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RISMEDIA, October 1, 2009—It’s the land of Celluloid Heroes, the place where “everybody’s a dreamer and everybody’s a star.” It’s the place where “success walks hand-in-hand with failure, along Hollywood Boulevard.”* It’s where homes sometimes sell for sums of money too ludicrous to contemplate to people who make fortunes for acting–sometimes badly. It’s Hollywood, and it’s where Johnny Johnston of Sotheby’s International Realty makes his living. 

Not every home buyer in the heart of show business is a star, of course—but they all expect to be treated like one. Whether they are buying a bungalow in Los Feliz for a million or so, or a palatial estate in Beverly Hills for a price equal to the GNP of some small countries doesn’t really matter. You see, the rich and famous are different than you and me, but they are not different in what they want from a real estate professional: they want knowledge, integrity, selection and value. 

Likewise, selling homes in this market is not all Beverly Hills and Hollywood glamour, either. There’s staid Hancock Park, funky Silverlake, totally hip West Hollywood, and all the neighborhoods surrounding Downtown Los Angeles. Love it or hate it, it’s what makes LA such a unique place. As you can imagine, it’s hard to successfully straddle all these different markets within-a-market as some of them have nothing in common with each other except proximity. 

Somehow, Johnny Johnston manages to do that. He is unusual because in his five years of selling homes, he has not limited his efforts to one area, as is so common with agents. “I resisted becoming a niche Realtor,” he says, “I try to cover as much of this city—and its diverse spectrum of buyers—as possible. My clients range from first-time homebuyers to savvy investors.” In such a moving market, Johnston had to decide how to target his marketing and his marketing funds. Two years ago, he decided to make a presence for himself on the Internet. 

“I find buyers and sellers through three channels,” Johnston reports; “I find them through referrals, open houses and my Internet marketing. I stopped paying for fliers and mailers; I only market online.” 

Some fascinating observations about Internet Marketing
“When I look at my present active clients–and sales that I’ve closed this year- 40%-50% of all my sales are through Internet leads–or second generation referrals from Internet leads,” Johnston told me recently. “I’m not generating a high number of leads every month, but the leads I do generate prove to be valuable ones– ones that perform and close. I’ve found that the people who sign into my ‘lead capture box’ sometimes don’t prove to be real, but people who email or call me directly from the site almost always close. Prior to subscribing to an online marketing service, my website did nothing to generate leads. It was a pretty calling card–but served no purpose in terms of soliciting or generating new business. People only went to the site when I sent them there–and they were already clients–essentially, it was useless.” (Johnston could be speaking for the 95% of agents who fail online with those comments, because that is precisely why 95% of agents do fail at online marketing: their website does nothing to generate leads). 

Now that Johnston’s site is generating real leads for him every month, he’s made some other observations that are telling: “The entirety of my marketing campaign has shifted to the Internet–and almost exclusively to CompassSearch and the work they do. They have proven to be the single most effective lead generator that I’ve established for my business. I consider myself a very approachable agent and I still have a higher return rate with leads from my online marketing than through any other method. 2009 looks to be one of my best years yet and that’s due to my success online.” 

He has seen the light of Internet success
When I remarked that having his best year yet in this market had to be satisfying, Johnston also told me what made him love his new status as an Internet marketer even more: “What I love most about it is that it’s effective. It amazes me how few people around the market are tapping into it. I still hear people talking about mailers and door knocking and cold calling… I’ll never do them. And while I have to give my online marketing services supplier (CompassSearch) full recognition and props, I’m hoping it won’t let the cat out of the bag–because the last thing I need is my competitors becoming savvy to the efficacy of Internet marketing. One of the things I love about this type of marketing campaign is that it’s self-propelling and sustaining. Besides having to put new listings on my site occasionally and making sure the art is current, this is a campaign that runs 24/7 and is targeted exactly where I want to be seen. I don’t have to come up with a new flier or a new gimmick to mail out every 6 weeks. I leave it alone and it does its work on its own. I have to update my site once–maybe twice–a year, and then it performs on its own year around. Because Compass brings me the leads, I can leave it to them and just go sell homes, knowing there will be leads coming in every month for me to call on. My marketing just keeps getting stronger as time passes and I can’t tell you how good it is to know that regardless of market conditions in the future I will still have real leads to sell homes to. It brings a whole new level of confidence to what I do.” 

