New Jersey Mortgages -

From Hawaii to New York, and Canada to Florida, 100 of the top real estate professionals working in the upscale residential market converged last week in Dallas at The Institute for Luxury Home Marketing’s annual Leaders in Luxury (LIL) conference. This exclusive event was an invitation-only educational and networking opportunity for real estate agents who handle million and multi-million dollar homes and estates. The event attracted top luxury home agents who, on the average, work with properties priced at $3 million and above, with many working with homes valued at $10 million to $100 million.

“Registration was limited to only 100 top luxury agents,” said Laurie Moore-Moore, Founder and President of The Institute for Luxury Home Marketing, “giving our attendees the opportunity to build an exclusive network of contacts focused on the upscale residential industry, while learning from the best in the business.”

Of particular note to the real estate industry was the unveiling of new, cutting-edge research from a study of thousands of the wealthiest American consumers. The study, conducted by Premium Knowledge Group, reveals that there are six discernable categories of the wealthy, ranging from the Unmistakable Affluent (as characterized by Paris Hilton) to the Understated Affluent (as characterized by Warren Buffet), each category with different motivations, lifestyles, and decision drivers.

“Understanding this sophisticated research information and how to use it when working with high net worth individuals offers the Leaders in Luxury attendees insights which can give them a competitive edge,” said Moore-Moore. Other speakers and panelists for the event covered architectural and design trends, best marketing practices, the economic outlook for luxury consumers, and more.

“The Leaders in Luxury conference was an outstanding event – first class in every way,” said attendee Jo Ellen Nash, President and Managing Broker of Nash & Company in Vail, Colorado. “From the latest information on luxury market trends to the top luxury agents sharing their best ideas and practices, this conference gave me everything I needed to recharge and reinvigorate!”

The conference is an annual event and will be held in Santa Fe, October 12 to 14 in 2007. For information, visit www.LeadersinLuxury.com or contact The Institute for Luxury Home Marketing at 214-485-3000.

For more information about The Institute for Luxury Home Marketing, visit www.LuxuryHomeMarketing.com or call 214-485-3000.

New Jersey Mortgages

October 4, 2006—The burden of housing costs in nearly every part of the country grew sharply from 2000 to 2005, according to new Census Bureau data being made public. The numbers vividly illustrate the impact, often distributed unevenly, of the crushing combination of escalating real estate prices and largely stagnant incomes.

While many of the highest home values were on the coasts, in places like Southern California and Manhattan, many of the biggest jumps in the percentage of people paying a burdensome amount of their income for housing occurred in the Midwest and in suburbs nationwide, making it clear that the housing squeeze has reached deep into the middle class.

In New York City, more than half of all renters now spend at least 30% of their gross income on housing, a percentage figure commonly seen as a limit of affordability. In Staten Island, the percentage paying at least 30% of income rose to nearly 60%, up from 40.

Among suburban homeowners, there were big increases in the percentage of people with mortgages spending at least 30% in places like Loudon County, Virginia; Morgan County, Indiana; Nassau County, on Long Island; and Bastrop County, Texas.

“Housing prices have gone up much more than incomes have,” said Christopher Jones, vice president for research at the Regional Plan Association in New York City. “Clearly, you can’t sustain that sort of imbalance over the long run. There’s only so long that housing prices can go up without sustained increases in income to support them.”

The data, from the American Community Survey, was collected throughout 2005, some of it before the real estate market began softening over the past year.

While the escalation in house prices that began in the mid-1990s has slowed down in most places, and while prices are even dropping in some markets, rents are currently rising.

Historically, it is not unprecedented for housing prices to rise faster than household incomes, since housing prices fluctuate more than median incomes. In recent decades, median incomes have not risen at the rate that they did in the booming 1950’s and 1960’s, yet real estate prices in many parts of the country have escalated sharply in recent years.

“People want to hang on and stay in the market,” said William H. Frey, a demographer at the Brookings Institution in Washington. “And they are willing to stretch themselves to find or to rent a house that is suitable.”

The places with the highest overall percentages of people carrying a heavy housing burden were in fast-growing areas of California, Colorado and Texas.

In Southern California, Temecula and Hemet had the highest percentages of renters paying at least 30%, with 74 and 73% of renters at that level.

