13August2008
Posted by admin under: Uncategorized.
Vacancy / Construction Statistics
Considering the current retail market conditions of increased store closings and bankruptcies and retailers pulling back on expansion plans, it is no surprise that the overall retail vacancy rate continues to rise; at the end of second quarter, it stood at 6.6 percent. However, it is also important to note the relative stability of this property type, overall vacancy rate has increased only 80 basis points since first quarter 2006.
More pronounced are the vacancy trends found among different property types within the retail category. Shopping centers (encompasses strip, neighborhood and community centers) experienced the most dramatic rise; increasing 210 basis points over the last nine quarters to 9.3% at mid-year 2008. This is somewhat surprising considering that grocery-anchored neighborhood and community centers are generally accepted by the industry as the most recession-proof property type. However, this category is also the most vulnerable to “Mom & Pop” or local/regional tenants that may be more susceptible to a prolonged period of a slowdown in sales.
Behind shopping centers, the mall category (encompasses regional and super-regional malls as well as lifestyle centers) experienced a vacancy rate increase of 120 basis points over the past nine quarters to 3.7% at the end of second quarter. A couple factors may be at play in this increase as outdated enclosed malls continue to lose tenants, some of which have relocated to newer lifestyle centers, also included in this category. While it is important to note that this vacancy rate is by far the tightest in comparison to all other retail property categories, both malls and lifestyle centers are challenged to lease space in this market with such a high percentage of national and regional retailers halting expansion plans until the market turns around.
According to current information available through CoStar Property Professional’s Analytics module, this challenge is evident, as 21% of the 26.3 million square feet of space has delivered since 2007 in this category (nearly all of it being large lifestyle / town center developments) remains vacant. And, another 25.6 million square feet of mall/lifestyle center space is currently under construction with 77% of that space pre-leased. However, this pre-leased rate is strong considering current market factors at play — delivering a center with occupancy ranging 75% to 85% is common, as leasing space at a quicker pace and higher rents becomes more likely once tenants can see a center in its completed form.
Within other retail property categories, power centers recorded a 60 basis point rise in vacancy over the last nine quarters to 5.2%, the specialty center category (includes airport retail, outlet centers and theme/festival centers) recorded a 200 basis point increase to 5.6% over the same period. And while the vacancy rate has maintained at 5.1% for the last two quarters in the general retail category (includes freestanding retail building, urban street retail properties, etc.), it is the only category that has seen improvement in vacancy over the last nine quarters (a 60 basis point increase). The major factor at play here may likely be the continued strength of urban street retail properties.
Market Rankings
Looking at vacancy from a local market perspective, the 10 markets with the highest vacancy rates at the close of second quarter include Detroit (11%), Dayton (10.5%), Kansas City (10.1%), Tulsa (10.1%), and Memphis (9.9%), Dallas/Fort Worth (9.8%), Indianapolis (9.8%), Cincinnati (9.4%), Columbus (9.1%) and West Michigan (9.1%). The 10 markets with the lowest vacancy rates include San Francisco (2.8%), New York City (3%), Orange County CA (3.3%), San Diego (3.3%), Los Angeles (3.4%), South Bay/San Jose (3.5%), Miami-Dade (3.9%), East Bay/Oakland, Washington D.C. (4.1%), and Seattle (4.3%).
During second quarter, 24.25 million square feet of space was completed, which is down 36% over total square footage delivered last quarter, and down 16.4% in comparison to total square footage delivered in second quarter 2007. As of the close of second quarter, another 38.24 million square feet was scheduled to deliver through the end of 2009.
Some of the markets with the highest vacancy rates continue to have some of the highest levels of retail space under construction and delivered in 2008 as well. Dallas, which ranks sixth in terms of highest retail vacancy rates, has by far the most retail space under construction (nearly 12.8 million sq. ft.) and was also privy to the most retail space delivered so far this year (nearly 5.1 million sq. ft.) in comparison to all other markets CoStar tracks.
Markets that follow Dallas with the most retail square footage under construction include Chicago (7.6 mill. sq. ft.), Phoenix (7.25 mill. sq. ft.), Northern New Jersey (6.3 mill. sq. ft.), San Antonio (5.9 mill. sq. ft.), Inland Empire CA (5.6 mill. sq. ft.), Las Vegas (5.1 mill. sq. ft.), and Tampa (5.1 mill. sq. ft.). Markets that follow Dallas with the most retail space delivered during the first half of 2008 include Phoenix (3.98 mill. sq. ft.), Inland Empire CA (3.15 mill. sq. ft.), Las Vegas (3.1 mill. sq. ft.), Denver (2.9 mill. sq. ft.), Chicago (2.4 mill. sq. ft.), Atlanta (2.4 mill. sq. ft.), and Los Angeles (2.3 mill. sq. ft.).
On a more positive note, Dallas has distinguished itself by recording by far the highest level of net absorption (4.64 mill. sq. ft.) so far this year. In its Summer 2008 National Retail Market Trends Report, Grubb & Ellis noted the following about the Dallas retail market: “Strong demographic and employment fundamentals are supporting growth, keeping occupancy rates stable. The retail sector will maintain its vitality, largely due to pre-leased construction.”
Other markets with strong second quarter absorption include: Philadelphia (2.5 mill. sq. ft.); Denver (2.2 mill. sq. ft.); Boston (1.55 mill. sq. ft.); Northern New Jersey (1.5 mill. sq. ft.); Houston (1.5 mill. sq. ft.); Seattle (1.4 mill. sq. ft.); Las Vegas (1.3 mill. sq. ft.); Inland Empire CA (1.2 mill sq. ft.); and Salt Lake City (1.15 mill. sq. ft.).
Rental Rates
CoStar’s data shows that landlords are not yet ready to widely advertise lower asking rental rates. The average retail rental rate (on a triple-net, annual basis) ended second quarter at $17.86 per square foot, which is up 3.25% over a year ago and 11.76% over two years ago. A similar trend is true amongst nearly all the retail property types. The exception is the mall/lifestyle center category, which ended second quarter 2008 with an average rental rate of $22.35 per square foot, up only .09% over the rate two years ago.
