Boomer’s Blog

HomeVestors of America, the real estate investment (REI) firm with the ad campaign featuring cave man investor Ug, who carries a club and “Buys Ugly Houses,” has announced that Franchise Brands has bought a majority interest in the company.

Almost 20 years ago, the Dallas-based HomeVestors entered the real estate investment (REI) fray with the mission to buy and sell rehab-ready homes for fast profits. It and sold its first franchise in 1996, and has bought about 35,000 homes since its launch. Last year, HomeVestors bought 6,400 homes and sold 5,000, and in 2006, the company reports that it bought about 7,100 properties.

Since its inception, the company has flourished into a national franchise that specializes in buying — and selling — “Ugly Houses.” Currently, HomeVestors boasts about 230 offices in 35 states franchises sell most of their houses to other investors and first-time home buyers.

HomeVestors’ majority interest buyer, Connecticut-based Franchise Brands, formed three years ago with strong support from the founders of Subway restaurants. who also own Utah-based Bajio Mexican Grill, and Indiana-based Mama DeLuca’s Pizza. Terms of the deal were not disclosed, the Dallas Business Journal reports, but executives say that Franchise Brands is committed to using its resources to advance HomeVestors‘ franchise expansion goals and further develop its business model.

Sales Masters Dan Doran and Richard Roop say that negotiation is the world’s highest paying skill. In the real estate investment arena they say, just a slight edge over your competition will give you phenomenal results.

Seven Habits of Highly Successful Sales Negotiators
Every day, Dan and Richard work with real estate entrepreneurs, helping them to address their weaknesses and build amazing negotiations skills as they invest in real estate. These efforts are deeply rooted in the duo’s “Seven Habits of Highly Successful Sales Negotiators.”

Dan and Richard helped to develop this nifty self-assessment for GaryBoomershine.com using insights they’ve gained through working with thousands of real estate entrepreneurs and developing their highly acclaimed “Sales Mastery for Real Estate Entrepreneurs” sales skills enhancement program.

Take this Quiz: Are you a Sales Master?
Take a few minutes to jot down your answers to these questions for a quick self-assessment. Dan and Richard address these issues and more in my review of Sales Mastery for Real Estate Entrepreneurs, currently posted in the Resources section of GaryBoomershine.com: Here, you can check your answers and see how you rate.

1. Are real estate sales negotiations a science, or an art form?
2. Do you pursue deals with clients who are first and foremost motivated, or qualified?
3. Do you use a prepared script for meetings and presentations?
4. Do you think that real estate is just a numbers game?
5. What’s the best way to open the channel of communication with prospective clients? Why is this important?
6. Is the sale made during your presentation, or during the close?
7. What’s your most valuable sales asset?

California foreclosures and the mortgage meltdown have been making international news headlines for some time. But this month, news  from the Golden State went from bad, to the Twilight Zone.

Much like the classic TV show, first made popular in the 1950s due in large part to host Rod Serling’s melodramatic gravitas, California’s housing market begs for a prelude to prepare readers for the truly bizarre. As Serling said: “There is a fifth dimension beyond that which is known to man,” He might as well been introducing late-breaking developments in California’s foreclosure crisis.

Here are the five most most startling, weird and ugly foreclosure stories to come out of California so far this month.

1. California REO Foreclosures Selling like Ipods
   This month, the LA Times reported that in April, California home auctions sold nearly 23,000 foreclosure properties at courthouses throughout the state. That’s is a 44 percent jump from the number of REO auctions reported for the state in March. That’s 1,000 homes sold at auction each business day for an entire month.
2. IRS Tax Delinquency, Lies and the Lawmaker
   Although she denied it earlier this week in a written statement, public records show that California Congresswoman Laura Richardson’s Sacramento house was sold via foreclosure auction on May 7. When she bought the 1,600 square-foot home in 2007, she paid more than $535,000. By the time it sold at auction, she owed $600,000 in unpaid loans and fees, including nearly $9,000 in property taxes, reports Capitol Weekly.
3. Countrywide Exec’s Email Debacle
   When an e-mail sent by a distressed homeowner inadvertently landed in his in box, Countrywide Financial Chairman Angelo Mozilo mistook the “reply” button for the “forward” button and sent his caustic response directly to the sender. The LA Times reports that not only was he unsympathetic in his response, he characterized the online foreclosure counseling service that encouraged the homeowner to contact his lender as “unbelievable” and “disgusting.” Mozilo has been under fire for cashing out while Countrywide, and the rest of the mortgage industry was tanking. In 2006, Mozilo was paid nearly $50 million in compensation; between 2006 and 2007, he cashed in stock options then valued at $140 million.
4. Never Neverland Again?
   Mid-month, entertainer Michael Jackson averted the scheduled foreclosure sale of his 2,700 acre Encino Neverland Ranch when his $23.5 million loan was purchased by real estate investment giant Colony Capital, according to Reuters.com.
5. REO Lender Takes the Bat to Canseco’s Portfolio
   At the beginning of this month, news got out that baseball great Jose Canseco let his 7,300 square-foot Encino home slide into foreclosure. He bought it in 2005 for $2.8 million, and when foreclosure struck, the property already had an IRS lien from a judgement levied against Canseco for starting a fight that leveled a Miami night club several years ago. This week, the Chicago Tribune reported that Canseco, who blames his two divorces for his financial woes, intends to generate wealth in his new career as a celebrity boxer.

