february09issue

BuyTickets February 09 TRET E-bulletin

In this issue:


Feb1v2Win A Car At AREC09

When the going gets tough, the tough get going! We're sure you, like us, have had enough of all the endless negativity, bad press and doom and gloom surrounding us about this economic downturn. To change your outlook all you need to do is look around and see we are living in one of the best countries and economies on the world. What has changed for most people is their attitude. Don't believe everything you see and hear - filter what you are absorbing and try to look beyond the hype.

On the positive side mortgage costs have reduced dramatically, the average cost of petrol has dropped and we are already seeing smart thinking businesses prospering while their competitors are pulling back. We make our own future and history has shown that a recession is great news for anyone with drive, self belief and an entrepreneurial spirit.

We came across these five great reasons on why doing business in a
recession is better than in boom times from Australia's advertising and marketing guru, Siimon Reynolds:

  • 1. There is less competition. Every business in your area that goes to the wall means less competitors and a larger slice of a shrinking pie for those that survive. Times like this sees mediocre players falling away leaving the best companies to thrive.

  • 2. There is less risk taking. When things are good, businesses are more confident to take risks because they can afford to. When things are more challenging, we tend to play it safe. So for those businesses today willing to go out on a limb and take some risks in a volatile marketplace, the potential rewards are like never before. Your courage to stretch can see you win massive amounts of ground because few others will match your daring.

  • 3. Clients are more dissatisfied. In tough times, they tend to look around for better suppliers. They become desperate for any advantage they can get. So, it's easier than ever to tempt them to try your service. When times are good we tend to party, but when times are bad we all start looking for better solutions. Are you that solution?

  • 4. No capital means originality rules. Tried to get a loan from a bank lately? It's surely the toughest environment to raise capital since the 1930's. Why is this good news? Will it means that the only way to grow is by doing things better, not just through more money at things. It's time to pioneer new processes and smash the status quo. The truth is you have a much better chance of creating something extraordinary in this environment because you can't use capital to grow. You are forced to come up with awesome new ideas.

  • 5. After calamity comes regeneration. It's always shocking to watch news footage of forests ravaged by fire. It seems like nothing could be left alive. But come back to the same forest six months later and it will be teeming with new green life. The more mighty the devastation, the more new shoots grow up to regenerate it. So it is in business. That's why so many great companies like Intel, Microsoft, GE, Hyatt, Hewlett Packard, CNN, Wikipedia and FedEx were founded during recessions.

So, take no notice of the economic doomsayers. Truly, the next year can be one of the most prosperous, exciting and successful of your entire life. If you decide now to take advantage of these hard times, rather than just suffer them like the majority, as always, fortune will favour the brave.

Feb1v3

Make the most of 2009

To help you make the most of 2009, we've put together an AREC program jam-packed with sessions that each look objectively at the market and highlight the positives available for you to exploit. Each will show you how to optimise what you are doing now and give you new tools to take advantage of the opportunities that prevail to leverage your position and prosper. Every AREC speaker has a wealth of experience and knowledge to share with the audience - most have weathered one, if not more, periods of economic instability and have valuable lessons and learnings to share.

The 32 page AREC09 program brochure should have hit your desk last week and outlines in detail each speaker's background and experience and what they will be presenting. If you have not received your personal copy, please email laurawatts@tret.com.au with your details and one will be sent to you. Or, you can download a PDF version from the AREC09
section of the TRET website (all the information included in the brochure
also appears on the website AREC09 pages).

We are very excited to announce that all registered delegates to AREC09 have the chance to win a brand new Toyota Yaris thanks to AREC09 Expo exhibitor Open2View - another good reason to for you to make AREC you're number one training activity this year.

Great ticket prices available for AREC09

Don't miss out on saving $195 on your ticket if you purchase one by 31 March. This Early Bird offer is available for all ticket categories expect the leadership day stand alone, spouse Sunday ticket (NEW for 2009) and the AREC09 networking party.

If you have a group of 5 or more people attending, you can enjoy a saving of $295 per ticket if you book the group rate. This is available until the conference sells out and special conditions apply.

Also, a reminder that only a limited number of premium seats are available - for centre stage reserved seating, book your ticket soon. For all details of pricing, inclusions, conditions and bookings of AREC09 tickets please refer to the website store.

Each month between now and AREC in May, we will be bringing you a series of great articles showcasing AREC09 presenters and getting you ready for an awesome industry experience.

