Daily Archives: October 15, 2012

How to convince buyers they’re getting a bargain | North Salem Real Estate

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As we discussed last week, the fields of behavioral economics and behavioral finance were created in the hopes of gaining a better understanding of how real people make financial decisions in real life.

Fortunately for all of us, these fields — which draw from the behavioral sciences, economics and personal finance — have generated some findings that are anything but academic. These findings include some powerful insights for those of us trying to make decisions about buying and selling our homes.

Following on last week’s top four behavioral economics insights for homebuyers, here are a handful of the field’s top takeaways for sellers, to help manage your own mindset and to optimize the way you market your home to buyers:

1. Don’t let overconfidence lead to overpricing. Real estate agents are the only commissioned salespeople I know of who, as a general rule, spend much of their time trying to talk their clients down in pricing their product. Why? Because real estate agents know that listing a home at too high a price causes unnecessary woe, drama and failure. Set the listing price too high, and a home will lag on the market, attracting lowball offers. The end result is often a price reduction, or even (worst case) the home doesn’t sell at all.

Overpricing can result from the same overconfidence and overoptimism that causes buyers to make lowball offers on great homes in a hot market and inspires investors to day trade, erroneously thinking they have superhuman stock picking skills. In fact, when you study up on successful amateur day traders, it becomes clear that what they have is less innate skill and more the willingness to voraciously, constantly research the companies and the markets — many, for hours every single day. Many have also placed rules on themselves specifically to counter their own human emotions and irrational tendencies.

And that’s precisely how home sellers can and should deactivate overconfidence when it comes to pricing: Commit to the exercise of sitting down with your agent and poring over the data about what’s going on in your market, the data about what homes have recently sold for in your area, even the data on how long it takes the average home in your market to sell and what the list price-to-sale price ratios are in your area.

It takes time and discipline, but while you’re looking through the comps, your agent can show you the potential rewards: Every market has well-priced, well-marketed homes that sell quickly.

2. Understand the endowment effect. Lest you think, like so many do, that the above point is great for all those other clueless sellers, but certainly doesn’t apply to your innate, uncanny eye for knowing what homes are truly worth, allow me to introduce you to a little something called the endowment effect. Behavioral economist Dan Ariely explains it as follows:

“Simply put, the endowment effect shows that we value the things we own more than identical products that we don’t own. This causes a mismatch between buyers and sellers, where buyers are often willing to spend less than the seller deems an acceptable price.”

Just knowing that what you think is your personal prowess for price-setting is actually a thought fallacy that researchers have known about for years might help you stay committed to making your pricing decision based on the data rather than your fallible gut.

3. Consider offering rebates and credits. Beyond using behavioral econ and finance knowledge to optimize your own decisions, smart sellers can take clues from these fields as to how to max out their marketing to buyers. One such clue is this: Offer rebates, or closing-cost credits.

Retailers and big brands have long known that offering a rebate makes buyers feel better — and less hesitant — about making a purchase, giving them the sense that they will get a bonus or a gift for spending.

This same effect applies with real estate: If you can price your home competitively with similar, nearby listings and offer a closing-cost credit to the eventual buyer, you boost your home’s attractiveness and ability to compete with other listings considerably, reducing the amount of cash a buyer will have to bring in to close the sale and making it that much easier for a buyer to get off the fence.

4. Tell prospective buyers a story. The Atlantic recently did a deep dive into consumer implications of behavioral economics. The article revealed that buyers are more inclined to make purchases where the circumstances of the marketing actually tell the buyers a story that makes them feel like they are getting a bargain, as happened when Williams-Sonoma put a $500 bread maker next to a $300 one and realized that no one bought the expensive one, but sales of the lower-priced machine doubled because of the deal people thought they were getting.

I’m going to take this one further: Don’t just tell a story to make buyers feel like they are getting a good deal when they’re not. But do provide materials to tell buyers the story of the deal they are getting: Keep a binder in the property with the competitive comparables that you believe your home is priced well against. Market your home with photos and descriptions that surface the value your home holds compared to the competition.

And don’t stop there: Stage your home in a way that tells your buyers the story of the life they could lead in your home, whatever that ideal life is for the average buyer who wants a home like yours. And consider writing a love letter about your home and your neighborhood, telling buyers the story of how well loved the home was, and creating a compelling sense of well-being around it.

via inman.com

Realtor.com: Housing hampered by struggling job markets | Cross River Real Estate

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Most key housing markets are in recovery mode, but industrialized areas plagued with falling employment numbers continue to deal with distressed assets, Realtor.com, the website run by Move Inc., said in a new September survey of U.S. housing markets.

