Are You On Track Towards Achieving Your Commercial Real Estate Goals in 2011?
By Jim Gillespie | March 15, 2011
How are you doing in your brokerage business so far in 2011? Are you on track towards achieving your income goals for the year? We’re in March right now and you’ll probably need to have any sale transactions signed and moving forward with their contingencies by August or September, to allow the proper time for financing, removal of all contingencies, and closing the transactions by December 31st. And as far as closing any lease transactions by the end of the year, you’ll need to make sure you’ve got these transactions moving forward and get all leases executed in plenty of time, for you to get paid by the end of the year, too.
So if you’re on track towards achieving your income goals for the year, congratulations! And if you’re off track, how are you doing at getting your prospecting done every week?
Most commercial brokers rely on prospecting to develop more business for themselves, and when they’re not getting their prospecting done, their income suffers. So if you haven’t been getting your prospecting done at the level you know you should be, ask yourself the following question:
"If I were to prospect 10-12 hours every single week during the rest of the year, what kind of results would I produce in my brokerage business?"
And if you like your answer to that question, just get your prospecting done with no excuses.
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This Wednesday, March 16th, I’ll be interviewing a CCIM member who’s closed more than $1.4 billion in real estate transactions, who’s the most consistent prospector I’ve ever known within our industry. And he’ll be telling you how to produce outstanding results with your real estate prospecting, and how to make sure you get your prospecting done. In addition, he’ll give you all of the forms he’s designed and utilizes to plan his success and work his game plan throughout the year, which includes the forms he’s designed for tracking and following-up on his prospecting.
So if you’re not already registered for this live teleconference, click here for more information. And even if you register but can’t attend the live teleconference, I’ll still send you the audio CDs, written transcription, and highlights from my interview with this top expert, all in the mail to you!
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If you’re interested in one-on-one coaching to take your commercial real estate brokerage business to the next level, click here to contact me.
"I have had so many responses to the marketing letter I’ve mailed out that you wrote for me. Sellers have called in on properties they would like to sell, and the total dollar value of these properties so far is $56,000,000.00. I am blown away by the success of this program. One seller has an $8,000,000.00 property that we may already have a buyer for. Thank you, thank you, thank you."
Lisa Godley Gilstrap
Lee & Associates
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Topics: Prospecting |
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Are You Being Used By People When Making Your Commercial Real Estate Listing Presentations?
By Jim Gillespie | March 9, 2011
The majority of the brokers within our industry like to get and work on exclusive listings. If you look at the top-producing brokers in most any commercial real estate territory, over the long run the ones making the most amount of money are usually the top listing brokers. The only brokers who can compete with them in terms of money earned are normally a very select group of the top tenant rep brokers within our industry. And the reason that brokers working within both of these arenas normally make so much money, is because they’re focused on only working with the people with whom they have signed exclusive agreements. This helps these brokers ensure that their time will be invested wisely, and that it will only be invested with people they’ll be making money with.
Now compare this instead with the broker who’s working with buyers and lessees on a non-exclusive basis, where the principals on the average are also working with three other brokers. In these situations, on the average all of these brokers will have wasted their time and energy 75% of the time whenever their principals close a transaction, and they’ll have wasted their time and energy more than 75% of the time when their principals don’t.
With this in mind, when you’re going after exclusive listings or exclusive tenant rep assignments, you only want to go after the opportunities that you have a reasonable-to-solid chance of landing. So if you’re working for a more entrepreneurial brokerage company, for example, and you’re trying to get exclusive listings from large, very well known corporations, you may be wasting your time. Large corporations oftentimes like to hire large commercial real estate brokerage companies for their brokerage assignments, and you may be completely out of the running for any listing assignment before you ever begin pursuing it.
In addition, there will be situations where no matter who you are and which brokerage company you’re working for, the brokerage company that will be getting the listing will have already been chosen…before you ever make your listing presentation. This is because sometimes a special relationship already exists between the decision maker and one particular brokerage company, and/or because the decision maker is getting pressure from above them within their own company, to hire one specific brokerage company. So you’ll ideally want to know about these kinds of situations in advance whenever you can, before you ever begin wasting your time and pursuing them.
