Housesitter's to-do list

By Robert J. Bruss
Inman News

DEAR BOB: We recently purchased a beautiful waterfront home in the state of Washington. This will become our retirement home in three years, but we are reluctant to rent this home and are leaning towards having a housesitter live in it until we move in. This individual is highly recommended by our new neighbors. However, I read somewhere if we allow an individual to house-sit, we are granting "squatter's rights." Is that correct? This individual would not pay rent but will pay the monthly expenses. --Jeanine W.

DEAR JEANINE: "Squatter's rights" (legally called a "tenancy-at-sufferance") refers to occupancy without the owner's permission. Obviously, your housesitter will occupy the house with your permission so you need not worry about squatter's rights.

Purchase Bob Bruss reports online.

Be sure to consult your insurance agent in Washington to be certain you have adequate insurance for this unusual situation, including liability coverage in case the housesitter trips on a loose carpet, which could be considered negligence by you.

You need a written agreement with your housesitter so you can remove him or her at your will without cause. I suggest you consult a real estate attorney located near the property.

HOW TO GET HOME SELLER TO PAY FOR REPAIRS

DEAR BOB: We are in the process of buying an older home in a great neighborhood with outstanding public schools. As you often suggest, we insisted on a professional inspection contingency clause in our purchase offer. We also accompanied the inspector to discuss the problems he discovered. Two defects that the seller did not disclose are: 1) the roof is leaking water into the attic, and 2) the foundation is sinking slightly in one corner, probably due to poor drainage, which can be corrected. But the roof will cost at least $12,000 to replace. How can we get the seller to pay for the repairs? --Josh R.

DEAR JOSH: Congratulations on including a professional inspection contingency clause in your home purchase offer. Although the seller made a good faith effort to disclose known defects, perhaps he was not aware of the roof leaks and the foundation problem.

The best approach is to reopen negotiations and ask the seller to give you a "repair credit" for the leaky roof and the foundation repairs. This is better than asking the seller to install a new roof and fix the foundation. The reason is most sellers will hire the cheapest contractors who might not do a quality job.

A repair credit usually doesn't affect your mortgage eligibility amount or the appraised market value. If your seller refuses to give you a repair credit, you can always walk away.

In today's slowing home sales market, you can be sure the listing agent will help with negotiations. But don't be unreasonable. It's a good deal for both parties if the seller agrees to credit you with half the cost of a new roof.

NO EASY WAY TO FORCE RELUCTANT CO-OWNER TO SELL HOUSE

DEAR BOB: My wife and I own a two-thirds interest in a nice house with a pool. The other one-third belongs to the occupant who is not taking care of the property, is on food stamps, and is not likely to repay us or buy us out. How can we sell our interest in this house without a partition lawsuit? Private investors suggest paying him off to get him out. They offered us only a fraction of full-market value. --John L.

DEAR JOHN: You were very lucky to find anyone who would buy a two-thirds interest in a house. Without a partition lawsuit to force the sale of the property, you can't force the occupant to sell.

Just because the resident is "down-and-out" doesn't mean he should be able to keep you from selling. I suggest you remind him that if he sells, he will receive one-third of the net sales proceeds.

If I were an investor interested in buying that property, I would make you a very "low-ball offer." After you accept and taking title to your two-thirds interest, I would bring a partition lawsuit to force the sale of the property at full market value, thus making a "quick-flip" profit. For more details, please consult a local real estate attorney.

WHAT IF BUYER'S AGENT LIED ABOUT STATUS OF THE DEPOSIT?

DEAR BOB: We had a sales contract to sell our house. The buyer was supposed to pay a deposit into a trust account with the realty office representing the buyer. We expected to close with no problem. But a few days after the scheduled closing date, the buyer's agent told us the buyer is a "fraud" and passed forged checks for the deposit and the down payment. The agent cannot locate the buyer. Does the buyer's agency have any obligation to us to pay the deposit, which was supposed to be in a trust account? --Charles S.

DEAR CHARLES: That dishonest buyer's agent should be reported to both the state real estate commissioner (for possible license revocation) and to the local Association of Realtors (for discipline) due to breach of fiduciary duty to you.

There is no valid excuse for not promptly telling you the buyer's good-faith earnest money deposit check bounced.

However, I would not bother suing the buyer's agent because proving your loss might be difficult and costly. I suggest you move on. However, your listing agent should have been monitoring the situation so perhaps he or she should share the blame too.

WHAT ABOUT THOSE "WE BUY HOUSES" COMPANIES?

DEAR BOB: I am thinking of selling my home to one of those "we buy houses" companies. They claim to buy "as-is." They ask the seller to inform them of any repairs needed, but they also say if the seller does not inform them of any necessary repairs, they presume repairs are necessary anyway. This firm offered me a very low price. If accepted, they then perform a "due diligence" inspection before the contract is final. Does the fact that they assume repairs are necessary and that they highly discount the sales price change the seller's legal liability for repairs? --Mark P.

DEAR MARK: Most states now have laws and court decisions requiring home sellers to disclose known defects of the residence in writing. Making an "as-is" home sale is not a method to avoid liability for undisclosed defects of which you are aware.

If you sell to those professional buyers at a price heavily discounted from market value, you should insist on a written waiver in the sales contract that you have disclosed all known defects, and the buyer has investigated and will not hold you liable for any latent (hidden) defects that might become evident later. For more details, please consult a local real estate attorney.

NO EXPIRATION DATE FOR $250,000 HOME SALE TAX BREAK

DEAR BOB: I read in the AARP newsletter that Internal Revenue Code 121 will expire in 2007 but that it will be extended if Congress passes President Bush's 2007. Do you have any further information on this topic? --Helen K.

DEAR HELEN: There is no such expiration date in Internal Revenue Code 121, which provides principal residence sale tax exemptions up to $250,000 for a qualified single home seller and up to $500,000 for a married couple filing a joint tax return.

If there were such a provision in either IRC 121, or President Bush's proposed 2007 budget, you can be sure the National Association of Realtors (the nation's largest trade association with over 1.2 million members), the National Association of Home Builders, and other real estate groups will be extremely vocal to stop such an irrational tax law repeal.

SAVE RECEIPTS WHEN CONVERTING RENTAL TO PERSONAL HOME

DEAR BOB: I own a house that has been rented to tenants for many years. Now we want to use this as our primary residence and sell it after 24 months. What documents should I have to prove to the Internal Revenue Service this is indeed my primary residence so I can claim the $500,000 exemption of Internal Revenue Code 121? --Deb S.

DEAR DEB: Just move in. Save your utility bills and other evidence of principal residence occupancy. Be sure to file your income tax returns from your new principal residence, change your car registration, driver's license, bank accounts, etc. to your new address.

You mentioned "we." If your spouse is not on the title, that's all right as long as he also meets the 24 out of last 60 months before sale occupancy test. However, if your co-occupant is not your spouse, he or she must be on the title to claim their $250,000 principal residence sale tax exemption. For more details, please consult your tax adviser.

The new Robert Bruss special report, "How to Sell Your House or Condo for Top Dollar With or Without a Real Estate Agent," is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet PDF delivery at www.BobBruss.com. Questions for this column are welcome at either address.

www.LagretRealEstate.com

Decoding real estate's law of fixtures

By Robert J. Bruss
Inman News

Editor's note: Robert Bruss is temporarily away. The following column from Bruss' "Best of" collection first appeared Sunday, May 7, 2006.

During this peak home sales season, when thousands of houses and condominiums will be sold, buyers and sellers need to be aware of what is legally included and excluded from their sale.

Most experienced real estate agents have horror stories about "fixtures," which the seller removed but the buyer thought were included in the sale.

Purchase Bob Bruss reports online.

To illustrate, my mother was a mild-mannered woman. Only once did I ever hear her raise her voice. I was helping mom and dad move into their condominium. As I walked down the hallway to the condo carrying some boxes, I heard her scream as she entered the condo, "Where is the chandelier?"

The seller had removed the dining room chandelier. Even my dad was surprised.

Fortunately, a phone call to the real estate agent resolved the problem, the seller sheepishly restored the chandelier, and everyone lived happily ever after.

That typical example shows how important fixtures can be in a home sale.

THE SIMPLE REAL ESTATE LAW OF FIXTURES. Most home buyers and sellers, and even their real estate agents, often do not understand the simple law of fixtures.

A "fixture" is moveable personal property, which, by means of bolts, nails, screws, cement, glue, or other attachment method, has been converted to real property. Clearly, that dining room chandelier had been converted from personal property to real property because of its permanent attachment to the structure. Nothing was said in the sales contract about its exclusion from the condo sale.

A more troublesome example can be window coverings. Suppose a house or condo has beautiful draperies and attached wood window blinds. Those draperies hang by hooks from a drapery rod that is screwed into the wall.

The law of fixtures says the draperies are personal property because they can be easily removed without damage, but the drapery rods are fixtures included in the home sale. The wood window blinds, if permanently attached to the structure, are considered fixtures, which are included in the home sale.

