CAAMP 2011: The Relationship Revolution

I had the opportunity to attend the Canadian Association of Accredited Mortgage Professionals (CAAMP) conference this past weekend in Toronto. It was a first-class conference with thought-provoking speakers.

One full day of the conference was dedicated to the art of selling. Barbara Corcoran from Shark’s Tank; Seth Godin, best-selling author and creative thinker; Keith Ferrazzi, a world famous expert in relationships; Sally Hogshead, speaker and author; and, Jerry Greenfield of Ben and Jerry Ice Cream fame were the speakers.

A common theme throughout the day was that selling has changed. It used to be that selling was a transfer of information, a transfer of brand and a transfer of emotion. Seth Godin suggested that the only key aspect today is the transfer of emotion. The sense of community or, as Seth described it “tribes,” is the important factor today. To have the transfer of emotion, you need to be connected to the tribe. A tribe may be as simple as “Nike” and the people that are connected to “Nike.” As a salesperson, in order to have the transfer of emotion you need to be connected to the tribe and establish relationships to solve problems. In your business, are you connecting?

Keith Ferrazi reinforced the concept of tribes and that the new revolution is the relationship revolution. The job of a salesperson today is to solve what someone needs. An IBM study showed that your network is equal to your net worth. It takes some risk to create new relationships, so you need a system and process to manage your relationships versus managing your sales. Target individuals with whom you want to create relationships. Find a way to help and to give back. To be successful moving forward, you need to establish lifetime relationships, broaden your goal setting and lead with generosity.

Sally Hogshead agreed that salespeople need to create relationships, and took it one step further to say that you also need to be fascinating. It’s not that you learn to be fascinating, rather, you unlearn being boring. In a competitive environment, fascinating wins every time. You can choose to be the innovator or you can be comfortable. Being the best is not enough if no one notices or cares. Create relationships and be fascinating.

We have been trained to fit in; once you fit in, it is easier to ignore you. As you are making your way in business, are you connecting? In our competitive world, competence is no longer a scarce commodity. You can find competence anywhere. What are you doing to set yourself apart? Do you see your role as a problem-solver? Do you agree that you need to focus on creating relationships? This revolution is about humans creating relationships and working on the edge of the box. Set yourself apart and be fascinating.

Are you in the business of selling homes or placing mortgages or are you in the business of relationship development? What do you do to stand out from the crowd?

Kirk Bacon
Director of Education
Real Estate Council of Alberta

The Continued Evolution of RECA's Audit Program

As in many self-regulating professional bodies, the Real Estate Council of Alberta (RECA) has a comprehensive audit program. As part of this program, RECA auditors visit brokerages across the province and thoroughly review, among other things, trust accounts and brokerage accounting practices, licensing records, trade records, mortgage disclosure documents and agency disclosure forms.

Prior to 2004, RECA’s audit program had three primary objectives:

• promote compliance with the Real Estate Act and the Rules (the legislation);
• safeguard the integrity of the licensing system; and,
• reduce the number of claims against the Assurance Fund.

Under this regulatory framework, auditors were assertive and often referred matters for investigation. Of course, the predictable result from that were brokers who dreaded an auditor’s phone call. Many brokers told RECA they were very stressed from the time of the auditor’s first call until the conclusion of the audit.

In late 2004, RECA made the decision to add a fourth objective and to make this fourth objective the primary one for RECA’s audit program. This new objective was to be of service to brokers. Going forward, auditors were expected to work constructively with brokers to develop sound business and accounting practices that would promote compliance with the legislation.

Under this regulatory framework, RECA believes the audit program should provide positive and constructive assistance to brokers to identify and resolve potential problems, and develop effective record keeping and administrative procedures that foster and ensure compliance with the legislation.

To ensure that RECA’s audit program has been meeting this objective, RECA conducts surveys of all the brokers it audits shortly after the completion of the audit. Here are some highlights from the audit surveys conducted during the 2010-2011 fiscal year:

•  97.6% of brokers indicated that RECA auditors provided reasonable notice when scheduling an audit.
• 98.8% of brokers indicated that RECA auditors were flexible when scheduling the audit.
• 98.0% of brokers indicated that RECA’s audit guides and pre-audit publications were helpful to prepare for and understand the audit process.
• 77.4% of brokers did not find the audit disruptive to their brokerage operations. Of the 22.6% of brokers who found the audit disruptive to their brokerage operations, 80.9% acknowledged that the disruption caused by the audit could not be reduced or avoided.
• 97.3% of brokers reported the auditors provided clear and constructive explanations at the end of the audit.
• 94.6% of broker stated the auditors provided positive recommendations or strategies to prevent future problems.
• 91.0% of brokers stated the audit helped them identify and resolve potential problems.
• 85.5% of brokers stated the audit helped them develop more effective record keeping and administrative procedures.
• 95.9% of brokers indicated they received closing correspondence on a timely basis that summarized the results of the audit and future expectations for the brokerage.
• 97.2% of brokers found the closing correspondence was accurate.
• 99.6% of brokers stated RECA’s auditors were courteous
• 99.2% of brokers stated RECA’s auditors were professional
• 99.2% of brokers stated RECA’s auditors were approachable
• 97.6% found the overall audit process to be helpful.