List prices are still below 2007 peaks, but areas such as California, Seattle and Phoenix are experiencing a recovery while parts of the Midwest and Northeast deal with a lack of jobs and declining manufacturing sectors.

Housing inventory across the U.S. remained at historic lows with only 1.8 million units up for sale in September.

The median list price is slightly higher than a year ago, coming in at $191,500, and the median age of the inventory has fallen by 11.21%.

“Lower inventories, combined with somewhat higher median list prices, suggest that the housing market ending the 2012 home-buying season is in better shape than it was a year ago,” Realtor.com said.

The total number of listings, which stands at 1.8 million, is now down 17.7% from last year and 2.19% from August. Today, inventory is staying on the market 95 days on average, which is up from August but down significantly from last year.

With areas such as the Midwest and industrialized cities remaining the hardest hit areas, the housing problem is beginning to look more like a jobs problem based on data released in the report.

“These patterns suggest that the underlying nature of the country’s housing problems has changed,” Realtor.com said.  “What began as a collapse of a housing bubble fueled by poor underwriting and toxic mortgage products has evolved into a housing recession that primarily reflects continued weaknesses in local economies.”

The report’s findings suggest that as economists mull over the housing economy, the lackluster jobs recovery — or areas with drying economic activity — are what is driving the remaining depressed markets.

via housingwire.com

How Evil Is Your Smartphone? | South Salem NY Homes

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In a recent post, ReadWriteWeb’s Adam Popescu vowed to boycott Apple due to its association with Foxconn, the Taiwanese contract manufacturer infamous for sowing despair among its workers. Reading the article, I had to ask myself: Did the maker of my smartphone – a RIM BlackBerry – also help drive workers to suicide? Did it release toxic pollutants into the environment or fuel wars in places far away from its head offices? So I set about looking for the world’s most ethical smartphone. What I learned surprised me.

Participants in the comment thread below Popescu’s article were quick to point out the many electronic products that can be traced to Foxconn. The company’s factories churn out devices for Amazon, Microsoft, and Samsung. In a related Skype chat, ReadWriteWeb editor Ted Greenwald commented that there are no ethical gadgets, period; their manufacture and use are not sustainable, he argued.

Okay, maybe there are no ethical smartphones. But some must be better than others, right?

Ethical Consumer, a UK organisation “researching and recording the social and environmental records of companies” since 1989, is a leader in evaluating products for their impact on human rights, animal rights, the environment, and other factors that might fall under the heading “ethics”. Its report on smartphones isn’t very positive, in general. It awards points from a possible score of 20, and nobody scores more than 10.5.

That said, I was happy to find that my BlackBerry appeared near the top of the heap, just below Amplicom (a maker of cordless phones that doesn’t offer a smartphone as far as I can tell.)

BlackBerry fell considerably short –  behind Apple, Nokia, Toshiba, LG and Samsung – in waste management and the level of toxins in the production process. RIM never filed an environmental report, so Ethical Consumer gave the company a 0 in those areas. BlackBerry’s failures in the green category, however, were enough to bouy its score compared to that of other mobile manufacturers.

The 38 page report by Ethical Consumer is extensive, and includes goodies like: Samsung has ties to human rights abuses in the Congo – as does Toshiba, Motorola and Sony – and Sony has raised flags among animals rights groups for abuses including killing a goat at a promotional party. Several female Nokia factory workers in Thailand had to be hospitalized for severe lead poisoning in 2006, after they were told lead wasn’t harmful. Workers had to buy their own protective gear, like gloves and face masks, and were told to drink a carton of milk a day to remove the birth-defect causing toxin from their bodies. (Milk does not, in fact, help you pee out lead.)

CrackBerry Supports Human Rights

If we are judging how ethical a smartphone is based on its treatment of workers, BlackBerry is near the top. Incidentally, RIM’s report is surprisingly free of negative human rights indicators: no riots, no illnesses, nothing. The worst things about RIM, according to Ethical Consumer, was its failure to file an environmental report and that it had a factory in a repressive regime, namly China.

