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How Brokers Can Use Predictive Analytics to Recruit, Retain Top Agents

Jul 25, 2017 by

Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com:

In this third and final part of our predictive analytics series, learn how brokers are using predictive analytics to create targeted recruiting campaigns and retain the very best agents. 

Real estate professionals might not have a crystal ball, but predictive analytics come pretty close.

Predictive analytics is used for a variety of hard-to-pinpoint tasks: matching homebuyers with specific properties, showing a prospective buyer how their investment will gain (or lose) value over time, and identifying homeowners who might be ready to sell.

For brokerage owners looking to recruit and retain top talent, it’s a competitive edge. Here are ways for brokerage owners to use predictive analytics to stand out.

Providing Value to New, Existing Agents
Michael Hickman saw the value of offering predictive analytics as a way to stand out in a competitive market. Hickman, CEO, president and broker of Seven Gables Real Estate in Tustin, Calif., provides his 207 agents with access to Totomic, which culls buyer and seller demographical information across numerous consumer database platforms to better match specific categories of buyers to specific properties. Offering this insightful tool helps Hickman’s brokerage stay ahead of market shifts, and, more importantly, appeal to younger, tech-savvy agents, he says.

“An agent with 30 years of experience isn’t going to respond the same way to a recruiting message as a 25-year-old agent who’s in the know about the latest tech offerings,” Hickman says. “I can use predictive analytics to look up a prospect’s address and mine data about him or her. That lets me tailor my [recruiting] message to be more authentic and more likely to align with their interests.”

Generating Leads, Results

Real estate agents are brokerage owners’ clients. Jay Macklin, broker/owner with RE/MAX Platinum Living in Scottsdale, Ariz., says it’s not hard to sell prospects and current agents on predictive analytics once they see how easy it is to use. It’s also quantifiable in ways other tools and marketing efforts aren’t.

Macklin offers SmartZip, another predictive real estate tool that identifies serious sellers through major life events (death, divorce, marriage, etc.) in public records. Predictive analytics, he says, is essentially a lead-generation program.

“It’s good for our revenue stream because agents are able to quickly identify people who are more likely to raise their hand and sell a home,” Macklin says, noting his agents earned 10 listings as a result of using the predictive data in front of sellers. “That’s extra business my agents wouldn’t have received otherwise.”

Hickman admits it can take time for a large brokerage to implement and train agents on how to use predictive analytics properly, but it’s well worth the investment. Hickman’s investment averages out to $ 10 per agent per month, he says.

“My agents are saying time on market is shorter, and we’re hearing that sellers are excited because they can see quantifiable metrics on the marketing of their homes,” Hickman says. “If you’re not using predictive analysis of some sort in your real estate business, you’re missing the boat.”

Learn more about predictive analytics in the first and second parts of our series, “Predictive Analytics: The Next Big Thing in Real Estate?” and “How to Use Predictive Analytics in Your Real Estate Business.”

For the latest real estate news and trends, bookmark RISMedia.com.

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Trump’s Tax Plan: So Few Details, So Much for Brokers to Watch

Jul 4, 2017 by

Brokers have been busy parsing the statement of principles issued in the spring by U.S. Treasury Secretary Steve Mnuchin announcing “a massive tax cut for businesses and massive tax reform and simplification.”

Brokers and real estate professionals from all corners of the industry have spent a good part of their busy season trying to predict what will actually happen with the federal tax code and how it will affect their clients. Yet, there isn’t a real consensus in the community despite Mnuchin’s promise that the mortgage interest deduction will remain intact. Under the statement, mortgage interest and charitable giving are the only two deductions being kept in the plan.

But while all agree that the mortgage interest deduction is a critical federal policy that incentivizes home-buying activity for millions of Americans each year, there are concerns that other major changes to the tax code—such as the doubling of the standard deduction—could render it useless. According to the National Association of REALTORS®, the plan would “impact the demand for owner-occupied housing by reducing the number of homeowners who claim the mortgage interest deduction, eliminating the itemized deduction for property taxes, and decreasing marginal tax rates.” As a result, home values could drop 8 to 12 percent in the short-term depending on the regional market, concluded the NAR report, which was backed by a financial review conducted by auditing giant PricewaterhouseCoopers.

Sam DeBord, managing broker of Seattle Homes Group and vice president of strategic growth for Coldwell Banker Danforth, does not think the comprehensive tax overhaul would benefit the housing market or the local communities that depend on those tax revenues. This is mainly because most won’t claim the itemized mortgage interest deduction, instead opting for the newly doubled standard deduction, which blocks taxpayers from claiming specific items such as mortgage interest.

