Right from the start - Texas Association of REALTORS

April 2005
Succeed in the real world
Right from
the
start
How to make it in this business
Plus, what old-timers can learn from rookies
Behave yourself
Your manners matter
Do-not-call
update
Are FSBOs
fair game?
Test your fairhousing IQ
Commercial
transaction
of the year
Features
The first steps to success
25
How new agents can make it in real
estate. Plus, what long-time agents can
learn from the new ones.
by Bridget McCrea
Behave yourself
30
Displaying good manners does more
than just please your mom. It can
also help you attract and retain more
business. Find out how.
by Marjorie Brody
Winter Meeting recap
34
Catch up with the highlights and
association business you might have
missed at the 2005 Texas Association
of REALTORS Winter Meeting.
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Commercial transaction of 2004
38
John Talhelm and Kevin Erck closed
their complex, award-winning deal
despite a stigmatized property and
strict site constraints.
Contents
April 2005
Departments
Chairman’s forum 4
Legal 20
Laying the groundwork for
legislative success
What to do when you suspect
someone has presented a
fraudulent offer
Up front 6
• Learn the truth about plans to
lower property taxes in Texas
• Do-not-call update: Can you
call FSBOs?
• How to network and meet
quality contacts
• Avoid getting sick
Commercial 16
• Protect your properties from
lightning strikes
• Survey shows most renters
don’t have insurance
Technology 18
Ethics 22
Case study: Do you have to
disclose to potential buyers an
accepted offer with unresolved
contingencies?
Viewpoint 43
Need some help? How to recruit
and hire the right person for
your business
Real IQ 44
Make sure you’re playing fair.
Test your knowledge of federal
fair-housing laws
• FCC adds cell phones, PDAs to
do-not-spam list
• Fully exploit the potential of
your e-mail signature
Visit TexasRealtors.com
Cover photo: Picturequest
Table of contents photo: Corbis
c h a i r m a n ’s f o r u m
It’s hard work
Succeed in the real world
And we all have a role.
Chairman of the Board Lance Lacy
I
t’s crunch time! We’re about in the middle of that 140 days
that comes around every two years known as the Texas
legislative session. During this challenging period, lawmakers try to fi x all ills and balance the state’s checkbook. It’s
hard work, and I appreciate our legislators for giving of themselves to work on solutions to benefit all Texans.
Every session, the Legislature debates issues that influence
our lives as business people, R EALTORS , and property owners. If you
want a measure of the current session’s significance, though, listen to
how Bill Jones, chairman of the TAR Legislative Affairs Committee,
describes it: “This is the most important legislative session since I
became a R EALTOR 25 years ago. This is the one that will defi ne real
estate for years to come.”
No question, there’s much at stake. Bill and the committee’s vice
chairman, Dwight Hale, along with many others, have been researching issues for quite some time. “We’re not just arriving at our positions
as these matters come before the Legislature,” says Bill. “Last year, we
created task forces to study several key topics, including insurance,
mortgage finance, regulatory issues, and property taxes/school finance.
Regarding the property-tax issue, the task force looked at employment
taxes, income tax, business-activity taxes, value-added taxes, gambling—all the ways the public can seek relief from property taxes.”
The task forces seek input from R EALTORS across the state and publish their final reports on TexasRealtors.com. Ultimately, the reports
serve as important documents for the Legislative
Management Team. The LMT, which consists of chairs
“This is the one
and vice chairs of the Legislative Affairs, Political
that will define real Affairs, TREPAC, and Issues Mobilization committees,
as well as the TAR Leadership Team, discusses the
estate for years
issues and formulates legislative positions.
As a fairly new participant on the Legislative
to come.”
Management Team, Dwight has experienced the
group’s cooperative effort. “We thrash things around
until there is consensus,” Dwight says. “Everyone in there knows all
the issues, and everyone has an equal voice.”
Like TAR’s other government affairs programs, our legislative success depends on our grassroots efforts. Dwight encourages members
to volunteer for a task force or show up at one of the public task-force
meetings. Bill agrees that member involvement is key. “The best thing
members can do is be informed,” he says. “Read Texas R EALTOR magazine and the e-mails from TAR. Take advantage of the political affairs
programs. Come for the Hill Visits. Sign up to be a legislative liaison.”
With your involvement, we will come out of these 140 days of the
current legislative session in great shape. ✯
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April 2005
CEO Benny McMahan
Dir. Comm. & Mktg. John Gormley
Editor Marty Kramer
Senior Editor Ward Lowe
Art Director Joel Mathews
Production Artist Jennifer Idol
Contributing writers
Chris Heagerty, Louise Hull
CHANGE OF ADDRESS:
TAR members should always send address
changes to their local association first.
Editorial:
P.O. Box 2246,
Austin, TX 78768-2246
800/873-9155 or 512/480-8200
Fax: 512/370-2390
E-mail: [email protected]
Advertising Sales:
Network Publications Inc.
Carrie Hartin
410/584-1963
E-mail: [email protected]
Texas REALTOR (ISSN 1068-1248) is published
monthly except combined issues in
January/February and September/October by
the Texas Association of REALTORS .
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Postmaster:
Send address changes to:
TAR, Attention: Membership, P.O. Box 2246,
Austin, TX 78768-2246. Periodicals Postage Paid
at Austin, TX, and at additional mailing office.
Annual dues of members of TAR include $5
for a one-year subscription to Texas REALTOR .
Annual subscription rate to others: $25. Single
copy rate to others: $3.50. Office of publication:
1115 San Jacinto Blvd., #200, Austin, TX
78701-1906; mailing address: P.O. Box 2246,
Austin, TX 78768-2246; phone: 512/480-8200;
fax: 512/370-2390.
®
All articles and paid advertising represent the
opinions of the authors and advertisers, and do
not necessarily represent the opinions of the
editors of Texas REALTOR or TAR and should
not be construed as a recommendation for any
course of action regarding financial, legal, or
accounting matters by TAR or Texas REALTOR
and its authors.
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Copyright © 2005
Texas Association of REALTORS
All rights reserved.
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PHOTO BY SCOTT VAN OSDOL, WWW.VANOSDOL.COM
by Lance Lacy
Volume 58, Number 3, April 2005
up front
Minimum-services rule closer to adoption
Commission takes steps to spell out
broker’s obligation to clients.
In February, the Texas Real Estate Commission decided to
publish a rule that clarifies the minimum level of services
a broker must provide to buyers and sellers. The longdebated rule details the services required to fulfill the
broker’s obligation under existing law to negotiate the best
possible transaction for the client. The Texas Association
of R EALTORS supports adoption of this rule, because it
will ensure that brokers who purport to represent consumers do in fact represent them. Without such a rule
clarification, some Texas consumers would continue to
enter into agency relationships without the benefit of true
representation.
A recent online survey of Texas Association of
R EALTORS members showed that almost half of those
polled had handled a transaction in which the other
party used a limited-service agent. Of those, 76% had
problems or concerns because of that type of representation. One frequent problem cited was that the seller’s
agent asked the buyer’s agent to contact the seller directly.
Respondents also expressed dissatisfaction due to a lack
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of communication on the part of the other agent. The
top concern reported was the worry that, although
the agent’s client was getting good representation,
the party represented by the limited-service broker
was not.
The commission will vote on the published rule at
its next meeting on April 25.
Your wealth
Let’s start with the disclaimer up front: You—or your
clients—will want to consult a tax professional before
taking advantage of a newly clarified IRS tax break.
Though the details are complicated, some people whose
homes have appreciated significantly can defer taxes on
gains above the $250,000 exclusion ($500,000 for married joint filers).
The new guidelines apply to taxpayers who have a
home office or who convert their home into a rental. To
qualify for this tax deferral, a homeowner must perform
a 1031 exchange, buying a new commercial property
that costs at least as much as the commercial value of
the previous property.
To read the specifics of this ruling as well as examples
of how the deferral works, visit IRS.gov and search on
the term revenue procedure 2005-14.
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April 2005
TOP PHOTO © BANANA STOCK; BOTTOM PHOTO © STOCKBYTE
New IRS guidelines allow some
homeowners to defer big gains.
advertisement
up front
Do-not-call update
Are FSBOs and
expired listings
fair game?
Yes … and no.
You know you don’t want to run afoul of donot-call rules. After all, penalties run as high as
$11,000 per violation. What you may not know is
whether it’s safe to call FSBOs and expired listings.
First off, if the phone number for a FSBO or
expired listing is not on the national do-not-call
list and that person has not requested that their
number be placed on your company’s internal
do-not-call list, you may call.
