REAL ESTATE EXPERTS SOUND OFF
You can pose the question of “have we recovered?” to 100 Realtors and receive 100 different answers. The fact of the matter is that no one knows for sure if we are on the path to recovery, but many insist the market is showing positive signs. To get to the bottom of this issue, we spoke with a number of industry experts on the state of the real estate market, and also checked in with a few Realtors and other industry professionals who have found the path to success despite the direction of the economy. The market may be up or down at any given moment, but you are the one in control of your real estate career.
BUILDING A NEW BRAND – WITH OR WITHOUT A RECOVERY
By Brian Brunhofer – Developer
My wife Karen and I have spent most of our careers in the real estate and home building business. During our tenure as division presidents at Pulte Homes, we would often think “the only way we could enjoy our jobs more would be to start our own company.” So we did – Meritus Homes.
While some people may question our timing, we actually think it’s a good time to start a home building company. For the two years leading up to the launch of Meritus Homes, our team — which includes a third partner, Gary Janko of Janko Group — has been able to capitalize on stressful market conditions and assemble a portfolio of premium developed lots, raw land and financial securities at favorable values. Not only has this assemblage been a good opportunity for our company, we are confident we will be able to offer great quality homes to our homebuyers at today’s market values.
Meritus Homes will be offering move-up single-family homes and townhomes in Chicago’s north, northwest and western suburbs, including Inverness, St. Charles, Naperville, Lake Villa, Lindenhurst and Addison. Our first community, Creekside at the Estates of Inverness Ridge, is scheduled to open this fall in northwest-suburban Inverness and will feature 27 single-family homes.
As former division presidents of Pulte Homes, we’re in the unique position to offer our customers the efficient business model and streamlined operating procedures of a large builder, but within the context of a family-run company. We’ve adopted the best practices associated with a big builder and married those with the personal attention of a small builder.
Do I think people in Chicago are going to be camping out overnight to buy a home like they did five years ago? No – in fact, I wouldn’t want that to happen because it means there’s an inflated perception of the market and none of us wants to go down that road again. But I do believe the worst is behind us.
Will Meritus Homes ever achieve the same success as Pulte Homes? I guess that depends on how you interpret success. If you’re looking at sheer sales volume then obviously the answer is no. However, success for Meritus Homes is defined as providing a great experience and delivering the American dream to homebuyers. We are confident that as a small, family-run company, Meritus Homes will be able to accomplish that often and have a great relationship with our buyers – one in which we can celebrate the personal milestones in the process such as the first walk-through, sitting with them at the closing table and personally handing them the keys to their new home.
The best part is that Karen and I get to do this together. After 12 years at Pulte, 10 years of marriage and three children, we joke that running Meritus Homes is a lot like our life together – a division of love, labor and laughter. We’ve been very fortunate, and count our blessings every day. We hope to have similar success with Meritus Homes.
Brian Brunhofer is the founder and president of Meritus Homes. For more information, visit MeritusHomeBuilders.com.
SUCCESS IS A MINDSET
By Helen Oliveri – Agent
In a shifting market, the key to our success has been tenacity and a strong focus on return on investment (ROI). Understanding the activities that generate the most return has been instrumental to our explosive growth. As well, assessing the market and where the source of our business comes from has been influential to sustained growth.
Every year, I have grown our business substantially and I firmly believe that the market will not dictate my level of success. I demand this mindset of anyone affiliated with me, and, in fact, this is a consistent mindset throughout my entire team. We are high-minded overachievers and winners who believe we are the solution to achieving our clients’ real estate goals. Testament to this philosophy is that I have sold over 104 properties so far in 2010, and we are on path to break records this year.
Our systems and tools to market our homes have proven to out-compete the market. Everything we do is completely different from the norm and this is what makes us unique and successful. We market extensively and creatively invest in our homes. Our marketing drives competition and competition creates urgency. Urgency drives sales and sales drive service. Stellar service drives referrals, referrals create raving fans and so on. Then the cycle repeats itself.
We provide the personal touch regardless of the fact that we are a volume-based business. We are focused on understanding the market, adjusting to it and educating our clients through it to achieve their goals. Our expertise in this market is critical and essential to sellers and buyers. Additionally, how we convey our expertise is equally critical.
