In a world teeming with technological advances, the real estate industry probably is closer to cutting edge than much of the corporate sector. Besides making heavy use of the Internet to list properties, communicate to clients and pursue professional credentials, realtors have taken software and hardware deployment to new levels.
The numbers bear this out. A survey from the National Association of Realtors (NAR) shows that 87 percent of real estate firms had Web sites as of 2004, with 97 percent of individual realtors using personal computers for their businesses.
Another NAR study estimates that 56 percent of member agents had spent an average of $1,000 apiece on technology by mid-2006, with 30 percent investing upwards of $2,000. The same report reveals an upswing in the use of automated transaction management systems, which monitor each step of the real estate process, rising from 13 percent in 2005 to 26 percent last year.
Sophisticated Solutions
Remarkable software systems are transforming how the
corporate sector does business, regardless of the product or
service. But the real estate industry seems to be enjoying an
abundance of riches from the tech trend. In fact, analysts
from The Real Estate Center at Texas A&M University have
identified more than 900 firms that currently produce
real-estate related software.
Applications range from routine operations, such as accounting and business administration, to more sophisticated mobility and multi-list functions. While it's impossible to explore all the possibilities in one article, a few product categories are worth a second look.
- Mapping software. No one needs to know where a property is located - and the best way to get there - more often than a real estate pro. For under $10 (and up to $300), realtors can access comprehensive road atlases and detailed maps on lap- or desktop computers, as well as on their PDAs (personal digital assistants). Users likewise can combine demographic databases with mapping software, thus providing one-keystroke access to additional details about geographic areas, such as resident profiles, average area income, school information, retail patterns, churches, commercial activity and more. This sort of bundled information comes in handy when potential buyers have questions about neighborhood particulars.
- PDA perks. PDAs have been the realtor's friend
for a long time now, but today's software add-ons really
can launch handhelds into orbit. Besides the traditional
programs that come (e.g. calculator, scheduler and
synchronization software) with most models, some brands
boast full-feature mini-versions of top-name operating
systems, such as Windows. The big news, though, is the
assortment of newer programs designed expressly for PDAs.
Functions include financial analysis, MLS utilization,
graphic display (for property viewing), loan calculation
and property appraisal. Prices for the most popular
products start at under $20 and top out at about
$250.
- Multiple Listing Services (MLS). Today's MLS - a database that allows brokers to share with realtors information about sellers' properties - is an Internet tool critical to the industry. Though realtors must subscribe to MLS, typically for a fee, a wide range of Web-based software is available to help them maximize the service's usefulness. One of the most innovative products on today's market employs a voice recognition component. Here's how it works: A potential buyer spots an attractive home for sale, either on the street or on a realtor's Web site. He wants to know more, so he picks up the phone and dials the listed number. The customer then is prompted to say the street address and MLS number or listing code of the property in question. The program matches this information to the appropriate listing, and the caller gets the information he's after. Not only can realtors determine exactly what they want callers to know, they also can add customized comments. Changing settings, information and passwords, done via the Internet, is a simple process. In fact, most service providers offer generous technical support.
Hardware Happenings
If avant-garde software is changing the real estate business,
hardware development clearly has kept pace - with "mobility"
the operative word.
- GPS technology. Probably the most familiar of these tools is the GPS, for which mapping programs serve as the foundation. GPS units operate from signals beamed from satellites to cars. Drivers then receive verbal directions guiding them from one location to the next, a particularly valuable tool for agents who handle listings in large geographic areas. Some models even include large screens that superimpose street maps to accompany spoken instructions. Many newer cars come with factory-installed GPS, but add-ons are relatively inexpensive. Prices start at less than $200 ranging to more than $1,000.
- Smartphones. A smartphone typically integrates the features of mobile phones, PDAs and other electronic information tools, allowing real estate agents, in effect, to carry their offices with them. Wireless functions like calling, secure e-mailing, text messaging, instant messaging and Web connection play an important rule when a realtor needs to get a potential buyer property data on the fly. The basic smartphone features miniature keyboards and touch screens, though some brands offer full-size keyboards with slide-away storage. Depending on the choice of hardware and software, costs run between a few hundred dollars and to around $1,000.
