M. Nack’s Blog

I was looking into purchasing a holiday gift on-line this afternoon and came across a really unique on-line marketing method: On-line auctions!

This is how it works: You, the consumer, purchase “bidding points”. Each point costs 60 cents and raises your bid by 5 cents. For example, this particular site was selling a Kindle - valued at $260. Everytime I bid on the item, it costs me 60 cents and raises the bid price 5 cents. So, if the last bid was $55.55, my bid becomes $55.60.

Just like any auction, consumers get “caught up” in the excitement and fun of bidding. And - just like any gambling casino - because you are bidding “points” (aka “chips”), it’s easy to lose track of how much you’ve actually spent bidding (betting). Instead, the consumer is focusing on “$60 for an $$260 item?”

What happens if you are not the winning bidder? No worries! Any money you’ve spent bidding can be applied towards purchasing the item at retail - so you’re not out anything. So, if I don’t win the Kindle (which actually ended up going for $66!), let’s say you’ve spent $12 bidding (@ 60 cents, $12 = 20 bids), you can still purchase the Kindle from them for $260 less the $12 you’ve already spent - or $248. (Of course, YOU’VE spent the full $260 - but at least it hasn’t COST you anything.)

This seems like a terrific deal for the winning consumer - a $260 Kindle for $66 + whatever you spent to bid - but think about it from the merchant’s point of view! It’s complicated to set it up - you definitely need a major tech guru to do it for you - and you need some capital outlay to purchase the products you’re going to auction. But what an amazing way to make money FAST!

Let’s look at the math:

 A $66 sale price with a 5 cent bid increase = 1320 bids ($66 / .05)
1320 bids @ 60 cents/bid = $792
$792 + $66 sale price = $858 total.

Obviously, this isn’t pure profit - but nonetheless… The margins seem to be pretty good. This particular site claims they’re showing about 10% profit (whereas Walmart clears around 3.5% profit.)

And check out this wrinkle: This site was also auctioning off a 100 point voucher. Now what does a 100 point voucher cost a merchant? NADA! But @ 60 cents/point, 100 points = a $60 value to the consumer. So - let’s say I make 20 bids (i.e. spend $12 to bid) and am the winning bidder for the voucher for @ $700. (It actually went for just under $7). $12 + $7 = $19 that the merchant has just made - not to mention what the other people bidding against paid. In this case, a bid only raised the price a penny. So @ $7 , (i.e. 700 points @ 60 cents/point), the merchant collected $420 (60 cents x 700) for something that cost them absolutely NOTHING!

I’m not in anyway endorsing or recommending this site - but if you want to look at an example of this model, go to http://quibids.com.

My question is this: do you have a product that you could sell on-line that could use some variation of this model? H-m-m… something to think about!

“All Things With Exuberance!”
mary!

A couple of weeks ago, I attended a seminar on geo-thermal energy as an alternate heating and cooling source. The seminar was interesting enough - but what I really enjoyed was getting to know the company and the president of the company that was presenting the information: John Polich of Gabriel Environmental. [http://www.gabrielenvironmental.com/]

John clearly understands what we in the sales profession call “Relationship Marketing”. Which is more than a little surprising, since you don’t normally associate engineering -scientific types with marketing savvy.  

Here is what worked really, really well:

1) From the moment I drove into the parking lot, I was greeted by a flower garden in the midst of an industrial landscape. “Huh? What are these flowers doing HERE?!” (Remember, their core business is the environment and being “green”.)

2) When I entered the building, there were more plants. The reception area was inviting - but not in a big, flashy “corporate” kind of way - but in a “you’re part of our family” kind of way. Right away, I not only felt comfortable, I felt valued and respected. 

3) John gave his presentation on geo-thermal energy. I know, I know - sounds pretty dry. But what made it so interesting is not only is John clearly knowledgable and an expert, he is also quite passionate about the subject.

What I liked even better is that he shared his personal experiences with us.  Not only has John done the research, he has actually “guinea pigged” himself by installing geo-thermal energy in his own building. This was not a “theoretical” treatise, but a down-to-earth, common sense “this is how you do it” chat. My thought while he talked was, “Why would I send my clients to anyone else? This guys not only knows his stuff, he is clearly passionate about it!”

4) At the end of the presentation, we all received a gift of one of those energy saving light bulbs to take home with us. I asked the receptionist if I could have more of the geo-themal brochures they gave us so I could forward them on to some of my clients. She eagerly complied.

5) When I returned back to my office, there was a survey in my email asking me how they could improve my experience.

6) And just yesterday, I received a promotional holiday “care package” from them - complete with pens, mugs, post-it notes. And I’ve never even sent them any business! (Though I hope that will change in 2010.)