We hope you enjoy our first eBulletin for 2009.
The TRET team

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really...sometimes you have to look inside the box to find the people who think outside it

SOLD Magazine recently asked some of the experts featured on the real... DVD series what it was like to be involved in the making of such a powerful resource.

IvanBresic   JillianMcgrath   TonyNash   JohnPerdcudani   HankPetrusma

Those interviewed were (L to R):

  • Ivan Bresic, Bresic Whitney - Sydney (IB)
  • Jillian McGrath, McGrath Estate Agents Northern Beaches - Sydney (JM)
  • Tony Nash, RE/MAX - Sunshine Coast (TN)
  • John Percudani, Realmark - Perth (JP)
  • Hank Petrusma, Petrusma Property - Hobart (HP)

Why did you choose to share your knowledge and experience?

JP: I have found in explaining the ‘why' of your own business decisions you actually get clarity for yourself. Furthermore as a professional you have a responsibility to share and advance the profession you are a member of.
IB: I love sharing knowledge I guess because so many of my mentors and peers passed their knowledge on to me in my earlier years. I really believe the more you give, the more you receive. I also feel honoured to be interviewed with the likes of the agents who in my opinion are legends of real estate selling.
JM: When you share, you share in the hope that one person will take on board on thing and make a difference.

What did you learn from your own interview and listening to the others?

HP: I learnt that since separating from a dominant franchise relationship we had to rediscover ourselves and truly define what our differentials and ‘business spin' were.
IB: I learnt I still have a lot to learn, I learnt there are so many areas that myself and anyone who is serious can improve on. I really felt that if you are in the real estate industry, this DVD series is a must watch, these guys and girls are the best of the best.

What training tools have helped you get to be a top agent?

TN: I made a decision to spend 10% of my working life to either be trained or to train others, so many years ago I undertook to go to every seminar I could to become proficient in real estate. I am a voracious reader and I have bought and kept scores of books related to both business and real estate. I have bought excellent DVD training series and I have regularly attended conferences and therefore listened to and become friends of some of the best practitioners of real estate. I have kept abreast of technology and have used excellent CRM programs and have used coaches and mentors.
IB: Any form of real estate training is good. I was lucky to learn the key principles from an early age and from that point on I use seminars, conferences, DVDs and books to sharpen my skills, get me back on track or to ensure I review my goals.

Any other words of wisdom?

JP: Focus on the facts, focus on the plan, focus on your turf. Don't panic.
TN: Real estate and business is all about confidence and mental toughness. As quickly as possible salespeople should look at themselves as a business not an employee. That means that you take responsibility for your own actions and stop blaming the boss, the market or anything else for the position you are in. A salesperson must sit down two or three times a year and write and modify a plan. How much do you want to earn, what is the timetable to achieve that, what resources will you employ this week, this month, this year, the next three years? Treat your career as a business and hire a coach and a mentor.
IB: When times are tough, stay on the training and learning sessions, it's easy to drop them off but they are vital in trying to do good numbers in challenging circumstances. I say to my team to go back to the basics, go back to the stuff you know will work, stay persistent and positive, review your goals slightly downwards and just keep doing it.


Feb2real This month's really Hot Deal...

The outstanding real... training product features real agents...stories...inspiration...systems for success. If you are after a universal team training product this year with 12 hours of material and covering 8 core real estate topics - ideal for sales meetings, team workshops and individual study - you can't beat this great New Year special offer at only $495, saving you $300.

It takes a certain calibre of person to want to share the secrets of their success and even admit to their failures in order to help others succeed. Last year, TRET gathered together 19 of Australia's most successful real estate experts from different states, types of businesses and levels of experience and asked them to share their stories and their learnings.

The result is real...a set of eight training DVDs featuring 19 agents discussing eight key areas of real estate - Prospecting, Listing, Vendor Management, Buyer Management, Branding, Business Growth, Managing Your Team and Getting to #1. The series is designed to be viewed in any order and is perfect for pausing and reviewing the bits you want to see again, which is great for both team training and individual study. The resource has been rated highly by agents around Australia who find its format versatile and its content unique.

TRET is offering readers a $300 discount for purchases of the Real DVD series by 13 March 2009. The usual price is $795. You pay only $495*.
* plus postage and handling.

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Feb3David Knox: Get the Listing...Priced Right!

Having an overpriced listing is embarrassing, unprofessional and unprofitable. When your listings are priced right, you feel proud, confident and relaxed. In fact, instead of worrying about your listing selling, you can almost choose whom you will let buy it!
There are three main reasons why agents overprice:

  • 1. No pricing presentation. Most agents have perfected the listing presentation and related documents. But, you must also prepare a separate manual containing your competitive market analysis, supporting documentation and pricing illustrations that address all the key objections.