- Mobile printers. These lightweight, wireless printers likely are the handiest gadgets to come along in the last few years. Realtors don't have to leave their cars to print contracts, floor plans and reports from laptops and PDAs. Many models even allow photo printing directly from digital cameras and memory cards perfect for showing property pictures to a client. These units are affordable, too, some costing as little as $225.
Sales & Marketing [top]
The high-stakes game of selling property attracts many people to the real estate profession every year. Despite the job's fair number of demands and challenges, the potential payout often lures sales-savvy folks into the business. At last check, the U.S. Department of Labor counted approximately 460,000 real estate brokers and sales agents nationwide. While the industry appears stocked with workers, only the best post "SOLD" signs on a regular basis. The latest data from the Department of Labor lists the median annual earnings of salaried real estate sales agents, including commissions, at $35,670.
Currently, some of the most experienced real estate outfits rely on hi-tech marketing techniques to pump up their sales figures. Particularly in commercial property, certain firms use interactive CD-ROMs to promote already-existing buildings and future projects. Simply by loading the CD-ROM into their computer, potential buyers take a virtual tour of the structure at hand. These popular tools, often created and sold by Web design companies, help real estate firms showcase a property's architectural features and amenities. In addition, the CD often provides vital information, such as floor plan dimensions and pricing options. In short, the targeted buyer possesses all of the selling points in a convenient, portable format.
In some cases, real estate firms include the CD-ROMs in media packages, while others download the presentations onto their Web sites for easy client accessibility.
Taking the Lead
A number of real estate associations and organizations offer
lead generation services for agents looking to
dig up potential business. Essentially, home shoppers visit
the industry group's Web site in search of available
properties, or an agent in their area. The visitor usually
lists their name, current home address, phone number and
e-mail. The association or organization then sends the info
to the agent subscriber, who may pick and choose the leads
they wish to pursue.
Before purchasing a lead generation service, however, agents should find out the number of monthly visitors to the site. Moreover, make sure the lead provider filters the information, ensuring only quality leads. All too often, agents order such services only to experience a low conversion rate. In certain instances, this occurs because the provider does not frequently update the leads or verify their credibility.
Accelerated Marketing
Since real estate professionals spend a share of their work
week driving from one sale property to the next,
customized vehicle magnets let them advertise
on the go. Sometimes called magnetic tags, these removable
signs usually post an agent's Web address, logo or firm's
name. Either way, many industry pundits say the marketing
tools present an affordable way to brand an agent or company.
Depending on the design, customized vehicle magnets usually
cost about $40. Marketing companies that provide such tags
usually work with the agent to select font type, color, size
and more.
A Picture is Worth
For decades, real estate agents and firms have used listing
brochures, post cards, flyers and other printed materials to
show available homes and buildings. Today, these methods
still represent a practical approach to drawing interested
buyers. Folks in the market for a house, condo or commercial
space usually turn to these resources in their search.
Real estate printing companies sell a wide
range of products designed to shine the spotlight on
available properties, as well as agent services.
As far as postcards go, most real estate printing companies sell them by bulk, usually for less than $400 for 1,000. This fee tends to include design, materials, printing and mailing. Listing brochures and flyers often cost more. On average, these printed documents sell for no less than 75 cents per page. Still, they provide the potential client with much more info. For instance, brochures and flyers usually list room dimensions, types of construction materials, the year the house was built, amenities, pricing, the address and more.
Outside Help
According to recent findings by the Department of Labor,
about six out of 10 real estate agents and brokers were self
employed. Challenged by a competitive industry and a
fluctuating real estate market, most don't even have time to
set up the proper sales and marketing infrastructure. For
those faced with such a predicament, real estate
assistants aim to lend a helping hand. Such
professionals, usually associated with a larger PR firm,
provide a range of services. These might include:
Office Support: Real estate assistants often handle appointment scheduling, calendar maintenance, courtesy calls to clients, correspondence emails/ mail, and much more.
Marketing Plan: Real estate assistants sometimes establish a sales strategy based on the specific market at hand, send promotional mailings to prospective clients and update Web promo content and design.
Database Management: Depending on the extent of the services, real estate assistants might create or handle already-existing databases. With this, they constantly update client information, verify data, set up address labels for mailings, trouble shoot to reveal how they can improve the current system and more.