What is becoming more and more obvious to me as I study great small businesses like Gabriel Environmental is that we, as consumers, want to know who we are doing business with. We want to know that we have an impact on the businesses that we give our money to. And we want the companies we interact with to treat us like a friend.  Big corporate America has a difficult time creating that experience for the customer - though some do it surprisingly well (Starbucks comes to mind - though not so much now as in the early days.)

Big Corporate America seems to mostly keep their heads down focusing on keeping the shareholders happy. What they fail to realize is that keeping their customers happy WILL keep the shareholders happy! But big or small, all of us business owners can take a page from the marketing savvy of Gabriel Environmental.

“All Things With Exuberance!”
mary!

This is a blog post from Active Rain written by an agent in Scottsdale, AZ - Robert Herzog. His outrage at the short sale process replicates my feelings precisely. However, what I was attributing to incompetent bureaucratic BS may actually be an intentional business decision on the part of the lender - all made possible by the taxpayer bailout! Thank you very much. It’s almost enough to make me want to become a Republican!

Is The FDIC Killing Short Sales?

As some of you already know, I blogged recently about being interviewed recently by our local NBC news affiliate.  (To read the blog, click here.)  Basically, IndyMac Bank (now OneWest Bank), is holding one of my clients hostage, demanding a $75k promissory note, or they will proceed to foreclosure.  For the life of me, I couldn’t figure out why they were doing this.  The BPO came in at the contract price of $275k, with a net to IndyMac of $241k.  What advantage could there possibly be for them to proceed to foreclosure?

Yesterday, I figured it out.  You see, IndyMac was taken over by the FDIC and sold to OneWest Bank in March ‘09.  Guess who the investors are behind OneWest?  George Soros, Michael Dell, Steve Mnuchin (former Goldman Sachs executive), and John Paulson (hedge-fund billionaire).  

Now, listen to the deal they got from the FDIC….

Basically, they purchased all current residential mortgages at 70% of par value (70% of the outstanding loan amounts).  They purchased all current HELOCS at 58% of Par Value!!!

Next, in order to “sweeten the pot”, the FDIC stepped in and guaranteed the following: For any residential mortgages where OneWest experiences a loss, the FDIC will step in and cover anywhere from 80%-95% of the loss. The loss is calculated using the ORIGINAL LOAN BALANCE, not the amount that OneWest paid for the loan.  Let’s use my client’s situation as an example:

Loan Amount is $478,000, plus 6 months of missed payments, for a grand total of $485,200

OneWest pays $334,600 for the loan

We have an all cash offer. The net to OneWest is $241,000,

So, let’s do the math: The net loss, according to the FDIC formula is the ORIGINAL LOAN AMOUNT minus the amount of the offer.  In this case, $485,200 - $241,000, or $244,200.  Next, the FDIC, according to their Loss Share Agreement, writes a check to OneWest for 80% of the so-called “net loss”.  So, in this case, OneWest gets a check from Uncle Sam for $195,360 (.80 X $244,200).

Add the $195,360 to the sales price of $241,000, and you get a grand total of $436,360.  Remember, OneWest paid $334,600 for the loan.  So, OneWest puts $101,760 in their pocket, thanks to the FDIC. Folks, that is over $100k of our hard-earned tax dollars!

So, you ask…Why does this program hurt short sales?  Because, our brilliant government offers this SAME PROGRAM FOR FORECLOSURES!  The only difference is, the government picks up 80% of the tab on all of the extra costs associated with a foreclosure (BPO’s, upkeep, utilities/maintenance, legal fees, etc.)

So, If I’m OneWest, why would I want to waste my time negotiating through a Short Sale, when I can make the same amount of money (if not more) by just letting it go to foreclosure?  And we wonder why nobody can get a Loan Modification?  Why would OneWest approve a loan modification for this guy, when they can foreclose and make over $100k?  And, to add injury to insult, they have held this loan for 6 months!  Not a bad ROI, huh?

What infuriates me the most is that in my particular case mentioned above, they have the guts to hold my client hostage for a $75k promissory note, after they are already making more than $100k on the sale!!! This is his primary residence, 1st Position loan, and OneWest has NO RECOURSE!  Imagine if they could make $100k, then get a deficiency judgement!  Talk about making some big bucks!

Can you say “GREED”?

The scary thing is that over 50 banks have Shared Loss Agreements in place with the FDIC.  Some of them include:  Bank of America (go figure), CitiMortgage, Wells Fargo, etc.  

This entire agreement between the FDIC and OneWest can be found here, on the FDIC website.  It’s all there, for the world to see!  They have it all layed out.  All of the formulas, worksheets, etc.  

Now, it’s up to us to bring it to the attention of our elected officials and the media. Enough is Enough!

