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The Jamaica real estate submarket

The general market for goods and service is made up of many submarkets. When left free to operate without private or governmental interference, each submarket and the general market as a whole should theoretically regulate itself by the laws of supply and demand.

One of the submarkets of the general market for goods and service is the Jamaica real estate market. While the real estate market differs in a number of distinctive ways from other markets, it acts much like all markets with respect to changes in supply and demand, but with a slower response time. It has the appearance of being a single, simple entity when in fact the real estate market is itself composed of many complex sub markets. This would include Jamaica homes for rent as well. This would be known as a parent category.

Real estate is a commodity just as wheat, gold and sugar. By combining the other factors of production with land we can produce wheat, gold and sugar or buildings.

Major sub markets of Jamaica Real Estate
Most authorities agree that the five major submarkets of Jamaican real estate are:
1. Residential homes for rent in Jamaica;
2. Commercial;
3. Industrial;
4. Agricultural;
5. Governmental and special – purpose properties

Each of these five categories is further divided into minor submarkets. For example, “residential” as a major submarket can itself be divided into minor submarkets as follows:
1. Urban;
2. Suburban; and
3. Rural

Each of the minor submarkets can be divided further into single-family and multifamily, which could then each be classified as owner-occupied and rental. The point is what appears to be one big, but simple real estate market is in reality, a complex structure of many individual submarkets, each of which contributes to the overall market.

The characteristics of the real estate market
If the real estate market were allowed to operate without any interference or restraint whatsoever, each person could use his or her property in any way that would produce the greatest return. This could result in one person’s use of Jamaican property causing a loss in value to another person’s property. Obviously, we cannot permit land to be used for whatever purpose the owner thinks best for his or her private gain.

For example, if you lived in a very fashionable up-market residential subdivision and your neighbor bought two undeveloped lots adjoining your property for use as a pig farm or for a paper mill with its offensive odors, the social costs to you and the rest of the subdivision would far outweigh the private gain to your neighbor. Therefore, the real estate market cannot be permitted to operate free of all controls and restraints.

Listed below are five primary characteristics affecting ownership and sale that set real estate apart from other markets.
1. The market is local in nature; the product is immoveable.
2. It is slow to respond to change in supply and demand.
3. There is relative permanence of improvements; land is durable and fixed in location.
4. The market is not organized and is without central control; there is no standard product and no central information.
5. Governmental controls influence the market through zoning, building codes, taxes, etc

Local in Nature – The market for real estate is uncommonly local in nature compared with other markets. The reason, of course, is that land and the improvements thereon are immoveable. For example, we cannot transport sugar cane lands from Westmoreland to Kingston. If we were in the market for tomatoes we could haul our produce to the place where demand might be greatest. However, despite the demand for housing in Area A, we cannot produce an apartment complex or single-family subdivisions on land located in Area B and take it to where there is greater demand.

Slow Response – The property market is unusually slow to respond to changes in supply and demand. Very often the number of houses (supply) in an area begins to fall behind the demand, however, since the design, land acquisition, site preparation and construction phases of real estate are so time consuming by the time demand responds the market becomes flooded. The equilibrium between supply and demand is thus destroyed because the supply of the town houses exceeds the demand at the time.

Permanence of improvements – The characteristic referred to as permanence of improvements is also closely related to the above characteristics. The typical bungalow-housing unit has a long economic life compared to other commodities. Once we have built a block of offices we are stuck with it when perhaps we could have invested our time and money in a hotel. Therefore, the permanence of the improvements created eliminates many alternatives available to markets.

Decentralized nature – Another characteristic of the real estate market is the lack of a single, central exchange for dealing with the real estate island wide. If one wishes to buy 100 shares in General Motors, California, the product will be the same as General Motors, Florida. However, if one wishes to buy 100 hectares of beachfront property in Westmoreland, Jamaica the product will be different in many respects from beachfront property in Portland. This focuses the attention on the two main reasons why there is not a central exchange for real estate.

First, the product cannot be standardized. No two tracts of land are the same. Even two lots side by side on a street have different geographical locations on this earth. This concept is referred to as heterogeneity or non-homogeneity.

Second, no central data bank or information source tells about all real property in Jamaica. Also, one needs to be careful when using information about properties in one area to assess properties in another. If one wants to know about real property in any location, it is best to go to that particular place and seek local information.

Governmental Controls – The fifth and last of the primary characteristics of the real estate market, governmental controls, plays an inordinately important role when compared to other markets. Most people are familiar with direct controls such as zoning and building codes which govern construction and use of property.

Governments also exercise indirect controls, such as the monetary policies of Central Government. For example, if Government reduces the overall money supply to slow the inflation rate, higher rates for mortgage bans turn, drives many potential buyers out of the real estate market in Jamaica. This does impact heavily on the drafting of a rent agreement in Jamaica.

Although, a quality, professional, real estate agent, will help, his client, determine creating the most appropriate, listing price, it must be remembered, and understood, the final decision, is that, of the homeowner, selling his home. Since, for most, the financial value of their house, is one of his, largest, personal assets, an essential skill, of the agent, is, creating, a level of trust, and a personal connection, between homeowner, and his representative! Doing this, makes it, most possible, to creating, trust, and a bond, where a thorough, comprehensive discussion, becomes possible, etc! With, that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 5 key, strategic considerations, when it comes to determining the most – appropriate, initial listing price, etc.