Listing Support: Real estate assistants often help the agent or broker coordinate listing services. Usually, they research publishing options and handling all contractual dealings with the listing service. They also work with the publication to provide the necessary materials; current property photos, info, etc.
Closing Support: Real estate assistants sometimes provide guidance for agents looking to close a deal. This tends to involve clerical work and file maintenance from contract to closing, as well as coordinating all closing process activities.
Customer Service [top]
Any company aiming to stay in business must make its customers happy. In the real estate industry, this can be a thorny process, because selling or buying a property means big bucks, legal intricacies, and often lengthy client-realtor relationships.
Even so, the basics of solid customer relations haven't changed much over the years. The difference is, today's realtors can enhance client service with a few high-tech tricks. The most successful real estate operations consistently employ key strategies blending both cyber and personal elements.
- Use CRM software. While customer relations management software has been around a few years, some products specifically target the real estate profession. The best of these gives brokers everything they need to know about their customers in easily accessible databanks. The goal: To enhance client service by increasing an agent or broker's accuracy, efficiency and productivity. Functions may include asset and lease management; client contact information, financial records and transaction history; correspondence and document generation; automated telephone and electronic communication; and synchronicity with hardware such as desk and laptop computers. As is the case with most software genres, prices fluctuate widely - starting under $100 for off-the-shelf programs and running into the thousands for Web-based, subscription and fully supported systems.
- Go for a customer-friendly Web site. The great majority of real estate companies own Web sites, but not all achieve the same standard of customer service. In addition to full information regarding agents and listed properties, some of the most effective pages give clients (both existing and potential) free, value-added benefits. Some leading companies, for instance, allow registered users to review, critique or comment on any of the properties listed on their Web sites. Besides providing valuable feedback to the realtor, the input also serves as bargaining leverage (and sometimes, a reality check) for the potential buyer or seller. Other firms offer a free downloadable tool designed to display property information directly on a computer's desktop. After entering specifications on exactly what type of real estate they're looking for, buyers receive the latest listings without the bother of time-consuming Internet searches. Certain real estate firms even offer mortgage payment calculators, weekly real estate tips, loan status updates, neighborhood and school district information, community calendars and local government resources. Web page content providers usually offer these sorts of upgrades on a subscription basis, with prepaid annual fees starting around $50 for single components, and more for partial or full packages.
- Be courteous and professional. Industry research has identified several characteristics clients seek in their realtors, brokers and agents. These are reliability, assurance (that is, trustworthiness and competence), empathy and responsiveness. Customers want to be comfortable with their real estate company's image, as well. Employees, office space and PR materials should always reflect the business in a positive manner.
- Require that employees build customer satisfaction. The biggest producers in the real estate business enlist their staffs in improving client relations. This isn't hard to do when bonuses or other rewards are the incentives. But sometimes, sharing client feedback, good or bad, is what it takes to improve the bottom line. Some of the more successful firms, for example, distribute comprehensive surveys to all customers at the end of every completed transaction. After reviewing the findings with managers, the results often are passed along to the sales force. By seeing the responses firsthand, agents know exactly how to gear their performance for optimal client satisfaction. Other firms use survey results to cultivate positive client relationships. When feedback is unsatisfactory, the firm's owner personally reviews results with the appropriate agent. Then, the two collaborate on strategies to either improve the situation, or to make sure it doesn't happen again.
- Handle irate clients graciously. In a perfect
world, business carries on without a glitch, and the
customer's always happy. The truth is, however, even the
best companies must deal with disgruntled clients from time
to time. The key to navigating these situations unscathed
lies in a few simple tactics:
Never ignore complaints. Even a minor grievance from a single client may indicate a habit or behavior the realtor needs to address.
Take the client's perspective. Some customer complaints lack validity from the realtor's point of view. Nonetheless, clients wouldn't be griping if they didn't think they had a point. Rather than react defensively, the savvy realtor will try to see the issue as the client does.
Listen. Clients appreciate a sympathetic listener, even if their complaint is unfounded. When the customer is right, an open mind and a closed mouth can help a realtor learn from mistakes.
Promise carefully. Too often, realtors dealing with angry customers promise solutions impossible to deliver. Thorough research of a problem or complaint before taking action allows more focused, realistic and effective corrective measures.