RIM has (or used to have) factories in Canada, United States, Hungary, Brazil, Asia, and Mexico, where my BlackBerry says it was made in. After a casual disassembly, the small electronic parts in my phone reveal they come from China or Korea, but further information on exactly where and what factory is hard to find, as RIM is notorious for its lack of transparency. According to a 2009 Bloomberg article, “RIM’s five biggest suppliers account for almost 90 percent of its production costs,” suppliers that operate mostly in China. BlackBerry still beats the Android and especially Apple on this factory issue, however,  because riots and suicides at RIM factories are unheard of (so far).

Due to declining profits, RIM recently shut down one factory in Canada and one in Hungary, countries with strict labor laws and therefore high wages and good working conditions. There is nothing to indicate that RIM’s failure to dominate the market like it once did is due to its adherence to fair labor laws. Rather, RIM’s decline is a result of mismanagement and lack of innovation leading to low demand.

If RIM Can Do It, Why Can’t Apple?

Apple and its Android competitors don’t have RIM’s problems. So why are they still relying on Foxconn? Apple is incredibly profitable – reputedly the most profitable company of all time.

Apple set the smartphone standard and turned us into a touchscreen society. Why can’t it set the standard in labor conditions? Sources in the know say Apple would love to have its factories closer to home anyway to keep an eye on quality control. According to Ethical Consumer, Apple has been providing unsafe conditions to its overseas factory workers since 2008 and using factories in 10 countries classified as “oppressive regimes” since 2006.

Until Apple moves its manufacturing operations closer to home and/or makes a commitment to setting high standards for its labor practices, I will keep using and loving my BlackBerry despite ridicule from the Apple snobs and Android fanatics. I eagerly await RIM’s upcoming BlackBerry 10 phones.

Driven by breakthrough thinking and a wide-open sense of what’s possible, Alcatel-Lucent delivers the world’s most advanced technologies to companies all across the globe. Our driving motivation is to realize the potential of the connected world – by providing the technologies needed to turn networks into engines of sustainable economic growth, social development and opportunity. We provide a comprehensive suite of software solutions and services offerings designed specifically to meet the needs and demands of communication network operators and strategic industries. These solutions allow our customers to optimize network costs and quickly deploy innovative, value added products and services for their subscribers that increase loyalty and create new revenue streams. To learn more about how we’re turning the network into a platform, visit http://www2.alcatel-lucent.com/hln/network_evolution.php

via readwriteweb.com

Katonah Real Estate | Wells Fargo mortgage originations grow, profit climbs

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Mega bank Wells Fargo & Co. ($33.68 -0.57%) posted a third-quarter profit of $4.9 billion, or 88 cents a share, up from $4.6 billion, or 82 cents a share, last year.

The company’s profit grew as the loans in its portfolio rose another $11.9 billion, driven by the firm’s mortgage and deposit businesses.

Mortgage lending alone became more robust with $139 billion in mortgage originations recorded at Wells Fargo during the period, up from $131 billion in the prior period. Applications, on the other hand, fell to $188 billion compared to $208 billion in the last quarter.

The total residential mortgage servicing portfolio reached $1.9 trillion during the period.

“Through the efforts of our more than 265,000 team members, we’ve now achieved six consecutive quarters of record net income and EPS,” said Wells Fargo chairman and CEO John Stumpf. “By focusing on earning all of our customers’ business and providing outstanding service, we continued to generate growth across our diversified set of businesses. In the third quarter, core loans grew by $11.9 billion and we saw continued strength in our mortgage and deposit businesses.”

Growth stemming from asset management, commercial mortgage servicing, lending and the real estate capital markets also contributed to Wells Fargo’s third-quarter revenue. The bank’s revenue hit $21.2 billion, down slightly from $21.3 billion in the second quarter.

via housingwire.com

Mobile-friendly sites turn visitors into customers | Bedford Hills Real Estate

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The following post originally appeared on the Google Mobile Ads Blog.

 In this world of constant connectivity, consumers expect to find the information that they want, when they want it – especially when they’re on the go. We know that this applies to their web browsing experiences on mobile, so we took a deeper look at users’ expectations and reactions towards their site experiences on mobile. Most interestingly, 61% of people said that they’d quickly move onto another site if they didn’t find what they were looking for right away on a mobile site. The bottom line: Without a mobile-friendly site you’ll be driving users to your competition. In fact, 67% of users are more likely to buy from a mobile-friendly site, so if that site’s not yours, you’ll be missing out in a big way.

