Make the Investment
While computer technology no doubt is changing how real estate deals are transacted, there is little agreement—or hard data—on how brokers can best use the new electronic tools at their disposal. Is it really feasible to throw up a Web site and expect investors and sellers worldwide to find it amid the thousands of other commercial real estate sites available on-line? Or is the answer more about using technology efficiently to increase market share of local business?
Todd Clarke, CCIM, is a good example of the latter approach. While he recently won the same award his grandfather won 20 years ago—New Mexico Realtor of the Year—this investment specialist for Lewinger Hamilton, Inc., in Albuquerque, did it by combining old-fashioned selling skills with an up-to-the-minute database he has compiled listing almost every multifamily building in the state of New Mexico. Using the database to make his information work as hard as he does, Clarke has increased his market share of multifamily properties, expanded his marketing efforts, and created a number of profitable new business opportunities for himself. And he's not even 30 yet.
Following in the footsteps of not only his grandfather but his father and mother as well, Clarke started his career at the tender age of 20. He's one of youngest persons ever awarded a CCIM designation, earning it at 24. He went on to head his local chapter that same year and founded the Commercial Association of Realtors in New Mexico, serving as its president and developing its MLS/Computer Information Exchange (http://www.carnm.com/carnm/).
While real estate is in his blood, it seems Clarke's technical skills are equally inborn. Mostly self-taught, he started early at the keyboard. "When I was eight or so, my folks bought me a Commodore Vic 20, with the anticipation that I would stop disassembling the toaster, TV, and Pong game," he says. He went on to do computer consulting during college at the University of New Mexico and Sandia Laboratories.
Lewinger Hamilton actually hired him about seven years ago to develop a database, but given the soft market and a lack of resources, the project faltered. Becoming a broker and noticing how few of his competitors had computer skills, he decided to apply his technological expertise to commercial real estate. (At that point in his career he was long on computer skills, but short on real estate experience.) After completing a lease on a gas station, "I developed a database of all the gas stations," he says, "and started contacting all the owners—not realizing that most gas stations were leased for 20-plus years and there was little turnover."
The Apartment Niche
After another broker in the office shared an apartment listing, the two men started a Lotus spreadsheet database of available apartments—"all 20 of them," Clarke says. "Remember it was a really soft market."
Today, the database, which is broken up into several tables, holds 108,937 units in 5,012 communities, 2,000 color photographs of properties, 4,730 owner/investors, 6,579 contacts, and some 1,709 digital files. "It contains basic physical information—units, sites, addresses; previous sales; availability; appraisal history (some going back 20 years); most recent rental breakdown; vacancy information; grading information; demographics; aerial photos; and much more," he says.
Clarke started this collection of facts and figures with a goal in mind. "After interviewing and researching my competition," he says, "I was able to determine that on average, it took four days from the day they met with a potential seller to the day they made a listing presentation. My goal was to turn around a proposal during the same day.
"Today we can turn one around with color pictures, demographics, aerial photos, owner and market comparables, rent comparables, and a marketing package, within 30 minutes of completing an APOD on a property—approximately 45 minutes total."
Putting Information to Work
It's an impressive feat, compiling and spewing out data at the drop of an APOD, but the bottom line is whether or not this gets a broker to closing. Clarke says yes—in more ways than one.
"I now hold a significant market share of all apartment sales in the state—it has fluctuated between 25 percent and 65 percent for the past four years," he says. "I've obtained small and large listings that otherwise might have been outside my sphere of influence—because of a previous broker relationship or the owner was using a national firm."
By demonstrating his knowledge of the market, Clarke often is able not only to list the property but to achieve a higher sales price. "A property was originally listed with a competitor for $9.3 million—the seller was losing his shorts. I went in with the information in hand with our property management company and showed the owner how we could develop a plan to improve the financial condition of the property and sell it within three years for 20 percent more—and we did sell it for $11.8 million in 1996," he says.
Making the Investment
While the payoffs today are high, it took Clarke several years of hard work to build the database. "Originally I worked 100-hour weeks to develop the database—driving around, logging addresses, calling people, prowling through public information—which was of limited use, since New Mexico is a nondisclosure state—and going through old apartment files. I estimate that, for the last three years, I have spent between $20,000 to $40,000 each year to collect the information, purchase new equipment (for input and output), hire temporary staff, and expand the data that we collect."
The secret, he adds, is to keep investing in the business. "Most large businesses apply at least 5 percent of their gross income into research and development. I typically apply 10 percent—and I receive the returns. Because I provide the information, most potential clients/listings call me for advice/sales, so I spend less time doing cold calls."
While many professionals complain about the steep learning curve of technology and how it takes away from the people end of the business, Clarke says technology actually allows him to spend more time with his clients—and he's available when clients need him. "I can assist my clients during all hours—instead of the 9 to 12 when most clients perceive a need to buy or sell," he says. "In addition, it gives me the opportunity to spend as much time and effort on the small deals as well as the big deals."
Clarke's technology edge is applying the information he collects in as many ways as possible. "Because we track owners and investors as extensively as the apartment communities," he says, "I can often sit with a seller and show him exactly how many people have called in and told me that they are looking for a similar property. I can develop a personal letter to each owner, and as each letter is printed, that database records it under the property code to be used for our weekly or monthly marketing reports for our owners. It also allows me to forecast market trends and conditions with uncanny precision—and has often led to speaking engagements."
The information also is used in more than one place. "The database also generates about 65 percent of the information on our Web page. It tracks our market stats, our available listings, fliers, and uploads when necessary. So I can sit down and enter the info once and have it complete for several uses—the Internet, our MLS, our internal forms, and our marketing fliers," he says.
The investment also has expanded his business opportunities. "I have been able to use the information to generate substantial nonbrokerage consulting fees—on average, twice my investment in technology and time," he says. And that's because he sees himself as more than a broker. "I have become not just a broker, but an information provider/consultant to clients and potential clients," he says. "I mail a four-color, four-page newsletter to over 1,000 owners and investors in our area, updating them on stats, trends, and market conditions—free of charge. I use the information for due diligence as a buyer's broker—we have a 64-item checklist for our purchasers. I use the information to protest taxes on behalf of my clients. Last year we lowered some tax assessments to 70 percent of their original value. And I use it for consulting—to help my clients maximize their return on the asset—and to understand seasonal, local, and national trends," he says.
More Change to Come
Technology also has changed the shape of his business. "When I started, there were a dozen brokers in my market area selling apartments. Now I have one competitor for the large deals and only a couple for the smaller ones," he says.
He sees further change down the road. "Technology will bring markets together—only recently have I had clients consider markets that are within a one- to two-hour flight of their point of origin. Using a computer, they can keep day-to-day tabs on their assets, direct their managers, and follow the market trends," he says.
But as clients become more savvy, brokers must become more cutting edge or risk losing their advantage. "Technology is just a tool," Clarke says. "You need to continually update your tools to stay one or two steps ahead of your clients' needs. If you don't, your clients will—and your 'added value' will disappear."
Clarke's advice of "make the investment and reap the rewards" doesn't just apply to those in his age bracket. "Don't believe that old saying about old dogs and new tricks," he says. "There's a guy in my office who recently turned 60 and he spends hours learning Quattro Pro, Excel, and Word—and can't wait until the new versions come out so he can learn how to use the new features to make his business better. Prior to coming to our office, he had little computer experience. But now he's the only broker in the office who continually outperforms my sales."