As we know, real estate is localized, and depending on which area we are examining, the overall trend is that we are still in a declining market. It may be several years before we see an upswing in the market and trends indicate that we have a surplus of inventory and until this depletes, we will continue to be in a buyers’ market. Recovery seems to be further out than originally anticipated. Subsequently, telling people the truth is simply a must. At the end of the day, it is up to us to overcome the challenges of the market, to educate ourselves and our clients and to be honest, integrity-based professionals. This is the highest ROI a consummate professional can make. Invest in your business and in helping people and success will follow. To expect otherwise is just unacceptable.
My words of wisdom are to make the most of the market, invest in what works, be ethical and true, and the rest will fall into place. Success is a mindset, so never settle for less than being the best and success will follow.
Helen Oliveri is the founder of The Helen Oliveri team with Keller Williams, specializing in all of Northern Cook & Lake County real estate. For more information, visit helenoliveri.com, or contact her at 847.967.0022 or by e-mail at firstname.lastname@example.org.
By Buz Hoffman – Developer
In 2006, when the home building industry began to disintegrate, Lakewood Homes was hit hard, as were all builders.
Fortunately, we weren’t hit as hard as some, and this is because we stopped purchasing land prior to the collapse. Prices had become unrealistically high, and wouldn’t have allowed us to build the entry-level housing for which we were known. We decided to go into hibernation, understanding that land would be available again some day, at appropriate prices again.
In the meantime, while keeping our management team intact, we started Lakewood Real Estate Solutions, a consulting and construction resource. We’ve been pleasantly surprised to find that it’s much needed in today’s world of repossessed housing, partially built communities, abandoned developments and banks that have reluctantly become property owners. We offer a broad range of help regarding land planning, finance, mortgages, site engineering, construction, sales and marketing.
Instead of Lakewood originating new communities as we had in the past, we’re focused on working with banks to build out their distressed properties. We also offer assistance regarding the fine points of receivership involving foreclosed properties.
Currently, our biggest project, where we serve as general contractor, is the Sunset Grove shopping center in Long Grove. It’s anchored by a much anticipated Sunset Foods grocery. There will also be a CVS Pharmacy, Rosin Eye Care, Chase Bank and others. Opening date is scheduled for January 2011.
In addition to this commercial venture, Lakewood Real Estate Solutions is building out partially completed residential developments in partnership with banks, and other builders. We’re working on a community in Palatine, now under construction, and another in South Barrington.
We continue to advise banks about ways to maximize the value of acquired real estate assets as they compete in a marketplace saturated with foreclosures.
Experience has shown us, and those we advise, that the best way to get out of an acquired asset, with the least expense, is to build your way out. We demonstrate this with case studies. We have several capital funds currently looking to invest in properties identified by us. There are still opportunities in today’s real estate climate. We offer assistance to these funds as their operator, buying and building out profitable locations.
A prediction for the near future? We believe that our industry is not in the midst of an upswing. We are instead hovering near the bottom. But that’s not entirely bad, because it means there’s only one place to go from here: up.
Buz Hoffman is the president of Lakewood Real Estate Solutions. For more information visit lakewoodrealestatesolutions.com or call 847.884.8800.
THE WALL BETWEEN US AND RECOVERY
By Andrew Palomo – Lender
In terms of the current housing market, there are still many factors that I think are standing in the way of a recovery. The appraisal process is still a huge unknown in every transaction, condominiums are still more difficult to finance than a single-family home and Fannie Mae and Freddie Mac haven’t been addressed by Congress. However, I believe — more than anything — that what is required for a housing rebound is simple: jobs.
It is extremely difficult to market homes, plan mortgages and help people understand the market place when you don’t know what the next month will bring. When people are confident in their job situation, they will make long-term, large purchases. The housing market has always mirrored the job market. As unemployment stopped increasing, the housing market slowed its devaluation. To make a long and complicated story short, when jobs come back, the housing market will come back. Since many potential buyers are out of work or fearing the possibility of unemployment, they do not want to take on a long-term investment when they are unsure about their long-term source of income.
This leads many people, especially the younger generation, to continue renting instead of plunging into homeownership, mainly because of uncertainty regarding their job and future income. For many of these young adults, renting or continuing to live at home seems like the smarter option than buying a home they’ll struggle to afford.