Don’t worry, Johnny!
When Johnston worries about letting the “cat out of the bag,” I have to laugh. If there is one group of business people who continue to do the same old thing the same old way, its real estate agents. Despite their own trade association telling them that 87% of residential real estate sales begin online, most agents and brokers act as if we are two weeks past the days of the MLS book of listings. With 87% of residential sales starting online, you’d think an agent would be alarmed if not even 5% of their sales come from their websites, but there’s a general apathy that defies logic in this industry. Johnston, your secrets are safe—your competition is still clucking over their full color ads in this week’s L.A. Times Real Estate Magazine, where their competitors can see how well they are doing because of all the money they are spending on obsolete print media. Why would your competitors want to spend $3,400 annually to reach millions of Internet buyers to sell multi-million dollar properties when they can spend that monthly in the L.A. Times on one listing? 

You see, selling real estate today is not about high-gloss newspaper and magazine advertising. It’s about converting anonymous visitors to your website into people who ask you for more information about something they saw there, just as Johnston describes above. In the final analysis, online marketing success has little to do with which website you choose, how much information is on it, or how pretty it is. Online success depends on three simple factors: 

1. The site must be found often by Internet shoppers under the specialty that you practice and the location you practice it in; that means on Google®, Yahoo® and bing®;

2. The site must incent anonymous visitors to sign in so that you can work with them and develop them into a client; that means 5-15% of all visitors to your site sign in and become potential clients;

3. You must follow the proper procedures and timetables for responding to the leads the site generates. 

This applies whether selling a bungalow in Los Feliz or a palatial estate in Beverly Hills. Or any home anywhere. Make the Internet your marketplace and success will make you a star, and it will make you financially comfortable—in case that’s what you really want out of your real estate practice. 

* Lyric by Ray Davies and the Kinks “Celluloid Heroes”© 1968 all rights reserved. 

Mike Parker has written more than 200 published articles about online marketing services for realtors. For help in making your site an Internet Star or to determine if it can be found by internet buyers and if it is set up to be effective for you, click here and we’ll review it for you at no cost or obligation. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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RISMEDIA, October 1, 2009—The Federal Housing Administration (FHA) has delayed the implementation of rules that could make life more difficult for condo buyers in the metro Chicago real estate market and across the country. The delay should be especially helpful for those hoping to qualify for the first-time buyer tax credit that expires after Nov. 30. 

According to Jim Merrion, regional director of the RE/MAX northern Illinois real estate network, the new FHA rules, which were to take effect Oct. 1, 2009 will now be effective on Nov. 2. They are designed to improve the lending process, but they could cause some short-term delays in completing loans and closing purchases. “The FHA was wise to delay the implementation of these changes. Now, buyers trying to close a transaction by Nov. 30 should be able to file their FHA loan applications early enough to qualify under the old regulations,” said Merrion. 

The importance of FHA financing has grown substantially in the last few years because conventional mortgage financing has become harder to obtain due to more stringent underwriting requirements. According to some estimates, 25% of homes purchased this year in the United States will use an FHA insured mortgage, up from 2% just three years ago. The number in the metro Chicago condo market could be even higher. Through the first eight months of 2009, approximately 15,000 attached homes, primarily condominiums of various types, were sold in Chicagoland, according to Midwest Real Estate Data, LLC, the regional multiple listing service. 

“About half the transactions I’ve closed this year involved FHA backed mortgages, and most of those folks were first-time buyers purchasing a condo,” reported Lisa Campobasso, an agent at RE/MAX Vision 212 in Chicago. She explained that many first-time buyers are short on cash and turn to FHA financing because it allows them to put down as little as 3.5%, in contrast to the 10% down payment required for most conventional loans. 

The new FHA regulations now will apply to all mortgage applications received on Nov. 2 or later. Files that were initiated prior to Nov. 2 will be processed under the old regulations, even if the loan does not close until after Nov. 2.

The prime reason the new regulations may slow down the purchasing process when they become effective is that they eliminate what are known as spot approvals of individual condominium units. Instead, the entire condominium property will need to be approved before an FHA-insured loan can be used. 

Many condominium properties have never received FHA approval, according to Jane McClelland of RE/MAX in the Village, Realtors®, of Oak Park, Ill., who has extensive experience in marketing condominium projects, both new construction and conversions. “In our area, developers of condo conversions rarely got FHA approval because for the first year of the project, FHA financing was limited to the property’s former rental tenants, and the project usually sold out in less than a year. Also, very few buyers in years past wanted FHA financing,” said McClelland. “Now, of course, FHA financing is highly desirable, and we urge every developer and association to get their condominium property FHA approved.” 

