Ask yourself a few key questions about how reducing office space would impact your culture.

• How will consumers be best served?
• Will compensation structures for virtual agents differ from brick and mortar agents?
• How will the expense savings on the physical plant be put to work?
• Will you create new and useful tools, services and programs that will attract top agents?
• Will you pass on some savings to agents by helping them set up virtual offices?

Strategically visit potential changes that may need to accompany office space reduction. Things such as marketing plans, advertising, agent bonus structures and incentives must be taken into account before any action is taken.

Brokers who choose to induce change toward smaller offices by motivating agents through compensation incentives might consider the following examples:

(a) Give 5% more across-the-board if agents work virtually, or

(b) Make the ‘in-house’ plan 5% less than current practice and pay out at current splits only if agents work virtually (we prefer choice b)

(c) Consider introducing commission indexing by CPI or another metric in order to assure that margins will be maintained over time despite the higher payout to agents working virtually (see below).

Indexing of Commission Plan

Each year, increase the dollar thresholds that make up the different bands of your commission plan by some multiplier (e.g., the consumer price index).  For example:

Before: XYZ Company has only one commission plan that resets every January 1^st and is structured as follows:  each agent gets a 55/45 split on the first $50k of GCI, 65% for everything between $50k and $100k, and 75% on everything above $100k.

After: What occurs if the thresholds are increased by only 4% each year?  The first band (agent gets 55%) now runs from $0 to $52k (not $50k) while the second band (agent gets 65%) is now from $52k to $104k.  Fast-forward another year and the targets are now at about $54k and $108k and after three years they’re at about $56k and $112k, and so on.  It’s not too dramatic a change from one year to the next but the cost of not doing this is ever-shrinking margins that become uncomfortable over time.

Speaking of rewarding, most marketers will tell you that word of mouth buzz is among the most powerful and effective sales tool you can hope for.  But how do you inspire genuine endorsement of your product?  According to a recent study from Yahoo!, the Internet’s influence on capturing online interest, that in turn sparks the more critical offline conversation, has grown, while others like television and print remain flat. This is something to keep in mind when allocating marketing dollars.

Microsoft continues to have its head in the “clouds”, and I mean that in a good way, with the announcement this week that it is opening some of its popular Office programs — PowerPoint, Word and Excel — to the web.  For those who believe the future will see all of our important documents, not on hard drives, but on remote “cloud” servers we access at will, similar to our Yahoo and Gmail accounts for example, this is an important step in that direction.

In other Microsoft news, its search engine Bing launched bing.com/social which will combine both Facebook and Twitter results into one search experience.  To take advantage of this, make sure you are linking to relevant articles about your company, agents or listings as the search shares only the link content.  In other search news, Google rolled out a new version of its search engine, Google Caffeine. Are you noticing faster and more accurate search results?

Talk about “upwardly mobile,” Nielsen reports that 22 percent of people 13-plus years old have smartphones. This marks the first time the number has crossed 20 percent.  For fans of the seminal marketing book Crossing the Chasm, we could be on the verge of going from early adopters to early majority, an important trend when considering mobile media strategies.  Further brightening the lure of smartphones, the iPhone 4 was officially announced and preorders start today.  For the business user, the next edition features Multitasking, Folders and enhanced Mail making your office even more accessible in your pocket.

Riding on the popularity of sites like Craigslist, a number of newspaper and broadcast TV news sites have launched Boocoo, a national online listing and auction site with a local focus. Another tool to share with your consumers (think: the 21^st century moving sale)!

And finally, check out this advice as you launch or update your professional Facebook page. It may be time for a refresh!

My thought:  It doesn’t matter – Keep Selling.

It is important that we know what is happening in our industry and to remain aware of what others are saying to our potential customers – so continuing to read and educate oneself is always good.  But, don’t allow external forces determine your success.  I’ve know many sales professionals who have done well in down times and I’ve known many more sales people who have done poorly in good times.  The difference is always in the person and their attitude.

Long ago, I had a sales and training manager who broke my sales development into three areas: knowledge, techniques and attitude.  Knowledge included market conditions, competitors value props, trends, and products.  Techniques included communication skills, presentation skills, negotiation skills, and conflict resolution skills.  Both knowledge and techniques were tangible and easy to translate/teach/track. But attitude? How do you know if you have a good attitude or a bad attitude and who is to judge?

What I have witnessed in myself and others is that attitude, in sales, is simply the reflection of your work habits and work ethic.  Strong work habits and a productive work ethic is the reflection of a good attitude.  Poor habits and a lazy work ethic reflect a bad attitude.