  • 2. Fear of confronting the seller. You must be tactful, yet assertive in addressing the price. A rule to follow is to always question their position, never defend your own. Do a pricing presentation that blames the market ...don't have it be your opinion.

  • 3. Owners don't believe you. Your position is one of vested interest in having the home sell quickly, so the owners may not trust your presentation. That's why you must base it on facts.

Here are some standard pricing objections and techniques to handle them.

"Another Agent said they'd list it higher"

Inform the sellers that their mission is to select the best agent, not the best price. A real estate agent has no control over the market, only the marketing plan. Never select an agent based on price.
"Mr. and Mrs. Seller, I am here because I want you to hire me to market your home. I am accustomed to being in competition with other agents. If you chose me I want it to be because you feel I am the best one to handle the marketing of your home, not because I said the highest price. If you don't feel that I am the best, then don't hire me...no matter what price I say. If you hire the agent you like least, but says the highest price, you'd be overpricing your home with the least qualified agent. If you are going to overprice your home, do it with the best agent."
This is a powerful statement to make to owners. Make the point that they should hire you because you're the best, not the most agreeable on price.

"We can always come down"

Show the history of an overpriced home. Illustrate the steps down from the high price through market value down to a sale price under market value.
"...Here's a home that started out at a price $ X over market. It didn't sell so they reduced the price. It didn't sell so they reduced it again. It still didn't sell so they reduced it again. And finally they reduced it to market. What do you think happened? (Owner: I suppose it sold?) No. It still stayed on the market. Do you know why? What question do you ask me at the front door of every home I show you? (Owner: How long has it been on the market?) You ask me that because if it's been on a long time you can buy it for under market or something is wrong with it. That's what happened to this home. It sold for $ X below market price. What do you think would've happened if it were priced right on the first night? Yes, you can come down, and as you can see, you will have to. Is this the way you want your home marketed?"

"Couldn't we try it for a couple of weeks?"

Illustrate that the majority of market activity occurs in the first two to three weeks on the market. Use a chart that shows a curve of high activity in the first two to three weeks. Show them that this is the worst time to overprice since your best customers see the home.
"As you can see by this chart, most of the marketing activity on a new listing occurs in the first two weeks on the market. So when you ask, can we try it for a couple of weeks, look what you're doing. You're overpricing your home during the period when your best buyers show up, then lowering it after they're gone. It's like having a dinner party on Saturday and having the caterers come on Monday. I recommend that you price it right on the first exposure to the market."

"But we have so many improvements in it."

Most improvements are made for enjoyment, not resale. Cause the owners to admit this by asking the owners;
"If you had known at the time you were making those improvements that you were going to move today, would you still have made them?" (Owner: No, we probably wouldn't.) May I ask why not? (Owner: because we couldn't get our money back.)
Another important point is that structures and improvements do not appreciate in value. It is the real estate, the ground beneath it that appreciates. Where is it said that you can buy an item, install it in your home, decorate it to your taste, use it for a few years then ask a new buyer to pay you for it? The question that determines the value of an improvement is; if the item were not there right now, how many buyers would add the same improvement and pay what you want to charge?

"But we paid $ X for it"

This is the owner's attempt to link cost to value. There is no relationship between cost and value. What you paid for something has nothing to do with what it's worth today. If you purchase stocks, you clearly understand this principle. A technique to illustrate this to owners is to ask:
"Mr. and Mrs. Seller. I hear you say that since you paid a certain amount for this home that the subsequent selling price should be based on that. Is that right? Let me ask you a question that is realistic in many situations. If you had inherited this home through an estate, therefore your cost was zero, what would you try to get for it today? (Owner: As much as we could get.) Why, you wouldn't have paid anything for it? (Well, that doesn't matter...)

"They can always make an offer"

"Mr. and Mrs. Seller. The only way a qualified buyer can make an offer on your home is if they see it. The problem is, most buyers look up to their price range, peek a bit over, then focus only in their price range. By overpricing, you put your home into a price bracket where they won't look. (Show the MLS book and/or computer printout and how their home will be invisible to a buyer by not being in their range.) The buyers who do see your home will be able to afford your higher price, however, they will not be interested in it. The wrong price attracts the wrong buyers."
Use these techniques with caution, tact and compassion. Owners are not so unusual to want as much money as they can get for their home. You owe it to them to get as much as the market will pay.