How can relatively small improvements in your sales skills spark quantum leaps in your income? If anybody can tell you, it’s Dan Doran and Richard Roop. Today I found some notes I scribbled in my journal from a recent conversation I had with Dan and Richard about Sales Mastery for Real Estate Entrepreneurs, their audio training course we offer at SalesTeamLive. We’ll explore more about that here next week.

But since so many of us have selling on our minds these days, I wanted to take some time right now to highlight some insights I’ve gained from the dynamic duo on the mission-critical importance of negotiations in our business. According to Dan and Richard, negotiating is the world’s highest paying skill, and until now, it’s an issue that hasn’t gotten enough attention in our business

Seven Habits of Highly Successful SalesNegotiators:

• Continuously Practice and Improve: Mastering sales negotiations is both a science and an art. It’s a science in that it necessitates taking specific, measured steps that can be learned; it is an art because it requires an understanding that success can only come with dedication, practice and incremental improvement. When real estate investors commit to making perennial enhancements to their sales skills, the most lofty personal and financial goals are suddenly within reach.
• Master your Approach: Pursue deals with clarity in your purpose. Don’t look for deals with people who are motivated, find people who are qualified and use your sales skills to inspire motivation — even if they’re not encouraging over the phone. By simply shifting your perception and your approach, you can create exciting new opportunities in your business and advance the refinement of your negotiations skills. Approach every deal at your full potential. For meetings and presentations, do your homework and arrive early. Make sure you’re centered and not stressed out.
• Always Be at your Best: A useful trick for anti-stress and instant mood elevation is to recollect your last great transaction or happy moment. Use this memory to infuse your negotiations with passion and confidence. Tap into the resources you’ve got to make an instant change. Affirmations build confidence and self esteem are an awesome way to get into the “sales zone.” Review them before meetings and presentations. Muhammad Ali’s famous self affirmation: “I Am the greatest” became synonymous with his success as a champion. Use your affirmations to create a clear vision of the goals you want to reach and the steps it’ll take to get there. If you follow these tips, your enthusiasm may be so contagious that even your prospective client will catch it.
• Master the Presentation: Use a prepared presentation: this strategy is scientifically proven to boost your sales. Most investors don’t even realize they need one because they’re in a rut of thinking that real estate is just a numbers game. Don’t be jaded. Many of us often forget that we’re also selling a service. Keep your presentations simple, and avoid using technical terms and jargon with clients. Most of them will clam up if you’re using words that they don’t understand. Anticipate your clients’ objections and address them in advance by covering those issues in your presentation. Show clients the magic you can work for them. Embrace your purpose as a problem solver. Address people by name, agree with them whenever possible and follow a script.
• Find the Hot Buttons: Other than the obvious financial problems that are likely to plague your prospective clients, determine what other factors may play a role in their distress. Chances are, the hot-button items are emotional rather than financial in nature. It is not enough to identify the hot buttons, you have to use them to meet your client’s needs. To get a handle on your clients’ hot buttons, you have to spend time with people — 60 to 90 minutes — and be sincere in your motivation to help solve their problems. By spending quality time with clients, you’re able to use the hot-button issues you’ve identified to gage their agitation level. Once you’ve done this, you can draw them into the pleasure zone with your proposal and hopefully, offer some solid solutions.
• Master the Close: A good closer is a great presenter in this business. Many real estate investors don’t realize that the sale is actually created during the presentation, not during the close. A good way to engage with your clients is to apply yourself in conducting a great value-building presentation. Even if you’re not completely convinced that the client is into the deal, you must always mentally proceed with the sale. Here again, attitude is everything. To instantly improve your sales results, commit yourself to performing a great presentation. If you can do that, all that’ll be left in the close is the paperwork.
• Master the Followup: Do what others won’t, or just don’t bother to do: follow up after the close. The more distressed the client is, the more important it is to follow through after the close is complete. This important step lets people that they’re important: It crowns the transaction. It’s also how you’ll get your greatest testimonials.
• Boost your Self Image: Develop a great self image relative to selling. Richard and Dan say they battle this challenge constantly in their personal coaching endeavors. A positive self image is the most powerful sales tool in your kit. If you believe in yourself, you can do anything. Get negative sales experiences out of your head. In coaching, Dan and Richard ask folks to envision what their world would look like without their problems. The techniques and strategies we’ve discussed in this article, repeated over time, will boost your self image and provide you with phenomenal sales. Like Richard says, “In sales, you have to perfect your inner game before you can master your outer game.” Words for any real estate entrepreneur to live by.