With this in mind, before you begin investing a lot of time and energy in pursuing an exclusive listing, consider asking one or more of the following questions of your principal beforehand:
1) "You’ve already decided that you’re definitely going to be listing your property with a commercial real estate brokerage company and putting it on the open market…yes?"
2) "As of right now, are we the brokers you intend to list your property with at this time?"
3) "Are we the only brokers you’re going to be interviewing for this listing?"
4) "How solid do you feel about me being the broker you’ll be listing your property with?"
5) "Mr Owner, we’d love to list your property. And in moving forward in putting together both a detailed presentation and a presentation package for you, we’d like to know the following…If you feel we’ve done a good job during our listing presentation, will you be listing your property with us?"
These questions will help you to flush out any hidden agendas you’ll definitely want to know of ahead of time, and help you to better understand where the decision maker is really at right now in their thinking.
With this in mind, I recently learned about a broker who was meeting with a court-appointed receiver, discussing listing one particular property that the receiver was going to be selling. And the broker, being a person who understood the value in asking these kinds of questions, asked the receiver question number four on the list. And the receiver responded to the question by saying, "Since you’ve asked me directly I’m going to be completely honest with you. I’m not going to be listing the property with a commercial broker. I just plan on having three different brokerage companies deliver their listing presentations to me, and give me all of the information that’s in their presentation packages. Then I’m going to utilize all of this information to market the property by myself."
So by asking that one simple question, this broker ended-up saving himself a lot of time and energy that would have otherwise been wasted, and he let all of the other brokerage comnpanies waste their own time and energy instead, by making their own listing presentations to the receiver.
So you’ll want to do your homework ahead of time to maximize the probability that your time and energy will be wisely invested. Ask questions similar to the ones I’ve mentioned above, before you invest a lot of time and energy in going after exclusives, so that you pursue only the exclusives that you have a reasonable-to-solid chance of landing for yourself.
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Next Wednesday, March 16th, I’ll be interviewing a man who’s the best prospector I’ve ever known in our industry, and we’ll be telling you all you’ll want to know about how to develop solid new business through your prospecting. This broker is so good at developing new business for himself that he’s closed an average of $42 million in transaction volume every year during his 35-year brokerage career. Click here for more information on this live teleconference, and when you register for it, even if you can’t attend it, I’ll still send you the audio CDs, written transcription, and highlights from my interview with this top expert, all in the mail to you!
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If you’re interested in one-on-one coaching to take your commercial real estate brokerage business to the next level, click here to contact me.
"Jim’s coaching and training has assisted our company in landing millions of dollars of new real estate business."
Pat Hall
TOLD Partners
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What All of Us in Commercial Real Estate Can Learn From Billionaire Warren Buffett
By Jim Gillespie | March 3, 2011
As most everyone knows, Warren Buffett is one of the most seasoned, successful investors who ever lived. So when I heard that his Berkshire Hathaway, Inc. had purchased Burlington Northern Santa Fe Corp. in the Fall of 2009, I told everyone close to me, "This man definitely understands Peak Oil and its coming ramifications for all of us, and he’s positioned both himself and his investors to fully capitalize on it."
Peak Oil, in case you’re not familiar with the term, is the underlying cause of all that’s going on economically in our world right now, and I first began writing about this subject more than five years ago. And within these last five years, everything that’s been evolving economically within our world has been following precisely what the Peak Oil experts have predicted. So if you’re not familiar with this subject, here’s an article I wrote about it back in 2009 that will give you a more detailed explanation of it, and provide you with some solid resources.
