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The year 2017 was considered as watershed year for real estate industry in India. After the trilogy of Demonetization, GST and RERA, the sector was reeling in despair. However, the indomitable spirit of Indian real estate developers didn’t fade a zilch. They rose to the occasion and started to repackage the product, the price and the promotion of their unsold home inventory. From a sales and marketing stand point, they tried to push the envelope to appease the discerning customer. Some of the initiatives which caught attention were in the form of upselling the product, adding the service element to the product, dove tailing technology with homes, bundle up offers with home finance. The home developers also tried superlative adjectives, spiced things up with bollywood and sports celebrities endorsing various residential projects. Projects got rebranded by international brands and innovative launches were executed in line with global best practices. Many developers even completed micro level infrastructure abutting their projects and took over the government’s role of providing external and internal work. The Government continued to follow a lackadaisical approach to urban planning and infrastructure which hurt the customer sentiment further. Many a times, a home buyer got homes but without a motor able road leading to her home. While all of this was going on, Government also tried to get their act together, albeit, at snail’s pace. The Central Government announced RERA (Real Estate Regulation Act) and the states started its implementation in third quarter of 2017. It pushed developers to fast track completion of projects and a certain deadline date was announced. Many residential projects got completed in this rush of deadline, however the sales velocity didn’t match up the speed of completion of these projects. Eventually, RERA implementation failed miserably in most of the states and could not fulfil its objective to provide transparency to the home buyer. It rather deteriorated home buyer’s confidence and hope in Indian real estate. The home buyer, therefore further delayed decisions to purchase homes and felt comfortable being a “fence sitter”. Due to this conundrum, working capital issues reached to unsustainable level with most of the home developers. Many a times, the monthly sales were still not even matching to meet /clear even the lenders liability. The government came up with certain impetus to announce the affordable housing policy and hoped that this might turn the tables for the customer and for the developers. The intent was to ensure faster delivery at a good price to the customer and in turn achieve good working capital for the developer. Many developers diversified into this space and many new entrants also emerged in this space, including some corporates. However, the product suffered immensely as these new affordable homes were too small and were in far flung areas. Therefore, the affordable home policy could not sustain interest of the buyer, after initial euphoria.
So, after all the hoopla of innovative marketing, government compliances and regulations for last couple of years, the sales further nosedived. The inflation in construction cost created the double whammy for the industry. The construction costs took an upward trajectory, thanks to inflation in cement and steel prices. The regulator also continued with its risk weightage on real estate. Therefore, the financing cost of real estate projects especially in residential side continued to be in the range bound of 15%-24% per annum. With increasing construction costs, depleting sales, increasing lending cost, the home developer was pushed to the limit.
While all this happened, the old age mantra of “reduce prices and sell more” took a rebirth. The residential home prices which were chasing Manhattan prices started their journey back home. The home developers who followed this mantra created huge success, broke record of sales while others continued to sweat. Sales velocity became the buzz word and everything else took a back seat. Some of the home developers started to understand the sales velocity equation in a more pragmatic way. Rather than increasing the pipeline and increase the sales activity, the focus changed to win rate and reduction in sales cycle. Once the focus changed from increasing the sales activity to increasing the win rate, the sales velocity started to increase at good pace. Among the various associations of real estate developers, such sale successes were initially ridiculed as “black swan events” and such developers were termed as “outliers”, in a negative way. There were corridor talks that such developers are killing the industry. The lenders however, welcomed this step and are now gearing up to back up these developers more in such trying times. A sense of appreciation is now being seen among many quarters for these developers and the corridor talk died its natural death. It is expected that many other developers in last quarter of 2018, will follow suit and focus on reducing sales cycle and thereby increasing sales velocity. After all, nothing succeeds like success.
This article is written to appreciate such entrepreneurs in the real estate space who took the call to correct their pricing to achieve higher sales velocity. This article is an attempt to also encourage others to follow suit. Let there be a sustainability in prices for the home buyer. It is an important way to achieve reasonable growth in real estate business in India. Once that’s achieved, the economics will start to favour home developer again and there will be Happier Sundays!