But the printed sales contract can change the result. Most well-written home sales contract forms specify "window coverings" are included in the sales price (unless otherwise excluded).

REMOVE IT IF YOU DON'T WANT IT INCLUDED IN THE SALE. As longtime real estate agents know, the worst thing a home seller can do is hang a sign on a fixture stating the seller wants to exclude it from the sale.

Having bought many rental houses, I recall seeing little signs hanging from the dining room chandelier, or pasted on the front of the dishwasher, saying, "This item not included."

That is like waving a red flag in front of a bull. Unless the item is junk, the buyer will then insist on receiving that fixture as part of the home-purchase price.

A better approach for home sellers is to remove the item before exposing the house or condo to prospective buyers. Removing the dining room chandelier and installing a tasteful replacement is far better.

For example, last year I recall inspecting an $18 million estate where the seller had removed the built-in kitchen appliances. Frankly, I thought that was "tacky." But I was not a serious buyer so I didn't bring up the issue with the listing agent.

MY FAVORITE FIXTURE STORY. Years ago, in the small town where I live, a large house was listed for sale. One of its primary features was the beautiful rose garden.

After the house sale closed and the buyer obtained title, image the buyer's shock to discover the seller had removed all the beautiful rose plants. That seller obviously understood the law of fixtures.

Plants and trees growing in the ground are considered to be fixtures because they are permanently attached to the land by roots. However, because the rose plants were in large pots, the seller was legally entitled to remove them since they were not permanently attached to the real property.

AVOID FIXTURE TROUBLE WITH A WELL-WRITTEN SALES CONTRACT. When a home buyer spots non-fixture items, such as patio furniture, which the buyer wants included in the home sales price, the buyer must itemize that personal property in the sales contract to have it included in the sales price.

Similarly, if the seller wants to exclude any fixtures that are attached to the structure, those items must be itemized in the written contract otherwise they are automatically included in the sale.

Troublesome items to consider include: track lighting, fireplace inserts and equipment, solar systems, built-in appliances, screens, awnings, shutters, window coverings, attached floor coverings, TV antennas, satellite dishes and related equipment, telephone and Internet wiring, window air conditioners, pool-spa equipment, water softeners, security systems, keys to all locks, garage door openers and remote controls, mailbox, and landscaping equipment.

FIVE LEGAL RULES IF A FIXTURE DISPUTE GOES TO COURT. If a lawsuit develops over an item that the buyer thought was an included fixture, but the seller removed, five basic legal rules generally apply:

1. METHOD OF ATTACHMENT. The most important fixture rule is the method of attachment. If the item is permanently attached to the structure, it is legally considered to be a fixture, which is included in the home's sales price.

However, if an item can be removed without damage to the structure, such as draperies, it is not a fixture. Examples include unscrewing light bulbs and unplugging a refrigerator because both are personal property not permanently attached to the building.

The item's weight is immaterial. To illustrate, an aboveground swimming pool is removable personal property unless it is surrounded by a permanent structure, thus making it a real property fixture.

2. INTENT OF THE BUYER AND SELLER. If the written sales contract is indefinite, in a court trial the intent of the buyer and seller become pivotal.

For example, when the multiple listing service (MLS) listing specifies a "beautiful kitchen with the latest appliances," that implies the seller intends to include those appliances and the buyer can rely on that statement. Or a description of the beautiful swimming pool can be interpreted to mean the seller plans to include the pool cover and equipment.

3. ADAPTABILITY TO PROPERTY USE. When personal property is built into a home, it indicates it has become a fixture, which is included in the sales price.

To illustrate, when I bought my home there were built-in stereo speakers on each side of the den fireplace. Although nothing was said in the sales contract, I would have been very upset if the sellers removed those speakers. However, they did unplug their stereo equipment and I had to buy new stereo components.

4. AGREEMENT OF THE PARTIES. A written contract that lists a specific item, whether it is a fixture or personal property, usually prevails to make it included in the sales price. If in doubt, buyers should list any questionable items.

5. RELATIONSHIP OF THE PARTIES. As a general rule, if a lawsuit develops, courts tend to favor a) buyer over seller, b) tenant over landlord, and c) lender over borrower.

TRADE FIXTURES ARE AN EXCEPTION. The fixture rules explained above apply to residential sales. However, when a commercial business property is sold, the business tenant is entitled to remove business trade fixtures.

Examples include restaurant equipment, outdoor business signs, display cabinets, a bank vault, and a tavern bar. However, the business seller or tenant must restore the premises to its pre-lease or pre-sale condition.

SUMMARY: A well-written sales contract can prevent fixture problems by clarifying what is included or excluded from a real estate sale. For more details, please consult a local real estate attorney.

Go to www.LagretRealEstate.com

Secrets of powerful negotiation

By Bernice Ross Inman News

Good negotiation skills are akin to having a Global Positioning System, or GPS, in your car. Having them will take you where you want to go. Without them, you will be hopelessly lost in today's highly competitive, slowing market.

Last week's article looked at three different approaches to negotiating more effectively. Today's article examines three critical mistakes that poor or inexperienced negotiators make.

4. Don't be a White Knight

A major mistake many inexperienced negotiators make is negotiating as if they were one of the principals. A classic example is the agent who says, "I'm not going to let my sellers take a price that low!" This is known as the "White Knight Syndrome."

I remember dealing with a listing agent who was notorious for wanting to control all aspects of the transaction. I cringed when my buyers wanted to place an offer on his listing. Prior to the offer presentation, I explained that my buyers wanted me to watch how the sellers responded to their offer. They were particularly hoping that neither agent speak until the sellers responded. (This goes back to the principle that "the first one who speaks loses.") The strategy worked. I was able to present the offer without interruption. Furthermore, the sellers agreed to the price that their listing agent later told me, "that I would never have let them take."

5. How much will the seller take?

A major negotiation error that could cost you both your license and thousands in litigation fees is to represent that the seller will take less than the asking price for the property. When someone asks you what the seller will take, there is only one correct answer: the asking price. If the person persists, respond by saying, "The only way to know for sure is to write an offer." One agent made a major blunder when she told a reporter from a major newspaper her seller would take $500,000 less than the asking price on a $2.3 million listing. The seller sued her and her firm and won a huge settlement. The point is that even if the seller tells you that he or she will take less, the only way you can discuss it is if you have a written price reduction.

6. Stupid broker tricks

Smart negotiators never discuss the terms of any other offer that the sellers may have received. Because people don't like having their offer "shopped around," discussing the terms of competing offers can cost you the transaction. Assume, however, that you represent the buyer and you would really like to know what those other offers actually were. A question that many sophisticated negotiators will ask is, "How much have the sellers turned down?" A large majority of agents will answer the question. The correct answer, said with a smile in your voice is, "You know I can't discuss the terms of other offers. If your clients are interested, writing an offer is the best way to determine what they will take." Asking this question poses two hurdles to negotiating the deal. First, the sellers' circumstances may have changed and they may be more willing to take a lower offer. Consequently, what they turned down in the past may be acceptable today. Second, by asking this question and conveying the answer to your buyers, you may cause your buyers to overpay or not to write an offer at all.

For example, if your buyers can afford a top price of $375,000 and the sellers turned down an offer of $400,000 three months ago, most buyers will elect not to write the offer. If the seller is facing a job transfer, a foreclosure or needs the money for some other reason, they may be willing to take your clients' offer. Timing, rather than money, may be the issue. Inquiring only about what the seller will take doesn't address these other issues. Whenever possible prior to writing an offer, do your best to discover what the sellers' motivation is for selling their property. A seller who is facing payments on the current home plus a new home will be much more motivated than the seller who has no payments and can move whenever he or she elects to move.

Improving your negotiation skills requires having the right language. Watch for next week's article to learn how to avoid the language that can undermine your negotiation success.

