Realtor Coaching & Training: real estate downturn
Cruising through the sunny hills of Carlsbad in a massive silver Mercedes-Benz, he looks like any other pitchman of the California dream.
“They’re chicken,” Klinge said.
Or even, Klinge says, highlighting the risks in a shaky market.
But don’t expect other agents to start bad-mouthing one another’s houses and tying up teenagers.
“You do not have to waste your time going around in circles with Jim,” she said. “I really appreciate that honesty.”
Rather than downplay the greed and excess that caused the region’s travails, he revels in exposing them.
He surveys the wreckage with a pocket video camera, shooting footage of vacant, once-pricey houses turned into eyesores, voiced over with his deadpan narration. Then he posts them on his website, at www.bubbleinfo.com.
“Would you spend a million dollars for that house?” he says in one video, showing a two-story, boxy wreck with the rushing sound of a freeway in the background.
Why does he do it? To sell houses.
Klinge is a real estate broker, has been since 1984. He just doesn’t act like one.
In the summer of 2005, Klinge says, he sensed the housing crash coming. He had been through the real estate downturn in the early 1990s and was wary that the red-hot market couldn’t last.
But his real estate industry colleagues continued to declare that home values would keep soaring.
Most agreed with David Lereah, then the chief economist for the National Assn. of Realtors, who finessed the question of the market bubble this way: “I could think of froth as effervescence rather than some popping of bubbles,” he told the San Francisco Chronicle in June 2005.
Klinge heard the same thing from fellow brokers in San Diego. He felt that such talk emboldened buyers to take on more debt than they could afford and prompted sellers to ask too much for their houses, which would cost them time and money as their homes went unsold. He started blogging, his first post questioning the 20% to 30% annual home price appreciation in some neighborhoods, and arguing that “sellers have gotten too optimistic and are pricing their houses WAY too high.”
Nowadays, Klinge said, his blog gets about 2,000 unique visitors per day. About half his clients now come to him from the blog, Klinge said. He closed 43 house deals last year, he said, down from the 61 sales and purchases he brokered in his peak year of 2004, but enough to keep him in business when many agents have quit.
Lately, his videos have been picked up on Calculated Risk, an influential economics blog whose followers include Nobel laureate Paul Krugman. In one clip, the camera pans across the kitchen of a million-dollar fixer near Interstate 5. He pointedly notes the house’s proximity to the freeway, which he calls the “De-troit river.” There’s mold under the sink and a foot-sized hole in the drywall just above the floor.
“December 2006 this house sold for a million dollars,” he says. “Nineteen hundred square feet, built in ‘78, right across the freeway. One million.”
On the off-chance the real estate agent who sold the place is watching, Klinge puts in a request: “I want you to put your mai tai down, go grab your shingle and send it in to the DRE [California Department of Real Estate] right now. You don’t deserve a job,” he says. “Everyone who was on that deal deserves to be fired, even the janitor at the escrow company. This is embarrassing, $1 million. Right now it’s listed at $575,000 and that’s probably optimistic.”
Along with the house wreck videos, the site includes statistics on local home sales totals and price declines. Klinge has skewered brokers on the blog, calling them names like “clown” and “cherry-picking cheerleader” for not admitting that the housing market had tumbled. But he said no one had gotten upset enough to retaliate.
Klinge didn’t start out as the Hunter S. Thompson of real estate. He used to believe. In 1987, just three years into his career, Klinge had set up his own office in La Jolla and was riding the rising real estate market. He was convinced home prices would keep soaring.
“Everybody wants to live in La Jolla,” he said, repeating what he and everyone else were saying then.
He closed his office and became a mortgage broker. Arranging refinances got him through the 1990s real estate slump, and he returned to home-selling in 1995.
He knew the market was headed for a crash, he said, one day in July 2005, when he had just come home from a family trip to Disney World and answered the phone. The woman on the line had seen a house that Klinge was selling.
“Up until that point, the only thing buyers wanted to know was how much over list they needed to offer. All of a sudden this lady was being critical of everything, the property, the price. I hung up the phone and told my wife, ‘It’s over,’ ” he said.
A few weeks later, he started blogging. His wife, Donna, who helps manage the family brokerage, was nervous. “He was really pushing the envelope with the blog, taking people on, naming names,” she said. “I took deep breaths. I didn’t know how it would turn out.”
She said she was shocked one day to see a photo on the blog of two young men sitting on the floor of a house with their wrists bound like prisoners. They had been squatting in a foreclosed house Jim was selling, and he had sneaked up on them as they slept and tied them up with plastic zip ties in a brazen citizen’s arrest.
But Donna, who began dating Jim when they were at Cal State Fullerton in the early 1980s, had after 20 years of marriage grown accustomed to his provocative style. So far, he’s known when to stop pushing, both on the blog and with her and their two daughters, she said.
