I recently co-authored a book about real estate and mortgage fraud called Protect Yourself from Real Estate and Mortgage Fraud: Preserving the American Dream of Homeownership with attorney Rachel Dollar. In the book, we offer detailed descriptions of how various scams are pulled off. The intent was not to provide a how-to manual for con artists but to educate real estate professionals and consumers, so they are better equipped to defend themselves against these crooks.

As soon as the book hit the market, several people posted messages on my blog FlippingFrenzy.com claiming that our book provided con artists with information that would enable them to avoid detection and prosecution.

When Rachel and I and our writer, Joe Kraynak, originally began discussing plans for the book, we brought up this issue among ourselves. We were well aware that such a book could be used by con artists or con artist wannabes as a rudimentary training manual, but we thought at the time and still do that educating the public would provide a greater deterrent. The biggest threat to real estate professionals, homeowners, and the entire real estate industry is ignorance. The con artists are already well equipped with the knowledge and tools to rip off the system, and their biggest weapon is other people’s ignorance.

If you read any book or article on scams or white-collar crime, you always find explanations for how specific scams are perpetrated. If you go to the FTC (Federal Trade Commission) site on identity theft at www.ftc.gov/idtheft, for example, you can pull up an entire list of strategies that con artists use to steal information, including dumpster diving, skimming, phishing, and redirecting your mail to their address. The site even contains a video showing a con artist stealing mail from a mailbox and digging through the trash to obtain discarded documents. The FTC isn’t trying to teach people how to steal identities. The intent is to let potential victims know how identity thieves operate so they are better able to defend themselves.

In Protect Yourself from Real Estate and Mortgage Fraud: Preserving the American Dream of Homeownership, Rachel and I take the same approach, revealing how perpetrators operate, so that potential victims can take practical steps to prevent fraud and be able to spot the signs of a bad deal earlier enough in the process to do something about it. Unfortunately, anything you produce to help people defend themselves against fraud reveals something about how the con artists operate, so it is a bit of a double-edged sword, but the other option—keeping the public in the dark—gives the con artists more ignorant victims to exploit.

Only by being empowered by knowledge can we defend ourselves from the people who already have that knowledge and are committed to using it against us to separate us from our homes and our money.

Realtors across the country are hurting. Housing markets are in a downward spiral. Homeowners are flocking to FSBO websites to list their own homes. Internet lead generation services are heating up the competition. And many agents are offering cut-rate commissions to survive the cutthroat market.

Realtors have to remember, however, what most retailers already know — competing on price alone is for suckers. Start offering sellers lower commissions and you are setting yourself up for a world of hurt, both in the short-term and well into the future. Once you establish a reputation as the “cheapest agent on the block,” turning that around later can be nearly impossible.

Instead of competing by offering lower commissions, find something else to compete on — quality service, experience, and know-how. Adjust your marketing materials to highlight current market conditions and your unique ability to sell homes in a down market:

• Do not sugarcoat news that the market is down. Provide facts and figures showing the current condition of the market. Let prospective clients know that other agents may try to present them with a rosier picture just to get their business.
• Inform clients that according to the NAR, a home sells for 16-percent more on average when sold through a Realtor than when sold by the owners or someone less qualified. Most homeowners are unaware of this fact and may need to be reminded that you are likely to earn much more than your keep.
• Highlight your experience. If you have been a Realtor for ten years, that is a big plus. Make sure your clients know the value of your experience and that you have sold homes in slow markets before.
• Highlight your dedication. If you are a full-time Realtor, market yourself as a full-timer and let you clients know that selling homes is your passion. Let them know that some of the agents they talk to may be part-timers and may not be quite as responsive as you.

When you meet with prospective clients for the first time, make sure you have a marketing plan in place for their home. Highlight your three-pronged attack for selling a home in a slow market:

• Pricing the property to the market. Explain why setting the right price is so important in generating interest in the property. Explain how you arrived at the asking price, and back it up with plenty of facts and figures from comparable properties.
• Getting the property in tip-top condition. Explain why curb appeal is critical and why the home needs to make a great first impression. Consider putting together a team of consultants, including a home inspector and a professional stager to write up a plan of action, complete with an estimate for the work that needs to be done, and how much these improvements are going to increase the salability of the property.
• Marketing the property online and off. Demonstrate to your clients your ability to get the property listing in front of as many prospective buyers as possible. Explain the access you have to MLS listings and show your client at least eight places on the Internet where you plan on marketing their property, including Craig’s List and Backpage.