DavidKReturning to the AREC stage in 2009, David Knox is one of the highest-rated AREC speakers of all time. He has an enviable international reputation as an authority on pricing, negotiating and selling and audiences love his unique ability to combine humour with education. He is presenting sessions for the Sales program and optional Leadership Day.

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Feb4Darrell Weekes: 2-Step Plan to Update Your Skills

The real estate sales person is dead; long live the real estate expert!
My Mum taught me to find the good in everything and everybody. But I have to say I'm struggling to find the good in the current climate. Everything I read or listen to tells me the sky is falling or to quote John O'Brien's poem; "We'll all be rooned," said Hanrahan. But find something good I have - the death of the traditional salesperson.

"WHAT, how can that be good?" I hear you ask, and I'm glad you did. You see, most of the sales techniques around today were developed and implemented before the first FX Holden rolled off the production line (that was November 29, 1948), so they have been around a long time. As a result most Vendors and Purchasers have developed "anti-sales" systems to combat them. Now these traditional selling techniques still work, which is why salespeople still use them, "but times they are a changing" and sales professionals need to adapt.

You know, it's not accurate to quote Darwin as saying "it's survival of the fittest", what he actually said was; "In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment." What we are experiencing today is a drastically different environment to that of twelve months ago. So to survive you need to adapt and that means being fit for business. The question then becomes easy - do you want to win out at the expense of your rivals? If the answer is yes, then you need to update your skills, this is, after all 2009.

So, what does "update your skills" mean? Well, step one would be to STOP selling, no one likes being sold to. People want to be helped to BUY. To help you get a handle on this, let's take a leaf out of Michael Gerber's book, "The e-Myth revisited". Gerber says that to be successful in any business you must first understand the business you are in and that business has nothing to do with the products or services you sell. Instead, it has everything to do with the way your customers feel after you have done business with them. What business are you in? Well, Paula Irvine from Kaplan Professional told me once that real estate salespeople are "in the business of solving people's accommodation problems" and I have to agree.

The second step would be to become the expert people think you are. People really don't want to deal with a salesperson; they want to deal with a real estate expert who sells. You see, experts know stuff. Stuff we mere mortals don't know and we are prepared to pay for it. Let me give you an example, if your Ferrari was making a funny noise, would you rather get it fixed by a mechanic or a Ferrari expert who was a mechanic?

I've just finished judging some of the 2009 REIA National Award categories and the thing that struck me most, was that in all the client testimonials I read two words kept cropping up; expert and professional. Which leads me to ask this question, as a real estate agent how many competitors are there in your area? Now, how many real estate experts are there in your area? And if you were known as a real estate expert how many competitors would you then have?

DarrellWA legend in selling, Darrell Weekes' business philosophy is that ‘success is not a mystery; it's a system that can be learnt and replicated'. A sales professional turned coach; you can see Darrell present at AREC09 on Breakthrough Success in Any Market plus a session at the optional Leadership Day on how to grow salespeople in quality and quantity.

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Feb6Brain/Gender Studies & the Mars Venus Approach

This article by Dr Robert Schwarz goes over some of the latest findings in scientific research that demonstrate the biological basis for the distinctions that Dr Gray has been describing for the last 10 years. The intent of this article is to underscore the importance of accepting and embracing these naturally occurring differences for the purpose of enhancing communication and understanding.

Women relieve stress by talking with others about feelings. Men relieve stress by not talking about feelings and going into a cave.

Current research demonstrates that females on average have a larger deep limbic system than males. One of the chief functions of the limbic system is to process emotions. It is not by chance that women are more in touch with their feelings. They are generally better able to express their feelings than men, because of their more developed limbic system.

A landmark UCLA study suggests that women respond to stress with a cascade of brain chemicals that cause women to make and maintain friendships with other women. It's a stunning finding that has turned five decades of stress research upside down.

Scientists has generally believe that when people experience stress they trigger a hormonal cases that moves the body to either stand and fight or flee as fast as possible. It's an ancient survival mechanism left over from the time we were chases across the planet by sabre-toothed tigers. Virtually all of the research had been done on men. Now the researchers suspect that women have a larger behavioural repertoire than just "flight or fight".

When the hormone oxytocin is released as part of the stress response in a woman, it buffers the "fight or flight" response and encourages her to tend children and gather with other women instead. When she actually engages in this tending or befriending, studies suggest that more oxytocin is released, which further counters stress and produces a calming effect.