Discover these and more findings from, What Users Want Most From Mobile Sites Today, a study from Google (conducted by Sterling Research and SmithGeiger, independent market research firms). The report surveyed 1,088 US adult smartphone Internet users in July 2012.
The problem (and opportunity) is big…
While nearly 75% of users prefer a mobile-friendly site, 96% of consumers say they’ve encountered sites that were clearly not designed for mobile devices. This is both a big problem and a big opportunity for companies seeking to engage with mobile users.
Mobile-friendly sites turn users into customers
The fastest path to mobile customers is through a mobile-friendly site. If your site offers a great mobile experience, users are more likely to make a purchase.
  • When they visited a mobile-friendly site, 74% of people say they’re more likely to return to that site in the future
  • 67% of mobile users say that when they visit a mobile-friendly site, they’re more likely to buy a site’s product or service
Not having a mobile-friendly site helps your competitors
A great mobile site experience is becoming increasingly important, and users will keep looking for a mobile-friendly site until they find one that works for them. That means your competitors will benefit if your site falls down on the job (and vice versa).
  • 61% of users said that if they didn’t find what they were looking for right away on a mobile site, they’d quickly move on to another site
  • 79% of people who don’t like what they find on one site will go back and search for another site
  • 50% of people said that even if they like a business, they will use them less often if the website isn’t mobile-friendly
Non-mobile friendly sites can hurt a company’s reputation
It turns out that you can lose more than the sale with a bad mobile experience. A site that’s not designed for mobile can leave users feeling downright frustrated, and these negative reactions translate directly to the brands themselves.
  • 48% of users say they feel frustrated and annoyed when they get to a site that’s not mobile-friendly
  • 36% said they felt like they’ve wasted their time by visiting those sites
  • 52% of users said that a bad mobile experience made them less likely to engage with a company
  • 48% said that if a site didn’t work well on their smartphones, it made them feel like the company didn’t care about their business
Takeaways
While the research confirms what we already suspected — that mobile users actively seek out and prefer to engage with mobile-friendly sites — it’s a sobering reminder of just how quickly and deeply users attitudes about companies can be shaped by mobile site experiences. Having a great mobile site is no longer just about making a few more sales. It’s become a critical component of building strong brands, nurturing lasting customer relationships, and making mobile work for you.
To learn more about our study
  • Click here and join our free webinar on September 26 at 1 p.m. EST  / 10 a.m. PST
  • Get help on building a mobile-friendly site, visit howtogomo.com.
Posted by: Masha Fisch, Google Mobile Ads Marketing
via analytics.blogspot.com

Relevant is the New Black – Stop Sucking and Start Mattering | Pound Ridge Real Estate

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This isn’t breaking news or an exclusive by any means.

If I did years of extensive research, analyzed data, built fancy charts, used 3-D graphs on my iPad, and touted inarguable, NAR homebuyer and seller survey-backed findings, it would lead to just five words.

Follow-up in real estate sucks.

I define “sucks” two different ways.

The first: It sucks that there is not more time in each day to follow up with people you have already built a good relationship with or helped buy or sell a home. If someone is not currently in the market to buy or sell, only so many minutes can be allotted to relationship maintenance.

Especially, I should add, if you actually produce significant GCI (gross commission income) or carry a lot of listings.

I wish there were a perfect world. One where all you did was chit-chatted with friends on Facebook all day whom you worked with previously, just calling your sphere to say hello and asking how the kids are.

Too bad you are busy as hell and reality is such an important thing to consider when running a business.

Bottom line? Past clients and referrals make or break your business, but you could likely receive more if you followed up effectively.

The other way follow-up sucks in real estate is that it lacks the most important thing in marketing right now: context.

As the social Web has evolved, experiences are becoming increasingly personalized. This includes ads and marketing messages that we are exposed to.

This change means you need to completely re-evaluate your follow-up marketing strategy with your sphere of influence.

Here’s why: When an ad runs in my stream on Facebook that says, “Are you 33? Do you love your iPad? Kids using it too?” The answers are yes and yes and yes. I actually welcome ads like that with open arms. I can’t wait to click them and see where they lead.

Meanwhile in the real estate industry I see marketing like: fajita recipe cards, sports calendars, set-your-clock-back reminders, open house invitations, emailed market reports, and just listed/just sold postcards.

These are things that lack context with 95 percent of people with a pulse.

