2010 in the Rear View Mirror

As 2010 draws to a close, we hope the new year offers greater opportunities for all our friends in the real estate industry. To that end, we've highlighted some of the more popular posts and industry topics below. Best wishes for a better 2011, from all of us at the Talon Group. Bob Piper, Rodney Hall, Tony Cleveland and Jean Mason.

Loss Share Agreements: the FDIC's strategy to avoid repeating the fire sale days of the RTC period. Bundle distressed bank assets in a portfolio, sale to an investment group with a five year protection period against loss (up to 20% of the portfolio value). Learn more about it or risk not being invited to the dance in 2011/2012.

More things FDIC. The FDIC and its approved subcontractors (RAC's) went on a hiring spree this past year and most likely, will continue the pace through much of 2011. Don't make the mistake of thinking all the jobs are finance and accounting related; there's work to be done in all facets of the industry. This post addresses employment opportunities with the FDIC, while this one focuses on those with FDIC approved subcontractors.

Repositioning Your Business or Career. Developing new products and services could be critical factor for survival in the years ahead. Here's how one builder/developer addressed the situation.

Purpose Driven Networking. Launch an effective networking campaign without becoming a pest to everyone you know by starting here.

The Problem with LinkedIn Recommendations. Heavy on superlatives, light on specifics. Most have the objectivity of your mother. Here's a better way to solicit recommendations from past co-workers or bosses.

The Naked Interview. With a title like that, it's bound to be more fun than a regular interview, right? Strip away all the typical interview questions and try this if you want to really understand a candidate.

Our Favorite Interview Question. Self explanatory... read about it here.

Lesson Learned in the Search Business. Also known as Talon's School of Hard Knocks. Save yourself time and pain by learning what we learned (the hard way) over 25 years.

We Asked You: "How has the industry changed in the last 25 years?" Here's what you had to say.

Best Reads. Two books captured out attention this year. "Different" by Youngme Moon talks about separting your product, service or brand from the competition. This short clip sets the tone. Also, check out "Getting Naked" which makes the pitch for greater authenticity and transparency in business relationships.

Skinny Offerings at Fall ULI

We hoped to hear some great insights (if not encouragement) at last week’s ULI meeting but there wasn’t much to go around. The short version: we’re still in for a long slow recovery, so don’t expect to see huge improvement anytime soon. The lone bright spot appears to be the multifamily sector. With occupancy rates hovering above 90%, apartment projects are cash flowing and lenders feel comfortable enough with the underwriting to lend on them. As far as any other real estate category, it’s persona non grata. Here’s what we heard:

Capital Sources

• Pension Funds & Insurance Companies: no interest in participating in blind pools or anything with comingled financing. (For some crazy reason, they want to know what they’re investing in before they commit money. Yet another "new normal". )

• Private Equity Groups: appear to be sitting on more money than the Swiss banking industry but have been slow to put it in play. Reasons abound, along with pointed fingers: hurdle rates are too high, the best deals are tangled up or owners (read banks) are not willing to absorb the impairment to market values (read “what a willing buyer is willing to pay”). As one hedge fund veteran described it: “We’ve initiated letters-of-intent on 40 deals this year and have yet to complete one of them.

• Foreign Capital: One regional homebuilder enjoying success in the fast recovering Mid-Atlantic region said private equity groups, along with a few regional banks who weren’t heavy in real estate before, have been pursuing their business. Regardless, he said he’s seen more than a few deals completed this year with capital sourced offshore, through groups in Japan and Germany. Will this become more common? Do they interpret underwriting differently than their domestic peers?

Hardest deals to finance

• The blind pools and deals with comingled financing mentioned earlier, along with distressed properties or anything that has hair on it (e.g. unresolved regulatory issues), are next to impossible to finance at the moment. Of course, those metrics describe the majority of the deals out there, but who's keeping track? Creative underwriting won’t help; it’s like putting lipstick on a pig. Until something happens that allows re-pricing of these assets, they will continue to be pigs in the eyes of every capital provider... no matter how well you dress them up.

Key to success for new projects

• Using entrepreneurial skills to bring distinction to a project over what is already out there. For community developers, is there a deeper role the information center can play in the community versus just a purveyor of collateral materials? What about a day care center exclusively for residents in a first time buyer community? Or, an on-site medical center in an active adult community? (If any of this resonates with you, check out “Different” by Youngme Moon.)