Staffing & Employment [top]
What type of Real Estate business do you have or want? Did you purchase an existing firm or start from scratch? Have you ventured beyond the residential real estate market in any specialty transactions like commercial property purchases or leases? Distressed/foreclosed properties management? Have you added property management to your residential brokerage book of business? Marketed yourself as a consultant for real estate investors? Have you formed a strategic alliance with an architectural firm, especially if you are in the renovating/flipping business, too? Have you ventured into being a licensed Appraiser? Mortgage Broker? Your answers to these real estate business “scope” questions will greatly affect how and where you start looking for the talent you will need to be a successful real estate firm.
Unless you have a clear idea of what your real estate business’ “sweet spot” is or will become, it will be difficult for you to plan and build for the future, including determining the number and types of people and the skill sets you will need to support your anticipated book of business. As was hinted in the above questioning, you will need to decide if you want a covey of Real Estate Agents who can do almost everything or if you will engage specialists because you want to have a diversified offering. In the geographical market you serve, how have you made yourself different form al your competitors? Is there a segment of the market you serve better than your competition? Have you capitalized on this advantage? Is there a geography or type of property that you do well at representing because it is your “sweet spot”? Are there other brokers or agents “out there” whom you admire? Have you “gone after” them?
Unlike a lot of other small businesses, real estate is different in two ways, especially as it relates to your people costs. First, except for maybe an office assistant who helps you keep track of the business end of your brokerage and do things like compiling and mailing documents to clients, brokers, lawyers, mortgage companies, etc., all of the people you “hire” are on commission and act as independent contractors, so you don’t have to worry about payroll, taxes, benefits, and the legalities of being an employer with your agents. Also, most agents have their own cell phones, lap tops, I-pads, etc., and do not need or work from an office. So, the size of your physical gathering place may be just enough for have a couple of client meetings going on simultaneously and doesn’t have to be sized to accommodate the 25 agents who are part of your brokerage The biggest challenge you will have is keeping all your agents satisfied as they learn about the different terms & conditions each of them have with you (and, by-the-way, this knowledge of what everyone’s deal is with you will become “common knowledge”, so you are encouraged to have a defensible “rhyme & reason” why one agent gets a bigger percentage of the “sales price commission” than another—usually based on length of experience or a “running” earned commission/sales record). Truly, being paid a commission is the original form of “pay-for-performance”, so just make sure to keep it consistent and you will avoid lots of problems with your agents.
The key position in any real estate business is the Real Estate Broker. If you are starting the office (or buying an existing business) in all likelihood you have been a licensed/practicing real estate agent for some time and have decided to take the next big step. Sometimes, though, owners are not licensed real estate brokers, so one must be hired. Of course, without a licensed real estate broker, no business can be legally transacted in most states.
Next is the office assistant—the one position that may be a “classically paid” employee where all the issues of the employer/employee relationship arise (taxes, benefits, wage reporting to the state, etc.). Don’t underestimate the need for someone who is there to make sure everything gets done that needs to get done to keep your business (and probably your marketing campaign/image) running smoothly.
Agents—where and what kind of people are you looking for? If you’re just getting started, you’ll probably want experienced people so that your firm develops a sterling reputation in terms of your ability to successfully conclude both sides of the real estate transaction. Once established, you may want to add new/trainable agents so that you can both “mold” your team in your own image as well as having more favorable commission agreements with the newer agents for that the firm’s cash flow from transactions is better than paying up to 75% of you sales price commission to the agent.
All the other “specialties” associated with some brokerages, are things that you can decide to make a part of your business offering or not. Usually, so as to minimize the start-up cost of acquisition/training, once you decide to get into a specialty, you are more likely than not going to go out and recruit the “specialist” you need (who has an established reputation in your market), so that you have instant credibility and capability. Again, because most of these “specialist” have earned, commission based compensation, so as long as you are getting a piece of the action and the marketing/start-up costs can be recovered in a reasonable timeframe, adding new capabilities is not a huge gamble because the cost is in the expert you engage on a commission basis to add the capability to your firm.
