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PerFect Your
elevator
Madison
CommerCial real estate serviCes™
speech madison title agency, llc • madison exchange, llc • leaseprobe, llc • madison specs, llc
To network successfully, you need a when you think real estate, think madison. volume #1 issue #5
strong, memorable, but brief response to
the question, “So, what do you do?” That’s
Focus on the
your elevator speech. Take the time to
write a really good elevator speech. Then
memorize it and practice saying it aloud
Fundamentals
until you can deliver it in your sleep. Here
are a few tips:
1
start with a hook. That’s an attention he credit crunch is having a ripple effect throughout
grabber that tells people what you do from the real estate industry and beyond. Whether you’re
the client’s perspective. Ideally, it should be a a loan officer, a mortgage broker, a real estate agent, a
mildly startling (and, therefore, memorable)
3
stress your qualifications. Think
real estate attorney, a title agent or a builder, chances
statement with a clever twist. For example,
about your skills, education and experience. are your phone isn’t ringing quite as often as it once
don’t say I’m an accountant. Instead say,
Pick the top two. Remember, concrete facts did. Between now and the next boom market, many
I help business owners beat the IRS at its
own game.
are more powerful than general statements. professionals will leave real estate for other industries.
For those determined to stay, it’s a good time to focus on
2 4
Define your target market explain why you are the venDor
the fundamentals.
anD explain why they neeD of choice. Do you go the extra mile? Do
you have superior technology? Better contacts?
your services. Are you an attorney
who works primarily with home owners Whatever it is, drive the point home. 1. Concentrate on
Customer Needs.
5
facing foreclosure? Try something like
this, “Home owners facing foreclosure are ask for something. Ask for a business
card, a meeting, a referral—anything that The best business practice in the long term is to give
often blindsided by a system they don’t
understand. We help them understand gives you an opportunity to follow up. That’s every prospect the most valuable advice you can based
their options, navigate the system and come the whole point of networking after all. on your experience and industry knowledge—even if
6
out on the other side with a concrete plan to that means not getting their business today. It’s hard to
keep it short. Your whole speech should
rebuild their credit and position themselves take the long-term view when you’re wondering where
to buy a new home.” be over and done in two minutes or less.
your next project is coming from, but this is how you
build a reputation for quality service and integrity.
2. Network
Business is built on relationships. When there are fewer
PRSRT-STD
US POSTAGE projects coming your way, make use of the free time to
PAID
Permit No. 41
get out and meet people. Attend professional seminars,
1125 Ocean avenue - LakewOOd, nJ 08701
866.500.madisOn - Fax: 866.501.madisOn Lakewood, NJ professional association events and trade shows, get
www. madisOncres.cOm
more involved in community activities, volunteer at a
cont. pg #2
transactions you’ve closed in the last six months.
Step outside your
Focus
Where did most of your business come from? You
want to invest your time and marketing dollars
in the most effective way, i.e., where you get the comfort zone and
most for your money But, don’t get stuck in a rut.
Over time, business shifts and marketing venues shake things up a bit.
on the
that were once very effective may not bring in the
business anymore. So, your business plan should
include exploration into new lead sources. But, start
small and measure results.
6. Reinvent Yourself.
Fundamentals
• develop business strategies For
various scenarios. What will you do if your Add related services to your repertoire. When business
business drops by 25% or 50%? How can you maintain
was booming, did clients ask for services that were
an adequate revenue stream? What will you do if
outside the normal scope of your business? If you got
there’s a sudden burst of business? What resources
can you use to handle unexpected overflow? Come repeated requests for specific services, now is the time
up with some ideas for each scenario and write to find out what it would take to make those services
them down. These situations are less harrowing if available. If it requires a little training or another
you have thought them through in advance. license, why not take the plunge? Sometimes, all it
cont. from pg #1
requires is a change in your view of yourself.
4. Stay Informed.
local school or hospital, join online communities and keep it simple, but you should cover these basics: For example:
reach out to clients you haven’t heard from in awhile No one has a crystal ball. We all just try to make the
• Large developers who now offer home
or prospects who didn’t do business with you. And, • Figure out how much it cost you to best decisions we can with the information we have.