In a slow market, many sellers are worried that in addition to losing money due to market conditions, they stand to lose an additional 6 or 7 percent by having to pay your sales commission. Make sure they realize the benefits of using a licensed Realtor, including the following:

• In addition to marketing the home to the general public, you market to other Realtors, who can show the home to their clients.
• You prescreen prospects, so only the most serious prospective buyers can look at the home, and you accompany all qualified prospects as they tour the sellers’ home.
• You can help the sellers compare and evaluate purchase offers.
• You can negotiate with the prospective buyers without tipping the sellers’ hand or compromising the sellers’ negotiating position.
• You can handle all the details related to closing to make sure the sellers’ interests are protected.

When a sluggish market and other changes in the industry heat up the competition, you have to make some adjustments in the way you present yourself to prospective clients, especially those who are in the process of considering hiring you as their listing agent. Step up to the challenge. Never simply give in and lower your commissions. Offer more value, and earn your commission

To help kick off RISMedia’s 2nd Annual CEO Exchange (July 23 & 24 at the Sanctuary Golf Course and Clubhouse in Salida, Colorado), I will be providing each attendee a complimentary copy of my latest book, Protect Yourself from Real Estate and Mortgage Fraud: Preserving the American Dream of Homeownership, co-authored with Rachel Dollar, a legal expert in the mortgage lending industry.

If you’re unfamiliar with the CEO Exchange, it’s an exclusive gathering of over 100 top brokers and Real Estate industry leaders for the purpose of discussing the most pressing issues facing the residential real estate industry today, and as Rachel and I point out in the new book, the most pressing issue is the proliferation of fraud in the Real Estate and lending industries. Real estate and mortgage fraud are a cancer that is eating away at the very foundation of the American Dream of homeownership.

According to the FBI, Real Estate fraud is one of the fastest growing white-collar crimes in the U.S. From 2003 to 2004, reports of mortgage fraud jumped 146%, and another 28% from 2004 to 2005. Reported dollar losses from mortgage fraud increased 90% from 2003 to 2004 and 136% from 2004 to 2005. Currently, lenders report over $1 billion in losses annually from mortgage fraud, and this accounts for only about a third of the losses actually suffered (only a third of the industry is subject to mandatory reporting requirements).

Industry leaders have long known about this growing problem, but con artists are able to adapt as quickly as new legislation is passed. In my experience, the best defense is education–teaching Real Estate professionals as well as consumers exactly what constitutes fraud, how to spot the signs of fraud, how to stop it, and how to get the word out about con artists and their accomplices.

I view the CEO Exchange as the perfect opportunity to further the crusade against Real Estate and mortgage fraud. By getting our book into the hands of industry leaderswe can take advantage of the trickle-down effect. Once industry insiders and thought leaders read the book, they will sound the alarm, and the rest of the industry will begin to take the threat more seriously. By becoming educated and joining forces, we can defeat the con artists and preserve the health of the Real Estate.

Protect Yourself from Real Estate and Mortgage Fraud: Preserving the American Dream of Homeownership provides real-world examples illustrating exactly how real estate and mortgage fraud are committed, pointing out the common signs of each scam, and providing tips on how professionals and consumers can protect themselves from becoming unwilling victims or unwitting accomplices. Topics covered in the book include:

• Defining real estate and mortgage fraud.
• Demonstrating the catastrophic effects of fraud on individual homeowners; the real estate industry; and local, state, and national economies.
• Differentiating between fraud for profit and fraud for housing.
• Identifying common schemes and schemers, including asset rental, air loans, chunking, double sales, straw buyers, nominees, and faulty appraisals.
• Spotting the warning signs of a fraudulent real estate deal.
• Proven tips and tricks for avoiding fraud and steering clear of gray areas in your real estate transactions.
• Practical advice for real estate agents, appraisers, mortgage brokers, investors, title companies, lawyers, and homeowners.
• Reporting fraud: One person can shut down a shady deal. Why you need to be that person and what you should do when you suspect fraud.
• Guidance on what to do if a con artist has victimized you or a relative, friend, or acquaintance.
• Advice on what to do if you or a loved one has knowingly or unwittingly been involved in a fraudulent deal.

This is just the beginning of a revolution in the real estate and lending industries to take back control from the con artists and other opportunists who are committed to milking the industry dry for their own benefit.

I’ve just confirmed that I’ll be moderating two panels at RISMedia’s 2007 Leadership Conference–a high-level, networking and educational event for America’s real estate and relocation leaders held in New York City every year. Presented by RISMedia and sponsored advertisers of RISMedia’s Real Estate magazine, this conference–now in its 18th year–focuses on building stronger Real Estate and relocation businesses and the future of the Real Estate industry.