The National Association of R EALTORS asked
for additional guidance from the FCC, specifically
requesting that the commission clarify that calls
to all FSBOs and expired listings be considered
outside the scope of do-not-call rules. The FCC did
not make such a clarification.
However, the commission did shed light on what
is allowable. An agent may call a FSBO whose
number is on the do-not-call list when representing
a potential buyer, as long as the purpose of the call
is to talk about the potential sale of the property
to the agent’s buyer client. An agent may not call
a FSBO or expired listing whose number is on the
list to discuss offering services to that consumer.
Texas R EALTORS can take advantage of a free
member benefit—Do Not Call Sentry—to help
comply with do-not-call rules. To find out more
about this complete compliance solution, visit
TexasRealtors.com.
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Input needed on new forms
A task force created by the Texas Association of REALTORS Risk Reduction Committee is seeking
comments about the possible adoption of two new forms.
Form 1506, General Information and Notice to Buyer, is a summary of most issues a residential buyer
may want to consider. The task force received several requests to develop a comprehensive disclosure
or notice that an agent can provide a buyer for the buyer’s consideration. Much of the subject matter
in the form is found in other forms (for example, in the contract or seller’s disclosure notice).
Form 2701, Residential Listing Checklist, is, as the name suggests, a residential listing checklist.
If the task force develops such a checklist, other checklists likely will follow (for example, a buyer
representation checklist and a contract-to-closing checklist). The proposed draft permits some
customization and could be included in form-fill software.
The task force would like comments about the content and appearance of both forms, as well as
comments about whether members would find them useful.
You can view the drafts by visiting the Forms section of TexasRealtors.com and selecting Forms
under revision. Send comments by April 20, 2005, to [email protected].
PHOTO © DIGITAL VISION
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up front
The truth about Texas taxes
New Web site highlights REALTOR position.
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As part of a statewide campaign that includes radio
commercials and public-relations efforts, the Texas
Association of R EALTORS has created a new Web site,
TruthAboutTexasTaxes.org, to outline the association’s
position on tax measures being considered by the 79th
Texas Legislature. The Web site includes information about
proposals TAR supports as well as those the association
opposes. Visitors can find background information,
studies by leading Texas economists, letters submitted
to the legislative committees, and examples of positive
and negative financial consequences associated with
various ideas. You can also use an online form to e-mail
information on this topic to friends.
The radio campaign, which changes messages to
address the current situation, encourages listeners to visit
TruthAboutTexasTaxes.org. Radio spots have been airing
since late February in major Texas markets as well the 128
local stations that make up the Texas State Networks.
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The Texas REALTOR®
Advantage can help you
Reduce your risk
Ever needed expert legal advice? Member brokers and
any agents they designate enjoy free access to the Texas
Association of R EALTORS Legal Hotline. It is your link
to an attorney who can provide information on topics
such as agency, brokerage, closings, license law, listings,
regulations, titles, and trust accounts.
Legal reference publications also help you reduce your
liability, stay updated on the legal issues surrounding the
latest technology, and help you develop or fine-tune your
office policies. Titles include R EALTOR Reference Manual,
Internet Policy Manual, Legal Article Book, and Agency
Policy Manual.
You’ll find information on these and other riskreduction benefits in the Legal Tools section of
TexasRealtors.com.
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TexasRealtors.com
Texas Association of Realtors®
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April 2005
ADVANTAGE PHOTO © PHOTODISC
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up front
Are you over-networked?
Quantity of contacts must
be balanced with quality.
From the time you start in this business, you learn the
importance of networking. It makes sense to spread the
word to acquaintances that you are a real estate agent,
as does telling people you meet what you do for a living.
But is it possible to know too many people? Well, no, not
really. However, it is possible to not know the people in
your contact database well enough.
Some agents tackle this dilemma by prioritizing their
list of contacts. For example, they consider the people
most likely to sign on as client in the near future “A”
contacts. People who might buy or sell in the next two
to five years are “B” contacts, and so on. Then, the agent
tailors marketing plans to each group accordingly.
That method helps you allocate more of your time
and expenses on prospects you deem most promising.
Another approach—one that can be used on its own
or in conjunction with prioritizing your contacts—is
to strengthen your current relationships with casual
contacts.
How? Take a deeper interest in people from the moment
you meet them. Search for shared interests. Look for
more opportunities to “cross paths” with
the contacts you’d like to know better.
For example, if you casually know a few
of the parents at your kids’ school, attend
more school functions and join the PTA. If
you can’t find these opportunities, create
them. Call, mail, or e-mail a contact with
information about a topic you know interests
that person. If you have spoken about some
aspect of real estate to a group, approach
them again to give another talk on a different
real estate topic.
I’ll second that
More than one-third of homes sold in 2004 were bought by people who
didn’t plan to live in them full time. The second-home market, made up of
investment properties and vacation homes, accounted for 36% of all homes
purchased, according to a study by the National Association of R EALTORS .
The main reason buyers gave for buying a second home was to diversify
their investments (30%), followed by a desire for rental income (28%). The
market for additional homes appears to have legs, as 38% of second-home
buyers indicated they likely would buy another home within two years.
You can read more about how to tap into this market in the article Twice
as nice from the August 2004 issue of Texas R EALTOR . To access it online,
visit TexasRealtors.com and navigate to News & Pubs > Texas R EALTOR >
Article Archives.
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April 2005
TOP PHOTO © CREATAS; BOTTOM PHOTO © THINKSTOCK
Market for vacation and
rental homes larger than
first thought.
Invest in your business
TREPAC 2005
The 79th Texas Legislature will be one of the most
critical legislative sessions we have seen. We already
know lawmakers will be looking at various revenue
options to address school finance, and, once again,
Texas REALTORS® and the real estate industry will be
targeted. Expanding the sales tax base to include
professional services like real estate, as well as
proposing the creation of a tax on the transfer of real
property, are just a few of the issues we are facing.
Either option would have a tremendous impact on your
pocketbook and our overall economy. Your TREPAC
investment will let our elected officials know just how
clear your opposition is to any proposal that would
harm the real estate industry. Make sure you and your
industry are protected by investing in TREPAC!
Invest through your local association today!
Paid for by the Texas Association of REALTORS Political Action Committee.
P.O. Box 2246, Austin, Texas 78768-2246
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April 2005
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up front
How to …
Avoid getting sick
While avoiding sick people may work great
for some people trying to steer clear of
the cold and flu, it probably would hurt
your business to cancel appointments
with a coughing, sneezing client. You
need to smile, shake hands, and share
close quarters with many people each day,
regardless of their health. How can you
reduce the chance you’ll catch something
from a sick client when you have to spend
all afternoon in close proximity to him?
Contact management
Find a sink
Health experts say that the fundamental
action of washing your hands greatly
increases your chances of avoiding germs
and viruses that make you sick. There are
times when you should always wash your
hands—after you use the bathroom, before
and after you prepare food or eat—but
that’s not frequently enough.
How many people do you shake hands
with at an open house or a closing? When
you get a break, wash your hands. Did you
sit at someone else’s computer? Borrow a
cell phone? Take public transportation?
Wash your hands.
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Running your hands under cold water for two
seconds doesn’t count. Soap, warm water, and 10 to 15
seconds of scrubbing are necessary to help dislodge
and remove germs. Antibacterial gels that don’t require
water offer an alternative—no need to drive around
hunting for a place to wash your hands.
No touching
Avoid touching your eyes and mouth. This may
seem a little paranoid, but if you’re giving a listing
presentation at a sick person’s house, they’ve probably
touched or coughed and sneezed on many surfaces. If
you sit at a kitchen table, grab a doorknob, or sit on a
couch and then rub your eyes or touch your mouth—
bingo, you’re infected. Germs can live for a long time—
up to two hours—on surfaces.
Of course, you’re going to have an itch or forget and
rub your eyes. If you’re washing your hands frequently,
though, chances are you’ve gotten rid of whatever
germs were on your hands.
PHOTO © STOCKBYTE
Illnesses like the cold and flu are caused
by viruses that infect the nose, throat, and
lungs. Usually, the illnesses spread when
an infected person sneezes or coughs. The
virus takes to the air, clings to surfaces
sneezed or coughed on, and, if the person
covered his mouth, waits on the hands of
the infected person.
The best way to lessen your odds of
catching the virus is to eliminate contact
with it. Always wear lightweight gloves,
long sleeves, a respirator—no, you don’t
need to go quite that far. Just give some
thought to what and whom you come
into contact with.
