A Big Change
January 2008
I know, you have seen this once before. I have chosen to relocate my business to Network Real Estate, 860-707-0600 ext.209 , which is currently in the Peoples Bank building in Waterford at the corner of Broad Street and Jefferson in Waterford, about 1 minute off of 95.The owner and President, Eric Greenstein has committed to finding an office in East Lyme very quickly. As you know, I always explain the business changes and reasons, the good and the bad; this will not be any different. In addition, there were several requests this year for info on getting into real estate and what it takes and this is a great opportunity later in this memo to give you an idea of the business as well as learning from my business decision.
As those of you who read the real estate section have noted, the size of the ads now put in by the large companies have dwindled to small paragraphs without pictures. This was one of the attractions here and now, even though I believe print media is dying, if not already dead, saved me considerable expense in running my business. Since the ads were cut, I have replaced it with my own, at a cost last year of $9,000.00 out of my pocket, to at least give a decent presence in the print media.
For those of you who don’t know how we get paid an example follows. On a $200,000 transaction at 5%, the total commission is $10,000. That is split between the buying agency and the selling agency, which in this example is $5,000. Each agent, either by negotiation or by their volume, has a split agreement with the agency. In my case the split was 75%. On top of this the office and the agent contributed 3% each as an additional fee to Coldwell Banker. (Details on other fees relating to the business later) Just before Christmas this year, Coldwell Banker announced that the offices will no longer supplement the fee, but rather the agents would bear the burden of the entire 6% as profit margins were down due to the market.
Eric and Network had been after me for a while, let’s just say years, and I always respected Eric, but was not too fond of the location. However the deal that had been offered me, basically came to an 82% split, which is huge in the volume I do and the split increases with hopefully higher volume. This extra money will not only be used to supplement my family, but will also be shown in added advertising, a new web site and different expanded marketing. The structure of Network is such, that all calls on my properties will go directly to me, rather than the front desk, so potential buyers will be able to get first hand information from the person who knows the property the best and I will be able to more closely monitor the effectiveness of the ads.
I have already reserved the web page Leosplace.org (hopefully ready by now) and the new email is Leos.place@sbcglobal.net. Since I am such a computer ninny, the design is going to be ultra simple with links to preferred service vendors and their web sites & emails, a site where you can perform your own search for properties, including addresses (this will not replace auto search, just something if you had a curiosity about properties) Of course all listings will be on REALTOR.com and the Network Properties web site. Network currently also has offices in Norwich and through a merge with Partner Properties, offices up in North Country somewhere, where it snows way too much. For the Pfizer clients and all referral networks, all relocation agreements are honored as before, except there will be one level of beauracracy removed and I will deal directly with the relo offices which will be much simpler.
Ok, the downsides. The signage is not as large as before as Network does not use post signs. I will have corner signs and the regular yard signs. I do not think this is a deterrent and I of course will also still use brochure boxes outlining the property as well as my other listings.
Office coverage is not as expansive. There is a receptionist during normal business hours and at all other times , the calls will be fed into the voice mail and page me, just like before, so you can expect extremely rapid return calls. All listings go into REALTOR.com, and will auto feed into leosplace.org, which I will be heavily promoting as a site for folks to search for properties and addresses. Of course my listings will be featured. As an added bonus I will also allow folks with rental properties to list there properties for rent and will include them in my newspaper ads at no charge, providing they are doing their own showings/screenings. I will do showings/screenings at a very reduced rate and will also provide mls entries on listings if needed.
The agreement I signed with Network, by the way, is for 10 years. This will lock in my commitment to them and theirs to me. This way I don’t drive anyone nuts with this move. If any one has any questions that I didn’t cover, please call or email. Your support through the years has made it possible to have other companies want to put up with me. I appreciate it greatly and hopefully reflect it in my service and commitment to you as clients. My licensed assistant Diane Chuff is making the move with me as well. She is able to show properties, answer all questions and cover me when I am off. She shares my same commitment to protecting clients from harm in what is a large investment in all of our lives and giving what I feel is the best service available in real estate.
Thank you for asking!!!
A couple of folks have asked about my moving and if I am in financial trouble having to sell my home for less than I bought it for. Don’t worry, food stamps are not on the menu, yet.(kidding) It is just a sign of the times and I made substantial money on my last home, this one was bought at the height and I will lose some of the large gains from before, but that is not a huge problem. The market is correcting and I will probably even invest in real estate this time around on a rental property or fix up. As a matter of fact if my daughter didn’t NEED private school a car and vacations, I might have been able to retire now.
My buddy, life partner… Shirley and I have decided to buy a home together and we need space!! 3 ladies, her daughter, Amanda, my daughter Amanda and Shirley, cannot make it on 1 bathroom. We do not think we can afford a bigger home in Black Point, so we may have to move into the village or heaven forbid on the Waterford side, but not far from the water. (A joke for my Waterford devotees and no it won’t be Quaker Hill).
Did I make it look that easy?
I was besieged this year with requests from clients about starting a career in real estate. Here are the things you must know. The big thing is to get started you need money. A minimum of 6 months living expenses if you are the only bread winner in the family and one year is preferable. Between fees, business cards, signs and advertising, start up is at least $1100+. You need to take 60 hours of classes from a state certified instructor and then pass the test. The test isn’t hard, I passed it.
You may not have any income for 6+ months as by the time you get a buyer/seller and close, it could easily take that long. On figuring your income, as a starter on a 50/50 split arrangement in your office, you, on average make $1,250 from each $100,000 of sales. Remember, you have no benefits so check out the cost of health benefits. At age 47 it costs me $325 a month with a $2500 deductible. On top of that you have to pay quarterly taxes and self employment taxes. Vehicle expenses are high as I average 1700 business miles a month. To give you an idea, my first year I had $21,000 in gross income with a $11,000 profit.(not including insurance) The odds of being very successful are not great and the average salary ,for all REALTORS is somewhere around $25,000 a year. If anyone is interested in discussing further, give a yell. Trying to do it part time is crazy as you have showings, closings, inspections, appraisers and more to coordinate and you cannot service your clients properly.
About the weather
January 2, 3, and 4th was winter, its now spring. If you want snow, go to Vermont. I know a rich person there that owns a house and will let you stay for free. Call for his address. Other than that, bring on spring.
What to do with your old magnet
- Draw moustaches and more hair on my picture;
- Play magnetic darts;
- Cut it up and make a crafts project;
- Save it as a souvenir;
- Cut out the picture and keep it in your wallet.
Closing
This was not an easy decision. I realize I do not have a business, without clients and thought out all aspects of this move. I think you will see some great growth from Network in the coming months and if you didn’t see their signs before, you will now.
The move was predicated on the companies’ decision to cut our split, which is basically taking a cut in pay, as their profits were down. In a down market, reduced profits for all of us are expected. My dilemma was, what if profits were down more? Would advertising and splits change again? Would clients be hit with a transaction fee, now used by 2 of the other large local companies?
I look forward to working with all of you in the future, if needed and hope you will support my move. Thank you again for supporting me, all these years. It is truly my pleasure and I have enjoyed it immensely. |
