Talking To Clients About Home Automation

If you’re a real estate agent today, there’s a good chance you’ve sold and listed a house with home automation features. Connected “smart home” devices have gained popularity rapidly in recent years.

According to a recent report, in 2016, the number of smart homes reached 169 million and installations are projected to grow at an annual rate of 30 percent over the next few years.

With such rapid growth in recent years, it can be a challenge to keep up the home automation industry, let alone explain its myriad pros and cons to buyers. By explaining various smart home offerings and their comparative value, however, you can turn a possible unknown into a selling point.

What Makes a Home Smart?

Home automation features have been around since the 1970s, but were a concept way before then (think “The Jetsons” and “2001: A Space Odyssey”). But with the advent of WiFi-connected devices, the industry has exploded.

Generally, any home feature or device that can connect to the internet is considered a “smart” device. These items can be as minor as a lamp or as vital as a thermostat.

In general, smart devices sync with a smartphone or computer application where you can view data and control the device. Smart garage doors can be opened from your phone and allow you to check if you remembered to close the door without driving back home.

Smart smoke alarms can send a notification to your pocket if there’s a fire. Ultimately, these devices are built with two main goals in mind: convenience and cost savings.

Explaining Value

Make sure to familiarize yourself with the different types of home automation devices available, their function and price, and what type of value they add to the home.

One thing to remember is that most home automation features do not offer a big return on investment (ROI). But, that doesn’t mean these devices can’t be strong selling points for buyers.

Because the home automation market is so vast and varied, its value differs with each consumer. A young family might be much more interested in in-home child-monitoring cameras than other buyers; an eco-conscious client might be more concerned than most with monitoring their energy use day-to-day.

Once you’ve determined your client’s lifestyle needs, you can determine whether a home’s automation features are actually a selling point. Focus on the cost-saving aspects of automation and its convenience when making the case.

Paint a Balanced Picture

While smart homes improve people’s lives through convenience and cost savings, home automation is far from perfect. When talking to clients, make sure they understand all the pitfalls associated with the technology.

There is no real standardization of home automation software, so getting newer devices to sync with or talk to older devices is often difficult. Further, many connected devices require a monthly fee – so if your clients are moving into a home with an installed security system, they’ll still need to pay a fee to keep the system online.

Whether or not your client is interested in home automation, there’s a fair chance that some of the homes you’re showing will have smart home features. Make sure you’re familiar with various offerings so you provide honest, informed answers and help them decide if home automation is right for them.

Increase Your Profits In 2017

OutFront article by: Ruben Gonzalez, Keller Williams Realty Staff Economist

With the market hitting highs in 2016 and potentially moving toward a peak, questions have been coming up about what agents should do when the market slows down and, specifically, how to manage expenses. To help with this important conversation, I interviewed Garrett Lenderman, lead writer and researcher of KW Publishing.

Lenderman, who works directly with Jay Papasan and Gary Keller, has spent a lot of time studying the Budget Model as well as the accounting and spending habits of agents to provide some insight for others on how they can manage expenses and increase profits, even in a shift.

Gonzalez: I want to talk about how agents should manage their budgets during shifts. But first, I want to start just by asking you, what is the single biggest observation you have had while looking at agent budgets?

Lenderman: The biggest observation I’ve had is that agents need to stay committed to having a budget and maintaining a P&L. Not many agents enjoy looking at numbers, and who can blame them? It’s important for agents to keep score and take into account things like their ROI when making decisions about spending money. Doing so creates accountability and is a diagnostic tool because it’s difficult to continually make smart decisions when you go with your gut.

One tool recently introduced to KW associates to help them with this process is the Profit Dash app. Profit Dash offers agents holistic finance management using KW’s exclusive listing and transmittal data right from their phone. It helps make managing expenses easier.

Gonzalez: On to the topic of shifts, what do you think are the things agents need to watch out for if they are headed into a slower market?