This calming response does not occur in men, because testosterone, which men produce in high levels when under stress, seems to reduce the effects of oxytocin. Estrogen, most present in women, seems to enhance it.

Under stress men focus. Under stress women expand.

Men tend to look for the most linear straight approach (get right to the point). Women tend to see things as much more interconnected and therefore do not get right to the point because they see many points.

PET scan studies of how men and women process information show that while male and female brains perform equally well, women use areas on the right and left of the brain, while men only use areas on the left side.

Martian culture values logic over feelings. Venusian culture values feelings.

Testosterone is mildly damaging to the nerve fibres in the corpus collosum in baby boys. The connecting link between both halves of the brain in baby girls is left totally intact. Boy babies have a little less working connective nerve fibre between the two sides of the brain because of the presence of testosterone as the brain develops.

The right half of the brain is more responsible for emotions. The left half of the brain is more responsible for logic. Women have equal access to both halves. Men seem to be generally more ‘left-brained'.

Martian problem solving strategy is based on individual differentiation of tasks. Martian brains are evolutionarily selected to be more specialized and lateralize towards the left hemisphere.

Venusian problem solving approach is based on interactional collaborative approach. Venusian brains are evolutionarily selected to be less specialized and more interactional and collaborative between left and right hemispheres. There are also 40% more interconnections between neurons in the female brain.

Why is this information important? First, it helps everyone lighten up a bit and laugh. Frankly it can be really beneficial to not take ourselves so seriously. Men and women often behave differently because it is natural for them to do so. Since nature has selected these differences there is a purpose for them. As we begin to be more tolerant and accepting of these differences, we can then make the necessary adjustments to improve communication and performance that is supportive of each other

Dr John Gray is the world's foremost authority on gender communication and relationships and the internationally acclaimed author of 16 bestselling books including Men are from Mars, Women are from Venus. Hear his practical insights and easy-to-use communication techniques at the AREC09 session, Why Mars and Venus Collide. Property managers can enjoy an additional session, Mars and Venus at Work, as part of the dedicated PM conference day at AREC09.

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feb5Good communication = successful property managers

Dealing with workplace conflict be it with clients or colleagues is stressful. World renowned human communication expert Dr John Gray of Men are from Mars, Women are from Venus fame is this year's AREC keynote speaker. In addition to his keynote address, he will be presenting a special session exclusively for Property Manager on just this topic, but adding to the mix the differences between the sexes in communication styles. To indicate just how topical good communication skills is, Kaplan Professional General Manager, Paula Irvine has contributed the following article.

Everyone knows how to communicate effectively don't they? If this rings true, then why is there so much confusion, conflict and mixed messages in human communication? The real challenge for property managers is to know how to communicate with different people in a range of different situations.

For example, each day we're faced with resolving tenant complaints, negotiating between the landlord and tenant, networking or simply answering the phone. As a result, you need to use a range of communication methods to ensure the person receives and understands your message.

Consider:

  • Verbal communication: what you say and how you say it, and the language used.

  • Non-verbal communication: your body language (gestures and eye contact, physical proximity to the speaker, tone of voice, posture), use of images, written communication including letters, advertising and websites, and electronic communication such as fax, email and text messages.

Tips for communicating effectively:

  • Know why you are communicating. Think about what you are ultimately trying to achieve. What do you want your landlord or tenant to do or change as a result?

  • Give them what they want. Communicate with your clients the way they prefer to be communicated with. Ask them if they prefer email newsletter, postal newsletter, face-to-face meetings, telephone, letter, fax, or direct mail, and then stick to it (i.e. don't spam them with emails if they prefer face-to-face meetings)

  • What's in it for me? Always put yourself in your client's shoes by thinking about ‘what's in it for them?' i.e. when writing an advertisement or brochure think about what a tenant really wants and needs to know.

  • Be clear. Speak and write as clearly as possible. Consider undertaking a training course to brush up your skills if needed.

  • Be a good listener. Listening cannot be underestimated as a crucial part of the communication process. Don't interrupt your clients but instead give them time to finish what they are saying. Show you are actively listening by responding with a nod or a

  • "uh-huh" and giving feedback, i.e. "I understand your concern - do you want me to phone you after the inspection?"

  • Be respectful. Show respect for another's point of view, and be aware of and respect cultural differences.

  • Don't forget body language. Use appropriate non-verbal communication - shake hands when being introduced, and make eye contact. During communication, studies show that 55% of what people understand comes from non-verbal communication such as gestures and eye contact.