Boulder, Colorado, and College Station, Texas, held the record for renters spending at least 50%, with 47 and 46%.

The biggest jump in the percentages of people paying at least 30% of their income on rent, as well as those spending at least 50%, occurred in Olathe, Kansas, a booming suburb of 114,000 southwest of Kansas City.

S. Lawrence Yun, an economist with the National Association of Realtors, said renters in desirable cities might be spending more of their income on housing in hopes of getting a toehold in places with good schools, better homes and a good quality of life.

“There is certainly a concern that people are devoting a large portion of their income to housing, and one of the reasons is due to the more limited housing supply,” said Yun.

In the New York region, a very high percentage of renters in urban counties spent a big share of income on housing. In the Bronx, Brooklyn and Queens, close to a third of all renters pay at least 30%.

But many of the biggest increases in housing burdens occurred outside the city.

Among homeowners, there were big increases in the percentage of people spending at least 30% on housing in counties like Nassau, Dutchess, Orange and Putnam. The percentage of households spending at least 50% of income also rose in those counties.

In Clifton, New Jersey, the percentage of mortgage holders spending at least 50% of their income on housing rose to 27% in 2005 from 12% in 2000, a 134% rise. In New Britain, Connecticut, the group paying at least 30% more than doubled, rising to 57% of people with mortgages, up from 27%.

Nationally, the biggest increase in homeowners spending more than 30% of their income on housing occurred in an unincorporated area southeast of Los Angeles called Florence-Graham, where more than a third of residents live in poverty. There, the figure climbed to 43% from 17%. Other places with big jumps included Wyoming, Michigan; Round Rock, Texas; and Plymouth, Minnesota.

In general, the places with the highest overall percentages of homeowners spending that level of income were poorer cities. El Monte, California, a Los Angeles suburb, had the highest percentage of mortgage holders, 73%, spending more than 30% of their income on housing. In Newark, the figure was 72%; in El Cajon, California, east of San Diego, 69%; and in South Gate, California, 69%.

Jack Kyser, senior economist with the Los Angeles County Economic Development Corporation, said such cities are often the only places that people on the lowest rungs of the economic ladder can afford and they tend to stretch their resources to get in. He said El Monte and South Gate both are growing, largely because Latinos have been moving in.

“These communities are well located to employment opportunities and they can drive and it is not a horrendous drive,” Kyser said. “They are also close to public transportation and use it.”

The numbers, which were analyzed for The New York Times by Andrew A. Beveridge, a demographer at Queens College, provided a glimpse of how hot — and how unhot — some areas had become.

Two Southern California coastal cities, Santa Barbara and Newport Beach, had the highest median house values, at $1 million.

Youngstown, Ohio, a city long hurting economically, had the lowest, at $48,000.

In New York State, the median value of owner-occupied homes actually declined slightly in a few upstate counties, including Oswego, Steuben and Madison. The median house value dropped 9% in Buffalo, to $60,800.

Housing values rose only barely in some upstate counties, including Cattaraugus, Cayuga, Chautauqua and Chemung.

Because of a change in census procedures, it was not possible to reliably gauge the increase in cost burden among homeowners in places with large numbers of condominium or cooperative apartments.

In 2000, the bureau did not count owner-occupied apartments in multifamily buildings; in 2005, it did. So the 2000 and 2005 figures could not be satisfactorily compared for places like Manhattan and San Diego.

In Manhattan, where the median value of all owner-occupied homes hit $718,000, the increase in median gross rents from 2000 to 2005 was 14%, well below the 20% jump in Suffolk County on Long Island, the 23% rise in the city of Passaic, New Jersey, and the 24% jump in Ulster County, New York.

The increase in the percentage of Manhattan renters paying at least 50% of their income on housing was 13%—well below the 50% rise in Rockland County.

The data also showed that, among couples living together in Manhattan, about 17% were unmarried in 2005, compared with 10% nationwide.

Manhattan appeared to have the second highest number of male couples living together, following Los Angeles.

Sam Roberts contributed reporting.

Source: New York Times

 New Jersey Mortgages - OCt 3, 2006
The Pending Home Sales Index, based on contracts signed in August, rose 4.3% to a level of 110.1 from a reading of 105.6 in July, but is 14.1% lower than August 2005.