He also manages to keep things civil with his industry colleagues, a notoriously upbeat lot. Kris Berg, another San Diego County real estate broker who writes a blog as sweet as Klinge’s is sour, says Klinge “is a nice guy, a great guy.”
Does he offend other real estate brokers? Berg said she’s not heard anything directly, but is sure he must, simply because “there’s an inherent danger when you take transparency to that level. You’re going to alienate people,” she said.
Klinge figures that if he alienates some real estate agents but attracts more customers, it’s all worth it.
Marc Needham, 33, was a fan of Klinge’s blog for a year before becoming a client. He and his wife had looked for a house for a few months in 2007 with another agent but became fed up. “We had banks lying to us; our previous real estate agent lied to us,” he said.
Needham said the agent and lenders told him the housing market would soon rebound and pushed him to pursue houses he felt he couldn’t afford, places he said would have required spending 40% to 45% of his income on house payments.
Needham, a Web marketing director for a hospital chain, said he appreciated that Klinge agreed with his view that the housing market was more likely to keep falling than to quickly bounce back.
Represented by Klinge, the Needhams bought a four-bedroom house in Encinitas last year for $580,000. Needham said his house is probably worth less now, but he expected the decline, and Klinge also helped him avoid properties with problems he did not see.
Klinge recently took a reporter along when he visited a house with Christine Liashek, 29, a first-time home buyer. He did more warning than selling. She was drawn to a cozy, 1960s three-bedroom Carlsbad house with a swimming pool. It was just the size she and her husband — they have a dog but no children — were looking for. Standing in the living room, Liashek looked to Klinge for his opinion.
“That was the high school out there,” Klinge said, nodding his head toward the front door, “You’re going to have night football games, people parking here,” Klinge told her. “The baseball field’s out there too. You’ll probably hear the batting practice.”
Liashek still liked the house enough to ask him to show it to her husband later, which Klinge agreed to do. Then she asked him about a new home development nearby.
“I call it Foreclosure Ranch,” Klinge said. “The reputation concerns me. It’s probably the worst place in Carlsbad for foreclosures, and it’ll be hard to shake that,” he warned.
Liashek and her husband passed on the new development and the house near the high school.
But they’re still looking with Klinge. Unlike previous generations of home buyers, who relied on their real estate agents to provide them with lists of homes to view, Liashek finds properties herself on websites such as SDlookup.com, Redfin and ZIP Realty and e-mails Klinge the addresses of houses she’s interested in. Klinge will let her know which ones aren’t worth a visit.
“He’ll say this one’s under power lines, that one’s by the freeway, that one’s in a bad school district,” Liashek said.
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Just when you thought it was safe to go back into the water.
Realtor Coaching students……important housing data that you must know. Housing depreciation is picking up momentum. In other words, look for faster and steeper depreciation in home values over the next few quarters…..
The real estate downturn is picking up speed again. Continued negative economic news combined with the seemingly never ending credit crunch is forcing a new wave of home value depreciation.
After months of slowed-down price drops that hopeful commenter’s pegged as signs of a bottom, the third quarter saw record year-over-year price decreases of 16.6%, according to the S&P/Case-Shiller Home Price Index.
The number of bank owned homes (REOs) will unprecedented. Clearly, one of the best opportunities in this market in this real estate market is being a REO Listing Agent. Learn the exact how-tos now. Download the free Agent REO Secrets Guide Book NOW.
Case-Shiller calculated that third quarter prices fell -3.5% against the second quarter; the second quarter had fallen -2.2% versus the first quarter. Month-to-month figures do not auger well for those hoping for firmer home markets going forward. Between August and September home prices fell -1.85%, the fastest clip of the past six months. Prices only fell -0.49% between April and May, giving some real estate watchers hope that the declines were declining.
The sheer number of homeowners with negative equity in their homes..the ‘Underwater Homeowners’ is staggering. Its predicted that by this time next year nearly 50% of all real estate transactions will be either foreclosures or short sales. Realtors, learn how to easily list and close short sales now. Download the free Agent Short Sale Secrets crash course now.
John Osbon, founder of Osbon Capital Management, notes that the amount of debt load versus the value of housing stock has soared over the past 10 years, from 31% to 53%. “Debt load, or more like a giant margin call,” he says.
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ALL ABOARD!
Realtors, hang on for a wild ride…..
There is no doubt that our real estate markets are in a full blown recession. In most real estate markets property is depreciating at 2%+ per month. For example, in California property has depreciated 30%+ this year alone. Even if your market has yet to feel the effects of this massive shift in our economy..know that its coming your way.
Be clear, we are not anywhere near the “bottom” of this real estate downturn. Markets will get much more challenging for sellers. More foreclosures, more short sales, more depreciation. 2009, 2010 and maybe even 2011 we will see even greater real estate market turmoil….