  • Adjust your communication to suit the person. Also consider what drives a person, the factors that may influence the communication and its impact on a person, in addition to establishing a rapport with them.

  • Consider the context of communication. The circumstances and environment in which you are communicating, can also affect communication. The following examples can impact on communication in a real estate environment:
    Feelings — You have struggled out of bed with a head cold. Today you have a Tribunal hearing to attend on behalf of a landlord.
    Values — The new property clerk doesn't take pride in his appearance; he comes to work with scruffy shoes and a dirty car.
    Attitudes — Mrs. Landlord prefers to talk with the most senior property manager; she thinks you are too junior to be able to answer her questions.
    Experiences — Your landlords are being inflexible in their negotiations on rent for their property. This is their third investment property; they know rental values and are skilled in the process.
    Culture — A prospective tenant will not consider properties that have particular numbers in the address.
    Self-esteem — The new property manager has won employee of the month and is keen to send letters to all your landlords to promote himself.

Example:
A) A tenant storms into the reception area at a busy time. There are clients waiting for the salespeople and a landlord is seated with the property manager. The tenant leans over the reception counter pointing his finger at you and loudly reprimands you, accusing you of not passing on a message to the property manager regarding his broken air-conditioner.
B) The tenant phones you at the agency to make the same accusation.
In situation A, the communication is public and can impact negatively on all who witness it, whereas situation B keeps the communication private between you and the tenant.

And finally...
Communication is a skill and as such needs practice, and in some cases further training. Great communication skills will contribute to your success and professionalism as a property manager, as well as reducing the stress levels in what can often be a stressful job.

This year Kaplan Professional will offer CPD workshops for property managers, including a workshop on managing stress and conflict designed to enhance productivity in the Property Management Department. For more details visit www.kaplanprofessional.edu.au.

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Feb7Listen to your customers and let them define your sales and marketing strategy

Any marketer will tell you that consumer research is the corner stone of a great sales and marketing strategy. In fact, without market research it's impossible to develop the best sales and marketing strategy for your business. If you're not listening to your consumers in essence you're guessing what they want and need suggests Peter Richards, Head of Marketing at McGrath Estate Agents.

In the world of real estate this basic business principal very much applies. Our consumers are potential home buyers and, now more than ever, it's vitally important to seek their opinions, uncover their buying habits, listen to what they like (and dislike) and use this information to shape your strategy.

We place great emphasis on regularly "taking the pulse" of our consumers". We survey every single registered buyer a few weeks into their home search, giving them time to form habits and opinions. Results are assessed quarterly and trends are spotted and acted upon, forming the basis of our ongoing sales and marketing strategy.

It's true that some results and trends are predictable, and perfectly logical, but often we're surprised by the results of the survey.

Some of the more recent trends and results have illustrated the following:

  • When asked to pinpoint a single, preferred method of searching for property more than 80% of respondents are choosing an online portal, such as realestate.com.au. This is an upward trend and the pendulum continues to swing towards online property search tools and away from traditional print media.

  • In some geographical regions the popularity of metro and local press as a preferred property search tool has dropped to below 5%.

  • Taking the popularity of the internet as a given, it's also important to make sure that your internet listings are content rich, as almost 50% of respondents are stating that they now expect to see floor plans and video content as part of online listings. These features are rapidly becoming a standard expectation rather than a value-add.

  • We've recently starting to extract feedback to see if direct mail, such as flyers, DL cards and letters, is actually read by consumers or thrown straight into the recycling bin! Unlike most other results the answers to this question differed greatly, depending on the geographical region. It seems that in areas that may be subjected to a lot of direct mail (suburbs close the CBD for example) some 60-70% of respondents say that they do not read flyers before throwing them away. But, in areas further afield of the core metro suburbs up to 70% of recipients do take time to read them. It's certainly worth identifying this statistic for your suburb(s) to establish if you are achieving cut through via direct mail.

  • A key statistic that we track is consumer confidence. 2008 was certainly an interesting year, but the number of potential buyers who felt that the property market was "improving" rose to almost 25% towards the end of the year, from a year low of 6%.

  • Without doubt, the most powerful question to ask consumers is what they're NOT happy about, and we ask what people found to be the most frustrating element of their property search. Almost 90% of respondents are most frustrated by issues related to price, predominantly properties being advertised without a price guide at all.

Conclusions

So, what does all of this information tell us, and how can it help to shape our marketing strategy?