As they say, a fish always rise after striking its head at the bottom of the sea. Its time therefore to rise up and act aptly as per the changing landscape.

Disclaimer: The views presented in the article are personal views of the writer and not of any organisation/company. For any queries/comments/feedback, please write at [email protected]

Here are some ways in which you can sweeten the pot and beat your competition to a sale

Out here in the field we are seeing home prices dropping as sellers respond to housing market pressures. Some sellers are still expecting premium sales prices for their homes, but the transitioning real estate market is resisting high prices and causing sellers to re-evaluate their expectations.

It’s a whole new ball game and, if you want to play, you need to know the new rules. Getting an agent to stick your home on the local MLS system and waiting for the offers to come in won’t cut it anymore. Today, traditional sales methods are not enough to sell your home in a reasonable time for a decent price. Home buyers have too many choices and home options to choose from. They are driving the market and your home is only one of many that they are evaluating.

The obvious response to the market, which has been adopted by many sellers, but at a price, is to reduce the price of your home below other comparable houses in your neighborhood. Although many sellers have built in some wiggle room between their asking price and their bottom line, buyers are asking for reductions that will significantly erode the seller’s profit, sometimes to zero. Those who have a need to move quickly, for employment for example, will even take a loss in order to remove the burden of two mortgages or ending up renting. This situation, by the way, offers real estate investors an opportunity to pick up some good bargains.

Even in today’s market, you don’t have to drop the price of your home to the point of taking a loss. There are other ways in which you can add value to your home, even if it is only perceived value, that will enable you to make a good profit and still sell in a reasonably short time. The use of sales incentives can be a very smart and cost-effective way to add value to your home without sacrificing much of your asking price, if any. Here are some things that can sweeten the pot and make your home a more attractive choice to potential buyers:

1. Offer a 3% commission to the buyer’s agent. Some agents will not show your home for less than that and they will most likely pick your home apart in front of the buyer if they do show it.

2. If you’re in a homeowner’s association, pay the new buyer’s fees for the first year or more.

3. Buy a home warranty, which protects all the appliances in the house including the air conditioning and heating systems. The cost is usually less than $450 for one year.

4. You can pay all or part of the buyer’s closing costs, which can be deducted at closing from your sales proceeds, so you have no out of pocket expense.

5. Pay the buyer’s property taxes for a year or some period. You may already have paid a portion or all of it anyway. Again, no out of pocket expense.

6. If you have oil heat or propane, give the buyer a full tank of fuel.

7. Offer free grass cutting or landscaping for a period of time.

8. Provide all new carpeting or kitchen appliances or leave furnishings that the buyer may want.

9. Offer to pay the buyer’s property insurance for a year or more.

10. Buy down the buyer’s mortgage points by a point or two. This adds significant value to the buyer in terms of dollars saved and it will cost you little.

If you think about it, you can probably come up with more. I have suggested and used these and other methods for distinguishing my clients’ homes in this tough seller’s market. In addition, if you spruce up your home with new paint, especially the front door and kitchen, landscape your yard, clean thoroughly throughout, and stage your home to put it in it’s best light, your home will outshine the others in your neighborhood.

One final suggestion – hire a competent real estate agent. An agent will ensure that you don’t leave money on the table and help you with all the ways in which your home can be the best buy on the block. I can always justify my commissions because I get the home seller more money than he could on his own. A top-performing pro will make you money and not cost you. Just ask the many ‘for sale by owners’ who ended up hiring an agent after an unsuccessful attempt to sell on their own or the ones that ended up getting much less than their asking price. But if you are determined to go it alone, the above tips should help.