While RECA is very pleased with the results of the audit program survey, it will continue to fine-tune and improve its processes, and would like to thank brokers for their insight and suggestions as to how RECA can improve its audit program.

When RECA does receive suggestions for improvement, it takes them to heart. One recently implemented suggestion was additional ability for brokers and their accountants to file web-based accounting reports using the RECA Online system.

Another suggestion in development right now is a “RECA Certified Technology Program.” Once this program is in effect, brokers will be able to quickly and easily determine whether proposed technologies meet legislative requirements.

As a result of Council’s strategic direction to promote effective self-regulation, RECA’s audit program is going to be re-branded and further expanded. Effective December 1, 2011, the audit program will be rebranded as the Trust Assurance and Practice Review Program, within the Professional Standards department. And, in the months and years ahead, RECA’s Trust Assurance and Practice Review program will also help brokers with:

• the development and maintenance of brokerage policies and procedures;
• the review and development of reasonable and effective supervisory processes;
• how to investigate and deal with potential misconduct within the brokerage;
• the development of proper broker delegation agreements and supervision of broker delegates; and,
• reviewing and discussing the various representational and agency models and processes for ensuring adherence to the brokerage’s chosen model or models.

RECA is also close to completing the development of a real estate appraiser audit program and training auditors to complete these audits.

Do you have any suggestions on how RECA’s Trust Assurance and Practice Review Program can be further improved?

How Do You Measure a Year?

Five hundred, twenty-five thousand, six hundred minutes. How do you measure a year?

At the Real Estate Council of Alberta, we measure years, not in minutes, but in terms of the number of phone calls and emails responded to, the number of times we have the opportunity to interact with industry professionals across the province, and the number of authorized industry professionals.

Never do our means of measurement kick into higher gear than in the month of September when all industry professionals must renew their registration (or licence, in the case of real estate appraisers and candidates)

At the beginning of October, we provided some of the highlights of activity for the renewal month of September and now, we want to share more information about the work RECA does – not only during that pivotal month – but also throughout the year.

Our information services staff responded to more than 3,000 emails during the month of September, that’s likely a surprising number – made even more so when you realize RECA has only two licensing officers, plus one coordinator, responding to those emails. Of those 3,000 plus emails, 97 per cent of them were responded to within two business hours. There were more than 1,200 phone calls received by RECA information services staff in September, and all but 10 phone calls were returned within 8 business hours.

On the licensing side of things, RECA’s two full-time licensing staff processed more than 1,500 packages of documents (brokerage amendments, criminal record checks, etc.).

The annual numbers are even more astounding.

RECA information services and licensing staff received more than 9,300 telephone inquiries between October 1, 2010 and September 30, 2011, and more than 17,000 emails during that same time period. Again, those calls and emails are answered and responded to by only four full-time staff. Additionally, those numbers don’t include the individuals who visit the RECA office in person in order to speak with a licensing or information services staff member.

For those who are interested in the number of authorized industry professionals, year-over-year, here are those numbers:

Total individuals authorized (Nov 1, 2011) = 14,433

Total individuals authorized (Nov 1, 2010) = 14,818

Though it’s a decrease of approximately 2.6 per cent, it is not unexpected and a slight decrease was anticipated and planned for during RECA’s annual budgetary planning process.

More RECA renewal and general statistical information will provided in the 2010-2011 Annual Report, which will be published at the end of January 2012.

Do any of these statistics surprise you? Are there any statistics you would like RECA to report on?

Drastic Times Call for Drastic Measures?

Did anyone else catch CBC’s National last night? Paul Hunter reported from Cleveland on initiatives to demolish houses that have been foreclosed on and are sitting vacant, in order to reclaim the land and increase the value of the other houses in the neighbourhood – and, in fact, to improve the neighbourhood. The thought being that vacant, run-down homes bring down the overall value of a neighbourhood.

Cleveland alone has tens of thousands of homes in foreclosure and/or that are sitting abandoned, and millions of home owners across the United States are either behind on their mortgage payments or are in foreclosure proceedings. That means hundreds of thousands of properties, sitting vacant, not being taken care of.

Neighbours, worried about their own homes’ values, want something done, but whose job is it to step in and improve the value of a neighbourhood?

The National reported that Cleveland is performing surgery on its own housing problem. In 2007, Cleveland had the highest foreclosure rate in the United States and the economic decline in that city is still deepening. Enter the Cuyahoga Land Bank. The mission of the Cuyahoga Land Bank is to strategically acquire properties, return them to productive use, reduce blight, increase property values, support community goals and improve the quality of life for county residents.