UPDATE 9/18/09:  I JUST READ AN AWESOME ARTICLE ON THIS, THAT GOES INTO WAY MORE DETAIL THAN MY BLOG ABOVE.  TAKE THE TIME TO READ IT WHEN YOU GET A CHANCE! CLICK H ERE TO READ IT.

Wait, it gets better…The FDIC just announced that it needs to start borrowing money from the U.S. Treasure in order to replenish it’s deposit insurance fund (the same fund being used to pay all of these banks in the Loss Share Agreements).  Go Figure!  Click Here to read it.

I was speaking to a colleague the other day - an old time real estate agent such as myself. I often find myself having this conversation these days. The past 3-4 years have been really tough for real estate agents. We old-timers have gone through down markets before - but this one… It just never ends. And this poor fellow is literally at wits end. I could hear the desperation in his voice.

His credit cards are maxed out. He isn’t bringing in any money. He’s done everything he knows - and yet nothing is working.  He simply doesn’t know what to do anymore. He would go find a job if he could - but it’s not as if there are ample job opportunities out there.  I was at a loss. I wanted to say the perfect - something! -  to help him turn it around - but, frankly, I didn’t know what to say.

So, I have been giving the conversation a lot of thought.

The past 60-90 days my business has started to finally rebound. And I am excited AND RELIEVED! But to what do I attribute the turn around? I look around me - and it seems as if I am the only one that I know that can say I’m really busy. Not only busy - but actually productive! As in closing deals and making money. So, what changed?

Now, it’s certainly true that I have been working my ass off - but who hasn’t been? So that’s not the answer.

And the more I thought about it, the more I realized that:

Getting clear on the niche I wanted to serve and marketing to that niche has turned my business around 180 degrees! 

I have done over $3mm dollars in transactions just in the past 90 days!

That and keeping my head down - not being distracted by the million different rabbit holes that I COULD run down. I see this so often - agents trying just EVERYTHING - but not really executing on ANY ONE THING. It’s like watching a dog chase its tail.

The problem - even moreso now than ever - is that as real estate agents, we are very loathe to “niche” ourselves. We want to be open and available to whatever business comes our way. Particularly now! The problem with that approach is that the people we work with - the consumer, our clients and our customers - don’t know how we’re any different than any other real estate agent they meet. They like us, find us trustworthy and competent. But all these are intangible qualities that are difficult for them to articulate. They don’t refer us because WE haven’t given them any way to think about us that they can articulate to their friends and colleagues. And that’s 100% our fault.

Here’s the amazing thing: once I made a commitment to select a niche and let the world know that I had chosen to work that niche, past clients began calling me to work with me or to refer me. And here’s the truly amazing part - they were not just sending me referrals for the niche I had selected - they were sending me whatever business they had to send me!

By choosing a niche, I gave the consumer a way to think about me - and they began thinking about me!

So - if you are at your wits end and desperate to turn your business around, take 24 - 48 hours off. Shut off the phones, cancel all your appointments. Get crystal clear about who your ideal prospect is and who you most enjoy working with. Define your niche - and then begin to systematically market to that niche. Do not allow yourself to get distracted - keep your head down for 90 days and execute fully and well on just that one strategy.

Then call me in 90 days and tell me what happened.

“All Things With Exuberance!”
mary!

Is there really such a thing as “luck”? I know that sometimes events conspire in such a way as to make it seem that there is. And I have a client - a really interesting and completely charming fellow! - whose mantra is “I’m a lucky dog!”  [Now approaching 80, I can't help but imagine what he must have been like at 35.]

And even though Dirk proclaims himself a lucky dog, I know better. He doesn’t fool me for one New York minute. He has stuck to his vision, never giving up on it - through the best of times and the worst of times. I know full well that he creates his own “luck” - day in and day out working harder than many 35 year olds that I know. ”Yet Brutus says he is lucky.”  It could be that Dirk knows something that I do not. I will even allow that Dirk may actually know quite a lot that I do not.

Still, I think I know this: the secret to his “luck”. No, it’s not about working hard at all. That is such a typically American attitude: “Just work hard and you will be successful.”  You must trust me in this: that’s not it at all. Being a die-hard workaholic myself, even I know that is complete and utter BS.

The secret to this lucky dog’s success is that he  isn’t working at all. He is simply pursuing what it is he loves to do - his “purpose” , the thing that gets him out of bed in the morning and keeps him going until late at night - through all the aches and pains that must, of necessity, accompany approaching 80. Even though I am loathe to dismiss the power of the mind over the body and I have no doubt that loving your life and loving what you do goes a long ways towards alleviating any aches and pains that may annoyingly arise.

