The Real Estate Industry is Ripe for the Taking

Norm Brodsky is a veteran entrepreneur who has founded and grown six different businesses in his lifetime. In 2007, he sold one of his businesses for over $100 million. Mr. Brodsky is a columnist and senior contributing author to Inc. magazine and recently penned a great article about starting a new business. While his topic might have been general, he certainly had the real estate industry pegged.

                       

Mr. Brodsky posed the question, “instead of searching for the ‘next big thing’, how about going into a business everybody already understands?” To define a business everyone already understands, he gave three specific points: a business that has been around for more than 100 years, an industry that is a little antiquated, and one that has the potential for you to carve yourself a niche. The real estate industry easily passes the first requirement. The real estate industry has been around for well over 100 years in the United States, and over 1,000 years in Europe and Asia. (If you think about, real estate as a product has been around for over 10 billion years.) A business that has been around for over 100 years does not need to be hyped or advertised. People know the basics of how the real estate industry operates.

Secondly, the real estate industry is antiquated. Other than the advent of the Internet – which radicalized all industries – the real estate industry has remained far behind in terms of a true shift in culture and behavior. Real estate agents 100 years ago still showed their clients various pieces of property in person. The only difference between a showing appointment today and a showing appointment 100 years ago was the means by which the agent and the client arrived at the property. Yes, there have certainly been improvements to the systems and techniques real estate agents use on a daily basis, but there has not been a theoretical shift in how the real estate industry operates. The real estate industry is antiquated, and the sooner real estate professionals find a way to stay ahead of the curve the better for those professionals and the industry as a whole.

Finally, according to Mr. Brodsky, a business must have niches. Without niches, although the industry may be well established and be antiquated, the business would not be open to growth. Take restaurants for example. Every restaurant does not serve every kind of food; instead, every restaurant offers its own unique menu of foods. So too does the real estate industry have the ability for professionals to create a unique niche. A commercial real estate agent can focus primarily on medical offices. A residential real estate agent can focus primarily on high-rise condominium buildings. Or, a real estate professional can focus on investment or distressed properties that need renovations.

If you are thinking of entering another industry instead of the real estate industry, I challenge you to examine that industry to see if it passes Norm Brodsky’s three requirements for a powerful, sustainable business. If the other industry does pass these three requirements and your mind is more engaged by the other industry, I encourage you to enter that industry. But, if that industry does not pass the test, I strongly encourage you to take full advantage of all that the real estate industry has to offer.

Why You Should Work with a Realtor

The following blog post is a direct excerpt from the National Association of Realtors.

Not all real estate practitioners are Realtors. The term Realtor is a registered trademark that identifies a real estate professional who is a member of the National Association of Realtors and subscribes to its strict Code of Ethics.

Here are nine reasons why it pays to work with a Realtor

1. Expert Guide
Buying or selling a home usually requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page settlement statements. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes.

2. Objective information and opinions
REALTORS® can provide local community information on utilities, zoning, schools, and more. They’ll also be able to provide objective information about each property. A professional will be able to help you answer these two important questions: Will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

3. Finding the best property
Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your Realtor to find all available properties. Or worse, it can advertised on third party websites but no longer on the market. Take advantage of the knowledge and expertise a Realtor can provide when searching for your next home.

4. Negotiating experience
There are many negotiating factors, including but not limited to price, financing, terms, date of possession, and inclusion or exclusion of repairs, furnishings, or equipment. In addition, the purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

5.  Marketing power
Real estate doesn’t sell due to advertising alone. In fact, a large share of real estate sales comes as the result of a practitioner’s contacts through previous clients, referrals, friends, and family. There is a distinct difference between passive and active marketing.

6. Real estate has its own language.

If you don’t know a CMA from a PUD, you can understand why it’s important to work with a professional who is immersed in the industry and knows the real estate language. 

7. They are professionals
Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you’ve done it before, laws and regulations change. Realtors handle hundreds of real estate transactions over the course of their career. Having an expert on your side is critical. 

8. Buying and selling is emotional
A home often symbolizes family, rest, and security. Because of this, home buying and selling can be an emotional undertaking. Having a concerned, but objective, single agent who is dedicated to your (and only your) best interests is incredibly valuable.

9. Ethical treatment
Every member of the National Association of Realtors makes a commitment to adhere to a strict Code of Ethics, which is based on professionalism and protection of the public. You can expect honest and ethical treatment in all transaction-related matters. It is mandatory for Realtors to take the Code of Ethics orientation and they are also required to complete a refresher course every four years.