Lenderman: The first place I’d start with are expenses that sit below the line, and by that I mean expenses that aren’t necessary to the operation of your business. It’s tempting to treat your business as a personal account, but it’s important to separate that from your business expenses. If you do a good job of that already, the next place I’d look are expenses that aren’t vital for generating revenue. It’s easy, especially when things are going well, to take on extra expenses that aren’t directly driving revenue. But in a hard shift, those expenses can take you underwater.

It’s also important that you don’t make decisions you can’t outlast if things take a turn for the worst. This means either building up reserves that will prop you up in a shift or taking a good look at the affordability of long-term fixed expenses – especially those that would impact lead generation. When revenue starts to drop, you want to have minimal commitment to fixed expenses.

Gonzalez: What about teams? Are there some specific things that could get a team in trouble when things start to slow down?

Lenderman: The same rules apply for teams. However, I would say one of the biggest issues for teams now is their cost of sales. When things are booming and competitive, it can be a challenge to keep splits and salaries in check, but those are things that could make or break a team and will be a lot harder to negotiate down than it will be to keep them in line. Make sure you are making decisions that your business can survive when things get more difficult.

Gonzalez: Any final thoughts?

Lenderman: Watch out for shiny objects. It’s really easy when things are going well to start spending money on cool new systems, apps, fashionable furniture, sleek logos and watercoolers, but you need to really make investments that give you back multiple dollars in return. Hold your money accountable and have specific goals set for your investments. If you aren’t getting the return you want on something, cut the cord.

By: Ruben Gonzalez, Keller Williams Realty Staff Economist

Viewing The Shift

Economic Update

Keller Williams Realty Staff Economist Ruben Gonzales talks about spotting a market shift.

If you have been in the real estate industry for very long, you probably know that the housing market goes through cycles. During the growth portion of the cycle, prices are going up and inventory levels are typically low but growing. After the market shifts, prices begin to decline as inventory levels reach a peak and then start to decline.

The cycle that real estate agents are most familiar with is the basic seasonal cycle that exists in the market. In the spring, as the weather warms up and summer is on the horizon, listings and sales start  to pick up. When summer arrives and kids are out of school in most locations and weather is at its warmest, sales peak. The fall brings the start of the slowdown as listings start to dwindle and demand decreases. The market typically bottoms in January when weather is coldest.

Then there are longer cycles that dictate where these peaks and troughs move from year to year. These cycles can last a few years or more than a decade, depending on the underlying factors that are driving them. They are very difficult to predict in advance.

In any market, there are two sides to the coin driving the cycles: supply and demand. On the demand side, you have demographic cycles which dictate how many people exist in an area who are able to buy houses, and economic cycles which dictate if those people are in a financial situation that’s  conducive to purchasing a home. On the supply side, you have availability of space for new construction, the number of existing structures and the costs of labor and materials.

You may have observed that over the last few years the market has made substantial gains as it recovered from the huge downturn that started in 2006. The markets started coming back in 2012, and looking at the country as a whole, they have been up since.

So now the question is, “When will the market go in the other direction, and how do I know it’s happening?” The short answer is that we don’t know and that we won’t know until it has already happened.

It’s really difficult to predict the timing of market cycles because there are so many factors at play, and often the thing that causes a shift wasn’t even on the radar. However, there are some things you can watch to know when you are potentially getting close so that you can start shift-proofing your  business while you still have the resources available.

Look first for a persistent loosening in lending behavior by banks. As the most qualified buyers start to dwindle because demand is slacking, banks will look to loosen standards to stir some demand from the bottom of the credit barrel. Inventory will eventually start to rise, and prices will flatten  out, as demand begins to dwindle faster than supply can adjust. Sales will start to decline   year-over-year as the market begins to settle into a downward trend.

The things that might cause this on a local level could be caused by a dip in the local economy or  overbuilding spurred in the aftermath of a long spurt of population growth in an area. It’s important  to watch patterns in the local economy as well as the housing market in your area. If unemployment in an area begins to trend up or the population begins to trend down, chances are that the housing market has already shifted or will soon follow suit.

With the market at its healthiest in nearly a decade, now is the time to start shift-proofing your business. Remember, shifts are going to happen, but you can minimize your vulnerability by taking  actions now that will help you thrive, not merely survive, when the next one occurs.