Till Next Time,

Bernie Rosellen, Real Estate Auctioneer

Although, there are far – more, real estate agents, than successful ones, it might be helpful, to analyze, consider, and understand, what, the best ones, do, which makes them, stand – out, from the crowd! One of the key areas, which, often, differentiates, between, them, is, how they address concerns, and answer questions, effectively, and to, the best, of their abilities, and, to the satisfaction of one’s actual, and/ or, potential customers, and/ or, clients. After, over 15 years, as a Real Estate Licensed Salesperson, in the State of New York, I believe, strongly, using the 5 – steps, which, effectively, address concerns, and answer questions, not to the agent’s satisfaction, but to his clients. Therefore, this article will attempt to, briefly, consider, review, address, and discuss, why this approach, makes sense, and is effective.

1. Carefully listen: Don’t make the mistake, of trying to prejudge, what someone’s concerns, are, and, carefully, thoroughly, listen, and, then, ensure, you truly understand, what’s being asked! Too often, individuals rush to respond, which sometimes, opens – up, the so – called, Pandora’s Box, and, thus, create more concerns, and questions, which the other person, didn’t previously possess! A simple way, to do this, is to say, something like, In other words, your concerned about, and state, what you think, he said, Do not proceed, to the next step, until you are certain of this first one!

2. Empathy: Since, for most of us, the value of our house, is our single – biggest, financial asset, and, many consider, home ownership, to be one of the essentials of the so – called, American Dream, the reality is, these people, are seeking, an agent, who cares, about them. Proceed, with the utmost degree of genuine empathy, by listening, far more than speaking, and openly, focusing on the client’s best interests (actual, and/ or perceived). One effective way to word – this, is, I can perfectly understand, how you feel, In fact, I felt that way, and so did, many others.

3. Fully answer to their satisfaction: Transition this discussion, by adding, Until they realized a few things. Then, fully answer, to their satisfaction, and not, merely, to yours. Wait for some indication, either a gesture, body language, nodding, or verbal statement, indicating, they understand.

4. Create/ recreate the need (inspire and motivate): Depending, on your relationship, and when the concern was addressed, you need to, either, create, and/ or, recreate the need, in an inspiring, and motivating way. Using expressions, such, as, In light of what we’ve discussed, and reviewed, often, moves the discussion, forward, effectively!

5. Close the deal: Although, the previous four steps, are important, and necessary, unless/ until, an agent, closes the deal, by creating a meaningful, meeting – of – the – minds, and a true agreement – level, the process, will not move forward, in the most meaningful way!

Success comes from practice, discipline, commitment, knowledge, action, and consistency! Will you commit to these tasks, and skills, etc?

It looks like an interesting year ahead in 2007 for the Incline Village real estate market. Affectionately called “The Riviera of Lake Tahoe”, this cozy community on the north east shore is a standout when it comes to short, medium and long term real estate investing. Why are prices continuing to move up here while the rest of America stumbles?

To get an insight into why Incline Village real estate continues to show solid upward gains while the most of the country is licking their wounds, we need to analyze the current inventory for sale, the asking and sale prices for the past three years and the trends that are occurring. Bear in mind that there is a finite supply of homes and condos with virtually no raw land left for development and an increasing demand by the 40 to 70 crowd looking for their slice of heaven in the nicest community at Lake Tahoe.

It is important to look at not just median sale prices but also median asking prices over a long period of time so we can see trends in the market’s direction. So, stick with me and follow the dates and numbers.

The median asking price for single family residences in Incline Village reached a peak the last week of April 2005 at $2,300,000. This number declined to a low of $1,495,000 the second week of May 2006 and has crept steadily upward to its present level of $1,895,000 in late January 2007. The median asking price number is valuable when looked at in conjunction with the median sale prices over the same length of time.