Go to my site:www.LagretRealEstate.com

What video production companies have to offer

Real estate technology buzz
By Matt CarterInman News

Editor's note: In an increasingly competitive marketplace, brokers and agents are trying new things to gain an edge. In this four-part series, Inman News offers a look at new tools available for Realtors, including online communication plug-ins, online video and single-property Web site marketing.
For those who aren't inclined to shoot their own real estate video footage, independent video production houses like TurnHere have sprung up in cities around the country -- some that specialize in real estate.
Henrik Joreteg, the 24-year-old founder of Loma Linda, Calif.-based HouseFLIX, is just one example. HouseFLIX, which turned into a full-time job for Joreteg after he finished business school, offers to shoot, edit and host videos for $99.
"When we first started, we were selling videos for $250 each," Joreteg said. "We realized most agents are not willing to invest that in a listing. We figured out some efficiencies from doing a standardized video production, and are now able to do it for a more affordable price."
Although the company has fewer than 100 listings at the moment, it's a Realtor.com-approved vendor, allowing clients to link to listings on the official Web site of the National Association of Realtors. Joreteg said all the MLS providers in Southern California's Inland Empire region are able to incorporate links to virtual tours and video in their listings.
Fred Light, the founder and owner of New Hampshire-based Nashua Video Tours, also strives to provide high production values at affordable prices.
"It's very time-consuming, and I've played around with the pricing," he said. "Realtors don't want to spend money. But I have some people that do it for all their listings. If it was a (mobile home) they'd do a video."
Like most videographers who offer package deals, Light will help clients put their videos on their own Web sites, the local MLS or listing aggregators such as Realtor.com.
Prices range from $129 to $300, depending on the complexity, and whether features like music and narration are desired. Listing agents who pay for Realtor.com's enhanced Showcase services can incorporate video into their listings on the site for free. Light charges an additional $20 for those who don't.
"It helps sell the house, but it's also a good listing tool," Light said. "It's harder to have something different these days. Five years ago, if you had a Web site, you had a leg up on everybody. Now, they all have the same cards, the same Web sites."
"If you go into a listing presentation (with video), you're going to blow away the customer," Light said. Because most agents haven't yet jumped on the video bandwagon, "Nobody's going to come in and trump you."
Light, who is also a professional Web site designer, posts his clients' videos to six free host sites -- places with familiar names like YouTube, Google Video, Grouper, Veoh, BlipTV and WellcomeMat. Whether anybody ever watches the videos doesn't matter. They're a cheap and effective search-engine-optimization tool, Light said.
"I don't think anybody's looking (on YouTube) for real estate, but the links back to your Web site boost your rankings," he said. "It's kind of like blogs. The blog thing is taking hold because they show up in search engines."
Light says he's got all the business he can handle at the moment, and offers a wealth of advice to real estate agents who'd like to shoot their own video through his blog on the ActiveRain Real Estate Network.
Some of his tips, as outlined in Part 1 and Part 2 of a series on shooting real estate video: use a wide angle lens, and avoid zooming. Use a tripod and make slow pans, and a monopod to get shots from unusual heights. Avoid direct sunlight streaming through windows. Use a high-quality microphone. Take lots of footage (Light makes three passes through each house he shoots), and put the best shots in the beginning of the edited video.
Video on Realtor.com
Many multiple listing services and listings aggregators that offer virtual tours, such as Realtor.com, already allow listing agents to provide links to videos instead. The videos are hosted by approved virtual tour vendors in Realtor.com's Picture Path network.
But sometime in the next few months, Realtor.com plans to roll out a new feature that will let listing agents upload video directly to the site, said Joe Detuno, senior vice president of product development at parent company Move Inc.
"Some Realtors have already started using video using the Picture Path technology, which allows a URL to be uploaded to the site," Detuno said. "We intend to have that be much more accessible from the consumer standpoint, so video is much more prominent on Realtor.com and in the listings."
As it stands now, listing agents must choose between virtual tours or video at Realtor.com and other sites. But once the new video upload capabilities are in place, listing agents will be able to use still photos, virtual tours and video in the same listing, Detuno said.
As was the case when virtual tours were first introduced, direct video uploads will at first be available only to subscribers to Realtor.com's Showcase listing enhancements, Detuno said.
Although video is "still in its infancy," Detuno said he foresees the day when Realtors use all three visual aids -- still photos, virtual tools and video -- in their listings.
"I don't see video replacing virtual tours and pictures, I see it augmenting them," Detuno said. While more homes have the broadband Internet connections needed to view Web video than ever before, listings sites still serve mobile devices and other users without video capabilities.
WellcomeMat.com co-founder Christian Sterner took the site live in July to help real estate professionals and local businesses create and distribute Web video.
Although the site features some YouTube-like features -- users can upload videos in multiple formats, create a "channel" featuring all of their videos, and use links to embed a video player into virtually any Web site -- WellcomeMat offers additional options tailored for real estate pros.
Like TurnHere, WellcomeMat will connect clients with professional videographers, although it's up to the client and shooter to negotiate the fees for their services.
WellcomeMat will accept digital uploads or videotapes, and offers five video players designed to work in many different situations. Sterner said ad-supported Web video host sites like YouTube must compress videos "within an inch of their lives," in order to stream millions of videos a day, and that image quality suffers as a result.
WellcomeMat corrects the settings of the video its clients upload, and transcodes and compresses the images with the goal of preserving image quality, Sterner said.
Move Inc.'s Detuno said picture quality will also be a selling point for Realtor.com when it launches a service in the next few months allowing listing agents to upload video directly to the site.
One WellcomeMat feature Light likes is the ability to carve video up into segments.
If virtual tours have an advantage over video, some say, it's that they give viewers the ability to pick and choose which areas of the house they want to see. With video, prospective buyers may have to sit patiently through a two- to five-minute video before seeing what they're interested in. WellcomeMat has a chaptering tool that lets agents highlight scenes they want buyers to see -- such as a particular room or features -- while allowing buyers more control over the process.
WellcomeMat plans to add the ability to allow agents to automate the process of adding videos to listings on Realtor.com. For now, agents with "Showcase" privileges at Realtor.com can provide a link to their WellcomeMat videos using the listing's "virtual tour" button.

