2011 Sales Review / 2012 Sales Forecast

Helen Adams Realty Sales Meeting

CRRA Presentation, January 10, 2012

Slide #1

Good Morning Everyone.  Welcome to our first in a series of company-wide sales meetings this year.  Over the past 3 months, I have met with most of you together with Laurie, Donna, or Bob to discuss your business plans for this year.  The great majority of your plans conveyed a sense of gratitude for what you have and the opportunities before you.

Slide #2-4

Since this sense of gratitude was a common theme among our most successful business planners, I thought I would leave with you today three essays which convey a sense of self-worth and gratitude toward others.  A positive mindset and a desire to help others are key ingredients to a successful sales program.  Before we move forward with our meeting, lets take just 5 seconds to reflect on who or what we have to be thankful for… ok.  Raise your hand if you were as thankful for Patty Adams as I am?

Slide #4 – Cunningham Slide

Other people I am thankful for are Rebecca Madej, Chris Tilley, David Gulledge, and Hang Cunningham for their outstanding mortgage partnership with us.  I am very pleased to introduce Hank Cunningham to you.  Hank is President of Cunningham and Company.  He has more than 37 years of professional mortgage experience.  He currently serves as chairman of the Residential Board of Directors of the Mortgage Bankers of America.  Hank is also chairman of the Legislative Committee for the Mortgage Bankers of the Carolinas and holds the designation of Certified Mortgage Banker.  Please join me in welcoming Hank Cunningham.

Slides…

Scott’s changes in technology, Bryan Perkins, Holly Hester slides & printed material, Donna Hall & printed material, Laurie Knudsen & printed material.

Slide #5

Charlotte Metro Report: (FYI) Most of these charts will be published on our website later this week.  This report was created and published by Moody’s Analytics in July 2011.  They are forecasting that:

• The unemployment state will steadily improve over the next for years.
• Our population will continue to grow 1.5-2% per year.
• Our single family permits will more than double in 2012.
• Our existing home prices will slide 1.5% in 2012 and increase an aggregate of 11.5% by 2015.
• Net migration in Charlotte has been positive for as long as I can remember.  Cities which are big contributors to Charlotte population include: New York, Washington, Atlanta, Fort Lauderdale, Orlando, and Miami.

Slide #6

The Annual Home Price Appreciation Chart is published by the Federal Housing Finance Agency.  In 2011 they depict price depreciation of 4.4%, which is in line with Moody’s and the stats published by our association.

Slide #7

Mecklenburg Single Family by permits were about the same in 2011 as 2010.  For 2012, we are forecasting that double the number of permits will be issued as builders sell of their existing inventory and begin to build their pipelines; this is in line with Moody’s forecast as well.

Slide #8

The average sales price in Charlotte dropped 4% from $208,924 to $200,656.  We forecast a 1% price decline in 2012.

Slide #9

The number of units sold in our MLS system rose 2.3% to 22,529 units.  We forecast that the number of units closed in 2012 will be 23,205, which is an increase of 3%.

Slide #10

This slide shows the number of sales by price range in our MLS system.  We believe we saw a big increase in sales in the 251-350 price range because this is the price range for buyers who are moving up from their first home and have gained some confidence in the market.  In 2012, we will see continued strength in this mid-range price point.  Homes priced up to $150,000 will continue to share a large part of the market as homes in this price range are released by the banks, which will turn into attractive 3^rd party investment opportunities.

Slide #11

This slide is a history of total sales volume and total units sold since 2000.  The dollar volume change from 2006 to 2011 dropped 53%.  The # of units sold in 2011 is 22,529 units – a drop of 48% from 2006 levels.

Slide #12 – “The Trouble with #s, or why you Need a Realtor”

The Charlotte Observer did some pretty good research, which serves as the basis of this story “Housing Glut Looms”.  However, they didn’t tell all sides to the story, which can create misunderstanding and confusion.  Following are a few quotes from this article:

• “For every home listed for sale in Mecklenburg County, at least two more are poised to come on the market.”
• “It’s an epidemic”, said attorney Rick Mitchell, who sees a growing number of clients who have stopped making mortgage payments but have not been foreclosed on.
• “The mere thought of shadow inventory makes potential buyers wary of investing in a new home”
• When shadow inventory comes on the market, it typically sells at a steep discount, depressing neighborhood values.
• “Shadow inventory is probably the most critical part of the equation in terms of getting a recovery going.  It has a chilling effect”, said Mike Vitmer, Chief Economist at Wells Fargo.

