Mission-Directed Real Estate Brokerage as a Tool for Buyer and

WEBINAR:
Mission-Directed Real
Estate Brokerage as a
Tool for Buyer and
Neighborhood Stability
Sponsored by
NeighborWorks America’s
Community Stabilization Team
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Our Speakers
Moderator:
Marcia Nedland
Fall Creek Consultants
Ithaca, New York
Welcome:
Sarah Greenberg
NeighborWorks America
Washington, DC
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Our Speakers
Panelist:
Jorge Vega
Community HousingWorks
San Diego, California
Panelist:
Mike Loftin
Homewise
Santa Fe, New Mexico
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Our Speakers
Panelist:
Eric Dahl
Community Realty
Albany, New York
Panelist:
Donna C. Williams
Live Urban! Keller Williams
Realty
Chattanooga, Tennessee
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Ask Questions
•  In the right panel of your screen, you’ll see a
place to “Chat” and type questions.
•  Please choose the option of sending “To Host
and Presenter” or “To Allison McMullin”, then
type your question in the box and hit your
Return key to send.
•  The moderator will ask your questions at the
end of the presentations.
6
For More Information
This presentation and other resources will
be available for download at
www.StableCommunities.org/real-estate.
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Welcome
Sarah Greenberg
Senior Manager,
Community Stabilization
NeighborWorks America
Washington, DC
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Objectives of the Webinar
•  Describe the importance of real estate
brokers to buyers and neighborhoods
•  Share alternatives for creating or
engaging real estate brokers who will
work with you on your mission
•  Share pros and cons and business
models of mission-directed brokerages
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Agenda
•  2:00 Welcome
•  Jorge Vega, Community
HousingWorks
•  Mike Loftin, Homewise
•  Eric Dahl, Community Realty
•  Donna C. Williams, Live Urban! /
Keller Williams Realty
•  Audience Q&A
•  Adjourn 3:30
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Panelist
Jorge Vega
Community HousingWorks
Realty and Lending
San Diego, California
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www.chworks.com
www.chworks.org
Community HousingWorks
is a San Diego non-profit
that helps people and
neighborhoods move up
in the world by providing
a full-range of housing
options, combined with
training and support.
Mission-Directed Real
Estate Brokerage
Community HousingWorks Realty & Lending Mission
Statement
• Mission Statement
•  Community HousingWorks is a San Diego non-profit that
helps people and neighborhoods move up in the world by
providing a full range of housing options combined with training
and support.
• Programs
• Housing and Redevelopment
• 1500+ affordable rental housing units in San Diego County
•  Community Programs
• Resident Services
• Home Ownership Center
• Counseling
• Pre-purchase / Home Retention / Post Purchase
• Lending
• 1st Mortgage Lending / Down Payment Assistance
• Realty
•  Sales & Listings / Acq-Rehab-Resale / NSP / SS
www.chworks.com
www.chworks.org
CHW R & L Organizational
Structure
•  CHW R & L is a wholly owned subsidiary of CHW
–  Board of Directors
–  Finance / Budgetary controls
–  Separate E & O insurance
–  Construction & liability insurance
–  Legal counsel
•  State of California DRE
–  Corp. brokerage license with broker of record
•  Safe Act / NMLS compliant
www.chworks.org
CHW R & L: Prior to Launch
Conclusions
•  The first time home buyer segment of the
real estate market has been traditionally
underserved by large brokerages
•  A unique opportunity exists for community
based organizations that have an expertise
in the areas of real estate, management,
development and housing finance.
•  Creating home buyers is preferable to
searching for home buyers.
www.chworks.org
CHW R & L Department Goals
•  To develop a self-sustaining (non-grant dependent)
brokerage focused on the needs of first time home
buyers & sellers
•  To compliment the existing services offered at CHW
and deliver them in a manner consistent with the
organization’s mission
•  To promote home ownership
www.chworks.org
CHW R & L Services
•  Buyer & Seller Brokerage Services
–  Specialized toward needs of FTHB
•  Short Sales
–  Most result from failed attempts to modify
existing loans / generated in house
•  REO Broker
–  List bank owned properties
•  Acquire / Rehab / Re-sell
–  Directly for CHW
–  NSP recipients / other entities
•  New Home Sales
www.chworks.org
CHW R & L Competitive Edge
•  Large existing client pool and database
–  On going pre-purchase education
–  Short sales
–  Post purchase counseling
•  Direct lending capacity
–  1st mortgage lending
–  Down payment assistance program expertise
•  National affiliations
–  NW / NCLR / NAR
•  Access to ongoing training and
support
•  Grant eligible
–  Operating cost relief
www.chworks.org
CHW R & L Staffing Model
•  Broker of Record
–  Salary
–  No commission or stipend
•  Licensed REALTORS
–  Salary
–  Per transaction stipend (not dependent
on commission amount)
•  Admin Support
–  Salary
•  Transaction coordinator
–  Per transaction contract (independent
contractor)
•  Consultant
–  Independent contractor
Dealing with Real and Perceived
Conflicts of Interest
•  Proper authorization
–  Board
–  Licensing entity
–  Buy-in from existing staff
•  Proper disclosure
–  Affiliated business disclosure
–  Use of standard documents
•  Industry involvement
–  Active membership within local realty
trade association
–  Communicate your organizations’
policies
–  Develop partnerships
Find the Right Broker
• 
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Must believe in the organization
Socially motivated
Established business track record
Compliment to the existing team
Contact Information
•  www.chworks.org
•  [email protected]
You Can Do It!!!!!!
www.chworks.org
Panelist
Mike Loftin
Executive Director
Homewise
Santa Fe, New Mexico
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Homewise Business Model
Presentation
Michael Loftin,
Executive Director
Homewise Business Model
Marketing
and
Buyer
Community
Outreach
Assessment
Cost
Cost
Buyer
Development
Real Estate
Sales
Lending
Cost
Income
Income
-Real Estate sale
commissions
-Origination fees
-Sales referral fees
-Servicing release
premiums
-Developer fees
-Junk fees
The Financial Engine Problem
Revenue growth not linked to program growth
Program Growth & Costs
Revenue
Funding Gap
What’s This?
What’s This??
Homewise Business Model
Marketing
Buyer
and
Community
Outreach Assessment
Buyer
Development
Real
Estate
Sales
Lending
Successful Homeownership
Each function is aligned with the next, building the foundation for
customers’ long term financial security and organization’s self
sufficiency
Homewise Business Model – Key Results
Homewise earned 85% of its operating costs in fees in FY 08
Pros of Real Estate Brokerage
Improved Customer Service and Use of Resources:
•  Buyers purchase within purchasing power
•  Buyers referred only to good mortgage lenders
•  Increased control over subsidy sources (don’t oversubsidize)
•  Can help sell foreclosed properties quickly (before they
run down the neighborhood)
Pros of Real Estate Brokerage
Pros of Real Estate Brokerage
Pros of Real Estate Brokerage
Homewise earns income
from a variety of
sources
Cons of Real Estate Brokerage
•  Increased Liability
•  Complexity – New business lines don’t add
complexity they multiply it.
•  Increased expense of managing business
•  Alignment
•  Performance planning
•  MIS
Managing the Complexity -Standardization & Infrastructure
  Management
Information System that:
Is Specific to Business Model/Strategy
  Follows Workflow
  Helps Line Staff Get Their Job Done
  Gives Management the Data it Needs to
Manage
  Measures Operational Efficiency, Output, &
Impact
  Efficiently Provides Reports to 3rd Parties
 
