It’s one of those days, the kind when the sky is just a stretch of turquoise blue and a smattering of cotton-ball clouds. To the right, tall wisps of wheat and grass, to the left, towering hills shaded purple and green, cut in places by thin, glistening streams…
No, this isn’t a description of the backdrop for a soon-to-be released Western film. It’s the scene Greg Fay, founder of Fay Ranches brokerage, sees all the time while showing premium ranching and sporting properties to his clients. And with price tags ranging from $1 million to $100 million, Fay likens the complex process of taking a ranch from due diligence to the closing table as nothing short of real estate combat. But if this is a battle, Fay — whose gross sales for Fay Ranches topped $180 million last year — may have already won the fight.
“It’s not an investment prone to the vagaries of human whimsy like the SEC having a bad day and the stocks responding to it,” Fay says about the motivation behind the increasingly popular ranch ownership trend. In fact, for Fay’s clients — many of whom he describes as among the most successful businessmen in the world — ranch real estate is more viable an option than dealing with the fickleness of today’s stock market. “When it comes to ranches, my clients are very bullish,” he says, perhaps with pun intended.
But beyond the financial benefits, there’s a recreational and familial aspect to ranch ownership too. “You can just watch clients’ shoulders drop as they get to the ranch,” Fay says. “Then they get to see their kids or grandkids running around, skipping stones in the pond or riding 4-wheelers or a horse.” For Fay’s clientele, it’s about giving their children these “non-Nintendo moments” — like observing a bull moose ramble in an open field or listening to an elk bugle on a quiet night. “You can’t get those same experiences from stocks,” he says. “All you get from stocks is heartburn.”
However, convincing potential buyers that ranch ownership is an investment worth making still takes work — and a little bit of creative marketing. “Catching a big fish can be one of the strongest sales tactics we have,” Fay says, adding that many times, a “showing” consists of fly fishing, hiking, or even floating clients down the river on drift boats so they can get a better sense of the expansive landscape as they leisurely cruise on the water.
One of Fay’s favorite moments happened with two of his longtime clients: They were interested in purchasing a property but weren’t quite convinced. At dusk, Fay brought them to a particularly beautiful vista boasting panoramic views of the hilly, lush terrain. As the sun set between the mountains, Fay arranged a twilight happy hour, complete with folding chairs and margaritas for all. “My client’s wife was hurting a little the next morning,” he says, “but they bought the ranch!”
REALTORS® who are interested in specializing in ranch and land sales can learn more about becoming an Accredited Land Consultant at REALTORS® Land Institute.
Most people are familiar with Easter Seals—a non-profit organization that provides assistance to disabled individuals and their families—but not everyone may be aware of the storied history behind the charity, or its connection to real estate.
The origin of Easter Seals dates back to 1907, when the son of Ohio businessman Edgar Allen was killed in a tragic streetcar accident. Allen knew that with the right medical care his son could’ve been saved, and so he sold his business to begin fundraising for a new children’s hospital in town. Through his involvement with this hospital, Allen came to learn how stigmatized disabled children were—kept away the public and denied adequate care—and was inspired to start the National Society for Crippled Children, or what would later become Easter Seals.
Today, Easter Seals is the leading non-profit provider of services for individuals with a variety of special needs, and looks to all industries for financial support. In the real-estate realm, Century 21 has been a longtime sponsor, raising a total of $106 million over its 34-year involvement with the organization.
“It’s been a tremendous venture,” says John Kersten, head of fundraising for Century 21 Town & Country in Utica, Mich. Kersten’s brokerage was this year’s top Century 21 Easter Seals fundraiser, bringing in $847,000 for the cause. Kersten began fundraising about 15 years ago, and has since built up his efforts to include prizes like a $50,000 cash giveaway plus a Corvette Coupe. With a one in 5,000 chance of winning—and at the cost of only $50 a ticket—the charity raffles have become tremendously popular throughout the Metro Detroit area.
Other Century 21 brokerages across the nation organized activities as varied as golf outings and casino nights to beer and barbeque cook offs or charity walks. Through these and other means, the company collected $2 million for Easter Seals in 2012.
“We’re just glad to be able to raise money for a charity that reaches out to the community with their service and has the ability to help such a cross section of people lead more independent lives,” Kersten says.
And as beneficial as charitable giving is for the community, it’s just as valuable for boosting office morale and colleague camaraderie, says Patsy Molloy, director of marketing and corporate relations at Easter Seals. “Charity fundraising is great for real estate businesses who want their agents or other employees to feel good about giving back,” she says. “It’s about knowing they’re all part of something very special.”
It’s a phone call no association wants to receive. Fair Housing testers say sales associates in the market violated the law by treating households differently based on race and ethnicity.
