COVER FEATURE: The List Issue 2006

For Brokers
Having an intimate knowledge of real estate won’t ensure success when you hang your own shingle. Here’s some of what they don’t teach you in real estate school.



Is your office a fortress or a sieve?
By some accounts, up to 70 percent of identity theft cases occur in the workplace, and real estate offices, with their heavy customer traffic and the variable hours associates keep, can be vulnerable to thieves. Closing just a few security gaps can go a long way to helping you reduce the risk of data theft that can compromise your business and your clients’ interests.

Exterior door
Risk: Unlawful entry
Solution: Add dead-bolt locks and replace hinges with those that can’t be easily removed.

Computer
Risk: Theft of confidential customer data and work products
Solution: Firewalls are a first line of defense in protecting private information and should be inserted at every point where your computer system is connected to other networks, including the Internet. All data except that which you need to keep generally available should be kept behind the firewall. Encrypting data can further foil thieves. Don’t forget to install virus-protection software on your computers, too.

CDs and disks
Risk: Breach of confidential client information
Solution: Store CDs and disks inside a locked cabinet. Limit who gets a key.

Fax machine
Risk: Exposure of confidential deal information
Solution: Move fax machines to a secure room, such as a supply closet with a door that locks.

Unlocked desk drawer
Risk: Theft of unsigned checks and other vulnerable material
Solution: Keep drawers locked at all times. Limit who gets a key.

Unattended purse
Risk: Theft of credit cards, driver’s license, and other material with sensitive information, including appointment books
Solution: Encourage associates and employees to keep purses and valuables in a locked cabinet.

For more tips, visit the Current Links .

Source: Better Business Bureau



5 fatal brokerage beliefs
Poor financial or risk management can result in more than a loss of income; it can mean losing your business. Some small ways you can get tripped up if you’re not careful:

1. Believing there are more than 100 pennies in a dollar.
If you don’t include a line item in your budget for 5 percent profit, invariably you’ll let fixed and variable expenses eat up 100 percent of your company dollar. Absolutely limit variable expenses to 70 percent and fixed expenses to 25 percent of your revenue; otherwise you’ll never get out from behind the financial eight ball.

2. Believing confidentiality ends with the client relationship.
Don’t let your sales associates shoot from the lip. A sales associate who’s no longer working with a buyer isn’t entitled to disclose information about the buyer to a seller; confidentiality rules carry beyond the end of the relationship. An associate who thinks otherwise puts you at legal risk.

3. Believing without seeing.
When a seller hands your sales associate a document and says it’s a report on the results of a test he’s had done on the house, your associate mustn’t put the paper into the transaction file without verifying what the seller says. Sellers commonly misidentify documents. In one case, a seller was correct in calling a document the results of a “perc” test (a gauge of ground absorbance), but the results were for a different property — something the associate never caught. The issue later came up in a claim.

4. Believing the unbelievable.
If your associates can’t resolve differences with a client over what to disclose on the seller disclosure form, they should drop the client, especially if they believe the seller is lying. Even if associates believe a seller is telling the truth, they risk becoming vicariously liable if a claim is filed and the seller is determined to have lied. The question in such a case is, “Why didn’t the associate know the client was lying?”

5. Believing in a deal that’s too good to be true.
Caution your associates to exercise great care if sellers, with the OK of a lender, offer their buyer client a roundabout way to get 100 percent financing. In a growing number of deals, the seller inflates the home price, typically by 20 percent. The lender originates the mortgage loan as 100 percent financing on the original, uninflated price, but the mortgage is listed on the secondary mortgage market as an 80 percent loan-to-value loan based on the inflated price of the property. The seller then provides, at least on paper, a second loan to the buyer to cover the 20 percent down on the inflated price but forgives the loan after closing. Deals like this amount to fraud.

Source: Bonnie Sparks, CRB, CRS®, Mel Foster Co., Davenport, Iowa



10 recruiting and retention tips
Recruiting
1. Recruit most heavily in the first quarter of the year. That’s when companies typically roll back their commission splits and make cuts in their expenses, heightening associates’ receptivity to offers from other companies. —Brad Pearson, Prudential California Realty, Riverside, Calif.

2. Have a clear picture of the qualities, attitudes, skills, and habits of your better salespeople; then recruit for those desirable attributes. —Jasmine Frazier, Integrity Systems, Phoenix

3. If a person you’re recruiting is hesitant, have that person call three people from your staff. Let their affirmations speak for your company. —Paul Doucet, Prudential Property Specialists, Halifax, Nova Scotia, Canada

4. When you receive a recruiting lead, don’t wait a day to contact the person. Follow up on all leads as soon as possible, even if it’s just to leave a message with the person. —Carol Palomera, gri, Northwood Realty, Monroeville, Pa.