David Lereah, NAR’s chief economist, said the rise in the index is a hopeful sign.

“Our sense is that home sales may have reached a low in August – the Pending Home Sales Index shows home sales should be fairly stable over the next two months, although a minor decline is possible,” Lereah said. “With fewer new listings coming on the market, we should be able to draw down the inventory supply early next year to the point where home prices will rise, but at a slower pace than historic norms.”

The index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.

An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive record years for existing-home sales. There is a closer relationship between annual changes in the index and actual market performance than with month-to-month comparisons; analysis shows a strong parallel between changes in the index from a year ago and the actual pace of home sales in coming months.

Regionally, the PHSI in the West rose 9.2% in August to 112.7 but was 16.9% below August 2005. The index in the South increased 4.0% to 126.8 in August but was 9.4% below a year ago. In the Northeast, the index rose 3.6% in August to 95.4 but was 12.4% below August 2005. The index in the Midwest was unchanged at 93.8 in August and was 20.4% lower than a year ago.

ASSOCIATED PRESS

New Jersey Mortgages

WASHINGTON — Black and Hispanic home buyers pay more for their mortgages than do whites, according to a Federal Reserve report released Friday.

New Jersey Mortgages -September 28, 2006—(MCT)—Houston-based Stewart Title Guaranty Co. illegally channeled payments to home builders and lenders in exchange for steering their title business to the firm, California Insurance Commissioner John Garamendi alleged in a formal accusation Monday.

Garamendi is seeking millions of dollars in penalties, saying the company engaged in the practice from 1999 to 2005. Last year the insurance commissioner won $37.8 million in fines and penalties against nine title insurers after leveling similar accusations.

Calling the practice a kickback, Garamendi said it forces consumers to pay higher prices for title insurance.

In a statement Monday, Stewart Title said the state of California hasn’t issued clear guidance and said its practices meet guidelines of the U.S. Department of Housing and Urban Development. The company called Garamendi’s allegations “the result of a misunderstanding of Stewart’s business.”

The commissioner said Stewart gave up to 50 percent of its title insurance premiums to “shell companies” created by home builders and lenders that steered the title business its way.

The commissioner said participants included Folsom-based Elliott Homes Inc. and several national home builders and mortgage companies. Elliott Homes could not be reached for comment.

Garamendi’s office said Stewart has approximately 15 days to respond to the accusation. The matter eventually will be decided by the state Office of Administrative Hearings unless it is settled earlier.

Stewart said Monday it has met with representatives of the commissioner’s office “and is providing additional information to overcome these allegations.”

Copyright 2006, The Sacramento Bee, Calif.

Distributed by McClatchy-Tribune Business

September 27, 2006—(MCT)—At a pace that some analysts described as ‘astonishing,’ the price of existing homes declined nationally for the first time in 11 years in August, signaling that the long-awaited other shoe has finally dropped on the real estate market.

Home sales have been slowing for months but sellers appeared to be holding out to get their price. Now the pressure to sell is intensifying, leading to a drop in house values across the country.

In the Chicago region, prices stayed flat for the month, meaning that the average homeowner missed out on appreciation. But analysts see price declines hitting the area soon as anxious sellers give in to the trend and lower their asking prices.

Economists worry about the housing slump’s ripple effects. Even as the boom began to wind down last year the housing market probably contributed about $2 trillion to the U.S. economy, according to the National Association of Realtors. One estimate from Goldman Sachs predicts that the slowdown will cut 1.5 percentage points from the nation’s economic growth in 2007.

The Realtors’ association reported that the median price for existing single-family homes nationwide slipped 1.7% from last August, the first such decline since April 1995. It also was the second-biggest decline in the 38 years the Realtors have gathered sales data.

“It’s pretty amazing how fast the reversal has occurred since last year,” said David Stiff, chief economist at Fiserv CSW, a property-data analysis firm in Boston.

“There has never been such a quick deceleration in price appreciation,” Stiff said. “I was looking at data from 1969 forward, and it’s unprecedented.”

Illinois home prices, which had declined incrementally in June and July, dropped 1.9% in August, to $210,900 from $214,900, according to the Illinois Association of Realtors.