The move-up market has been constrained by a combination of people moving equity through previous home equity loans and cash-out refinances, along with the addition of the decrease of property values. Many owners currently have a home worth less than they owe on their mortgage; they are tied to their current home and surely don’t have the ability to buy and relocate at this time.
We need more job growth in this country for the housing recovery to truly begin. Also, my hope is that when Fannie and Freddie are dealt with, Congress will take a break from attempting to fix market issues with compromise bills that often miss the mark. When the regulatory storm calms down, we can assess the new landscape, make adjustments and get back to work helping people with their largest and most important purchase.
Andrew Palomo, CMPS, CMC, CRMS, CFP, is the branch manager at the Oak Park office of 1st Advantage Mortgage. He can be reached at 847.489.1900, or by e-mail at email@example.com.
STARTING OUT FRESH
By Bill Hults – Rookie Agent
“You must be very optimistic or out of your mind” is what a friend said to me when I told him I was getting my real estate license in 2009. I choose optimistic.
There is no question that the real estate market is experiencing a significant challenge. A record number of short sales, foreclosures and jaw-dropping price reductions are an every day part of our vocabulary. That being said, homes are being bought and sold every day and while it may be for less money, the fact remains that the buyers and sellers of those homes still need the services of an honest, professional and very often compassionate real estate agent.
After five months with Baird & Warner Evanston, I have realized a few important aspects to the business. Choosing the correct company to work with is essential. I visited with four different groups, and after meeting with Chris Smith and his staff I came to understand that the training Baird & Warner offered was going to be key to my success. The other element was the assistance I received from the other agents in the office. They have always been available to answer any questions that I have, regardless of how basic the question.
The second element to the business may be a negative to some, but to me is one of the most attractive parts: You’re on your own in terms of scheduling your time. You can be as busy as you want or not. In the five months I’ve been in the business, I will have closed four home sales and three rentals. I have several more of each in the pipeline and plan to close a total of 15 transactions by my first anniversary. Not exactly record setting, but a good first year. And I’ve done it on my time. I can live my life on my schedule, not someone else’s, and the value of that for me is priceless.
That’s the good news. The other side of the story is that I have worked harder for what I’ve made in these past five months than I have in any other job previously. I’ve made more telephone calls in this period of time than I have in the past five years of my life, and received more negative responses. But that’s alright because when you talk to someone who needs your assistance it makes it worth all the time and effort.
Is the economy going to recover? Yes, it is; no doubt about it. Are people going to start buying and selling homes in larger numbers? Absolutely. Do I know when that is going to happen? I have no idea. But I can tell you one thing without question: I plan to be there ready to assist any of them in finding the home that they are going to share with their families and create the memories they will remember for the rest of their lives.
Bill Hults is an agent with Baird & Warner in Evanston. He can be reached at 847.491.1855.
BUYERS AND SELLERS ARE MOVING – AND SO CAN WE
By Jennifer Ames – Agent
Like everyone in our industry, I am relieved that 2009 is behind us. That year, nationwide sales shut down as buyers feared for their jobs and expected home values to continue to fall, while sellers mourned the drop in their homes’ values and could not (or were not prepared to) sell at the new pricing. As agents, we often find ourselves in the role of counselor, and yet in 2009, it was nearly impossible to know how to advise our clients. As commission income dropped, it also caused us to question our own future. The bottom line is that 2009 was a frightening time.
Thankfully, the Chicago residential market has taken a turn for the better in 2010. In some parts of the market, sales are up, market times are down and multiple buyers are bidding on the same home. I attribute renewed activity in the market to the fact that people are getting back to living their lives, and where they live can be a key component in that equation. Our clients are moving to be closer to their parents or in a better school district for their children. They are relocating to pursue new job opportunities or downsizing so they can enjoy more flexibility to travel. Sellers seem less hung up on what their home is worth, and more focused on moving forward with their life plans.
When I meet with prospective new clients, my goal is to learn about their life goals. Why are they thinking about moving? Are they getting married or planning to have another child? Is their youngest child headed to college? Do they hope to retire in the next few years? By understanding their underlying motivation, I am better equipped to help them devise a strategy to accomplish their goals.
Buyers and sellers, it seems, are finally moving on, and if we’re there to help them, so can we.
Jennifer Ames is a sales associate with Coldwell Banker Residential Real Estate in Chicago. She can be reached at firstname.lastname@example.org.