Nationally our economy is entering into the worst recession of our lifetimes….
……..one of the richest people in the world now agrees with us….
Microsoft Corp. co-founder Bill Gates said the U.S. economy is headed for a “fairly significant recession,” and that the unemployment rate may peak at more than 9 percent. To put that into perspective, our current unemployment rate is less that half that now.
Agents need to buckle down and be financially, mentally and emotionally prepared for real estate markets (and the nations overall economy) to be in a recessive state for some time to come.
Clearly one of the best opportunities in this market is knowing how to easily list and sell Short Sales. Get started now by downloading your Free 7 Part Agent Short Sale Secrets crash course. Instant free download now.
Don’t make the same mistake that so many fellow agents are making…holding out hope that the ‘Clouds Will Clear’ anytime soon. Agents who are waiting for the market to improve won’t be in the real estate business by the time this economic cycle has ended.
Here’s the thing…when you accept the challenge to get your business and personal finances in order you will thrive in this market. Our students know that this is not a sellers market, this is not a buyers market-this is an agents market. Agents who have the skills and knowledge are making tons of money in this market.
How do I know? Well, simple. HREU has literally hundreds of Realtor Coaching clients who are having their best years ever. Yes, they are helping more people and making more money than they ever did in the previous ‘Hot Market’
Learn what these elite agents know and you will experience the success they are enjoying.
Start here….
10 Step System to Thrive In This Market (Same system used by our Superstars)
1. Wake Up. Stop spending money out of habit. For the next week keep a log of everywhere your money goes. Be totally awake and aware whenever you grab for your wallet. Start questioning yourself on every purchase.
2. Know How Much You Cost to Exist. You are spending money every day-even if you never leave your house. Your housing expenses, your utilities, your food etc. Know exactly how much you are spending per month (see point 1) and then divide by 30. That will tell you exactly how much you cost to exist every day. Bet its more than you think.
3. Go Through Every Bill and Question It. True story: We had a Realtor call us the other day asking to enroll in our short sale program. Her challenge, she was broke. We suggested that she should go through all of her monthly bills and question them. Start with your insurance, price shop. Cut back on Starbucks. Is a cup of coffee really worth $3? She did this and found $1800 that she could completely cut out of her monthly overhead. You need to do the same.
4. Drop Your Spend-y Friends. You know who they are. These are the friends who always want to “go shopping.” People who live to spend should be kept at an arms length in this market. Some people see all of their worth in how others see them. Ask yourself if you think this way as well…become aware of your thought regarding your consumption.
5. Stop Thinking of Yourself as a Consumer. When was it that us Americans went from being called ‘citizens’ to being called a “consumer.” You are not what you consume. You are not what you drive, what you wear. Define yourself by your own terms.
6. Track Your Time…Hour by Hour. For the next week, now that you are tracking your expenses, track your time. Keep a log of what you are doing hour by hour for the next week. Be honest with yourself about where your time is going. Here is the thing, chances are you are ‘working’ 8+ hours per day but, only doing things that will result in a pay check for 1-2 hours per day.
7. Pay Off All Your Debts. Imagine what you would feel like if you had no debts. Most agents work because they have to. They have so much legacy overhead. Meaning, they are paying off the luxury bling-bling lifestyle that they may have been living from the past sellers market. Pay that debt off.
8. The More You Learn The More You Will Earn. You already know this to be true. But, man is it ever true for this market. BE the go-to agent in your office, in your market for short sales. Be the local short sale expert. Learn the exact process to take REO listings. You already know REOs are controlling the market..be the agent with those listings.
9. Save Money and Protect It. Now that you are in control of your spending, have paid off your debts…start saving. Simple savings plan system. Take 10% (or more) from every penny you earn. If your Mom gives you $100 for your birthday save $10. You get a commission for $10,000…sock away $1,000. Pay yourself first. When you get that commission check go to the back and transfer 10% into a savings account then pay the other bills.
10. More Intensity vs Simply More Time. Yes, you will have to work hard in this recession. Chances are you will have to work harder now than you ever have to before. But, be careful not to confuse ‘Time Spent Working’ with ‘Instensity’. In other words, focus on what you are getting done during the day vs simply how much time you are spending. HREU Superstars Don’t work in the evenings and Don’t work on the weekends…why? Because they are working intensely durng the day. Are you?
Going forward every agent must know how to list and sell REOs or Bank Owned homes. Get started now by grabbing your FREE copy of our newest book, Agent REO Secrets. Instant free download now.
Realtor coaching, Real estate training, Realtor REO coaching, Realtor short sale training and coaching, real estate prospecting scripts, bpo forms, Realtor listings bank owned, how to list reos bank owned homes.
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