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A new agent just joined today. He came from a national franchise firm that had four successful offices. Now they are down to only one. It continues to be very hard for the traditional office to succeed in this market. It is even more difficult for them to justify to their agents their policy of paying the agent only a percentage of the toal commission rather than all of it like we do.

Even our agents have a hard time believing this business model is really possible. One day an agent came in to the office to get paid. She picked up her check for $15,000 and she came in my office to say thanks. She also said, “I know this is going to sound foolish but I almost feel guilty taking all of this money. Don’t you feel bad about giving the agent all of the commission?” My thought was I had not really thought about that. Then I answered her by saying, no because it’s not my money. You’re the one that had the buyer. You found the property. You saved the deal when it fell apart three times. You earned the full commission. We created the structure so you can do that. We know that if we our job right will have a lot of agents. For us, a little bit times a lot is a good thing. For the agents, keeping all of the commission less a small fee is a good thing for them too. She walked out happy with her $15,000 check.

It’s been over a month since my last post, primarily due to the fact we have been very busy! In August we held our 5th anniversary party. We opened our office in June of 2004 and since then have had over 1300 Chicago area agents make what they determined to be the Best Choice for them by joining Charles Rutenberg Realty.

As a company, August 2009 has been our busiest month ever. We completed nearly 200 transactions. Our sales volume for the month was76% higher than August 2008! While year to date 2009 sales were 6% less than 2008 year to date, the last three months show an overall increase of 13%. Our average sales price is lower in 2009, $213,029 versus $240,439 for 2008.

It was reported on Friday, July 24th, that the residential real estate market has started to recover.

Sales of previously occupied homes have increased for 3 straight months. That
hasn’t happened since early 2004. Median home prices for June in the
Chicago area are up 5% over May, $210,000 vs $200,000 though June is
still below last years number of $256,000 by 18%.

Another encouraging sign is that the share of foreclosures in the market is
shrinking. Only one of three sales in June were foreclosures compared
to nearly half earlier this year.

FInally, supply is now down to 9.4 months. It is commonly agreed that a balanced market would have
a supply of 6-7 months. All in all, we are moving in the right direction and as more people become more confident this is the case, the market will improve even more. As they say, success breeds success!

Charles Rutenberg Realty is a firm built on the premise that it is the agent who brings in the business so it is the agent who should keep the commission earned. We can do that because we keep our expenses low so as to keep the commission paid to the agents high. One key way we keep our expenses low is by not providing a physical office for our agents to work out of on a daily basis. In our firm the agents computer is their office. We do this because the public no longer looks for their potential real estate agent in a physical office, they look for them online.

Well, we are not the only ones who know this is now the norm. A local Naperville real estate firm, one that had a very high profile physical office location, has elected to close that office. The reason? They acknowledge the consumer now does their search online and not in a physical office! This is what they said in their recent announcement:

“In years past, an office on the local street corner was the best way to reach our clients. Today, the “local street corner is on the Web” and it’s there that we are investing heavily in to promote our sellers to more buyers and our buyers to all the listings in the most advanced format possible.”

We have been saying the traditional firms would be coming to that realization for the last five years. We are pleased to see it is now becoming a reality.

Are you aware of this financial incentive available to new buyers?

Here is a brief overview prepared by DIGIOVINE HNILO JORDAN + JOHNSON LTD.
Solutions for Success.
www.dhjj.com:

■ For qualifying purchases of a “principal residence” within the U.S. made from January 1, 2009 and before
December 1, 2009.
■ The credit is the lesser of 10% of the purchase price or $8,000.
■ “First-time homebuyer” is any individual (if married, and their spouse) who is a US resident if they had no
ownership interest in a home during the three years previous to the day of the purchase.
■ Purchases from a relative do not qualify for the credit (sibling, parent, grandparent, aunt or uncle).
■ “Purchase date” for homes under construction is the date of occupancy.
■ There is no repayment of the $8,000 credit as long as the home continues to be the taxpayer’s principal
residence for 36 months from the date of purchase. Exceptions to this are death, divorce settlement or
involuntary conversion.
■ The credit also does not apply if the taxpayer’s financing is from
proceeds of tax-exempt mortgage revenue bonds or if the District of
Columbia homebuyer credit is taken for the tax year the residence is
purchased.
■ The credit phases out for taxpayers with modified adjusted gross
incomes between $75,000 and $95,000 ($150,000 – $170,000 for joint
filers).
■ This is a “refundable” tax credit (which means it can be used to
offset your tax liability with any remaining credit refunded).