Go to www.LagretRealEstate.com

Real estate video

By Matt CarterInman News

Editor's note: In an increasingly competitive marketplace, brokers and agents are trying new things to gain an edge. In this four-part series, Inman News offers a look at new tools available for Realtors, including online communication plug-ins, online video and single-property Web site marketing. (Read Part 1 and Part 2.)
Make them yourself or find somebody to shoot, edit and host 'em -- but don't miss out, believers say: video is an easy way to set yourself apart from the competition in real estate.
You don't have to hire a professional or go to film school to make use of video. The ability to shoot video in digital format and edit it on a computer has turned the process into child's play -- literally.
But there's more to it than walking through a listing capturing some footage and posting it on YouTube (no-no's in this video: "blown out" sunlit windows and rooms cloaked in darkness; occupants and their possessions at every turn, and a heavy-breathing cameraman who gives the whole thing the atmosphere of a slasher flick).
With a little bit of effort, it's possible to get good results shooting your own video. And there are a growing number of videographers who will do the work for you at surprisingly affordable rates. At the upper end of the scale, there are professional production companies capable of producing broadcast video that's good enough for TV.
For the most part, agents and brokers are using video in two ways: to promote themselves, which brings them clients and listings, and to sell individual properties with videos that accompany listings.
Ellen Wasserstrom, a Realtor with Coldwell Banker in Bernardsville, N.J., had her husband shoot a video for prospective clients, plugging her experience and marketing skills.
The video -- accessed by clicking the "meet Ellen" button on Wasserstrom's home page, is not slick. She and her boss are filmed against window blinds and a blank wall, and a distant microphone picks up the sound of their voices reverberating around the room.
But the video gets its point across, and Wasserstrom says clients have taken note.
"I can't say if that's how I get any business, but (clients) do tell me they saw it, and liked my video," Wasserstrom said.
Wasserstrom said she's not ready to start cranking out videos for her listings, though.
"I'm a really big fan of the (photo-based) visual tours because people can click on the room they want to see, and go at their own pace," Wasserstrom said. "If I found more people were interested in video I would probably do that. If there was a property where the setting was so spectacular you could capture it best that way, I would use video. Here in New Jersey, we don't have the panoramic views that some resort properties do, but we have some very nice vistas."
Broker Douglas Heddings of The Heddings Property Group LLC in New York City recently began producing videos for each of his listings. He's amazed that he seems to be alone among the 27,000 registered agents in his market to have plunged headlong into video.
"I think I'm the only one on the island of Manhattan who's doing it, which I find mind-boggling," Heddings said.
Heddings, a senior vice president at Prudential Douglas Elliman, hires a professional videographer, Ted Stoecklein, to shoot his videos, and pays for the premium level of services available from the video hosting service WellcomeMat.com.
Making a professional-quality video for each listing is more than twice as expensive as a virtual tour, Heddings said, but that doesn't mean it's cost prohibitive. Although Heddings handles high-dollar properties in Manhattan, he thinks video makes economic sense for marketing less-expensive homes, too.
"When you're talking about charging the seller 6 percent to market their home, I don't care if it's a $150,000 home or a $1 million home, the cost to you to provide such an incredible service is insignificant," Heddings said.
Videos don't sell listings all by themselves, but they do help attract serious buyers, he said.
On a recent listing on the Upper West Side, Heddings had planned a two-week marketing campaign to build interest before showing the property. When the seller signed a lease on another property, the timetable was accelerated.
Heddings set up six appointments to show the property on a Friday night. Each prospective buyer had already seen the video accompanying the listing, and three made bids.
"Do I think that happened because of the video? No," Heddings said. "But the six people who came were all very real and interested parties because they had seen the video. A couple made comments, like 'I feel like I've already been here.' "
Heddings gets double duty out of his videos for listings by appearing in them when he can attend the shoot.
He makes it about half the time, and has his videographer follow him on a tour of the property. They've even ventured out for a look at nearby attractions like a park or playground.
"A lot of people aren't going to be comfortable on camera," Heddings acknowledged. "But you don't have to do a video tour with you walking through the property for it to be effective."
The no-branding prohibitions many MLS providers place on listings mean that some agents can't inject themselves -- or even their Web URLs -- into their listings videos. But that's not a problem for Heddings, whose listings appear on the Prudential Douglas Elliman Web site because there's no MLS provider for Manhattan.
Heddings is already comfortable being in the public eye, thanks in part to his blog, True Gotham, which offers real estate professionals and consumers an insider's perspective into the industry.
Heddings said he's planning to launch a Web TV show on the blog, which will feature guests ranging from mortgage lenders to real estate agents and brokers discussing topics of interest to consumers. The program, which will run five to seven minutes, is in pre-production, Heddings said.
Neighborhood videos and TurnHere
Shooting a video for each and every listing can be a time-consuming and expensive process for a product that can only be used once. But builders, brokers and agents are also making videos about entire communities that can be used to promote many listings.
Real Living commissioned TurnHere to make nearly 50 videos that show off the best features of communities in Ohio where the company has many listings. The community videos are displayed with each of the more than 6,600 listings available through Real Living's company-owned offices, said Kaira Rouda, Real Living Inc.'s chief operating officer.
A video of Upper Arlington, a suburb near Real Living's Columbus, Ohio, headquarters, shows residents enjoying the community's mature trees, restaurants, churches and schools.
"It's all about providing as big a picture as possible, and I think technology helps you do that," Rouda said. Video helps house hunters explore on their own without time pressures. "It shortens the time and research involved in looking for a home. Consumers are informed before even working with an agent."
Real Living was so pleased with the community videos that it commissioned TurnHere to produce 40 videos profiling individual agents. The agent videos will soon make their debut on Web sites Real Living provides its agents, and will also be linked to the agents' listings.
Rouda said the initial batch of agent videos will help other Real Living agents decide whether to make room for video in their marketing budgets.
"It's another marketing tool they choose whether or not to do, like direct mail or search-engine optimization," Rouda said. "What I tell agents right now is it's still pretty new, and it's a proven fact that consumers are drawn to video online. If you want to be on the leading edge, it can get quite a lot of attention for yourselves and your listings. Someday it's going to be the status quo."
TurnHere, a startup owned by Inman News founder Bradley Inman, can tap a network of more than 2,000 professional filmmakers who create broadcast-quality online videos.
One advantage of hiring a company that employs high production standards is that the end result can be used as part of a TV ad campaign. Although television is a medium many small companies once considered cost prohibitive, companies like Spotrunner and Spotzer help advertisers book commercials in tightly targeted cable markets.
Rouda said Real Living has repurposed parts of spots shot for TV for the Web, but that it's less likely that the company would pay to put video commissioned for the Web on TV. Real Living was pleasantly surprised, however, when Time Warner offered to run the TurnHere shorts in the local cable television market for free.
"It was odd for them to come to a traditional advertiser asking for content," Rouda said, but Real Living was happy to oblige. The spots -- which feature the Real Living logo -- will soon be showing up on televisions in communities around Ohio, at no cost to the company.
Coldwell Banker builds video library
Community shorts produced by TurnHere are also featured at ColdwellBanker.com, where 43 videos on a "feedroom" page are organized in "channels." The channels -- "Ready to Buy," "Ready to Sell," "Local Beat," "Lifestyles" and "Side Door" -- help users sort through content, and all of the videos are accompanied by links which lead to pages that match viewers to Coldwell Banker agents and listings.
The company's video library "has a sophisticated tracking tool behind it to allow us to get an idea of how consumers are interacting with our video content," said Charlie Young, senior vice president for marketing, Coldwell Banker Real Estate Corp. "We're able to tell what videos are most popular, what's the average time spent watching videos, what videos have the most click-throughs and more."
Coldwell Banker uses video from a number of sources to provide visitors with information about the company, the communities it does business in, and the home-buying process. Videos on the site include productions by HGTV, Forbes.com and Fine Living.
Watch any of the eight TurnHere neighborhood videos in the "Local Beat" channel, and links are provided that take viewers to pages where they can search for homes or find Coldwell Banker sales associates in those communities.
In the Lifestyles channel, clicking on the Fine Living video "Comparing Markets: What 800K Buys," provides a link to Coldwell Banker's Home Value Estimator page, which offers "Live Market Watch" and "Comparable Market Analysis" tools.
Forbes.com videos on luxury, retirement and international real estate have links to Coldwell Banker's property search page.
Young said Coldwell Banker has found that the videos backed by its national advertising are "very popular. Last year and this year one of our national TV spots drives consumers to ColdwellBanker.com, (which has) a subsequent 'commercial extension' with the same look and feel of the commercial."

Go to my web page: www.LagretRealEstate.com

Why second home's a better investment than stocks

It's more than just the 'pleasure' component


By Tom Kelly Inman News

Ted Jones never has tried to keep up with the Joneses. The senior vice president and chief economist for Stewart Title drags his own huge net to filter financial data and often offers opinions that are over the top compared to his housing brethren.

When it comes to second homes, he really heads back to basics and suggests potential buyers do the same.

"My definition of a second home is one that is purchased with no intention ever to sell it," Jones said. "If you sell it or even intend to sell it, it's an investment. Period. If you do, you've lost my definition of a second home.

"We plan to pass ours on to our daughters as a part of their inheritance. If fact, we don't want it to go up in value because then we would have to pay more property taxes."

Clearly, Jones' idea of value of a second home has little to do with wealth accumulation. His only value gauge comes from the ability to enjoy the property -- sunset over the lake, cocktails by the seventh fairway, a breathtaking mountain view just a short walk up the road, etc.

While it's easy to agree with Jones about the basic idea of a second-home investment, most potential shoppers can't afford to consider only the pleasure component; they are in need of a larger total package. So, let's consider investing in a second home versus common stocks to help explore the possibilities.

Conventional wisdom still holds that common stocks offer the best returns over time. If you measure cash-on-cash return, this may be true, but when you look at total return, the picture changes. The ownership of real estate offers four distinct advantages over stocks:

1. Real estate prices are less volatile in most areas. As we have seen in the opening years of this century, stocks can move a great deal in both directions. This makes ownership of stock a crapshoot, with profit solely dependent on timing. If you cashed out in December 1999, your returns were huge; if you waited a year, you probably lost a great deal. Since then, it's been up and down. House prices fluctuate, but within a lesser range. If real estate prices don't shoot up the way stock prices do in a bull market, real estate markets don't crash the way stocks do when the bull runs out of steam. In short, it's a less risky investment.

2. Real estate is a leveraged investment. You can own a second home with an equity investment (down payment) of no more than 20 percent. In fact, there are many programs that let you buy with a lot less. Most people can't do this with stock. You need to pay the entire price of the stock. So, when the price of a stock rises 5 percent, you make 5 percent on your money. If your real estate rises by 5 percent in value, your return is upwards of 25 percent.

3. Real estate is tax-advantaged. Any interest incurred for the financing of a second home is deductible from ordinary income for tax purposes. If your second home becomes an investment property, tax can be deferred and sometimes eliminated. You still pay capital gains tax on stock and you can't deduct the interest on any debt incurred for the purchase of financial assets.

4. And finally, here's the only return that drives the Jones camp: you can live in real estate. Stock certificates are pretty, with great colors, cool writing and embossed letters. Unfortunately, you can't go to sleep in them or stand on them to watch the sunset over the lake, or hold a party for your friends and family in them. They just (hopefully) make you money. Real estate provides many different kinds of satisfaction that money can't.

While I absolutely concur with Jones and about the pleasure power of a second home, I also believe deeply in its long-term wealth-building powers. In a nutshell, if you think a house is good enough to live in and enjoy, someone else will too, and they'll pay you for the privilege to rent it. The ownership of an investment, particularly that property you can personally enjoy, pays dividends on a variety of levels and can be a very profitable road.

Go to my web site: www.LagretRealEstate.com

Steps to take before hiring home-improvement contractor

Bill & Kevin Burnett Inman News

Q: I am thinking of hiring a company to install a door in my home. I notice on the Contractors State Licensing Board Web site that this company is exempt from having workers' comp insurance because it has no employees. I assume this means that it will sub out the actual installation of my door.

My question is whether I will be liable if one of the workers gets hurt on my property. Who is legally responsible -- the company or me? I don't want my homeowner's insurance to be at risk.

Also, I've been shopping for an interior painter and notice that many licensed firms are also exempt from having workers' comp. I'm afraid I could be at risk with these painting firms too.

Last, do you recommend that whomever I hire also carry personal liability/property damage insurance? I'm not sure exactly what to ask the contractor for in this regard.

A: Your concerns are well taken. Here are the answers to your questions in the order in which you asked them:

1. Your assumption that the company will subcontract the work may not be correct. Installation of a door is a small job and can easily be handled by an owner-operator.

