" as a direct result?  Again yes.  Will what they are doing tend to ultimately destroy their brand in a manner they have not even considered?  Again, yes.  But any "good" will be in the short run. In the long run, no good can come of it.  Click here to see the ad I am talking about. 

What prompted me to write this post about marketing was an email I received today about a print magazine Pragmatic Marketing sends me.  I didn’t want to just say (that would have been too simple!) the following: They are changing to an online version and while I was at their site arranging for a free subscription (which you can get too) I saw that all of their past issues were downloadable right now.  Thought I would pass that along to my friends.

When I saw what my friends, John Kalinowski and  Derek & Mariana Wagner had done with this idea, like everyone else I thought, "Pretty nice.  In fact, really nice".  But I also saw that they were only using photos of the house the sign was in front of (a very 80’s and 90’s approach).  I wanted to take it further, much further.

As you can see above, my new design doesn’t even bother with pictures of the subject property - I simply use nice pictures that people will want to look at: high-end homes, Camelback Mountain, a pretty girl.

Do what you like with this idea, although I highly recommend you use nothing that is "too racy".

Also, HAPPY NEW YEAR TO EVERYONE!

One of the true pioneers of what is referred to in marketing as “positioning” is Al Ries. Al Ries and Jack Trout wrote the groundbreaking book, “Positioning, The Battle for Your Mind“. It is probably the most influential book on advertising ever written. That statement is on the cover of their 20th anniversary edition of their book. I really doubt anyone who knows much about marketing or advertising would dispute it.

My favorite book by Ries and Trout is “The 22 Immutable Laws of Marketing“. I believe anyone who is going to spend any money advertising would benefit from reading and understanding that book.

Here is a post I ran across today by Al Ries - that drives the point of one of those immutable laws home - that I thought was so good I wanted to pass it along.

The seller has a problem.  They have a house they want to sell and need to sell it at a certain price.  They hire an agent who takes on the task of selling the home.

"Maybe if you had more open houses?"

"Have you thought about running an ad in the Wall Street Journal?"

"There are a lot of people from California with money because the prices are so high there.  Run an ad in the L.A. Times."

"If you go to (large local employer) you can put a notice on their bulletin board about the house."

This is just a partial list.  The limits of the list are only the limits of the seller’s imagination.  There are hundreds and hundreds of these great ideas for getting the house sold.  Sometimes agents try them all (one at a time, of course).    Usually, the agent notices that it didn’t work.  But for some strange reason this does not prevent the agent from attempting the very same science fair project again at a later time, and surprise: they get the exact same results they did the first time.

Walking through the office about 15 years ago a very nice agent asked me if I would go in with her on running an ad in one of the picture magazines.  She didn’t want to buy the whole page herself and was looking for a couple of other agents to put one of their houses in the ad, in order to defray the cost of the ad.  I asked her why she was running the ad and her answer was, "To make the seller happy".  I asked her if she believed that running an ad in the picture magazine was very likely to sell the house.  Her answer was no, she did not think it would even help sell the house.  I told her I did not ever run ads on homes because they did not make any difference in getting the home sold.  She agreed with me.  But she still ran the ad.

It was easier for her to run that ad than it was to tell her seller the truth.  My answer to sellers on that issue is, "If an ad in the paper or some magazine was going to sell their home they don’t need an agent.  They could just run the ad themselves and save the commission."  That’s the truth.

From Anne:

ok, so if I may start my question asking. My goal is to get seller’s to stop getting so addicted to my marketing efforts and more focused on price. I feel my current listing presentation does a pretty good job (although now after star power I’m going to make it even better) as some are well trained while others act like cocaine addicts and can’t get enough of my open houses and are always calling me with new ideas to get "exposure" to their potential buyer and crap like that. Some of them I flat out tell them no and others I feel so sorry for because they are seriously in trouble if they can’t sell financially. How do I handle this? any thoughts?

Yes.  Get a subjective reality on what does and does not cause houses to sell.  Get rid of all of the little points of "reasonableness" on this subject.  The "unsolvable problem" does not exist in the mind of the seller.  I do understand that it seems like it does.  It exists in your mind.  You do not have certainty that what you are doing is enough.  There is some nagging doubt that there is "something" you aren’t doing that you "ought to do".  This point alone opens the door to all sorts of nonsense (the not very fun kind of nonsense).

If you believed that running those ads or holding those open houses (or whatever "exposure" you or they could dream up) was going to cause the house to sell, you would be doing them.  You wouldn’t need any sales pitch or prodding.  You would just do them.  There are two factors here: what works for you and what you "like" to do.  Open houses can work.  I don’t like them.  Therefore I don’t do them.  This is not a statement that others should not do them or that someone who does not know how to correctly hold a house open should not learn how to do it. 

I believe that if you re-read the first paragraph after your question and wanted a simple answer to what caused a home to sell (assuming the usual is already being done) you will come to realize what you already know: price.