Average retail rent ranking trends remain relatively the same quarter-to-quarter, with the country’s tightest retail markets closely correlating to those with the highest rents. The 10 markets with the highest average retail rental rates, in order from highest to lowest, are New York City, Orange County CA, San Francisco, Los Angeles, Miami, San Jose, Long Island, Oakland, Washington, D.C., and Las Vegas. The five markets with the lowest average retail rental rates, in order from lowest to highest, are Tulsa, Dayton, Toledo, Birmingham, and West Michigan.
Grubb & Ellis provided an interesting look at specific retail rental rate trends in its report. First, the average rental rate on a 3,000-square-foot, vanilla box, in-line space in a grocery-anchored shopping center ranges from $15.60 in Des Moines, IA to $133 per square foot in New York City, with the bulk of U.S. markets asking between $20 to $30 per square foot for such a space.
Second, the average rental rate for premier urban shop space — the highest-producing retail streets in each Market. At the top, of course, is New York City’s Fifth Ave ($1,250 psf), followed by Rodeo Drive in L.A. ($600 psf), Union Square in San Francisco ($425 psf), Michigan Ave in Chicago ($312.50 psf), Westfield Valley Fair in San Jose ($250 psf), Boston’s Newbury St. ($165 psf), South Beach Miami ($120 psf), and 7th & F Streets in Washington, D.C. ($100 psf).
Sales Activity
CoStar’s tracking of retail building sales, 15,000 square feet or larger, unsurprisingly showed total retail sales volume down in first quarter compared to fourth quarter 2007 (note: CoStar reports sales data one quarter behind the close of each quarter to heighten accuracy and assure that all deed records from transactions are accounted for in each market.)
CoStar’s national average cap rate for retail building sale transactions 15,000 square feet and larger came in at 7.37% at mid-year, which compares to a range of 6.8% to 7.2% dating back to fourth quarter 2006. Whether or not cap rates will continue to rise in future quarters remains unknown.
First quarter retail sales transaction volume totaled $3.38 billion, down 24.3% in comparison to the $4.46 billion recorded during fourth quarter 2007 and down about 45% over the volume recorded in first quarter 2007.
Although data collection is not complete, a quick query in CoStar COMPS conducted today shows that $4.36 billion in sales amongst all retail property types has already been recorded during second quarter, a promising indication that sellers and buyers are coming closer together on pricing, thereby relieving the severe drought of transaction activity.
CoStar statistics support the theory that sellers and buyers are just now coming closer to a meeting of the minds on pricing. While the first quarter average retail sale transaction price came in in at $170.25 per square foot, slightly higher than the $169.35 per square foot recorded in fourth quarter 2007, a current query of second quarter transactions recorded so far in CoStar COMPS shows a dramatic drop in the average to $138.36 per square foot. Such a price correction would meet the average sale price per square foot trends recorded during 2004.
What’s in Store?
Michael Dee, now the executive vice president of business development for Staubach Retail, said in the Grubb & Ellis’ Summer 2008 report, “It’s challenging because the credit markets remain dysfunctional. Shopping centers have gotten a bad rap due to the struggling housing market and slower consumer spending. These are real, but some investors with cash to spend are hoping to get shopping centers at a discount. We haven’t seen much of that yet because we haven’t seen many distressed sales, but that could be changing if the economy softens further and lenders remain tight-fisted.”
Grubb & Ellis takes the position that the economy will recover quicker than it did from the past recession; in a statement from the report, “There are three reasons to expect the slowdown…to be short and shallow. First, the Federal Reserve has been throwing everything plus the kitchen sink at the credit squeeze to get banks lending again, including aggressively cutting interest rates, unprecedented lending to investment banks and stepping in to keep Bear Stearns from collapsing. In short, the Fed has our back. Second, the rest of the world continues to grow, boosting U.S. exports thanks to the weak dollar, which will add a percentage point of growth to gross domestic product this year. And third, corporate debt levels are low (unlike consumer debt), so there is reason to think that layoffs and cuts to capital spending might be less severe than the 2001 recession. A shorter recession, if it comes to pass, would result in fewer layoffs, putting a floor under consumer spending.”
26July2008
Posted by admin under: Uncategorized.
“Mrs. Johnson. Hi. My name is George McGee. And I’m one of those high pressure door-to-door salesmen, can you tell?” Dressed in shorts, tennis shoes, and a nice t-shirt, I looked anything but like a buttoned down high pressure professional salesman.
Mrs. Johnson would usually giggle which was my cue to resume.
“Seriously, I’m the one talking to the families with kids at O’ Henry. I can only stay a few minutes as I am supposed to show this to 30 families a day. Do you have a place where we could sit down?
To which she would usually say “Well, for just a few minutes” and we’d be off and running. If she was at all resistant or uncomfortable, I’d add:
“Your friend, Donna Peterson, was not sure you’d be interested, yet thought you might, at least, want to see what it is”.
“Well, what is it?”
“Let me show you. Can we just sit at the kitchen table? Is Julie here?” And we were into the presentation right after I’d check to see if we had any mutual friends.
As Julie joined us, and her brother Bobby, my mind raced to recall all of the smartest kids in their grades, preferably who were also well liked.
“Julie, do you know Angie Smith?”
“Yes, she’s on my softball team”.
“Bobby”, I’d continue, “Do you know Mike Harris or Gerald Lamar?”
“Yes, they’re both in my grade. We play flag football together. Got a game tonight. Want to come?”
“Darn, I’ll be working. Wish I could. Carol, have you met the school librarian, Phyllis?”
“Oh yes. She’s been at that school since I went there” (And here is an ideal time to give my prospect permission to reject).
“Well, they all got something from me. You all, might like this, you might not. If you end up liking the study guides; great! If not, remember I’m easy to get rid of, Ok?”
Nine times out of ten, if the mutual relationships were positive, they answer was:
“OK, but don’t worry about that”. The family may or may not buy. Yet, I knew at that moment, all my weeks of gathering pre-approach information to build up names was about to pay off. I’d earned this situation. I’d prepared for it. I was, if possible, not going to let it get away.
At the door, I’d admitted I was a high pressure door-to-door salesman. I’d thrown down the gauntlet and answered the prospect’s biggest fear and initial objection with a humorous permission to reject. See how this all comes together?