The door installation company is not required to maintain workers' compensation insurance coverage unless it has employees. Owner-operators are exempt.

If the company chooses to subcontract the work, workers' compensation insurance is required only if the subcontractor's employee is performing the work.

For more information on workers' compensation go to Division of Workers' Compensation Web site www.dir.ca.gov/dwc/faqs.html.

2. According to the licensing board Web site, if a contractor has employees, workers' compensation insurance coverage is required.

Whether you are liable if an uninsured worker is injured on your job is a question best left to attorneys. However, we all know that anyone can sue someone for just about anything at any time. Plaintiffs look to potential defendants with "deep pockets" for money damages.

We think it's unlikely that a contractor would carry other types of insurance if he does not carry workers' compensation insurance on his employees. At this point, the "deep pocket" is you and your insurance company.

If a worker is injured while working on your property and the contractor doesn't have insurance, you could be asked to pay for injuries and rehabilitation through your homeowner's insurance policy.

Verify whether an employee is doing the work and if so, verify your contractor's workers' compensation coverage on the licensing board Web site, http://www.cslb.ca.gov/, or by phone at (800) 321-2752.

3. Absolutely require the contractor to provide proof of personal liability and property damage insurance before you hire him to do any work on your home. Failure to do so puts you at risk.

Verify coverage on the Web site. Also, ask to see a copy of the certificate of insurance or ask for the name of the contractor's insurance carrier and agency to verify that the contractor has the coverage.

Ask the insurance carrier some specific hypothetical questions like, "Do you cover the contractor if he is injured when installing my door?" or "What happens if he damages my wall in the process of installing the door?"

We would also suggest that you ask whether the contractor carries a general liability insurance policy to protect against third-party bodily injury and property damage.

According to the licensing board, licensed contractors are not required by law to carry general liability insurance. But home improvement contractors must tell you whether they carry it. Ask. If uninsured, they should be able to explain how they would cover losses that would ordinarily be covered by insurance.

Sounds like a lot to go through for just replacing a door, doesn't it? But if you go through this process you'll avoid liability and probably get a better result.

Contractors who take the time and incur the expense to be licensed and insured are serious about their business and generally will do a better job than those who are not.

Go to www.LagretRealEstate.com

Some agents find bang with single-property sites

By Jessica Swesey Inman News

Editor's note: In an increasingly competitive marketplace, brokers and agents are trying new things to gain an edge. In this four-part series, Inman News offers a look at new tools available for Realtors, including online communication plug-ins, online video and single-property Web site marketing.

If you've been to any real estate tradeshows in the last year or two, you've no doubt noticed a slew of vendors offering to sell single-property Web sites to Realtors.

Single-property Web sites typically use the exact address of the listing as the URL and feature photos, property details, maps, virtual tours, neighborhood information and links back to the agent's main site.

Realtors, brokers and vendors contacted by Inman News had varied responses to whether single-property Web sites work as a viable online marketing strategy. Some said that having single sites does nothing for search-engine placement, while others said that's not the point of using such a tool.

Agents who have found success with single-property Web sites say they are great for showcasing listings, wowing sellers and showing prospective clients what you can do for them.

Christopher Thiemet, a St. Louis Realtor with Circa Properties, said he now uses single-property Web sites to market all his listings, though his marketing plan is constantly evolving. One benefit of using single-property sites, he said, is that it helps to simplify the advertising -- he advertises the simple Web site address with each property ad in print and other marketing materials. Also, the sites enable Thiemet to market the neighborhood, and they have been a lead-generation tool for him.

"I am utilizing the domain name being the 'property address dot com,' " he said. For instance, www.1955withnell.com is a site for a listing Thiemet is currently marketing.

Having a simplified Web address can help in viral marketing when consumers pass along a link to friends, he said. Many times a URL for an MLS listing can be three lines long, which breaks inside an e-mail message, Thiemet said, whereas the shorter Web address will not break in most cases.

Thiemet said the sites have helped him cross-market his services when people stumble upon a site URL in a craigslist ad and click through to realize that he has other listings and services.

"It gives me more credibility as someone who specializes in a certain market," he said. When these sites are well designed, it makes an impression that the house is nicer than the one that wasn't marketed as nicely, he said.

Thiemet runs weekly advertisements in print publications and includes the property Web site domain. He also includes the site URLs on property signs, riders and brochures. This enables interested buyers to find out more detailed information, and Thiemet does not require registration or login information to gain access to this information.

"It's taking more of a passive role as a salesperson," he said, noting that the role of agents has been turned completely upside down in the last 10 years, moving away from "information gatekeepers."

"What I'm finding really effective for me is to give people as much information as they need, be the expert and when they're ready to finally take action then they'll more than likely remember me as the person who was really helpful to them," he said.

Thiemet says the property sites, which include information about the neighborhood and community, have created a loyal buyer pool for him. He was getting ready to meet with a couple relocating from Philadelphia who found him through a single-property Web site link that ran in a craigslist ad.

He creates the site templates himself, but has been testing a new product from RealBird. Other companies that offer single-property Web sites include AgencyLogic, Single Property Web sites, and Realasites.

Kristal Kraft, a Denver-based broker with The Berkshire Group Realtors, also uses single-property Web sites to market each of her listings, and she's been doing it for about a year and a half.

Kraft said she designed the first property site herself and that the Web site is what caused the house to sell. Like Thiemet, Kraft includes neighborhood information in the sites and she believes this is the best way to showcase a neighborhood. "People buy because of the neighborhood, not just the house," she said.

The Denver-based Realtor also says that simplicity is a major benefit of this marketing technique. The site "makes it really easy to link to schools and other links that are relevant." She likes having a complete package of everything about the home and the surrounding area all in one place online.

She has since moved to using a technology vendor to create the sites and she hosts them at www.imbeautifulinside.com. She also has purchased street names for URLs and placed single-property Web sites at these addresses where appropriate.

Kraft often refers to the single-property Web sites she's used to market properties in her listings presentations and has secured new clients this way.

She also said it's really easy to market the sites in craigslist ads, on signs and brochures. "The investment to do this is low-cost compared to other (marketing) methods," she said.

Realtor Kevin Boerr's twist to the concept of single-property Web sites is taking shape for a trendy loft in San Francisco's Potrero Hill neighborhood. Boerr is building a blog to market this property, though it's not ready to go live until later this week.

"I've been debating for awhile and wanting to do a single-property Web site with a blog. The problem is if you do a brand-new domain, Google takes forever to notice it and doesn't take it seriously," he said.

This part of the single-property Web site approach has puzzled many in the industry who say that there are no search-engine benefits to having single domains for every listing.

Mary McKnight, who operates RSS Pieces, a blog about blogging and search-engine optimization tactics, says that the single-property Web site method is not valuable in driving site traffic since the new URL will be ignored by Google far longer than it takes to sell the house.

She also says that the splintered traffic these sites can create will effectively direct clients off an agent's site once they have found a property they like, can lower Alexa Web site rankings and traffic, and cause backlinks to be generated for a secondary site instead of the agent's main site.

"The type of information contained on one of these single-property sites could just as easily and more affordably be hosted on your own Web site," she said. "Splintering traffic to an outside site that contains your own information just doesn't make sense."

She recommends agents redirect the property site's domain to a page on their existing Web site.

Agents interviewed for this article who said they have had a lot of success with single-property Web sites all said that they drive traffic to the site by way of brochures, fliers, signs and riders, rather than search engine or other online methods.

Boerr's approach is to use the single-property site marketing technique with his own blog, 3oceansrealestate.com/blog, which shows up high in search-engine results because Google has recognized it as relevant and containing fresh content. His plan is to use his blog to get the Web traffic and send interested buyers over to the property's blog where all the details and neighborhood information is available.

Boerr, like others, believes that single-property sites are great for property marketing but terrible for search-engine optimization. He said the challenge will be to combine the marketing cache of a single-property Web site with the SEO benefits of an established blog and that's what he intends to do with the Potrero Hill loft site.

Boerr said he has purchased the appropriately named domain like PropertyAddress.com and will redirect it to a well-established site so it will then live at 3OceansRealEstate.com/PropertyAddress.

Go to www.LagretRealEstate.com

Russia, Bulgaria have highest real estate transaction costs

Inman News

Home purchases in Europe by an out-of-country buyer are subject to the highest transaction costs in Russia, according to a report this week by Global Property Guide, an international real estate research firm.

Transaction costs are about 25 percent of the property value in Russia, 24.9 percent in Bulgaria, 19.7 percent in Monaco, 17.9 percent in Belgium, 17 percent in Italy, and 16.3 percent in France, the company reported.

The report is based on the total cost of buying and selling a property, including taxes and fees, for the purchase of a property by a European buyer who is not a resident in the country where the property is purchased.

Also, the sample is based on the purchase of a condo in a major city that is worth about 250,000 Euros, or about $339,500 in U.S. dollars based on the current exchange rate, and served as the seller's principal residence for the past 10 years.