April 2005
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commercial
When lightning strikes
Proper protection can
minimize damage.
The National Weather Service estimates
that 25 million cloud-to-ground lightning
strikes hit the U.S. each year. It would take
only a single strike to do serious damage to
one of your buildings and the people and
objects inside. Lightning damage to property is more common than you might think.
Forty-one percent of the more than 17,000
fires caused by lightning each year occur in
structures (55% happen outdoors). Not only
do lightning strikes cause property damage,
injuries, and deaths; they can disrupt operations in a commercial building or require
relocation of tenants in a rental property.
Even with the destructive potential of
lightning and the frequency of strikes, only
10% of homes and less than half of commercial and industrial buildings have effective protection, according to the Copper
Development Association.
Underwriters Laboratories, the independent, not-for-profit product-safety testing and
certification organization, recommends not only installing a UL-certified lightning-protection system but having the system and installation verified by a third party
to make certain it meets the requirements of UL or the
National Fire Protection Association. Underwriters
Laboratory warns that some manufacturers simply
claim that their systems meet national standards without submitting the systems to independent testing.
The organization has a Master Label Certificate
Program to help property owners find out if their
equipment and installation conform to standards. This
certificate also can be valuable in showing your commitment to lightning safety to insurers and tenants.
You can find out more about the UL lightning-protection programs online at www.ul.com/lightning.
Uncovered
Majority of renters forego insurance.
Many people who live in rental properties mistakenly believe their belongings are
covered against theft, fire, and other casualty losses by the landlord’s insurance policy.
Perhaps that’s why almost two-thirds of renters do not carry renters insurance. A survey
conducted for the Independent Insurance Agents & Brokers of America revealed that
approximately 50 million American renters have no insurance protection if something
happens to their belongings or if a visitor gets injured in their apartment or home.
Survey respondents also pointed to the cost of renters insurance as a significant
factor keeping them from purchasing protection. However, coverage for $30,000 worth
of belongings and $100,000 liability coverage runs $12 per month on average, according
to the IIABA.
Paragraph 34F of the Texas Association of R EALTORS Residential Lease gives renters notice that they are responsible to secure their own insurance. It states: “Landlord’s
insurance does not cover Tenant from loss of personal property. Landlord recommends
that Tenant obtain insurance for casualties such as fire, flood, water damage, and theft.
Tenant represents that Tenant
intends
does not intend to purchase such insurance.”
The Texas Apartment Association lease contains a similar notice.
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April 2005
PHOTOS © DIGITAL VISION
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technology
Phones and PDAs added to do-not-spam list
As part of CAN-SPAM regulations, the
Federal Communications Commission
last month published a wireless
domain-name list (www.fcc.gov/cgb/
policy/DomainNameDownload.html).
It is now illegal to send unsolicited
commercial messages to an e-mail
address with a wireless domain name
(e.g., @cingular.com, @mobile.att.net,
@ vtext.com) that appears on the FCC’s
list absent prior, express consent.
These domains are used by wireless
devices like handhelds and cell phones.
A commercial message is defined as
any message that contains an advertisement and is not either a request for
information from the recipient or a
client communication.
Before you send an unsolicited
commercial e-mail message to
someone’s wireless device, you must
first check to see if his domain name
appears on the FCC’s wireless list. If it
appears on the FCC’s list and you don’t
have his permission, you can’t send
the message.
Additionally, there are specific
requirements for sending e-mail that
contains advertisements to any recipient. Ensure that you are in compliance
with CAN-SPAM and other laws that
pertain to e-mailing prospective clients
by reviewing the Texas Association
of R EALTORS updated model e-mail
policy at TexasRealtors.com by going
to Legal Tools > Reference > More.
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What’s your sign?
Brand yourself
Make sure your signature contains more than
your name and phone number. Consider including your title and designations, your Web site’s
URL, the city you work most in (if it’s not obvious), your niche or specialty, or your branding
statement (e.g., “Selling El Paso for 25 years”).
Branding statements are good; personal mottos
(e.g., “Dance like no one’s watching … ”) or witty
quotes are distracting.
Don’t color outside the lines
Some e-mail programs entice you with unusual
fonts, bright colors, and various backgrounds to
spice up your signature. Employ these sparingly.
These add-ons don’t position you as a professional.
Would you write business correspondence in neon
ink on blue paper? Then why send an e-mail with
a green font and a blue-sky background?
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Turn a signature into a message
Take advantage of your e-mail program’s ability
to accommodate multiple signature files. You can
utilize these signatures as templates for short
replies to common e-mail inquiries. For instance,
you might want to send one message to all buyers
who contact you and a slightly different response
to seller prospects. In Microsoft Outlook, go to
the Tools menu and click Options. Select the Mail
Format tab, then click the Signatures button near
the bottom of the box. Click New, enter a name
for this message, and click Next. Type the entire
message you would like to use as a template. Be
sure to include your standard signature information as well, as this information won’t appear otherwise. Click Finish, then click OK.
To use that signature as your message, rightclick on the text of your standard e-mail signature either in a new message or in a reply. A
list of all saved signatures appears. Select the
appropriate one, and the text you entered when
you created that signature will appear. You can
modify that text, if you desire, before sending the
communication on its way.
PHOTO © CREATAS
In addition to saving you keystrokes, e-mail signatures can perform other functions beneficial to
your business. Here are some tips to get the most
from your signature.
April 2005
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legal
I received a suspicious
offer. Now what?
How to handle a case
of suspected fraud.
by Ron Walker
D
Beware unusual requests
Many times the listing broker is asked or
required to change the original listing price in
the MLS to a higher price to reflect the contract
sales price. In most cases, the contracts require
the seller to accept proceeds only up to the
amount of the listing price and for the excess
sales price over the listing price to be paid to the
buyer, another person, or a purported contractor. In these suspect transactions, the purported
improvements are never made, and eventually the
property ends up in foreclosure.
Title companies have become more aware of
flags that identify these suspect transactions and
may refuse to close them. Most times, a mortgage
broker or mortgage banker is involved, since
one must possess a keen knowledge of what
must ultimately pass to the lender or source of
funds for the fraud to occur. But others may be
involved, including the appraiser, the buyer, the
buyer’s broker, and the contractor.
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April 2005
As the listing agent, you must keep several
ethical responsibilities in mind. First, R EALTORS
have an obligation to promptly present all offers
to the seller. Second, you should advise your seller of the proliferation of these types of suspect
transactions. Offer your opinion if you believe
the transaction is suspect. Third, Standard of
Practice 2-4 of NAR’s Code of Ethics provides
that R EALTORS shall not be parties to the naming
of a false consideration in any document, unless
the consideration is obviously nominal.
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The bottom line
If you receive a suspect offer and believe false
consideration or mortgage fraud is involved, take
the following steps:
1. Present the offer to the seller.
2. Advise the seller of your suspicions and
concerns.
3. Obtain and provide copies of published articles that show that these types of transactions
are of concern.
4. Advise the seller not to accept the offer or
counter the offer without first discussing the
matter with his attorney.
5. Inform the seller that legitimate loan programs exist for a buyer to borrow money to
make improvements to a property the buyer
plans to purchase (such as a “one-time close”
PHOTO © PHOTODISC
espite more awareness about mortgage
fraud, suspect offers seem to be increasing. These transactions often involve: the
payment of an inflated price for the property (for
example, $290,000 sales price for a house listed
for $218,000); inflated appraisals (either knowingly by the appraiser or without the appraiser’s
knowledge); false financial statements for a borrower; contract and loan conditions that provide
for purported future property improvements;
false and inflated estimates from contractors for
the purported improvements; extraordinarily
high fees to the mortgage broker or to the real
estate broker or both; or last-minute amendments
to the contract inflating the sales price to a significantly higher amount.
or “rehab” loan). These legitimate
programs do not require any payment by the seller to a contractor
and do not require alteration of
MLS information.
If, after the foregoing, the seller
wants to proceed with accepting
or negotiating the offer, you must
make an ethical decision. If you
believe that false consideration
or mortgage fraud is evident, you
should inform the seller of your
ethical obligation under Standard
of Practice 2-4 and withdraw from
the transaction. (Of course, if the
seller wants to make a legitimate
counteroffer that does not call for
any of the suspect activity, you
may present such a counteroffer for
the seller. However, keep in mind
that the suspect transactions can
appear to be legitimate at first and
through a late amendment, the suspect issues may later arise. Keep the
seller aware of this risk.)