5. Don’t start your day until you’ve made three recruiting phone calls, even if you’re mostly leaving messages. If you do this every day, you’re leaving more than 1,000 messages per year for people to join your office. —Mark Wehner, ABR®, CRB, CBS Home Realty, Omaha, Neb.

6. Know everything there is to know about your competition. Look at their Web site, recruiting systems, management style, marketing materials, and all the statistical information that can be gleaned from the MLS. Use that information to strategically position your company, office, and yourself to win the war for productive recruits. —Carol Johnson, The Recruiting Network, Schaumburg, Ill.

Retention
7. Keep your associates “marketplace informed”—about average days on market for listings, percentage increase or decrease in their listings’ days on market compared with the MLS, and so on — and listen to their frustrations and ideas. Associates don’t leave if management keeps them informed and hears what they have to say. —Darla Scott, Management Master, Newton Square, Pa.

8. Maintain associate “job descriptions” for different income levels and ask salespeople if they’re tough enough to hold themselves accountable to realize income at the higher end. —Saul Serna, Business for Life, Rockford, Ill.

9. Recruit your existing salespeople. Don’t get so focused on attracting new recruits that your existing associates, feeling lost or uncared for, leave. —Ken Sinnott, Prudential Sussex Realty, Gibsons, British Columbia, Canada

10. Help your associates — with training and resources — become real estate advisers to their clients instead of just transaction machines. You’ll help them set a higher bar of service and stand out from the crowd. —Albert Clark, My Home Management Club, Clifton, Va.

Sources compiled by The Recruiting Network Inc.



Cool name!
Some brokers stand out with an intriguing brokerage name.

• 24-7 Real Estate LLC Bensalem, Pa. — When Elaine Corbin launched her company in 2005, the distractions never stopped. “I was trying to think of a name at a time when everything was happening at once,” she says. “Even late at night the phone kept ringing.”
  
• Adonis Realty Chicago — With the Greek god of beauty in mind, Jenny and Anthony Samaras formed their company in 2004, although the husband and wife team aren’t yet brokering residential sales full time. “To me, real estate is a beautiful thing,” says Jenny. Also, “Adonis” is the Greek version of Anthony, a nice added touch, she says, since her husband is Greek.
  
• Rock & Roll Real Estate San Francisco — When the big Bay Area earthquake struck in 1989, Constance Kopriva was in her car near the Presidio. Cars were riding the buckling street as if they were on a bucking bronco. “I saw the ground rock and roll,” says Kopriva, who opened her brokerage with her husband about a year later.
  
  
  

12 questions you can’t ask in an interview
It can be challenging to know what you can ask job candidates as you seek to comply with federal antidiscrimination laws. In general, avoid questions about a candidate’s age, arrest record, credit history, citizenship, disability, driver’s license, educational attainment, emergency contact information, English language skills, height and weight, marital or family status (including child care arrangements), race, color, sex, national origin, and military records. But you can still learn job-critical matters related to these topics by framing your questions in a nondiscriminatory manner. Examples:

Heading off conflict
Who wouldn’t agree it’s easier to preempt conflict with your sales associates and staff than to tamp it down once it’s surfaced? But you can’t forestall conflict without knowing problems are brewing. Here are three techniques for illuminating discontent that, if left to fester in the dark, can spread into conflict.

The ask/tell approach.
Set aside time to gauge whether you and your staff and associates are on the same page.

Ask: What are your expectations?
For sales associates, ask what they’re looking for in technology, support systems, leads, and brand marketing. For staff, ask if their priorities are wages or schedule flexibility.

Tell: Here are my expectations.
Define how you measure achievement, and have people sign off on agreed-upon objectives.

Ask: How am I doing?
Check with your associates and staff to see what you could do better and what changes are needed in the office to make things run smoother.

Tell: Here’s how you’re doing.
Deliver your feedback to associates and staff with care and accompanied by kudos. Correcting someone brusquely, or in front of others, might get you short-term performance gain, but it’ll cause long-term resentment.

The sandwich approach.
When sharing concerns with associates or staff, serve the meat of the matter between two slices of praise.

Top slice:
Make eye contact, ask if they’re open to hearing a concern, then start with a genuine compliment such as, “I appreciate the care you put into your work.”

Meat of the matter:
Broach the problem in the form of a question, so you can get their viewpoint on it. Then tell them your feelings about the issue, and work together to identify a plan for addressing it.

Bottom slice:
Serve another compliment about overall performance so that they aren’t left with the feeling that their value is at issue.

Tip:
Don’t limit compliments to times when you’re about to be critical. Sprinkle compliments freely, as warranted, so associates and staff won’t assume your nice words are a prelude to criticism.

The confidential critique approach.
There are things about your management approach people are unlikely to say to your face, so let people anonymously list your strengths and weaknesses in a review. Some key elements to include when you structure your review:

Confidentiality.
Have associates and staff submit critiques to your human relations chief, if you have one, or another intermediary. Don’t receive the critiques yourself.

