Posts belonging to Category Business Practices



So You Want To Be a Broker?

Have you ever dreamed of being your own boss and opening your very own real estate office? If so, then you will want to attend So You Want to Be a Broker at TBR on April 24. The course is designed to help you decide if opening your own real estate firm is right for you. Do you have what it takes to succeed in a very competitive business? What valuable business experience do you bring to the table? The pros and cons of venturing out on your own will be discussed. Timing is critical in the opening of any new business. What is the current business climate and is now the right time to begin? The course will help you answer these important questions.  

One of the first decisions an entrepreneur must make after deciding to open a new company is developing a business model. After carefully checking out the competition in your area, you will want to decide on the type of services you will offer. Will you open a small office with just yourself, or will you decide to open a firm that relies on recruiting agents to your new company? Will you be a full-service company, a service center, or operate a VOW? Your business plan will be dictated by the choice of company you chose to operate. The course will compare the benefits and expenses of operating a franchise company with that of a non- franchise company. The course is also designed to show the cost/benefit of remaining a sales associate in various business models vs. the cost/benefit if you own the company. The course will take you step-by-step from inception to profitability by helping you figure out how much commissioned income you need in order to generate a profit. Various types of business models will be compared to show you how to figure your break-even point in each.  

A section on FREC rules and regulations is also covered to help brokers understand their responsibility to supervise the activities of their agents. Agency relationships, escrow deposits, advertising, business records, and anti-discrimination policies are some of the topics discussed.

 So You Want to Be a Broker is offered at TBR as part of the Cinema CE series, and provides three hours of continuing education.

Jane Fairall
Florida REALTORS® Instructor
Certified Success Coach
Watson Realty Corp.

At Home with Diversity

How do you treat people who “ain’t from around here?”  How does it feel to be the odd man out?  How does it feel to know you are not being understood?  How do each of us lean toward our clients and move to meet their needs—not ours?  How do you make sure everyone feels honored and taken care of?  How do you put these good feelings and intentions into a business plan?

On a personal level: is 2014 the year you want to notch up your professional business model? Is it past time to make head way on earning your CRS? Your PMN? Your CIPS designation? 

Want a fast paced class with like-minded REALTORS®?  Join us Thursday, May 1st for At Home With Diversity.

This course has two major goals:

1.  To heighten awareness of and sensitivity to the social and cultural constituencies of local real estate markets. Participants will learn about the people who make up the local market, along with their values, customs, real estate needs, and expectations of real estate professionals.

2.  To provide practical skills and tools to increase the professional’s effectiveness in servicing all social groups. Specifically, the course builds skills in cross-cultural communication and strategic business planning.

Cultural diversity is found on both a global level and just down the street, or across the state lines. How are real estate transactions viewed differently in South Florida, Georgia, Dixie County?

Let’s talk about people—and how to present ourselves as welcoming and professional, no matter what our background.

Watch a brief video about the class, and register for At Home With Diversity, May 1, 9 a.m. – 5 p.m.

Patti Ketcham
Florida REALTORS® Instructor
Ketcham Realty Group

Legal Update: RESPA

Sometimes even the Big Boys don’t get the word.

Every REALTOR® and every Board Affiliate knows that it is illegal to refer real estate closing business and get compensation back. It is an improper practice under RESPA and other laws. If you know anyone doing it, tell them to stop.

In a recent federal court case in Maryland, the judge has turned a regular lawsuit into a huge, class-action suit, giving buyers since January 2008  the possible right to sue a huge realty company and the title company with which they did many closings.

The federal suit will involve treble damages; the actual damages being sought are over $11 million. And now it looks like the Consumer Financial Protection Bureau is probing marketing agreements and affiliated business arrangements between the real estate industry and the title insurance industry.

Here is what is alleged to have happened in Maryland:

In the case of Patrick Baer, et al, v. The Creig Northrop Team PC, et al, it is alleged that the Northrop group received more than $600,000 in compensation from Lakeview Title Company. RESPA prohibits gifts, payments, compensation—anything of value—in return for the referral of business. You cannot refer RESPA deals in return for free services, discounts to you, gifts to or for you.

Northrop is no little, uninformed entitity. Creig Northrop Team, PC, is  affiliated with Long & Foster Real Estate, Inc. Northrop was ranked No. 2 in the U.S. last year and No.1 the year before in transaction volume by The Wall Street Journal.

