Real Estate-Boom!By Cherri Gann
Not even a recent weak economy could slow down the record-breaking real estate industry-particularly its home sales. Thanks to near 45-year-low interest rates, between 2002 and 2003 existing single-family home sales climbed 9.6 percent, new single-family home sales rose 11.5 percent and mortgage refinances shot up by an astounding 71 percent. Between 2003 and 2004, existing single-family home sales climbed again by 11.2 percent and new single-family home sales rose another 10.8 percent.
According to a study of the State of the Nation's Housing by the Joint Center for Housing Studies of Harvard University, in addition to the low rates a further combination of mortgage innovations and home price appreciation also helped push the national homeownership rate up to 69 percent.
And, experts also tell us a risky stock market has been part of the mix. "We have a lot of people coming into the real estate market as investors," says Phil Gerisilo, associate broker with John L. Scott Real Estate, in Seattle, Washington, and co-author of Succeed In Real Estate Without Cold Calling, due out this month.
"After the dot-com crash, people became a little disenchanted with the stock market and began to look at real estate as a viable alternative solid investment," he says.
"Without question, real estate has been a far safer and better investment than the general stock market," agrees Michael Simon, executive vice president of IncentOne and former COO of Coldwell Banker Europe. "We've seen a move away from the 'smoke and mirrors' of the stock market where you never quite know from where the information is coming."
Simon believes that "Corporate America" struggles with how it communicates value propositions and earnings to the layman. "It's still too complicated for an average investor to understand," he says. "But, when compared with real estate, which is tangible, something you see and touch it every day, a typical investor would rather put money in something he or she can own. This is easy to understand because with real estate, you pay X for something and get Y."
Handling a Hot Market
We've all been taught (or we learned) not to touch a hot stove, but this market is one scorcher where it may make sense to grab on with both hands. As a generator of more than 23 percent of the U.S. Gross Domestic Product, how does one capitalize on a strong market such as this? Every pro has his or her own strategies, but these experts offer a couple of examples for real estate.
"There's a push toward second home ownership so that's a viable market," says Simon. There's also interest in time shares, time-share reselling and investment property."
Gerisilo has just one word of advice for Realtors looking to gain an edge-specialization. "Finding a comfortable niche-such as first-time home buyers, retirees, or condominium or luxury home buyers-is a key."
Using condos as an example, Gerisilo suggests becoming an expert in your area by knowing about every new project that's in the works, the per-square-foot selling price and how much condos have appreciated in the last year.
Whatever the forte, Gerisilo advises to "Become thoroughly knowledgeable, study the customer's needs, wants and desires and then narrowly market to that target."
How is that useful for a promotional products distributor? Well, a little research on your part of the areas of specialization will help you speak the same language as your client.
Marketing Real Estate
A big fan of promotional products marketing, real estate ranks number eight on the list of Top Buyers of Promotional Products study by PPAI, and it seems there's no sign of that slowing down.
"This business is all about name recognition so there's a huge market for these products," says Gerisilo. "A lot of agents in my office give out drinkware. I use calendars, magnets and notepads often."
"This summer, I purchased ball caps for a client to use in conjunction with a tradeshow," says Pamela Pupple, owner of the Las Vegas, Nevada-based Pupple PR Agency, which counts several commercial real estate companies among its clients. "This tradeshow includes a bus tour where developers will explore properties and land for sale. The caps were chosen because Las Vegas summers are very hot, and potential buyers would need the added sun protection while walking around outdoors to look at the properties."
John Liberati, president and CEO of Liberati Investment Corporation, in the Philadelphia, Pennsylvania, area also uses promotional products. "We use pencils and pens, of course," he says. "Then there are the imprinted golf balls for golfing event sponsorships. Also, when we wear a logoed shirt-which is often-people always approach us and start talking about business opportunities."
On the other hand, although Simon believes promotional products are useful and effective, he isn't particularly impressed with those most typically used by real estate agents. "My opinion is that the days of simple logoed pens have come and gone in terms of an incentive for people to take action because we're inundated with those all the time," says Simon. "There's a need for creativity and items of real value to the customer. We've seen success with our gift certificate awards as traffic drivers to offices or online.
In that same vein, "Items such as calendars, magnets or buttons with the agent's picture aren't meaningful to a customer who has moved through the whole process of buying a home," he believes.