On Thursday, September 6th, I will be moderating the following panels:

• “A New Opportunity? How Brokers Can Succeed with Agent Teams”
• “From A to Z-How Do I Form and Lead a Championship Agent Team?”

For more information about RISMedia’s 18th Annual Leadership Conference, visit the conference homepage.

On June 12, 2007, Reuters reported that “U.S. home foreclosures in May jumped 90% from a year earlier, reflecting a poor spring housing market and foreshadowing even higher levels later in 2007.” And this was only one of dozens of articles I read in June declaring the current foreclosure crisis and presaging worst times to come.

Real Estate professionals probably find these headlines more than a little scary, but just think how scary they are to homeowners, a majority of whom are probably a layoff or an accident away from foreclosure themselves. And think how scary it is for homeowners who have already received a missed-payment or foreclosure notice.

The good news is that if you are a Real Estate professional, you are in an excellent position to help these homeowners while creating a new revenue-generating division in your team or brokerage and generating some very positive PR.

Early in my career, I lost one of my first homes in foreclosure. I fell behind on the payments and was too embarrassed to ask my parents for assistance. By the time they found out about it, it was too late to save the property. Some good came of this, however; I realized that nobody in my market was serving the needs of distressed homeowners facing foreclosure. Sure, a few shysters in the neighborhood were pouncing on foreclosure victims like helpless prey, but nobody was informing distressed homeowners of their options and offering viable exit strategies.

Shortly after becoming a real estate agent and opening my own brokerage, I decided to launch a separate division to handle foreclosures, and it has become one of the most rewarding and profitable divisions for my business. I encourage you to do the same.

Why start a foreclosure division?

I encourage you to add a foreclosure department to your real estate business for several reasons, including the following:

• Working with people in foreclosure will generate an incredible amount of business for your organization, including listings, buyers, cash acquisitions, land contract sales, and renters for company-owned properties.
• You gain the opportunity to help people who are in foreclosure–people who probably don’t know what options they have available to them. You could be the one who offers them one last chance to get their life back in order.
• You can offer one option that most foreclosure investors cannot offer–the option to place the house on the market and sell it for the distressed homeowners. If the owners choose not to sell the property to you as an investor, they may hire you to list it, in which case, you profit from the commission. Either way, you win.

A foreclosure division provides your entire Real Estate operation with recession insurance. Even when the U.S. economy is booming, a minimum of four to five percent of all homes in America are in foreclosure or facing foreclosure. When the market tanks, you have even more opportunities.

Getting started

Getting started in the foreclosure arena requires some attention to detail. You can lose a lot of money if you are ill prepared and fail to do sufficient research. Your preparation must include the following:

• Secure financing (most foreclosures are cash buys).
• Brush up on foreclosure laws and regulations in your area.
• Prepare a foreclosure packet informing distressed homeowners of their rights, options, and deadlines.
• Network with loan officers, bankruptcy attorneys, title insurance companies, and other real estate professionals who can assist homeowners facing foreclosure.
• Network in the neighborhood to find leads on pre-foreclosure opportunities.
• Follow foreclosure notices published in your area.
• Research documentation on foreclosure properties, including the title and any liens against the properties.
• Inspect the properties with your own two eyes before making an offer or bidding on the properties at auction.

Tip: Consider setting up a cash-buy division in your business, as well, so you can move quickly to seize great buying opportunities. Your cash-buy division can purchase properties that are listed at bargain basement prices, unlisted properties, and pre-foreclosure and foreclosure properties.

When you step into the foreclosure arena, be careful. Study up on the foreclosure market in your area and invest with integrity. You deserve to earn a fair profit from your work, but you should always inform homeowners of all of their options and do what you sincerely feel is in their best interest. Don’t withhold valuable information just so you can get a better deal. My most recent book, Foreclosure Investing For Dummies, shows you how to invest with integrity.

A funny thing happens when you become a top-producing salesperson. You stop selling. You stop worrying about the numbers—about sales quotas and profits and the bottom line. You start talking to people. You build relationships, partnerships, and business synergies.

You stop selling, but you end up selling and earning far more than you ever did when you were trying to sell.

What’s the explanation behind this phenomenon? It is captured in the quote at the top of this article: “…it’s always about the people, and the people only.”