But let me ask you to raise your hands?  How many of you in this room have been involved in a multi-offer situation in the last 12 months?  This article suggests that bank owned sales are an epidemic and they are pervasive… that bank sales are happening throughout the market.

Slide #13

In all MLS, the number of closed sales for bank owned properties is at a rate that is 70% higher than in areas 4-1, 5-1, and 6-1.  In all MLS, the number of bank owned properties that are bank owned is 106% higher as a percent of listings than bank owned properties in areas 4-1, 5-1, and 6—1.  Finally, the sold median price for the entire MLS for foreclosures and short sales is $70,000 and $130,000 respectively, vs. $161,950 for traditional sales in all MLS.

Slide #14

And if the Observer had gathered opinions from other sources like Zelman’s quote that “inventories of homes coming down, showing healthy declines or…

Slide #15

…from Nick Timivaos, who said, “Prices can stabilize as long as the “distressed” sort of home sales remains about one-third of all sales.”  Also, if the Observer has shared these prices, then it would have been clear that the majority of bank owned business is in the lower price range of our marketplace.

Slide #16-23

Slides 16-23 just represent the back-up data for the Bank Owned Activity Summary, so I won’t spend any more time on them, but they do show a constant level of bank owned business over the past 24 months.

Slide #31

Briefly, here’s a few of the descriptions of a Ninja: self-improvement, knows the market better than their competition, great customer satisfaction, sales systems with proven consistent results, focused on what works.  For those of you who have been involved with Ninja Selling over the past 4 years, you will recognize this description of courses which Zan Monroe has taught us.

Slide #32

And how do we reinforce our business strategy and coach and advise you, our business partners, to execute on these “Ninja Systems”?  The answer is our team of managers and staff who all engage with you on many, many levels on a daily basis… as coach, as educator, as advisor, as friend.

Slide #33

We have the correct business strategy.  We have the best systems and processes, and the managers and staff to help you execute.  How will we sell real estate in the future?  Active Web, our website provider, asked each of our 23 Enterprise Partners to try and answer this question.  At your seat is my essay, and I would like to highlight some key insights as to how I think we will sell real estate in 2030.  First, we must become masters of the real estate process.  Our business becomes more and more complicated each day, and only the full time professionals will survive into the next decade.  Here are a few excerpts…

• This idea of sharing knowledge is the essence of Eric Thompson’s statement that “we will become masters of the real estate sales process.” We strive to become masters of the process by being informed about ALL issues effecting real estate.
• So what is a REALTOR?  A professional, full-time, fully engaged REALTOR is someone who, as Eric Thompson says, “is sort of like a hybrid REALTOR-Attorney, but much more.”  A full-time professional agent has the knowledge and experience to provide choices or advice and/or guidance in the areas of contract negotiations, design, education, mortgages, appraisals, inspections, remodeling, taxes, investment strategies, market history, market trends, marriage, and family, and on and on and on.  The nature of real estate and its transaction is heterogeneous in the extreme.

Slide #34

The internet has unleashed the information genie from the bottle and she will not return.  This free-flow of information gives consumers the ability to make better, more informed decisions which will drive the real estate market to greater and greater efficiency.  Ignorance cripples market efficiency, while sound data lets buyers and sellers make smart choices.  In a choice-driven market, the consumers take the central roll and become drivers of change… So how will we sell real estate in 2030?  In the end our clients and customers will shape this answer through their quest for richer and more timely information, greater transparency and well-defined service and performance standards.  As REALTORS we recognize these interests of our clients and customers, and we will adapt and join them in their quest.

Conclusion

We are looking forward to an extremely, highly successful year this year.  We will continue to focus on things we can control: the kind of people we hire and work with, the way we treat our customers, the quality of our service, our integrity, and our attitudes.  Here’s to a fabulous 2012, and thank you for joining us today.