Making End$ Meet - Real Estate R&D Findings & News

Real Estate Findings:
It's all about Quality.
April 7, 2016

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Wise Agent
HWD - REB
HWD - REI

Introduction: It's All About Quality.

Greetings.

For the past year or so, I've been researching real estate. Because everyone has a direct or indirect interest in it, is affected by it, and knows someone (who knows someone) who works in it, I'm sharing this message with pretty much everyone I know . . . which, come to think of it, is a first. Usually, I try to target my messages precisely to particular interest groups. But since everyone is interested in and affected by real estate, here goes.

The original reason for this research was a request by a local broker that I visit her office and do something to help her agents be more successful. This simple request sent me on a year-long journey that, most of the time, perplexed me.

Now at long last, I'm happy to announce that I've arrived at some clarity that I'd like to share below in hopes of helping you, yours, and theirs avoid common hazards and enjoy good success.

I've looked at real estate through ten pairs of eyes:

Agents (salespeople),
Brokers (leaders/managers/trainers),
Tenants,
Buyers/investors,
Investor "gurus",
Government,
Vendors, like software developers and real estate oriented social networks,
Property management companies,
Accountants, and
Appraisers.

What follows below is a fairly detailed discussion of what I learned through each.

Advice from the fifth group (Gurus) to the fourth group (Investors) to flood the market with post card and "yellow letter" direct mail campaigns, and software designed by the seventh group (Vendors) to process responses to these campaigns rapidly, led me to wonder about objective quantities like population and housing stock . . . quantities that would determine both optimality and excess. I became curious what would happen if significant numbers of aspiring investors acted on the gurus' advice.

Working from the sixth group's (Government's) eyes, based on 2014 U.S. Census data, I prepared this Findings Summary in which I determine a Demand Ratio by relating population (Demand) with "doors" or housing units (Supply) across the country, in my state, in my nearest metropolitan area, and in my county.

Given such a variety of areas, don't you suppose one would see variety in the ratios? I did; and I found that I was wrong. Much to my surprise, the Demand Ratio (Population divided by Doors) was consistently 2.4 . . . except in my own county, where it was 2.3.

Aren't you amazed by the consistency? I was. What it tells us is that when we hear about "hot real estate markets" or an "inventory shortage" it doesn't mean that the Demand Ratio has increased; that, as we're taught in classical Economics, the population has outgrown the housing stock.

It isn't a matter of quantity. The ratio is amazingly stable. Kudos to the Construction Industry for keeping up with population!

On the contrary, it's a matter of quality. Investors are looking for good deals . . . for example, bargain run-down houses that they can improve and flip at a profit.

(To find one good deal, they must examine 30 prospects! To find five, they must examine 150! See Millionaire Real Estate Investor, page 216.

From this lesson, the importance of a good Real Estate Investor "Lead Funnel" - something better than a white board - became so obvious to me that I built an app for it! For more information, please click the below screen shot.)

Real Estate Investor Lead Funnel

Buyers and tenants are looking for nice houses and apartments in nice neighborhoods. Landlords are looking for good tenants who are gainfully employed, peaceful, law-abiding, and financially responsible, especially when it comes to paying the rent on time.

It's all about quality, not quantity. That is why I am an Axiologist. That is why Zen and the Art of Motorcycle Maintenance is one of my favorite books. Like or not, admit it or not, it's all about quality.

So when we say markets are hot or that inventory is short, what do we really mean? We mean that there's a high demand for quality, and/or a short supply of it.

Agents. Looking through agents' eyes, my original question went something like this:

"Lookit: agents are salespeople. They need a good contact management solution, or Customer Relationship Management (CRM) tool. (I'll be they need a written Marketing Plan, too.)

What are their CRM options? And among those options, which one is the best?"

So I wrote a survey, that pretty much everyone ignored, asking about CRM for real estate.

Who can blame them for ignoring it? Real estate sales is a highly competitive field. Who has the time or inclination to fill out a survey, especially from an obscure inquirer like me? Besides, real estate folks are disinclined to spend much time punching buttons at a keyboard for any purpose. They're all about face-to-face, or F2F . . . except the highly successful ones . . . who are a minority . . . .

Fair enough. Lesson learned.

But in creating the survey that everybody ignored, I learned a lot about the CRM-for-real-estate space:

Despite the fact that this is 2016, and both computers and the real estate industry have been around for a long time now, there's still a bewildering number of choices, with no consensus about which one is best.
Learning curves are steep, and real estate folks are disinclined to tackle them. So they stick with their Gmail address books, Outlook, spreadsheets, and/or hybrid manual systems.
They fall into two groups: (1) Those who don't have a CRM and wish they did, and (2) Those who have one, dislike it, and yearn for something better.
There IS a best one: Wise Agent. It does everything a CRM should, for only $25/month for up to five users. On a per user basis, that is as little as $5/month. Amazing value.

Once it became obvious that my own survey wasn't going to get a lot of traction, I looked around for surveys others had done, and found a couple done by ActiveRain and Realtrends, which you can see on the bottom right section of this page. From their findings, I felt encouraged to continue my own research.

Finding WiseAgent took some doing. I found them almost by accident when I noticed a Youtube video of some very happy young real estate agents dancing. Intrigued by their joy, I called them and asked what CRM they used, if any. They replied, "Wise Agent! We love it!"

