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houstonwehaveaproblem

houstonwehaveaproblem

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Published by magi_bird

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Published by: magi_bird on Jan 18, 2011
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01/18/2011

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Warning: This is not a "feel good" article. It is not for the faint of heart, those that write and then believe their ownpress releases, adopt "ostrich posture" or say "This too, shall pass" to defend inactivity. Nor is thisfor those individuals whose commitment to real estate, even in boom times, was "part time salesman". Thisinformation is intended for thoughtful consideration by full time Real Estate Brokers and Practitioners who arepassionately committed to building wealth for themselves and their clients through real estatetransactions, investing, lending and the Real Estate Profession as their Career Path for life. We must fight for ourcareers, our wealth, our quality of life and the future of our families. We need to change both our relationship toour Clients and our significance to their success. We need to lead by example: "Do as I do, not just as I say." Thiswill establish our ultimate credibility and justify our survival.
 
"Houston, We Have a Problem!
By Magi Bird 
For years the Real Estate Industry has said:You are a Real Estate Professional if;
*You get a License*Join a reputable Brokerage*Get quality in house training from your Broker*Join NAR, the State and Local Board of Realtors*Join and participate in your local MLS*Take Continuing Education*Earn Designations*Practice Ethically*Practice Legally*Are diligent in verifying the facts you represent*Demonstrate competence in all you do*Disclose all material defects*Disclose Agency and Conflicts of Interest*Protect your Client's Interests, Funds and Confidentiality*Never undertake a job you are not qualified to do*Never give advice you are not qualified to give.*Treat fellow practitioners with respect.*Perform all obligations in a timely manner. All of these activities are a minimum standard of performance and yet our profession has a 90% failurerate and an average income that would make any other profession blush. Can you imagine someonereasonably competent with numbers becoming a licensed CPA and working for $40,150 a year? Yetthat was the mean net income for Real Estate Practitioners in 2008 according towww.bls.gov.
Show Me The Money!
 The real money must be in owning the Brokerage, right? According to the same source, the meanincome for Real Estate Brokers in 2008 was $57,500! Can you visualize spending an estimated$10,000 per person to open, furnish, supply, carry and staff a Real Estate Office for 22 full timeAgents: the generally accepted minimum for a Residential Brokerage to break even. Then train,supervise, be legally and financially responsible for every word spoken and act committed bythose agents for the fabulous compensation package of $28.75 an hour? 
 
Before I Alienate Everyone Reading This:
I know you are not average and do not fall into the mean incomes shown. I know that almost everyprofessional I have ever met cares deeply about their clients and doing the right thing, both legallyand ethically. I also know that to earn more than the mean industry income requires the practitioner towork evenings, weekends, holidays, and to be on call 24/7. Success in real estate as practicedtoday means making compromises between the needs of your business, your family, the days of yourlife and sometimes your health. To compete in the industry today, you must complete, hire orapproximate all of the following actions; 
To Do List For Brokerage;
1. Build a Personal Brand/Company profile.2. Hire and train agents/assistants to service specific sections of transactions/business activity so youcan cover the overhead.3. Stay in constant contact with past Clients so they don't forget you.4. Prospect, prospect, prospect!5. Get more Designations and pay to belong to the issuing organizations.6. Social Network, the more the better!7. Blog, Blog, Blog....8. Advertise, advertise and advertise!9. Build a Website10. Market globally but find a niche that works locally.11. Hire and train more agents/assistants to handle increased volume.12. Do more deals to afford the new agent/assistants.13. Join a lead generating service or two, or three.14. Join a newsletter service.15. Hire SEO Services16. Advertise, advertise and advertise!17. Attend Continuing Education Classes, again and again and again.18. Build, buy or join a transaction coordination platform.19. Hire more agents/assistants to handle the program and the updates.20. Work longer, harder, more efficiently to afford all the above.21. Hire and train more agents/assistants22. Download all the real estate in the country to your website.23. Send squeeze page ads to drive traffic to your website.24. Buy more insurance, licenses, permits, pay more dues and fees.25. Pay increased wages due to minimum wage law.26. Pay higher operating costs and taxes, due to inflation.27. Buy upgraded Software, auto responders, make links and drive traffic28. Build email lists and data bases29. Fire the web guy and start over.30. Repeat from the top31. Repeat from the top32. Repeat from the top. 
Please stop!
The definition of insanity: "Doing the same thing over and over again in the same fashion,while expecting different results!" It is self defeating to continue doing more of what is not workingwell to begin with.
The residential real estate boom is over!
It will not be back for 15-20 years. Even if you work in a City or State where real estate values havefared relatively well, new laws, higher taxes, consumer expectations, new regulations and economicfallout will permanently change this Industry.
 
Short Sales: Taking the Long Road to a Slow Demise;
I understand that you are out in the field making a killing in Short Sales! Translation: You are nowworking frantically to do deals that will take 2 or 3 times longer to close escrow, have a higher fall outrate and will pay commissions from 30%-60% of what they were 2 years ago. Have you reduced yourbusiness expenses by 40% to 70% or more? Have you reduced your household expenses by 50%,60%, 70% in order to survive on your after tax income? Or are you trying to double and triple yourtransaction count to stay even?Have you or your Spouse taken a second job to stay in the Business? Are you doing every businessactivity by yourself because you terminated your support staff? We are only 40% through theCommercial Property deflation spiral. What do you think this downturn will mean for your business,your family, your health and your wealth?
How long can you tread water?
 The amount of money printed by the Fed and the massive deficit will cause horrific inflation. The effectof monetizing the bailout programs and government expansion will be camouflaged for the next twoyears due to the collapse of pricing on homes, cars, consumer products and service providers who willcut to the bone to stay alive. Most won't. Inflation is already evident in increased costs of food,energy, taxes, fuel, governmental fees, fines and penalties. Do you have a plan to deal with theserealities or do you feel exhausted, angry, scared, overwhelmed, confused and powerless: with habitdriving you through your day? I will let you in on two secrets.1. You are not alone and you are not paranoid. No matter what the "talking heads" say, this is theworst economic disaster since 1929 and our guts know it. Many successful people are preparing for theworst and few know what the worst may be. All of them know it won't matter which party is in power.Economic spirals are not changed by politics or policy. Spirals are simply accelerated or slowed in theshort term by governmental intervention, they must run their course before the turn around and weare not yet half way through this one.2. There is an alternative. We have an opportunity to adapt our business and evolve into a differentkind of Professional. It requires defining ourselves and our work differently. It involves focusing ourbusiness 180 degrees differently than you do today. In other words: discomfort, change, a steeplearning curve and risk in the short term in order to survive today and thrive tomorrow. I ask that you do not react to this article and try not to defend your practice or your business. I knowthese thoughts appear threatening and arouse anger. While both anger and rebuttalfeel constructive they are actually distractions. As small business owners we protect our businesses aswe would our children. This is a reflection of how much we cherish them and how much money, timeand effort we have invested in their success.To a great extent our Business defines who we are and our purpose for being on this Earth. For thesake of economic survival, look at your business objectively. As a financial enterprise, what would youpay for it today?
Research the Statements I Have Made and Draw Your Own Conclusions:
Post your income, deduct your expenses, calculate the number of hours you work, then divide. Whenyou have your answer, you decide. Are you being fairly compensated for the hours of your life?
I Believe;
1. That the present Retail Brokerage model is: Broker, broken, broke...2. That most of us are not in this business for the money.3. Most of us receive great satisfaction by changing the lives we touch for the better.4. Anyone making that commitment deserves huge compensation in return.

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