Not every real estate agent is a professional Realtor. Make sure you thoroughly examine and vet your next real estate agent to make sure they are a professional Realtor before asking them to sell your home or find your brand new dream home.

4 Key Qualities for Today's Real Estate Agents

The role of a real estate agent in today’s economy is markedly different than the role agents played 30, 20 or even ten years ago.

It is important for all parties involved in a real estate transaction - including buyers, sellers, renters and agents - to understand these significant changes. As a buyer or seller, you do not want to work with an incompetent agent. As a real estate agent, you want to keep your skills useful and up to date to best serve your clients.

So what exactly does it take to make a good real estate agent today? Well, here are the 4 most important qualities in today’s real estate agents.

Be a Transactional Guide

This feature was valuable in an agent 20 years ago, but is just as important - if not more important - today. In years past, agents were gatekeepers of information. Today, that information is readily available through services such as Zillow, Trulia, and Realtor.com. So instead of relying on a wealth of “hidden” information, agents must now serve to interpret this now public information for their clients.

A good transactional guide will advise clients of various mortgage and loan strategies; they will pay careful attention to the specific terms and details of all of your contracts; and they will oversee the various parties and service providers involved in the real estate transaction.

Have a Deep, Local Expertise

In the age of Big Data, there are countless sources of helpful information regarding homes, neighborhoods and cities across the country. The role of a real estate agent is to study and analyze these numbers and present it to the client in a way that reflects their needs and wants.

The website WebMd contains a plethora of information on all issues related to health. However, only a doctor should use this information to diagnose a patient. Similarly, Zillow and Trulia contain a wide range of data on the real estate market but only a real estate agent is best suited to interpret this data for the buyer or seller.

Be a Good Negotiator

Today’s real estate market is competitive. Homes sit on the market for less than a few days before receiving multiple offers. Homes receive offers that are several thousand dollars above asking price. There are fewer qualified home buyers in the market than years past. With such cutthroat conditions for buyers and sellers, how can you navigate these heady waters?

Real estate agents - good ones, anyways - are trained in the art of negotiation. They are sales professionals, and sales professionals understand the nuances of making a good deal. They also know the market better than anyone else, and have hard numbers to back up their art.

Be a Good Marketer

In the old days, a home was sold through the MLS and by placing ads in the newspaper. Today, anyone with Internet access and a Twitter account can be considered a marketer. How can you differentiate your home (or your buying prowess) to potential buyers (and sellers)?

The answer is a real estate agent who understands where buyers and sellers are looking for homes, how they are looking for homes, what type of home features sell a home, and what financial qualifications make a buyer more appealing.

Unlike the travel agents of days past, a good real estate agents will always be in high demand. While purchasing a plane ticket is a relatively frequent, standard, and inexpensive process the purchase or sale of a home is infrequent, contract-based, and often expensive. It is these qualities that make a good real estate agent desirable and it is those four important traits that separate today’s real estate agents from agents long ago.

A Real Estate Improvement Company

The real estate industry has many unique facets and players. But no matter what role you play or how what you do in the real estate market, there is one important goal that everyone should keep in mind.

When you consider real estate, you should consider it as an investment. And when you think of the criteria involved in making a good real estate investment, you must examine and analyze the utility and the value of such an investment.

Another way to look at utility is to look at usage. Is a particular property being used to its highest and best usage in accordance with all local laws and statues? In other words, can I put four different townhouses on this large residential lot on a busy street and receive more income in rent than I would be able to charge if I only had a single-family home on this property?

When we talk about value, we think of cost and we think of price. Can you sell a particular property for a price more than the purchase cost? If so, your property has positive value. If not, you property has decreased in value.

The goal of a real estate improvement company is to maximize both the utility and value of a property. We can do this through investing, managing, developing, and marketing a particular property.

To take our previously stated example of the townhouses, we will take a look at the utility and the value. With regards to utility, we have certainly increased - or improved - its utility. We now house four different families, versus just one previously. When looking at the value, we have increased the net operating income of a property thereby increase its value.

But just how much did we increase the utility and the value? This is where a real estate improvement company will come in hand to determine just how much utility and value this project provided versus other similar (or different) projects.

When looking at a piece of property, think about what the best usage of that property could be. Then, think about if that type of project is feasible on that property. If you have mastered those concepts and kept those goals, you have yourself a real estate improvement company.