Where to lodge a complaint
Complaints can be filed against
a mortgage broker or mortgage
banker with the Texas Savings and
Loan Department (www.tsld.state.
tx.us) or against a real estate salesperson or broker with the Texas
Real Estate Commission (www.trec.
state.tx.us). There are numerous
complaints involving allegations
of mortgage fraud that have been
filed with these agencies, and there
are criminal investigations pending. Being called into one of these
investigations, either as a suspect or
a witness, can be time-consuming
and worrisome. Exercise much caution when you encounter a suspect
offer. ✯
Ron Walker is director of legal
affairs for the Texas Association
of REALTORS .
®
April 2005
TEXAS R EALTOR
®
21
ethics
Ethics case study
Must you disclose to other potential buyers
an existing accepted offer with unresolved
contingencies?
The following case from the National Association
of R EALTORS Ethics and Arbitration Manual concerns Article 3 of the Code of Ethics, which states:
“R EALTORS shall cooperate with other brokers
except when cooperation is not in the client’s best
interest. The obligation to cooperate does not include
the obligation to share commissions, fees, or to otherwise compensate another broker.”
®
®
R EALTOR A informed Seller S about this second offer. At Seller S’s instruction, Buyer B was
informed of the second offer, and Buyer B waived
the contingency in his purchase offer. R EALTOR
A then informed R EALTOR Q that Seller S and
Buyer B intended to close on their contract and
the property was not available for purchase by
Buyer T.
R EALTOR Q believed that R EALTOR A’s failure to disclose the existence of the accepted
offer between Seller S and Buyer B at the time
R EALTOR Q contacted R EALTOR A was in violation of Article 3 of the Code of Ethics, as interpreted by Standard of Practice 3-6. R EALTOR Q
filed an ethics complaint with the association of
R EALTOR A.
At the hearing called to consider the complaint,
R EALTOR A defended his actions, noting that
while Buyer B’s offer had been accepted by Seller
S, it had been contingent on the sale of Buyer B’s
current home. It was possible that Buyer B,
if faced with a second offer, could have elected
to withdraw from the contract. R EALTOR A
argued that continuing to market the property
and not making other brokers aware that the
property was under contract promoted his
client’s best interests by continuing to attract
potential buyers.
How do you think the hearing panel ruled?
®
®
®
®
A purchase offer with a contingency
to sell an existing home
R EALTOR A listed Seller S’s house and placed the
listing in the local association’s MLS. Within a
matter of days, R EALTOR
X procured a full-price
®
The REALTOR argued that offer from Buyer B. The
offer specified that Buyer
continuing to market the
B’s offer was contingent on
the sale of Buyer B’s curproperty and not making
rent home. Seller S, anxother brokers aware that ious to sell, accepted Buyer
B’s offer but instructed
the property was under
R EALTOR A to continue
marketing the property in
contract promoted his
hopes that an offer that
was not contingent on the
client’s best interests ...
sale of an existing home
would be made.
A week later, R EALTOR Q, another cooperating
broker working with an out-of-state transferee on
a company-paid visit, contacted R EALTOR A to
arrange a showing of Seller S’s house for Buyer T.
R EALTOR A contacted Seller S to advise him of
the showing and then called REALTOR Q to confirm that he and Buyer T could visit the property
that evening. R EALTOR A said nothing about the
previously accepted purchase offer.
R EALTOR Q showed the property to Buyer T
that evening and Buyer T signed a purchase offer
for the full listed price. R EALTOR Q left the purchase offer at R EALTOR A’s office.
®
®
®
®
®
®
®
®
®
®
®
®
®
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®
Ruling
The hearing panel disagreed with R EALTOR A’s
justification, pointing to the specific wording of
Standard of Practice 3-6 that requires disclosure
of accepted offers, including those with unresolved contingencies. R EALTOR A was found in
violation of Article 3. ✯
®
®
®
®
®
22
TEXAS R EALTOR
®
April 2005
View the full Code of Ethics in the Prof.
Standards section of TexasRealtors.com.
The first
steps to
success
New agents can make it in real estate—it
just takes planning, persistence, support, and
realistic expectations.
PHOTO © BANANASTOCK
by Bridget McCrea
A
fter 25 years of training new real estate agents,
Marilyn Eiland has gotten pretty good at sizing
up new recruits. Full of enthusiasm and energy,
they come to her like fresh sponges, ready to absorb
all of the knowledge required to succeed in real estate.
Unfortunately, most also bring unrealistic fi nancial
expectations and a naiveté about just how much
prospecting they’ll have to do to get through the first
12 months in the business.
It’s a business—plan accordingly
Many new agents are light on the business basics that
will guide them through the early stages of their sales
career. “The lack of a well-thought-out business plan is
April 2005
TEXAS R EALTOR
®
25
THE
F IR ST
ST EPS
TO
S UCCE SS
Brokers: A new agent’s success begins with you
Brokers and managers play key
roles in every agent’s early success, providing training and support to new recruits as they navigate their first year in the business. Here, trainers share their
thoughts on what Texas brokers
can do to better ensure the success of their new recruits:
Just having them join a R EALTOR
board and an MLS system, then
giving advice here and there isn’t
enough. On the other side of the
issue, it’s up to the agent to understand the benefits of having a successful training program behind
you when you get started.”
“Brokers need to include a lot of
confidence training in the mix
and make themselves available to
answer questions that help boost
a new agent’s confidence. I’m a big
believer in the power of positive
thinking, but I see this as an area
that’s sorely lacking among new
recruits. A lot of people just don’t
make it because they lack the confidence needed to succeed.”
“Brokers need to help rookies
build their skill level and their
confidence, and they need excellent training programs in order
to do that. They also need to put
a go-to person in place so agents
have someone who will answer
their questions as they come up,
and provide actual prospecting
tips that agents can use to build
their confidence and go out there
and get the business.”
®
— Ken Pearcy
many veteran agents who want to
fulfill that role. They could also
better reinforce rookie success by
taking the agent to lunch or giving
them a bottle of champagne when
they close their very first sale—
something that would make the
agent say, ‘Wow! I really love my
broker.’”
— Ellen Castro
— Marilyn Eiland
— Rhonda Hamilton
“Brokers probably shouldn’t hire
brand new people into real estate
if they don’t have the training and
support to help them get through.
“For starters, they can train better.
And, they could assign mentors,
despite the fact that there aren’t
the biggest stumbling block,” says Eiland, partner with
Houston-based Prudential Gary Greene, R EALTORS ,
where she’s developed training programs for more than
two decades. “They think the phone will just ring with
someone who wants to see a house and rarely take the
time to develop a plan and source of business.”
That’s likely why rookie agent stats are so disheartening. The National Association of R EALTORS estimates
that 78% of new agents leave real estate within two
years. Clearly, high hopes can get shut down quickly in
an industry where more than 1 million R EALTORS and
numerous non-member licensees went head-to-head to
sell 6.8 million existing homes nationally last year.
The good news is that with a dose of reality, broker
support, a solid plan of action, and a willingness to
®
®
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26
TEXAS R EALTOR
®
April 2005
“During the interviewing processs, brokers can paint a true
picture of what it is going to take
to be a successful agent. They
can ask themselves: Does this
person have what it takes and
the potential to succeed? Do they
have the financial resources? Does
their family support their career?
Do they have a sphere of influence that they can call upon? By
answering these questions honestly, brokers can better assist agents
to plan financially and time-wise
for their business start-up.”
— Jan Brand
pound the pavement, new agents can beat the odds. Ken
Pearcy, vice president of training for the Austin division
of Coldwell Banker United R EALTORS , is another educator who says it all starts with a business plan.
When new recruits come on board, Pearcy spends
two weeks training them on the fine points of business
and marketing planning. Key areas he covers include
first-year income goals, an accurate assessment of the
new agent’s financial resources and liabilities, and a
marketing plan that takes the agent through the first
sale and beyond.
“Marketing plans and income goals aren’t always
in sync, so we train them on how to do enough marketing to reach those financial goals,” says Pearcy, who
trains all of Coldwell Banker United’s 220 agents. “By
®
establishing some direction, we help them create a road
map, instead of just letting them go out and see if real
estate will happen.”
Make a long-term commitment
Floor time and open houses are popular ways to generate business, but Jan Brand says new agents need to
“go beyond the norm” when starting out. As director
of career development for 1,400-agent Ebby Halliday,
R EALTORS in Dallas, Brand refers to strategies like company advertising, floor time, and open houses as “passive.” To truly generate business, she says rookies must
devote half of each day to prospecting.
“Just get involved with meeting people,” says Brand,
who often points her new recruits to community activities, clubs, and organizations. Participation can help
get your name out there, she says, and will help others
think of you when it comes time to buy or sell.