"Residential investments in Europe incur punitively high roundtrip transaction costs in many countries, exceeding 15 percent in several cases," according to the report.

The United States was not listed in the report, which focuses on Europe. Real estate transaction costs were listed at 5 percent in the United Kingdom, which is toward the bottom of the scale. New or renovated properties can carry additional taxes, according to Global Property Guide.

Transaction costs can total 33.75 percent of the property value for new properties in Monaco, while those costs can total about 31 percent in France, according to the report. "Real estate agents' fees are highest in Scandinavian countries ... this is because the agent guides buyers throughout the property registration process."

Some countries require the assistance of lawyers in real estate transactions.

The transaction-cost research is based on input from local real estate agents, government agencies and the World Bank Doing Business Web site, according to the research firm.

Go to www.LagretRealEstate.com

Web tools open new lines of communication for agents

By Glenn Roberts Jr. Inman News

Editor's note: In an increasingly competitive marketplace, brokers and agents are trying new things to gain an edge. In this four-part series, Inman News offers a look at new tools available for Realtors, including online communication plug-ins, online video and single-property Web site marketing.
Maybe you haven't used Jaxtr, Jott, Meebo, Pinger and Twitter. In fact, maybe you haven't heard of them.

They are not: alien planets discovered on "Star Trek"; nicknames for illicit pharmaceuticals; new cable television networks; or Pokemon pals.

They are: new ways to communicate.

Instant-messaging, text-messaging, voice-messaging and e-mail-messaging technologies are a hotbed for communications mashups, and these companies among others are supplying the "always on" business of real estate with plenty of tools to instantly reach out and text, call, IM or e-mail someone at all hours.

While these communication tools do offer more opportunities to generate leads and keep in touch with clients, some real estate professionals say that managing all of these communications channels can be a challenge and a time drain.

Jim Duncan, a third-generation Realtor for Century 21 Manley in Charlottesville, Va., who maintains a blog at RealCentralVA.com and has amassed a collection of 13 e-mail addresses, four instant-messaging addresses and a voice-over-Internet account through Skype.

"I'm always online, for better or worse," he said.

Duncan has been blogging for about 2 1/2 years, and he entered the real estate business about six years ago. He experiments with some of the latest communication tools that he learns about from blogs and other online sources, and he keeps what works.

The new communications technologies can make his work more efficient, though the tradeoff is that he has to work harder to keep up with this expanding communications chain, he said. "I color-code everything I do. I just have to prioritize my tasks."

For the past month Duncan has been testing out a free click-to-call button at his blog site. That service, called Jaxtr, allows people to click an online button to connect by phone, send a text message or send a voicemail message, and it can keep both parties' phone numbers and other contact information private.

"I thought I'd give it a shot. I'll keep it there for another couple months -- it's free," Duncan said. So far he received one contact through that service.

There are many other examples of click-to-call technologies, among them realPING, LivePerson's LiveCall and Google's Click-to-Call. Cendant Corp., now Realogy, announced in 2004 the availability of a LeadRouter system for its real estate brands that converts online information entered by consumers to an automated voice message that is delivered to agents' phones.

Duncan said he has tried Jott, a free service that converts voice messages to a text-based e-mail with a link to the recorded audio file. So far, he has used Jott to record personal reminders about appointments. "That thing is awesome," he said. "I'm going to keep it as long as they keep it free. Even then it might be so ingrained that I pay for it." That service can also be used to send a text conversion of your voice message to another individual or a group of people.

While Duncan considers himself to be an early adopter for many new communications tools, he said it doesn't necessarily pay to be the first one using them.

"The challenge that we're facing from the technology standpoint is that there is not a critical mass yet for bleeding-edge technology. If only one person in the market has heard of it -- it's cool to be in the leading edge but it doesn't do any good if nobody else is using it. The balance is knowing and using what is new and cool but also knowing and using what everyone else is (using)," he said.

He has signed up for an account at Twitter, a messaging tool that allows users to post short text messages to the Internet from their phones or computers, though he hasn't found a way to integrate that with his real estate business and he doesn't believe it would be useful for his clients. "I don't have time for Twitter," he said.

While instant-messaging has been around for years, there are innovative tools that can embed live chat into existing Web sites. Meebo is one example. This tool allows consumers to ask questions and receive answers in real-time from agents, or the agent can respond later if the agent is away from the computer.

About seven weeks ago, Realtor Kevin Boer of 3 Oceans Real Estate in Palo Alto, Calif., began to test Meebo at his blog site, and he's had a couple of online conversations with prospective clients using this chat tool.

With Meebo, Boer said he logs on at the Meebo.com Web site when he is at his computer to indicate that he is available for live chat via his Web site. He can also see whether there are other people who are currently visiting his site. He said he sees potential for using Meebo to set up a virtual open house in which he is available to chat with consumers online about specific properties.

"Meebo is such a new tool ... I don't think anybody is certain about what the etiquette is. It's a slightly different etiquette online." He said he could choose to initiate an online chat when he notices that there are visitors at his site, though they might be spooked by this approach. Perhaps with an open house there will be more acceptance for Web visitors to be engaged in this way, he said.

He has also put up a Jaxtr click-to-call link on his site, and plans to test out Meebo and Jaxtr for a few months before deciding whether to keep them around. Rather than just toss them, he may push them down further on his blog page so they would have less visibility -- "location is important," he said, whether it's a blog site or real estate.

Most of the people who have used those tools to communicate with him, he said, are other real estate agents. A problem is that the Meebo chat requires the user to be in front of a computer, he said -- as he is often working in the field. Another company, CellSigns.com, offers an IM Connect tool that allows agents to participate in live chats with consumers via their computers or mobile phones.

Like Duncan, Boer said he has used Jott to send himself reminders "and it is brilliant -- it really is."

He has also tried out Pinger, which is an instant voice-messaging tool that allows users to send voice messages directly to an individual or group without ringing their phones. The recipients see a text message that directs them to call a number to listen to the voice message. "That (service) is basically the voicemail equivalent of Jott," he said, though he has shied away from using that to contact clients because their mobile service plan may require them to pay for each text message they receive.

How will all of these competing technology gadgets evolve? "For the next 18 months easily it's going to be the Wild West," he said. "If anybody and their grandmother have an idea to put widgets on blogs having to do with communication, they're going to release it. In the end I think there is room only for two or three communication-based products (on Web sites). I don't anticipate any other blogs having multiple chat platforms available on blogs or multiple call-me platforms."

While many of the new tools are free, he said he wonders whether the tools will be ad-supported in the future or will follow the "cocaine-dealer model: they get you hooked and then charge you." All of these competing business models are reminiscent of the original dot-com boom, he said. Companies seem to be burning through a lot of investment capital in the rush to develop new technologies. "The free ride has to come to an end," he said.

And while several of the new communications technologies may offer simple ways to communicate with others, "now there are 10 ways instead of three that prospective clients can reach out for me, and I've got to keep track of (all) 10 of them," he said, adding, "That's a tradeoff I'm willing to make."

Jack Fessler, a Realtor for First Weber Group in Madison, Wis., has used a live chat feature at his Web site and tries to respond to any consumer inquiries he receives by e-mail or phone within five minutes.

"If you don't call them back within 20 minutes then they are already on another Web site asking someone else," he said. He also operates a property rental business and gets dozens of calls per day related to that business. "It gets a little crazy sometimes. Most of the time my work phone is directed to my cell phone."

Cecilia Sherrard, a team leader for YouShouldOwn.com real estate team, a part of Realty One Real Living Ohio, is also using a live chat feature on her Web site and has also experimented with IM at her site. The tools haven't been a big lead generator, she said, as most people using the chat feature don't seem to be serious buyers or sellers, and they can be from all over the country rather than from within the state.

Consumers who are serious about a real estate purchase or sale, she said, "are not chatting about it -- they're picking up the phone." But even if the chat feature doesn't lead to business in the short run, Sherrard said it's good for developing a rapport with consumers. "It all helps," she said.

When she is not in the office, Sherrard keeps in touch with her team using a wireless device. "I can be on the beach and (view) my Internet leads," she said. "Technology does come in handy." Even while driving she can be working, she said. While stopped at a red light "I can send a lead to an agent -- a referral at a red light -- literally faster than the speed of light." Her colleagues have a nickname for her: "The Internet Queen."

Time management is a challenge, she said, as consumers expect quick responses. "You must check your e-mail as frequently as you do your voicemail. People don't have patience anymore -- they'll go to the next agent in line," she said.

Some of the new communications tools that are available to agents can be "more of an extra headache than anything," she said, as standard phone and e-mail conversations will usually suffice. "There are great fun gadgets out there but when it comes to real estate I don't think they're all necessary."

Missy Caulk, an associate broker for RE/MAX Platinum in Ann Arbor, Mich., said she has used Pinger but prefers another service from GotVoice.com that sends e-mail notices about incoming voice messages and allows her to retrieve the message via e-mail. This is useful is she is preparing a report at the computer and doesn't have time for a live conversation at that moment, for example, she said.