Rejection becomes more difficult if your prospect is smiling or, especially, giggling. And usually there is time to jump in and further establish relationship and trust. With the confidence your prospect gains by understanding they, not I, are in total control.
For example, when you walk into a store and that clerk comes up saying, “Can I help you?” our initial knee-jerk response is “No, I’m just looking” to ward off the hard to reject intruder, right?
If on the other hand, that clerk, without encroaching into your space, says, “If you need any help with sizes, I’m over here,” what is our response?
“Where are the 32 longs?” Or “What’s been marked down?” As we are drawn to the “easy to reject” spirit of help, as opposed to the feeling of being pressured to respond.
How might you inject more permission to reject into your sales environment? Maybe you are prepared to hear well balanced objections. Maybe your product is not enough of an improvement to be deemed needed.
If permission to reject leads to rejection as in – “George, they’re nice books but unfortunately my kids are slugs, hate school, and prefer to spend that money on video games”.
As difficult as that is to hear, it’s the truth. And one’s chance of hearing the truth is infinitely more possible if the person is not defensive. She’s not defensive because the ‘permission to reject’ keeps her emotional energy feeling firmly in control.
In Real Estate, our firm has a policy: no matter what the terms of a buyer’s agreement or listing contract, if our client wants to void the agreement for any reason, we honor that desire. This does not happen more than 5% of the time. I feel our clients rest more comfortably knowing they are at the reins and could “pull the plug” at anytime they choose.
Does this remove our control? Yes, just like it did thirty years ago while selling books in Riverside, California. My ‘ah hah’ is that if that money-back-guarantee worked for Sears (unfortunately, no relation) and Roebuck, that same permission to reject would be effective for George Sears McGee … or you.
25July2008
Posted by admin under: Marketing Tips; Sales Territory; Sales Tips; Soft Sell; Uncategorized.
“No, we don’t know them”.
“No never heard of them”.
“Nope, the Thompsons and Griswolds don’t sound familiar?” “Now, what are you selling?”
“Oh My!”
Names that had opened doors of families with kids at O’ Henry Middle School, and Austin High no longer opened doors. And not only that, people weren’t as friendly, in fact, they were down right ornery.
But wait, these people live in the same town, work at some of the same places. You know kids. If it’s not in their life, you don’t hear about it.
Anyway, what I’d realized is that I had changed the school districts, the territories as I had moved through town that summer selling books. I had simply run out of names. I was defenseless to find commonality which killed my receptivity. Without names of customers my new prospects knew, I’d lost my attractiveness, lost intrigue, lost that build up of interest; I was a common salesman. A probable bother and time-waster, peddling books my family would never use and essentially a waste of money. That’s how names that no longer worked changed everything. Changing territory was hell, at first.
In America, everything one consumes includes in its price commissions, concessions, discounts, and costs of doing business.
Anyway, my days of hanging with people who were enjoying my presence, doing business with me, appreciating my being, my low pressure attitude, and my energy changed as I changed territories. From an ego gratifying pleasure to an uncomfortable daunting awareness that I’d entered hostile territory.
Ugh. Prepare your psyche for some abuse. Prepare to psyche yourself up to prove yourself, to earn respect, to gain confidence in this new territory.
One Saturdays, I would take two weeks of past customers (30 demonstrations X 14 days) and return to bask in the comfort of the names accumulated over several weeks of concentrated efforts and personal relationships (friends). Those Saturdays were called “Gravy Days” because I would routinely sell a high percentage like double or triple as many books as weekdays. And a few Saturdays where my closing ratio of presentations was 70-80% instead of the more typical 10-20%. What made the difference? Having names that worked unrecognized names for the new territory where I was no longer referred. I was cold calling. I was groveling or at least I felt like that at the time.
The day was more grueling when I was not referred. Isn’t that the way it’s always been? Don’t we want to know if there’s anyone we know in common? And if so, isn’t bonding more rapid? Antagonism lowered, and attractiveness enhanced.
Hmm. Wonder if there’s a lesson here?
A study about happiness was featured on a major newscast. The Finish people were the happiest according to the report for these major reasons:
Even though taxed rather heavily at 65%, the Finns enjoyed free education and medical care, were homogenous as a species, had social community, and felt known and liked as part of a loving community. Hmm, sounds like working territory tight.
Boy, that sounds good, doesn’t it? Cubans I met on a trip there once taxed heavily, also enjoyed free education and medical care. For this benefit they chose (Cubans don’t choose, but probably would).
What I’m getting at in my round about way is happiness is greatly increased if we build relationships and communities of our own wherever we go. And the better we operate from within thee communities and inter-woven friendships, the better the chance for business success and genuine happiness.
So work your community, your territory tight. Make sure you have squeezed every positive bit of energy out of your own personal momentum Because, changing territories can, at least initially be a challenge socially and financially.
A book we were expected to read in sales school was Acres of Diamonds. More a pamphlet than a book, perfect for the mind of a 20 year old .with attention deficit disorder.
The story of a man who sold his farm in search of . As he approached the possibility of dying penniless, find “Acres of Diamonds” were discovered under the very he sold to go off in search of riches . The lesson, of course, is working your territory tight, and not leaving the farm too soon. And Acres of Diamonds taught me to appreciate what is seen and not seen (underground).
What acres of diamonds may lie at your feet? More likely the answer is in working the territory tightly. Is there an effort or energy there worth protecting and saving? Just know that new territory requires a more concentrated effort, especially at first.
So, how can you work your territory close? I made a habit of asking for a referral (does the family next door have kids your kids’ age?) that way, with 30 presentations a day I was also trying to find additional interest in the same territory. I knew that if I chose to leave that territory, I would be in for some tougher work weeks. So, be sure to ask for a referral at every sales opportunity. You know you don’t do it. So test the idea yourself in the next ten presentations and see. Maybe you’ll learn another lesson.
I observed this in 10,000+ situations. Or among 25 + demonstrations a day 6 days a week 11 weeks a summer, the 7 over the seven summers I worked. So when I share sales experience, it’s from an intense beginning with more sales situations than probably any other person you know, and then followed by thirty years of Real Estate experience.