Receptivity.
Accept the anonymous criticism with grace, and make it clear people’s views can be shared without fear of reprisal.

Responsiveness.
Act upon the feedback you get, quickly; otherwise people will stop sharing their views. Taking action doesn’t always mean taking the recommended steps. But couch any disagreement in respectful terms such as, “I hear what’s being said here, but this is why I do it this way,” or “I disagree, and here’s why.”

Source: Adapted from Tom Gegax’s By the Seat of Your Pants: The No-Nonsense Business Management Guide (Expert Publishing Inc., 2005)



What you can learn from …
Stock brokerages
When the growth of the Internet in the late 1990s enabled investors to gather information and manage buy and sell transactions on their own, brokerages lost their place at the center of the stock transaction.
How they coped: To survive, some brokerages consolidated their day-to-day trading business into customer service centers, freeing up stock brokers to cultivate high-net worth clients seeking “high-touch” attention for all of their financial planning needs.
Lesson for you: As a real estate practitioner, you don’t need to limit yourself to helping households buy and sell their primary residence. Plant the idea that real estate should be integrated into the household financial planning process and not separated from stock and bond investments. Then position yourself as a trusted adviser on the real estate portion of a household’s portfolio.

Airline carriers
When the airline industry was deregulated in the late 1970s, many established airlines used their newfound freedom not to reset their strategies to compete with discount upstarts like Southwest but to accomplish goals that made sense only during the regulated era, says Jonathan Byrnes, a senior lecturer at the Massachusetts Institute of Technology, who also writes for Harvard Business School publications. The result was the loss of Braniff and Pan Am, among others.
How they coped: Surviving airlines abandoned old strategies even at the expense of their short-term financial picture. Some dropped profitable long-distance routes — easy targets for low-cost carriers — in favor of the now ubiquitous hub-and-spoke system, something new carriers couldn’t replicate quickly.
Lesson for you: If your market shifts, throw out your strategy book. Example: If you’ve traditionally recruited new licensees and a new competitor entering your market starts attracting them first by offering salary plus commission, change your focus. Go for veteran associates, something that a company with no track record in the market would have trouble doing.

Automakers
Ford, GM, and Subaru wrestled with weak sales after poorly matching some models to buyers. Ford launched Edsel to fill a middle-market niche for which, it discovered too late, little demand existed. GM couldn’t convince younger buyers that Oldsmobile was once again the cool car it was in its early days. And Subaru, trying to capture older drivers with a Honda Accord look-alike, damaged its hold on young drivers who liked its rugged four-wheel drives.
How they coped: Ford dropped Edsel, GM dropped Oldsmobile, and Subaru returned to its rugged four-wheel drives.
Lesson for you: Don’t overextend yourself into a market you may not be ready for. If you specialize in high-end homes, don’t suddenly enter the FHA REO market. If you do, consider creating an affiliate with its own branding so that you don’t confuse consumers. You can’t “turn around an entrenched image rooted in consumer experience,” says Mark Kassof, a marketing strategist in Ann Arbor, Mich.

Telemarketers
When the federal do-not-call registry took effect in 2003, tens of millions of households signed on to put their phone number off limits to salespeople. Woe to telemarketers who slip up: Each mistaken call can lead to an $11,000 fine. State do-not-call laws come with their own fines, too.
How they coped: Telemarketers created their own do-not-call lists to add a protective layer between themselves and new federal no-call registrants. When telemarketers call households that have signed on too recently to be included in the last registry update, callers apologize and then explain that there can be a lag of several weeks between registration and when the updated registry is released. Then telemarketers add the household’s number to their internal list.
Lesson for you: Internal lists can help protect you from calling households not yet on the registry but who’ve asked, in previous calls from you, not to be called again. The federal government imposes a fine for calling these households a second time.

Mountain Dew
The popular high-sugar, high-caffeine soda’s brand image had offered a rural antithesis to whatever characterized the urban elite at the time — corporate conformism in the early 1960s and the hippie movement in the early 1970s. But by the 1990s with the emergence of the high-tech entrepreneur culture, marketers feared the rural imagery was dated, says Douglas Holt, a professor with Oxford University’s Said Business School.
How the company coped: Enter the slackers. Marketers maintained the drink’s outsider status by pegging it to urban slacker culture. The drink has become what Holt calls a “brandtopia,” an iconic product whose outsider authenticity gives it cultural authority.
Lesson for you: To stay in tune with changes in your market, update the essence of your brand, not the brand itself. Example: You launched your brokerage years ago as a brash upstart doing things differently. Now you find a host of new competitors touting their fresh approach. Don’t try to set yourself apart by breaking with your identity and saying you’re the established choice. Reinvent yourself as the company to whom innovation is old hat.