  • Despite the popularity of the internet, print media (local and metro press) will always be an important part of your strategy, to both capture the passive local buyer and increase the profile of your brand.

  • However, most home seekers are doing their serious home searching online, and your internet strategy should be exceptional and content rich, with floor plans and video content wherever possible.

  • Direct mail may or may not be achieving cut-through in your local area. It's important to find out if it is and, if not, react accordingly by potentially reducing expenditure on direct mail.

  • Consumer confidence in some areas of the market seems to have bottomed out and is showing signs of bouncing back. This is particularly true in the first home buyer market, as a result of the increased first home buyers grant.

  • If possible, advertise your properties with an accurate price guide. An inaccurate price guide or, worse still, no price guide at all, really annoys home seekers. Some respondents suggesting that they won't even bother to pursue a property that doesn't have a guide price advertised.

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Feb8How to manage in a downturn

Real estate agencies have been faced with a number of challenges in 2008, but there are a number of strategies you can implement to strengthen your business during these tougher times. With any of these strategies, it is imperative to act quickly to address any negative developments. Sitting on your hands and waiting for the market to improve will be detrimental to your business and staff, and a denial of the fundamentals of market cycles. Most locations have enjoyed rising property prices for many years however agency principals need to prepare their business to cope with what might be a protracted downturn.

Know your cost base

Understanding and focusing on the composition of your cost base is a good strategy for managing in a downturn.

It is important to know your cost base intimately and accurately. Many principals know the detail of their sales revenue down to listing by listing, but they need to also understand the overhead structure of the business. In times when revenue is strong it is easy for expenses to rise as a percentage of revenue, but these are often not managed down effectively when sales commission weakens.

For example the percentage of vendor advertising spend recovered can really sneak under the radar. Now that days on market have moved out considerably, your business carries the cost for much longer. Recovering money often becomes tougher in a downturn and can hit your cash flow hard. Don't dismiss asking for upfront payments from vendors, which will improve your cash flow instantly. Try different strategies to have the vendor pay, such as collecting on set dates over an agreed period of weeks from a credit card. If the vendor can't pay for advertising up front, work out a firm repayment commitment with them and remember to also keep your salespeople accountable to the policy and process. This money comes directly off your bottom line so there's no excuse for not getting it back.

Knowing your break-even point is also critical; working out the shortfall per annum or month between your rent roll income and the overall business fixed costs. Every agency should regularly go through the exercise of calculating how many sales they need to make per sales person to bridge the gap beyond what the property management income doesn't cover. The next step is to understand and monitor your break-even plus desired profit, as no business owner wants to only break even.

You can't change the market, but you can change your cost base. But don't forget it is only part of the strategy as you don't become wealthy by just cutting costs.

Staffing considerations

Training and remuneration are two key considerations when managing a business through tougher times.

When markets change, it is wise to review staff remuneration structures to reflect the current market. You should analyse the performance of staff against expectations, and the number of staff you employ against the likelihood of lower revenue. When volumes are down it is appropriate to have staff on a greater percentage of commission and lower base salaries. This is better for your business and better for your sales people if you get it right.

You should also consider whether your staff need up-skilling or re-skilling in response to market changes. This is both a defensive play, to protect your existing business, and offensive - if you can raise the bar on client service you will stand out from the crowd. Considering the economic environment, developing your people may involve investing time mentoring through scripts, dialogues and role plays rather than only spending money on professional training courses.

Your leadership skills can also make a real difference in a changing market and have a positive impact on staff performance. The most successful real estate businesses have role models leading by example and showing a positive attitude even if times are tough. You can also engage your staff by tackling issues as a team.

Revisit your business plan

Updating your business plan to reflect the current environment will help you identify areas for focus or review. A business plan should not be overburdened with detail, it is a simple outline of what you want to achieve, how you will achieve it, who will assist you (staff, advisers, etc) and when you want to reach certain goals.

Holding firm on your sales commission rate is also a must. To do that you have to understand your value proposition, your market position and how the market perceives your brand. Your business plan should contribute to your understanding of your value proposition. Your staff must be able to articulate what makes you different and what your value proposition is. It is all about the prospective vendor understanding the value for money, not just the commission rate. Holding firm on realistic quotes or quoting ranges is also incredibly important in a slower market.

Importance of property management and property management staff

Your rent roll continues to bring in money no matter whether property sales are up or down. Not only will your business feel the benefit of regular predictable income from the rent roll, it will also feed the sales side of the business when landlords decide to sell or move in. The current market highlights the important role played by property management staff.