Here are the median sale prices for houses for each of the last three years:

2004 -$865,750 2005 – $1,110,000 2006 – $1,150,000

While the median sale price has ratcheted steadily upwards during the past three years the median asking price rose sharply during the seller’s market of 2005, retreated a bit in the buyer’s market of 2006 and is now starting to creep upwards again. What this tells me is that the mentality of the sellers in Incline Village is one of optimism. Most of the property owners in Incline Village are relatively affluent and can afford to hold onto and enjoy their property through any perceived softness in the market. While the fact that some buyers are sitting on the sidelines is evidenced by the decline in unit sales versus 2005, prices are remaining firm as evidenced by both the median asking and sold prices over the past three years.

Most people who buy property in Incline Village and other high-end resort communities do so because they want to, not because they have to. Most sellers sell because they want to, not because they have to. It creates a market where properties generally sell slower, but at a higher percentage of the final asking price than most other places in the country.

Another key factor is that virtually all of the homeowners in high-end resort communities make their money somewhere else. The prices of the properties bear no relation to local incomes unlike the typical residential real estate market. The prices for properties for sale in Incline Village reflect what an affluent person is willing to pay for any particular property.

We must also keep in mind that the level of sales in units in 2005 was an anomaly since it was by far the biggest year ever in the history of real estate sales for Incline Village and Crystal Bay. When comparing annual sales totals it is better to look at the time period from 2000 through 2005 and compare the average annual totals of unit sales versus 2006 to get a more accurate reading. When one looks at the long-term statistical data we can see that even though sales in units in 2006 are approximately 30% below the average annual totals for the previous five years, the dollar value of the properties being sold is still extraordinarily high and this value is moving upward steadily over the long haul.

When the median asking price for single-family homes was $2,300,000 back in April 2005 we had only 107 houses for sale in the entire community. At the present time there are 157 single-family homes for sale in Incline Village, an increase in the inventory of almost 50% versus April 2005. The fact that we have so much more inventory on the market then at the same time two years ago and yet actual closed sale prices continue on a slow upward path tells me that no price decline of any significance across the board will be taking place anytime soon. Individual properties, depending on the motivation of the seller may provide special values for a particular buyer. But in my opinion, there’s not going to be a general price decline among single-family homes in our market because there is so much intrinsic value in owning land in Incline Village.

When we take a look at the condo market the numbers are even more dramatic in favor of local market strength over the long term. The median sale price of condos for the past three years is as follows:

2004 – $405,000 2005 – $485,000 2006 – $580,000.

The median asking price for condos topped out at a staggeringly high $725,000 during the fourth week of April 2005 when there were only 55 condos for sale in all of Incline Village and Crystal Bay. The median asking price in this category bottomed out so far at $555,000 the first week of January 2007 and has now crept up slightly to $559,000. This is to be expected after the overall median price of condo sales rose an unsustainable 43% in just two years and the inventory jumped all the way from 55 units up to our present total of 126 condos currently on the market.

It is actually a testament to the strength of our local market that the median price of condos did not decline when the inventory increased so dramatically during the past two years. What this shows is the intrinsic value of owning property in Incline Village and all of the rights and benefits that you receive such as access to the private beaches, discounts at the golf course and rec center, specials at the ski area and most importantly of all the phenomenal quality of life that we get to enjoy here.

In summary, I do not anticipate that the number of unit sales will increase dramatically in 2007 versus 2006 although that would be a pleasant surprise. My crystal ball tells me that the median price for houses in 2007 should remain close to or slightly above the median price for 2006.

I feel that the median price for condos in Incline Village and Crystal Bay, due to the excess of inventory in relation to 2005 and the median asking price trend will result in strength for the quality properties that are within walking distance to the Lake and weakness for the lesser properties that are in lower demand locations. There will always be exceptions to this as individual complexes may have a shortage or excess of supply from time to time during the year. It is very hard to generalize about the condo market in Incline Village since each complex has its own unique attributes. Prospective buyers looking for property in Incline Village, Lake Tahoe and other mountain resort communities tend to prefer high quality interiors and locations that make him feel like they are truly away from civilization and up in the mountains.