The nine-county Chicago region avoided price depreciation, and condo prices inched up 3.4%.

But there is no denying that the slowdown is taking a toll. Chicago-area sales in August were down nearly 21% from last year, while condo sales were off 11%.

During the lull the inventory of homes for sale has grown about 40% from last August. Local realty executives say sales will pick up when more sellers cut their asking prices to more realistic levels.

“It’s a transitional market, and the sooner we get out and make 1/8price3/8 adjustments, the better,” said James Merrion, regional director of Re/Max Northern Illinois in Elgin.

“Too many sellers got greedy,” he said. “Prices have to come down.”

Not so, said Tommy Gentile, who has been trying to sell his five-bedroom home in west suburban Montgomery for about six months. He has reduced the price by $20,000, to about $380,000, leaving little wiggle room.

“That price is pretty close to rock-bottom, as far as money we’ve put into it,” Gentile said of the house, bought two years ago. “We have to get our money back because we’ve bought another house, and we’re remodeling that one. We have two mortgages.”

Few people are coming to take a look, Gentile said. Between competition from home builders offering incentives to close out developments and about 10 neighbors who also have their homes for sale, it’s a struggle to attract interest.

Nationally, the Realtors said total sales slipped 12.6% from August 2005.

Though the numbers were slightly better than anticipated, it was still the slowest rate since January 2004.

Ian Shepherdson, chief economist at High Frequency Economics in Valhalla, NewYork, said the national price news probably was worse than reported.

“We estimate that seasonally adjusted single-family home prices have fallen at a 5.9 percent annualized rate in the past three months,” Sheperdson said. “The speed of the collapse has been astonishing. This time last year single-family homes were up 16.4 percent, year over year.”

David Lereah, chief economist for the National Association of Realtors, predicted that though prices aren’t done sliding, “we have reached bottom in terms of sales, or close to it.”

“Prices are going to continue to go down for the remaining months of the year,” he said.

“For some areas, like south Florida and California, it’s going to take a lot longer, but for most areas, starting in 2007, prices will be up just a little,” he said.

Others see it taking longer.

“With inventory still rising, there is no chance of any short-term relief,” said Shepherdson. “Prices and volumes have a long way to fall yet.”

Merrion said price cuts should continue, and then the market will right itself. “Where there’s a glut of inventory, you’re going to see fairly good-size price reductions of 5 to 10 percent,” said Merrion. “But it will be temporary and the market will catch up in a year or a year and a half.”

In the data released Monday some parts of the Chicago market saw increases in sales and prices.

Sales of all types of properties in Grundy County, for example, grew by an eye-popping 15%; most other counties’ increases, however, were far smaller.

Home sales in Cook, DuPage and Kane counties rose about 1 to 2%.

Bloomberg News contributed to this report

Copyright 2006, Chicago Tribune

Distributed by McClatchy-Tribune Business News.

 Provided exclusively to The Mortgage Press by David Beadle, president of BestInfo Inc., the BestRates pager and e mail rate alert service for mortgage industry subscribers. Send your inquiry to bestrates@mortgagepress.com for full details on a free two-week trial subscription.

A reading of “1″ has the lowest impact on rates, while “10″ has the highest. Although carefully verified, data are not guaranteed as to accuracy or completeness. BestInfo Inc. cannot be held responsible for any direct or incidental loss or liability incurred by applying any of the information or opinions in this feature.

October 3
September Auto Sales
Rate Impact: 3
Ford Motor Company’s announcement in mid-September that it will be sharply and rapidly reducing production capacity was one more reminder of the changing face of the automobile manufacturing industry in this country. With 90 percent of so-called “foreign” cars now built here rather than shipped across the ocean, the situation has changed dramatically from what it was in previous decades. And with the computerization and robotics built into the new plants coming on line over the next few years, the days when assembly plants were staffed by legions of blue collar workers are rapidly disappearing. For analysts trying to read the economic tea leaves, a change is required to avoid misinterpretation of the inflation outlook. This will be partly due to the fact the high paying but low skilled jobs available in the last century are evaporating.