Motivate your sales force
What’s the latest thinking on keeping your sales associates revved up throughout the day? Start by knowing how they think, then consider the incentives you provide them. Ramp up your recognition of performers — and not just top performers. And don’t forget training.

• Use DISC.
The oldest of the personality assessments, DISC (Dominance, Influence, Steadiness, and Conscientiousness) is increasingly used in real estate to help brokers recruit sales associates. You can try using it to get a picture of what motivates your associates, too. Tailor your incentives based on what you find out. For example, don’t offer a power lunch to those who score high in conscientiousness. They’d probably prefer something low-key. —Tina Ramirez, Tina Ramirez Enterprises LLC, Antioch, Calif.

• Beware of inappropriate incentives.
“Although everyone likes recognition for a job well done, don’t assume your associates will appreciate any incentive you throw their way. Offering go-getters a free yard sign in return for hours spent on floor time can backfire if they find it demeaning or an attempt by you to control how they do their business. Self-motivated associates respond best to simple, but genuine, praise. Carrots like free yard signs work best for new or mid-level associates who need help getting through potentially unpleasant tasks like calling expireds. —Edward Deci, University of Rochester, N.Y.

• Recognize four, not one.
You’ll want to offer kudos to your top performing sales associate whenever you hold a sales meeting. But don’t stop there. Also recognize associates for such things as most improvement, biggest single deal, most helpful, and other accomplishments. —Mike Berry, Mike Berry Seminars, Murrells Inlet, S.C.

• Train first.
With training comes confidence, and with confidence comes motivation. So save your motivational efforts until your associates have the training to master prospecting, negotiating, and other skills that build confidence. Who should provide that training? You should. That way your incentives flow seamlessly from what you taught. —Roger Turcotte, GRI, Roger Turcotte & Co. LLC, Contoocook, N.H.

More: Realtor Benefits(sm) Program partner The Pacific Institute offers a 10 percent discount to NARmembers on “Investment in Excellence,” a course that helps people achieve their potential.



9 need-to-know federal job laws
If you hire for your brokerage, you’re likely to be familiar with Title VII of the Civil Rights Act. That’s the federal law that prohibits job discrimination on the basis of race, color, religion, sex, or national origin. But did you know there are more than a dozen federal laws that affect your employment practices, even if you have only one employee? Here are nine laws to keep on your radar screen. (Unless otherwise indicated, the laws apply to companies with a minimum of one employee.)

1. Consumer Credit Protection Act.
The 1968 law protects employees from discharge because their wages have been garnished for debt and limits the amount of an employee’s earnings that may be garnished in any one week.

2. Electronic Communications Privacy Act.
Enacted in 1986, it sets out provisions for access, use, disclosure, and interception of, and privacy protections for, electronic communications. It also prohibits unlawful access to and certain disclosures of the contents of employee communications.

3. Equal Pay Act.
This law, passed in 1963, prohibits sex-based wage discrimination between men and women in the same establishment who are performing under similar working conditions.

4. Federal Unemployment Tax Act.
This 1939 law provides for unemployment compensation to workers who’ve lost their jobs. Most employers pay both a federal and a state unemployment tax.

5. Occupational Safety and Health Act.
Enacted in 1970, the law imposes a general duty on employers to furnish a place of employment that’s free from recognized hazards that are causing or are likely to cause death or serious physical harm to employees.

6. Personal Responsibility and Work Opportunity Reconciliation Act.
Under this 1996 law, employers must report new hires to state welfare agencies so that the agencies in turn can report to the National Directory of New Hires that people who were on welfare got jobs. The law also addresses procedures for withholding child support from wages.

7. Americans with Disabilities Act.
Enacted in 1990, the law prohibits discrimination in employment practices, including job application procedures, hiring, firing, advancement, compensation, and training. It applies to recruitment, advertising, tenure, layoff, leave, and fringe benefits, among others. Minimum company size: 15 employees.

8. Age Discrimination in Employment Act.
This law, enacted in 1967, prohibits employment discrimination against persons 40 years of age or older. Minimum company size: 20 employees.

9. Older Workers Benefit Protection Act.
Enacted in 1990, the law protects older workers from discrimination by employers based on age when providing employee severance and other benefits. Minimum company size: 20 employees.

To learn about these and other federal employment laws applicable to brokerages, visit the Current Links .

More information
REALTOR® Magazine Online offers a full-range of tool kits for brokers, including packaged sales meetings. For books, including REALTOR®Magazine’s Broker to Broker, visit the Real Estate Bookshelf at  REALTOR.org/store.

THE LIST ISSUE

Intro

Need to Know

Style & Design

For Brokers

Business Smarts

Prospecting & Service

Tech Watch

Download the 2006 Lists (PDF)