Another good way to strengthen your chances for
success, says Pearcy, is to come into it with enough
money to hold you over for at least six months. Factor
in your spouse or significant other’s income to the mix,
and then figure out if you can live on your reserves,
plus that added income, for six months or longer as you
build your business.
“A good 80% of a new agent’s money will be made
during the second half of the year,” Pearcy explains.
That’s because it can take several months to start filling
the pipeline with listings and sales.
Eiland advises new agents to research brokerages
carefully before hanging their license at a particular
office. Intent on having new agents sell $1 million
in property during their first year in the business,
Eiland tells agents upfront that while the number
sounds high, it will generally only cover their firstyear expenses.
“They can think in terms of real income during
the second year,” says Eiland, who impresses upon
agents the need to get their feet wet during the first
year. Hand out business cards in the mall, she suggests,
come up with a list of 50 to 75 names from your
own life whom you can begin calling and mailing
information to immediately, and practice initiating
conversation with acquaintances who may very well
turn into customers.
“Get face-to-face with them and tell them that you’re
in real estate,” says Eiland, who adds that the agent
who is afraid to “bother” their friends with real estate
talk is going to have a tough time succeeding in this
relationship-based business.
®
Long-time agents can
learn a few things from
new recruits
They come into the office with PDAs and laptops in
tow, ready to fire up their state-of-the-art contactmanagement software and kick start their new real
estate careers. What they lack in real estate and
sales knowledge, they make up for with energy and
a willingness to embrace technology in any aspect
of their new careers—something not every veteran
agent wants to do.
Can the two groups learn from each other?
Definitely, say many real estate trainers who are
seeing an influx of younger, tech-savvy agents in
the field. “Because technology was part of their
previous career and life, most new agents today
possess tech skills,” says Jan Brand. “They’re
anxious to learn how to implement those skills
into their new career.”
New agents also infuse a natural enthusiasm
and energy into an office, says Brand. “They’re like
sponges—they want to learn everything.”
Ken Pearcy of Coldwell Banker United,
R EALTORS has seen a similar trend, and says
that enthusiasm can help boost an entire office’s
attitude about success. “New agents are very
enthusiastic about starting a career, and that
infects everyone in an organization,” says Pearcy.
“We all need a little burst of enthusiasm every once
in a while to get fired up again.”
Rhonda Hamilton of Rhonda Hamilton Learning
Services says the benefits new agents bring to
an organization go beyond just tech smarts and
enthusiasm. Because many have come from
different careers, those rookies also bring with
them new ways of doing things and innovative
strategies for tackling problems.
“Whether it’s through the use of technology or
some other method, the veteran agent who sits
down and learns from that person can increase
his or her own business profitability and time
management,” says Hamilton, “while the new
agent can watch, listen, and learn from the person
who has already racked up years of success in the
industry.”
®
April 2005
TEXAS R EALTOR
®
27
THE
F IR ST
ST EPS
TO
S UCCE SS
Establish yourself early if you hope to stick around
Calling an agent’s first year in business the “make or break period,”
Ellen Castro, a Dallas-based agent, author, speaker, and consultant says
new agents who want to beat the odds must work hard at creating a good
reputation for themselves. It matters not only to customers, but also to
other professionals in the industry.
“In real estate, reputation is everything,” says Castro, who helped rewrite the Texas Association of R EALTORS Quick Start manual. She adds
that agents who pay attention to detail (like putting correct dates on
contracts), establish themselves as reputable professionals (showing up
on time, for example), and build trusting relationships with clients (such
as promptly returning phone calls), will have much better chances of
success in the future.
“Every time you promise to call clients back and then neglect to follow
through, they’ll lose trust in you,” says Castro. “The more trust there is
between the parties, the easier it will be to get to—and through—the
closing process.”
Here are three additional areas that Brand advises all rookies to focus
on during their first few years in the business:
• Understand that you are starting your own business: You may be
working for a broker, but you’re actually an independent contractor.
Be willing to invest the personal and financial resources needed to
run your own business. Brand suggests talking to successful agents
and management to find out what works best for them. “There are
many resources available in our industry, including great speakers,
books, and magazine articles that explain the business and how to
focus your efforts in the right places in order to succeed,” she says.
• Stick to your guns: Plan your weekly schedule and stick to it, and
never let up on lead-generating activities such as farming and prospecting. Avoid overextending yourself by following a marketing plan
that’s in line with your resources, and adjust it accordingly as those
resources increase. “Be realistic in setting your budget,” Brand says.
• Establish standards: Eager to get to the closing table, many new
agents jump at any kind of business that comes their way. To those
people, Brand says, “Don’t waste your time on unmotivated buyers
and sellers.” Instead, use buyer and seller checklists to help determine
their seriousness. Key questions to ask include: Is this seller realistic
about the value of his home? Is this buyer ready, willing, and able to
purchase at this time? Is this buyer open to starting his application
for financing? “Eliminating time-wasters is crucial,” says Brand, “so
stay with what you have established as your professional standards
and boundaries.”
®
You will be rewarded for hard work
To those agents just starting out in real estate, Rhonda Hamilton, president of Longview-based Rhonda Hamilton Learning Services, says, “get
out there and make yourself known.” She has seen too many agents who
plan to rely on their own sphere of influence (friends, family, co-workers, etc.) to launch their careers but then fail to ever tell those people
about their new careers.
28
TEXAS R EALTOR
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April 2005
Give new agents
a quick start
One way brokers can help agents
learn important skills they need to
succeed is with the Texas Association
of R EALTORS Quick Start. This comprehensive course, completely updated for 2005 by industry experts and
educators, gives new agents information about prospecting, dealing with
buyers and sellers, technology tips,
record-keeping, and much more. For
more information, contact the TAR
Professional Development Department
at 800/873-9155.
®
“Then, they’re shocked when a
friend or family member buys a home
through another R EALTOR ,” says
Hamilton, who also helped rewrite the
TAR Quick Start Manual. She urges
agents to begin building name and
brand recognition early in the game.
Hand out brochures, attend business
functions, get involved with community events, join and get involved in the
local R EALTOR organization, and find
other inexpensive ways to keep yourself in front of potential customers.
“Sitting in the office all day is not
going to get you anywhere,” Hamilton
says. “You need to make a plan and
daily to-do lists that are aligned with
your own weekly, monthly, and yearly
goals. Then actually get out there and
do the work.” ✯
®
®
Bridget McCrea is a writer and
former real estate agent in
Dunedin, Florida. She has written
several real estate books, including The Real Estate Agent’s Field
Guide—Essential Insider Advice
for Surviving in a Competitive
Market (AMACOM Books).
Don’t let
manner
mistakes
cost you
money
The wrong words
and actions can
offend clients,
prospects, and
colleagues.
PHOTO © CREATAS
by Marjorie Brody
30
TEXAS R EALTOR
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April 2005
M
isconceptions about the role of etiquette in
business abound. In our fiercely competitive
market, it’s critical that real estate professionals understand and practice basic good manners. Buyers
and sellers don’t want to do business with people who
treat them poorly.
A telling consequence of bad business etiquette: The
Research Institute of America reported that 96% of customers never complain about discourteous professionals, but 91% specifically decide not to do business with
companies who have in some way offended them.
To avoid becoming one of these statistics, keep in
mind the following tips about good manners:
Don’t forget the basics
• Say please and thank you, hello and goodbye—it
sounds so basic, but I can’t tell you how many people
take this one for granted.
• Smile and look interested in others ... and listen.
Don’t cut people off or otherwise interrupt them.
• Open doors for others, regardless of gender.
• Look at people when you talk to them.
• Introduce yourself and others.
• Be helpful.
• Respect people’s time.
• Compliment people.
• Write thank-you notes.
• Do what you say you will do.
Meeting manners
Whether running a sales meeting, attending a
workshop, or making a listing presentation, a few
simple rules of etiquette can make the experience
more enjoyable for everyone.
• When you are the presenter, make sure the equipment works and that you have a backup plan in
case something goes wrong.
• Do not exceed your time allotment when giving
a presentation.
• Do not go off on tangents.
• Do not engage in side conversations.
• Turn off cell phones, put pagers on vibrate.
• Don’t arrive late or leave early (or intermittently).
• Do not slouch or sprawl in your seat, doodle,
drum your fingers or yawn, read, eat, or sleep.
• Avoid sarcasm.
• Do not attack people or be unfairly critical.
Professional appearance
• Remember that your clothing creates an impression.