Managing the Complexity – The
Homewise Applicant Tracking System
Work Flow Management
 Follow the work flow of the home purchase process
 Facilitate case load management for counselors, sales
agents, and loan officers
 Facilitate handoffs between work functions
 Provide tools to customers (action plans, buyer ready
certificates, credit repair letters, etc.)
 Communicate with mortgage origination software and
desktop underwriting
HATS – The Homewise Applicant
Tracking System
Real Time Reports
 Operational reports for improved efficiencies (conversion
rates, drop out rates, cycle times)
 Outputs by staff member and in aggregate (inquiries,
intakes, buyer ready clients, purchase contracts signed,
mortgages closed, class attendees, active counseling
caseload, etc.)
 Production and earned income cash flow projections
 Impacts (increase in credit scores, savings, wealth created;
reduction of consumer debt; etc.)
Conflict of Interest Issues
  Assumption
that separations of duties
results in better outcomes is questionable
  Regulatory system regulates activity (who
does what when) not outcomes
  Better to focus on outcomes
 
Why not prohibit making a subprime loan to a
prime borrower rather than who is allowed to
rip-off the borrower and in what manner?
Nonprofit Broker Ethics
  Be
customer centric
  Strive to get customer best deal possible
  Bewar of practices that could compromise
customer:
Realtor commissions vs. salary for
compensation
  Representing sellers (as opposed to buyers
only)
 
Marketing
  Homewise
markets homeownership – not
homes, mortgages, or brokerage services
  Homewise wants to be the entry point of
the process to people thinking about
buying a home.
Business Campaign for
Homeownership
•  140+ Business Partners
•  Over 300 buyers in two years
Panelist
Eric Dahl
Community Realty
Albany, New York
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Community Realty
New York’s Capital District.
  Four-counties.
  Urban focus.
  Regional collaboration.
  First closing in 2005.
  www.yourownhome.org
 
Capital District
Homeownership Collaborative
 
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Affordable Housing Partnership (Lead Organization)
Albany Community Land Trust
Albany County Rural Housing Alliance Better
Neighborhoods Inc.
Community Loan Fund of the Capital Region
Community Land Trust of Schenectady
TRIP NeighborWorks® Homeownership Center
TAP Inc.
Charitable Leadership Foundation
In-House, but Independent.
Assumed name of Affordable Housing
Partnership of the Capital Region Inc.
  Licensed broker & agents
  Independence helped:
 