You have to go deeper in 2012.

In fact, either dig deep or go to sleep (feel free to tweet that).

With everything you do moving forward, please take a moment and ask yourself, whether it is a post card, business card, Facebook update, tweet or phone call, “Is this RELEVANT to the recipient?”

Don’t bullshit here either. Be honest with yourself. It’s critical.

Relevant is the new black.

Contactually, a popular new social CRM (customer relationship manager), can help your efforts towards increased relevancy, both tremendously and immediately.

Money and Happiness

It makes staying in touch with the right contacts fun and simple. I especially enjoy the way it helps you segment your social and email databases into relevant categories. It happens in an interactive game called “The bucket game.” It’s a jovial and quick way to get your unorganized list of contacts into one or more categories (like buyer, seller, past client, Facebook friend, etc.) By approaching this tedious task with a gaming approach, it is actually really fun and you are done in no time at all.

Bucket Your Contacts

Contactually connects your email and social media accounts, analyzes your history with each relationship, and automatically prompts you in a daily email to re-engage with important people who are slipping off your radar.

By leveraging the social graph, anytime you call, email, tweet, Facebook or LinkedIn message someone from Contactually, you have what is relevant to them, in real time, in the form of their live social streams. If their latest tweet was about their kid’s baseball game, there is your reason to call.

The paid version of Contactually also brings integration into Gmail, Salesforce, Highrise, and many other popular and robust CRMs.

Increased context and relevancy with your sphere of influence, with a little help from a software. I dig it.

Of all the dings in your agent armor, an important person slipping off your radar should be considered a big, fat dent. Avoided at all costs.

If your current marketing efforts are extinguishing more interest in what you do than they are generating actual new business, time for a pivot.

You can learn more about Contactually or sign up for a 30-day free trial now.

Or you can reorder sports calendars for 2013. The choice is yours.

via next.inman.com

Shadow Inventory: Less Scary | Bedford Corners Homes

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Visible inventory of homes on the market has been falling repeatedly. Existing home inventories are at an 8-year low, while newly constructed home inventory is near a 50-year low. As we enter the winter months, inventories will fall even further. Very little gets listed after Thanksgiving, and not until March will inventory show some additional choices for buyers.

Just because we are able to see low inventory today does not automatically mean that inventory will be low in the near future. There is also shadow inventory to monitor. These are properties not yet listed on the market but will surely come on the market since there are still plenty of homeowners under distressed conditions. CoreLogic indicated the shadow count has fallen from 2.6 million this time last year to 2.3 million today, according to its definition. If the shadow is defined as those homes in the foreclosure process or where mortgages have not been paid for 3 months or longer, then the count is higher at 3.4 million in the shadow pipeline today, though it is less than the 3.8 million from one year ago. Since not all mortgages that are 3 months late become an REO because a good portion catch up on payment later or get a “cure” via loan restricting, the actual number of properties reaching the market for sale will be measurably lower than the shadow count. Though one can dispute the definition and the exact size of the shadow, one thing that is consistent is that the shadow is less threatening today than one year ago.

A steadily diminishing shadow will naturally shed more light on normal sales. From 2009 to 2011, roughly one-third of all home sales were distressed properties. Based on recent data, the distressed share will be around 25% in 2012. The figure will reach the teens next year and probably single digits in two years.

What impact do falling distressed sales have on home values? The median price will be pushed up. As everyone knows, foreclosed properties sell for less. However since this negative impact will be less strong in the upcoming years, the median price of all transacted homes will be higher than when compared to the past few years. So aside from the normal supply-and-demand dynamics that have been pushing up repeat-price indices such as Case-Shiller and government price data, the median price will also be rising and probably faster because of the fewer distressed over the horizon.

Two years ago, the scariest of Halloween costumes was dressing up as Shadow Inventory. Today, not only have people gotten used to the sight, it is a greatly diminished figure.

Postnote: Shadow inventory is not falling in some judicial foreclosure states where a foreclosure process takes an incredibly long time because it requires a court approval. These states include Illinois, New Jersey, New York, and Connecticut. Though the intent is to keep financially troubled families from being forced out, there are increasing stories of gaming the system, where a homeowner does not pay the mortgage and collects money by renting out the property. As a result, any home price gains in these states will likely perform a “dead cat bounce” because of the very long shadow looming over them.

via economistsoutlook.blogs.realtor.org