According to the suit, Patrick and Christian Baeher purchased a home through Northrop in 2009. They were referred to Lakeview Title for title insurance and settlement services. The suit alleges that a sham employment agreement existed between the title agency and Carla Northrop, wife of Creig Northrop, and that was for the purpose of funneling funds back to Northrop in return for title closing referrals.

Mrs. Northrop, it is alleged, was shown as an employee of the title company but did not actually perform any work there, did not have an office, an email address there, nor a telephone there. Her actual employment was generally kept a secret.

Northrop and Lakeview also created a marketing agreement under which Northrop would designate Lakeview as its “exclusive provider of title and settlement services.” Lakeview then paid $6,000 to $12,000 a month for mostly unspecified marketing services. The Federal Court has already ruled that there is no record of real, joint marketing services reasonably related to the actual amounts paid by Lakeview.

So what may be a fake employment to funnel back money to a realty company, or a meritless marketing agreement to funnel back money to a realty company, all in return for referring RESPA related closing business, now has one of the largest realty firms looking at a huge class action suit.

And it is not like no one saw this coming. Ten years ago Florida attorneys for Boards of REALTORS® began preaching that the “I will rent a desk in your office” scheme was illegal. The same with “I will provide you cell phones but I get to advertise on your voicemail or website or email”; i.e., all where the RESPA service provider gives the REALTOR® something of value, in return, implied or expressed, for the return of referral of title business.

It has to be arms-length, or the REALTOR® has to cut out the practice of referring any buyer in a RESPA related matter. The latter is just unprofessional. Buyers want and need help. But if it looks, smells, and tastes like it might be an illegal referring arrangement, it should be avoided.

Joe R. Boyd
TBR Legal Counsel
Board Certified Real Estate Attorney
Boyd & DuRant, P.L.

New HUD Forms: Know Before You Owe

New HUD Forms Improve Customer Understanding, Aid Comparison Shopping, and Help Prevent Surprises

The Consumer Financial Protection Bureau (CFBP) has issued the final rule for the new integrated mortgage disclosures, combining the overlapping disclosures required by the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The new rule will, once again, change the residential mortgage and closing markets as we know them.

The new rule was issued in November 2013, but does not become effective until August 1, 2015 and will apply to transactions for which a creditor or mortgage broker receives an application on or after that date. The new forms are available for viewing on the CFPB website.

As stated in the CFPB’s final rule, a new Loan Estimate form will replace the current Good Faith Estimate (GFE) an early TILA disclosure, and the new Closing Disclosure Statement will replace the HUD-1 and final TILA disclosure.

The new Loan Estimate will combine the disclosures currently provided in the Good Faith Estimate and the initial Truth in Lending Disclosure. Lenders must provide the Loan Estimate three business days after an application is submitted by a consumer.

The new, five-page Closing Disclosure Statement basically reorganizes all of the information now contained in the three-page HUD-1 Settlement Statement. The reason behind the new form is to make it easier to read and explain at the closing table. Of great significance is the fact that the Closing Disclosure Statement must be provided at least three business days before the closing. The CFPB will need to relax this requirement or lenders and closing agents will need to make significant changes in the way we do business today. It is currently not uncommon for the settlement statement to be finalized within hours of closing, certainly not three days prior to closing.

The good news is that the CFBP has listened to our industry and incorporated some important changes in the final rule. The CFBP first issued a proposal back in July 2012 which sought to integrate the mortgage disclosure requirements of the TILA and RESPA.

Overall, it appears that the new forms are an improvement to the existing forms. As with all changes, this is yet another one that we will need to accept and change our practices accordingly.

Becky McNeal
Advantage Title Group

There’s Gold in Them There Hills

Yep, there’s gold, or as Steven Louchheim commented, silver, to be had in the hills of Tallahassee. When Barbara Corcoran was in Tallahassee recently, it was obvious that she made her fortune (Gold and Silver) by thinking out of the box in real estate.

Now start thinking outside of the box and do something that no one else has thought of. Need more listings?  More sales? How about a twofer? In open houses, many people are starting to look at the possibility of downsizing. Or, they may be in the process of deciding whether to downsize or move to another location. In either case, the majority will need to sell their homes in order to make that move.