–  Housing counselors promote choices.
–  Mitigate real & perceived conflicts of interest.
–  Maintain relationship with seven partners.
–  Keeps other Realtors® engaged in partner’s
programs.
–  Distinct identity and marketing.
Initial Goals (2004)
 
 
 
 
 
Service (buyers)
Promotion (neighborhoods)
Production (#)
Representation (buyers)
Revenue (social enterprise)
Goal 1: Service
 
A perceived gap in our delivery system:
 
We tried to put the agent up front:
Goal 2: Promotion
 
 
Four counties w/emphasis on urban
neighborhoods.
Since inception:
–  80% of Community Realty’s
transactions have been in city
neighborhoods.
vs.
–  40% for the 4-county MLS market.
Goal 3: Production
 
 
Realtors® as the first point of contact.
Bring new buyers into the process.
Goal 4: Representation
 
Buyer Brokerage (Initially)
– 
– 
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1st-Time buyers. All incomes.
Company earns commission. Pays salaried agents + $500.
Only exclusive buyer brokerage in our market.
Nat'l Assoc. Exclusive Buyers Agent (NAEBA) member.
Dropped exclusive buyer. Expanded to include...
 
 
 
 
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Repeat Buyers (Occasionally.)
Seller Listings (Nonprofit and private, mostly urban.)
Commercial Mgmt. (Small business incubator.)
Housing Development (Site research & acquisition.)
Consulting (NSP implementation, planning data, etc.)
Closed Transactions
by Client Type (2009)
Goal 5: Revenue
 
Diversify program
revenue and decrease
reliance on grants.
 
New opportunities for
program-generated
income.
 
Primarily cooperating
broker commissions.
Also listings, consulting
& property management.
 
Brokerage broke-even
this YTD...barely.
Scale & Assumptions
 
 
Imagined a break-even point at ~60
transactions with 3 salaried agents.
Our reality:
–  Average earnings of $2,800/transaction
–  Average 28 direct hours/closed client
–  Conversion rate of 1:4
 
Needed a better mix of transactions
and more diverse revenue.
Firm Ranking (2009)
 
Four-county ranking by # sides closed:
Community Realty
ranked 61st out of
388 CRMLS firms.
Lessons learned...
Be clear about goals & mission.
  Extremely competitive marketplace.
  Cooperate with existing agents.
  Buyer brokerage is labor intensive.
  Be realistic with projections.
  Pay attention to legal details & RESPA.
  Learn from traditional brokerages.
  Start small or collaborate with existing.
  People choose agents, not companies.
 
Panelist
Donna C. Williams
Live Urban!
Keller Williams Realty
Chattanooga, Tennessee
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Why Focus Exclusively on Urban Properties?
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Passion + Profit
Neighborhood revitalization vs selling properties
Increased value to clients
Easier to attract "the optimal" clients
More profitable
Effective long-term business model
Donna C Williams
Cell: 423.505.1815
[email protected]
3 East “Get the Word Out” Activities
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Large Site signs
Realtor & Lender luncheons/presentations
Block Party
Neighborhood Association meetings
Employer Briefings
Print advertising
Donna C Williams
Cell: 423.505.1815
[email protected]
Know the Opportunity You’re Presenting
• 
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Determine specifics of your inventory
Develop realistic inventory & timeline projections
Identify financial opportunity for the Realtor
Select an internal point person
Be mindful of challenges
Clearly communicate expectations
Donna C Williams
Cell: 423.505.1815
[email protected]
Now, Go Find the Right Realtor for Your Team!
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Think Collaboration, Not Cost
Be sure of your selection process
Determine key objective criteria
Give thought to subjective criteria
Develop a written description of the opportunity
Research the Realtor pool, make “star candidate” list
Widely distribute opportunity with emphasis on stars
Donna C Williams
Cell: 423.505.1815
[email protected]
Teamwork + Commitment = Success
Donna C Williams
Cell: 423.505.1815
[email protected]
THANK YOU
For More Info or Written Brief of Presentation
Contact us at [email protected]
423-505-1815
Donna C Williams
Cell: 423.505.1815
[email protected]
Q&A
•  In the right panel of your screen, you’ll
see a place to type questions.
•  Please choose the option of sending
“To Host and Presenter” or “To Allison
McMullin”, then type your question in
the box and hit your Return key to send.
•  The moderator will read your questions.
75
Realtor Neighborhood Stabilization Project
•  NAR and NCST partnership to promote
greater Realtor involvement in local
NSP efforts
•  Case Studies and Resources available at realtor.org/
government_affairs/foreclosure_prevention/
realtor_neighborhood_stablization_project
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Thank you to our sponsor and
our speakers:
NeighborWorks America, and
Sarah Greenberg, Jorge Vega, Mike
Loftin, Eric Dahl, and Donna Williams
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For More Information
This presentation and other resources will
be available for download at
www.StableCommunities.org/real-estate.
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Thank you and have a
wonderful afternoon.
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