We've certainly all heard the ads placed by the National Association of Realtors: "Selection is the highest in years." - "Rates are at historic lows." - "Prices are favorable." That's a great start, but your clients expect and deserve something more than the NAR "party line" from an innovator like you. To differentiate yourself from many of your compatriots you need a strategy that will help you develop new business and provide legitimate value to your clients. We've got one for you.

As an agent, you've probably noticed that different neighborhoods, property types, and price ranges tend to fluctuate differently. This is in stark contrast to the media portrayal and consumer sentiment that focuses on county, state, and nationwide median homeprices. You can use this knowledge to your clients' advantage.

After some analysis we noticed one particular property type was being mercilessly hammered in value: the much-maligned 1 bedroom condo. Historically, most agents have steered their clients away from 1 bedroom condos on the basis that when times are rough, they make particularly poor investments. And alas, you were right! We decided to do some historical tracking of one of our personal favorite areas: Cabrillo Park in Santa Ana. It's one of the nicer areas in Santa Ana, has great freeway / job access, and features Tustin schools. At the high point 1 bedroom units went for $295,000. Today, a unit can be had for about $200,000 -- that's a drop of over 30%!

For Your First-Time Homebuyers:

You may have a plethora of first-time homebuyer prospects and not even know it (they probably don't even know it, either). Something spectacular has hapened: on a cashflow basis, it now costs about the same to own as it does to rent and someone who earns $50,000/yr without a lot of consumer debt can afford to buy $0 down. This hasn't happened in Orange County for years. For those interested in the specifics, you can download our analysis software pre-loaded with our numbers here. Including taxes and association fees we end up with a total payment of $1707. But estimating income tax savings we end up at $1340/mo. But wait, there's more! That payment includes $172/mo of principal on the loan bringing us to a rent-equivalent payment of $1168/mo. Market rent is around $1250.

For Your Investors:

In this market an obstacle for many investors is liquidity. The number of suitable investors with $50,000 of liquidity is far larger than the number of suitable investors with $250,000 or more. How many additional clients would you have if you could offer those with $50,000 of liquidity a viable investment option? Now you have something: Putting down 25% ($50,000) we end up with a positive cashflow, after-tax. Additionally, our 10 year internal rate of return (IRR) on capital is nearly 12%, based on only 3% appreciation.

The Upside:

We frequently tell our clients and the agents we work with that real estate is not magic. Making good decisions is not the result of some divine ability to predict market movements, but rather the product of consistent critical thinking. We don't purport to know what the market will do. However, I think most reasonable and prudent investors (and first-time homebuyers!) would be more excited about the upside comeback potential of property that has lost over 30% of its value in the last 12 months than a property that has only dropped by 5%. The same things that make a 1 bedroom condo a terrible investment in good times are the things that make it an attractive one during the bad.

Whether it's providing some third-party expertise, co-authoring articles, private-labeled software, or custom website elements, we can help you stand out from the crowd (and it won't cost you a thing.) All you need to do is ask.

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