Even business casual doesn’t mean sloppy.
• Don’t wear cologne that is too strong.
• Grooming counts—be clean and neat.
• Don’t chew gum in public.
Also, pay attention to your body language, as it affects
people’s perceptions of you. Remember to smile, have
good eye contact, and an open stance.
Language tips
• Be aware of slang.
• Avoid foul language.
• Explain acronyms and jargon—not everyone understands terms very familiar to you.
• Avoid sarcasm.
• Power robbers (I hope, I guess, maybe, probably)
undercut your credibility.
• Be careful where you hold conversations. Elevators,
hallways, restaurants, airports, trains, etc., may
not be appropriate spots to discuss sensitive or
private matters.
Use technology appropriately
• Cell phones are not private; you shouldn’t use them
in public areas. Never disrupt the service you are
performing to take a call on a cell phone or regular
phone.
• Pagers/beepers: Put them on vibrate and don’t check
private or confidential information in front of others.
• E-mail is not private. Check spelling, keep messages
short, always use the subject line.
• Don’t use speaker phone unless it’s a conference
call; people who don’t pick up their phones are seen
as arrogant.
• Keep your outgoing voice-mail message short and
change it regularly so people know when to reach
you. When leaving a message, say your name and
number slowly at the beginning and end.
• Smile when talking on the phone and don’t chew
gum or food.
• Remember, no one likes to be placed on hold on the
phone.
• When scheduling an appointment, make sure you are
very specific—double-check dates and times.
• Verify all appointments at least 48 hours before they
are scheduled to occur.
Manner myths
Some people dismiss the importance of good manners
April 2005
TEXAS R EALTOR
®
31
D ON’ T
L ET
M ANNER
MISTAK ES
for reasons that don’t hold up. Here are some common
myths about etiquette:
Myth: It takes more time to do things politely. While
it may take time to learn to apply manners—just as it
takes time to incorporate any new behavior into your
routine—good manners save you time. You won’t have
to spend time soothing hurt feelings or making up for
damaging mistakes.
Myth: Guidelines for proper behavior just make things
more complicated. Etiquette isn’t all that complicated.
Most of the guidelines are based on kindness, efficiency,
and logic. Once you
become familiar with
Marjorie Brody will
the guidelines, they’re
easy to apply to difbe one of the many
ferent situations. And,
dynamic presenters at
they free you from the
discomfort of uncerthe 2005 Texas REALTORS®
tainty and the fear
that you might offend
Convention in Corpus
someone.
Christi Sept. 7 – 11. Look
Myth: Etiquette is
old-fashioned. While
for more information
it’s true that business
today is not as univerabout the convention in
sally formal as it once
upcoming issues and on
was, people still need
to be courteous and
TexasRealtors.com.
act professionally.
Not only does this
reflect well on you and your company, but your work
environment is also more enjoyable when people are
kind and pleasant.
Myth: If an office has a laid-back environment, etiquette
doesn’t apply. Even if your office environment is quite
casual and laid-back, etiquette is appropriate. Being
friendly and polite is important in all environments.
Myth: Manners are constant. Once you learn them, you
don’t have to update them. While we often associate good
manners with what our mothers told us about behaving in social situations, those rules don’t always apply
in modern business settings. For example, some women
were taught to curtsy upon being introduced. That is
certainly not appropriate in today’s work environment.
Myth: If you get a reputation for being polite, people
won’t respect you. Being polite doesn’t mean you’ll lose
clout; instead, you’ll gain it. If you treat people with
respect, they’ll respect you. Aren’t you more inclined to
go the extra mile for someone who honors your dignity?
Being strong doesn’t have to imply being mean.
32
TEXAS R EALTOR
®
April 2005
COST
YOU
MONEY
Myth: Emphasizing what’s proper just shows that you are
a snob. Sometimes, people do use their knowledge of protocol to intimidate others. And being a snob does demonstrates bad manners. The key to courtesy is making
others feel comfortable. Do that and you can’t go wrong.
Myth: Manners stifle self-expression. You can be yourself while being polite (unless, of course, you pride
yourself on being rude). Good manners don’t stifle selfexpression—they just refine it. You can chitchat without engaging in malicious gossip. You can be straightforward or honest without being crude. Etiquette allows
for a wide range of behavior. You can be polite and still
have plenty of personality.
Myth: Manners won’t help you improve the bottom line.
Applying appropriate business etiquette can both directly and indirectly enhance your bottom line. What’s
more, only a small investment is needed for a large
return. Here’s why: Customers and clients are more
likely to do repeat business with someone who makes
them feel comfortable and valued—two outcomes of
appropriate business manners.
Myth: Business etiquette gives you firm rules, with the
answer for every sticky situation. Etiquette guidelines are
neither rigid nor carved in stone. Appropriate behavior
changes with the times and with the situation. While
you should know and use good manners, you choose
when to apply them. However, you should certainly not
break etiquette guidelines out of ignorance.
Though business etiquette won’t provide you with
behavior cues for every possible encounter, it will
provide valuable guidelines that, combined with
your knowledge of the situation and the personalities
involved, will get you through most situations. You will
have the knowledge to put your clients and customers
at ease and impress them not only with your real estate
service but with your manners as well. ✯
Copyright © 2005 Marjorie Brody and Brody
Communications Ltd.
Marjorie Brody, CSP, CMC, PCC, ( 800/726-7936,
BrodyCommunications.com), is a speaker, consultant, and coach to Fortune 1,000 executives.
She has written more than a dozen career-related
books, including the award-winning Help! Was That
a Career Limiting Move? and 21st Century Pocket
Guide to Proper Business Protocol. Her workplace
and career commentary has been featured on CNBC
and Fox-TV, in the Wall Street Journal, and many
other media outlets.
TAR 2005
Winter Meeting
2004 REALTOR
of the Year:
Louise Hull
®
Louise Hull, broker/
owner of Cornerstone
Properties in Victoria,
earned TAR’s top honor
as 2004 R EALTOR of the Year. She has served in
numerous leadership positions on many levels of the
R EALTOR organization during her successful career.
Hull is a longtime member of the Victoria Board of
R EALTORS , where in 1987 she served as president and
earned the R EALTOR of the Year Award.
At the state level, Hull served as the TAR Region 11
vice president in 1995 and 1996, TREPAC Orientation
chairman in 1994 and 1995, a TREPAC trustee from
1991 to 1997, and in 2000 as chairman of the Texas
Association of R EALTORS .
Hull has used her communications savvy as a
member of the National Association of R EALTORS
Communications Committee, serving during the
formative years of the ongoing and highly successful
nationwide image advertising campaign. She’s a
veteran NAR director who has chaired or served on
several NAR committees.
In 2001, Gov. Rick Perry appointed Hull to the
Texas Real Estate Commission, and she also currently
serves as NAR Regional Vice President for Texas and
Louisiana.
Hull is pictured above with 2003 R EALTOR of the
Year Ann Houston (right) and below surrounded by
her family and friends.
®
®
®
®
T
he Texas Association of REALTORS 2005
Winter Meeting concluded after five days
of meetings, education sessions, and
networking. Meeting attendees found plenty of
worthwhile activities at the Hyatt to occupy their
time. Here are some of the highlights:
®
®
®
Lt. Gov. David Dewhurst (pictured above)
delivered the keynote address at the Board of
Directors Meeting. Dewhurst mentioned the
challenges facing Texas and said that R EALTORS
are important to any solutions.
State Sen. Todd Staples addressed the TREPAC
Investors Breakfast and Awards, praising
R EALTORS for their political activism and
encouraging them to stay active in the schoolfinance debate to ensure homeowners don’t continue to face an unfair tax burden.
State Rep. Rob Orr spoke at the TREPAC Trustees
Meeting about his experiences as a freshman
representative trying to secure appointment
to committees where he could promote
R EALTOR issues.
The Texas Association of R EALTORS Executive
Board approved TAR Life Membership for David
Stirton of Houston.
The Texas Association of R EALTORS Board of
Directors elected the following officers for 2006:
Chairman Dennis Patillo, Chairman-elect Avis
Wukasch, and Secretary/Treasurer Randy Jeffers.
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34
TEXAS R EALTOR
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April 2005
®
A few days after
addressing the TAR
Awards Luncheon via
speaker phone, Sandra
Lancaster of Grand
Prairie accepts the
Tom D. Morton Award
for AE of the year from
CEO Benny McMahan
at a ceremony in
Grand Prairie.
John Talhelm (left)
and Kevin Erck of
Cushman & Wakefield
of Texas in Houston
display their William
C. Jennings Award for
commercial transaction of the year.