However, even those condo complexes that now have FHA approval will need to be recertified after Nov. 2 if their approval was completed more than two years ago. It may be possible to expedite that certification process by seeking a loan from an institution that is also an FHA Direct Endorsement Lender. That status allows a lender to directly carry out the certification process needed to grant FHA approval to a condominium complex. 

The new FHA regulations taking effect Nov. 2 also contain other restrictions that could make life more complicated for condo buyers. Here is a partial list: 

-At least 50% of units in the project must be owner occupied or under contract to owners who intend to occupy them. For new construction, the 50% owner-occupied rule applies to those units closed or under contract.

-For new construction condominiums, at least 50% of the total number of units planned must be sold or under contract before an FHA insured mortgage can be closed.

-No more than 25% of the total floor area of a condo property can be used for commercial purposes.

-No more than 15% of the units can be more than 30 days past due on their assessment payments to the condominium association. 

There is, however, some good news for borrowers in the new FHA regulations. For example, they eliminate the long-time prohibition against the FHA financing units in condominiums where the homeowners association retains a right of first refusal, Merrion reported. 

Another change allows the FHA to insure loans in new condo conversions for any qualified buyer. Previously, only former rental tenants could get FHA financing for the first 12 months.

“The changes in FHA regulations are just one example of the current environment,” said Mark Zipperer of RE/MAX Edge in Chicago. “It has seemed as if lending requirements have been changing on a daily basis this year.” He emphasizes that those looking for a condominium will benefit greatly by working with a Realtor who knows the local condominium market. “An agent with in-depth knowledge of the local market offers two important advantages to buyers right now,” said Zipperer. “First, they are going to know which condo buildings offer the best opportunity to secure good financing, whether it’s conventional or FHA. If you have a building where the association has financial problems or one with a high percentage of renters, it can be almost impossible to get a mortgage right now. “Second, the agent will help buyers avoid the potential potholes that can come with condominium ownership. For example, before I even show a condo building now, I will study the minutes of the condo board meeting to learn what plans and problems might be on the horizon. An agent who doesn’t normally work in an area just can’t develop that kind of knowledge.” 

For more information, visit www.remax.com. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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RISMEDIA, October 1, 2009—It’s clear there are many more foreclosures in the real estate market’s future and we don’t need a fortune-teller to enlighten us on that score. What we do need, however, is to know the level of foreclosures being forecast over the next few years, as this will likely be a crucial component for strategic business and life planning activities. 

Fortunately, rather than having to engage a fortune-teller, we can use a report compiled by The Center for Responsible Lending, which projects foreclosures over the next four years and their impact by state. It allows us to take a peek at what will likely occur from 2009 through 2012. The projections show an estimated 2.4 million foreclosures will occur in 2009, with a total of 8.1 million from 2009 to 2012. 

While we’re still experiencing an unacceptable amount of foreclosures in 2009, even for the large U.S. market, the forecast appears to depict the beginning of the descent back to normal levels. These projected foreclosures will likely start the downside of the curve with a higher percentage of the 5.7 million foreclosures left after 2009, taking place in 2010, continuing to de-escalate into 2011, 2012 and so on, leading to a more reasonable level. We could see even lower foreclosure rates as court-supervised modifications rise. 

While it will take several years to return to a more typical annual rate of foreclosure, we appear poised to move in that direction. In 1979 the foreclosure rate was about .25% and rose to 1.25% by 2006, while bobbing up and down a bit in between. As the rate has been on a steady rise, it is difficult to zero in on an accurate, consistent rate. 

How can knowing all of this help you? If you are not handling REOs, then you can plan your business and consult with your clients accordingly for this timeline, knowing there may still be some devaluation of homes in various markets over the next few years. 

If your business is handling REO properties, some planning for a future when there are gradually less and less foreclosures, may make sense for you. Keep watching the numbers and your local market activity and adjust for your success accordingly. 

Chris Kaucnik is marketing director for Home Warranty of America, Inc. 

For more information, visit www.hwahomewarranty.com. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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RISMEDIA, October 1, 2009—(MCT)—Realtors are bracing- make that hoping- for a flurry of activity in the next few weeks as a tax credit for first-time home buyers edges toward its expiration. 