Despite ongoing troubles in the U.S. housing market, some areas post green lights for investors looking for relatively high and fast price gains in the next year. According to Money magazine, these markets have what it takes to make for solid real estate investments (REI). (Additional data provided by Wikipedia and the U.S. Census Bureau.)

1. McAllen, Texas:

• U.S. Census data for 2003 estimated the city’s population to be 116,500.
• 12-month forecast: 4 percent
• Median home price: $109,000
• One-year price change: 2.1 percent
• Five-year price change: 23.3 percent
• Change in foreclosure rate: 23 percent

2. Rochester, N.Y.

• U.S. Census data for 2003 estimated the city’s population to be 216,000.
• 12-month forecast: 2.7 percent
• Median home price: $121,000
• One year price change: 3.4 percent
• Five year price change: 20.1 percent
• Change in foreclosure rate: 5 percent

3. Birmingham, Ala.:

• U.S. Census data for 2003 estimated the city’s population to be 236,600.
• 12-month forecast: 2.7 percent
• Median home price: $156,000
• One year price change: 2.9 percent
• Five year price change: 29.4 percent
• Change in foreclosure rate: 20 percent

4. Syracuse, N.Y.:

• U.S. Census data for 2003 estimated the city’s population to be 144,000.
• 12-month forecast: 2.6 percent
• Median home price: $126,000
• One year price change: 0.8 percent
• Five year price change: 29.5 percent
• Change in foreclosure rate: 27 percent

5. Buffalo and Niagara Falls, N.Y.:

• U.S. Census data for 2003 estimated Buffalo’s population to be 285,000; Niagara Falls to be 54,000.
• 12-month forecast: 2.4 percent
• Median home price: $105,000
• One year price change: 1.6 percent
• Five year price change: 24.5 percent
• Change in foreclosure rate: 14 percent

6. New Orleans, La.:

• U.S. Census data for 2003 estimated the population to be 469,000.
• 12-month forecast: 2.2 percent
• Median home price: $158,000
• One year price change: 1 percent
• Five year price change: 43.7 percent
• Change in foreclosure rate: 49 percent

7. Scranton, Pa.:

• U.S. Census data for 2003 estimated the population to be 74,300.
• 12-month forecast: 2.2 percent
• Median home price: $128,000
• One year price change: 7.2 percent
• Five year price change: 41.1 percent
• Change in foreclosure rate: 8 percent

8. Grand Rapids, Mich.:

• U.S. Census data for 2003 estimated the population to be 195,600.
• 12-month forecast: 1.9 percent
• Median home price: $124,000
• One year price change: -3 percent
• Five year price change: 8.3 percent
• Change in foreclosure rate: 37 percent

9. Baton Rouge, La.:

• U.S. Census data for 2003 estimated the population to be 225,100.
• 12-month forecast: 1.9 percent
• Median home price: $170,000
• One year price change: 5.7 percent
• Five year price change: 38.3 percent
• Change in foreclosure rate: 14 percent

10. El Paso, Texas:

• U.S. Census data for 2003 estimated the population to be 584,100.
• 12-month forecast: 1.8 percent
• Median home price: $134,000
• One year price change: 6.9 percent
• Five year price change: 51.9 percent
• Change in foreclosure rate: 32 percent

Can’t sell that flip? Consider becoming a landlord to generate cash flow while you hold on for better prices.

The Wall Street Journal reports that 2.2 million vacant homes were for sale in Q1, up from 2.1 million in Q4, and about one million more than was considered “normal” before economic crises permeated the market.

The U.S. homeowner vacancy rate, which tracks the number of vacant homes for sale, jumped to 2.9 percent in Q1, up from 2.8 percent in Q4 2007. According to recent U.S. Census Bureau housing data, the vacancy rate has risen significantly since the housing bubble morphed into the mortgage meltdown. Between 1995 and 2005, the rate sat between 1.5 percent and 2 percent.

Families today are no more likely to own their homes now than they were in 2002, despite widespread opportunities, such as subprime mortgages, that were purported to boost home ownership among borrowers with poor credit scores. Related Census data show that the seasonally adjusted share of homes occupied by owners rose to 67.9 percent Q1, up from 67.7 percent in Q4 – this level peaked at 69.3 percent in 2004. These numbers and the credit crunch fuel more speculation that home prices will continue to drop well into Q4 2008.

While the dream of home ownership has become an Ambien-fueled nightmare for many Americans, data show that droves of families who’ve managed to claw their way out of bad mortgage deals are looking for places to live.

There currently are 4.1 million vacant homes for rent, and the rental vacancy rate edged up to to 10.1 percent in Q1. The rental vacancy rate clearly is on the rise since Q4’s rate of 9.6 percent was recorded by the Census. Analysts say however, that the growing inventory of vacant rentals should keep rent prices relatively stable, and help to temper inflation.

For those looking into becoming a landlord, the Boston Globe offers six rules from the trenches that could save you from financial — and emotional ruin.