proplayersrealty.com Blog

It has been said that the only constant is change. This is so true, and the way that we are able to remain successful I is learning to adapt to our ever changing environment as quickly as possible.
The real estate market obviously is not what it was two or three years ago. One of the problems we face is not the current market but our memories of what the past market used to be. We are accustomed to looking back over our shoulder and using the past as a comparison for the future. This is causing many people in our industry to become immobilized by not focusing on a solution to the current market.
Is there a solution to our current market? The answer is “yes’” and it lies within each one of us. I am not saying that we have control over outside factors, because in large part we don’t. What we do have control over is how we perceive the obstacles that lie ahead of u: “Only in the face of adversity will you find the seed to a greater achievement.”
We can all help each other with this in many ways, but as a REALTOR in this market you must first ask yourself the question: Am I willing to do what it takes?
Without sounding harsh, it is important for all of us to assess where we are personally, because that will help us to determine where we want to go and how we can get there. If you don’t know where you are or where you want to go, how can you begin anything? Self assessment is critical. To think and act outside of the box is essential. The way we used to transact business will not be sufficient to get us where we want to go. This means that we all must get out if our comfort zone and expand our way of thinking. Brainstorming with other REALTORS and our clients sometimes yields the best ideas on how to move a piece of property.
I love to get with a group of three or four colleagues at least once a week to brainstorm problem listings, clients, lender situations, marketing ideas. Etc. This not only helps us motivate each other, but something very special takes place when you focus energies on a particular transaction. I have always said to the people I work with that the idea may be silly, but it is the effort and focus on the project that creates synergy and results. As long as it remains positive and productive, a momentum begins that can result in moving mountains.
One aspect of real estate in which I have recently become very involved with is trades. Currently, I have 22 trade transactions pending. Some of them are personal transactions and some are client transactions. There seems to be a growing curiosity about how this works and how it can benefit you as a REALTOR. Some of the common questions I hear: (1) Do I get a commission? (2) If so, how is it paid? (3) Where do I begin trying to put a trade deal together? (4) How does it even work?
These are good questions. Yes, you get a commission if you have the seller agree to it in writing prior to bringing the two parties together. A trade is simply helping one person get out of property that no longer works for them and getting them onto one that better suits their needs at the time. Keep in mind everyone is in a different position with their property. For example, why would someone want to buy a beach property that my client really needs to sell? There are several people who have been waiting to purchase beach property but have not been to do so because their current property has not sold. They would love to take advantage of some of the deals out there, but in order to do so they need the cash from what they own. Their basis may be so low in what they own that the very investment property your client needs to sell that’s causing a negative cash flow may cause a positive one for the new buyer. Too many times we assume everyone is in the same equity position.
You begin working on trades by marketing what you or your clients are willing to look at as an option. It doesn’t mean they have to do one. It simply opens up another avenue for you to pursue. Basically, a trade is simply an agreement that your seller will purchase what their buyer is selling and it will be a simultaneous closing, each contingent on the other’s closing. The proceeds will be shifted from one asset to another and can often generate a cash position for your seller/buyer.
There are great benefits in these transactions. Just the activity on this creative selling helps consumers’ confidence and shows people that real estate is still moving at a good pace. We all know activity breeds activity. We need to keep the energy up, keep the ball in play, and keep moving in a positive direction.
We can learn a lot from one another and together keep the real estate market on a positive plane. We are in this business for a reason. Let’s keep out clients matched with the properties they can benefit from in the long run, and stay focused on a productive and prosperous future.
By Jason Naumann