October 6
September Employment
Rate Impact: 9
With the FOMC scheduled to meet again on Oct.24 and 25, this will be the last employment report before the gathering. However, jobs may not be the focus for the Federal Open Market Committee. Instead, the members may be concentrating on the inflation outlook in light of the dramatic drop in energy prices which took place during September. It wasn’t merely gasoline. The price of natural gas plunged to a two-year low, and other home heating fuels followed suit in advance of the winter season. In addition, the government issued a preliminary long-range forecast calling for a milder winter across the northern tier of states due to the development of an El Nino weather system in the Pacific Ocean. If it has the expected impact, the result could be reduced demand combined with plentiful supplies. In short, a “perfect storm” of good news for those whose family budgets were literally crushed last year by brutal heating costs.

October 11
September FOMC Minutes
Rate Impact: 5
Here’s the key question: Does the Federal Open Market Committee believe consumers will spend the savings from lower gasoline and home heating bills, or will the cash be placed in piggy banks? The answer may determine the future direction of Fed interest rate policy. Unfortunately, the Fed may duck the question at the Sept. 20 meeting, which occurred only shortly after the gasoline price drop and before winter heating bills began to arrive. Therefore, we may have to wait until November or later for Fed officials to address the issue in their released meeting minutes. And there’s always the possibility that some adverse event such as a disruption of oil shipments may reverse the drop in prices, thereby rendering the matter moot in regard to gasoline and distillates such as diesel fuel, propane and home heating oil.

October 13
September Retail Sales
Rate Impact: 8
With vehicle sales having sunk in August from buoyant July levels, traders will observe whether or not they rebounded as clearance efforts accelerated with such tried and true measures as zero percent financing on some models. The outcome could have a significant impact on overall retail sales, which were disappointing during the back-to-school promotional period. Naturally, retailers are always looking for new ways to get shoppers through the door, and the latest development is the ever-earlier beginning to the holiday merchandise season. Just as back-to-school has back-tracked into early July, look for the promotional calendar for the December holidays to be skewed not only into October (which has already become a key shopping month), but into September as well. However, since the government’s surveys typically take place during the middle of a month, the impact is unlikely to show up in the federal statistics.

The Internet has influenced a structural shift in most real estate professionals’ marketing mix. Whether you work for an independent or branded residential agency, it is becoming increasingly difficult – and painful – to ignore marketing your firm or yourself on the Web. From personal Web sites to sophisticated search engine marketing programs, the sourcing of new business and clients is increasingly an online proposition.

What events are influencing this structural marketing shift?

Fueled by the average American’s thirst for information and scarcity of time, the Internet is where the action is today; in real time.

According to Search Engine Marketing, Inc., by Moran & Hunt (IBM Press 2006), total Web users surpassed the 300 million mark in 2004, with paid placement advertising generating nearly $3 billion in 2005 and expected to grow to $5.5 billion by 2009. Naturally, real estate professionals are among those turning to the Web as a source of new business in the form of lead generation.

Besides this volume of both bodies and dollars orbiting the Web, consider further that, according to the National Association of Realtors (NAR), more than 70% of those initiating the sale or purchase of a home begin doing so online. As of 2006, 72% of all Internet users in the United States have the use of broadband to access the Internet, according to Neilsen/NetRatings. That’s 103 million Americans able to quickly view and download large graphics files such as photos and virtual tours available in over 930 MLS databases across the country.

With the maturity of the Internet and the genesis of third party lead generation Web sites, many agents and brokers are in a quandary as to which, if any, such vendors they should engage to increase their online marketing exposure.

That is not surprising. A recent Google search of real estate lead generation Web site search yielded 9.3 million results in just .36 seconds. From www.agentconnect.com to www.zillow.com, and everything in between, a vast labyrinth of Web sites and vendors await an agent’s search in cyberspace.

Eager to enroll real estate agents into their program for a fee with promises of robust, qualified, and exclusive leads, many of these vendors fall short of agent expectations for a variety of reasons – not all of which are the vendors’ fault.

So, what is an Internet or e-commerce lead anyway?

Well, let’s consider what a lead is in the first place. According to the Merriam-Webster Online Dictionary, a lead or prospect is a potential buyer or customer.