I often wonder if the authors of many of the sales books ever sold anything, unlike the book you are holding.
I may not have the literary skills of a professional writer. However, one thing I do have is the experience that, if tested, will help you, or my sons and daughter, to not only succeed in sales and help you enjoy life more, too.
Find the acres of diamonds under your feet by working your territory tightly and enjoying the fruits of the relationships you have already developed, and that will pave the way to softer selling.
24July2008
Posted by admin under: Uncategorized.
After thirty one years of full time Austin Real Estate brokerage, I can safely say I’ve seen my share of bull and bear residential markets in Austin since 1978. This loaded question is particularly difficult because different segments of our Real Estate market are behaving differently, or better values in some price ranges than in others, for example.
A simple rule of thumb is that when stocks are down, rich people do not ‘feel’ as rich and homes in the $500k to $5 million range suffer the most. When interest rates are up, middle America, with both partners working, cannot afford as much of a house payment, so homes in the $300k and under suffer most. Does that make sense to you? Lower home prices, look at interest rates, higher priced homes, look at the stock market.
Right now, conventional money is a bit tougher to qualify for. And even those folks with good paying jobs are having to jump through a few more hoops than what their neighbors had to do, just three months ago.
My guess is that Austin Real Estate in general, in the last six months, is down 7-10% in the $500k and up market and down a bit less (5% to 7%) in the $300k and under market. Condo and loft Realtor insiders will tell you that the toughest condos to sell out in these condo high rises are the $600 to $800k range units in these buildings downtown. My guess is that the stock market is affecting that the most, moreso than interest rates. By the way, the condo crash may not ever happen. You heard it here first. And we are not recommending buying them unless you really dig the downtown fever.
Here’s a funny personal story that exemplifies what is happening right now in Austin.
I offered a long time acquaintance $250k for a home off Mopac and Northland that he wanted $300k for. He wanted to ”leave some meat on the bone” and get out of town to start over in Colorado with his new sweetie.
A former appraisor himself, he thought his 1,750 sqft single family home in less than stellar condition was worth $325k to $350k and that surely I would be able to make more money for myself buying his home outrightfor $300k and ‘flipping’ it for $350k, than earning a 3-6% brokerage fee to help him sell on the active MLS or on our infamous Austin Silent Market.
After seing the inside of the home for the first time, I realized the home was not the layout or condiition I thought would be easy to sell. I told him I was not interested, at all.
When he pressed me with ‘OK what will you give me?’ I said, “I will give you $250k, yet you could probably do better letting me help you market the home and get $300k net. The appraisor/owner/’don’t wanter’ looked at me and said, “George, you’re old, lazy, and scared”.
At first I was offended. Gee, just because I wouldn’t give him $300k for his place was no reason to get personal. Then, I realized he was right. I am older, lazier, and I am scared or at least a bit tentative about what the Real Estate market is going to do. So I responded to his charge with, “Bingo, nailed. You are correct. Guilty as charged, I am old, lazy, and scared!”
To which he smiled and replied, “I’m scared, too.” And then we were friends again. He went on to reveal that his neighbor had offered him $265k for the ‘dump’, I mean, property with potential, and he was just trying to see if he could get more ..out of me.
I said, “Sell the home to your neighbor! Even if you might be leaving $5k to $15k on the table, fixing the home up and hoping to get more is unlikely and you might end up getting less if the market continues to lose momentum. He said, “Thanks for telling me that George, I think I will.” And as far as I know, he did just that.
So, is now the right time to buy? Maybe. If you run across someone who is willing to accept that the market has lost some ‘air’ and might be 7-10% under sales comparables from six months to a year ago. Remember, the time you buy is not as important as the amount you pay. Capeche?
And most people make money in Real Estate when they buy. Not when they sell.
One other question to ask yourself as to whether this is a good time to buy or sell is - Am I moving up or down in home sales price?
In a contrarian viewpoint, if the market is down 10% then the the $30,000 you “lose” on your home is what helps you save $60,000, or 10% loss of value on the $600,000 house you are moving up to. And you cannot have it both ways. Most people will let the fact that they are not going to make as much as they want from the sale of their current home keep them from being in a position to make a killing on the one they want to buy. “Fear of loss is stronger than desire for gain” is one of my mantras, if you have ever been around me.
Sort of like the saying, “You can’t steal second with your foot on first”.
So, my thougths are if you are planning on moving up in the next three to five years, sell now and rent for a few months/years while you make offers one homes waiting for the owners that can afford to or are willing to take the ‘hit’ you were willing to take on the sale of your home. And if they are not, they can just ‘camp out on first, right?’.
I suggest, buy today and try to get the sellers to accept today’s real or tomorrow’s prices, which seem to be equal or lower than last years, in most cases. If they will, a purchase might be a great thing RIGHT NOW.
The ASM Group sold two homes in the million plus range this last month.
One sold for 10% under the current appraisal and our clients are thrilled to be free of that home free to look for the steal sign to take second. In the second example, we helped two doctors referred to us by some clients here buy a home on Bunny Run for less than the seller paid twelve months ago. And they are happy too.
If you disagree with any of my diatribe, by all means, please write me and tell me how full of it I am. All I know is what I see in my little world. And I could be wrong.
After all, I am old, lazy, and scared.
George Sears McGee 6/13/08
23July2008
Posted by admin under: Clarksville Real Estate; Soft Sell.
Your Journal
Why Keep a Journal?
Do you ever remember getting a letter or a note that made you feel so good you kept it?
As I wrote this on a beautiful sunny but cool afternoon in an outdoor Austin café, I asked my cute young waitress the same question.
“Two” she blurted out “and I keep both in my pocket”
“Really? Did your letter come from a family member or a boyfriend?”
“No, both notes came from strangers.”
“Really? Just two?”
“Yeah, customers, over the last year who wrote me sweet little notes about how I’d brightened their day.”
Imagine if two little notes written by the strangers are saved and treasured, how many letters you may have written yourself that have made others in your life feel special? Sounds nice to be affirmed by others for spreading joy, huh? We can also reward ourselves with situations and people who bring blessings to our life and acknowledge the good we bring to ourselves and others.