How do you mine these oportunites? If you have been in real estate for 10 years or more you probably have a number of past clients that you have sold homes to. Why not give them a call to see how they are doing, and if they are anticipating a move. If they want to downsize and stay in Tallahassee, then you could get a listing and the sale of another home (there’s the twofer). Even if they move out of the area you would still have a listing.

So you are fairly new to real estate, or have past real estate experience, but just moved to Tallahassee. What do you do? Go into the tax rolls and find homes that have been on the tax rolls for more than 10 years. There are many neighborhoods where most of the homes have been occupied by the same owner for years. Try Betton, Waverly Hills, Midtown, several neighborhoods in the northwest, the Country Club area, Killearn Estates, and many more. Give them a call.

Another opportunity for getting the gold, or silver, is to go again into the tax roll and look for vacant home sites. Did you know that there is beginning to be a shortage of single family home sites? Either individual home sites to build on, or larger tracts where builders would be interested building a small community. Call these people. They may not have even been aware of the value of a vacant home site, or need to sell. You will never know until you call.

Now go out and look for the gold and silver in the hills of Tallahassee.

Ann Cleare
Capital Property Consultants

Planning for Success: A Conversation with Ann Brockett

Ann Brockett, REALTOR® Emeritus, recently retired real estate broker for Coldwell Banker Hartung & Noblin—and 40+ year real estate industry veteran and overall wonderful person—recently sat down with us to share her experiences, insights, and hopes for our industry as a whole and to provide a few tips for REALTORS® who are currently engaged in the business planning process for 2014.

What is it, in your opinion, that we actually DO as real estate professionals? In my opinion, our primary job is building and sustaining relationships for life. Every REALTORS®’s goal should be to “sell to generations,” not just a specific preoccupation with “Lead Generation.”  Marketing may generate leads, but personal contact and relationship development guarantees business.

What kind of local market activity and trends do you believe we will experience in the upcoming year? I believe our local market is going to heal slowly but steadily; but I don’t believe that overall appreciation rates will go up remarkably, especially in the townhome and condo markets.  Regardless, I believe that buyers will always favor the single family home and REALTORS® should do themselves a favor and take advantage of business planning workshops, professional designations, and other educational opportunities to stay ahead of all the governmental and market changes to best serve their customers.

What is the need and value of goal setting or creating a personal business plan? I have not met a REALTOR® yet who has not been successful when they took the time to create and commit to a personal business plan or some type of goal-setting process. A business plan is a wonderful tool, although as REALTORS® we have to sometimes work in the business to get to the point where we can begin to develop a realistic one. As a broker, part of my job was ongoing evaluation of agents in order to gauge their ability to succeed. There have been a couple of agents whom I counseled over the years who decided they were not “cut out” for this work and they found something else to do which suited them better;  and there have been others who were really talented but needed a “nudge” to get on track professionally.  Many offices offer business planning clinics and classes for REALTORS®, and those who are committed to the profession should take advantage of those learning opportunities.

What is the key ingredient to any business action plan? That’s easy: PROSPECTING. It is the basic ingredient for any successful real estate career. If you are going to stay in this business, you MUST stay in touch! Find out how people want you to reach them and make sure you do—either quarterly or semi-annually—and keep records of special dates/major events in their lives, as that is your opportunity to engage them in a way that is “all about them.” Here are the basics to get you started or rebooted in that area:

  • Plan to hold open houses monthly and send out those announcements to the community, your sphere of influence, other REALTORS® and invite them to help you find a buyer for your listing!
  • If you work primarily with buyers, plan to employ your sphere of influence to help find you new customers; break down your contact plan into numbers—for example, aim to send out a least 25 cards a week to your personal contacts and follow up by telephone if you have permission to contact them.
  • If you are really determined, plan to carve out three evenings per week to contact past clients, recent leads, and referrals; make it a part of your calendar! This is a friendly call—not a sales pitch—and your opportunity to add another building block to your relationship. Be sure to maintain records of family occurrences (births, deaths, marriages, separations, children, pets) so that you can have profitable conversations and avoid possible embarrassment.
  • Remember that it is so much easier to keep the business you already have; spend time and effort making every transaction a worthwhile experience and use this time to inspire customers to tell their story and create more relationship opportunities. Remember, if your customers like you, love you, and think that you are the best ,they will continue to do business with you over and over again.