Now, if you were to ask Dirk point blank, “Dirk, what is your purpose in life?” I’m not sure he would have an answer. But I saw a quote from Deepak Chopra today: “The heart has reasons that reason does not know” And therein lies the real secret.  Our purpose lies within our heart - not in our mind. Oh, we struggle mightily with our minds to grab onto it and understand it - and we think we don’t really “know” unless we can’t wrap our mind around it. But the heart already… just… knows…

I guess this is a long-winded way of saying that I don’t really believe in luck. I believe in taking responsibility for your results - you know, “the numbers don’t lie” - and all that. Taking responsibility for your results is not so popular these days. We want to be bailed out, provided for, given a fair shake, blah blah blah. But the hard, cold truth is that the numbers DON’T lie - and sooner or later you take responsibility for your results or you end up wondering, “What happened? How did it all go so wrong? Where did I go wrong?”

Yet, even so, I, too, am a lucky dog. I have been so richly blessed - beyond any measure of “deserving”. I most assuredly have enjoyed the immense good fortune of a happy life. [Though I doubt that "deserving" has one iota of anything to do with anything.] And I doubt that these two positions can ever be reconciled in any way that makes any kind of sense. But, then again, the heart has reasons that reason does not know. The heart already…just…knows…

“All Things With Exuberance!”
mary!

It’s amazing what you can learn about people by the way they handle their real estate transaction. I’m working with a buyer right now to whom I have shown maybe 50 homes. We finally saw one that he fell in love with on Tuesday - a marathon day of looking because he wants to get in on the 1st time homebuyer credit. He has been contemplating this move for quite some time - but we are getting down to D Day and H Hour - and we’re running out of time.

We submitted an offer on the property. However, we ran into a bit of snag on his financing and the whole thing has now given him pause. Of course he’s been talking to friends. My experience is that friends and family will often discourage any positive decision to do something - because they can never be wrong if they tell you NOT to do something.  And if things don’t work out quite as expected (and when do they ever?), they can say, “See! I TOLD you so!”

Now, I am not saying he SHOULD buy the house. But I am surprised that this young man is willing to give up so easily on his dream. It makes me wonder - what else has he given up on too easily? To stand up for your dream and fight for it takes the courage of your convictions and commitment to see it through.

I sometimes wonder about the younger generation. Are we aging Baby Boomers just overgrown spoiled brats insisting on getting things our way? We grew up in an era that questioned the status quo -  that refused to ”settle”. We realized that there ARE some things worth fighting for - and that fighting for them took courage and commitment - but that Viet Nam was not one of them. And is Iran? You gotta ask…

Or am I just letting my ex-hippy attitudes take over?

“All Things With Exuberance!”
mary!

There is something inherent in human nature that we want to possess things. We want to own things, hang onto them - make them ours.

My husband and I just spent 48 hours on the eastern shore of Lake Michigan. We are exploring this area as a possible future vacation/get-away spot. It has the advantage of  being closer to Chicago than Door County.  And since the market downturn caused us to give up all our acquisitions in Door County, we are feeling the need to recreate that experience. We spent a fair amount of time discussing and exploring possible candidate areas for future ownership.

And yet, from a financial standpoint, owning a vacation home makes no sense at all. For the money we spent on our cottage in Door, we could have taken some pretty fabulous vacations. And how many times did we go to Door and really vacation? How many times was going just one more thing added to an already over-crowded “to do” list?

And yet there is that emotional sense of belonging: belonging to a community, of belonging to a place, of being invested in what goes on and what happens, of putting down roots. Belonging to a place that just the mere thought of brings happy memories of good times - the proverbial “Blue Bayou”. You don’t get these emotional deposits by merely vacationing - staying a night or two, taking in the local treasures - and then moving on. These things only come with acquisition and ownership.

What I’m really describing, of course, is “Home”. Being raised a Navy kid, the idea of Home is something that has always eluded me. Interesting, isn’t it? That someone who has never truly experienced “Home” should make a living selling them. But that’s a story for another day…

And why is it that I have never truly invested where I am living with that interest and sense of belonging? Because I have to live here. I have to come home day after day after day to a place of sanctuary. If I invest TOO much emotional currency into it, and things don’t go the way I want them to, then I’ve lost my sanctuary. This is, after all, life in the city. And if we lose our sanctuary, we will not be able to continue to live here. At the end of the day, this is what forced us to leave our condo in East Ravenswood.

Perhaps it is about commitment - not wanting to make so much of a commitment to a locale that it holds me back. Holds me back from what?

I have a client that I sold a home to 4-5 years ago that jumped in with both feet right away. She knows all her neighbors, eats dinner with them on a regular basis, is involved in the local library, the parks, etc etc etc. I emailed her recently. I asked her if she had ever thought about running for public office. She has that investment, that commitment to her community.

Perhaps the reason owning a 2nd home is so important is that it provides that sense of belonging without requiring too much commitment. It’s like living together vs. getting married. We want to be in a relationship  - but getting married is just too scary. Crazy, huh?

“All Things With Exuberance!”
mary!