Using the Web and social media to sell real estate

According to a research published the the NAR (National Assiciation of Realtors) for 2009, most Realtors have a web site for presenting their own listings (63%). Actually most of them had sites active for more than 5 years (57%) and the percentage of Realtors using Web for promoting their business is growing. Yet only 3% of their business actually is coming from their online presence, how comes?

Managing their web site and social media presence can be overwhelming for Realtors and real estate investors if they don't have the right strategies and tools.

Lot of effort and in some cases also a substantial investment of time an money and so little results? It turns out that the majority of contacts with prospects and customers still happen through e-mail or text messages and the phone, but the site is recognized by many as an essential part of their business and yet it is not performing well at all.

It turns out that there is a major shift going on in the culture of a typical real estate buyer and of the typical investor, and Realtors, at the same time, need to keep up with it. It isn’t all about the merit of the individual property anymore, but it becomes more and more a relationship issue.

When we look at the figures, we see that the Realtors that fare better, much better, are those which have been in the business longer (at least 16 years) and who get a substantial amount of their business from past customers and from referrals. But even they can improve their performance particularly in terms of time spent to cultivate those referrals.

So how can a new investor or Realtor coming on the scene shorten the “learning curve” and start getting referrals and customers without working almost full time for just about 8,000 dollars a year? That’s how much a regular Realtor grosses during his first two years in business and it is no wonder that half of those who join the profession for the first time plan to leave it soon.

The problem here boils down to how you use the site and what kind of information you put in there. Of course listings are important, but I doubt a customer would need to go to an individual Realtor’s site to view  the listings. You have Realtor.com, Zillow.com and a host of other sites where you can get comparisons and and again it very seldom happens that the agent actually sells the property he is listing: it is usually sold by some other Realtor who brings in the buyer.

So why use the site just for the listings, when we already know this isn’t something customers are looking for and it isn’t what is selling anyway. Indeed lot of effort is put by Realtors in social media activities as well, but again there is no set pattern of presence, a little integration strategy and very little work on personal branding.

If I were to be giving a listing to a Realtor I would like to know what he would do for me to facilitate the sale. If I were  planning to purchase an investment property, maybe from a distance or even from abroad, I would expect my Relator to be competent and trustworthy.

The lack of personal branding is even more dangerous for new Realtors who don’t have past clients voicing for them and that cannot bring to the table a substantial amount of transactions, of experience and accreditations.

So again there is a huge space of improvement possible in the field of real estate, both for investors and Realtors looking for buyers and sellers. It is a matter of integrating and finding out what’s working and testing it as they move along. The current statistics tell us that it is definitely not working: only 3% of transactions are coming from the web. It is a clear indication that change is needed and the sooner the better.

Roberto Mazzoni

Today I share the content of a very interesting article from Robert Hann, an entrepreneur now turned marketing consultant with a specific focus on real estate. The matter discussed here is whether you should be using a blog to promote yourself as an agent or an investor as compared to purely SEO strategies and tools.

Is the real estate blog really dead?

Should you provide valuable content that improves your image but drains your time and energy with no apparent immediate result or should you just focus on getting on the first page in Google no matter what the content and then try to convert your leads? My personal answer is that you probably need to do both, but the article describes very clearly that while SEO is the real deal when it comes to business generation,  a full fledged SEO strategy is well beyond the means of the average real estate investor or agent.

Also interestingly, Hann devalues the hyper-local approach that we have seen evolving in the last few years. We have been invited by the Internet Marketing “gurus” to go local, to focus on local search keywords. here is what Hann has to say about it: “When a Big Company decides that it wants to compete in SEO for some desirable keywords, it will simply outspend the little guy and just crush him.  The focus on hyperlocal and “long tail” strikes me as the result: small companies and individual agents pick up the crumbs that the big guys let fall from the table. In other words, their SEO-based strategies are viable only insofar as some Big Guy allows it to be viable.” (read the full article by Robert Hann)

So even if SEO has a key effect on your ranking it cannot be the backbone of your marketing effort as a little entrepreneur. Yet even blogging is not enough, and here we have the opinion of Garron Selliken, a technologist and broker in Portland: “When comes to generating leads from search, the past, present and future of real estate sites is SEO, not blogging, transparency, authenticity and finding your voice.  The way to get clients is to show up where the most concentrated group of most motivated buyers/sellers are hanging out and ask for the business. This is why SEO focused content kills blogging…it is targeted directly at the relevant phrases and lands on pages designed to satisfy needs AND convert into conversation.” (the full article by Selliken is well worth reading).

Gahlord Dewald, a SEO consultant, adds more weight in reducing the value of blogging as a business platform in this article: “Online business strategy and blogging” He says that “The real estate blog may have never been alive in the first place” and comments: “Though I don’t have any data to back it up, I’d wager that for every solid, compelling and meaningful real estate blog there are twenty zombie real estate blogs: packed with stolen/poorly crafted/duplicate content that is either devoid of purpose or stuffed to the gills with SEO keywords”.

Do you think this would be applicable for many other fields in addition to real estate? I do

Roberto Mazzoni

P.S. Share you experience on this topic by commenting on this post, or simply say hi

The National Association or Realtors reports that home sales have been up, nationwide, for two months in a row. Historically-low mortgage rates result in mortgage payments that sometimes are lower than rent. Indeed the national average commitment rate for a 30 year fixed rate conventional loan fell to 4.35 per cent in September 2010, which is a record low. As a comparison, the rate was 5.06 per cent in September of 2009.

Houses have never been so affordable as today.