Once you have defined the talent you need, it is time to assemble the “agents” who will make you successful. If you have been in the real estate business in the geography you are now serving, you know who the good ones are. Go after them directly. Also, with today’s social media, using your private list of key contacts by simply letting them know you are looking for good “agent” talent will probably satisfy your needs faster than you might imagine. The same is also probably true for your office assistant. You can also use your search engine to query “employment agencies near {zip code}”. Not only will you get names of a variety of hiring agencies (aka “headhunters”) that can relatively quickly provide you with suitable candidates at a reasonable cost, but you will also see a number of boards on which you may post your “opening” at virtually no cost. If you use this tool, be prepared for an avalanche of candidates—the point being, be selective.
In today’s world, it is also a “must” to make certain that every person you are hiring (or engaging) is fully fluent, functional, trained, and adept at using today’s tools to perform work in a virtual world. This training should include knowing how to maintain the integrity of e-files, systems, e-storage, and all forms of communication medium so that the integrity of your clients’ and business’ information/data, especially financial information, is uncompromised.
How do you find the talent you need? Please refer to the Human Resource for suggestions. This information provides additional ideas on where and how to recruit the talent you need.
Billing & Accounts Receivable [top]
The billing process garners most of the money that feeds American business and industry coffers. But in real estate, cash flow all too often chokes up somewhere between property sales and commission checks, leaving accounts receivable ravenous for the next meal. This frustrating state of affairs plagues large and small firms alike, and the numbers bear this out.
Cash Crunches
According to the U.S. Bureau of Labor Statistics, both
brokers and agents nationwide made decent money in 2005,
averaging $76,930 and $52,090 respectively. Yet some sources
estimate that the annual turnover rate in the industry as a
whole runs from around 45 percent to as high as 80
percent.
Certainly, long work hours, market fluctuations and legions of competitors scrambling for commissions contribute to the problem. Nonetheless, a number of industry insiders suggest that inability to effectively manage cash flow in a business that rides on commissions can leave agents and brokers out in the cold. The news isn't all bad, however. A few solid strategies applied to cash flow management can keep a real estate company solvent across the sales cycle.
Start On The Inside
From realtors and brokers to economists and analysts,
pundits agree that steady cash flow begins in the office.
Fortunately, getting on track typically means making a few
simple adjustments. The following tactics are excellent first
steps toward solvency:
- Put finances on paper. List all monthly fiscal activity, including revenue sources, receivables, expenses and debts. Hundreds of software accounting programs – some less than $100 – make the process relatively simple, even for agents with limited computer savvy.
- Watch the pennies. Industry insiders say
tracking small, sometimes unnecessary, business purchases
can go a long way toward plugging budgetary leaks. On the
long term, limiting administrative expenses for a
predetermined period – a year perhaps – can
help boost and stabilize cash flow.
An example: Advertising costs can drain company operating monies. Experts suggest going with those media that produce the biggest return (i.e. leads) on the investment. - Look at bank charges. Fees and surcharges may seem negligible on a month-to-month basis, but over time, these nibbles take big bites out of the operating budget. Contribute more cash to the flow by shopping for lower rates and for small- or no-fee deals, sometimes available to established businesses.
- Distinguish between bank and cash balances. Relying on bank statements to manage cash flow is a great way to go out of business. Always reconcile actual payables and receivables to what the hard copy or online account statement indicates. Again, a range of business software packages now available can assist with this chore.
- Don't mix personal and business cash. This may sound simplistic, but a number of experts point out that smaller and start-up operations sometimes fall into the trap of using their own credit or bank accounts for business expenses. The reason – personal bank accounts frequently provide entrepreneurs the revenues required for start-up costs, while personal plastic pays for computers, software, furniture and other supplies. Continuing this unwise practice for extended periods muddies financial records – at the very least rendering it well-nigh impossible to analyze and budget cash flow.
- Make cash flow projections. Once every accounting “i” is dotted and “t” is crossed, it is critical to estimate and project cash flow for at least a six-month period. Doing so allows realtors to plan for peaks and shortfalls within a timely framework, thus diminishing the chances of a fiscal crisis down the road.
Facts On Factoring
In an ideal world, the proper financial maneuvers would
stabilize cash flow and keep the receivables column in tiptop
condition. But in the real estate industry,
“ideal” is not the norm. Now and then, a company
simply must spend money before the commission check
clears.
Several analysts suggest that factoring can free up cash even before a deal closes. In a nutshell, factoring is the buying of accounts receivable at a discount (by a finance company, for instance), allowing realtors to be paid on the spot rather than waiting a month or more for their earnings. Cash-flow assured, they can then (theoretically) refocus their energies on building sales and ensuring customer satisfaction.