When you achieve a certain level of financial success, when you have money in the bank and no longer have to worry about paying bills, you can afford to focus more energy on people and relationships. And when you do that, sales begin to soar! Your clients and prospective clients, which pretty much consist of everyone you meet, can sense your genuine interest in their lives and their businesses and your commitment to serving their best interests, and they feel more comfortable buying from you than from a salesperson who appears ambitious to the point of being desperate.

If you have not quite achieved the status of top-producing salesperson, I recommend that you stop waiting for the time when you have enough money to afford shifting your focus to people and relationships. Do it now. Drop the profit motive. Give up the mentality of bottom-line thinking. Stop worrying so much about sales quotas. Start thinking about people and establishing personal relationships with the people you want to do business with.

As Terry Brock of Achievement Systems Incorporated explains, the underlying force that drives commerce is not E-Commerce but “R-Commerce” (Relationship-Commerce).

Through Internet discussion forums, blogging, and social networking sites like MySpace, R-Commerce is increasingly influencing the way people shop for and ultimately buy products and services. Before shoppers even consider contacting a salesperson, they may spend several hours or days researching online resources and discussing their situation among friends and acquaintances on blogs, discussion forums, and via e-mail and instant messaging. As a salesperson, you have much less influence over the decision-making process. Shoppers’ peers wield much more influence. In other words, prospective customers care far less what you say about yourself and your products and far more about what their peers say about you and your products. And that means that building strong relationships and lots of them is more important than ever.

To be an effective salesperson in this age of R-Commerce, spend less time marketing your products and services and more time marketing and branding yourself and nurturing relationships with clients and prospective clients. In short, start pounding the pavement online and off and leaving people with a positive and lasting impression. As you gain traction and your circle of influence begins to grow, the community you create will begin to spread the word far and wide. Your message will begin to spread like a virus. You can then stop selling and let your bottom line take care of itself.

One of the not-so-secret secrets to sales success is to build on past success. That is what the 10/10/20 technique is all about, and here is how it works:

When you list or sell a house, knock on the 10 doors to the left and right of the house you just sold and the 20 doors across the street and distribute your postcard with a handwritten note letting the neighbors know that you have listed or sold their neighbor’s home.

That is it. That is all it takes to start generating new clients. It should take you less than an hour. Most of the neighbors are not going to want to talk with you at length. In less than an hour you have the potential of reaching 10,000 people.

Whoa! Where did that 10,000 number come from? According to my estimates, from attending weddings and anniversaries, every person knows at least 250 other people. By contacting 40 people in the area, you indirectly contact nearly 10,000 more, and everyone in sales, particularly in real estate, know that selling is all about meeting people and building relationships.

The 10/10/20 technique is just another way of networking, but this form of networking is much less formal than most and creates a grass-roots marketing campaign that spreads like a virus. As the neighbors begin to talk about that agent who had the courtesy to knock on their doors and let them know what was going on with that house that was for sale down the street, word will begin to spread far and wide, and prospective clients will begin calling.

I recently shared the 10/10/20 technique with a coaching client of mine, Domenic Manchisi. An excellent student, Manchisi actually practices what I teach. He even decided to add a little of his own flair to the technique. After he helps clients find and purchase the home of their dreams, he takes a photograph of them in front of their new home and places the photo on the postcard that he hands out to the neighbors. This nice touch helps introduce the new family to the neighborhood.

Manchisi reports that the response has been overwhelming. As soon has he sells one house, he has two more listing appointments waiting for him.

According to Manchisi: “The people who are home when I go to the door are very impressed, as no other Realtor in my community does this. The sellers love it and see first-hand how hard I work for my clients.”

More from Domenic Manchisi:

Recently in my home town of Milton, Ontario we had a home show a three-day event held in the local sports arena showcasing local businesses. My office, Prudential Town Centre Realty, had a booth, and my team had a majority of the floor time. We handed out my personal brochure along with a copy of our Marketwatch newsletter and spoke to everyone who walked by.

At the time of the home show, I had been doing the 10/10/20 for about a month and I was surprised at the recognition I got for just that. Many people commented on me coming to their door. My marketing campaign to my farm of 10,000 has been going on for four months. Between that and knocking on doors, everyone seems to know my name. I am really starting to see how all this comes together. Not only am I enjoying the experience of getting out in the community and meeting my neighbors, but my profile in the business community is also growing.

Although you can adjust the technique by handing out business cards, instead, the postcards are something a little different and less business-oriented and they give you more flexibility do add a personal touch like Domenic did.

Try this new guerilla marketing maneuver, and then write to me to let me know how it is working for you.