Christopher Mayer, a Columbia University economics professor said recently "If you're expecting a short-term gain, you should be looking elsewhere," he had argued for many years that land shortages and rising populations would translate into ever-rising prices in the "superstar" cities like New York and San Francisco and LA.
With many of the real estate bulls now waving the caution flag we have clearly reached the time for a re-think on this subject. Before we start going down the "Doom and Gloom" road it should be understood that owning your own home is still the corner stone of the "American Dream" and it will always be that way.
What does it take to fuel that dream, home prices are normally driven by 3 things. The first is low interest rates, the second is the willingness of home buyers to pay for their idea of the American Dream and lastly the ability to attract 1st time buyers to the market.
Let us take a look at Los Angeles as a market place for home buyers, the average home sells for 10 times the average salary. Whatever way you look at it this is unsustainable, no matter how creative the banks and lenders become with their new programs. As it becomes more difficult for the 1st time buyer to enter the market it starts to affect "Move Up" market.
The 1st time buyer will normally start with a one or small two bedroom house or condo with the hope that price rises will allow then to "Move Up" to a bigger 3 bedroom home in a better area within a short period of time, say one to two years. Slower price rises or higher interest rates will put the loan repayments on a new larger home out of the reach of the buyer and this leads to the whole market getting weaker.
The Europeans have an interesting system in place, credit scores have no bearing on the way they calculate your ability to repay the loan. Under the banking and home loan laws you most provide proof of income, once this is done they will offer you the chance to finance up to 4 times your income. Most programs will finance up to 90% of the loan to value of the property this system seems to ensure a steady supply of 1st time buyers along with regular increases in house prices with affordable loans.
LA and New York are the so called "Super Star" markets and not really reflective of the whole county, so your strategy will largely depend on where you live. Local markets are affected by many forces like jobs, the new house market and inflation to name but a few. Homeowners who hold on to their homes for a number of years and pay down their debt do far better than those who refinance every two years taking out the equity they have built up, this really is the Number One Cardinal Sin for homeowners.
The TV and newspapers are jam packed with advertising that is trying to convince you to refinance, generally the only people making any money out of this is the Broker or Loan Officer.
Have an opinion or a question you would like me to answer, then write me! http://www.CarlHampton.com
Don't misunderstand. All these services are important and closings can't happen without them. And they're proven revenue streams that can put you into the HOV lane ? laughing all the way to the bank. And it's great that NAR is recommending you give the services a closer look and perhaps offer them alongside your real estate services.
But before you open your one-stop shop, make sure your real estate business is firmly established. If it's not, you can end up careening off the road and into one deep ditch.
Read this next sentence carefully: Adding ancillary services to your real estate business too quickly is one of the worst career mistakes you can make. You can easily go from working 50 hours a week to 70 or 80. And misery will follow. I've seen it time and time again in my consulting practice. When people lose focus in their business, it can be as ugly as a 10-car pile up. You can't serve two masters.
But here's the good news: you can add these services to your real estate business with less effort and with fewer hours at work if ? and this is a vital if ? you put the right systems into place.
Systems can put your entire business on autopilot to prevent costly employee mistakes and to give you more time for a life outside real estate.
Here are five steps you can start taking today for a smoother running business:
1. Step back from the daily bustle and take a fresh look at your business and pinpoint what's not working. Be honest (it often helps to get feedback from a third party for this task).
2. Create a picture of what you want your business to look like in one year, three years and five years. To be in a position to add ancillary services, you need to identify precisely where you want your real estate business to be in terms of income, personnel and your time commitments.
3. Write a business plan that puts service to your clients as priority number one and one that includes systems. You create systems by diagramming every function within your business. Write down tasks, required results, process steps (workflow), who's responsible, deadlines, needed resources and standards of performance. When you finish the plan, you'll have detailed checklists for every part of your business so that everyone knows exactly what has to be done. (And when you add a new hire, you'll be amazed at how quickly and easily these checklists help get them up to speed.)
4. Get employee buy-in and train them. REALTORS? aren't people managers ? you sell real estate (and other services if you choose to). People are unpredictable and managing them can be a monstrous task. But with systems, written job descriptions and your detailed checklists, you give people fool-proof jobs they can follow easily. Systems let people manage themselves. And tell your employees regularly where you are heading and how you ? with their help and dedication -- are going to get there.
5. Monitor and implement improvements.
I've found in working with REALTORS?, it usually takes about 90 days to implement a systems approach. And they usually start seeing efficiencies and dramatic increases in their revenues (and decreases in their time worked) within six months.
It's an exciting venture to ponder. And it's an exciting time in real estate where new and profitable possibilities dot the landscape. Possibilities that will allow you to build the kind business you want as you drive along your own personal road to riches. Best of luck to you!
Both Carl Hampton & Bob Corcoran are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Carl Hampton has sinced written about articles on various topics from Finances, tax and Real Estate. Your Money Matters By Carl Hampton the best selling Author of "From Credit Despair To Credit Millionaire" ,. Carl Hampton's top article generates over 49500 views. to your Favourites.
Bob Corcoran has sinced written about articles on various topics from Mortgage, Marketing and Communications and Family. Bob Corcoran is a nationally recognized speaker who is the founder of Corcoran Consulting Inc an international consulting and coaching company that specializes in performance coaching, and the implementation of sound business systems. www.CorcoranCoaching. Bob Corcoran's top article generates over 33100 views. to your Favourites.