When I made up my mind to be writing this book you hold in your hands, I’d already written an average of one page, plus, three times a week from 15 or 16 years of age to age 55, so writing should be not problem, right? Well, I figured surely in those 6,000 plus pages there were enough interesting stories and life lessons to fill a book.
Instead of going back through 6,000 pages of my journals, I decided to write only the highlights to create chapter titles. I decided about fifty would do it. I began to think of the chapters in my life that would be the most interesting and meaningful as far as life experiences. I also felt the desire to pass onto my four children the crux of life lessons to which I’d been exposed and more importantly, how I reacted and my life results. My children would no doubt learn more from my biggest mistakes which led to unintended consequences than successes.
How about a life memoir centering on my mistakes as well as my successes? I decided both deserve equal time. Hey, far from perfect, I have hurt a few people and made some huge errors in judgment. Yet, one thing you’ll get, kids, is the truth, especially as you grow into woman and manhood and are ready for the truth – the good, the bad and the ugly. Why not? If not now, when, right?
Long story short, I decided to write a whole new book rather than try to find material among my forty years of journals. My journal writing has helped me in many ways. If I were upset, instead of crying, I wrote the anger right out of my consciousness. Ever fired off an email you wish you could get back? That’s what I am talking about! Writing slows down the mind and allows one to get the reaction out of the mind, to invite better energy. I am convinced, writing in my journal 15-30 minutes several times a week saved me a few needless lawsuits which might have brought on over damaged egos and sharp tongues or pen.
Ever feel like you just needed to “get away and think things through?” Often what I thought might be an ideal topic, once I sat down to write, was not particularly moving. Then I would think of something or someone who was bothering me at the time. What am I upset or obsessing about? And usually, as I put pen to paper, the words and feelings would start to flow.
Writing P.A.N.notes (see chapter 10) is easier and that habit leads to more notes to clients, family members, and waitresses.
Now, I have a personal journal and a business journal. Have you ever been at work and needed a telephone number that you just know is on a scrap of paper around here somewhere?” About 20 years ago, my friend and very successful commercial Real Estate broker, Diana Zuniga, suggested I use a single steno notepad to write “everything” down. Now, ten years later, instead of looking for a piece of paper, I look for my steno or my business journal. Write it down. Now, I know with PDA’s and cell phones, all of our business contacts go into some database management system. We certainly use those tools as well, yet often in that early sages of fathering information it’s good to have backup in another format because “the dullest lead is better than the SHARPEST mind”.
What I have found interesting to do is to look back over various goals and concerns addressed many times over the last forty years. Many of my concerns at 15 are still issues. I continue to struggle with at 55. Yet progress is being made gradually and through journaling allowed to be analyzed and brought to light.
One last great spot to keep your journal is beside your bed. Upon awakening, write down your dreams without analyzing them, at all. If you write quickly upon awakening, your journal will allow awareness of your subconscious state in a positive and in a spiritual way.
Write about issues that matter, that make you cry and laugh. Your journal is yours and will never become published as a book. I know mine won’t. Yet that habit has led to a book that is now in your hands. A softer approach than just starting to write cold turkey. Practice with a journal and work up to a book, won’t you?
19July2008
Posted by admin under: Uncategorized.
Seems like finance markets are in a bit of a state of free fall. Qualified prospects are having a hard time getting loans that were easy just three months ago. Does it matter if your home is well priced, if the buyer cannot get a loan to buy it?
Sort of like whether it matters what gas costs if we actually run out? I surely do not know and would doubt anyone who claims to know any different. All I do know is that now might be a good time to be particularly cautious. Make sure you are buying at less than replacement value, if possible. Opportunity is everywhere, just make sure you are being careful.
Even though we are in Austin, Texas which has, so far, seemed to have avoided the worst of the national downturn, why does that phrase “no man is an island to himself” keep wafting through my head?
Food for thought,
George Sears McGee
18July2008
Posted by admin under: Uncategorized; fail.
As a quasi-autobiographical account of someone who’s been blessed with healthy success in sales and a well rounded life, I’d love to tell you it’s been all downhill. But it hasn’t. In the late 80’s, I decided to start investing in Real Estate instead of just acting as an agent.
Along with a few partners, my father, a few doctors and other clients, over a three year period, we bought over forty properties, highly leveraged, with very little down payment.
We were rolling along pretty well with $40,000 per month in mortgage payments, and $40,000 per month in rental income. I was working under the assumed premise that, with inflation, the four million dollars worth of property would be worth eight million in seven years. I was 34 years old, planning on being a millionaire by the time I turned 40, as long as the rents stayed even or rose as fast as the property taxes and expenses.
At that age, and being a bit cocky, okay quite a bit cocky, I was also not too worried about the other expenses owning rental property above and beyond simply covering the PITI (principal, interest, taxes and insurance). As far as predicting or making allowances for rents actually decreasing, well that was simply not a possibility. Or was it?
Sure enough, along came the Savings and Loan collapse, with foreclosures rampant and many of my nice rental properties going vacant. Rents dropped by…(drum roll, please)… 35%. So instead of rents of $40,000 a month, our rental income dropped to $25,000 a month. Guess what didn’t change? You guessed it, the payments. So, with $40,000 a month in payments and $25,000 a month in rents, our negative cash flow approached $15,000 per month. Ouch!
My primary income source was Real Estate brokerage, and nobody was buying. And if I wanted to sleep at night, with a clear conscience, how could I encourage clients to buy with prices still dropping?
Even my doctor partners were ready to ‘cry uncle’. So, we circled the wagons, quit making payments, collected what rents we could and began efforts to get the lenders to work with us. Seven months later, we were unofficially bankrupt.
I wondered how I could go from on my way to becoming a millionaire to not just being broke, but owing over $2 million, after being foreclosed on all our rental properties, in less than seven months. I felt terrible for myself, for my father, and for my partners. We were not alone. Yet that was little solace. I had a wife and three young sons. No longer the successful Real Estate whiz, I was in the depths of depression and financial ruin.