The incentive offers a tax credit of 10% of the purchase price, up to $8,000, for first-time buyers with certain income limitations. The tax credit was created as part of the $787 billion federal stimulus package in February to help stimulate the property market. It is set to expire Nov. 30, though some lawmakers are pushing to extend the deadline. 

“Starting back in the summer, we started seeing a real uptick in people asking about it,” said Larry Strother, chairman and owner of ERA Strother Real Estate.

Nationwide, more than 1.4 million first-time buyers have filed the credit on amended 2008 tax returns, according to the Internal Revenue Service. North Carolina ranks 10th among states, with almost 45,000 filers. Local home sales dipped in August 2009 but had been climbing steadily in the months before that. The local market has been one of the strongest nationwide, with the military presence cited as one of its pillars. Fort Bragg also is why first-time buyers account for anywhere between 40% and 60% of the local market, according to Realtor estimates. 

Real estate agent Joyce Register has helped six first-time buyers this year. She said all of them asked about the tax credit. “They certainly had it in mind,” she said. 

Realtors say falling home prices and interest rates hovering around 5% have done more than the tax credit alone to lure first-time buyers. But it does appear to have nudged some into buying. “There were a lot of buyers who were on the fence, who were renting and maybe weren’t sure if they were ready, and this first-time home buyer tax credit got them off the fence,” said Kelli Bennett, a mortgage loan specialist with Key Mortgage in Southern Pines. Bennett has been holding seminars to tell potential buyers about the credit. The question she said she hears most is whether the credit has to be paid back, which it doesn’t if the buyer lives in the home for at least three years. 

Buying bigger
If the tax credit is edging some families closer to purchasing, it’s not enticing them to buy something a little bigger when they take the plunge, Strother said.

“The interest rate does that,” he said. “When the interest rate goes lower, we start seeing people buy more house than they would have, because they’re able to afford more. People in our marketplace, they’re buying payments.” 

Anyone who wants to take advantage of the tax credit needs to hustle. The purchase must be complete by Nov. 30 to qualify. The processing time of about 45 days for a home sale leaves less than a month to get the ball rolling. “We’re getting close,” said Jimmy Townsend of Townsend Real Estate. “It needs to be done in the next couple of weeks. And in my opinion, that’s pushing it.” 

There are a cluster of bills in Congress to extend the tax credit for at least another six months. The White House has said it’s reviewing them but must weigh the risks to the market if the credit expires versus the cost of extending it.

The program would cost an estimated $15 billion if it were to be extended. That’s more than twice what was projected in the stimulus bill. But Strother says the government is getting value for its money. “The housing industry has always led this country into recessions and has always been the one single thing that has led us out of recessions,” he said. “If we want the economy to improve faster, we need more houses to sell.” 

The local Realtors support the extension efforts; the credit has been an eye-catching advertising tool. But they say military buyers would insulate the market against a dip if the credit does expire, which has been the case during the worst of this recession. “I want to promote it, but I don’t want to make like it’s the end of the world if it does expire,” Townsend said. “People who are not going to buy a home are not going to buy a home just because of the tax credit. A home is not something you buy like a stock. It’s a place to live. It’s the American dream.” 

Copyright (c) 2009, The Fayetteville Observer, N.C.

Distributed by McClatchy-Tribune Information Services. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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RISMEDIA, October 1, 2009—(MCT)—A forthcoming federal report on retirement savings recommends easing a penalty for hardship withdrawals from 401(k) plans and that workers receive better education about the consequences of such decisions. 

The Government Accountability Office (GAO) report suggests ways for Congress and federal agencies to reduce the long-term impact of early withdrawals, or “leakage,” from retirement plans. The economic downturn has caused many 401(k) participants to take drastic measures with their retirement accounts. About one in seven cashes out of a plan after a job change or loss (without rolling over the money to a new account), take hardship withdrawals, or borrow against their portfolio, according to the GAO report. “Even small amounts of leakage can have a significant impact on the retirement savings of some plan participants,” the GAO said. 

Some Washington lawmakers are concerned that by tapping 401(k) funds for immediate needs, workers are jeopardizing their long-term retirement security.

“Americans’ retirement savings have taken a huge hit due to the recession,” said Sen. Herb Kohl, D-Wis., chairman of the Senate’s Special Committee on Aging, in a written statement. “Despite the financial hardships many are facing, people need to resist raiding their 401(k) because it’s a really bad deal for them over the long run.” 