1. Competitive Market Analysis (CMA): The best, and only, logical, practical, realistic, and well – considered, way, to determine, a suggested price, is preparing, a thorough, Competitive Market Analysis (CMA). This should consider, houses, with similar features, in the same, general area/ region, and measure/ evaluate, factors, such as: Time on Market; the relationship of the initial listing price, and selling one; significant advantages and disadvantages; positives and negatives, related to specific, local area, etc. Professionals, should suggest, a range, based on this process, and help, suggest, to the owner, the advantages, and disadvantages, while, answering questions, and addressing specific concerns.

2. Strategy/ marketing plan: There are a variety of possible strategies, and, the finest marketing plan, must be based on meaningful, teamwork, between agent, and homeowner! From the onset, a thorough discussion, of the possibilities, and which, marketing plan, makes the most sense, is a valuable step!

3. Sellers objectives/ priorities: Real estate professionals realize, they must, carefully, effectively, listen, and learn, his seller’s/ client’s personal objectives, and personal priorities/ goals, etc! Pricing must be based on the seller’s tolerance, patience, and personal comfort zone, and conform to the realities, of the current, market conditions!

4. Local market/ type and conditions: Know, understand, and determine, the existing, real estate, local market, including the nuances, in terms of the conditions, and types, including factors, based on supply, and demand, etc.

5. Time considerations: Whether, the seller, has the patience, ability, and mind – set, to wait, as opposed, to, if there are pressing, financial/ personal economic factors and considerations, often, determine, pricing strategy. While, someone, who is ready, willing, and able, to, patiently, wait, can price the house, on the higher – end, of the range, others, who, time matters, must price it right, from the start!

When, you are ready to sell your home, carefully, interview potential real estate professionals, before hiring an individual! Thoroughly, discuss, many relevant factors, and ensure, you are on the same – page, from the onset!

So you’ve finally figured out a way to generate real estate leads through the internet?

Congratulations, you’re rich!

Except for one tiny little thing, of course: actually closing your leads and generating sales.

Without a solid system, the only thing you’ll be generating is a lot of work and heartache. In fact, I would say it’s better to avoid online leads all together unless you’re willing to invest the time upfront to set up proper systems.

What exactly do I mean by a system? A proper lead follow up system consists of three parts:

1. Customer Service/ Follow Up at Internet Speed

Everything is faster on the internet. Think of the last time you shopped for anything online. Were you willing to wait even half an hour for an answer from an online store, or did you just move on until you found the answer immediately?

Online customer service is an entire article in itself, but here are the basics:

• Make it easy for them to contact you – post your phone # prominently and use an online form – just posting your email address is worthless.
• Respond within 5 minutes – after 30 minutes you may as well not even bother.
• ALWAYS provide something of value in every phone call/ email/ tweet/ note on rock thrown through their window, etc. This could be market news, useful links, answers, etc.

2. Use a CRM System (even if it’s just an excel sheet).

37 signals, a hugely successful software company has a great saying: make half a product, not a half a**ed product. The same goes with leads: it’s better to work half your leads well, than try to work all your leads and do a half-a**ed job of it.

To do it right, you’ll need to track your leads. For no frills, make an excel sheet with their info, how/ why the found you, and what you’ve sent them so far. Don’t forget the most critical part: prioritize your leads (I can’t argue with the time-tested “A, B, C” system, but feel free to get creative if you need a little flair in your CRM).

My personal favorite for real estate CRM is Highrise, by the aforementioned 37 signals (just Google “highrise, they’re #1). It’s free up to 250 contacts, it’s drop dead simple to use, and it plays nicely with your email.

3. Give The People What They Want.

Ask yourself why they contacted you in the first place: what do they want? Figure that out, then create or find those resources and put them all in a folder called “resources” on your computer. For example: buyer’s guides, market statistical reports, recent neighborhood sales, advice articles about picking lenders, etc.

That way, every time you email a lead you can either attach something useful, or link to it in your email. It also gives you a great reason to call them, so you can ask permission before sending them an attachment.

In all honesty, there is simply no way to get the same success rates from online leads as you do from referrals and personal connections – that’s simply the nature of the beast. Done properly, though, you can generate a solid amount of business without letting online lead follow up take over your life.

Now if you’ll excuse me, I have to go research the pet weight restriction of a condo building for a random lead who just called… hey, I never said it was easy!

Nowhere is this more true than on the web where the majority of home buying searches are conducted- “web appeal” is the new “curb appeal”, the lure that draws buyers in. Today’s prospective buyers are used to quality imagery in other marketing venues. Appealing photos will rivet the prospect’s attention, whereas homes with so-so photos may well be passed by.

When selling your home, you hire a Real Estate agent to do the best job marketing of your property. Agents are experts in the business aspects of the selling process; research, pricing, advertising, negotiating and closing. But, the centerpiece in your listing-pictures-is a photography expert taking them?