A “State of the Market”
For the last few years we have enjoyed the perfect ride in commercial real estate, with the simultaneous occurrence of stabilizing rents, improving fundamentals, and really, really cheap money. Banks, insurance companies and institutional investors funneled money into the market because its returns, in an environment of low interest rates, exceeded those of alternative asset classes. This segment of the broader real estate market typically includes office, retail, multifamily, and industrial properties.
Although investments in commercial real estate continue to be strong, in the multi-family sector, “real estate fundamentals are on the mend,” according to Caroline Blakely, a vice president in multifamily housing and community development at Fannie Mae. U.S. demographic trends and steady job growth bode well for apartment rentals. In line with that, vacancies are declining and asking rents are climbing. Fannie Mae is slightly less optimistic about rent growth than other institutions in the real estate industry.
After the 2000 dot-com crash, commercial real estate revenues declined, vacancies rose, and rents decreased. But since late 2001, revenues have steadily increased, with investors pouring more money into the sector. The key was the Federal Reserve flooding the market with liquidity through low interest rates, enabling commercial real estate investors to enjoy phenomenal returns in the face of poor fundamentals. One result was extremely low levels of delinquencies and default for banks’ commercial real estate portfolios.
Analysts remain bullish on commercial real estate returns because fundamentals have improved in recent years; however, they expect to see a “significant slowdown” in price appreciation for real estate. High prices still being paid in some areas of the apartment sector are “worrisome.” However, property transactions overall have already slowed this year and buyers have been holding out for better prices. In this view, this “cooling” is rational and a sign that some of the effects of higher interest rates are percolating through the system.
A positive commercial real estate market is predicated on its positive economic views. All bets are off in a “stagflationary” scenario or if job growth tanks, or if we get real significant increases in interest rates. (Brian Lancaster, Wachovia Securities)
Some real estate professionals are less sanguine about prospects for the commercial real estate market, agreeing that commercial real estate is currently in a good position, and that the U.S. economy’s strength and resilience will benefit the industry generally. However, the world we live in now is more global than it was 10 or 20 years ago and capital can be rapidly pulled out of markets because of events that occur thousands of miles away. That makes commercial real estate’s status as a “favored child” more precarious.
Capital market integration and securitization is going on and is inevitable. Securitization refers to the pooling together of relatively illiquid assets into more diversified financial products, whose securities are then sold to investors. This enables markets to develop by expanding their investor base and providing lower-cost financing. However, investors can now respond to new information more quickly than ever before – and this has the potential to create more volatility, not less.
What could happen to us? China could revalue its currency faster than expected, translating into higher prices in the U.S., which would impact the real estate market. An unanticipated jump in U.S. interest rates could also cause investors to shed real estate very quickly. All you need is a few performance failures, because a lot of real estate is being bought with the notion that there will be growth in fundamentals. We could possibly be at a very high risk point in commercial real estate. (Richard Edelstein, a professor at the Haas School of Business at the University of California at Berkeley).
Sources: Caroline Blakely, a vice president in multifamily housing and community development at Fannie Mae; Richard Edelstein, a professor at the Haas School of Business at the University of California at Berkeley; and Bradford Case, an economist with the Board of Governors of the Federal Reserve System.
— Margaret (Missy) Davis-Whiddon
Vanguard Commercial Realty

If you are reading this then . . . Congratulations! You have paid your Tallahassee Board of REALTORS®, Florida Association of REALTORS®, and National Association of REALTORS® membership commitment for another year!
Whew! I don’t know about the rest of the TBR members, but I am glad that the 2007 real estate market is behind us. I love a roller coaster as much as anyone else, but give it a rest! As tough as this has been for our profession, it pales in comparison to what this past year has been like for our sellers. How many times have you been at a marketing meeting and heard a fellow REALTOR® get up and tell a heart-rending story about the terrible situation their sellers are in? And to “please bring an offer; this family really needs to sell their home.” Despite the challenges we face in this present real estate market, we are not facing many of the real-life challenges that this market has brought to the sellers.
So, how do we best help our sellers now? I was going through and organizing the piles of great notes and marketing ideas that all of us tend to accumulate during the past year. One of the stacks of notes I found was from the past FAR conference that addressed this very issue. How do we best help our sellers now? It’s pretty simple: tell them the truth. So, what is the truth? The truth is it does not matter one little bit what they could have gotten for their home two or three years ago, it does not matter how many late night shows they watched on TV about flipping property, it does not matter that they really need to sell this property in order to join their spouse who has already moved to the new job, it does not matter that they raised their children in this house and it is full of sweet memories. What matters is how well it is priced, how easy it is to show, how well it has been maintained, and how flexible they can be during negotiations. It is simply a matter of “do you want to stay or do you want to go?” If a seller is ready to go, then they must listen to the market. REALTORS® do not set the price that people will pay – the buyers do. And there is a price point at which any property will sell. For some sellers, this price point is just too low. Then they must stay and wait until the market changes. If this is not an option for them and they want to go, then we must tell them the truth. The truth is this is a less than desirable time to be a seller, but there are homes selling every day and theirs can, too. But no one is willing to pay an inflated price for the seller’s sweet memories or pay for poorly maintained/renovated property. There are just way too many other choices and buyers will just move on to the next ten houses on their list.
So, this year I resolve not to tell sellers what they want to hear, but instead tell them what they need to hear. It is their responsibility to choose if they want to stay or if they want to go. It is our responsibility to tell them the truth; they look to us to help them know what it will take to move on. This is a tremendous responsibility. And part of the truth is that buyers are starting to stir around out there, and if a house is priced right it will sell. I truly believe the buyers’ wait-and-see attitude is coming to an end and that this has the potential to be a very good year. Some of the best real estate decisions and purchases ever made will occur in 2008. It is great time to be a buyer and the choices are almost endless. I encourage you to hold tight these next few months, tell your sellers the hard truths, and help your buyers take advantage of what is a GREAT market for them.
And once again, congratulations for making the commitment to your real estate career for 2008. I hope you have one of your best years ever! And, hey, please go show some of my listings (“this family really needs to sell…”)!
— Patti E. Ketcham, CLG, CRS, e-PRO, GRI
Ketcham Realty Group