That’s what happened to the Lehigh Valley Association of REALTORS® in Pennsylvania, but the story doesn’t end there.
Taking the view that even a single allegation of discrimination is one too many, the association worked with community groups to institute a hard-hitting campaign to educate its members about Fair Housing. “We made a decision to be part of the solution,” says Andrea Decker, the association’s president in 2012, when the Fair Housing testing was conducted.
The campaign combines the latest best practices on federal Fair Housing rules from NAR, the U.S. Department of Housing and Urban Development, and other groups, with an outreach program that vests brokers in the education process.
“We decided brokers were the best means to mitigate this issue,” says Justin Porembo, the Lehigh Valley association’s government affairs director. “We asked them to have an educational forum at each of their monthly staff meetings to keep the conversation about Fair Housing going.”
A new task force was created to develop monthly Fair Housing topics that brokers could use in their meetings. The task force also looked at ways to increase minority representation on the association’s board, and it worked with HUD to create a publication directed at consumers to help them understand Fair Housing and how to report activity that they think might violate the law.
The campaign has been in place for about a year now and it’s impact has been significant. “Ultimately, we feel the outcome was positive,” says Ryan Conrad, the association’s CEO. “We’re moving forward.”
In a 6-minute video. Conrad and others walk you through the details of the report by the Fair Housing testers, how the association responded, and what the outcome has been.
Share the video in time for Fair Housing Month, April 1-30.
Tax provisions are once again under discussion as lawmakers look at dueling budget plans
The federal budget process for next year began last week with release by the Senate and House budget committees of their fiscal 2014 plans. The House plan, prepared under the leadership of Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, is intended to bring the federal budget into balance in 10 years by limiting spending to about 19 percent of the gross domestic product.
The Senate plan, prepared under the direction of Sen. Patty Murray (D-Wash.), chair of her chamber’s budget committee, is intended to put the budget on a sustainable path to balance by reducing it by about $1.85 trillion, half coming from cuts and half from new revenue. The new revenue would come in part by making changes in the tax code, including by closing “loopholes” and “eliminating wasteful spending in the tax code.”
The budget is just a financial blueprint and doesn’t have the force of law, so even if some version of these two proposals is eventually passed by Congress, any actual spending cuts or tax law changes can’t be known at this point just by looking at these documents.
Even so, they’re important to real estate because they point to what battles REALTORS® could be facing in the months ahead. For example, in talking about closing tax loopholes or eliminating wasteful tax expenditures, lawmakers can use that language as a starting point for looking at deductions and credits that are available to households and individuals today. Could that include the mortgage interest deduction? That’s a possibility, says Evan Liddiard, NAR’s policy analyst on tax issues.
Liddiard sat down with Colin Allen, an NAR Legislative representative, last week to talk about how real estate fares under the two budget proposals in Congress and what comes next in the process. Get their take on how the budget battle is shaping up in the 4-minute video above.
Next step in the process is release of the Obama administration’s budget proposal, which is expected in early April. Last year the administration called for curtailment in the value of itemized deductions for wealthier households.
A political analyst looks at the issues facing the Republicans and Democrats as they look to next year’s congressional races and the 2016 presidential contest.
Much like the secret meetings at the Vatican to determine the new pope, the major political parties are holding their own “conclaves” right now to figure out how to approach the next couple of election cycles, says Amy Walter, national editor of the Cook Political Report. Walter spoke during a luncheon at NAR’s Association Executive Institute event in San Diego, Calif., which ends this week.
Both parties face obstacles over the next several years, Walter says. Unsurprisingly, the biggest issue the GOP has to deal with is appealing more to minorities, a topic discussed at length in the months following the 2012 presidential election.
The Romney campaign believed that the 2012 election would play out much like the one in 1980, in which voter dissatisfaction with the economy and with the general direction of the economy led to Ronald Reagan beating Jimmy Carter, Walter says. However, minorities totaled just 11 percent of the electorate in 1980, she said. In 2012, they made up 26 percent. That trend will continue as 50,000 Latinos turn 18 every month in the United States.
“If your base is older, white voters, the trend line isn’t exactly going in the right direction,” Walter says.
This will make it more difficult for the GOP to win future presidential elections, she adds. Right now, if you look at the national picture, Democrats have a virtual lock on 17 states and the District of Columbia, which equates to 242 electoral votes. The GOP, by contrast, only has about 13 states that are practically guaranteed, which amount to 102 electoral votes.
This gap is at the heart of the effort by GOP Chair Reince Priebus to reach out to minorities over the next few years, Walter says. Additionally, Republicans are touting young rising stars like Louisiana Gov. Bobby Jindal and Florida Senator Marco Rubio, who are of Indian and Latino descent, respectively.