“As for the proposed tax reforms from the administration, the mortgage interest deduction is not protected,” says DeBord. “The standard deduction would be altered to the point that it would take away 90 percent of mortgage interest deduction users’ ability to claim the deduction. It would remove the incentive to invest in real estate, which we know is most Americans’ primary route to wealth-building and retirement savings. Disincentivizing homeownership and investment in real estate is bad economic and social policy.”

He adds that such a move would also disrupt the plans of former homebuyers who made their real estate investments based on the financing equations dictated by the mortgage interest deduction.

“There are 35 million households who have purchased homes under the promise of the mortgage interest deduction and are claiming it today,” DeBord explains. “Changing the law now would be pulling the rug out from under the budgeting decisions they made based on current tax policy.”

With the mortgage interest deduction all but neutralized for so many homeowners and potential buyers, brokers are looking to other parts of the comprehensive tax reform to find new wealth-building strategies for their clients. One aspect getting a lot of attention is the plan’s removal of the alternative minimum tax (AMT)—a mechanism that was initially implemented to make sure high net-worth taxpayers couldn’t avoid paying their fair share, but has become more of a burden on the upper-middle class instead.

Michael Schaffer, broker/owner of Reason Real Estate in Denver, Colo., noted that the elimination of the AMT could boost the market for second homes even if price increases are slowed by the dilution of the mortgage interest deduction at the entry level.

“The big things that impact real estate are the (elimination of the) alternative minimum tax and doubling the standard deduction. They are really the only things that matter, assuming that the mortgage interest deduction remains as it currently stands,” Schaffer says.

Schaffer predicts that high-income earners will see a major benefit with the removal of the AMT, which will encourage them to borrow the maximum allowable against their home. With current deductibility being limited to the first $ 1 million of home purchase debt—including the primary residence and up to one additional home, as long as the second home is not an income property—the interest rate will effectively be subsidized by the tax deduction, which Schaffer says can free up funds for more second homes or vacation properties, as well as larger loans on personal residences.

“An effective strategy for an individual high earner would be to draw the maximum on a conventional mortgage on their primary residence and then an additional conventional mortgage on a second home up to the limit or a total of $ 1 million between the two properties,” Schaffer says. “If the two properties together don’t cross the $ 1 million line, a home equity line of credit can be drawn for up to $ 100,000 on either of the properties, and all of the interest will be deductible on all three loans.”

For the lower end of the market, however, Schaffer said there could be more of a shift toward renting, and construction will likely shift from building entry-level single-family homes toward move-up luxury homes, second-home condominiums, and multi-family rental units.

At the high end of the market—or regions such as Southern California, where middle-market homes can hit $ 1 million without even including air conditioning—the upside of that analysis has a relatively low ceiling, which has luxury agents like Chad Rogers keeping a close eye on the proposed elimination of state and local real estate tax deductions.

“The proposed change will negatively affect the federal income tax bill for residents in high-tax states such as California, New York and Illinois,” says Rogers, a celebrity real estate expert with Hilton & Hyland.

Rogers sees the elimination of the AMT as a positive for real estate, and he’s reassured by the administration’s desire to keep the mortgage interest deduction. However, he says many successful brokers in his market (where the MLS reported 51 closed sales of over $ 10 million in the first four months of 2017) stand to benefit the most from the pro-business provisions of the plan—mainly the reduction of the corporate tax from 35 percent down to 15 percent.

“The lowering of the tax rate to 15 percent for income from pass-through entities, such as from partnerships, S-corporations and LLCs, may result in significant tax savings to the high-income-producing broker,” Rogers explains, encouraging self-employed brokers to check with their CPAs about creating pass-through entities that will help their businesses.

Andrew King is an award-winning journalist with 15 years of experience with the Gannett newspaper company, appearing in The Journal News (Westchester, NY), Asbury Park Press and USA Today. He also contributes to The Real Deal, TheLadders.com and TechPageOne.com.

For the latest real estate news and trends, bookmark RISMedia.com.

The post Trump’s Tax Plan: So Few Details, So Much for Brokers to Watch appeared first on RISMedia.

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Brokers Shutting Down Feeds to Sites Like Zillow

May 27, 2017 by

With all the turmoil going on with Zillow, it’s no wonder that some brokers are shutting down their listing feeds to these type of sites.

The post Brokers Shutting Down Feeds to Sites Like Zillow appeared first on National Real Estate Post.

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Brokers Shutting Down Feeds to Sites Like Zillow

May 26, 2017 by

With all the turmoil going on with Zillow, it’s no wonder that some brokers are shutting down their listing feeds to these type of sites.

The post Brokers Shutting Down Feeds to Sites Like Zillow appeared first on National Real Estate Post.

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