So as our worldwide energy resources continue getting scarcer, the price of petroleum is rising due to supply and demand. And as businesses keep getting squeezed financially, they’re looking for more ways to save money. So with all of this in mind, as the price of petroleum continues to rise, the greater the cost savings that will occur in shipping by rail instead of shipping by truck. So the amazing investor Warren Buffett has now positioned his investors very well. And in terms of how well he’s actually positioned his investors, here are two excerpts from a recent letter he sent out to his shareholders:
"The highlight of 2010 was our acquisition of Burlington Northern Santa Fe, a purchase that’s working out even better than I expected. It now appears that owning this railroad will increase Berkshire’s "normal" earning power by nearly 40% pre-tax and by well over 30% after-tax. Making this purchase increased our share count by 6% and used $22 billion of cash. Since weve quickly replenished the cash, the economics of this transaction have turned out very well."
"Both of us are enthusiastic about BNSFs future because railroads have major cost and environmental advantages over trucking, their main competitor. Last year BNSF moved each ton of freight it carried a record 500 miles on a single gallon of diesel fuel. That’s three times more fuel-efficient than trucking is, which means our railroad owns an important advantage in operating costs."
And Warren Buffett’s entire letter to his shareholders is available for you to read on the Berkshire Hathaway Web site.
So with energy costs on the rise and companies looking to cut back on their expenses, look for more companies to now transition into shipping and receiving their products by rail instead of by truck. When gasoline was much cheaper, the overall price of shipping by truck was not that big of a deal to companies, but now it’s becoming a bigger deal. Which means that there will be shifts occurring within industrial communities as companies will want to locate in areas where they can minimize their overall costs for shipping to their customers.
So as a broker, if you specialize in industrial properties, there’s money to be made by understanding your clients’ overall needs including their shipping expenses. Because when the price of gas was lower, it may have made great sense for your clients to be located where they are right now, but it may not make great economic sense for them anymore.
And if you’re not an industrial broker, there’s still money to be made. Buildings with lower energy costs will become even more important as time goes on, when the price of a barrel of oil climbs to $150 and beyond. This price may not look like it’s right in front of our faces right now, but neither did $100 a barrel oil just 3-4 years ago.
With all of the uprising that’s been going on in the Middle East lately, there’s a good chance that the government of Saudi Arabia, the world’s largest oil producer, will be overtaken by its own people sometime within the next year. And if that happens there’s no telling where the price of a barrel of oil will end up. Oil right now is four times what it cost us just 8-9 years ago, and as you can see here on this chart, there’s a direct correlation between the price of oil, and the price of food. That’s because there are approximately ten calories of energy that go into growing, processing, packaging, and shipping every one calorie of food that we consume within our homes, before we ever even refrigerate and/or cook the food in our homes. So with this kind of relationship between food and energy, we can see how rising energy prices means rising food prices for everybody around the world. And with the price of food now skyrocketing everywhere, combined with 40% of the people in places like Egypt now living on just $2.00 a day or less, we can see why some of the people in the Middle East have finally decided it’s time right now to overthrow their dictators. Because when a lot of people begin having great difficulty providing food for their families, they demand change.
As the price of energy rises, the demand by people to live closer to the heart of the major cities will increase, because when you live closer to work, it’s less expensive to drive there. And the outlying areas, where middle-class people have long commutes into the major cities for their jobs, will suffer more in terms of vacancies and overall declining real estate values. Commuting great distances to and from home to work will not be affordable to many of these same people anymore, unless they’re utilizing good public transit when commuting.
As an example of this, in the area where I live here in Southern California, a solid percentage of the people living here commute 90-120 minutes in traffic each way to work every day by driving. And since the price of gasoline has now gone up considerably, people have been organizing carpools among themselves in order to spend less money on gasoline. And at the same time, this community that grew from 27,000 people to more than 100,000 people in just 20 years, now has 92% of its homes that are on the market for sale…for sale as distressed properties. And home values have now gone down 40-50% during this economic downturn, too. So while this community was growing, and many new homes were being built, this expansion of people moving away from the city to live here made great sense to so many people…when gas was inexpensive. But now that gas has gotten much more expensive and it’s taking a major bite out of people’s budgets, the economics just aren’t working anymore.