Despite their success in winning the presidency again last year, the Democrats have significant challenges of their own, Walter says. At the state level, the average GOP congressional district has gotten whiter. That’s due to a combination of redistricting and the fact that Democratic voters tend to cluster in urban areas with a much smaller geographic footprint.
Additionally, the 2014 midterm elections could shift the momentum back to the GOP, she says. Most of the close battles for Senate seats are going to be in states that tend to vote Republican. And minority and young voters typically don’t turn out as much for midterms. That means it will be very difficult for the Democrats to win back a majority in the House and maintain a commanding majority in the Senate for the foreseeable future. “It’s going to be a lot of defense for the Democrats [next] year,” Walter explains.
Also, there’s still some uncertainty as to who the Democratic candidate for president in 2016 will be. Hillary Clinton would seem to be an obvious choice, but it’s not entirely clear whether she’s going to run. And other than Vice President Joe Biden, the Democrats don’t have that many appealing candidates to choose from, Walter says. In contrast, GOP has a surprisingly deep and diverse group of potential candidates right now, including Jindal, Rubio, South Carolina Gov. Nikki Haley, and Kentucky Rep. Rand Paul.
“If [Hillary Clinton] doesn’t run, it’s going to be a thin bench for the Democrats,” Walter says.
Every day is different. Each one brings new challenges and opportunities, new sources of joy and frustration. But no matter what’s going on, you should be able to maintain a certain level state that’s independent of events, says Jared James, an entrepreneur, real estate speaker, and YPN Lounge blogger.
James, who gave a presentation yesterday afternoon at NAR’s Association Executives Institute in San Diego, Calif., says too many people just react to things that happen to them, thus getting blown around like a dead leaf in the wind. But, he adds, there’s a very simple way to get into a positive, productive mindset every day, regardless of circumstances.
As a serial entrepreneur who currently runs a few companies in addition to traveling all around the country to speak, James uses the following method to get emotionally grounded: No matter where he is or what he’s doing, he spends a half-hour early in the morning each day reading, praying, and reflecting to reach his ideal state.
Additionally, he mentally reviews what he wants to accomplish that day. He says it’s important to get very specific about those tasks. “When you have a desired outcome, your brain gives your body marching orders,” he says. “Every single day, you’re going to have an outcome, whether you set one or not. Wouldn’t you rather have some control over it?”
James suggests implementing a similar routine to reach a consistent emotional state every day and help you achieve goals that will improve your business. You may not think you have the time, but as James says, “People say they don’t have a half-hour in the morning to do this. Well, do you want a spend a half-hour doing this, or eight hours or more not accomplishing anything?”
Though he was speaking to an audience of association executives, entrepreneur and speaker Josh Linkner’s presentation this morning at NAR’s AE Institute in San Diego, Calif., was applicable to anyone who works in real estate. Linkner, who has started and invested in a number of technology companies over the past two decades, says a problem plaguing not only this industry but the entire business world is a lack of creative thinking.
According to Linkner, virtually everyone has some capacity for creativity. However, from an early age, this instinct is suppressed by external forces — particularly school and work. “Our creativity is declining,” he says. “We don’t grow into creativity, we’re growing out of it. The lesson society teaches us is to not be creative, just do what your told and don’t take risks.”
This is a huge issue, though, because creativity and innovation have become more critical than ever before. In a recent survey of 1,500 CEOs around the world, creativity was cited as the most important attribute of leadership today, Linkner says. Moreover, the tendency to do things the way they’ve always been done and avoid taking chances is a recipe for disaster in a rapidly changing business environment.
“Playing it safe has become the riskiest move of all,” he explains. “If you run that game plan in the real world, it’s a surefire path to mediocrity.”
In his presentation, Linkner offered the following five tips for people who want to accelerate their business through creativity: Continue reading »
Despite the improving economy, home loans even for well-qualified borrowers are still unnecessarily hard to get and take too long, real estate practitioners say. But lenders take a different view. In a roundtable with three of the country’s largest lenders, home mortgage executives say they’ve ramped up capacity and are making loans quickly for qualified conventional borrowers and they expect to keep doing so even as they gear up for a host of new mortgage lending rules coming out of Washington in the next year.
“We all made a lot of loans last year,” says Joseph Rogers, Jr., executive vice president of Wells Fargo Home Mortgages. “Wells Fargo made over a half a trillion dollars in loans to customers last year. Our retailers served over a million customers. That means somebody was getting financing.”
NAR brought the three lenders together in mid-March for a wide-ranging discussion to get their take on the state of the conventional mortgage market, how long before private lenders get back into the market with non-agency products for conventional borrowers, and what it will take for lenders to get all the new rules coming out of Washington incorporated into their business processes.