Chad Pinson, managing director of contact referral Web site HomePoint.com (www.homepoint.com), states a qualified real estate lead is a consumer who:

• is likely to retain professional assistance from a real estate agent,
• is qualified to consummate a real estate transaction because the consumer is:

o Ready - Will make a purchase or sale decision within 12 months of initial contact
o Willing - Either wants to, is compelled to, or must do the transaction
o Able - Has the legal and financial capacity to consummate the transaction.

With regard to the Internet and e-commerce then; what is a lead?

Many agents who enroll in online referral programs such as www.HomeGain.com, www.RealEstate.com, www.HouseValues.com, www.HomePoint.com, and others are under the impression – rightly or wrongly, depending on the vendor’s sales force – that every referral from such programs is a qualified lead.

This is not necessarily so. Some programs offer pre-screened, qualified leads, but many do not.

For instance, www.Lead2Realty.com prescreens subscribers’ leads, and charges between $30 and $70 per lead, depending upon whether the lead is a buyer, seller, or combined buyer and seller. More often, such referral programs generate potential leads in the form of contacts. A contact exists when a search engine such as Google, Yahoo!, AOL, and MSN is queried by a searcher for real estate topics such as sell a house in Green Bay, or Buy a home in Denver.

Through these search engines, a potential client (the searcher) identifies and visits a Web site included among the search results to screen properties and consider real estate agents to list a home for sale or to assist in the purchase of a home. Typically, these Web sites require the searcher to enter contact information in order to gain access to the MLS database available through the given vendor’s site. The operative term here is contact information, not lead information.

While it may seem a matter of semantics, the difference between contact and lead information significantly affects the value of the referral. A contact does not become a lead until some reliable system or some knowledgeable party qualifies the lead as described above. This is where many referral program Web sites disappoint their subscriber agents. They call contacts, leads, which sets an unrealistic or false expectation for the subscriber agent. So, when the agent subscriber responds to an e-mail lead referral and follows up with the potential client, only to be advised by the person that they just wanted to see what homes are selling for in their neighborhood and are not presently in the market, the agent subscriber is disappointed and often perceives the referral service as a poor resource for new lead generation.

Most such Web sites also generate their fair share of bogus leads that occasionally slip through quality control screening. Some are both creative and humorous. For example, one service recently received a home seller request for assistance from a ‘Hugh Afner’ of Lake Shore Drive in Chicago. A customer service representative called the contact’s phone number in Chicago and was directed to Hugh Hefner’s personal assistant at the Playboy Mansion in Los Angeles. Needless to say, Hefner had not inquired about listing his property for sale on the referral site. Clearly, when such bogus leads reach an agent, they further diminish the perceived overall value of all real estate referral program Web sites.

Now, two key agent issues are presented by the contact versus lead scenario described above. First, how to overcome the disappointment associated with the lead, not contact, expectation set by the referral program Web site. Second, the dilemma of what the agent should do with a given contact. Is this person a waste of an agent’s time, or is he or she a potentially premature lead in need of nurturing and/or a source of additional referral business?

Let’s address the lead expectation issue first. As any savvy real estate agent knows, the sales industry is a numbers game. They know that their performance is a function of their arduous farming, direct marketing, networking efforts, and also their hustle and intelligence. Based on these painstaking and enduring efforts, top agents consistently outperform their peers because they know they need to engage X number of client suspects, to convert them to Y client prospects, to convert them to Z clients, to convert them to revenue-generating transactions. Given this funnel, it may seem that contacts would be a reasonable starting point for generating leads. Does it make sense for agents to view all the people they meet in person as contacts and/or potential leads and clients?

Most agents don’t strongly believe that everyone they meet or who crosses their path will become a client, but most good agents treat everyone as though they might become a client. This is often true whether that person has articulated a real estate need or not. As such, wouldn’t the “contact” that searched a given Web site’s property database have expressed a known curiosity about real estate activity in a given neighborhood? And if that given neighborhood is in a subscriber agent’s primary trade area, shouldn’t they be entered in that agent’s customer relationship management (CRM) database so as to be further engaged by that agent? By so doing, a savvy agent can expand their contact base by adding a client suspect who has knowingly expressed an interest in that agent’s trade area. By adding a qualified “suspect” to your CRM database, you have increased the number of suspects from which future clients will be drawn.

Bonnie Cox, a 28-year industry veteran and a broker with RE/MAX Masters in Denver, Colorado notes the importance of staying in contact with as large a group of consumers as possible. Her contact system has helped her close over 80 transactions in the last two years.