When I called the Wise Agent folks to congratulate them for their excellent work, I was so impressed that I asked if they had a reseller or affiliate program. First they said no; then they said yes.

Now I'm happy to be an affiliate, so to get your WiseAgent CRM up and running quickly and easily, please contact me.

Brokers. Nothing says "refer me" like a job well done.

One of the challenges that fascinated me about the business is how Agents are independent and mobile. They can, and do, switch companies. Since this is so, what's a Broker to do?

I noticed a dilemma for Brokers: somehow, they need to understand what is going on well enough to help, support, train, and encourage their agents, and their companies invest massive resources into providing them with systems to help them do that. But Agents have a disincentive to use those systems because they (the systems) are company-specific and proprietary. If they switch companies, they risk losing their stuff and having to start over.

And even if they don't, I noticed that company-specific proprietary systems weren't enjoying a lot of popularity. I found that the more popular solutions were independently developed.

And, I found that a lot of systems, both company-specific and independent, were so complex as to turn off both Brokers and Agents. I recognized a challenge to provide everyone with simplicity, to provide Agents with autonomy, and to provide Brokers with a very light amount of oversight, enough for them to understand what's going on without being meddlesome or intrusive.

For Agents, the solution was Wise Agent. But what about the Brokers? For them, I presumed that Agents would handle detailed contact management, and that Brokers would focus on work flow.

I learned that a typical real estate transaction involves 10-30 tasks, and that a successful office processes hundreds, even thousands, of such transactions yearly. That's a lot of tasks . . . a lot of work flow.

I learned that the best real estate work flow solutions handled these tasks in a to-do list fashion. Meanwhile, studying Time Management best practices, I learned that authorities recommend doing away with To-Do lists entirely and calendaring everything instead . . . the logic being, most items on a to-do list just sit there, and the only things that actually get done are given a definite relationship with time.

Combining my own military leadership training, my real estate findings, and my time management findings, I recognized a need to create an easy way for real estate professionals, especially Brokers, to schedule their tasks.

So I created it. Here's one screen shot which, if you'll click it, will take you to another page where you can see a ten-minute video demonstrating its back-dated planning advantages:

I call it HWD for Real Estate Brokers & Agents. I include Agents because they need to plan their work too; but they're dividing their attention between managing their current book of business, and prospecting to expand it. So the app is a place where Agents & Brokers can work together to make sure everything is being done when it should be, that nothing is overlooked, forgotten, or languishing on someone's desk or To-Do List, and that they're giving each and every client red carpet, five star treatment they need and deserve, maximizing chances of success for every transaction, enhancing client trust and confidence, and maximizing quality referrals.

Investors. I learned that investors are under a lot of pressure:

Perhaps they dislike their jobs and they see real estate investing as their escape route, their way to a happier life . . . a posture of desperation that can and often does lead to hasty, regrettable decisions.
Most use borrowed money, so there's pressure from lenders to pay the debt.
They're in fierce competition with each other to find those good deals.
They feel economic pressure to keep deals profitable by maximizing prices and rents, and minimizing costs.
They feel pressure to take action while at the same time worrying that they might be making huge mistakes.
Although they derive their income and wealth from things (properties), they depend on people to make it all work. Successful investors develop a "Work Network."

Work Network Screen Shot from HWD for Real Estate Investors.
Click to Enlarge.

The most severe pressure I noticed arose from the tension between Criteria and Haste. I found it most striking. From hearing and reading the testimonies of both the most and least successful, I concluded that while haste may be popular (especially among younger, less experienced investors), prudence is right.

In other words, real estate investors don't need any help hurrying. There are plenty of voices and tools already out there to help them do that.

On the contrary, where they need help is in being prudent by setting and enforcing strict Criteria. That's why I made the HWD App for Real Estate Investors.

Real Estate Investing Market Analysis

Bureau of Labor Statistics: Real Estate Agents

Millionaire Real Estate Investor (MREI) Book Review & Notes

Best CRM for Real Estate Agents: Wise Agent

Work-Flow Solution for Brokers: HWD

Deal Funnel: The HWD App for Real Estate Investors

Pareto Analysis: Real Estate Brokers & Agents in the U.S.

Property Management Companies. In real estate, all roads lead to landlording, and landlords don't like details. They'd rather delegate them to property management companies.

Although it's about money, money management is not a strength of property managers. Their strength is in managing properties. With so many balls to juggle, from repairs and maintenance to collecting rent, things like bank reconciliations and accurate accounting can fall through the cracks.

That's where Controllership from Making End$ Meet can help.

Summary & Conclusion.

As a student many years ago, while working out at the Western Washington University gym, I noticed this saying on a professor's T-shirt:

"Research is what I'm doing
When I don't know what I'm doing."

Over the past twelve months or so, that quip has come to mind many times as I've struggled to find my way through the maze of books, software, personalities and groups I've encountered in the real estate space. It has been quite the investment of time, effort, and money. Now, having brought it all together in a single place to share with the world, I am hoping you and I can work together to use these findings for our mutual benefit . . . which are, once again:

For help with any or all of these, please contact me.

Respectfully offered,

Kris Freeberg, Economist
Making End$ Meet
[email protected]
(360) 224-4322