What wisdom could you share with real estate agents considering what direction to take professionally in their real estate career? When I started brokering for Millard Noblin years ago, I knew I didn’t want to own my own company… that was me, though. You have to discover within yourself what YOU want to do in real estate, how you want your day to go, what you want to accomplish in life—and develop small steps and plan how to achieve small goals to keep you motivated in the tough times.

What is your view of how to positively change perceptions within and without the REALTOR® community? I am concerned about a number of issues and trends on the national level, but what concerns me the most is the need to increase the number of educated agents instead of simply driving for more membership. If we don’t do that, then our respect level and perception from the outside is not going to increase.

  • As REALTORS®, it is extremely important how we conduct our business—making sure that fees assessed and services offered are within the scope of their broker’s permitted activities and in legal compliance.
  • A powerful tool for gaining trust is by simply providing a written detail/outline of what we are “doing” for them and not assuming that they automatically know. I believe the perception of our value can be greatly increased by outlining for your customer what you bring to the table—and that will definitely “raise the bar” instantly for many customers.
  • We can positively increase our reputation on all fronts by understanding the power of good relationships with one another. Other REALTORS® are our colleagues and our customers; if they  know you, like you, and trust you they will sell your listings and help you reach your business goals.
  • We have to commit individually to continue to build trust and abide by the Golden Rule and Code of Ethics—which means everything YOU say, intend, or insinuate has to be the truth. If you do that consistently, you will be a successful REALTOR® and a success in life.

Interviewee: Ann Brockett, Coldwell Banker Hartung & Noblin
Interviewer: Christic Henry, Kingdom First Realty

The Pre-Listing Inspection

REALTORS® know how to get a house ready for market: paint, stage rooms, clear surfaces of clutter, have sellers remove half their belongings, and create curb appeal. However, the most important pre-listing task may be to get a home inspection –especially in older neighborhoods. At minimum get a four-point inspection so you’ll know ahead of time if there are issues that would make getting insurance difficult for a buyer.

So many contracts fall apart at the point of inspections. Issues identified have to come up eventually; why not have them come up before you’ve started marketing?

It is not unusual for a home that is older than 15 years to have one or more major issues show up in the home inspection. Often, the owner does not know of these issues. Even the best maintained homes can have hidden issues in those attics, roofs, toilets, and crawl spaces. Most sellers are surprised when this happens and it can be a challenge to get agreement about who pays for these unexpected repairs after an offer has already been negotiated and accepted—that is, if the buyer is still interested in moving forward. Bad inspections can discourage even the most enthusiastic buyers.

While this is another initial expense for the seller, the Pre-List Inspection will likely:

  • Save the seller money and angst. She or he will know ahead of time what issues will likely come up and adjust the price accordingly or get repairs done ahead of the curve.  No surprises.
  • Create more buyer confidence in purchasing an older home. Repair items have already been identified before an offer is made and necessary repairs done. This can often encourage a higher offer.
  • Aid contractors in making repairs. The written email report with pictures and descriptions of problem areas can be easily sent to repair folks for quick and easy estimates.
  • Help the transaction go more smoothly. Everyone’s needs are considered up front and issues may already be resolved at the time of the contract offer.
  • Bonus benefit:  it will save us time and angst. And our sellers and buyers will be happier campers.

It is so much more pleasant to go to a closing where everyone is feeling good.

Be sure inspectors you use are licensed, insured, certified, and experienced. Often you can work out a discount with one or two companies for the pre-list inspections. The Tallahassee Board of REALTORS® has a list of inspectors who are Board Affiliates.

Terry Anne Kant
Kant Realty of North Florida LLC

Know Before You Show

Long before the Internet gave us access to every property on the market we knew the rules. If we wanted to sell something out-of-area, something that had not been entered in our own MLS, we knew we had to call the listing broker to determine what compensation, if any, they would pay a cooperating broker. The responses varied widely. The one thing you never did, unless you like working for free, was write and present an offer just assuming you would be paid.

