Utah to Add Over 1300 Jobs in Outdoors Sector

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The already record-low unemployment rate of 2.5% in Utah may be in for another shock as three companies announce the addition of 1335 jobs to the state.

The announcements came yesterday at the Outdoor Retailer Winter Market trade show. Utah already has about 36,000 people employed in the outdoors industry, contributing a direct annual impact on the state of $4.5 billion, according to trade show president, Frank Huegelmeyer. “The best incentives are free in the state of Utah.” he said. “If you want to own the mountain, you have to be on the mountain.”

Backcountry.com, which already employs 430 workers in the state, and sells more than 250 brands of outdoor gear, will spend $4.8 million expanding its Park City and West Valley City operations, adding 1250 jobs. The company says 274 of the jobs will be high-paying jobs well above northern Utah’s average wage level.

Smith Optics makes and distributes ski goggles and helmets and will be opening a 120,000 square-foot operation in Clearfield that will employ 60 people.

Peregrine Outfitters is a distributor of over 6000 outdoor accessories and will be opening a distribution center in Ogden on March first with 25 employees.

Additionally, Amer Sports recently announced that it is making Ogden, Utah the headquarters of its North American winter sports division. The company owns the brands Suunto, Salomon, and Atomic among others.

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HouseValues Feeling the Pain

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Real estate lead-generation siteHouseValues.com is not doing too well and their trajectory is looking pretty bleak. They lost $1.5 Million in the third quarter of 2006 and on the 24th of this month they announced they are laying off 60 workers, or 12% of their total workforce and they eliminated the COO position altogether.

They also announced they are doing away with their mortgage lead-generation business and said they will be “scaling back or eliminating initiatives that are not critical to its real estate agent customers.”

It’s no secret that I’m not a fan of their business model, but it’s not easy to hear of people losing their jobs. And more losses should be expected.

Sound like the company is treading water? Considering that Realtors and brokerages are getting wise and catching up with the consumers want for information over the internet, I’d say HouseValues is a sinking ship.

Salt Lake Tribune Day Late on Story

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Today the Salt Lake Tribune ran a story on the front page of the Money section titled, “Zillow’s Zany’s Zestimates“. The article basically says the same thing my post yesterday says- that Zillow is very inaccurate, especially in Utah because this is a non-disclosure state.

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Their approach was a bit different as the piece mainly put the blame on Realtors, which is strange because the state’s status as non-disclosure is determined by lawmakers, but had the overall story feeling like a next-day news break.

Also cited were some examples of home values and the estimates given on the website. One home was estimated on Zillow to be worth $1,800,000 with 1900 SF but reality has 2400 SF and was appraised for $350,000. I’m a bit rusty on my math, but that’s a margin of error of about 500%.

Like I said yesterday, I think it’s good for consumers to have information. If it were up to me all the information would be open to everyone, including sold and sales data and MLS comments. Either way, it is still always advised to seek the professional advice of an experienced Realtor when selling or buying a home.

Zillow Not Accurate in Utah, Other Non-Disclosure States

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Zillow’s estimates fluctuate between being not-bad to being way-off and different areas have very different accuracy rates. States that are non-disclosure, such as Utah, cause a challenge for Zillow because the main source of information for their website is the county records and in Utah they aren’t able to get much information and even worse, sometimes they get innaccurate information.

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I like what they are doing and I think it’s great for the consumer to have another point of information, but it’s important to know that a Zillow estimate, by their own admission, is only a starting point from which a home-owner can begin to get an idea of what a home is worth.

I have had buyers tell me about what Zillow said the value of different properties we’re looking at are and I have to remind them that a true market analysis of the home may show a completely different picture because it is accurate, based on local conditions and sales, and prepared by me, an experienced Realtor and not a computer program.

Real Estate’s Revolving Door

             

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When I first came into the real estate industry in the nineties there were a couple thousand real estate agents licensed in the Salt Lake City area. Four years ago there were about four thousand. Today there are over eight thousand. That’s 100 percent growth in four years! In Utah there are now over 25,000!

          

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The general perception is that Realtors drive their big fancy cars around all day looking at beautiful homes and make hundreds of thousands of dollars a year working part time hours with no education.

Truth is about 90% of people who get into real estate fail. They’re so focused on what the job entails that they really never understand what the work is all about. And it all begins with licensing.

The state makes a lot of money collecting licensing fees from all these people who are so willing to pay for the chance to make it rich selling dream homes every Saturday at the open house. But this lack of education, commitment and understanding is the principle reason for the overall failure of these licensees and their ill-fated clients.

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In Utah it takes about two weeks of schooling to get through all the classes required to get your license. Two Weeks! And when you do earn your license what do you know about selling real estate? Nothing.

Many new licensees don’t even own their own homes and have never bought or sold real estate before. Often the client knows more about the real estate transaction than than the Realtor does. And these are the people the state deems “experts”. They have spent two weeks learning a few hundred completely useless terms, how to calculate the cap-rate of a four-plex and they skim over the legally binding purchase contract and they are then sent out to represent people in the largest financial transaction of their lives. Yeah- that makes perfect sense.