While real estate agents are known for working at odd hours -- including nights and weekends -- to serve their clients, Caulk said agents have to decide whether the business is going to run their lives. "Are you Denny's or are you Outback Steakhouse?" she said -- Denny's is always open while Outback is not. "I have a life," Caulk said, and she chooses to manage her workload around her personal schedule rather than the other way around.

Go to www.LagretRealEstate.com

Ellicott city MD Land tour

Useful links

I compiled the list of very usefull web sites regarding rental properties:

http://www.iiproperty.com

http://www.writemyads.com/

http://www.choiceofhomes.com/

http://homevaluehunt.com/

http://www.mapwing.com

http://www.mouseonhouse.com/

http://www.zipcodestats.com/

http://www.bbandt.com

http://www.mortgage-investments.com/

http://www.turnhere.com/

http://www.rentalhouses.com

http://www.rentometer.com/

Secrets of powerful negotiation

By Bernice Ross Inman News

(This is Part 1 of a six-part series.)

Order-taking is dead. If you want to prosper in today's market, negotiation is the key to prospering while your competitors starve.

During 2005 and 2006, I remember being shocked to learn that many agents across the country had sold substantial amounts of property without ever going on a physical inspection or dealing with a loan contingency. The buying frenzy was so great that buyers waived all the contingencies in order to purchase.

Those days are gone. With the collapse of the subprime market and a decline in the number of transactions nationally, negotiation skills are a key factor in determining whether an agent will survive in today's shifting market. If you want to prosper while those around you are floundering, becoming a master of negotiation is the route to consistent high production, regardless of the market conditions.

1. WAIT! (Why am I talking?)

There is an old adage in sales circles that the first one who speaks loses. When buyers are jittery, it's easy to scare them off. The easiest way to do it is to open your mouth. For example, you may point out the lovely chandelier in the entry. If the buyers think it's ugly, the buyers' focus shifts to how much it's going to cost to change it. By drawing attention to this feature, you have just created a major objection that could block your sale. Consequently, the first rule in negotiation is to always ask, "Why am I talking?" Another consistent mistake poor negotiators make is that they begin negotiating with themselves rather than waiting to hear what the client has to say. For example, when an agent has to present a low offer, many agents are apologetic or even worse, defensive. When the agent opens his or her mouth and complains about the price, the sellers will follow suit, even though the price may have been acceptable. Putting it a little differently, keep your opinions to yourself. If you're talking, you may be losing business.

2. Sell benefits, not features

When a buyer purchases a primary residence, they're not buying a house. Instead, they're buying the emotional benefits attached to home ownership. Consequently, focusing on the physical characteristics of the property -- such as the bedroom-bath count, type of kitchen, size of yard, etc. -- is the poorest way to motivate a buyer to take action. A better strategy is to focus on the benefits of the home-ownership experience. For example, a large backyard is a feature. A benefit is the emotional value the feature has. In the case of someone who likes to garden, a large yard offers the opportunity to spend many enjoyable hours engaging in a favorite hobby. For parents, a large yard can be the safe haven where their children play under their watchful eye. In contrast, for a homeowner who travels frequently, a large yard may be a maintenance headache requiring expensive gardening services. The only way to identify what constitutes a benefit to your clients is to take the time to discover how they live, what they like to do, and what matters most to them.

3. Humor diffuses tension

A "pattern interrupt" is a neurolinguistic programming technique used to defuse volatile situations. A pattern interrupt can help you regain control of the negotiation when things are spiraling out of control. For example, if one or more people start shouting during a tense negotiation, do a pattern interrupt by coughing and asking for a drink of water. (Be sure to ask the person who is shouting the loudest to get it for you.) The idea is that by changing the person's body position, you can also change the energy at the negotiation table. A number of years ago, one of my best lender clients had an REO (foreclosed property) listing in ritzy Bel Air, Calif., that we couldn't sell. The market was abysmal, with almost 60 months of inventory in this particular price range. After extensive marketing, we finally received an offer that was 40 percent below the lender's foreclosure price. I set up the appointment with the senior VP and trudged over to discuss the offer. Imagine my chagrin when I was ushered into the conference room and the entire board of Directors was there. At that point, I wanted to run as fast as my 3-inch heels would carry me. Instead, I backed into the room and looked over my shoulder at the board. When they wanted to know what I was doing, I replied, "I figured I better be ready to run away fast when you see what this offer is." Everyone laughed. They didn't sell the house to this buyer, but they did give me a price reduction that lead to a successful sale.

Go to www.LagretRealEstate.com

Why investors love rental homes

Today's real estate profit opportunities

By Robert J. Bruss Inman News

Depending on the residential rental demand in your community, rental houses and apartments may or may not be a superb real estate investment opportunity for your situation. Some towns have an oversupply of rentals (such as Phoenix, Ariz.) so rental houses and apartments obviously aren't great investments where there are too many rentals available. The same principle obviously applies to other types of properties, such as office buildings and warehouses, where there are lots of "for rent" signs.

Personally, I've done quite well with rental houses for many years. Overall, they have proven to be the safest and least risky long-term investment in most communities. I prefer single-family rental houses because they are so easy to buy, finance, manage and profitably resell. Also, if the local rental market is slow, there is always a strong market for lease-options. For more than 25 years, I have used lease-options to profitably buy and sell houses, including my personal residence.

The primary reason single-family rental houses have proven to be so profitable is their long-term appreciation in market value is driven by buyer demand for houses, not by their rental income (as is true for apartments and other rental properties). However, this leads to the primary drawback of most rental houses: they usually don't produce enough rental income to result in a positive cash flow.

EXAMPLE: When I began investing in real estate, the basic criteria to earn a positive cash flow from a small investment property of one to four units was the monthly rental income should be at least 1 percent of the property's market value. To illustrate, if a rental house cost $100,000 to purchase, it should produce at least $1,000 per month gross rent. Those were "the good old days." Today, a landlord of such a house is lucky to earn 0.75 percent of its market value in monthly rent. In other words, the prices of homes have outpaced the rental income that can be earned from them. The higher the residence's market value, the worse the disparity with attainable rent. Just a few days ago, I was talking with the owner of a house worth $1.2 million who wants to rent it to tenants. He told me the highest rent he can get is only $5,000 per month, not enough to cover his monthly mortgage payment of about $7,500.

Rental-house investors in small towns often have a big advantage where residence market values have not risen as fast as in most large cities, but the rents have kept pace with inflation. I know several investors in smaller cities who come close or sometimes even exceed the 1 percent per month of market value rent criteria. If you enjoy living in a small town, consider the advantages of owning residential rental properties there. Several excellent recent books on this topic include "Investing in Duplexes, Triplexes and Quads" by Larry B. Loftis; "Building Wealth One House at a Time" by John W. Schaub: and "Start Small, Profit Big in Real Estate" by Jay P. DeCima.

I do not recommend buying a second or vacation home in a vacation area. The primary reason is the demand can be very unpredictable in such areas. Currently, the buyer demand is strong in most vacation areas, but it is weak in a few others. The high price of gasoline is sure to affect demand for vacation homes in weekend resort areas.

If you decide to buy such a secondary personal residence, it is best to buy during the off season when buyer demand is low and sellers who have their properties listed for sale are usually highly motivated to sell. A good book to study on this topic is "The Cottage Ownership Guide" by Douglas Hunter. It explains the pros and cons of owning property in vacation areas, including renting, sharing and selling these specialized residences.

How smart landlords handle rentals

Take these tips from experts on managing your rental property. For example, don't skimp or take shortcuts when screening for tenants.

By Otesa Middleton Miles, Bankrate.com

Owning rental property seems like an easy way to generate extra income. But it's actually not all that easy.

Nevertheless, many people are doing it. According to the National Association of Realtors, 40% of home sales in 2005 were second homes, and 35% of investment-property owners plan to buy another property in the next two years. Most -- 63% -- of the survey respondents said they bought the investment property for the rental income.

One of the best ways to protect that investment is to be scrupulous in searching for good tenants.

Landlords who take shortcuts when screening potential tenants, who skimp on insuring the property or who fail to outline everything in a detailed, written lease, can end up with unpleasant and costly surprises. But there is one shortcut neophyte landlords can take: They can listen to the pros so they won't have to learn lessons the hard way.

Do your own due diligence: A case study

Take, for instance, the tenant who looked so good on paper, with his attractive credit report and handsome deposit check. Too bad the paper he looked good on was bogus.

The tenant had doctored his credit report, giving himself a stellar rating. Then he bounced his hefty $4,000 deposit check. Pasadena, Calif.-based landlord Payman Emamian says not only were he and his real estate partner out of money, but the lying tenant also damaged their two luxury Hollywood town houses. (The guy claimed he'd work in one and live in the other.)

After three months, Emamian successfully evicted the man, but not before he ran up a $20,000 tab for back rent, legal fees and repairs.