So as a broker, understand the shift that is going on because of the rising cost of energy. The price of energy will continue to move both up and down, but the long-term trend of energy costs is definitely upward.
Recognize this trend and the opportunity it presents for you to create and close more transactions. Educate your people on this trend and get them to take action now before other property owners even recognize what’s going on. Move your owners out of owning non-rail-served buildings and into owning rail-served buildings. Move them out of owning less energy efficient buildings and into owning more energy efficient buildings. And move them out of owning properties in areas with lower or middle-income populations, where many people drive great distances to work, and into owning properties within the major cities, where the commutes to work for most of the people will be much shorter. Because when people begin having great economic difficulty living in the outlying areas, the commercial properties within those areas are going to take a beating.
Recognize what’s coming our way, get out ahead of it, and strategically and professionally guide the people you do business with to make the right decisions. And in doing so you’ll generate a lot more transactions than the other brokers you’re competing against right now.
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My March Commercial Broker Newsletter is now ready for you to mail or E-mail to all of your clients and prospects. If you’re not currently sending a monthly newsletter to all of your clients and prospects, you’re missing out on a huge opportunity to brand yourself and keep you in people’s minds every month during the year. If you’re interested in more information on how you can send this newsletter to your clients and prospects, click here.
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If you’re interested in one-on-one coaching to take your commercial real estate brokerage business to the next level, click here to contact me.
"Within 7 weeks after beginning my work with Jim I landed new business worth over $500,000.00 in commissions to me!"
Mike Giuliano
Lee & Associates
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Listen to This Audio Interview on Getting Through Tough Economic Times
By Jim Gillespie | February 23, 2011
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Powerfully Positioning Yourself in the Minds of Your Commercial Real Estate Clients and Prospects
By Jim Gillespie | February 15, 2011
Most commercial real estate brokers rely primarily on prospecting to develop more new business for themselves. And while prospecting is a solid way for brokers to develop more new business, it can be very limiting when compared with both prospecting and doing solid marketing together.
Think about this for a moment…When you’re prospecting people throughout the year, how many times are you actually prospecting them? Twice? Three times? Maybe four times at the most if you’re not currently following up with them on a particular real estate requirement? But if you’re marketing to them also by mailing to them 12-24 times a year, you’re branding yourself in their minds 12-24 more times during the year when compared with just doing your prospecting alone. And these additional 12-24 contacts with them are extremely powerful!
Even if you were instead just E-mailing to them one or more times a month, with solid information they’ll want to know about, this is much more powerful than just prospecting them 2-4 times a year alone. When you’re mailing or E-mailing to people, providing them with information they’ll definitely want to know about, you’ll stay in their mind much more as someone they’d be interested in working with. In addition, when you include a photo of yourself in every mailer or E-mail you send to them, they begin to feel that they already know you, which is very, very powerful also.
Yes, we all know that residential agents include photos of themselves in their mailers, and there are a lot of commercial brokers who won’t do this because this is what the residential agents are doing. But it’s solid marketing, and it makes your clients and prospects feel that they already have a relationship with you, and that they already know you. Residential agents are getting signed exclusive listing agreements from their owners also, and I’ve yet to meet a commercial broker who refuses to do this in their own business, because this is what the residential agents are doing. So whether it’s including your photo in your mailers, or getting signed exclusive listings, they’re both activities that make solid business sense.
And when you’re mailing or E-mailing to all of your clients and prospects, don’t focus exclusively on sending them "just listed" and "just sold" information…or comparable sales and leasing rate information. Sending this information does nothing to differentiate you in their minds as a brilliant consultant or an advisor, and it doesn’t do much to differentiate you from your competitors either.
Any broker can send just listed, just sold, and comparable sales and leasing information to all of their clients and prospects, and there will definitely be times when you’ll want to be doing this. But what you’ll want to be doing in addition to this, is differentiating yourself as the consultant or advisor who will expertly guide your people through their next transaction. Send them information including articles that you’ve written, telling them all the important trends going on in your marketplace, how these trends affect them, and what this now means in terms of what they can expect with property values in the area in the coming months.