Grabbing a point-and-shoot and photographing a home seems to be a reasonable option. Often, one can get good shots simply though luck. However, many aesthetic and technological difficulties must be overcome in order to result in the consistently great photography needed in today’s multiple-photo listings.

Internet display systems, known for showcasing still photos, panning slide shows and virtual tours, are another tool available to realtors. These products are only as good as the photography used within. Use poor photographs and you get a poor photo housed in a slide show or tour.

Photography is a highly specialized industry-all photographers are not the same. A good portrait photographer does not necessarily make a good real estate photographer because the photographic challenges and thus, training, are different. Architectural photographers are not the best choice because they charge a significantly higher rate that cuts into your realtor’s bottom line. Professional Real Estate photographers give you similar results at a good price point.

Top-of-the-line equipment aside, professional real estate photographers have more than just a good eye. They know exactly where to put the camera, and are skilled in holding it straight. Professional photographers are experienced at reliably producing multiple uniformly-good shots of every house. Exteriors are taken from the best angle and trumpet blue skies and puffy clouds. Interior shots are well-composed, evenly lit and clearly convey accurate visual information about the space you are looking at.

Photos rarely emerge from the camera ready for display. They require post-shoot processing and this is where the Real Estate professional photographer excels. Great real estate photographs “pop” off the screen or page. They look and feel bright, light, open, and inviting. When done well, the viewer does not know why they like them, they just do!

Ask yourself which listing you would rather be: You are viewing two comparable listings, one with a few photos that are somewhat dark, feel cropped too closely and a little hazy. The other listing has clear, detailed photographs of the outside setting and main rooms of the house. It’s clear which is going to generate more interest, showings and a potentially quicker sale.

So what can you do to get the best photography for your listing?

Examine the existing listings of your prospective agents. Do they feature excellent photos? Are there a half dozen or more pictures on the web listings? Professional Real Estate Photography is done at the agent’s discretion. If the agent you choose doesn’t use professionals, insist that they do. Those that do see the results. And so will you.

One of the things that I think most people in the marketing world take for granted is that everybody understands the fundamental role of marketing in business. Through my daily interactions with other business owners over the past several years, however, I have been amazed at the relative lack of understanding about the importance of marketing. More often than not, marketing is a back seat, tertiary thought that comes after their product/service and daily operations, if it’s even that high of a priority.

One of the phrases that my business partner, James Orr, has coined in the real estate investing realm is that “everything starts with motivated sellers.” Without motivated sellers, there are no properties to buy, rentals to put tenants in, fixer uppers to flip, or deals to wholesale. This is such an important aspect of real estate investing that it’s almost a mantra for the way that James and scores of other successful real estate investors run their businesses. The key to getting in touch with motivated sellers happens to be marketing.

I guess that a good place to start in this discussion is to define what marketing is. Google define tells us that marketing is “the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to satisfy customers.” Marketing really does consist of more than what most people think it does. Marketing is more than just the activities that drive sales. Rather, marketing encompasses all the activities that seek to identify what consumers want and how to promote and deliver those goods and services.

Before an individual or company ever even makes the decision to produce a particular product or service, they should first spend the time to determine if there’s even a market for that offering. If there is a demand, they then need to figure out how to get that offering to the consumers that want it, how to tell consumers that it’s available, and how to price it such that there is money left over for a profit. This is all part of the marketing process, and really should occur before the product itself is even produced.

In more common usage of the term, “marketing” is often seen as only the promotional aspect of a product or service that is already available. This part of marketing consists of making the consumer aware of what you’re offering, and convincing them to buy it. There is a tendency in corporate environments to separate the marketing and sales functions into disparate departments, which is often a mistake. The purpose of the promotional element of marketing is to drive sales, and therefore the two functions are intricately connected. A good example of the disconnect between these two departments is when companies that sell capital equipment have vastly more people in their marketing departments than they do in their field sales force. Another example is when marketing and product development folks ignore the input from the field sales personnel. This input is often derived from actual customer contact, which most employees of large organizations don’t experience.

The prime purpose of one of my blogs is to test marketing promotions using a vast array of messages, media, and markets, which are often referred to as the three M’s of marketing. Before we conduct a test, we first do some background research to determine if there is even a market for what we’re considering selling, and we analyze whether or not we can at least break even on the marketing test using certain realistic assumptions about sales ratios. Pricing strategy is also something we discuss a lot before launching a new test. The actual development of sales copy, writing and placing ads, setting up measurement systems, etc., comes later in the process. Making sales and tracking metrics, then tweaking the marketing, comes next.

Sadly, many business owners don’t understand the importance of marketing. Because of this, they fail to plan for rough spots in the business cycle, such as off seasons, economic downturns, and other events. As the cliche goes, “failing to plan is planning to fail.” Every business should have a marketing plan of some sort, and it should be in writing. Companies that don’t “do” marketing will invariably fail.

In short, without marketing there are no sales. And without sales, there is no revenue. And without revenue, any business will quickly succumb to the statistics that show that nearly 2/3 of all businesses fail within their first 4 years.