My old manager use to say “your attitude will determine your altitude.”  Don’t worry about what the others say and just keep working hard – the results will show for themselves.

That advice seems as good to me today as it did then.

There was plenty of good news regionally this week. In Maine, home sales jumped a whopping 63 percent last month. Sales of existing homes in Boston rose 41.8 percent, in Pittsburgh 42.2 percent, in Portland 49.2 percent, and in New York and its surrounding suburbs 39.6 percent. Wow! Also, in California house prices rose 21 percent in April from a year earlier as forecloses fell. Folks in the Midwest and South, are you seeing similar trends?

A report from Zillow found that foreclosed homes typically sell for an average 20 to 30 percent discount. It’s no wonder, then, that auctions have increased by about 10 percent a year since the early 2000s.

On another note, the FHA guaranteed 1.9 million loans last year, beating out competitors Fannie Mae and Freddie Mac. They’ve been working overtime!

Finally, just a little reminder of what our job is all about: finding people a home. Enjoy the holiday!

You may remember that when it comes to bonds, prices and yields/rates of return move opposite one another.  When bond prices rise, their associated yields fall; and when bond prices fall, their associated yields rise.  Keeping this inverse relationship between prices and yields in your mind helps to explain why mortgage rates (based upon the Mortgage Backed Securities market) can change rapidly.  So, let’s look at a typical market change:  the US Stock Market falls (for example).

When the US Stock Market falls, what typically happens is that investors, who are nervous about owning risky stocks, allocate their money into much less risky US Treasuries that provide them the security and some degree of returns that they are comfortable with.  As US Treasuries become more popular, their price increases (remember the old supply and demand curve?)- thereby making their yield/rate of return lower (inverse relationship).  The Mortgage Backed Security market trades closely with the US Treasury market.  So, when MBS prices are up (trending with Treasuries,) the mortgage rates that banks can offer qualified customers can go down.

As with all other debt/bond investments, the inverse is also true, when the US Stock Market rally’s and investors move more money into the stock market, and away from investments like US Treasuries and Mortgage Backed Securities, prices of these type of investments go down (i.e. weaker demand).  The lower prices in the MBS market causes banks/lenders to increase (raise) consumer mortgage rates.

To demonstrate how rapidly prices and yields/rates can change, just consider the impact the European market had on our US market last week.

Monday: As investor sentiment changed from the past weeks European Union announcement to address the debt problems of certain EU members, the stock market rally forced US Treasury Yields higher and MBS yields higher as well (meaning higher consumer mortgage rates).

Tuesday: Stocks opened lower and then gained ground as the day progressed.  The net effect is that mortgage rates stayed predominantly the same as they ended on Monday.

Wednesday: The US Treasury Department auction of $24 billion of 10 year notes came and went as expected – a view that US debt remained healthy.  Since everything happened as expected, rates once again remained fairly consistent.

Thursday: Again, very little movement with mortgage rates.  The Treasury sold $16 billion of the 30 year bonds – just as was expected.

Friday: The US Stock market sold off quickly this day.  The reasons for the sell off were many, but the net effect was a large number of investors who moved out of the stock market and into the US Treasuries.  This increased demand increased prices for Treasuries and Mortgage Backed Securities to new highs for the year.  This price increase allowed banks and lenders to provide better mortgage rates – a few at 4.75%.  So, in the time frame of 5 business days, there were some very big swings in consumer mortgage rates.

There you have it – a quick review of mortgage rate drivers.  Mind you, I do not believe that our sales associates should provide any direction to their customers on decisions regarding mortgage rates; that should be left to the loan officer everyone feels is the best qualified.  However, I do believe that it’s important for our sales associates to understand the drivers of mortgage rates.  Today’s consumer is very desirous that our sales associates can answer the questions they have regarding their new home purchase.  And while you don’t want to be quoting rates, being in the position to understand the direction of mortgage rates clearly differentiates you from the rest of the crowd.

If you are interested in staying abreast of the direction of rates on a daily basis, I would recommend visiting the Mortgage News Daily website.  It’s chock full of great information and helped me verify some of the information you read above.

They identified 5 key attributes.

1. Strong Leadership

Leadership was determined to be the single greatest predictor of success.

2. Ability to attract and retain talent

Research conducted by Real Trends concludes there is a direct correlation between an increase in closed sides and an increase in the number of sales associates.