Lawrence Yun, chief economist at NAR, states: “A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions.” A decade ago mortgage rates were almost a double of what they are today and they are about 1.5% lower than the peak of the housing boom in 2005 and prices are 22% lower than in that time frame (in some states like Florida prices have been pretty much cut in half, really).

What is even more important, housing affordability conditions are today 60% higher than during the housing boom so it has become an even stronger buyer’s market especially for families with long-terms plan that will reap the benefits of the low rates not only now but for all the many years to come (see the original article from NAR).

The glut of foreclosure is still keeping the market down in terms of median prices, but the recovery signs are visible also in new homes sales that have risen 6.6% in September, reducing the overall inventory from 8.6 to 8 % of new homes monthly supply (see the article from Agent Genius).

Roberto Mazzoni

The Federal Reserve is joining the bandwagon of the agencies and institutions that will be investigating the behavior of banks while originating loans during the heydays of the real estate bubble. Officers have apparently been signing off loan paperwork without even reading them (see the full story at Fed throws its weight into foreclosure probe). Banks are countering the accusation by saying there is little evidence that any foreclosures were improper, but investigators are replying that some of the documentation later produced could be forged.

The Federal Reserve gets into the foreclosure fraud investigation.

So far banks have tried to play the issue down, but the new stand of the Federal Reserve, that could impose penalties on banks, is letting them take the issue more seriously now. “The banking agencies are looking into whether companies had controls in place when foreclosure documents were signed and whether employees involved in the foreclosure process were adequately trained.” On the market side, buyers are already inquiring aggressively as to the availability of proper paperwork before they buy a house that has been foreclosed on. This puts a totally new slant on the market and reduces markedly the desirability of buying a repossessed property (REO – Real Estate Owned).

So we will see buyers shifting more into purchasing from an individual seller who has been holding his house for some time and there could also be a recoil on short sales since they are anyway bank-related and they depend on the availability of documentation that is possibly not there any more. For one thing, banks will have an hard time in general and that will translate in more complexity in the selling and lending process. Several sales could be canceled at the very last minute.

Apparently there will be no easy and fast solution to the issue and the experts say it will have to be solved eventually by the states, while the federal government is also going to probably have an hard time because of it:
Foreclosuregate: BofA Thanks WH For Caving. The original international investors who bought the loans that have defaulted and that lost a fortune on them could come back now and ask the US banks to buy these loans back since they might have been originated without following the proper procedures.

Iceland was one of the main purchasers of the securities built upon these potentially faulty mortgages and is not faring well at all an a country after the massive burst of the real estate bubble in the US (see
New Mortgage Crisis in Iceland: Could U.S. Be Far Behind?), this can very well lead to a bold move to recover their money now that the so called “foreclosuregate” is coming to light.

Things are sure changing in the world of real estate, you’d better watch closely the outcome as it unfolds.

Roberto Mazzoni

P.S. Add your comments about any real life experience you have on this.

Banks have become much stricter about appraisals and loan values. Now you really need to be in the know for being able to sell your house for what is really worth and not become a victim of a low ball appraisal that will kill your sale and prevent your potential buyer from getting financing.
Aside from a general tendency in reducing values and incorporating bank repossessed houses into the market evaluation formula, appraisers have now different guidelines to follow in establishing the “real” value of a property and therefore steering underwriters towards an approval or a denial of the loan.

Evaluating houses is becoming more challenging.

I have been recently at an official meeting of my Realtor’s organization in Florida and I have gotten a very detailed explanation from a major bank underwriter of the criteria he follows in establishing whether an appraisal is good and in deciding about every single loan application that comes to his desk.

The first idea he as in mind when he evaluates a case is that the house could come back as an REO (bank owned property) and therefore the current trend in REO properties on that specific market and neighborhood is very relevant. Not only the values of recent REO sales are taken into account, but also the tie it took for those properties to sell and any peculiarity in their location.

For example, houses on a very busy street that contains mixed residential and commercial building are very unlikely to get a loan since the bank already knows that they will be very difficult to sell. They they consider four key factors in establishing the correct value:

1)The comparable sales must not be older than 90 days. If you have comps that are 6 months old or even one year old, you are in bad shape and it is very likely they won’t be considered at all and a new evaluation will be asked or the application will be denied.

2)In order to be considered a real comparable, the sold property must have a size (square feet) that is very close to the subject property: usually between plus or minus 10%. It is actually advisable to have comparables that are a bit bigger or a bit smaller (an approach technically called “braketing”) but you should stay within the 10% variation.

3)Room counts and bathroom counts must be equal. The bank will not consider a 2 bedroom/1 bathroom house as a valid comparable for a 3 bedrooms / 2 bathrooms. A 3/1 could do.

4)Distance is a bit more flexible than before. The usual role used to be that you searched for comparable properties within 1 mile radius from the subject; but now that you need to be much stricter on the square footage and the room/bathroom count, they will allow you to stretch up to 2 miles and, in some rare case, up to 4 miles. This is particularly true when you have very peculiar houses, like water front mansions, and you need to travel some distance to find something really comparable.

Age or effective age (the rejuvenating of a property due to rehabbing) are not very important and the presence of other peculiar amenities, like inlaw apartments (small dwelling units separated from the main house), are usually disregarded in the overall evaluation.

These rules are both important for investors, that now need to consider them when acquiring a property to rehab, for sellers that need to establish a reasonable value for the home, for buyers that need to make sure they can be financed, for appraisers that need to play by this tune if they want to keep their job and for brokers or Realtors that have to improve their evaluation skills to not lose sales.

Roberto Mazzoni