• Smaller tracts with shorter build-out cycles appear to a the honey hole. (Check your redneck dictionary for that term.) Ten reasonably priced deals with 100 lots per community carry far less risk than a bargain basement purchase of a single 1000 lot PUD. Deals that don’t require massive upfront investments for infrastructure and can begin booking sales sooner are like a warm Snuggy to capital providers. Five to ten year build-outs no longer work for most of these firms, no matter how much data you plug into the proforma. One private capital player said he’s even skeptical of three and four year projections; he wants to see deals that can be bought and sold out within a few years.

The Chairman's Report

Finally, we were hoping to hear some really good scoop from Sheila Bair’s address. Ms. Bair is the Chairman of the FDIC and the holder of all things secret in that department. For the most part, they remained secret. She gave a confident, eloquent speech that lasted fifteen minutes, followed by another 15 minutes of Q&A. When all was said and done, her 30 minutes of face time yielded little in the way of specifics: no action plans, no strategy, no policy direction. But gee whiz, she sure sounded impressive on the podium. Maybe that’s why she’s parked in Washington DC; she sounded like a politician!

Turns out there were better panels to sit in on. Earlier this week, Builder Magazine posted a much more informative article on deals that have been done with the FDIC and how they were structured. We’ll save you the trouble of looking for it; check it out here. Next time, we'll study the program agenda a little better. Click here to read the Builder Magazine report.

Repositioning Your Business or Career

The reports coming from last week's Fall Meeting of the ULI point to a long, slow recovery, or as Ivy Zelman once described it, a "canoe" rather than a broken "W". The extend & pretend recovery will continue to force many builders and developers– i.e those without access to public money– to the sidelines for the foreseeable future. So, what happens when a talented management team finds itself blocked from their normal line of work? The answer: attack the issue the same as a real estate project in need of repositioning: develop new product and services to address the "new normal".

Perhaps the best example of this can be seen on Lakewood Real Estate Solutions new website. LRES is comprised of the former management team of Lakewood Homes, founded in 1990 by Buz Hoffman. For the last 20 years, Lakewood has been known in the Chicago market as an industry leader, offering superior housing product and thoughtfully planned communities. During their reign, Lakewood attracted some of the best talent in the Chicago market, the same talent that now comprises Lakewood Real Estate Solutions. When the recession and resulting credit crunch pushed them to the sidelines, they chose to leverage their in-house talent as a workout team, helping banks and institutional owners with distressed real estate assets.

That alone isn't necessarily headline news; after all, many professionals in our industry are trying to do the same thing. The differentiator in their case is a unified team with a proven track record, combined with a website that is simple and delivers a crystal clear message. We first learned about it when one of their first blog posts, "Buzzwords" arrived in our Inbox. The email announcement captured our attention for two reasons: it was clean and attractive, but also lent a positive feel to an otherwise discouraging business (workouts). We also like how they invested the time and energy to develop a professional, multifaceted website. Everything about it smacks of professionalism.

Whether you're a one man show or a team of talented people, you might want to consider doing something similar to what Lakewood has done. It will require some investment, but there are plenty of off-the-shelf products to quickly build something similar to what you see on Lakewood's site. A $1500 investment and monthly fee of $40 (for web hosting) should get you there. (Check out Adobe's Business Catalyst, a suite of services that in addition to web site development also includes blog posts and email campaigns.)

Before you balk at the cost, keep in mind that promoting yourself and your experience has never been more important. If the latest reports for a long, slow recovery are an indication, short term contract gigs might become de rigueur. A multifaceted site like this helps people find and learn about you. One other benefit– it lends greater credibility to your job search when you've been "consulting" for over a year (or longer).

Check out Lakewood's web site and feel free to post your comments; they would appreciate the feedback.

Pony Rides and the Great Real Estate Recession

The forecast continues to look bleak for real estate development of any kind, but particularly the commercial real estate markets, which appear headed for a financial tsunami. The numbers are large enough to cast a shadow over every facet of a recovery, even when divided by two. Somewhere in this pile is a pony, i.e. opportunities for investment and employment, assuming you know where to look. (Check out our prior posts on the FDIC/RAC's, for one.) The point: real estate projects (distressed and otherwise), will still need to be analyzed, managed, leased, sold, finished, marketed, etc. provided you connect with the right buyers and sellers. Here's the state of the union and best guesses for what's coming. In coming weeks, we'll talk about how to ride the pony.