Yet, one thing I kept in mind was the adage learned twelve years before as a college student. I had to continue to ‘fail forward’. ”Every adversity carries within it the seeds of future benefit” and “This too shall pass” seemed to waft through my head often in those times. WhileI no longer owned any investment property other than my home, I had a loving, forgiving and understanding wife, three healthy sons, forgiving parents, understanding clients and partners, and a mindset learned from seven summers of hard knocking to “fail forward.”
Though the bankruptcy was hard on the lenders, I took some pride in that I honored all of my credit card debt and other bills involved in the living of life. Only the investment debt would be avoided in my bankruptcy.
By convincing creditors to let me pay on my debts at pennies on the dollar, I budgeted to send what I could as the market began to stabilize and commissions started coming in again. After a few years I’d paid all of my personal debt, and as a result of that forced budgeting, I’d began saving 10% of every commission I’d received. If I received $100 lease fee, $10 went to savings. The amounts were not as important as the habit.
As I look back on those turbulent years, I realized as frustrating, humbling and difficult as they were, the lessons were invaluable. When I was able to start earning fees and helping people make good decisions about buying, or not buying property again, I was much more grounded in the advice I gave clients. I’d learned that the “sword of leverage cuts both ways”.
I do not recommend you do what I did. I hope this chapter helps you realize what can happen in Real Estate, particularly the investing part.
To this day, I own my own home and the one next door, a rental property between my home and office (which is seven blocks away) and a small condo with my sister. And instead of 95% of my net worth being precariously attached to mortgages, I have most of my net worth in savings all because of the savings habit begun as a result of ‘failing forward’.
Just remember, like Josh Billings said in the 1990’s, “It’s no disgrace to fail, but to lay there and grunt, is”. The only disgrace might be in never having tried. Fear of failure stops us dead in our tracks. Having the philosophy of failing forward takes out a lot of the fear and allows you to move, and fail, forward, softly.
25June2008
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Table of Contents
100 Things to Do Before You Die. 3
By Referral Only. 5
Names, Names, Names. 8
Working Territory Tight 11
Permission to Reject 14
Be Funny, Make Money. 17
90 No Contest 19
The Common Denominator of Success. 21
Greatest Salesman in the World. 23
Question Authority. 25
Do it Differently. 27
How’s Business?. 29
Fail Forward. 32
Answering Objections, Not 34
Question behind the Question. 36
A “Born” Salesman. 39
Know Your Audience. 41
Getting To “The Red” 44
Being Yourself … for a Change. 48
Charge Neutral 50
I am Third. 52
Offendable. 53
Your Perfect Day. 56
Beat Your Best 58
Right Livelihood. 60
Mastermind. 63
Finding Joy. 65
Keep a Journal 66
Toastmasters. 68
Act Your Wage. 70
30% Annually. 71
Remodel Time. 73
Working In The White House. 74
President White House. 75
A Penny for Your Thoughts. 76
52 Books a Year 77
Who You Know.. 79
Who You Are. 82
Feather In Your Cap. 85
Are Your Fireproof?. 86
This Too Shall Pass. 87
Alcoholic or Pothead?. 89
Waiting For Godot 90
I’m so Happy for You… Right! 91
Wave First 92
Six Months Off 94
Don’t Tell People about Your Problems. 96
H.A.L.T. 98
F.O.R.D. 99
Listen with Your Eyes. 102
Negative Selling. 103
P.A.N.S. 104
What You Will Someday Become…… 106
Premature Obituary. 108
Mediation. 110
Wind In Your Sails. 113
Graduating. 115
Grass is Always Greener 116
80/20 Rule. 117
No Time To Think. 118
Worry Weeds. 119
Buy this now.. 123
Your Greatest Fear 125
Dropped A Peach. 128
Is There A Book In You?. 130
If You Can Talk, You Can Write. 132
Sales Breath. 133
Self First 134
Too Good To Pass Up. 135
Eightfold Path to Peace. 138
Live Beneath Your Means. 140
Grateful 141
What if?. 142
Silent Selling. 143
Are We Communicating?. 146
Before jumping headfirst into how make sales softly, perhaps we should spend time analyzing why we work or are in sales, at all. For if we have a strong enough why, how becomes infinitely more do-able.
We work to put bread on the table and roof over our heads first, not very exciting, yet a reality for us all. However, if we’re able to work with a passionate why, that motivation will pull us through difficult times more easily.
Do yourself a huge favor. Put this book down now, get out your journal or a piece of paper and without stopping, write down 100 things you would like to do before you die. Take off the blinders, don’t worry right now about how you will do any of the things you put down, or whether you deserve to do any, or whether it’s realistic that you will ever do any of these things. At least do ten now and we will come back to this. I put visiting Cuba down as one of mine a few years ago, for example when I wrote my first 100 things down.
I visited Cuba with my son, George, in 2002. We discovered that 99% of Cubans had never left Cuba, and they seemed curious about the rest of the world. But like the frog that was not trying to jump out of the boiling water even after the lid had been removed, they were satisfied and accepting of their fate.
Would it surprise you to know that only 10% of Americans even own a passport?
And my guess is that only 1% of those use those passports to go any further than Mexico or Canada, our neighbors. What is the different between Cubans and Americans, if Americans do not take advantage of their inalienable right to experience the world?
So, among your 100 Things to do Before You Die, visiting far away lands might be ten to twenty of those might be places you’d like to visit.
Another 20 might be things you’d like to have? Several vehicles, a boat, a summer beach cottage, a new wardrobe, a new kitchen & deck, a place to meditate in your home, big or small goal, write it down.
No one need see your list, but you. Are you having a hard time completing this exercise? Why? What does that tell you about yourself?
Let me guess. You don’t like to make New Years Resolutions either, do you? Possibly you are more of a problem solver than a goal setting. Socrates said “Know thy self”. Maybe you would have an easier time jotting down “100 Problems to Solve Before I Die”. What challenges do I face considering a trip to India?
Maybe you get depressed thinking about things to do with the feeling that this will only remind you that never will, or that those goals are hopeless. Then I was guessing you think of writing these down once and for all to get them permanently off and out of your mind. Freeing your mind and focus on what is at hand. That would be fulfilling, wouldn’t it?