The lenders say 2012 was an especially busy year, particularly in the refinance segment, because of ultra-low interest rates and regulatory changes that created a window for borrowers to move into FHA loans. Volume on the refi side could very well dip this year, but on the purchase side, the lenders say they’re making a lot of loans and plan to keep doing so. “All of our companies have been investing very heavily [on meeting purchase demand] and have been rewarded for increased capacity in this business,” says Saber Salam, senior vice president of Chase Home Mortgage.
Looking ahead, once the federal government provides clarity on what it plans to do with the two big secondary mortgage market companies Fannie Mae and Freddie Mac, which have been in conservatorship for the past several years, lenders will look anew at what it takes to get a robust private mortgage market into place.
A lot has to happen, they say, including getting the credit rating agencies back into the business of rating private-label mortgage-backed securities, and that takes time and money, so expect it to be years before we see the return of a substantial market outside agency-backed mortgages. “If we settle the issue of what’s going to happen to Fannie Mae and Freddie Mac, and on the role of FHA, and take out that ambiguity, that will help a lot [in spurring a return of private money inti mortgages],” says Rogers.
Loan standards are about right
Without a doubt, borrowers used to low- or no-doc loans are seeing tighter loan standards today and that is unlikely to change, says Rogers. “But for those other customers who are well qualified with a decent FICO score, I think credit is readily available.”
Shawn Krause, executive vice president of Quicken Loans, says to the extent lending appears tight, it’s because lenders are having to navigate a very confusing repurchase environment. Repurchase refers to when Fannie Mae, Freddie Mac, FHA, and even investors say loans weren’t originated to their parameters and require the lenders to buy the loans back, a costly penalty that lenders say is the result of a changing playing field.
“How you interpret these things makes a big difference, because lenders have been stung through repurchases, after we were trying to do what we were told,” says Rogers. “Now we have a different environment we’re dealing with.”
The lack of clarity on the repurchase rules is contributing to the difficulty borrowers face in obtaining loans, said Salam. “What we’re dealing with is some of the history of where lending standards used to be versus where they are today,” he said.
Seeking to make a better connection with consumers online, Web site realtor.com® (yes, with a lowercase “r”) unveiled new branding this week. The rebranding effort covers — for now, anyway — the corporate logo and the overall design and structure of the Web site.
“We wanted to focus in the near term on the new look and feel,” says Andrew Strickman, realtor.com®’s vice president of brand and creative. “One of our desires was to clean up the design — make it more open, warmer, and brighter.”
The rebranding is the product of an “exhaustive” research and information-gathering project started by realtor.com® and its parent company, Move Inc. in the first quarter of 2012. That initiative involved input from internal stakeholders, REALTORS®, and consumers, Strickman explains.
Based on the feedback received, the overall strategy is to engage both the hearts and minds of visitors.
“People care deeply about the place they live in,” Strickman says. “It’s an emotional decision, but also a logical one. We really wanted to understand the role that a site like realtor.com® plays in the consumer’s mind as they think about and dream about buying a home.” Continue reading »
Next year is a big year for the health insurance reform law enacted three years ago, but it’s this year that you might want to start thinking about what, if anything, you’ll need to do to get ready.
The Patient Protection and Affordable Care act of 2010–what often gets referred to as Obamacare—includes an employer responsibility provison that might have an impact on you if you oversee a state or local association or brokerage.
This employer mandate, as it’s called, requires any employer with more than 50 full-time equivalent employees to provide health insurance for its employees. Right off the bat this would appear to rule out many if not most state and local associations of REALTORS®, because few associations have more than 50 employees. Same thing with brokerages, because many of them, while they might have 50 or more sales associates, don’t have quite that many employees. (Independent contractors aren’t counted as employees under the law.)
If you meet the eligibility threshold, you have to make insurance available to your employees and contribute to the cost of that coverage. Failure to do so means your employees have to get their own insurance (in one of the new “individual exchanges” that are being set up under the law), and you would be on the hook for penalties for the failure to provide affordable coverage.
The law does make a tax break available to small employers if you pick up employees’ insurance costs, and for employees who have to get their own insurance, some tax help is available there, too.
Even if you don’t meet the mandate’s employee threshold, it might make sense from a business standpoint to provide insurance, and depending on a number of factors, you might be able to provide relatively affordable coverage to your employees, especially when you factor in the tax break available to very small businesses.
There are other major aspects to the law that kick in next year, so you might consider meeting with an insurance broker or business adviser this year not only to understand what requirements you face but also what makes the most sense for you from a business standpoint.
In the 6-minute video above, Marcia Salkin, NARs managing director for legislative policy, and Robert Hay, associate director of policy for the American Society of Association Executives, talk about the employer mandate that kicks in next year and put other aspects of the law into a helpful context for you as you decide how the law affects your operations.