• $38 billion – the remnants from failed banks that the FDIC is trying sell, ranging from virtually worthless mortgage backed securities to office decorations such as plastic Christmas trees.
• $1.4 trillion – the total original value of commercial real estate loans due to reset between 2010 and 2014, nearly half of which are underwater, i.e. the borrower owes more than the underlying property is worth. (Congressional Oversight Panel Report
• 40% - the decline in commercial property values since 2007.
• $280 billion – the additional loan losses that will need to be absorbed based on extrapolating the last two points.
• 94% - the portion of failed banks (since 2008) that had real estate loans as their largest category of delinquent debt. Construction loans accounted for 23% of the total. (SNL Financial)
• 35% - portion of which real estate loans comprise the total loan portfolio of most banks.
• 95% - portion of real estate loans comprising the total loan portfolio of Imperial Capital Bank in La Jolla, CA.
• 33% - amount of total U.S. deposits held by Bank of America, JP Morgan Chase and Wells Fargo following consolidations and acquisitions, up from 21% in 2006. (SNL Financial)
• 280 – the number of bank failures since 9/25/2008.
• 829 – the number of U.S. banks currently on the FDIC problem watch list. (Standard & Poor).
• 2932 – potential number of bank failures over the next decade (Keefe, Bruyette & Woods.)

Tip of the Month: Indeed.com

If you’re in job search mode and not familiar with Indeed.com, you should be. Indeed.com is a free service that scours the top job boards and Fortune 500 companies for new openings daily. To give you an idea what I’m talking about, today I searched for “Real Estate” as a keyword in the following markets and this is the number of advertised openings that came back:

Dallas, TX: 2040
Houston: 984
Charlotte: 638
Phoenix: 977
Washington DC: 2979
Atlanta: 1264
Chicago: 2286
Denver: 789
San Francisco: 2246
Los Angeles: 3886
Orlando: 549
Miami: 1085
Las Vegas: 386

If you care to add it up, that's 20,109 openings in those thirteen markets alone. Granted, not all will be real estate specific roles and only a portion might be a match. However, shrinking the total to 5% or 10% still leaves a decent number of job leads... not to mention the opportunity to identify companies you didn't know of before.

Indeed will also notify you when a new position is posted in your area which meets your personal interests or criteria, so you don’t have to recheck it every day. This is truly a great service, especially considering the price of admission (FREE!).

Cover Letters - Less is More

Talon Tip: keep your cover letters and introductory emails short. Imagine someone reading it on a smart phone with a small screen. Here’s a draft I helped someone with earlier this week (the original was three times longer):

- - -

Dear Mr. Hall,

Thank you for your time today. Per our discussion, I am interested in a Chief Financial Officer position. A brief recap of my experience:

• Acme Homes: three years as CFO of this $100M homebuilder
• Chesterfield Homes: ten years as Controller for this regional builder.
• Deloitte & Touche: seven years experience in public accounting and tax advisory

I’ll be happy to forward a full resume upon request or, feel free to view my public profile on LinkedIn.

Thanks again for your time and interest.

John Doe
jpdoe@hotmail.com
555-712-9758

Real Estate Market Update- 9/2/10

"Are you seeing any improvement in the market?"

That's the most common question we hear from people lately– inside and outside the real estate industry. Here are some of our observations based on market data, first hand accounts and listening to OPO (Other People's Opinions). We don't recommend using this to re-balance your retirement account, but at least it will provide a glimpse of what we're seeing and hearing.

• First things first, without question we've seen an uptick in search activity this year. It's not surprising when you consider the meltdown of 2008-2009; it would be hard not to post a respectable gain. Regardless, our search activity for the four months of May to August was reminiscent of the go-go years of 2006 and 2007. We actually broke a sweat!

• Is this a sign of a recovery? Who knows. Our search activity remains confined to a small group of builders and developers who cleared the impairment hurdles or were lucky enough to sidestep legacy debt issues. In several of these instances, they are hiring in multiples: one client retained us on five searches YTD, another on four. It's been a long time since we've seen nine searches from two clients.

• "Confined to a small group..." could also read "which leaves a large group sucking wind on the sidelines". Some appear to be highly cautious and conservative, others paralyzed by the lending freeze that blankets our industry or from being boxed out on land positions by the big builders. How much longer they can withstand these challenges remains to be seen.

• Meanwhile, a hiring campaign has been underway at the regulatory agencies (FDIC, FNMA) and the subcontractors they work through (RAC's). For many in our industry, this could prove to be the safe harbor (employment-wise) while waiting for the storm to pass. We posted on these job opportunities (and how to pursue them) twice before. If you missed them, here are the two links: FDIC Part I and FDIC Part II

• Another common trend during market corrections is the rise of small start-ups. Weak employment motivates many real estate professionals to create their own opportunities, usually by banding with a handful of peers to offer turnkey solutions to banks, institutional owners or by raising seed capital to do deals under the new basis thresholds.