Emamian's advice to landlords: "Never accept a credit report that a tenant brings you."

Emamian, who bought his first rental property -- a four-unit building -- in 1998, says he's learned to double-check everything. To help landlords dig into backgrounds, companies such as the Houston-based National Association of Independent Landlords, or NAIL, provide credit reports and scores for $15.95 each. Landlords must first get the applicant's permission, signature and Social Security number, and they must provide their own proof of real estate ownership and photo identification. NAIL provides a host of other background checks as well, including a nationwide criminal search for $12.95 and a national eviction search for $5.95. Many landlords charge prospective tenants an application fee to cover the costs of screening.

Emamian doesn't stop at second-guessing tenants. He applies the same level of scrutiny to information provided by sellers when he's scouting a potential rental property. "Never listen to sellers as to what the expenses are," Emamian says. "You research."

Most buyers know they need to foot the bill for taxes, insurance and some maintenance, but many don't factor in utilities, landscaping, private trash collection or the loss of income when the unit is vacant.

Check references

When screening tenants, Emamian always asks for two landlord references. The past, not the current, landlord is the most important reference, because the present landlord may fudge the truth to get rid of a terrible tenant. If you don't want to do the calling, you can pay an outfit like NAIL. Emamian also asks for a copy of a bank statement.

"I want to make sure they have assets -- how is that check going to clear?" he says.

Jim McDavid has survived 40 years as an owner, manager and seller of rental property by doing very thorough due diligence, and basically by doubting everything prospective tenants tell him. In fact, McDavid says, he does a criminal background check on applicants and asks for photo identification as an extra precaution.

"Everything changed on 9/11, even in real estate," says McDavid, a licensed real estate broker in his home state of South Carolina, as well as in North Carolina and Virginia.

Buy adequate insurance

Protecting yourself goes beyond combing through a tenant's background. McDavid says that too often landlords skimp on a very important item: insurance.

"Tenants create all possible situations you can imagine," he says. McDavid tells of a young woman who rented from a client. The woman's boyfriend slipped her two illegal drugs, ecstasy and methamphetamine, and now her family is suing not only the boyfriend, but the owner of the town house and the lender.

"Protect yourself against the impossible," McDavid says of insuring rental property. "You need as much (coverage) as you have on your automobile driving around." Also, most experts recommend requiring tenants to have renters insurance. The owner's coverage repairs and replaces the building's structure, and many times the appliances, but not the tenant's belongings.

Another form of protection is proof of a property's condition. McDavid suggests having a written, signed document with photos of the property when the tenant moves in.

"Establish a baseline," he says.

Just say 'no' to form leases

What about those leases for sale at office supply stores? They're useless because each state has different landlord and tenant laws. McDavid suggests getting a standard lease for your state from a real estate office or association.

Warren Wheeler, a real estate attorney in Atlanta, agrees.

If you buy a lease-in-a-box, Wheeler says, "for a good bit of time that works -- until there's a problem." Generic leases also don't take into account concerns for different types of dwellings. A high-rise luxury condo will have different stipulations than half of a duplex, a converted row house, a single family home on an acre of land, or a unit above a bakery. Get an attorney to help add provisions particular to your property, Wheeler suggests.

Also, set up house rules, put them in writing and enforce them uniformly. If one tenant feels another tenant gets special treatment, it could be considered discriminatory.

"You can't discriminate racially," Wheeler warns. "There's a federal law against that."

Heed environmental matters

With environmental concerns taking center stage nationwide, landlords, too, must take heed. They need to watch out for lead paint, asbestos, mold and overall indoor air quality, says Robert Gallo, a certified indoor-air-quality manager who works at RTK Environmental Group in Connecticut. "If the structure was made before 1979, chances are it will have lead paint in it, even if it has been painted over," he says.

Landlords need to give tenants the U.S. Environmental Protection Agency booklet, "Protect Your Family from Lead in Your Home." Gallo recommends having the property inspected by a licensed lead-testing company. "Most people are poisoned not from eating paint chips, but from the dust," he says.

Gallo says the do-it-yourself lead-testing kits examine the surface but can't determine if there's lead underneath. His company uses X-ray fluorescence to scan every painted or sealed surface. He charges $400 for a 3,000-square-foot home, which includes a diagrammed report and advice on the cheapest and safest way to correct the problem. To protect against mold, Gallo says, clean up all water immediately.

Consider hiring a property manager

Lisa Vander, founder of Pacific Blue Investments in Solana Beach, Calif., tells her clients not to deal with all of these details. Instead, she urges her clientele to farm out that work to a professional property manager.

"If you're retired, that can be your job," says Vander, who considers herself a real estate wealth developer. "If you already have a job, do not take on managing your own property."

For handling these day-to-day dealings, property managers typically charge a percentage of the rent -- about 4% for very large complexes and up to 10% for single-family homes. The property owner, Vander says, should "learn to manage the equity in the property and buy other property, while managing the manager."

The owner should be thinking about how to increase the rent by improving the property while decreasing expenses, she says.

Other matters to consider

Vander also tells her clients not to go it alone. "Get involved in an apartment association," she says. That way, property owners have others to turn to for advice, forms and referrals. She recommends establishing separate bank accounts for each property so that the finances of each investment can be analyzed separately. It's also important for keeping tax records straight.

Finally, each expert recommends demanding an adequate security deposit from tenants, as a form of protection if all the above fails. And to avoid the headache that Emamian experienced, insist on getting the deposit before the tenant moves in -- and in certified funds: cashier's check, certified check, money order or, of course, cold hard cash.

Go to www.LagretRealEstate.com

Marketing Ideas From Home Builders

By JOE CONNOLLY startupjournal.com
To increase sales in a slower market, consider creating the impression of greater value for your product or service. One way is to make your most popular option standard.

That was one idea from the recent International Builders' Show. Because the homebuilding business is slowing, there may be lessons in what builders are doing that other business owners can apply to their own industries.

You can also reduce the financial impact by dropping one of the standard features that customers seem to be interested in the least.

When sales slow down, it can be a good time to catch your breath and reassess.

That's why some home builders are conducting professional customer-opinion surveys to see how customers perceive them. They haven't had to do this in the past five years.

Some have found that customers don't value what business owners may see as their best features. For instance, one builder raved about all the time his crews spent crafting custom-made kitchen cabinets. But research showed that customers thought the cabinets looked as though they didn't match. The woods and the grains all looked different.

Sales rose when the builder started installing matching, uniform cabinets -- at lower cost.

Your image may not be what you think it is. For example, one builder thought that it was known in its area as the low-cost builder. But it wasn't. It was surprised to learn that two other local builders were perceived as the low-cost builders.

When the builder discovered how people really saw it, it started adding some optional new features to its products. When it no longer acted like the low-priced guys, its sales doubled.

One builder said it's worth the money to hire a professional to create a survey, because those it wrote didn't even receive responses, much less any insights. He said it's more difficult than it may seem to get objective and accurate findings.

'Deluxe'

One developer says whenever a townhouse sells, he automatically raises the price of the two units next to it, because the market has set a price for the unit that sold. He can always bring down the price of the neighboring units later.

Daniel Levitan, a Florida-based marketing and development consultant to builders and developers, says if he has 100 units to sell, he calls only six or 10 "standard" units. Then he finds an added feature on all the rest to justify charging a premium. The bonus may be the view, the location near the parking lot, or extra square footage. He'll call them upgraded, deluxe, luxury, elite, special, limited, select or another variation.

He also says to hold back your best units in a slow market, if you can, so that you can charge a premium for them when business improves. He says if you sell your best units in a down market, you'll be left with just the average inventory when business improves, and you'll never get out of the project.

Online Connections

Your Web site may be even more important than you know and can cut sales-time costs by hours.

Charlie Scott, the owner of Estridge builders, a smaller home-building business, says that he tracked the online activities of a customer who eventually hired him to build a house. (He told the customer about his research and the customer said fine.)

Mr. Scott could see that the buyer first looked at links for various neighborhoods. Then he looked at floor plans -- several times. Then he went back to neighborhoods. As the buyer became serious, the business owner could see the client spending more time researching the business's reputation online.

The buyer spent about nine hours searching the Web site over several days before he even called the company, according to Mr. Scott. Plus, this customer was doing all of his shopping around 9 p.m. -- long after the sales office had closed.

Leveraging a Sideline

The key to growth may be a small part of your operation that's not even your main business, but a new feature you're developing. Here's an example:

Estridge Builders found that more customers want new technology built into their homes. So it hired its own home-technology experts to advise clients. Then the builder started reselling its own monthly Internet-connection service.

Now the builder advertises that it will build a house and install and provide the service for you, as part of the deal.

As proud as it is of this service, it doesn't call it by the same name as the rest of the company. The reason: Estridge builders sells its technology know-how to its competitors.

The builder keeps its name off the trucks, and pride takes a back seat, to create a win-win deal.

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