The Cuyahoga Land Bank, is a non-profit corporation, funded by a variety of sources. Its primary funding comes from penalties and interest on delinquent property taxes and assessment. This primary revenue stream is supplemented by the Cuyahoga Land Bank’s sale of acquired properties to qualified rehabbers and housing developers, as well as by donations of property and funds from the Cuyahoga Land Bank’s partners.

The Cuyahoga Land Bank is convincing some financial institutions to donate their foreclosed upon houses/structures to the city and fund the demolition of those structures. In doing so, they can improve the value of the other houses in the neighbourhood on which they hold current mortgages. The thought being that empty lots are more valuable to a neighbourhood than  eyesores. In addition to improving the value of the neighbourhood as a whole, it can be less costly for a financial institution to pay for the demolition and get the tax write-off on the donated land than to keep paying taxes and advertising the property for sale.

I’m sure all of us are thankful that the Canadian housing market hasn’t gone the way of many metropolitan areas of the United States, but what if it does? How would Canadian mortgage holders/financial institutions handle such large numbers of foreclosures? Is tearing them down the answer?

What do you think of efforts in Cleveland to improve neighbourhoods and increase the value of occupied homes? Do you worry that certain areas of the Canadian housing market could go the same way as the U.S.?

How Am I Not Myself: Using Your Licensed Name

When you go into the store to buy a new television or a new couch, you don’t expect the salespeople to keep your best interests at heart. There’s a good chance you don’t have a prior relationship with the salesperson and there’s a good chance you won’t have an ongoing relationship with them after your purchase is completed. You don't enter into a written relationship agreement with them, and if you never actually know their name, it's not a big deal.

Real estate and mortgage, however, are different from those every day, run-of-the-mill purchases. Partly because of the sheer amount of money that is typically involved in the transaction, and even more so because consumers turn to real estate and mortgage industry professionals for professional assistance and in many cases, professional representation. It is because of that professional representation and assistance that it is extremely important Alberta real estate industry professionals ensure they are who they say they are.

But you may ask, "How Am I Not Myself?"

Well, for example, if your name is Joseph Thompson, and in all of your advertising you use "Chip" Thompson because that's what people have called you since you were a teenager, and that's the only name your clients know you by, and yet you sign your service agreements with "Joseph Thompson," because that's the name on your licence, you are not complying with the rules as all advertising must be done in the name on your licence. If a member of the public saw one of your advertisements and wanted to search your licensing status on the Real Estate Council of Alberta (RECA) website using “Chip Thompson” as the search term, they wouldn’t be able to find you or information for the brokerage with which you are registered.

With renewals behind us, now is as good a time as any to remind industry professionals that they must only be trading in real estate, dealing in mortgages or acting as a real estate appraiser in the name that appears on the authorization issued by the RECA.

Make sure you’re using the name on your licence. To do so, conduct a search for yourself using the “Search for an Industry Member” button on the RECA website. If you are trading in real estate, dealing in mortgages or providing real estate appraisal services using a name or “also known as” name that does not appear when you use that search function, you are not complying with the rules. Remember, short forms of your legal name are acceptable, but you must first notify RECA in writing of your desire to use a shortened version of your name. For more information about using your licensed name while advertising, review RECA Information Bulletin: Advertising – Licensed Name.

What's New at the Zoo - Zoopraisal!

Zoopraisal, a new online appraisal tool created by Zoocasa, has generated significant interest among real estate professionals. Users enter basic information, such as address, square footage, number of bedrooms and lot size, and Zoopraisal calculates a value for the property based on their secret proprietary formula.

Real estate appraisals performed in Alberta must be done by a licensed real estate appraiser or candidate, as stipulated by the Real Estate Act, and RECA has received many e-mails with concerns that Zoopraisal is conducting unlicensed activity.

Despite the concerns raised by some of Alberta’s industry professionals, Zoopraisal does not require a real estate appraisal authorization as Zoopraisal does not receive consideration or compensation for its services. Within the definition of “real estate appraiser” in section 1(1)(u.1) (i) of the Real Estate Act, is the notion that a person is only considered a real estate appraiser pursuant to the Act if their appraisal activities are done for consideration or other compensation.

The value of Zoopraisal to consumers appears to be negligible. Several RECA staff members have used Zoopraisal for their own properties, and received “appraisal” price ranges as wide as $150,000 on properties worth about $500,000 – that’s a range of 30 per cent of the home’s value. And, most found the mean price to be significantly higher or lower than they feel they could get on the market today.

Consumers or lenders interested in a professional appraisal still need the services of a licensed real estate appraiser. Even the Zoopraisal system itself recommends that homeowners supplement their Zoopraisal by contacting a licensed real estate appraiser, so what exactly is Zoopraisal’s value to consumers?

Do you think online real estate appraisal tools, such as Zoopraisal, potentially mislead consumers regarding the value of their property?