Four members this year earned the Omega Tau
Rho award recognizing their outstanding service to the real estate industry. Pictured above
are Mark Wolfe, Dallas, and Carolyn Sutherlin,
Abilene; not pictured are Kent Ray, Euless, and
Janice Campbell, Austin.
Annette McCanse (left) and Sherryl Wesson
from the MetroTex association accept an
Education Program of the Year award.
Educators of the Year Kay
LePage (left) of San Antonio
and Barbara Bach of Dallas
pose with 2004 Chairman
Dave Dalzell.
TAR Chairman Lance Lacy
addresses the Housing
Initiatives Committee.
Sally Yaryan and Roger
Sturgell from the Austin
board accept an Education
Program of the Year award.
April 2005
TEXAS R EALTOR
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35
TAR
20 05
W INT ER
MEET ING
TREPAC Golden R contributors
are honored at the TREPAC
Investors and Awards Breakfast.
From left to right, Wayne
Stroman, Scott Kesner, Dwight
Hale, George Stephens, John
Molyneaux, Ronda Needham,
Benny McMahan, Gooley Orr,
D’Ann Harper, Mary Frances
Burleson, Cindy Cunningham,
Mary Garvin, Bill Watts,
Lance Lacy
TREPAC awards
Quota: Amarillo, Beaumont, Corpus
Christi, El Paso, Greater Dallas,
Greater Fort Worth, Kingsville,
Orange, Pampa, Port Lavaca/
Calhoun County, Rockport, San
Antonio, Victoria, Wichita Falls
Participation: Abilene, Amarillo,
Austin, Borger, Collin County,
Del Rio, Greater Lewisville, New
Braunfels/Canyon Lake, Navarro
County, Northeast Tarrant County,
Port Lavaca/Calhoun County,
Rockport, San Antonio, San Patricio,
Wichita Falls
Charles McMillan, candidate
for NAR first vice president in
2007 and former TAR chairman, gives the invocation at
the Awards Luncheon.
36
TEXAS R EALTOR
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April 2005
Golden R contributors:
Mary Frances Burleson, Cindy
Cunningham, Kim Erwin, Bob Hale,
Dwight Hale, D’Ann Harper, R. Scott
Kesner, Lance Lacy, Benny McMahan,
Dennis Patillo, Tom Stacy, Timothy
Teas
Sustaining Golden R contributors:
Mike Brodie, Virginia Cook, Mary
Garvin, Gooley Orr, John Molyneaux,
Ronda Needham, George Stephens,
Wayne Stroman, Bill Watts, Randy
Wright
State Sen. Todd Staples speaks
about the “mobility crisis” in
Texas at the TREPAC Investors
and Awards Breakfast.
Emmy Award-winning TV
reporter Jeff Crilley explains
ways to get free publicity in
his education session “How to
finesse the press.”
Chairman-elect Dennis Patillo (foreground) addresses the Region 4
Caucus while Secretary/Treasurer
Avis Wukasch and Region 4 reps
Richard Taylor (second from left)
and Van Glover look on.
April 2005
TEXAS R EALTOR
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37
The deal that died three times
The winners of the 2004 William C. Jennings
Lone Star Award for commercial transaction
of the year triumphed in the face of strict site
constraints and a stigmatized property.
John Talhelm (center) and Kevin Erck
(right) of Cushman &
Wakefield of Texas
Inc. in Houston
accept the William C.
Jennings Lone Star
Award from CEO
Benny McMahan
at the TAR Awards
Luncheon in February.
38
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April 2005
That was the scenario facing Senior Director John
Talhelm and Associate Director Kevin Erck of Cushman
& Wakefield of Texas Inc. in Houston.
Who will buy that?
In April 2000, Talhelm and Erck contracted to represent
Panalpina, a multibillion-dollar international supplychain-management corporation with two existing facilities in Houston. Panalpina wanted to build a new office
and warehouse facility to consolidate its existing airfreight-forwarding and ocean-freight-packaging groups.
PHOTO © CREATAS
I
f you don’t do commercial real estate, perhaps the
following will help you put the 2004 commercial
transaction of the year in perspective: Your client
wants to buy a brand new house that’s twice the size
of his old one. He must keep the same commute, stay
in the same school district, and won’t buy the new
house until his old one sells. That’s asking a lot, but not
unrealistic, right?
Did he mention that the city has announced that
within two years it will condemn his property and
take it by eminent domain?
The new Panalpina facility at the Houston Intercontinental Trade Center consolidated
the company’s air-freight-forwarding and ocean-freight-packaging operations.
PHOTO COURTESY OF CUSHMAN & WAKEFIELD OF TEXAS INC.
In addition to certain square-footage requirements,
the nature of Panalpina’s business necessitated that
the new facility be within certain travel times to an
international airport and a deep-water ocean terminal.
Also, the project could not move forward until the
company’s existing air-freight facility, near Bush
Intercontinental Airport, was sold.
The catch was that the existing facility, a 38,000square-foot office structure with 100,000 square feet of
warehouse, lay in the airport’s expansion path. It was
no secret that at some point the city would condemn
the property and acquire it by eminent domain.
“The airport had said that during a one- to two-year
period of time, it was definitely going to take that
property,” says Talhelm. “The hard part was that there
was no definite time line. They just let that fact be
known, which made it all the more difficult to sell it.”
Lost in translation
The existing facility wasn’t the only obstacle that
threatened to end the deal. Panalpina almost killed the
whole project when the annual-cost numbers it received
looked too expensive. Somehow, the company was
given incorrect figures.
“That was the most nerve-wracking scenario,” says
Talhelm. “They had numbers that were almost double
what the actual estimated annual cost was going to be.”
Talhelm and Erck went through a complete financial
analysis to locate the source of the erroneous data.
“It took about a month to uncover that,” Talhelm
estimates. “Information was somehow translated
or communicated incorrectly, and it almost cost
us the deal.”
Just a few criteria …
The group searched for a buyer for the existing airport
facility while also looking for a site for Panalpina’s new,
consolidated Houston headquarters, which had a few
requirements of its own:
• Location: It had to be within a 15-minute drive of
an airport and a 30-minute drive of a deep-water
ocean terminal to accommodate Panalpina’s timesensitive deliveries.
• Size: The parcel needed to be about 50 acres, with
parking for 435 employees and storage for up to
30-ton loads.
• Shape: The parcel needed to be primarily rectangular and able to accommodate construction of a
510,000-square-foot building.
• Flood zone: The site had to be located outside of
the 100-year flood plain.
While the site selection, request for pricing, and
design phase on the new headquarters moved forward,
marketing of Panalpina’s existing facility languished.
Due to the potential condemnation, no buyers would
assume the risk. Talhelm and Erck met numerous
times with representatives from the Houston Aviation
Division, offering several proposals that outlined
ways the city could acquire the property. However,
the city saw no reason to move on the property if
April 2005
TEXAS R EALTOR
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39
THE
DE A L
T H AT
DIED
THR EE
T IME S
there were no potential buyers.
“The city doesn’t do anything without a reason,”
explains Talhelm, “especially if they’re considering
doing something ahead of schedule.”
Without unloading the existing facility at the airport,
the entire Panalpina project was in jeopardy.
The solution
No one wanted to buy the airport property. During
one of the many late nights spent trying to devise a
strategy to sell it, Talhelm and Erck devised a way to
secure a buyer. Since
many developers
would covet the
“The requirements
opportunity to design
for distance and time
and construct the
new, consolidated
constraints that were
Panalpina facility, they
placed on us by Panalpina could use that fact as
leverage to unload the
from the standpoint of
existing facility.
They stipulated
location really gave us a that all bidders on
the development
very tight area in which
of Panalpina’s new
to find this significant-size facility had to agree to
purchase the existing
piece of property.”
Panalpina facility at
Bush Intercontinental
Airport if they
were selected as the winning developer. Cushman &
Wakefield would continue to aggressively market the
facility on the successful bidder’s behalf, but ultimately
the winner would be responsible for the property.
“It was the price of admission. There were going to be
plenty of financial rewards for the developers,” explains
Talhelm.
All the interested developers approved this caveat,
thus providing the catalyst—potential buyers—for the
airport to move on the project.
“The airport people were nervous because they knew
if we did get a tenant or buyer in there, then the price
would go up when they wanted the property,” Talhelm
says. “Even though they have eminent domain, they
still have to pay fair market value. They saw the level of
interest we were generating and stepped up and made
the offer.”
