New Jersey Estates/Weichert Realtors/ NJ Luxury Real Estate/ New Homes: November 2008

Techno-Selling

The days where you could do your business out of a shoebox with 3 x 5 note cards is gone. The power of the computer age has made many of the things we did years ago obsolete. Agents need to set up their business to run like a true corporation to be successful in this millennium. With these changes, there are a few specific areas we need to evaluate.

In this millennium, contact management and customer service software systems have become more imperative for Agents. Agents will need to have tremendous amounts of information about their clients and potential clients. This information will enable them to become a valuable resource to their clients and, in turn, sell more to their clients. In addition, these Agents will receive more referral business because their service level has increased. In order to join these successful Agents, you will need to be able to keep in contact with your clients quickly, and more frequently, if you hope to create winning sales situations.

I firmly believe, based on the social-economic trends, in the future people will not move so frequently. The average years people spend in one home will increase. There will be fewer moves in people's lifetimes. There are a few factors contributing to this trend. The first is desire of the American people to simplify their lives. In increasing numbers, people are reducing their monthly overhead. There are more single-income families because one of the parents is staying home with the children.

This reduction in gross income, caused by the loss of one breadwinner, reduces the discretionary income. Families are making decisions based on the value to the family unit and to the children, especially. They are realizing that living in a big fancy house does not have the same value as having Mom and Dad at home more often. A larger home does not always create a larger, more enjoyable lifestyle. This voluntary downsizing is currently a clear trend in our society.

The second key reason is the largest segment of the population has only one move left. The boomers are now seeking to enter the age of early retirement, while they are still active. The boomers are starting to evaluate where they will move next. They have more selection in the types, and variety, of housing, than all other preceding generations. I think this will be one of the most viable sections of the marketplace. We will see them sell the large family fortress. After that sale they will have many different areas and options of the type of housing they can choose, i.e., condos, townhouses, ranches, retirement communities galore, golf course communities, and 55+ communities. The builders and developers clearly see this group as the fastest-growing segment of the market. They are beginning to gear up for the eventual onslaught.

You need to be prepared to service the boomers by knowing the inventory available and amassing systems to take advantage of the onslaught. Position yourself for the changes today, do not be caught. The new technology will enable you to do more work and research. It will allow you to collect more knowledge and data in a shorter length of time. Not only do you need to have the technology, you need to use it. I regularly see too many Agents resisting change, rather than embracing change. You need to know how to squeeze the most value out of your software. You need to have the software, but you also need to use it. Not using the software is like not having it in the first place.

You must have a command of your contact management software. This software is the lifeblood of your business. It will enable you to create sales. There are many good software packages out there such as Act!, Top Producer, On Line software, or Goldmine. Each has its own particular strengths and weaknesses. Do your homework and carefully check out each one.

When you purchase software, you must evaluate the training that each one offers. If you cannot get good, solid training, do not buy that software. Some of the value of the software is learning it quickly and efficiently. If you are going to have to self-teach yourself, while you are trying to run your business, you will never fully utilize the software. You must be able to use the full power of the software to be able to bring the most success to your business.

Make sure your software has the power to network. I would advise you not to purchase software that does not network. If you expand your business beyond yourself, you will need the capabilities to network your computers. Also, do not buy software if the manufacturers say they are working on a network version that will be out soon. I had this experience with my primary contact management software. The manufacturer took over 18 months to complete the job. Every time I called them, they said completion was one or two months away. I made the mistake of waiting to switch and lost valuable time and dollars in the process.

The Internet is a way to augment your sales and listings. It will allow you access to more potential clients. There are a few basic needs to reap success out of the Internet. You need to create a quality web site, or you will be relegated to the bush leagues. Next, you need to spend the time and energy to constantly update and adjust your web site. If you have the same content you had months ago, people will stop re-visiting your web site. You want more than a one-time visit from people. You want people who regularly come back to view your properties and information and refer others to your web site.