Copyright 2007 Don Kanare – All rights reserved.

Why real estate agents need to stay motivated and on top of their market

Real estate is sales. No more and no less. You can go for months without selling anything and, naturally, be discouraged that you’ll ever succeed. Feast and famine is the order of the industry. So it is crucial that you break through this feeling to land your million dollar deal for the year. To land those deals you have to BELIEVE that you can do it – and that is why motivation is so important!

Motivation is also important for the following reasons:

a. Personality makes the sale!

Motivating yourself is essential because in real estate it is your personality, almost more than anything else, that counts. Reputation travels fast. Your success will hinge on word of mouth. Make a good impression and many more clients will want you to service them. That is why it is crucial that you feel on top of your field and that you remain confident in your abilities and skills, even when things don’t go as planned. Real estate can be hugely stressful – both for you and for your client. If a client leaves unhappy, whether it was due to your efforts or not, word-of-mouth spreads quickly and can affect your referral network and, ultimately, your bottom-line. Remain motivated!

b. Motivation gives you momentum!

Motivation pumps you up. Real estate is a feast and famine phenomenon. The famine part may be harder to sustain your energy for the feast. But the feast will come if you’re primed for it. That is why it is so important to retain your motivation so that you keep on enhancing your skills and so that you, somehow or other, manage to maintain your relish for your work. Motivated agents are more inclined to go the extra mile for their leads and clients, and the extra mile is always worth it.

c. You are self-employed

At the end of the day, you are running your own business – and that is precisely why motivation matters! As agent, you may work under a broker and the broker may provide you with marketing tools, education and mentoring, but, ultimately, you are responsible for your own results. It will be largely up to you to find the leads, manage them and close the deals. In short, you as agent are a business-person, an entrepreneur, self-employed and, like any self-employed individual, you will have to motivate yourself to keep your business going. In other words, the drive, determination, and self-discipline, must ultimately come from the agents themselves. And that is why it is so important for you to be self-motivated!

d. Motivation is one of the two most important skills!

Real estate hinges on knowledge. You’ll need to know your geographic locality inside out as well as going property prices and industry regulations. But, otherwise, the two most important factors are your personality and motivation. As regards personality, you’ll need to be gregarious, likeable, and you’ll need to possess excellent people skills. You’ll also need to have empathy in order to understand people’s situations and needs, so as to serve them best. Otherwise a positive attitude is crucial. Without that, you are at risk of defaulting on the first particularly since you’ll, likely, find the labor uphill work for you (especially in the beginning) and tend to be disheartened or frustrated. In that way, motivation underlies anything to do with real estate and is basically the corner-stone of your success.

Says Zurple, the real estate lead generation agency: Success in real estate relies on two main things – a great business strategy and a strong drive to succeed. If you’re missing one or the other, you will struggle. And if you have both – your’e on your way to success.

The bottom line is this…

Success in business, especially the real estate industry isn’t the 100 meter dash – it is a marathon. Maintaining a steady level of motion can be tricky, but it’s your main – if not your only – way to success.

Here are three tips that can help you:

1. Recognize your progress: Take it slow and pat yourself on the back for those minor victories. Congratulate yourself for staying on task and for completing all those incremental steps that were so necessary for closing the deal.
2. Find yourself a successful mentor: In the cutthroat industry of real estate finding someone excellent to help you can be laborious. Avoid brokers who are ready to hire you for fees. Take your time in finding someone who is a good match for you, who is honest and who has your best interests in mind so that he. or she, will give you the time and guidance that you need.
3. Organize your time well: Set aside time to speak to clients, review industry reports and statistics, attend meetings, and see to all the other variables that go into the real estate schedule. Improve your skills as you go. Don’t avoid tasks that you don’t like. Be self-disciplined. Look to the future – don’t dwell on your failures; learn from them.

And one more thing…

Get and stay motivated!