Don’t Let the Market Keep You Up at Night

The real estate market is one that needs a level-headed approach. There are a lot of outside forces that make predictions about the market’s performance for the next quarter, year or decade. However, as we saw in the previous quarter, while economists warned about rocketing interest rates, remarks from the Federal Reserve seemed to calm those worries. In any case, you as an agent ought to be adaptable to the market, both if and when it cycles.

This blog will explain how to avoid the relentless stress and nerves that come from various market predictions. You’ll see what the real estate professionals at Baird & Warner predict for the future market, as well as their tips on drowning out the noise and being an agent who can adapt with the market. If you’re part of the TL; DR crowd then start your free seven-day trial of AgentEDU today and watch the full course, “Learning Your Real Estate Market.”

 

What’s around the corner

Baird & Warner President and CEO Steve Baird stated in a video exclusive to Chicago Agent magazine that 2019 will be a good year for the market. He used rising wages, low unemployment and the economy to bolster his prediction. Baird & Warner President of Residential Sales Laura Ellis made similar positive predictions for 2019. Ellis mentioned, “When I look into my crystal ball, I’m very optimistic for 2019. With unemployment low, with rising wages and the market coming into more of a balance, they both saw the coming of a “very favorable environment.” The situation gives perspective homebuyers an advantage; higher wages and a good economy may place them on good footing.

Although Baird notes that 2019 will face a bit more headwind than the previous year, he blames this on interest rates; as they went up roughly half a percent in the last year. However, he mentions that slow incremental increases to the rates won’t affect the market as much.

 

It’s when, not if

Both Ellis and Baird noted that the will market shift, albeit in a slow manner. One thing that every agent needs to be able to do is adapt to inevitable market changes. Ellis explained that change is on the horizon and real estate offices and agents will need to be prepared to adapt. “Even when the market cycles – it’s not an if, it’s a when. We just have to be paying attention and we need to be able to shift how we’re doing business, how we’re dealing with those changes,” Ellis stated in the video.

A recent whiff of a possible shift is evident in the fact that the Illinois Association of Realtors reported home sales in January were down 22.9 percent year-over-year, however, they also noted the continuing list price increases, as well as a three percent increase in inventory over last year. The association mentions the rough weather and government shutdown as possible factors, but others still worry if this will be a continuing trend.

 

Food for thought

With factors like rising wages and low unemployment, there is little to worry about regarding the near future. Nonetheless, both Ellis and Baird note that market cycles are inevitable and factors like interest rates could play a role in the future. They state that agents and real estate brokers must pay attention to the indicators and be ready to adapt to the market. Wage growth, unemployment levels, list prices, inventory levels, interest rates and other indicators are key factors in being prepared. Failing to be prepared can cause confusion and unease; both for you, as an agent, or for your brokerage. It’s better to be ready.

To learn more about becoming an expert on your market and understanding market indicators, start your seven-day free trial of AgentEDU and gain access to our “Learning Your Real Estate Market” course.

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How to Help Your Frustrated Homebuyer

The home-buying process is one that requires patience and understanding of your clients’ needs. Also, a good agent keeps up with how their client is feeling. If a homebuyer is frustrated this can create some difficulty in the process. As an agent, you must properly assess the situation and provide guidance to your homebuyer to ease the frustration.

This blog will explain where this frustration stems from, has it changed and how you can create a better experience for your client. If you’re part of the TL;DR crowd then start your free seven-day trial of AgentEDU today and watch the full course, “Representing buyers.”

In today’s technology-driven society, almost anything can be done on a smartphone. Therefore, it has been widely assumed that the process of home shopping is easier today that ever before. However, a recent survey by the National Association of Home Builders finds that more Americans are frustrated in the process.

 

Homebuyer expectations

The NAHB polled nearly 17,000 people over two months, and of those polled, 13 percent considered themselves prospective homebuyers at the time. A majority of them were first-time buyers in the millennial demographic.

Seventy-two percent of these prospective buyers said they expected the ongoing home-search process to become “harder or about the same” in the months ahead. Only 19 percent said they thought it would get easier. One of the top frustrations for home buyers is the inability to find an affordable home. Fifty-two percent of millennial respondents, the largest prospective home-buyer demographic in the survey, cited price as the toughest barrier in buying. Price is key in any home search, which is why thorough communication with your client on this topic can create a smoother home search.