People want to work with the person who they feel understands both the trends in the market, and where the market is headed, much more than they want to work with the person who just reports data and information to them that’s easily obtainable from other brokers.
So when you’re mailing and E-mailing to your clients and prospects, position yourself in their minds as the one consultant or advisor who knows what’s really going on, who can expertly guide them through the closing of their next transaction. Keep this in mind when you’re writing what you’re going to be sending to them, and write to them in the voice of the person who already is this expert they want to be working with.
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This Wednesday, February 16th, I’ll be interviewing a man who’s a Past President of SIOR, who’ll be telling you how you can get paid hundreds of dollars an hour in guaranteed money by handling distressed properties. This broker has represented some of the biggest, most recognizable names in Corporate America, including General Motors, Kraft Foods, Nike, Motorola, General Dynamics, Hughes Aircraft Company, Cox Communications, Bank of America, Sanwa Bank, and Mary Kay Cosmetics. Click here for more information on this live teleconference, and even if you register for it but can’t attend it, I’ll still send you the audio CDs, written transcription, and highlights from my interview with this expert, all in the mail to you!
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If you’re interested in one-on-one coaching to take your commercial real estate brokerage business to the next level, click here to contact me.
"My work with Jim has helped my team, my company, and my development business to perform at substantially higher levels."
D. Alex Rhoten
Coldwell Banker Commercial
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Topics: Marketing, Prospecting, Uncategorized |
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One of the Greatest Mistakes Made By Commercial Real Estate Brokers
By Jim Gillespie | February 8, 2011
So many commercial brokers don’t get their prospecting done on a regular basis. And one of the patterns that commercial brokers find themselves getting into, is prospecting until they have enough leads to keep busy, and then reducing or eliminating the time they’re spending doing their prospecting. This is one of the greatest mistakes that commercial brokers are constantly making, and it ends up costing them a lot of money.
One of the main reasons that brokers need to be continually prospecting, is because this will have them find bigger and better leads than the ones they’re currently working on. But you’ll never find these leads or even know that they exist, unless you’re continually doing your prospecting.
Many brokers think that they need to be working on most of the leads that they’re constantly coming across, and this can greatly get in the way of them making money. So what happens is brokers will then prospect until they get busy with the maximum number of leads they think they can handle, and continuing to prospect makes no sense to them whatsoever. I mean, why would you want to prospect if you believe there’s no way you could handle working on more leads, and that you wouldn’t even have the time to follow-up on them?
This is where brokers must learn how to keep prospecting anyway, and continually throughout the year, and learn how to let go of the less desirable leads they’re working on. But when you only prospect until you get busy, working on all the leads you’ve already uncovered, you often don’t want to let go of any of these leads. You’ve got the time to work on them, and as long as you believe there’s money to be made on them, why would you want to let go of these leads?
But when you’re continually prospecting during the year, you’ll uncover more and better leads than the ones you’re currently working on. But you’ll never, ever see these leads if you stop doing your prospecting. So what you want to be doing is prospecting continually during the year, working on many of the new and better leads you’re constantly locating, and letting go of what are now becoming the less desirable leads that these new and better leads are now replacing for you. This is a far cry from what many brokers are doing, who are prospecting until they get busy with leads, then they reduce or eliminate their prospecting altogether, until they’re done working on the leads they’ve already uncovered. This can cause huge gaps in the incoming commissions of a commercial broker, as from the moment a broker begins prospecting once again, it can take awhile before they close their next transaction.
On the other hand, when you’re continually prospecting during the year, and working on only the best leads you’re continually uncovering for yourself, you upgrade the quality of the prospects you’re working with, you’re working only with the people who will be loyal to you, and you’re increasing the amount of the average commission you’re earning on every transaction. This is because you’re continually uncovering more opportunities where you’ll be earning even larger commissions, and you’re letting go of the opportunities where you’d be earning smaller commissions instead. But you never would have uncovered these opportunities for earning larger commissions, if you had stopped doing your prospecting once you had uncovered your original leads.