So, arm yourself with information. Read trade and renovations / repair services
don’t be afraid to talk to your competitors. Maybe you complete a transaction. If you haven’t been
financial publications and take advantage of free • Landscape designers who now offer
can find a way to work together on a few deals. After tracking your cost per transaction in the past, take
all, part of a deal is better than no deal at all. online news sources. driveway repairs / re-paving
your total expenses from last year and divide by the
• Real estate agents who now team up with interior
number of transactions you completed. That gives
To make the most of your networking efforts, be sure
you an average cost per transaction. You can then 5. Build / Refine Internal decorators to create a consulting service for
to prepare a good elevator speech (see page 12).
fine-tune that number by calculating the cost per type Procedures (training, work would-be home sellers
• Real estate attorneys who now handle tax appeals,
3. Create a Business Plan. of transaction and breaking out the cost per trans-
action by type of expenses (marketing, staff costs,
flow, compliance etc.). tax foreclosures or negotiate with lenders on
Most small businesses do not have formal business facility/utility costs etc.). Then, do the same thing for Have more time on your hands these days? Don’t waste behalf of financially distressed property owners
plans. Although this critical omission may seem the transactions you’ve completed so far this year. this opportunity to address internal issues that often • Mortgage brokers and loan officers who now
insignificant during boom markets, it can be the get overlooked when you’re busy. Review work flow offer credit counseling to consumers and small
difference between survival and failure in leaner With these figures in hand you have a solid basis for and quality control systems to make them as efficient
business owners.
times. So, if you don’t already have a business plan, comparison between last year and this year, as well as possible. Review legal guidelines and make sure you
The whole idea is to take what you know and give it
sit down and create one. as a mechanism for determining where and how are in compliance. Finally, use this time to train your
a new twist—and maybe, add another skill or two.
to cut costs. staff—review the basics and add some new skills. Is
A little online research will uncover many examples everyone making the most of your software programs? Don’t just hunker down and wait for the proverbial
of business plans and instructions on how to develop • measure results and direct your Probably not. Spend some time on a refresher course. storm to pass, step outside your comfort zone and
them. You can make your business plan elaborate or resources accorDingly. Examine the It will pay off in increased efficiency. shake things up a bit.
2 3
Madison SPECS, LLC
ing because it involved a basis step-up calculation and
Madison sPecs reports other particularly complex tax issues. The final result
was a savings for the client of more than $500,000.
strong First
• Shopping mall in the Poconos—this assignment illus-
trates the value of persistence. We first met this client
in October of 2006, and we kept talking until we got
year results
the job—in May of 2007. As a result of our cost segre-
gation study, the client realized $1 million in savings.
• Office complex in Brunswick—one of the buildings
had been sold separately, so we had to calculate a
look-back figure pulling that building out of the mix.
Madison SPECS (Specialized Property Engineering And, the client had invested heavily in renovations.
and Cost Segregation), the newest member of the So, there were lots of issues involved that made this
Madison Commercial Real Estate Services™ family a particularly interesting assignment. This study
of companies, completed its first year of opera- generated a savings of $600,000.
tion in August. A beaming CEO, Eli Loe-
benberg, reports, “The first year in this • Office tower in Philadelphia—working
business is usually a loss year, but we’ve on one of the largest buildings in the city,
done as well in our first year as others we saved our client more than $1 million
have done in their fifth year.” on this assignment.
ceo credits “The first year in this business is usually a loss year, but we’ve
done as well in our first year as others have done in their fifth year.”
madison network
So, what’s the secret of their success? According to
In its first year Madison SPECS generated savings
Loebenberg, “I have to give kudos to the Madison
organization and their business network. It was
First year highlights for its clients totaling more than $22 million.
Madison’s business relationships that really got us off Here are just a few of the projects that made SPECS’
the ground. When you have good contacts, a strong
team of seasoned professionals and a little luck on
first year a memorable one: looking ahead
your side, you can succeed in any market. • Apartment complex in Brooklyn—this assignment Having made a strong start, Loebenberg is setting
stands out because 1) we were recommended by a the bar even higher for year two. He plans to double
“In fact, I think the down turn in the real estate market competitor, and 2) the entire project from the initial the company’s capacity by May of 2008. He expects
in general may have worked to our advantage. When phone conversation to the final report had to be demand for this service to remain strong regardless
business slows down, investors tap every financial completed in two weeks. We got it done and generated of fluctuations in the real estate market. “People are
advantage available to them. And, cost segregation savings of more than $160,000 for the client. always going to need tax planning. And the fact that
offers significant tax benefits—particularly when people aren’t buying new properties doesn’t matter,
you’re holding properties, rather than buying them • Converted warehouse in Brooklyn—this was an because we can do a look-back and pick up lost
for quick resale.” assignment that really got our accountants’ juices flow- opportunities from previous years,” says Loebenberg.