The GAO study says Congress should consider changing a rule that prohibits 401(k) participants from making additional contributions for six months after a hardship withdrawal. The suspension also includes employer matches. The requirement, the GAO report said, may in fact make the leakage problem worse “by barring otherwise able participants from contributing to their accounts.” In addition, the GAO said the Labor Department should encourage employers to give workers “understandable and useful information” about the adverse long-term consequences from hardship withdrawals, loans and cash-outs. Also, participants could view projections of their account balances when left in a tax-deferred portfolio versus the results if they cashed out. The GAO also said the Treasury Department should clarify 401(k) regulations that require participants to exhaust all available loans before resorting to hardship withdrawals that subject workers to taxes and early-withdrawal penalties. 

“Participants facing sudden and anticipated hardships would also benefit from the assurance that they are using the most appropriate and least damaging option,” the report said, “thereby minimizing the negative impacts on their overall retirement preparedness.” 

The year-long study, completed in August 2009, was commissioned by the Special Committee on Aging. The report takes particular aim at cash-outs, noting it can be “the most damaging form of 401(k) leakage,” is the least regulated, and runs “counter to the goal of retirement savings.” (In a cash-out, the money is not rolled over to another retirement account). Cash-outs of any amount—partially or in full—can impact a participant’s account balance at age 65 more than comparable amounts taken either in a hardship withdrawal or a loan, the GAO said. 

“Participants who voluntarily cashed out their entire 401(k) account balance at job separation experienced the largest reductions in the amount of retirement savings that accumulate over their working careers,” the report noted. For example, a participant who cashed out his entire 401(k) at age 35 would forfeit more than $183,000 in savings by his 65th birthday, according to the report. Cashing out later in a career, when there is less time to recover from losses, leaves an even bigger wealth gap. Yet many participants choose to cash out of a plan when they leave a job, in part because they aren’t given enough information about the potential hit to their finances, the GAO said. 

The report noted: “With better information on the consequences of the various forms of leakage, participants may choose to preserve their retirement savings, resulting in a better retirement outcome.” 

(c) 2009, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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RISMEDIA, October 1, 2009—Showing Suite, Inc., developers of the HomeFeedback,™ system has launched new software for individual real estate agents, real estate teams, offices and Multiple Listing Services. 

“Consumers want to have transparency to the home selling process and that is what we have delivered and expanded upon with Showing Suite,” said founder and CEO Rick Bengson. “We offer an affordable suite of real estate productivity products that can work a la carte’ or seamless together for an agent, a team, or an entire office that provides home sellers transparency to the selling of their home. We do it selling homes faster, saving agents time and building better relationships via that transparency. Our motto is start with a showing and end with a sale.” 

According to the company, Showing Suite products can be purchased separately or different combinations according to the needs of the client. The company is best known for HomeFeedback, which is included in this deluxe software package recently released. HomeFeedback has been used by more than 700,000 real estate agents in 170 markets in North America. According to the company, Showing Suite is completely interactive and its unique features include: Automatically obtain showing feedback from Supra and Sentrilock electronic lockboxes; Web dashboard to view, delegate and track all incoming website and offline leads, actions; Website showing scheduling; Foreclosure feedback for Asset Managers to document the need for price reductions and Eight integrated brokerage productivity reports for tracking listings, expiring listings, leads, and sales. 

For more information, visit www.showingsuite.com or call 858-270-1055. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

RISMEDIA, October 1, 2009—Century 21 Real Estate LLC, the franchisor of one of the world’s largest residential real estate sales organizations, announced October as National Open House Month. This is the second year in a row in which Century 21 offices around the country will hold open house events for thousands of their property listings throughout the month of October. This follows on the heels of the company’s successful “April is Open House Month” and “Path to Your Dreams Sweepstakes” promotion this past spring. 

“Historically low interest rates, outstanding selection and affordability make this one of the best times to buy a home in decades,” said Tom Kunz, president and chief executive officer of Century 21 Real Estate LLC. “The Century 21 National Open House Month provides our brokers and agents with an excellent opportunity to reach out to potential homebuyers and educate them about their local housing options, as well as the First-Time Homebuyer Tax Credit, which is available for eligible buyers who close on their purchase no later than November 30.” 

For more information, visit www.century21.com. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.