Bonnie explains that, “When you (agent) receive an Internet lead, consider it the beginning of a long-term relationship … while most buyers appreciate a brief contact during the initial relationship building period, they will almost certainly want to do much of the property research on their own.” Following the initial Internet contact and follow up, Bonnie “immediately enrolls the prospective buyer in her newsletter and monthly ‘drip’ marketing program.” According to Bonnie, that prospect will now have two monthly automated contacts in the form of the newsletter and “drip” e-mail marketing campaign.

Using the Internet to take a longer-term view on prospecting seems counterintuitive.

The Internet is known as a real-time, get-the-information-fast and make-it-happen-now medium. It clearly is a mechanism for doing so. However, according to an independent study by Hebert Research of Bellevue, Washington (commissioned by www.HouseValues.com), sellers take an average of nine months researching and pondering the issues surrounding the sale of their home before listing and selling their property. Sellers conduct pre-research for 5.5 months, active research for 1.4 months, and take 2.4 months actually selling the home. Conversely, the study says that buyers take nearly 17 months from the time they first contemplate purchasing a home before actually consummating the purchase. Buyers conduct pre-research for 7.1 months, active research for 5.5 months, and spend 4.1 months actually finding, negotiating, and closing the purchase.

In traditional real estate prospecting, agents tend to focus on listing and buyer representation prospects during the selling and buying phases identified in the Hebert Research report, that is, the three-month period for sellers, and the four-month period for buyers. Agents tend to focus on these two areas because: 1) as commission-only salespeople, agents must focus on the short term, and 2) prior to the Internet, it was very difficult to identify prospects in the pre and active stages of real estate research. While the Internet hasn’t done much to change the agent’s compensation plan, it has significantly increased the likelihood that an agent can both identify and engage a potential prospect in the pre and active research stage. But this is where technology and historic industry culture tend to clash.

So, how can agents change their short-term focus to engage more prospects earlier in the sales cycle? The answer is to embrace change intelligently, and to reduce the pain associated with such change.

Agent focus in a new market
Agents need to ask the right questions of agent referral network providers, recognizing the value of a good contact, and converting good contacts to leads at the appropriate time. For example, ask a referral network sales representative the following: Who is considered a lead – anyone entering data in your system’s Web site while viewing properties? Or, are leads those who request more detailed property information or agent assistance? Are a given referral network providers’ contacts pre-qualified? If so, what does that process entail? What questions are asked of their Web site visitor?

Besides qualifying the contacts provided, agents should probe further to understand how the contacts are distributed to the referral providers’ subscribers. Are leads distributed simultaneously to multiple agent subscribers, who then compete for the given contact’s business? Are they considered exclusive to one agent subscriber per geographic territory, such as a ZIP code? If so, is there a time-sensitive component to the exclusivity?

Many referral network providers recognize that Internet searchers are impatient; studies show they must be contacted quickly to be converted to a qualified lead. This is true even if the contact is engaged early in the sales cycle as described above. In 2005, more than 70% of consumers utilized the Internet before making a real estate decision, and half of those concluded business with the first agent with whom they made contact, according to the National Association of Realtors. As such, many contacts are exclusive for specific periods of time, and will be sent to another agent subscriber if the first agent subscriber does not respond within a given timeframe.

In closing, the Internet and real estate referral network providers are now an established and recognized source of new business in residential real estate. Now, it is up to agents to convert contacts to leads, leads to clients, and clients to revenue¬-generating transactions. One possible first step is for agents to subscribe to quality e-commerce real estate referral programs, and manage their lead expectations.

Kyle Cascioli is an Adjunct Professor of Real Estate in the Burns School of Real Estate, part of the Daniels College of Business at the University of Denver. He is also Manager of Real Estate Services at HomePoint.com (www.homepoint.com), a consumer-centric real estate Web site that provides vendor, marketing, and agent-referral services in selected markets across the United States.

Cascioli is also the broker-owner of Barrett Associates, Inc., a member of the National Association of Realtors, the Colorado Association of Realtors, and the Aurora Board of Realtors.

Warning comes after U.S. homebuilding suffered its biggest slump in a decade.