 

Obstacles for homebuyers

It is possible that price growth and inventory shortages are taking a toll on homebuyer confidence. When NAHB conducted this same survey last year, fewer prospective buyers (65 percent compared to this year’s 72) said they thought their home searching would get harder in the months ahead and 27 percent expected the search to get easier.

Price growth is one aspect that impacts both the buyer and seller. The buyer wants the best deal whereas the seller wants to make a profit. More than three-quarters of buyers surveyed said that at least half of the listings in their market were outside their price range. 49 percent of respondents stated that they could not find a home at a price they could afford. This is up from 42 percent a year ago.

The inventory storage is an obstacle that homebuyers with specific desires hits the most. In NAHB’s Housing Trends Report, 40 percent of active buyer respondents said they were specifically looking for an existing home rather than new construction. Appropriately negotiating price brackets and understanding homebuyers’ wish lists for their homes is key in creating a process where both parties can understand expectations.

 

Road ahead for buyers

Even with all the obstacles and frustration in the process, these prospective buyers generally planned to continue actively searching. When asked what their next steps would be if they could not find the “right” home in the next few months, 63 percent of respondents said they would simply “continue looking until the right home opens up in a preferred location.” Forty-four percent said they would expand their search area in response. This means that homebuyers may be frustrated, but they are dedicated to find their dream home even if it means opening search areas or spending longer times searching.

Home shopping has its obstacles, and recent inventory shortages in unison with price growth can amount to frustration. Those are aspects you cannot truly control. You can, however, guide your client into realities and make the home search process much less stressful. By discussing plans with your client and having an understanding of their concerns, you can alleviate some of that frustration. Check out our AgentEDU course dedicated to understanding buyers. If you start a seven-day free trial, you’ll have access to our “Representing Buyers” course.

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How to Create Accurate Job Descriptions

As you plan to bring on new people, evaluate which job responsibilities you should delegate, share and keep in your care. It’s best to start slow, adding one role at a time, while learning what you really need operationally and financially. In this blog, we will review three of the most common team member titles, job descriptions, and compensation models. This is to help you compare your needs with the current industry standards and hire appropriately.

If you’re part of the TL;DR crowd, start your seven-day free trial of AgentEDU today to access the entire team building track and watch the full course, “Team Members Job Description and Compensation.”

 

Team assistant role and compensation

This administrative position will help you organize, track, manage and coordinate any area of your business. Your assistant can be licensed or unlicensed, depending on your needs. A licensed assistant can answer questions for clients and even show homes. An assistant is often suggested as a good first hire because they can free up the time you currently spend on administrative work, allowing you to focus more on profit-building tasks. A team assistant will not directly generate income for your business but may indirectly help you grow by allowing you to serve more clients.

A full-time assistant will require an hourly wage or salary, plus benefits, and will require a larger investment than . Real estate assistants often make between $30,000-$45,000 a year, plus bonuses and benefits, depending on your market. You’ll need to withhold income tax, state taxes, Social Security and Medicare taxes. These payments can add up to 15 percent or more to the cost of their total salary. You’ll also have to report all of this to the IRS. Additionally, you may need to provide office space, workers’ compensation, errors and omission insurance and health care benefits. You may be required to include them on your auto insurance policy.

 

Buyer’s agent role and compensation

Some agents prefer to focus their own work on listings, and need help representing buyers. Since buyers often require more of your time and attention than sellers, hiring someone to manage the buyer side of your business could make a lot of sense. Buyer’s agents show houses to clients and convert showings to sales on properties of interest to the buyer. A buyer’s agent will also understand the current marketplace and financial implications of investing in various neighborhoods. They will help buyers narrow their search based on needs and lifestyles and can bring new perspectives to your clients. And though the buyer’s agent only focuses on buyers, the right hire can bring a more diverse understanding to your business as a whole. He or she can serve as an advisor to you and other agents.

A buyer’s agent is typically paid a small salary plus commission. The commission for buyer’s agents is typically up to 50 percent, after expenses are paid. Splits may be adjusted to differentiate between team-generated leads, which may generate a 40/60 split, and agent-generated leads, which could be a 60/40 split. The selling point for this position is that a buyer’s agent is more likely to make more money in a team setting while handling the side of the transaction that they prefer.

