Tend to the Trend

Tend to the Trend
Most of us have people in our lives who have taught us something we will never forget. One of those people for me was a marketing professor I had in college. I believe his name was Fitsimmons.
“Fitz” as we called him, told the class, “Remember – it is much easier to speed up a trend than reverse one.” It was a pretty simple concept but one I have always tried to remember. I certainly did not remember it as well as some of my friends in the real estate business, however. Many of them folded up their tents and left the business for a year or so and went on vacation. While they were gone, there was nothing to do. In effect, they missed out on a whole bunch of work for very little return. I stayed in town and worked hard but spent more of my efforts on markets that were still strong like office and retail. The good news is I sold all my residential holdings by August of 2005.
Well, I am here to tell you that those guys that left have returned and so has the market activity. This is not just my opinion. I have some facts to give you; the first one is merely anecdotal: Market America Realty and Investments has presented more contracts and has the highest dollar volume of pending deals now than any other period since 2004.
The News Press reported a more concrete fact: Lee County home sales spiked in March – bucking a national trend (Article Here). There were 636 single family homes sold through Realtors in March, and that is a 50 increase from February AND the median price was up 5%. The areas that were hit the hardest (like here) will have the greatest margin of recovery.
Single family home permits and multifamily home permits are down. This is also a good thing. This will help slow inventory growth
If you want to buy a home at BELOW replacement cost, this is the time to do it. There is a ton of inventory and bargains are to be had. Heck, we are selling Parkside not only below preconstruction pricing, but certainly below replacement costs. This is true for Citadel, Grand Isle, and a host of other communities.
Our team has been watching the market carefully, and we have been waiting for a while to see the up ticks in the indicators that we see now. For the past few months the number of pending sales has increased, the number of closed sales has been up, and until now the number of foreclosures has been up. This months list of Lis Pendens (kind of a pre-foreclosure notice) show a down tick, however. This is critical because we believe the Lis Pendens to be a following indicator, not a leading indicator.
We are at bottom.
The commercial buyers have also returned in a big wave. This morning there were almost 70 professionals at our bi-weekly Commercial Investment Professional Meetings, many sales reported and properties are moving.
The industrial market and the retail market have responded favorably to the number of roof tops that are being filled. These companies are coming into town to set up shop.
Those buyers that are sitting on the fence waiting to buy only to see if prices will come down further may miss the market they are watching. I would say this to them; the worse case you may have if you buy now is that there is a further small down tick, and then you will see a gradual and pleasing rise in prices. If you do not buy now, you risk the chance of missing the opportunity altogether.

Last week I wrote about some negotiating techniques (Click Here) but only got to the first one on my list:
Sit on their side of the transaction. (My favorite)
Don’t negotiate with your self (A common mistake)
Remember: Price, Terms, Timing AND Product ( The fourth one here is often forgotten)
Give them the sleeves off of your vest
Ask for the sleeves off theirs
Red Herrings
Surprise
Nibble Nibble Nibble
It’s not over. Ever.
It’s all about price.
My favorite technique that I use all the time is to “sit on their side of the desk”. (Also good for any relationship, by the way, just ask my bride, Gail) To me the best outcome of any transaction is that everyone is happy and both sides feel like winners.
To sit on their side of the desk you need to know as much as possible about them. You need to know what their hot buttons are, what their wishes are, and what they can do without. If you can give them what they want, and you get what you want, you have a win-win situation, right?
It is not always about price, sometimes it about down payment requirements, or about cash flow, or closing dates, or HOA fees. It may be about emotions not facts. If you can put yourself in their shoes you may be able to close a deal that you otherwise would miss.
It may be about having kids in the neighborhood for them to play with, or it may be about signage rights on a commercial parcel.
Try a little role reversal when you are in your next deal. Empathy goes a long way. Become informed on your buyer or seller. Don’t work blind. Sit on their side of the desk.
The Nibbler
One technique that drives me crazy is the Nibble. You may be able to use this technique, but I for one, cannot stand it. The nibbler is the guy that makes the deal, signs the offer, and then you go home thinking you have settled the transaction.
Not so fast.
When you get home there is a message on your answering machine asking you to call him about the ______________ (fill in the blank here) perhaps it is the carpet cleaning or some other minor thing. You concede. He then calls the next day and takes another nibble, perhaps about the pool equipment, again you concede, and then it’s the termite tenting he wants, and then there is a list of other items that he adds every few days or so. He keeps nibbling at the deal until it no longer resembles the original deal. This is a very effective technique especially when the seller is anxious to close the deal.
The block to this is to not concede even the slightest. (You can’t blink here folks.)
We get nibblers on commercial deals all the time. They need one more week to close, for example, and they don’t ask for it until the end. Then they need a few repairs done; A cleaning; Another week for the survey to come in; They push and push until you won’t get pushed anymore. The block here is to not let them push in the first place.
I will review more negotiating methods next week.
You all have heard me say that Market America is in the real estate customer business, not the real estate agent business. This is how we run our company – concentrating on the customer. But I was thinking about this the other night and would like to add a refinement to this.
Many agents in the business list properties. In fact it is one of their goals. “How many properties can I list?” It is true, the more listings they have, the more they will earn.
We on the other hand, would like to add clients, not properties. Our business is client-centric. We build relationships and through getting to know the objectives, the needs, the goals, and the wishes of our clients – we all benefit. The way to build a client base is through service, but most importantly it is a long term thing – a client will out last a property any day. If you take care of the long term relationship the short tem one will follow.
If you have missed past emails you can search here: ARCHIVES
Gregg Fous
Gregg@ma-realty.com
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