It took the right combination of incentives to make
the developers stand up and agree to this type of clause.
In this case, the incentives were the fact that this was
40
TEXAS R EALTOR
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April 2005
going to be one of the largest projects in the country
that year, coupled with the fact that the tenant was a
multibillion-dollar company. That helped the developers
assume more risk than they might on other projects.
Home at last
With the certainty of a buyer for the airport property,
the Cushman & Wakefield team finalized a 100-page
RFP and provided it to bidders to base their detailed
proposals on.
After several rounds of presentations by developers,
Talhelm and Erck chose Chicago-based International
Airport Centers. That decision began the months-long
process of finalizing lease documents, completing
assignment of the land contract to the developer, executing a sales agreement for the existing building, and
completing the design and layout of the new facility.
“The requirements for distance and time constraints
that were placed on us by Panalpina from the
standpoint of location really gave us a very tight
area that we had to find this significant-size piece of
property,” says Talhelm.
International Airport Centers, an industrial
developer, purchased 50 acres of land that fit the
criteria in the Houston Intercontinental Trade Center,
near the airport—a stone’s throw away from the old
facility. The parcel was chosen for its location as well as
its large amount of unimproved land.
Contracts were executed in July 2003, three years
and four months after the initial assignment date,
and construction finished in June 2004. The Houston
Aviation Division acquired Panalpina’s existing facility
simultaneously, which released International Airport
Centers from purchasing the property.
A really big deal
When it was all done, this project resulted in the
construction of the largest single-tenant building in
Houston since 1997. It also ranked as one of the 15
largest real estate transactions closed in the United
States in 2004.
And it may turn into one of Cushman & Wakefield’s
most recognized. This project is a finalist for the Best
Industrial category at the Houston Business Journal’s
2005 Landmark Awards, which honor commercial real
estate projects that make significant impressions on the
Houston landscape.
“I’ve certainly been involved in projects that were
bigger land-wise,” says Talhelm, “but this ranks as the
most complicated deal I’ve ever done.” ✯
Advertiser Index
1% Realty ...................................... 19
Advanced Access Internet ............ 37
Best Home Warranty ..................... 17
Calculated Industries ..................... 13
Capital Farm Credit....................... 21
Capital Real Estate Training .......... 42
Commission Express ..................... 21
Continuing Education ................... 15
Craig Proctor ................................... 7
CRS Council................................... 23
Grubbs Infinity ....... inside back cover
Exit Realty ........24, 41, & back cover
Hard Money .................................. 42
Help-U-Sell ...................................... 5
Heritage Land Bank ...................... 33
Info Pak ......................................... 42
Leader Mortgage .......................... 37
Nationwide Insurance ................... 15
POSTcards4YOU ........................... 37
RII Stroman .................................... 42
R.D. Baker ..................................... 42
Real Fast ........................................ 29
Real Living ..................................... 19
Real Living DFW ............................ 37
Realty World .................................. 42
RE/MAX .......... inside front cover & 1
RE/MAX Lake Cities ...................... 37
Reo Advisors ................................. 15
Resulti ............................................ 42
Sellstate Signature Realty ............... 2
Sign Studio .................................... 42
Stoneburner and Associates ......... 15
Texas Home Warranty ................... 19
Texas REALTOR® Advantage ........... 10
Texas REALTORS® Land Institute ..... 13
TREPAC ......................................... 13
UPS .................................................. 8
Washington Mutual ....................... 11
WelcomeMaps.com ....................... 19
42
TEXAS R EALTOR
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April 2005
viewpoint
Go team!
Recruiting the right people for the right job.
by Bob Corcoran
ILLUSTRATION © ARTVILLE
I
f you opened a restaurant, would
you be the cook, waiter, host, and
manager? No? You shouldn’t try to
perform every role in your real estate
business either. To be successful in this
profession, you need the right people
doing the right jobs.
Too many agents, though, try to do it
all. So let me ask you: How much time
do you spend on activities that don’t provide income?
Real estate agents perform four dollar-producing tasks: list, prospect, sell, and
negotiate. The rest are not profitable activities.
Everything you do outside these four tasks steals
time from you that you could have used taking
your business to the next level.
Now, the big question: How do you hire the
right people? Look again at that list of four tasks.
Notice hiring isn’t one of them. I’m a big proponent of outsourcing the hiring function. A temp
agency, recruiter, or consultant can help. Not only
can that third-party perspective be healthy, it will
save you from doing non-dollar-producing work.
But if you choose to do it yourself, my advice,
whether you’re hiring salespeople or administrative staff, is this: Do not rush. The more time you
spend preparing to hire, the better. If you hire
out of desperation, you’ll end up deeper in the
hole fi xing a bad situation. And the wrong pick
can bring your business to a screeching halt.
When that person leaves, guess who gets to do
his work? Plus, a poor employee is going to affect
you and your team emotionally, and your clients
will pick up on this.
When you decide to hire, write down all the
duties the position will fulfill. Design the job
with structure and organization, and make it fit
your long-term needs and business plan.
For the interview, choose strategic questions.
Here are a few that have proven successful in my
business when hiring both administrative staff
and salespeople:
Have you ever played team sports? Remember,
you’re creating a team. You want people who
understand the team concept. Avoid building a
group of individuals who just call themselves a
team. A true team doesn’t have ulterior motives
and team members are on the same page; they
know precisely where they’re going and how they
will get there.
Was the team any good? Why or why not? See
if this person understands what makes a team
flourish or flounder.
Tell me about a favorite work experience? This
will help you understand what the person likes
in a job and if your opening fits his or her needs
and wants.
Tell me about a former favorite boss? This reveals
the kind of personality the interviewee works
best with. Will you mesh with the prospect? (An
important note: You have to know yourself and
the personality types you work best with, too.)
Tell me about a bad past work experience and
how you handled it? This opens the door to how
the person might function in a stressful situation—and I don’t have to tell you, real estate has
its share of stress.
I challenge you to take a fresh look at your
business and production levels right now. Take a
few minutes to write down where you are and ask
yourself the tough question about whether you
are where you want to be. If not, maybe you can
benefit from building a team with the right players in the right position. A team that’s moving
toward the same goal. A team with synergy. And
a team that will drive you toward your goals. You
can build that team if you plan and hire right.
Good luck! ✯
Bob Corcoran is founder and president of
Corcoran Consulting (CorcoranCoaching.com),
an international consulting and coaching company that specializes in performance coaching,
and the implementation of sound business
systems into the broker’s or agent’s existing
practice. You can reach him at 800/957-8353
or [email protected].
April 2005
TEXAS R EALTOR
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43
?
real IQ
How do you fare?
C
omplying with fair-housing laws
sounds easy, but do you know what
to do when faced with a real-world
situation?
Take a moment and review these questions
and answers. See how well you really
understand the rules of fair housing.
1. True or false? A landlord may advertise that
an apartment building is non-smoking.
2. True or false? An agent who advertises
listings only in her church newsletter
wouldn’t violate fair-housing laws; she’s just
marketing within her sphere of influence.
3. It is legal to show a single buyer only
downtown lofts if he says:
a) “I don’t want a huge place”
b) “I’m not sure if I want a house or condo”
c) “I want to buy a downtown loft”
d) none of the above
4. True or false? You may not advertise
a property as being within “walking
distance” of a grocery store because that
discriminates against handicapped people.
5. True or false? A landlord may not refuse to
rent to a person who uses illegal drugs.
6. If you represent a black seller who refuses
an offer because he doesn’t want to sell to
a Hispanic buyer, you should:
a) ask him to inform the buyer in writing
b) stop accepting offers from Hispanic
buyers
c) ignore the remark and reject the offer
d) inform the seller that it is illegal to reject
an offer based on the buyer’s race
7. Which of the following is not one of the
seven protected classes under federal fairhousing laws?
a) sexual orientation
b) race
c) religion
d) national origin
8. True or false? A white woman who will
sell her home to anyone except another
white person is not in violation of fairhousing laws.
1.
True.
5.
False. Illegal-drug users are not considered handicapped.
2.
False. Advertising your listings exclusively in a religious publication
6.
d.
discriminates against people of different religions.
7.
3.
4.
False. Descriptions of properties, services, or facilities (e.g., walkup, great view, jogging trails) do not violate fair-housing laws.
44
TEXAS R EALTOR
a. The seven protected classes are race, color, sex, handicap,
familial status, and national origin.
c.
®
April 2005
8.
False. Refusing to sell to anyone due to race or color violates fairhousing laws.
ILLUSTRATION © ARTVILLE
Answers