4 5
Madison Title Agency, LLC
A closer
Under N.J.S.A. 17:46C-10.1 as amended in 2004, NJ Bear in mind however, that when the sender gives
title producers are required to make disbursements you a Fed reference number, it means only that the
from “collected funds.” But, the statute defines funds have been sent. It does not mean they have
collected funds as funds deposited by: been sent to the right account. Always verify that
look At • Cash
the Fed wire funds have been deposited to your
account before making any disbursements.
good
• Electronic wire transfer
• Certified check Automated Clearing House
• Cashier’s check
Transactions
• Teller’s check
Funds
• Bank check The generic term electronic fund transfer most
• A check drawn on a licensed attorney’s trust account often refers to an ACH transfer. An ACH transfer is
• A check drawn on a trust or escrow account of a a bank-to-bank transaction using a batching system
licensed NJ title producer. supported by a network of financial institutions. The
largest of these networks is NACHA, a non-profit
Cash is always a sure thing. But, let’s face it, very trade organization that represents more than 11,000
In recent weeks title underwriters have barraged few people make hard cash deposits for real estate financial institutions as well as regional payment
agents with bulletins on the issue of “good funds.” settlements. And, the other items on the list war- associations. The most common uses of ACH transfers
Driving this growing concern is the number of lend- rant closer examination. are automated bill payments, automatic payroll
ers who have announced recently that they are no deposits and ATM or debit card transactions.
longer funding loans—an announcement that often Electronic Wire Transfer
signals a bankruptcy proceeding in the offing. The In terms of real estate closings, there are two crucial
Electronic transactions are increasingly common in
key message in all the bulletins is the same: do not distinctions between Fed wire and ACH transfers:
all segments of our economy. But for the purpose of
disburse funds from your escrow account without
closing on real estate transactions, you need to under-
verifying that these are collected funds that cannot • Funds transferred through an ACH are not
stand the distinction between funds transferred using immediately available, and
be withdrawn, i.,e., good funds.
the Fed wire system and funds transferred through an
Don’t be lulled into a false sense of security just automated clearing house (ACH) system. • An ACH transfer can be recalled by the originator for
because you live in a state with a “good funds” law. up to 90 days (60 days for a non-business customer).
In this environment, even strict adherence to your Fed Wire
state’s good funds law can leave you vulnerable. What’s more, the same information you give out in order
Funds transferred by Fed wire go through the Federal
What’s more, the practice of disbursing funds based to receive an ACH transfer can be used with equal ease
Reserve. This method is a real-time, irrevocable
on the receipt of funds from “reliable” sources, rath- to transfer funds out of your accounts fraudulently.
transfer through which funds are available for
er than waiting for those funds to be collected can
lead to disastrous consequences.
withdrawal within minutes. Fed wire transfer is the FedACH
preferred method of transferring funds for large
transactions and, therefore, is the preferred method Finally, to make matters more confusing there
Although these laws vary from state to state, the New
of funding for real estate settlements. Although the is also a FedACH. As you may have guessed this
Jersey statute is fairly typical and serves as a practi-
cal example of how the legal definition of good funds recipient can refuse or return funds received by Fed is an ACH system sponsored by Federal Reserve
may not be sufficient protection in today’s market. wire, the sender cannot rescind the transfer. Financial Services. What distinguishes the FedACH
cont. pg #8
8
6 7
Although any of these drafts can be revoked by
Additional Security Measures MAdison Brings
the customer, it is difficult to do so. For example,
customized
if the customer returns to the bank and says that To protect themselves, some lenders have begun
he lost the bank check, the bank will place a stop to re-verify the underwriting immediately before
training
on it. However, the bank will require the customer funding a mortgage. Any discrepancies found in
to purchase an indemnity bond to cover the the process can result in the lender’s refusal to
fund the loan. Assuming no problems are found,
amount should the check ever be found and paid
erroneously—a practice that protects the bank and
this practice may easily delay closing for a few days. to Your door
As a settlement agent you need to be aware of this
reduces the possibility of fraud. But, if you have
practice and ensure that loan funds have cleared
any misgivings at all about accepting payment, you The Title Training Institute, the educational arm
before you make disbursements, or you may find
should call the bank that issued the check to verify of Madison Commercial Real Estate Services™,
yourself caught in the shortfall.
its legitimacy. provides free, customized training in the areas of:
Here are a few additional practices that will add to
cont. from pg #7
Certified Check your financial security in these uncertain markets: • TiTle, seTTlemenT and escrow issues
A certified check is a check that is written against
from other ACH systems is that it can handle inter- • dual signatures— require two signatures • §1031 exchanges, and
a customer account with a certification from the
national fund transfers, whereas other ACH systems on the release of funds over a certain limit
bank that the customer’s signature is genuine and
are restricted to domestic transactions. Otherwise it • cosT segregaTion sTudies.