"There is a much more sophisticated level of retention marketing that goes on today and marketers should seize this opportunity," says Simon. "With the typical home-ownership cycle being seven years, agents need to stay in touch with their customers.
"Doing this is a big challenge, and I'm not sure how a simple business card, holiday greeting or similar product doesn't end up in the circular file as soon as it is received. How will these items keep the agent's contact information top of mind when consumers are either trying to make a referral or buy a new home. There are more tangible items to remind consumers of their great experiences that will result in another call."
What should promotional marketers who want to partner with real estate professionals know? Simon begins by explaining they are split into two groups-the owner/operator/franchiser and the individual agents.
"Owners and franchisers are marketing themselves for brand recognition," he says. "Agents take the initiative-and spend their own money-to market themselves. It's two different buckets of marketing dollars to go after."
The big thing to understand is "Real estate is less about real estate than about customer service," says Simon. "It's not investing in a piece of property or an office building. It's a personal relationship that agents need to develop-and maintain-with customers."
On this note, whoever owns the inventory-i.e. property-ultimately dictates the transaction. Thus, three things are on an agent's mind at all times: customer acquisition (finding interested buyers), finding interested sellers (and getting an exclusive to market their property) and self promotion. "If you're buying or selling, I want you to remember who I am," says Simon. "And I'm going to keep reminding you that I exist so when you decide to buy and sell again, I'll be the one you call."
His advice is to approach the agents. "The agent owns the customer relationship and the product inventory knowledge," says Simon. "Developing a local relationship is much more cost-effective than trying to penetrate a large corporate infrastructure. Working locally shortens the sales cycle and decision-making process."
Gerisilo works with a distributor who often attends company sales meetings and seminars. "We have about 120 agents who see this distributor's short presentation, including samples. It's even better when he shows agents how usage can improve business," he says. "Often the agents place orders right then."
"One of the problems in our industry is that real estate agents will try something once, and stop doing it if they don't get a quick response because they think it didn't work," says Gerisilo. "Well, you can't just do something one time. It needs to be consistent and ongoing. You're going to lose customers if you're not in front of them. That's something agents need to be shown and convinced."
"Many real estate agents don't have the mentality that they are a business and all businesses advertise," he continues. "So they should be shown why promotional products advertising is important with facts to back up the information."
Gerisilo also suggests making it really easy for agents to buy the products and implement the distribution. "The more complicated it is, the less likely they'll be interested," he says. "Also, make it easy to obtain the product and re-order it-for example, online or automatic re-orders." In a nutshell, anything that simplifies the process will help generate more orders for the distributor.
Real Estate Outlook
Harvard University's JCHS State of the Nation's Housing 2005 study shows some indication that growth in homeownership could decline. But this doesn't mean the opportunity for business is gone.
The most popular reasons for buying a home are the desire to own a place of one's own, be closer to a job, invest in a vacation home or property as well as the need for more (or less) space, job relocation and retirement.
"The market hasn't always been as hot as it is now, and I've been through the cooler ones," says Gerisilo. "But people are still transferred, divorced, re-married and make other life changes, so there's buying and selling in all markets. You just might need to be more focused when things slow down.
"Agents who are better known to buyers and sellers are the ones who are going to get the business," he continues. "Agents' ongoing personal marketing campaigns must be consistent. Like brushing their teeth every morning, it has to be something they must do all the time. If not, they should not be surprised when business drops off."
Insert the old ad business cliché here: What happens when you don't advertise? Nothing.
"Creativity is key right now, and real estate agents are far more receptive to seeing new ideas," says Simon. "Moving them away from the essentially self-promoting items to more 'value-added' ones for the customer is the better way to attract, retain and thank clients.
"If promotional marketers focus ultimately on end users and can make a case for why they will be pleased to receive it, then that will be a strong marketing message," he continues. "It's about what is in the consumer's best interest as compared to the agent's best interest. At the end of the day, the customer writes the check, not the agent."
"Like any industry, name recognition in our business is important-probably even more so because as a Realtor, you're marketing yourself and your services to potential clients, says Gerisilo. "It's really important when you're creating that message-no matter how it's delivered or what media is used-to focus on the client's issues. It isn't, 'Hire me, I'm the best real estate agent in the world.' Distributors must keep that thought in mind when suggesting products or presenting campaigns."
Finally, Gerisilo concludes, "Promotional products are 'must-have' items-I don't even think they're optional. You have to keep your name out in front of your customers and it's just a question of how-and promotional products can do it." PPB
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