It is also important to understand the capital value of your property management business. For example, a rent roll with 300 managements and an estimate of $1,000 income per property per annum, could have a value of $900,000 (using a valuation multiple of $3.00). You would only need two property managers to run this $900,000 asset. It can also be used to leverage into further rent rolls or others assets, however be sure to only gear your business assets conservatively so you can cope with any changes in the cost of debt.

So when you think about investing in staff don't just consider the sales side of your business. If you had $900,000 to invest elsewhere you would complete a thorough due diligence on the investment adviser who would manage the investment. Be sure to do the same with the staff who manage your rent roll.

There has been an increase in the level of enquiry from business owners considering their selling options. Now is the time to think about whether your business should be expanding its property management through acquisition with sensible gearing, to exploit the increased opportunities for growth we're seeing.

Opportunities

In conclusion, even in a slower sales market, opportunities always exist but only for those that look for them. Businesses that are well capitalised, have sound management structure and systems and a desire to grow, are well placed to take advantage of the current expansion opportunities. If your business does not quite fit this bill then write these objectives into your future business plan. In the meantime employ the necessary steps to strengthen your business to get through these tougher times.

This article was contributed by Nick Dowling, National Head of Real Estate with Macquarie Relationship Banking. For more information, he can be contacted on (03) 9635 8194 or nick.dowling@macquarie.com. It has also appeared in SOLD Magazine.

This information has been prepared by Macquarie Bank Limited ABN 46 008 583 542 for general information purposes only, without taking into account any readers' specifics goals or financial situation. Whilst we have taken all reasonable care in producing this information, subsequent changes in circumstances may occur at any time and may impact the accuracy of the information. Before acting on this general information, you must consider its appropriateness having regard to your own objectives, financial situation and needs. All potential investors should obtain financial, legal and taxation advice before making any financial investment decision.

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Feb95 survival tips for long term success

It appears that the tide is turning in favour of employers rather than the employees. Unemployment is about to reverse the trend of the last eight years and start to increase. This is going to mean competition among employees and a bonus for the employers who have struggled to find staff.

It seems that the markets and the recruitment firms are now backing this up. Recruitment firm Talent2 has recently released results of a survey that show Gen-Ys are nervous about the apparent "insecurity" of employment which they have yet to experience. The times have been quite good to Gen-Ys, but now it is time to batten down the hatches and jostle for position!

Meanwhile, the foxy old Gen-Xers and baby boomers are sitting back in their computer chairs rubbing their hands with glee as the young upstarts finally feel some pain. Right? Well, no actually. You see, no one is a winner in this case. In the event of a sustained increase in unemployment, we're all going to feel it - Gen-Y, Gen-X, baby boomers and any pre-baby boomers (what are they called?) that may still be out there working away. We will all be vying for less positions, so the game becomes more about performance than it does about filling the gaps.

So, what does this mean for the Gen-Ys that are yet to experience such a downturn? Put simply, it just means you need to work hard.

But as a survival tip, here are the five things you can do to ensure your long term success:

  • Head down, bum up - this is the time to knuckle down and contribute. Forget the demands for more Friday night drinks and staff discounts - just do your job to the best of your ability.

  • Teamwork - team players are vital, particularly in times when morale may be down, so keep up your spirit and think of the "team", not yourself.

  • Communication - stay close to what is happening in your business, areas of opportunity and areas for improvement. If needs be, put your hand up for the difficult tasks. People want to see employees "roll up the sleeves" not run and hide.

  • Lead - not in a style reminiscent of Mussolini, just lead by example.

  • Exceed expectations - deliver what you say you will and even a bit more. If that means you have to put in extra, then do it!

But seriously, all the above should not be a surprise. In fact, you should be doing these things now. If you commit to all the above, there is no business out there that could afford to loose you, whether economic conditions are good or bad. As always, in times of uncertainty, go back to basics and focus on your "core" strengths.

This 14 Jan 2009 SmartCompany blog by Michael Phillips first appeared 1 Oct 2008. Michael Phillips is a 30-year old CPA managing a business full of Gen-Ys. He's the Commercial Manager of Cremorne Group which wholesales and retail mens and womens apparel including the Tommy Hilfiger, Blazer and Perri Cutten brands. He offers his experience as a pioneering Gen-Y managing Gen-Ys, covering issues such as how to recruit, retain and get the most out of Gen-Y - the notoriously difficult younger generation of employees aged 15 to 30. Register now for the free SmartCompany. Email Alert - check out www.smartcompany.com.au

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