In order for a buyer’s agent to be successful on a team, the team must have a high-producing buyer’s agent. Buyer’s agents should show properties and close deals, with the help of the team’s lead generating marketing efforts and administrative assistance. Your compensation models should hold agents accountable for their productivity.

 

Listing specialist role and compensation

A listing specialist can either bring in the listing or step in once the listing agreement has been signed. A listing specialist will represent the seller and oversees all aspects of the seller’s transactions, from initial contact through closing.

The listing specialist may prepare all materials and documents for the listing as well, including marketing materials, listing agreements, disclosure statements, market analyses and online property profiles. The specialist will also conduct the necessary research to advise on the sale price of the property, and work with the sellers to take photos, stage the property and make repairs.

Like a buyer’s agent, listing specialists may be paid a small salary, but the role is largely based on commission, up to 40 percent of the net profit. Base salaries for your listing specialist should depend on the experience level of the agent and your local market. Salary compensation should be strategic to inspire productivity. Like the buyer’s agent, generating their own leads and closing deals is a main priority. They should be held accountable for their productivity and compensated appropriately.

Plan to start slow as you hire new team members, and grow your team by one position at a time. Pay your team members competitively and based on their productivity to retain them and support your financial success. To learn more about how to fill out your roster and create accurate and useful job descriptions, start your seven-day free trial of AgentEDU today and watch the full course, “Team Members Job Description and Compensation.”

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Opening your own brokerage in 3 steps

Increased earning potential, financial freedom and control over their vision of business are the main reasons real estate agents start their own brokerage. However, there are a lot of challenges associated with starting and running your own brokerage. It means more work for you, at least at first, and more risk. So, you have to be certain your reasons for hanging your own sign are the right ones.

But if you plan properly and employ the right business model, owning a brokerage may be right for you. In this blog you’ll learn how to determine if you’re ready to open your own brokerage. If you’re part of the TL;DR crowd then start your free seven-day trial of AgentEDU today and watch the full course, ‘Are you ready to open your own brokerage?’

Before reviewing the steps of the planning and transition process, think about what you can confidently take on and where you may need some help. These are important things to consider before you decide to go out on your own.

Ask yourself these questions:

  • Do you understand the financial and personal risks, and are you willing to accept them?
  • Do you feel confident that you can manage and run all aspects of your own business?
  • Have you put your financial plan together? Do you have enough capital to support your efforts?
  • Do you have the right people lined up to join your business? If not, do you have a recruiting plan?

If you answered “yes” to all of these questions, then you could be a good candidate to open your own brokerage. But there is a lot that you need to know before you do.

 

Have an exit plan

Make sure you account for potential practical, political and emotional issues when leaving your current business. You’ll still need a strong professional network once you open your brokerage, so make sure you don’t burn any bridges during the transition.

Think about these questions:

What will the process be? Who do you need to speak with, and when? How will your current brokerage react? How will you handle any sales that are currently in process? Does your brokerage have your database, and do they have the right to use it after you leave? What if other agents want to leave with you? Where will your new office be? Would your new office be in direct competition with your current office? What are your obligations to the brokerage, the managing broker and other agents in the office?

Along with an exit plan, you’ll need to write up your plan for the new business.

 

What will your business model look like?  

Begin by deciding on a business model. What specialties will you offer? How many agents will work with your brokerage? How will the brokerage support them?  Outline the roles you will play, as well as any additional responsibilities you’ll have to take on. Figure out which roles you need to hire for. Use technology to help fill in the services you lose by separating from your old brokerage. Draw up a transition plan for your team that details how workflow will continue through the changeover.

 

Become an expert on your financials

Nothing can happen until all the financial pieces are in place, so you’ll need to be an expert on your budget. Opening your own brokerage will require a financial investment. Can you fund the start-up costs on your own or will you need to borrow capital? What about investors?

Many businesses fail because they are under-capitalized. Make certain that you have enough capital to manage startup costs. Plan to cover operating expenses with savings for at least six months, including rent and utilities. You’ll need to budget for office equipment and marketing expenses. Make sure to include insurance costs for your business, fees for any online services you use, membership fees and other miscellaneous items.

To learn more about the financials needed to launch your own brokerage as well as your next steps, start your seven-day free trial of AgentEDU today and watch the full course titled, ‘Are you ready to open your own brokerage?

 

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