3. Focus on your model

There is no evidence that one business model is any better than another. What is key is choosing your business model, committing to it and building value around it. Companies that try to be all things to all people ultimately disappoint themselves and others. Five types of business models were identified:

• Graduated commission plans
• High commission concept
• Capped company dollar
• “Freedom shops”
• Online and/or discount models

An interesting observation made was that the more commission plans a company has seems to directly relate to less company dollar. In other words, more plans equals fewer company dollars. The advice given was to keep commission plans simple with limited options that stay true to your operating model and value proposition.

4. Customer Service Focus

We have been focusing the last 10 years on creating favorable online impressions with our clients. However, when human contact is disappointing, that favorable impression is lost. Truly successful tools and services recognize that customers demand responsiveness. We have to do a better job at customer service if we want to be a great real estate firm.

5. Ancillary services are part of the core offering, not add ons

Firms can no longer view mortgage, title, escrow and insurance as add ons. They are necessary core competencies to the successful real estate firm.

I think these 5 attributes make a great score card for any real estate broker to do a self-evaluation on their business. How would you rate your firm in these areas? How would your agents rate you?

Thanks to the REAL Trends team for a great conference.

While there was much to celebrate this week, a large number of foreclosed homes are expected to hit later this year: another sobering forecast which indicates that a major recovery is not necessarily imminent. We need to keep motivating homebuyers, especially first-time home buyers, because our industry may be the first indication of how the economy does without government “life support.”

Trying to get the market back on track, the five hardest hit states submitted proposals this week on how they plan to use the $1.5 billion in TARP funds given in housing aid by President Obama. The next five hardest hit states will present similar proposals for $600 million in funds in June. And still other states are perhaps enjoying the downturn, with lower-than-average loan rates. Stay tuned for the economy’s regional comeback stories…

In other good news, remodeling is back! Homeowners who are staying put and those who put remodeling plans on hold due to the recession are now investing in the upkeep of their homes. In fact, the Joint Center for Housing Studies at Harvard University is predicting nearly 5 percent growth in such projects over 2009. This may also be a great investment for homeowners considering that even renting prices are now on the rise.

Lastly, in the coming months, home prices may drop even further. So go take advantage of the increased consumer confidence (which is at its highest level since the financial crisis struck in September 2008!) and let us know your success stories!

In another back-and-forth, former Fannie Mae executives said that competitive pressures, combined with the political goal of increasing homeownership, were to blame for the company’s decision to back riskier mortgages. On the flip side, though, the Treasury Department said poor management decisions and weak regulation were the causes. All sides have presented their arguments, and, like so many other things, the answer probably lies somewhere in the middle. What do you think?

A record number of homes were lost to foreclosure in the first three months of this year. This may seem upsetting, but it also indicates that banks are wading through the many foreclosed properties quicker. Good news for those in limbo. Also on the good news front, another report out this week showed that the number of delinquent loans dropped 16,630. Although this may seem modest to the industry, I bet all of those homeowners would feel differently. With all this change though, we still shouldn’t expect home prices to return to bubble-era highs anytime soon. It’ll be 2039, according to some, in various areas.

In my last bit of news: This week is tax week, as you undoubtedly know. The good news here is that 54% of working Americans, according to a CareerBuilder study, say they will be using whatever they get back from Uncle Sam to pay off bills. Another 12% will renovate their home with the new cash. We can be excited about both!

It may be difficult to find the data required to measure ABCR against your competition, however your sales agents effectiveness in explaining your company’s value proposition greatly impacts your ability to maintain margin.  Highlight all products and tools that differentiate your company as well as all listing statistics that show where you outperform the competition (e.g., closed sales price versus original asking price, average days on market, etc.).  This will allow your clients hard data with which to compare your fee structures to that of your competitors.

Although each company must independently establish its own policies, one effective technique may be to require management approval to list homes at or above a predetermined commission rate. It is very important to establish listing parameters that maintain the integrity of compensation structures while holding agents accountable to perform at those standards.

Focusing on the following measurements (with special focus on listing-side transactions) will help maximize ABCR:

1. Study ABCR differences between branch offices (Multi-office companies). Barring no other specific explanations, this could highlight managers and agents who are effectively communicating the company’s value proposition.  Then, help other offices and agents to deliver the value proposition with similar effectiveness.
2. Rank sales agents by ABCR. Ranking by ABCR will highlight whether your ABCR is driven up or down by only a few agents and allow you to focus appropriately.  For those that fall below your expectations, coach them in the effective delivery of the companies value proposition. In most cases, the differential is connected to this skill set.
3. Analyze your listing data to measure ABCR performance (measure with and without certain outliers such as one-time exceptions, new construction, referrals and the like).  Also compare ASP, units, and absorption rates and establish changes to performance parameters based upon those results.