And every time some Yahoo gets a license and screws up a deal or two before going back to their “real” jobs they ruin the industry a little bit. Give a few more people reason to not want to have “professional” representation next time they need to buy or sell real estate. Sometimes they cost people tens or even hundreds of thousands of dollars and assist in causing families myriad problems and heartache.

         

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The licensing process should be a two year process of instruction, education and, most importantly- internship. Students should attend courses (not classes) on agency, including its application and meaning. They should be taught actual case law examples of fraud and they should be shown what representation and fiduciary really mean. And they should spend a year as an intern for working Realtors where they can learn the work that is supposed to go into each transaction. Let them see the prospecting and how most agents go months without making any money. Show them the endless phone calls and marketing expenses that sometimes end with no reward.

Give them the real part of real estate.

Students could take courses on inspections and the different testing that occurs, title insurance and the title plant operations, home warranties, escrow process, zoning and state regulations, negotiations, and every student could be required to get licensed in appraising and lending.

By having this kind of education in the business every licensee would have real value to offer their clients and the clients would be much better represented and taken care of. Fewer people would get into the business and fewer people would fail. Everyone would win- especially the consumer.

It takes two years to get a license to cut hair but it only takes 90 hours in Utah to list million dollar homes and advise people where they should relocate their families.

Is that right?

Real Estate Revolution Not For Sellers

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Taking a look at the Real Estate industry from the perspective of an involved real estate blogger who does a lot of reading, research and speculating about the industry, I can tell you that at times I have been excited, optimistic, frustrated, and hopeful about the “Revolution” happening in the business. But when I look at the reality of it all, without judgement, I’m mostly amazed and here’s why;

Everything is still the same

At least when it comes to listings. Sure, there are a few more companies and some new models, but when you look at the market share of these new models- they seem to be taking their business from other new models and smaller shops, not from the large brokerages. In my area the large brokerages are growing and although there are tons of small companies popping up every day, the don’t become relevant and they aren’t taking away market share from the established companies.

There is a pool of consumers (25%) that are going to use alternative models, go the FSBO route, and use the lowest-bidding agent they can find and that’s just the way they are. They would rather “save” on commission then make more money with a higher sales price.

And that pool of people are selecting between those smaller brokerages and new models, but the majority (75%) of consumers are just not buying into it. They are going to use a large full-service brokerage no matter what is going on in the industry and no matter what “special deals” there are. They don’t care so much about “saving” money- they care about the job that gets done.

So newer models and smaller shops are all competing over 25% of the market and the major brokerages are all competing over 75% of the market. There are some cross-overs here and there, but this is the same ratio we’ve probably had for the last ten or fifteen years and it doesn’t seem to be changing much.

I like the new innovation. In fact I happen to think I have the best real estate search on the planet  (BlueRoof.com). I feel this way because I’ve been told this by a lot of people and my clients feel this way, but mostly because it’s just my own opinion. I’m building it to be what I want in a real estate search. Of course there are tons of things I am still adding to it and improving on it- that’s how websites are. But as much as I like the new innovation and the new sites popping up- the consumers are still listing with big brokerages.

Seattle seems to be a hot-bed right now of real estate tech, with Zillow and Redfin and about ten other new models, but isn’t JohnLScott  and Coldwell Banker still the biggest and growing?

Buyers are finding agents on the internet, but sellers aren’t finding their agents that way- the RE 2.0 market is a buyers market- not a seller’s.

Used to be that you had to “List to Last”- meaning that to last in the business you had to get listings. Not so anymore- now you can have buyers come to you by using other people’s listings on your website. But the listings aren’t coming so much from internet.

At BlueRoof we’ve taken a lot of listings (about one every 2-3 days average) and we’ve had quite a few of the clients contact us from the website after reading about us or hearing about us or just finding us. But the amount of buyers we get compared to sellers is huge. My other website is even more so.

What thisall means to me is the consumer is enjoying the internet search and innovation when they look to buy a home, but when it comes to selling, the new “revolution” is pretty much the same as it has been.

Brokerages Don’t Earn Commissions- Realtors Do

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Today, more than ever, there is an ever-growing gap between commission rates being charged by Realtors. And the gap between value and cost is growing right along with it. As tens of thousands of people have flooded into the real estate industry over the last five years technology and innovation have allowed some to raise the traditional value-proposition. But in Utah about 90% of people who get a real estate license fail- meaning they have gotten out of the business because they could not succeed.

Some of those people who eventually fail and some who actually stay in the business do and say things that hurt the industry as a whole. Some claim outrageous things just to get some business. And with all the competition some brokerages have become more aggressive with their marketing and claims.

It is important to know that brokerages do not sell homes– home-owners do. And brokerages do not list homes or work with buyers- agents do. Individual agents- not brokerages. If an agent from XYZ Realty does a great job for you in Tulsa that doesn’t mean that any agent from XYZ Realty in Orlando will also do a good job for you. Another agent from XYZ Realty in Tulsa may not even do a good job for you. The name on the sign doesn’t matter- the name badge on the agent does.