How to obtain the credit:

• The credit can be claimed on either the 2008 or 2009 tax return.
• Note: If the 2008 tax credit is limited because of income
  limitations, taxpayers will need to consider both years to determine
  which year to take the credit for the greatest benefit.
• Any first-time homebuyers who believe they are eligible for all or
  part of the credit can modify their income tax withholding (through
  their employers) or adjust their quarterly estimated tax payments in
  order to reap the benefits prior to the filing of their tax return.
• Note: On May 29, 2009, HUD announced that individuals will be able
  to secure short-term bridge loans to apply the first-time homebuyer
  credit to their down payment. The home buyer must be using an FHA
  approved loan. The tax credit can generally not be used to meet the
  3.5% minimum down payment required by the FHA.

For more information, please visit www.dhjj.com or call Kara Bourbon at 630-420-1360.

Last week Charles Rutenberg Realty closed on a million dollar plus home sale. Many were surprised because homes in that price range weren’t supposed to be selling. There were hundreds of similarly priced homes on the market in Naperville so what made the difference? Why did this home sell?

The two key reasons this home sold are 1). It was priced right for the market and, 2) we featured what this home had that others didn’t. In doing our research we found almost all other similarly priced homes in the immediate market were situated on standard small residential lots. The homes were magnificent but there was no land. Our property was not only magnificent, it sat on over one acre and the views to the rear showed no other structure, The feeling was one of being out in the country even though it was only 8 minutes from downtown Naperville.

Once we focused our marketing on this unique feature, (our USP, unique seling proposition) we secured a firm contract with no contingencies. The buyer wanted land in Naperville and we had the best combination of magnificent house, spacious land and proper pricing. Suddenly, selling in today’s market didn’t seem so difficult.

Reading Crain’s today, the front page says “Home Sales Show Spark”. Perhaps buyers are starting to realize that it doesn’t make sense to wait if they are ready to buy a home. Interest rates are so low it is unlikely they will go lower and, if rates go up, it will make the effective price of their home higher since their payment is higher.

An interesting relationship between rates and prices is that at a 5% rate, if rates move by one percentage point (100 basis points) it is effectively the same as the price moving 10% or more! Thus, even if there is a possibility that prices may drop a bit more, it is highly likely interest rates will soon begin to move up. Waiting for a better price may effectively result in a worse deal! Plus, the home the buyer wants will likely be gone if they wait for the bottom, wherever that might be. All in all, the prudent buyer will take the steps necessary to secure the home of their choice today, while the selection and the interest rates are to their advantage.

I just got back from a trip to southern California. Their properties have seen dramatic adjustments in the last year and are projected to drop another 25% this year. In contrast our prices in the Chicago area have proven to be rather resilient. Even though individual home prices are dropping, both MLS statistics and Charles Rutenberg Realty sales records show that the average sales price in our markets have held even. While there are numerous anecdotal stories about sales at big discounts, the statistics don’t show that for the overall market. This continues to be a great time for a buyer to get into the market, especially if they qualify for the first time buyer tax credit.

We now have a new president. In his speech, President Obama stated we all need to take personal responsibilty to effect change. As Realtors, it is up to us to create our own success. We can do that through marketing.

One of the main reasons Charles Rutenberg Realty has, in under 5 years grown to be 20th largest real estate company in the Chicago area and the largest to offer 100% commission, is the mailing of our marketing flyer to over 30,000 area real estate agents on a regular basis. Direct mail works if it is done on a regular basis. You can carve out your niche as the local market expert through the use of consistent direct mail.

While postcards are the most common tool used in direct mail marketing, there are a number of options to choose from should you decide to start a consistent direct mail campaign. Remember though, it is the regularity that creates the impact. It is always better to send fewer pieces more often than to send a large number only once or a few of times.

Best wishes for a successful business this year.

Ray Zabielski