Despite all the technical aspects that can be part of your business, the only thing you are really selling is the desire to do or have something and the purpose to get it. This is true of real estate as much as anything else. More and more I see people around me focusing on tools, techniques, marketing funnels and all that goes with it. It is all very fine and you need to be able to use any of these elements in order to keep your business running, but focusing on them is going to defeat any enterprise. You can only focus on people and their desires and on making sure that they can achieve them with your help.
give people motivation and make them win and they will get you money.
This evening I participated to a meetup in the area of Tampa focused on Internet Marketing. The special guest was one of the top professional bloggers in the nation who happens to live in the area and that I know because I have bought some of his materials on blogging. It was the perfect situation where the people present could have picked the brain of somebody who has managed to gain a five figure income online only by himself and through his own efforts and by blogging alone.
But the majority of the people present were asking what platform should they use to publish their blog, which theme (graphic layout) they should chose for their WordPress installation and so on, and the majority were not even asking questions. I could not believe my ears! They had a really successful blogger within their reach and they could have asked for free advice on how to establish their own success online and they were silent.
After the event, very few people exchanged some chat and I was the only one to reach the speaker, whip out my business card and fire many more questions in addition to the ones I had already done, trying to establish how his business was working and, more importantly, how his customers (students who try to become professional bloggers) were succeeding. And he told me that the vast majority of people got bogged down in technical issues and really didn’t believe they could make it, have trouble in staying focused and don’t know whether they are coming or going.
It looks a lot like the type of feedback that I hear from many fledging real estate investors: they have never done a deal and they wonder where to start from looking for the perfect “system”. Exactly the same happens in Internet Marketing training circles or affiliate marketing training circles. The fact is that where people are involved you cannot have a system: people are different, they react differently to things and therefore you need to become an expert in dealing with THEM not in technology.
There are many techniques for selling a house, but then again it boils down to people and how well you can motivate them. For example I have started marketing a house I have just finished rehabbing few days ago. I decided I was going to have a buyer fast and I already have a hot prospect: he lives just next door with his mom. He has seen the house change under his eyes, he knows it inside out and knows the neighborhood perfectly and would like to say close to mom but have his own space. He is VERY motivated. Do you thinks it is going to be an hard sale, if he can qualify for a loan? I don’t think so. Did I have to argue about the price? No. Did I have to explain the intricacies of the contracts? No. Did I have to show the house, pitching all of its amenities? No!
It’s a world made of people. They want to communicate with you and being helped, even if sometimes it looks like the contrary. Do that, and the rest will fall into place.
It is a fact, the unexpected cold weather experienced this year throughout the world has impacted home sales in the US bringing them down 7.6 during the month on January with an overall percentage of 90.4 of pending contracts signed as compared to the very high percentage of 98.7 in December 2009. We also had the effect of the rush to buy at the end of 2009 when it was not clear whether the government support to purchase was going to be extended during 2010.
Bad weather slowed home sales in the US this winter.
Some closing were simply postponed by winter storms and buyers couldn’t get comfortably to look at houses in some areas. Even in “hotter” climates like Florida we have experienced a slow down because of the combination of bad weather and the lull after the December rush.
But a very interesting fact is that, despite the bad weather and the little slump after the December rush, the overall sales in January 2010 were still 12.3 higher than January 2009. These statistical data come from the National Association of Realtors through the voice of their chief economist, Lawrence Yun (see the original article here and the video below).
The extension of the buyer tax credit program will probably determine a rebound of the sales in April all the way through June, then after June the market will have to stand on its own legs and we will see whether it is now able to self sustain itself. For one thing, banks have reduced the inflow of bank owned and foreclosure properties on the market which allows for greater stability.
Many of these “toxic” assets are being held back, preventing them to complete the foreclosure steps, or are sold at auctions so avoiding their landing on the open market.
This is a perfect climate for international real estate investors that want to fund rehab projects because the next three months will offer the best chance of a fast sale. The two key ingredients to make it fast, in my experience, are: providing a house that is a bit higher in quality than any other house in the neighborhood and price it around the average of the selling prices in the area. You must make sure it is in excellent move in condition and that it is competitively priced to the point it will appraise for the contracted selling value.
One house every 418 received a foreclosure filing in February 2010 nation wide, the proportion is of course much higher in the sand states (Arizona, California, Florida, Nevada) which are champion in the foreclosure arena, but that’s not surprising. What is kind of surprising is the overall foreclosure market that counts 2,095,030 houses at the time I am writing this article (source RealtyTrack) and its breakdown: 26% of these foreclosures are now bank owned, 40% are coming up for auction and 34% are still in the pre-foreclosure stage.