So as a commercial broker, you want to continually be prospecting during the year, and mastering the skill of working only on the best leads you’re uncovering for yourself, while continually letting go of what are now becoming your more marginal leads. When you do this you’ll continually be working on only the best leads in your territory, you’ll begin earning larger commissions, and you’ll maximize the income you’ll be earning within your brokerage business every single year.
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My February Commercial Broker Newsletter is now ready for you to mail or E-mail to all of your clients and prospects. If you’re not currently sending a monthly newsletter to all of your clients and prospects, you’re missing out on a huge opportunity to brand yourself and keep you in people’s minds every month during the year. If you’re interested in more information on how you can send this newsletter to your clients and prospects, click here.
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If you’re interested in one-on-one coaching to take your commercial real estate brokerage business to the next level, click here to contact me.
"Jim has me much more focused on doing the activities that generate new listings for me, in addition to doing the activities that have me sell those listings."
Chris Sands
KW Commercial
Click here to see more testimonials from my coaching clients.
Topics: Prospecting, Uncategorized |
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Transforming Your Commercial Real Estate Brokerage Business in 2011
By Jim Gillespie | January 18, 2011
As I’ve been saying for many years now, whenever a broker falls short of achieving their income goal for the year, it’s usually not because the game plan they had designed to achieve their goal with wouldn’t have worked. The problem usually lies in the fact that the broker got off track from working their game plan.
With this in mind, most brokers rely mainly on prospecting to develop more business for themselves. There are other approaches that can work well along with prospecting, but in the end it’s usually prospecting that will develop the majority of the business for most brokers. Keeping this in mind, it can be very helpful for you to take the income goal you’ve set for the year, and determine how many prospecting calls you need to make in order for you to achieve this income goal. And in doing this, knowing how many prospecting calls it takes for you to get an exclusive listing, or to sell or lease one single property, will be helpful to you. But if you don’t know these numbers right now, you can still come up with a good approximation of how many prospecting calls you should be making every week.
So what is your income goal for the year? And how many prospecting calls do you think you need to be making every week in order to achieve this income goal? You can utilize your gut level intuition in determining this, and getting input from a successful commercial real estate broker, your manager, or from a seasoned commercial real estate coach, could be a good idea for you here also, in order to make sure that your numbers are realistic.
And once you have the number of calls you’ll need to be making for the year, begin tracking the number of prospecting calls you’re actually making, to make sure you’re really on track in making your calls. You could also consider creating a chart or an Excel file to keep track of how many calls you’re making every single week during the year, which will help you to both see and feel how well you’re doing throughout the year. If, for example, you’ve determined that you should make 5,000 calls during the year, and you’re going to be working 50 weeks during the year, you’ll determine that this then equates to making an average of 100 calls every week that you’ll be working. And when you know that you need to be making 100 calls every week to achieve your income goal for the year, and you’re recording how many calls you’re making every week along the way, you’ll get immediate feedback on how well you’re doing.
This immediate feedback will help you to stay on track in doing what you know will produce the income goal you want to achieve…unlike many other brokers who will constantly be feeling busy throughout the year, but they’ll be wondering why they haven’t made the amount of money they wanted to. And the reason they haven’t made the amount of money they wanted to, is usually because they were busy doing unproductive activities, instead of doing their prospecting.
So if you truly want to stay on track towards achieving your income goal for the year, know how many prospecting calls you need to make throughout the year to achieve your goal, and then track the number of prospecting calls you’re actually making. When you do this you’ll do a much better job of staying on track towards achieving your income goal, you’ll understand immediately when you’re off track from achieving your goal, and this immediate feedback will then help to kick you right in the butt and get you back on track.