Overall, factors typically pay in two stages: the majority of cash on the initial advance, and the balance delivered upon commission payment. Depending on the situation, fees can run from 2 percent up to 5 percent. On the rise industry-wide since the late 1990s, factoring is a boon for real estate professionals, mostly because financing options in this sector are otherwise limited.
Even so, factoring is not for everyone and definitely is not a quick-fix for nonessential or personal expenses. For these reasons, experts say that consulting a credentialed financial professional before entering into any agreement is critical.
The International Factoring Association Web site, www.factoring.org, likewise provides a wealth of information – including an extensive list of factors – and is well worth a visit.
Vendor Relations & Purchasing [top]
The business of selling property requires people skills, persuasiveness and plenty of marketing materials. At last check, the nation's real estate brokers and sales agents accounted for more than 450,000 jobs, according to the U.S. Department of Labor. While pros in the field technically are vendors – property vendors that is – they also must deal with a fair share of suppliers themselves. If only to stay ahead of the competition, realtors routinely place orders for personal campaign items. Brochures, postcards, Web sites, calendars and more – it's all about getting the agent's name in front of potential buyers.
Still, not every promotional supply vendor provides the same quality products as advertised. Much like the house that looks good in a newspaper photo, but disappoints up close – certain real estate marketing materials also amount to nothing more than a money pit. For this reason, real estate agents should be very careful when selecting a vendor to essentially brand their identity. Low cost does not compensate for poor quality when trying to make a good impression. All too often, agents order marketing supplies in bulk based on the cheapest price. In the end, they're stuck handing out sub-par merchandise, potentially lowering people's expectations of the houses that agent represents.
As is the case with nearly all property, if a deal sounds too good to be true, it probably is just that. The bullets below highlight some good rules of thumb when shopping for a marketing materials vendor.
- First and foremost, make sure to review the vendors experience and portfolio. Some of the more popular promotional product suppliers offer customer referrals, a good sign. Also, find out how long the business has existed. The last thing an agent wants to deal with is a young company overwhelmed by a particular order. In the same regard, ensure that the supplies will be delivered in a timely fashion. In an industry based on flipping property as quickly as possible, punctuality is everything when it comes to marketing materials.
- There are many one or two person operations that claim
to provide marketing support materials geared toward the
real estate industry. While a good number of these smaller
vendors do provide the same high-quality products as a
major supplier, others clearly are in over their heads. In
short, anyone with fairly inexpensive software and a
printer can claim to be a guru in designing marketing
tools. Agents really need to research the business before
cutting a check. One method to gage a vendor's eye for
appealing merchandise is to log onto their Web site.
If it looks like an aesthetic disaster, there's probably a good chance their promotional products won't be any better. As self-proclaimed specialists in the field of real estate advertising, they should know that the layout of their Web site reflects on their product. If they fail to recognize this when it comes to attracting their own clients, what's to say they won't do the same when it comes to attracting yours? - Some of the larger online vendors serve as one-stop shops for all real estate needs. While they do sell marketing materials, they also offer Web design, provide lock boxes, calculators, clipboards, education books, etc. These all-in-one operations are perfect for the real estate newcomer that might not know where to search for materials, or what materials are even needed for that matter. Some of these suppliers also offer weekly specials and deals based on purchase size.
Take Advantage Of Great Bargains, Easy
Purchasing
Vendors catering to real estate professionals know that
their target market only looks to grow in the future. Still,
competition is fierce, and many online suppliers do what they
can to stand out from the others. Because of this, agents
need to shop around before settling on a particular provider.
Many suppliers offer special deals for registered shoppers.
Some even scratch shipping fees when a customer orders a
certain amount of product. To make the online shopping
experience all the more beneficial, a number of vendors now
tout monthly closeout specials, reducing the cost of products
drastically. By simply creating a personal account with
certain vendors, the realtor can shop, keep track of order
status and view past purchases in a matter of seconds. In a
hectic field that keeps its professionals running from one
sales property to the next, such one-click solutions make all
the difference.