The final part of my Top 100 List might focus around what you’d like to be. A mediator, a friend, an inspiration, a hermit, a writer, a comic, a rancher, a fireman, a better salesman, a skilled negotiator, a more loving partner, a more forgiving soul, more organized, or a voracious reader.
Once you have completed your list of the 100 Things you’d like to do, be or have, then it’s time to congratulate yourself for accomplishing what 95% of the world population will never do. Go out and reward yourself: play some tennis, take a long walk, go to a nice restaurant, and hug your partner, whatever. Take some time to be kind to yourself for completing the first step in having a more meaningful self-directed life. As Socrates said, “The unexamined life is not worth living”.
Now that we have examined what we want, let’s go back and see the Top Ten Things we want to be, to be doing, or to have and look at them more closely. Let’s spend some contemplative time analyzing why we feel most strongly about our list. Let’s put them on our bathroom mirror at home. Let’s continue to consider why and let our subconscious mind work on how we might be able to reach those goals. What baby steps can be taken in the direction of those aspirations?
I wanted for all my life to visit Cuba. For many reasons, I speak Spanish. I love traveling in Mexico, and I heard from friends how beautiful the land and the people are. I had also thought our US policy towards Cuba was not in line with loving kindness. I understood forty years ago, Kennedy had resolved the Bay of Pigs fiasco, yet look at all the other counties have gotten past that. I mean, we kept communication with Russia and Russia is no longer a huge threat. Why should we punish Cuba, who was merely a cog in the wheel generated by Russia?
If setting goals and clear communication is the answer for personal relationships, wouldn’t the same apply to countries?
Anyway, whatever country you want to visit will happen sooner if you acknowledge it as a goal and show your subconscious to learn as how to get there.
Who would not want to build their careers By Referral Only? Never make another “cold call”?
When I was selling books door-to-door in college, our training emphasized how much more we would enjoy our work and do much better if before we quit at 8:30pm that night, get the names of the family next door and the ages and grades of their children before we quit. That way the following morning instead of hitting that door to door “cold”, a frightening thing in itself, we had an “appointment with Marcy Clark and her son Willy who’s in the 10th grade, and Suzie in the 5th grade at Wilson Elementary”.
So instead of “Hi, I’m selling encyclopedias” the approach would be “Mary,
I’m George and I’m talking with all the families with children attending Wilson Elementary. Are Willie and Susie home? Great, I can only stay a few minutes, is there a place we can sit down?”
If Mary asked, “Where did you get my name?” or “How was I referred to you?”, my response would be “In visiting with Betty Thompson whose children, Tim and Lucy, go to school with Willie and Susie. Betty wasn’t sure if you’d be interested yet she thought you might be. So I promised her if I dropped by, give you a peek, just to see. Is there a place we can sit for just a few minutes?”
Nine times out of ten, Mary, after hearing of a close friend who had gotten something from me, would at least be curious enough to invite me in and take a look.
And isn’t that all we deserve? Running your business by referral only ensures that you’ll stand a much better change of spending your days with people who are primed to at least consider your services or products, and have some respect and openness due to your having already been positively referred to them by someone they care about.
In my 35 years sales career, I’ve often realized how the “new” ideas of today are often only a slightly different spin on the sales lessons I learned from the Southwestern Company in Nashville - a company over 100 years old at that time, which had been teaching sales skills to contemporaries of my father and grandfather. So what’s the “Ah ha” for me in that story? Wouldn’t your sales/consulting appointments run more smoothly if you had better pre-approach information? Have you been a little lazy about making sure you are referred?
Ten years ago, I had attended Joe Stumpf’s By Referral Only “Main Event”. Before attending, I was asked to fill out a pre-conference questionnaire. This aspect alone told me this experience was going to be different from any other seminar I had attended.
The questionnaire asked, “Where did your business from this last year come from?” I had been thinking of how to double my business the next year. We, like so many of my fellow real estate practitioners yet, stopping to fully analyze the results year just passed was not on my radar. Well, as I analyzed the results. I realized first that my records were not very organized. Could I even find records to analyze?
After considerable digging, I discovered that 60% of my business had come from two advocates. So rather than working to find totally new prospects through expensive, hard to justify advertising, maybe I should focus on appreciating and rewarding those two people. Maybe I should focus on finding two more angels among my current clientele to double my business.
Nevertheless, ten years of being a member of the community which is By Referral Only, I have developed systems which align with that original pre-conference “Ah ha”.
What is as important to me today, at 55, is earning a good living for myself and my family, and enjoying how I spend my day in the workplace. Would you rather spend your day in front of strangers holding a distrusting attitude or friends of clients who’ve been referred to you for your help?
That may seem like a dumb rhetorical question, yet if one were to examine the way 85% of Real Estate, mortgage professionals or many other service providers spend their time, you would wonder no more.
I’ll give you one or two examples. “Great job, George”, we hear from our client, and from some reason, we fear “No problem, don’t mention it”. It’s as if we are saying “Keep this between us, don’t mention it. Thanks, but I’ve to now go put an ad in the paper for my next business opportunity”.
Sounds crazy, yet without systems in place to accept thanks, and to realize when you hear the world thanks, it should be like a meditation bell sounding off. ‘Thanks’ is a sign from the universe that says “You’ve done a good job. I owe you. How can I repay you? In essence, hearing the word, thanks is a referral moment. These moments pass in our country or millions of times without ever being acknowledged, fully recognized, and appreciated.
How about next time you hear the words “Thank you”, you train your mind to realize that as a referral moment and respond with something like the following: “You are most welcome. Thanks for noticing. We would do that for anyone you care about you might send our way. By the way, who is the next person you think of who might be getting ready to buy or sell a home?” Or “You’re welcome. Hope you will not keep me a secret!” Or “You’re welcome. What’s most important to you about what we did?”
Test that the next time. A client of yours says Thank You and sees what happens and then keep testing.
Here’s another minor shift you might consider: What do you say when someone asks “How’s business?” Great! Fantastic! Couldn’t be better! or some version of “We’re kicking butt!” For some reason we’ve been told” People like to do business with winners – with people who are doing well. If that’s true, there lies in that response, an unintended consequence.
