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By Bernice Ross
Inman News™

The median age of first-time buyers is approximately 31 years of age. According to NAR, the median age of REALTORS® is 56. The issue for the real estate industry is: Will these two groups be able to bridge the gap and work together?

Intergenerational challenges

Until recently, the “I am the real estate expert” model dominated the industry. Before the advent of IDX (Internet Data Exchange) and third-party vendors that publish listings data, consumers had to rely on agents to access what was on the market.

Not only were the agents the experts in terms of what was on the market, they also controlled access to it.

This situation gave rise to the “expert model” in real estate. This is a perfect fit for people born before 1965 (boomers and traditionalists), who value expertise. As a result, real estate professionals have often marketed themselves as “Your local real estate expert.”

While this approach still has value for older clients, “expertise” may be less prized among Gen X and Gen Y. Gen Xers may prefer to do their own research and make up their minds independently, for example, while members of Gen Y may decide by surveying their friends. (Of course, these are general trends and there are always exceptions.)

The disconnect occurs when older agents work with younger clients. For example, it’s common for older agents to point out how well they know the market, their experience in maneuvering through the red tape of closing a transaction, and that the price they recommend is the right price if the client wants to close the deal.

This approach turns off younger clients. In fact, many younger clients are put off by what they perceive to be parenting behavior.

Older agents are often focused on building a relationship with their clients. As a rule of thumb, most Gen X members prefer to keep their own counsel. They’re interested in information that will help them to make better decisions — not in having a business friendship.

Gen Y also wants information. However, they don’t want it from an expert. Instead, they value peer-to-peer feedback. Consequently, the agent must approach the Gen Y client as the agent would approach a friend with whom they are on equal terms — not as an expert to a beginner.

If you can contribute to Gen Y’s peer group, you may be invited in as a valued resource. Again, you’re not likely to be invited as the “expert,” but rather as a friend who sells real estate.

Innovate or slowly fade away

The challenge is that if you don’t innovate now to meet the needs of the next generation of real estate consumers, your business will slowly dwindle to nothing.

Jimmy Macklin, the Gen Y founder of Tech Support Group for Real Estate Agents page on Facebook, described it this way: “I’ve always felt that our only true competitive advantage is our ability to innovate. Nostalgia is poisonous and it’s boring.”

Describing today’s top producers who have failed to step up and become involved with the social media, Art Aviles, a real estate broker/owner at ANA Realty, summed it up like this: “The top 10 percent of yesterday, and today, might very well not be the top 10 percent in the near future. Why?

“Generation X, Y, and watch out for Z! We are social media junkies and will not fly with you if you are not tech savvy. Remember that they are some of the present clientele, yet most definitely all of future business. One last thing: Social media and real estate tech is still a baby (who) just recently learned to walk and passed its “terrible twos.” Wait until it’s in puberty! Bye-bye if you didn’t innovate by then.”

Bridge the Gap

For older agents, just learning all the new social media terms can be daunting. On the other hand, doing face-to-face listing presentations, handling confrontational negotiations, and mastering the basic real estate fundamentals can be equally daunting for younger agents.

As one astute member of Gen Y put it, “The Gen Y (members) have the pipeline, but they don’t have the skills. The boomers have the skills, but many of them no longer have the pipeline.”

The solution to this challenge is a new type of team that pairs a member of Gen Y (born 1977-94) with a boomer (born 1946-1964).

While a common scenario is a parent joining with a son and/or daughter as the heir apparent to the business, an increasing number of REALTORS® are finding that partnering with someone who is 25 or younger than they are is smart business.

If you’re feeling puzzled about how to best work with clients who are 25 years or more apart from you, why not try partnering with a member of the other generation and share the best practices that each of you bring to the table?

That’s a win-win for you, the other agent, and for the consumers you serve.

Most real estate agents and brokers spend a good deal of time behind the wheel of their car. Indeed, it’s not uncommon for real estate agents to drive more than 20,000 miles per year for business.

Fortunately, local transportation costs are deductible as business operating expenses if they are ordinary and necessary for your real estate business. Obviously, such expenses are ordinary and necessary for real estate agents and brokers who usually do most of their work away from their office.

It makes no difference what type of transportation you use to make the local trips — car, SUV, limousine, motorcycle, taxi — or whether the vehicle you use is owned or leased.

If you drive a car, SUV or van for business (as most real estate agents do), you have two options for deducting your vehicle expenses:

You can use the standard mileage rate; or
You can deduct your actual expenses for gas, depreciation and other driving costs.

Most people use the standard mileage rate because it is simpler and requires less recordkeeping: You need only to keep track of how many business miles you drive, not the actual expenses for your car, such as the amount you pay for gas.

If you use the standard mileage rate, there is good news: Due to the rising cost of gas, the Internal Revenue Service has increased the mileage rate for the second half of 2011.

How the standard mileage rate works

Under the standard mileage rate, you deduct a specified number of cents for every business mile you drive. The IRS sets the standard mileage rate each year. Ordinarily, there is a single standard mileage rate for the entire year. However, there are now two rates for 2011:

51 cents per mile for all business driving during Jan. 1, 2011, through June 30, 2011; and
51.5 cents per mile for driving during July 1, 2011, through Dec. 31, 2011.

To figure out your deduction, simply multiply your business miles by the applicable standard mileage rate.

Example: Ed drove his car 10,000 miles for his real estate business during the first half of the year, and 10,000 miles during the second half. To determine his car expense deduction, he simply multiplies his business mileage by the applicable standard mileage rate. His deduction for the first half of 2011 is $5100 (51 cents multiplied by 10,000 miles equals $5100). His deduction for the second half of the year is $5450 (54.5 cents multiplied by 10,000 equals $5450).