Real Estate Insurance [top]
By Marita Bon
Real estate agents and brokers personify the phrase "small business" at its most basic. Typically flying solo, with perhaps an office worker or two, these professionals are on their own when it comes to protecting corporate assets and income from financial catastrophe. In fact, the most recent statistics from the National Association of Realtors reveal that fully 83 percent of its members act as independent contractors. This means a lot of folks with minimal benefits, no sick time and no insurance - unless they provide for it themselves.
Given this, real estate pros, especially newly-minted ones, should secure their interests with the same care as would any other entrepreneur. This means consulting a business-insurance expert long before planting a "For Sale" sign in front of that first home or office complex. Once the appointment is on the calendar, consider making the following insurance areas part of the agenda.
Business Owners Policies: Covering the Bases
The Insurance Information Institute, a nonprofit organization dedicated to public education on that topic, suggests that a Business Owners Policy or BOP offers a reasonably priced, effective means of providing key coverage for small real estate offices. Most BOPs include:
- Property insurance: Buildings, office equipment, inventory
- Business interruption insurance: Revenue loss when operations shut down or slow due to property damage
- Casualty protection: Physical harm or property damage ensuing from employee actions or products
- Crime insurance: Financial loss due to robbery, vandalism or in-house white collar criminal acts
- Liability insurance: Lawsuits due to accidents on company premises or during company activities
- Vehicle coverage: Damage to or theft of rented or borrowed cars and trucks
Keep in mind - BOPS offer solid solutions, but they don't take care of everything. Floods, earthquakes, owned vehicles and specialized liabilities typically don't make the cut. Workers compensation and life, health and disability insurance likewise require separate policies.
Property Insurance: From Soup to Nuts
In addition to protecting office structures and inside equipment, property policies can be expanded to include coverage of outdoor fixtures (e.g. storage sheds) and appliances such as snow blowers and lawnmowers. Other types of property coverage are:
- Ordinance or Law: Reimburses construction costs entailed by legally-mandated demolition of an unharmed section of an insured structure.
- Debris Removal: Increases the insurance limit (usually $5,000) to pay for debris removal (e.g. broken glass, destroyed shrubbery) on a covered property.
- Signs Coverage: Insures electrical signs against accidental damage.
- Boiler and Machinery Insurance: Reimburses loss or damage resulting from failure of air conditioning, electrical appliances and other equipment.
Liability Insurance: Blame Can Cost Money
While standard BOPS include liability insurance, the nature of the real estate business makes the purchase of specialized policies a good idea. Two additional options are:
- Errors and Omissions Insurance: Protects the insured when a lawsuit charges mistaken actions or failure to act, thus resulting in injury to the claimant.
Example: A realtor forgets to tell his potential buyer that the front porch has a loose floor board. The client trips and breaks an ankle.
- Umbrella Liability Insurance: Covers what BOPs or general liability do not. These policies kick in when underlying coverage runs out, with certain parameters required to qualify for purchase. According to an I.I.I. report, costs for the first $1 million in coverage run between $150 and $300 a year. Additional increments have lower price tickets.
Business Vehicle Insurance: Your Company Rides On It
Since realtors practically live in their cars, obtaining adequate vehicle insurance is a must. While it's true that personal automobile policies provide some degree of coverage for business-related driving, this does not apply when personal vehicles are primarily business "tools." By the same token, private policies do not protect company-owned cars and trucks, but business vehicle policies do.
Another consideration: When a realtor uses a personal vehicle to transport clients to listed properties (or to any job-related location), he or she is vulnerable to litigation in the event of an accident with injuries. It is imperative to have enough coverage in place to prevent a costly lawsuit from sinking the business.
Workers Compensation Insurance
Laws regulating worker's compensation differ somewhat from state to state, but one thing is true across the board: BOPs do not include this protection. While most realtors and brokers run very small offices, insurance industry pundits suggest that those employing three or more staff seek guidance from their respective state departments of workers compensation.
Health Insurance: Big Costs, Big Issues
Industry analysts have penned millions of words around the issue of health insurance for real estate industry professionals. Not surprisingly, the biggest challenge continues to be the prohibitive cost of coverage; and because most realtors run solo businesses, they do not qualify for lower group rates. Statistics from the National Association of Realtors reveals that of 1.3 million members, 28 percent do not have health insurance. The good new is that the NAR has made government advocacy regarding this dilemma a major part of its mission.