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This Wednesday, January 19th, I’ll be interviewing the most powerful marketer I’ve ever known in commercial real estate brokerage. He and his team continually maintain an annual average transaction volume of $55 million a year, and he’ll be telling you everything you need to know about how to produce outstanding results in this difficult commercial real estate market. And this guy does some AMAZING things that no other broker I know of in our industry is doing!
So if you’re not already registered for this live teleconference, click here for more information on the teleconference. And even if you register for the teleconference but can’t attend it, I’ll still send you the audio CDs, written transcription, and highlights from my interview with this expert, all in the mail to you!
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If you’re interested in one-on-one coaching to take your commercial real estate brokerage business to the next level, click here to contact me.
"With Jim’s coaching I landed $1.7 million in new business in my first eight weeks!"
Mark Whitman
Dorin Realty
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Topics: Prospecting, Uncategorized |
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Getting Your Commercial Brokerage Business Off to a Great Start This Year
By Jim Gillespie | January 13, 2011
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2011: An Important Year for The United States of America
By Jim Gillespie | January 11, 2011
This may be the most important year for our country than any other year that I’ve lived through during my lifetime. This I believe will be the year that our country stares difficulty right down in the face and asks itself, "What do we have to do as a nation in order to pull through this?"
While there’s cautious optimism within many people regarding the economy right now, there are many things going on behind the scenes also, indicating that the economy is in worse condition than many people believe. So much has been done to protect the Wall Street insiders, and in the process this has all been making an economy that’s already in bad condition, look better to us.
So in the following paragraphs here, when you see the blue hyperlinks, these are links to articles and resources on the subjects I’ll be discussing, that will give you more insight and more details on them.
In starting out, several months ago I published an article discussing the dangerous condition that the stock market is in, and since that time it’s now been disclosed that insiders have been selling their own companies’ stocks at the rate of 3,177:1, meaning that these executives believe it’s time to get the heck out of their own companies’ stocks, and get out NOW.
3,177:1…that’s a massively huge ratio of sellers to buyers!
And in looking back at all of the bailouts that have been given to the different companies that have received them…remember when Congress was debating whether or not we should bailout all of these companies to the total amount of around $700 billion? Well as it turns out, the money that was loaned to these companies wasn’t really $700 billion, but $9 trillion instead! Which makes me wonder what the entire debate was about around loaning out just $700 billion.
So in comparing the amount of $9 trillion to $700 billion, you can see that our economy and our financial system has been in much worse condition than many people had believed.
But in relating all of this to commercial real estate, these insiders are being taken care of within our own arena also. The fact that so many of these upside down and distressed properties aren’t being taken back and sold as they normally would have been, has created a logjam within our industry that’s hurting your income as a commercial real estate broker. And when you combine with this the fact that the lenders are being allowed to keep these upside down loans on their books at their full original amounts, without taking any write downs in the value of them, we have one of the greatest cases of window dressing in the entire history of our nation. If any of us were to publish financial statements showing our own asset values at these inflated levels that were a reality years ago, they would call it fraud. But it seems to be business as usual today within our financial industry.
And for the the real icing on the cake, in terms of how special these financial insiders are being treated, read this story that happened in Colorado. A man was riding his bicycle and was hit by another man driving a Mercedes. The driver didn’t stop, stopping only eventually to take care of the damage that was done to his car from the collision. But the rider of the bicycle, however, suffered spinal cord injuries requiring multiple surgeries, and he may never fully recover.
Well the driver of the car was eventually apprehended, and when the case went to court, the prosecutor refused to prosecute him for a felony, and offered him a plea bargain deal for only a misdemeanor charge. The driver of the car manages more than $1 billion in assets for a major Wall Street firm, and the prosecutor felt that having a felony on this man’s record could be detrimental to his career with his company, as the Securities and Exchange Commission would have to be notified about the felony.
So as you can see, between both the financial bailouts and getting this kind of special treatment, the rest of us are all living in a completely different world.