You want to create the quintessential source of information on real estate in your area, via your web site. Create a section to share a piece of yourself with the visitor. Share your philosophy on selling and your mission statement. Remember that there are 50 bazillion REALTORS® on the World Wide Web. You need to make yourself stand out. Creativity will enable you to be selected and viewed differently than other Agents.

Work with a server company that will constantly help put you in the forefront of the search engine pages. If you are not in the right spot on the web you might as well not be there at all. The web is growing and changing at an alarming rate, so even if you are positioned right this week, in two weeks you might be out of the game because of changes on the web. You need to constantly review the search engines, your web page, and your competitors' web pages.

This techno-revolution is changing many things in real estate, but the one thing that will never change is quality telephone and face-to-face sales skills. If you do not have the sales skills, the technology will only prolong the inevitable, and you will eventually be out of the business. The technology will help good salespeople become better and allow them to do more business. The techno-revolution will not cover up poor sales skills.

Highly skilled salespeople will always have the advantage. If you want to be included among them, the feeding of your mind is the best expenditure of money in your life. Your mind is the most valuable computer you will ever own. We often take the mind for granted because it comes as standard equipment that we do not buy or pay for. Just as we need to upgrade the hardware and software on our computer, we must upgrade our mind and sales skills. Techno-revolutionize your mind by studying the art of selling, the art of time management, and the art of understanding your business. These skills will take you further than all the fancy gadgetry of the 21st century. My biggest fear is that Agents will try to use technology to replace the sales skills. Technology will not replace the skill of selling, it will only enhance the skill. An exceptional salesperson in a dinosaur system can still achieve success in today's world. A poor salesperson in a high tech system is still a poor salesperson. Poor salespeople are always paid at the bottom of the ladder. That fact will never change.

I encourage you to learn the new technology that will enable you to provide greater service to your clients and to do more transactions with less effort. Do not neglect the most valuable computer that occupies the six inches between your ears. If it is well trained, this one can network with anything and anyone at the drop of a hat.


Written by Dirk Zeller
November 28, 2008 

Investor Report: 1031 TIC Bankruptcy

The firm, DBSI of Boise, Idaho, was part of an investment wave that followed a 2002 ruling by the IRS. That ruling said owners of commercial and residential income properties could fulfill the tax-deferral requirements of Section 1031 of the Internal Revenue Code by investing in tenants-in-common ventures.

Under Section 1031, investors who seek to avoid or defer capital gains taxes on their properties can exchange their interests for "like kind" real estate, provided they follow IRS guidelines.

In 2002, the IRS ruled that tenants-in-common arrangements -- under which as many as 35 investors own fractional interests in individual properties -- can qualify as vehicles for 1031 exchanges. For example, an owner of a small retail shopping strip might exchange into a TIC that owns a much bigger and more valuable downtown office building.

The tenants-in-common owners could thereby avoid immediate taxation of capital gains and end up with bigger and theoretically higher-quality real estate - tax free - in the process.

The TIC structure comes with built-in problems, however. Their fractional interests generally are not liquid investments -- it's tough to sell them if you need to pull out money..

Some critics also say TIC ventures pay too much for their commercial properties, and that investors have been charged excessive fees to participate.

DBSI managed the activities of dozens of office, retail and other commercial properties in 30 states, but says it got caught up in the real estate downturn and credit crunch.

Now its eight thousand-plus individual investors are stuck in illiquid TICs ... and waiting to hear what happens to them next.

The DBSI bankruptcy comes on the heels of recent advisories from the Federal Trade Commission and the Treasury Department warning investors about potential dangers in 1031 exchanges.

Bottom line: Section 1031 exchanges -- structured and facilitated by independent, qualified intermediaries -- can be a great way for small scale and large investors to save on taxes.

TICs may also fit into the equation, but only if investors fully understand all the risks, including, now in the wake of the DBSI implosion, the possibility that their TIC may go belly up, leaving investors waiting in line at the bankruptcy court hoping for pieces of the remains.


Written by Kenneth R. Harney
November 28, 2008