Now our listings are routinely marketed for us all across the country—Realtor.com, Homes.com, Homefinder.com, hundreds more. Individual companies’ listings are syndicated routinely. For REALTORS® only, we even have RPR (REALTORS® Property Resource). In short, all the information you need to find the right property. Only one thing is missing: the offer of compensation. It is often mistakenly assumed these properties can be treated as if they were a part of our MLS system, and therein lies the rub. The MLS offers cooperation AND compensation to its participants. Nonparticipants are offered cooperation only. So we are back to the old rules: ask if the broker will compensate you in a sale.

And if you question it, this excerpt from our NAR Code of Ethics should say it all:

Article 3
REALTORS® shall cooperate with other brokers except when cooperation is not in the client’s best interest. The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker. (Amended 1/95)

  • Standard of Practice 3-1

REALTORS®, acting as exclusive agents or brokers of sellers/ landlords, establish the terms and conditions of offers to cooperate. Unless expressly indicated in offers to cooperate, cooperating brokers may not assume that the offer of cooperation includes an offer of compensation. Terms of compensation, if any, shall be ascertained by cooperating brokers before beginning efforts to accept the offer of cooperation. (Amended 1/99).

Just know the rules before you show. Simple courtesy will usually get you a resounding “yes” from the listing broker and, generally, a smiling reply, “How can we assist you in selling our inventory?”

Rae Roeder
Rae Roeder Realty

Florida REALTORS®: Another Year, Another Convention… Why?

For those fortunate few who attended the 2013 Florida REALTORS® convention in Orlando, and especially those who attend regularly, this piece is not needed. If you are not in this group, let me ask you to think about it.

An Amazing Offer. For the four or five days away from your business, you are offered enough quality educational updates to keep you current for the coming year. We received critical information regarding hurricane insurance; attended education sessions on both NAR’s REALTORS® Property Resource (RPR) and Florida’s Form Simplicity; received updates on MLS data syndication; heard the impact of changes to Fannie Mae; learned requirements for managing rentals; and attended computer user groups (50 Apps in 50 Minutes!)—and far more than I can remember.

It’s not all dry instruction, though. This year’s opening session was both entertaining and mind-expanding with a program by HGTV stars of The Property Brothers. If you can make money laughing, what could be better?

Another question to consider: Who is using the latest money-making technology and who is changing with (or even before) the market? My answer: Trade show attendees who bring these programs and forward-thinking strategies back from the convention with them, incorporating new ideas and tools into their business.

Don’t miss out next year. Mark your calendar now to attend the 2014 Florida REALTORS® convention, August 13-17, 2014 at the Rosen Shingle Creek Resort in Orlando.

Rae Roeder, CRS, e-PRO, GRI, SFR, SRES
Rae Roeder Realty

PDC Update: Improve Your Business

We all want more business and to make more money, yet many of us keep doing the same thing and expect great things to happen. As Albert Einstein said, “Insanity is doing the same thing over and over again and expecting different results.”  TBR is offering YOU the opportunity to break that cycle. Two outstanding classes are scheduled in September to help you improve and build your referral business and ultimately make more money. I know all of us want to build a stronger business. What worked seven years ago is not working now, so it is time to learn how to address the current market.

Prospecting and lead generation are the most important sales activities, and probably the most neglected. There is so much for a REALTOR® to do and such little time to get it done. Both of the classes listed below will address your referral business. A two-day CRS class in September will focus on all the essentials for refocusing your business plan to a customer service-centered, repeat, and referral business. A three-hour class will focus on systems that will save you time and money, while keeping you in touch with your sphere. Both classes will address the expectations of customers and how those expectations have changed over the years. In the end, you will have the tools to create a productive referral business to boost your business.

September 25-26, 8:30 a.m. – 5 p.m. each day
Building an Exceptional Customer Service Referral Business (CRS 210) 

September 27, 9 a.m. – Noon
Turn It On Automatic – Serving Repeat and Referral Customers 

Take these classes and be on your way to earning the valuable CRS designation. Don’t be Average. In this market, average isn’t enough. Compared to the average REALTOR®, Certified Residential Specialists are statistically three times more successful. Annually, CRS agents earn nearly three times more income, have more than three times the transactions, and three times higher annual gross sales. That’s a lot of “times three,” but more importantly, that’s a lot of success. Just take a look at the top producers in Tallahassee. What percentage of them have earned the CRS designation? Now is the time to start or continue your climb to be an Above-Average REALTOR®!

Miriam Nicklaus
Chairman, Professional Development Committee
Armor Realty of Tallahassee