Subconsciously it’s like holding up your hand like a stop sign and saying “Great! So I really do not need your help” or “We’re doing so well we don’t have time to help someone you may have been thinking about sending our away”.
Do you see that? So the suggestion Joe Stumpf teaches at the Main Event is to consider answering like this “How’s business?”
And in a charge neutral, not overly enthusiastic, say “Good, mainly because of some systems we’ve put in place to help you and friends you care about you might send our way”.
Now, maybe you may not get a hot referral lead to buy a million dollar home every time. Yet, think how many times as a Realtors or whatever you do, do you have people ask “how’s business” twenty, fifty, one hundred times a year? My guess is that if you trained yourself to answer this way, you might earn an extra $10,000 to $50,000. I know I have.
A By Referral Only mindset is not word of mouth. It’s not hoping for more business. Its advertising our paradigms to embrace the concept that if I am to grow and work By Referral Only, I’m to recognize, appreciate and consequently, put systems and daily language in place to maximize that possibility. Do you like that idea? Would that be hard for you to do? Are you above asking for help?
“Do you all know the Petersons?
“Yeah, sure I know Bill and Mary.”
“Do you know the Randolphs, the Garza’s, the McClellands, the Harringtons, or the Hayes?”
“Yeah, she’s a cheerleader”.
“How about the Thompsons …Joe Thompson? He’s the one at Vanderbilt now?”
“Yes, we know the Thompsons. What have you got? How do you now all these families?”
“How about the Brooks, David and Beth? How about the Rawlings?”
And by the time I’d been in an area for a few days to a few weeks, to have to 20 to 50 names of folks they knew, and admired.
Finally, after reading my entire list of clients I’d say “Well, these are folks who’ve either gotten something from me or my company. I’m not sure whether this will appeal to you or not, but I wanted to pop by, show it to you just to be sure, before I got out of the area. Should we just sit over here on the porch, or would it be better at the kitchen table?”
By this time I’d read the names of 20-50 families these people knew and cared about and had mentioned had “gotten something from me”, they were curious. “Well, sure. Come on in” or “Now, of course” with the children begging.
As I read the names often it became a game. Could I finish the entire list before my potential prospect started getting angry I was not answering the question about just what I was selling? But it was always worth it.
Also, some names were more important than others. The school librarian who bought a study guide from me or from another student in a previous summer would sell more books than I could have ever sold.
My first summer in Riverside, California in 1972, I earned $5,600 in 90 days. Now I work twice as much as the average college student 60 hours a week, yet the summer ended for all of us in September. My second summer, I earned $13,000 and saved $11,000. In 90 days that summer, I earned more than Organic Chemistry and Petroleum Engineering majors (one of the most difficult degrees at the University of Texas) were being offered by the big oil companies, like Exxon. Actually, you could buy a brand new car in1972 for less than $2,000. That was a lot of money. And I would never have earned that much if at the tender age of 20 had not learned the values of names. More importantly, names that worked.
Once my prospect and their children had let me know who they knew best and liked most from “the name game”, I would sprinkle those names in my presentation to solidify the values of the study guide.
“Bobby, the president of the national honor society said if the math section helped in raise his GPA just a little he felt that would help him have his pick of colleges”. And “What Mary really liked about the history section. And what Joey liked about the English section was… And even though Mrs. Houser might have to work another shift or two to afford the study guide, she said if it helped her kids so well in school, it would certainly be worth it!”
I would sometimes spend up to 20 minutes with a few of the kids on the block getting names of families on the entire streets, so I’d never have to make a cold call.
And before I left the family who had fun with me and enjoyed my presentation (which never took more than 20 minutes) I would say “You know Mrs. Houser, I’d hate to bother anyone who doesn’t have children, and do the folks next door have kids in school?”
“No they’re in their 80’s and the folks next door don’t either. In fact, there are no kids until you get to the big yellow house on the next corner. They’ve got five!”
“Is that the Alexanders?”
“No, that’s the Lamars. They’ve got Andre, who’s in 8th with Holly, and Jamie in
4th grade, with my son, Willy”.
“What about the brick house on the other side of them?” I wrote down every name, child’s name, grade and even where they worked. Then, dressed in a T-shirt, shorts and tennis shoes, I’d run not door to door, but to my next appointment referred to me, and bounced up to that door with:
“Vicki, Vicki Lamar?”
“Yes”
“Hi, I’m George and I’m one of those high pressure door-to-door salesmen.
Can you tell?”
Vicki would usually giggle, and before she could say, “We’re not buying anything” I’d say: “Have you seen the new TV the Thompsons got? Mary told me your daughter
Holly has practically moved in with them… Is that true?”
“Well, Holly does go down there a lot”.
“Well, Mary just got something from me, she was not sure if you’d be interested. But she said Marcy was really excited about it and thought Holly would be. too. Are Andre and Jamie here too?”
“Well, yes.”
“Great, I can only stay a few minutes because I have to show these to 30 families today. Is there a place we can sit down?”
People always tell me when they hear I sold “dictionaries” door-to-door that they couldn’t believe there was any money in that, and usually they’d follow that with “I’d never let you in” or “We never buy from door-to-door salesman”.
I didn’t get in every door, mainly because I didn’t want to. Yet I’ll bet I got into 90% of the doors I wanted to. Why? I’d learned the importance of names. At the ripe old age of 21, I had learned an extremely valuable lesson: that names, referrals, and excellent pre-approach would get me in their door. The valuable lesson would be one of the most valuable lessons about sales and marketing I would ever learn.
Did selling books change my life? Well let me ask you. “If you earned more in three months, as a sophomore, than the brains in the majors in college were going to have to spend four times as long to earn, would it change your thinking or career planning?”
My father was a judge all his life. He made a good living, yet he never had the opportunity to take more than two weeks off at a time his whole life.
I decided then that learning to sell was a skill and that if I were willing to work hard, even if just for 90 days, at a time with people I chose to, and earn more money than lawyers as a 20 year old history major.
And I would never be at the mercy of some boss or company who could fire me after 20 years of service. I felt free. I felt in control and I decided to embrace the fact that I had learned to sell in a way that I and the people who were my clients could enjoy.
Somehow, working three months and having nice months off seemed too sweet to ever pass up in life.