The real estate market won't get straight very soon but will offer the perfect climate for international investors.
But let’s look at these numbers again nation-wide: in February of 2010 the total new foreclosure homes were 308,524 and the sales of foreclosure properties were 45,941. This means that, nation-wide the total inventory of foreclosure homes should increased of 262,583 units. But apparently overall house sales are up 3.1% from last year (in the 0-$100K range) and the overall inventory had been reducing, even in the sand states.
Well this is easily explained by the fact that an increasing portion of the pending foreclosures are being held back from the market. Banks keep these toxic assets close to their bosom because they dont’ was to take an immediate hit in their balance sheet, they don’t want to suffer the consequences of having to hold an REO and they don’t want to flood the market with foreclosures that would reduce the overall price to their further detriment.
Therefore we can expect a constant controlled flow of foreclosures in all markets and particularly in the sand states, for still some time, until all the toxic asset backlog has been cleared. In the meantime they will be available as a shadow inventories that investors can tap into before they ever reach the auction or the MLS (Multiple Listing Service – the nation wide service used by Realtors for promoting houses for sales, including REO’s).
I was today at a presentation of some investors who are tapping into the shadow market and predict that the flow of foreclosures will continue probably for another five years at least. So the markets were prices have bottomed out or are bottoming out will take longer to recover. Nevada and California seem anyway much faster than Arizona and Florida.
So now you know. If you are waiting for better times to sell your house, you had better run. And maybe try to get in connection with some international real estate investor, like me, who can maybe give you a better price. In the average international investors, due to currency exchange advantages, can give up to 10% more than an American real estate investor, if it worth it, of course.
Sam Zell, real estate billionaire, and Warren Buffet, billionaire who also does real estate, are both convinced that the market is going to rebound nation wide by mid 2011. They also say that within a year or so the residential housing problem should largely be behind us (read the full article here). Is it good news or bad news?
I think it is very good news because the nation wide improvement will be preceded by local markets that will recover faster which means good opportunities for medium term investments, like 12 months, which are very common in today real estate market and very acceptable also to international real estate investors.
The package I am proposing to my investors right now, for example, is a 12 months package where we buy a property at a discount, we rehab very fast and put it back on the market with a lease option agreement for buyers who have less than perfect credit.
This strategy allows to get buyers pretty fast and lower holding costs, since the property starts to produce cash flow while the prospective buyers straightens out his credit and gets a loan. The whole process never takes more than 12 months which is very acceptable for an European investor who is accustomed to one or two years wait time for his investments in Europe.
So I predict a sharp rise of interest from foreign investors in the US real estate market.
Roberto Mazzoni
P.S. If you are a Realtor or an investor who wants to deal in international real estate, leave a comment on my blog of follow me on Twitter or Facebook.
Foreclosures are still abundant all around Florida and people wonder when the market will ever come back, but there is news for them. International real estate investors are making a big difference in some areas of the state and Sarasota has already begun to recover and has become a seller market in some specific neighborhoods.
A beautiful villa on the Gulf of Mexico - 3410 Flamingo Ave Sarasota
It is funny because the Sarasota market stopped abruptly few years ago when the bubble burst and suddenly prices plummeted to half the value just overnight. There was no gradual descent and now it is the first to pick up thanks to the heavy positive effect of European capital coming over. But why are Europeans preferring Sarasota to other locations in Florida or the US?
The city has definite an European flavor when you go to its key locations and there already major communities from different European countries. There are whole neighborhoods that are devoted to specific nationalities and languages. Like for example there is a huge and upscale gated community that has Italian street names, Italian restaurants, Italian tradesmen and so on. And you find also strong British, German, Polish, Russian communities.
Real estate professionals in Sarasota have heavily invested in services which are friendly to the international real estate investor: almost all major real estate brokers demand that their agents know and speak fluently at least two languages, there are attorneys and tax consultants that can provide specialized services to foreign nationals and you also find currency exchange services that can lock your exchange rate at a certain date when you are ready to buy real estate.
And, most importantly, you have banks that are willing to lend to foreign nationals, which is a rarity today in the US real estate market. The combination of all these elements, is pulling in huge amounts of capital from Europe and Realtors are frantically active in Sarasota. I have just been there and seen it personally. It is a good model that is worth imitating.
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