Because health coverage - indeed ANY insurance - is a major business investment, the right agent can make the purchase process both easier and less expensive. Look for a professional who is:
- Fully credentialed according to state and professional regulations
- Willing to explain policies in detail and answer all related questions
- Committed to finding the most comprehensive, cost-effective protection
- Agreeable to a regular policy review and update
- Easily accessible via telephone or e-mail.
Real Estate Communication [top]
By Marita Bon
Real estate professionals simply do not fear technology. Alright, that's a bit of an overstatement. But the fact remains - desktop computers and cell phones have been industry tools since the day they hit the market; and the numbers bear this out. A recent National Association of Realtors report reveals that 95 percent of realtors own and use a PC, while 95 percent use a mobile phone.
Moreover, what successful realtor hasn't used the Internet to list properties, post information and do research? Not many. According to the same study, a whopping 89 percent of these pros own or utilize a company Web site to conduct business. NAR research likewise indicates that most of its members plan their annual budgets with a line for technology purchases.
As a leading domestic diva would say, all that's "a good thing" - because today's mobile communications manufacturers continue to produce a dizzying array of hardware and software designed to go just about anywhere. Real estate pros hustling for the next sale no longer have to take calls in theirs car, only to rush back to the office to enter data or surf the Net.
Wireless PDAs, Smartphones and new, multidimensional software makes doing business on the road a matter of routine. Here's a rundown on the hottest products out there.
PDAs and Smartphones: Look Ma, No Wires!
Personal Digital Assistants, or PDAs, hit the market in the early 1990s, with Smartphones following a few years later. In a nutshell, a PDA is a handheld computer that manages a host of administrative tools, among them contact lists, appointment calendars, word processors, calculators and day planners. Wireless PDAs take these simple functions into a new dimension, featuring Web browsing and e-mail capabilities. Price points for these gadgets are reasonable, ranging from less than $100 to 400-plus.
A Smartphone (sort of a PDA on steroids) combines cell phone technology with features such as information access, scheduling, e-mail, pager, touch screen, text messaging, Internet, voice recognition, organizer, camera, video player, and the list goes on. Like their wireless PDA cousins, information entered on the road (an offer on a property for instance) can be synchronized with the office computer, often in real time. Several excellent models are available for $400 to $800.
Software: Watch What These Babies Can Do!
For tech aficionados, today's PDA software industry makes sure every day is Christmas. Real estate pros have hundreds of industry-related programs at their disposal, some starting for under $100. Better yet, many higher end packages offer free online support or subscription services for a nominal fee. Here are just a few samples of what the market has to offer:
- Client/Property/Transaction Management: This software genre, generally compatible with most PDAs and Smartphones, tracks listings, closings, sellers and buyers, as well as commissions and lockboxes. It maintains document files, records promotions and open houses, and tracks ongoing offer sequences. Some brands provide quick access to local MLS data.
- Commission/Accounting Management: Sometimes bundled with other products, this software automatically tracks commission details, and also handles franchise and referral fees, deductions and splits. Commission estimates are calculated on projected closing dates and estimated sales prices. A good number of programs offer fully functional accounting systems.
- GPS software functions by signals sent by the Global Positioning System, a network of 24 orbiting satellites which "talk" with ground receivers to pinpoint geographic location. GPS-enabled PDAs and Smartphones can provide voice-guided turn-by-turn directions; re-calculate missed turns; find gas stations with the lowest prices; save favorite routes and locations; display moving maps; and perform dozens of other navigator chores. Some leading providers offer annual subscriptions (including software) for around $50.
Get More Mileage from Your Mobile Gadget
Slick as mobile devices are, some real-estate experts are quick to point out that many realtors don't take full advantage of PDA and Smartphone capabilities. The following quick tricks can make day-to-day field operations much more efficient:
- Instant message. Communicate in real time with clients who shy away from phone calls, but love the written word.
- Do a "small screen" presentation. Put together a slide show on various listings using inexpensive presentation software (under $30). Have these visuals available for client previewing when on a "house-scouting" drive.
- Research. Don't waste time between showings. Visit http://ebooks.REALTOR.org to download hundreds of titles on a range of industry topics.
- File business literature. Save promotional materials on handhelds to print at a moment's notice - even when you're away from the office.
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