In addition to all of this, there are some political developments on the horizon that I want to mention to you. If you didn’t see the recent episode of 60 Minutes, showing the great difficulty that many of our state and local governments are up against right now financially, I recommend that you take a look at it. During this 14-minute segment it’s mentioned that 50-100 local U.S. governments could be filing for bankruptcy within the coming months, and during this segment you’ll get a better idea of the great financial difficulties now facing our state and local governments, and the difficult choices that are going to have to be made by them.
In Europe, financial difficulties have been accelerating even faster than they have been here, and governments have been moving to seize the retirement savings of their people in order to get access to more money. And right here in the U.S., legislation is being discussed right now that would allow our individual states to file for bankruptcy, which would relieve them of huge obligations, including their state pension obligations. Along these lines, right here in my home state of California, it’s been estimated that over the next two years the state’s annual obligations to its top three government pensions, will be five times the total amount of the annual tax revenue generated by the state! So you can see that bankruptcy is an option that some states could utilize to deal with their current financial problems.
And if you think that our government would never come after our own retirement savings, here’s an article from Forbes mentioning that discussions are now underway for the government to implement an annuity program around people’s retirement savings.
The good news is that many people believe that business overall is improving. But you may have also noticed that the price of energy is rising, too. This is what happens, as I’ve previously written about, when our energy resources keep getting scarcer, and our demand for energy from businesses begins increasing again. As the price of energy rises, businesses find it more difficult to remain profitable with the higher costs, and some experts are now predicting $4.00 a gallon gasoline by the time summer gets here.
With all of this going on, I believe we’ll be seeing more distressed assets coming onto the market. And if this begins happening, more transactions will be closing, and brokers will begin making more money. There has been an increase in the number of distress sale transactions within recent months, and at some point the lenders will have to accelerate getting rid of these problem assets, as the number of distressed properties they’re having to deal with today is increasing.
So this is going to be a year that will be economically challenging for our nation. I believe there will come a time when our country will have to look itself right in the mirror, dig down deep, and do all that it can to find a way to rise above these economic circumstances that are right now in front of us.
But remember…from crisis comes opportunity. So continually stay focused on what opportunities are now emerging for you to capitalize on, as we continue moving forward within this economy.
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Marcus & Millichap
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Getting Back on Track Right Now in Your Commercial Brokerage Business
By Jim Gillespie | January 5, 2011
From my many years of experience in coaching commercial real estate agents, I know that this first week of the New Year can be a slow one for brokers transitioning back into their businesses again. So in knowing this, here are some questions that I recommend you ask yourself:
1) Are you mentally and emotionally fully back to work again after the Holidays, and working your brokerage business full out?
2) If you’re not completely back from the Holidays yet both mentally and emotionally, on what day do you anticipate being back fully and working your brokerage business full out?
3) What must you still do, prepare, plan, or organize to position yourself to be massively successful this year? And when will you have this done by?
It’s important to get back on track now as soon as you can in your brokerage business, because I sometimes observe brokers not getting back on track until around the middle of January…and sometimes even later than this. And with this in mind, it’s extremely important to begin the New Year being fully prepared, and having the right game plan in place to attack the New Year and be hugely successful in it.
So answer the questions I’ve written above, get everything in place to have a great year in your brokerage business, and get moving!!!
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If you’re interested in one-on-one coaching in the New Year to take your commercial real estate brokerage business to the next level, I have programs available where we’ll have coaching calls twice a month, three times a month, or every week. And you’ll get access to listen to my monthly teleconferences where I interview top commercial brokers, telling you their secrets about what has them produce such outstanding results in their brokerage businesses every year. And you’ll receive the audio CDs, written transcriptions, and highlights of all of these teleconferences sent to you in the mail, too. So if you’re interested in one-on-one coaching to take your brokerage business to the next level, click here and contact me.
"Jim has me much more focused on doing the things that make me more money and he holds me accountable to make sure that I do them."
Greg Barsamian
Coldwell Banker Commercial
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