there are sufficient funds in the account to cover • Fax conFirmation— immediately before
has the same limitations as other ACH systems. Do
the check at the time it is certified. Many banks no you disburse funds against “collected funds”
not confuse a FedACH with a Fed Wire—the two Your staff can earn CLE and CPE credits in the
longer provide certified checks, preferring instead to require a fax confirmation from your bank that
are definitely not equal. comfort of your office from a program we create
issue cashier’s checks, which are more secure. the funds are available
specifically to match your goals. The presentations,
which are geared primarily for accountants and
Cashiers Check/Bank • ach blocks— Block ACH withdrawals from
Checks Drawn on Trust / your escrow / trust accounts.
attorneys, typically run about one hour, but can
Check/Treasurer’s Check run longer depending on the content and format
Escrow Accounts
These terms are interchangeable and refer to a draft Conclusion you want. And, of course, we always allow plenty
of time for questions and answers.
drawn by a bank on itself. The bank agrees to honor In 2004 New Jersey amended the statute to include
Given the current climate in the mortgage market,
this check when properly presented for payment. trust and escrow accounts held by licensed attorneys We have had particularly positive response to
prudence is not enough; true vigilance is required to
The bank, rather than the individual customer, signs and title producers to the list of “collected funds.” protect settlement agents from disbursing funds in our lunch & learn and dinner seminars. Our
the check. This means that the check is as sound as The question you need to ask yourself is this: Has good faith only to find that the supporting deposits summer series, which included dinner seminars
the institution on which it is drawn. the attorney or title producer in question been have been withdrawn. in Manhattan, Brooklyn and at our corporate
offices in Lakewood, NJ, were well attended. The
as prudent about making disbursements against
In most cases, the funds are available the next small group format lends itself to open discussion
collected funds as you are? If you’re willing to bet
business day. Although cashier’s checks have and active question & answer sessions that make
traditionally been treated as “collected funds” upon your livelihood on it, then go ahead and make the training session interesting and informative.
deposit, in today’s economic climate the more disbursements. But, the best and safest practice by To take advantage of this opportunity, please
prudent approach is to wait for these funds to clear far is to wait until these funds have been collected call Esther Silberberg at 732.333.2327.
before you make disbursements against them. and irrevocably credited to your account.
8 9
LeaseProbe, LLC
thoroughness and accuracy of the lease abstracts As a final step, LeaseProbe put all the corrected lease
would determine the accuracy and, ultimately, the abstracts through its standard quality control process—
All Lease
value of the new lease management system. re-verifying the data on each and every abstract.
To produce the lease abstracts, the company initially Results:
Abstracts
hired a firm (not LeaseProbe) that outsourced the LeaseProbe completed the review in three weeks.
work to a non-English-speaking country. When the The client was able to adhere to its original training
retailer’s staff started to enter the data from these and implementation schedule, thus avoiding the
Are not
abstracts, they soon realized the abstracts were costs of delay.
riddled with errors.
And, what’s more important in the long term,
Challenge: LeaseProbe found that 37% of the data on the
creAted Without accurate data, the company would have
had to delay implementation of the new software
original abstracts was incorrect. By correcting this
data, LeaseProbe safeguarded the usefulness of
the lease management software and the retailer’s
equAl
program. And, the clock was ticking. With investment in the software. In addition, with
training sessions already scheduled at a dozen or so accurate, easily managed lease data at its fingertips,
locations for more than a hundred employees plus the retailer protected itself from potential losses in
trainers from the software manufacturer, the direct the millions.
Lease management is just as important for cost of delayed implementation would be thousands
companies that lease a lot of space as it is for the of dollars. The indirect cost of potential missed
landlords who rent the space. An inability to keep options or missed financial opportunities cannot be
track of multiple leases can cause a tenant to miss quantified, but nonetheless represents a genuine risk.
financial opportunities or even force the tenant to
vacate a desirable site. The potential loss can easily Solution:
reach millions of dollars.
With training sessions scheduled to start within five
Recently, these concerns led a large clothing retailer weeks, the company hired LeaseProbe to re-do all
with more than 850 stores nationwide to seek a lease 850 abstracts, verify the data and correct the mis-
management solution. In the process they learned takes. What’s more, they requested that LeaseProbe
that all lease abstracts are not created equal. mark any changes on the abstracts produced by the
first vendor.
Situation:
LeaseProbe immediately collected and organized
The company purchased a lease management
the lease files. Our team leaders reviewed the other
software program. The cost of the program,
vendor’s abstract format so we could work with it
installation, training and initial data entry ran an
efficiently and mark up their abstracts electronically.
estimated $200,000. Part of the underlying costs
and one of the most critical steps in the process Then we set to work abstracting the leases, verifying
was the creation of lease abstracts to serve as the accurate information and correcting errors on the
raw data source for the new software program. The original abstracts.
10 11