If you choose the standard mileage rate, you cannot deduct actual car operating expenses, such as maintenance and repairs, gasoline and its taxes, oil, insurance, and vehicle registration fees.

All of those items are factored into the rate set by the IRS. And you can’t deduct the cost of the car through depreciation or Section 179 expensing because the car’s depreciation is also factored into the standard mileage rate (as are lease payments for a leased car).

The only expenses you can deduct (because these costs aren’t included in the standard mileage rate) are:

Interest on a car loan;
Parking fees and tolls for business trips (but you can’t deduct parking ticket fines or the cost of parking your car at your place of work); and
Personal property tax that you paid when you bought the vehicle, based on its value. This is often included as part of your auto registration fee.

You must use the standard mileage rate in the first year you use a car for business or you are forever foreclosed from using that method for that car. If you use the standard mileage rate the first year, you can switch to the actual expense method in a later year, and then switch back and forth between the two methods after that, provided the requirements listed below are met.

For this reason, if you’re not sure which method you want to use, it’s a good idea to use the standard mileage rate the first year you use the car for business. This leaves all your options open for later years.

However, this rule does not apply to leased cars. If you lease your car, you must use the standard mileage rate for the entire lease period if you use it in the first year.
By Stephen Fishman
Inman News™

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You have worked as hard as you can to get this property sold. Your marketing efforts have generated 50 showings but no offers. What can you do?

Recently, one of our private coaching clients posed this question to her coach. She had done everything within her power to place the property under contract. However, the sellers weren’t willing to lower the price any further. They had a great reason. If they dropped the price any further, they would have to bring money that they didn’t have to the closing table.

The challenge for the agent was that the sellers were blaming the failure to sell the property on her and they were angry. How would you have handled this situation?

One of the most powerful ways to address this situation is to do an update on your market statistics. For example, if there are currently 60 properties listed in their area and price range and 10 of them sell each month, this means that in order to sell their property, the sellers must be in the top 17 percent of the properties on the market each month in terms of the price, condition and the location. With this many showings and no offers, they’re continuing to fall in the bottom 83 percent that are still listed each month rather than in the 17 percent that sell.

The next step is to explain the seller’s choices. Here’s what to say:

“Mr. and Mrs. Seller, as you can see from the current market statistics, only 17 percent of all the listings will sell this month, while 83 percent will continue to be listed next month. Furthermore, most of the properties that are selling are in like-new condition. Given these circumstances, you have the following options:

“First, you can adjust your price.

“Second, you can update the paint and the fixtures to make the house more appealing.

“Third, if you absolutely must get this price, you can take the property off the market and wait for the market to improve.

“It’s your house and it is your decision. What would you like to do?”

Furthermore, it’s often useful to either take the sellers out to look at the competition or to pull together a slide show of the interiors of the properties that went under contract or that are currently on the market. Sometimes the reason a property is not selling is that buyers can afford to be choosy. The agent who sold our last house told me that the only things that are selling where she is working right now are in like-new condition. Everything else, unless it’s way below market value, is languishing on the market.

A third way is to do a price-per-square-foot comparison. Remember to choose comparable sales where the lot size and the improvement size are within 10 percent of the seller’s property. Failure to do this will yield inaccurate results.

The next step is to make three pricing lines: one for sold listings, one for current listings, and one for expired listings. In most cases, what you will observe is that the sellers’ current price falls in the price range where most of the listings are expiring. Here’s what to say:

“Mr. and Mrs. Seller, as you can see from these three pricing lines, the properties that have gone under contract in the last 90 days have all been priced between $135 to $145 per square foot. The properties that failed to sell and currently are showing on the multiple listing service as expired listings were all priced at $153 to $160 per square foot. Your property is currently priced at $154 per square foot.

“Consequently, you have an important decision to make. You can leave your property at $154 per square foot and it will probably still be on the market, or you can reduce your price to $145 per square foot and increase the odds that it will sell. It’s your choice; what would you like to do?”

Now if the sellers are being unrealistic and you’re no longer willing to work on an overpriced listing, here’s a different approach:

“Mr. and Mrs. Seller, you have an important decision to make. You can continue to keep your property on the market at the price where it is currently listed or you can lower the price to the point where the property will sell. Clearly, since we have had 50 showings and no offers, the property is not priced where buyers today are willing to purchase it.

“It’s your choice; what would you like to do? Continue with your current price? Or reduce the price, end the two-hour commute each day, and get on with your life?”

If the sellers say they want to keep the same price, the next choice is really yours. Are you going to choose to continue to work on an overpriced listing or are you going to walk away? In many cases, your willingness to walk away can be a huge wake-up call. Here’s what to say:

“Thanks so much for the opportunity to market your home. Given the current market conditions, I would be doing you a disservice to continue to represent you on the sale of your property when the market data says that you won’t sell in this market unless you drop your price. I have cleared this with my broker and we are releasing you from the listing. I wish you the best in getting the price you want.”

If you have an overpriced listing that is not selling and the sellers aren’t willing to be realistic, walking away is probably the smartest thing that you can do. If the sellers realize you’re serious and reduce their price, it’s a win for you both. If they are unwilling to reduce their price, you have just eliminated a huge energy and money drain from your business.

By Bernice Ross

Inman News™

One of the most common questions we hear is “where do I find my blog content?”  Ideally it would come from you everytime, a nugget of profound wisdom.  The fact is you are working hard and may suffer from periodic “brain drain”.  Remember one key thing when coming up with your next Blog Post, what is simple or common to you is profound to a first time home buyer, investor, or person looking for advice on losing weight or good nutrition.

Plan B?  Go to major news sites and look for relevant content for your clients and add your professional spin to it.  Here are a couple places to start:



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