But brokerages need to promote the brokerage, so they create marketing to persuade the consumer why to use one of their agents. And some of the marketing is really good. Some brokerages have really stepped up their marketing to increase the value for their clients.

Some brokerages just make stuff up and try to scare the clients.

Let’s examine some of the “untruths” and scare tactics that many brokerages use. Remember, this is meant to illustrate how a brokerage tries to get higher commissions for all of their agents, not as example of how some agents are actually worth more or less than others.

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The first untruth is one of the most common and shows how pretentious and blazen some brokerages are with their marketing. They try to convince the client that they earn a higher commission because of their superior negotiating skills.

Now, of course, there are agents who are better negotiators than others, and this is an important part of decided who to work with. But there are two flaws in this claim.

The first is that a brokerage that claims that they can negotiate better is actually saying that all of their agents are better negotiators than all of the other brokerage’s agents, which is absurd, cocky, and delusional all at the same time.

What, do they have Realtors taking negotiating tests to determine which agents they will hire so they can ensure that their agents are the best? Of course not- most brokerages have a mix of new agents, experienced agents, good agents, bad agents, etc. So for a brokerage to say that their agents are better negotiators is crazy dumb.
The other flaw is in the idea that a home actually sells for more simply because of the agents negotiating. As though when a buyer sees a home they like, the listing and buyer’s agents lock themselves in a room and negotiate the price and conditions, with the best negotiator winning. In reality, buyers and sellers decide on price and conditions they are willing to accept and the agents facilitate their clients wishes and coordinate the transaction. Usually agents never meet or talk to the other agent’s client, so how could they negotiate with them?

Negotiating absolutely makes a difference, and many times deals do not close without good negotiating. Negotiating comes into play when an agent can convince another agent to convince their clients of something, or in keeping transactions together when things get sticky. But the brokerage has nothing to do with that- the agents do.

The second untruth is that they are worth more because they have sold so many homes in that neighborhood/city/state/zip code/price range. Buyers do not only buy homes because they are listed by a certain Realtor. They don’t call an agent and say, “I want to buy one of your listings because you sell the most homes.” They look for homes and buy the best one they find in their price range.

Experience absolutely matters and you will pay more for that experience. And networking can sell homes so it helps to have an agent who talks to other agents and can spread the word about their listings. But if they are marketing their homes effectively the other agents and clients will see that home anyway. And again- it is the experience of the Realtor and the networking of that agent that makes the difference, not the brokerage.

The next untruth some brokerages (and agents) will tell people is that the client needs all their “stuff”. I don’t know about all the markets across the country, but in Utah, Colorado, and the Bay Area of California, Homes For Sale magazines do not sell many homes. They are not even meant to sell homes. They are meant to bring in leads for real estate agents. That in itself is not a bad thing. I’ve ran a lot of ads in the magazines, and I try to create the ad so that lots of buyers will contact me. I advertise homes in the local magazines because it certainly doesn’t hurt and the more exposure, the better. But magazine advertising alone does not justify a higher commission or using one agent over another.

“Just Listed” and “Just Sold” postcards are sent out to get business for the agents, not just to sell homes- if an agent is saying that they send out “Just Listed” postcards only to sell your home- ask them how many homes they have actually sold because a buyer saw a postcard and they called the agent and bought the home.

Postcards usually go out to people in the surrounding area, and those are people who would see the yard sign anyway. They probably send them out to get leads.

Moving Trucks aren’t bought by agents just to help their buyers. Agents buy moving trucks so they can plaster their name all over them and have the buyers drive these moving billboards all over town. Sure, it can help the buyer- having a truck to use, but renting a U-Haul is usually about $50/day so it’s not that big of deal, and certainly not enough to choose an agent for.

Very few people find homes in the newspaper anymore. Why would they when they can go online and see all the homes with photos, maps and detailed information? Of course all marketing helps and you never know- someone might actually choose to read about the few homes in one of the many magazines instead of seeing all the homes online, and they might notice the ad for your specific house, and eventually buy that house, but the chances are very slim that the buyer wouldn’t have found the house anyway by looking online.

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A lot of real estate marketing is for the agent, not the seller. Don’t get me wrong- all of these extra things are not bad and they certainly don’t hurt your chances of selling your home, but that’s not my point. My point is that some agents use even one of these things as the reason that you need to pay them higher commissions or choose them over someone else. The value proposition is simply not always there.
At some companies the agents are taught to defend a high commission by saying, “it’s not the cost that matters- it’s the value.” And that is true, but value comes from the Realtor, not the brokerage.

Some agents will charge 7% to sell a home and they are worth it. Others will charge 4% and not only do they not earn it, but they actually cost the sellers money by giving them bad advice and preventing the sellers from having good representation.

Selecting a brokerage is foolish- select the Realtor who you feel will best represent you and your interests. Ask them about their experience and ask them about how they will make you more money when selling your home or how they will ensure that you find the right home and get it for a fair price when you are buying. Ask good questions about the agent and don’t choose your agent simply because of the franchise name on the sign- choose them because they are the best for the job and they are worth whatever it is they are charging.

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And if you want to know what marketing matters most when selling a home? Here’s my opinion…