• One thing is becoming clear: to survive (prosper?) in our industry today it helps to have an alternate strategy. For some, that might be a Plan B or C... and some of which have yet to be defined.

Behavioral Interviewing, in simple terms

“The best predictor of future performance is past performance”

If you've ever been in an interview and heard a question that started with "Tell me about a time...", then you've experienced a behavioral interview question. Behavioral interviewing is said to be 55% predictive of future on-the-job behavior, while traditional interviewing is only 10% predictive. As a result, more companies are adopting Behavioral Interviewing methods. Don't let the name intimidate you; the process is quite simple. All you need to remember is "STAR"; is that simple enough?

STAR serves as an acronym for the outline of a behavioral interview question and stands for:

• Situation / Task
• Action
• Result

In a behavioral interview, the objective is to learn about a candidate through a series of questions that draw on his/her past experiences: situations faced, actions taken, results delivered. If an interviewer wants to learn about a candidate's managerial experience, he might ask "What was one of the more difficult employee situations you've dealt with in recent years." From this starting point, a skilled interviewer can delve into a variety of questions: What were the circumstances surrounding it? What actions did you take? What other actions did you consider? What led to follow the path you took? What was the outcome? Given the opportunity, would you have done anything differently?

As you can see, this one question can lead to long list of other questions. It's possible to spend 5-10 minutes on one question with the STAR outline. This is when an interviewer begins to truly understand a candidate: how they identified the problem, assessed the situation, determined a course of action, experienced the results and what they learned in the process. Best of all, everything is based on a candidate's first hand experiences, not speculation or educated guesses on how they would handle something. As one of our partners is prone to say: "One is fiction until proven to be fact. The other is just plain fact."

One final thought: candidates should not feel obligated to come up with a stellar result for each question. A candidate's most valuable experience might have had a less than favorable outcome. However, this usually requires encouraging a candidate to speak openly and assuring them that a negative result does not necessarily demean their candidacy.

FDIC Opportunities, Part II- Navigating the RAC List

One of our recent posts focused on employment opportunities with the FDIC. However, most of those require prior experience with bank workouts and represent only a small portion of the total opportunities. For most real estate professionals, the gold mine of opportunities is with firms approved as primary subcontractors for the FDIC. These are the firms that actually manage the assets, determine values and strategies for liquidation, etc. For example, CB Richard Ellis is said to be targeting 600 new hires nationally for FDIC related projects. As more real estate portfolios end up in FDIC receivership, new positions will continue to surface with FDIC contractors requiring expertise in general operations, sales and marketing. Here's a strategy on pursuing those opportunities, sometimes before they've even been posted.

Step 1: The FDIC Receivership Assistance Contractors (RAC's)

The FDIC has published a list of firms approved to help with the management and liquidation of REO assets. The list is divided according to specialty or disciplines, some that appear to cross over each other. Your first task is to build a spreadsheet with the companies and contact names that could apply to your field of expertise. Don't be surprised if you end up pulling contacts from four or five of the listed groups; that alone should give you 30-40 potential employment contacts.

Step 2: Use Jigsaw.com to go beyond the immediate list

Here's an example of how to expand your reach with the RAC list: scroll down the RAC list to the second group that's focused on Owned Real Estate (ORE). The first subcontractor listed is CB Richard Ellis' Dallas office. A general email address is provided as well. You should certainly send your information there but I'd recommend going one step further by identifying one or two others in the same CBRE office whose titles indicate some involvement with asset management or liquidation. Using an online directory like Jigsaw will save loads of time and help you quickly identify who's who in a company. The monthly fee of $25 month is a bargain and allows up to 150 contacts to be pulled each month.

Don't stop there: use Jigsaw to determine if CBRE has an office in your local market... for example, Phoenix. Look for anyone in the Phoenix office with a title related to asset management, REO, distressed assets, FDIC, etc. If you find two or three potential contacts there, you now have 4-5 potential networking contacts vs. just one from the primary list. Repeat this for all the companies in your primary groups and soon you'll have 100-200 names on your spreadsheet. Note: make sure you capture the following for each contact: name, company, title, mailing address, email address and phone.

Step 3: Send each an email but don't attach a resume

Emails with attachments from unknown senders tend to get sidetracked by spam filters. You want to share the key details of your experience quickly and simply, without the need to open an attachment. Hence, we present the "Blackberry resume". It's clear, concise and can be easily read on a smartphone. Best of all, it's almost impossible to miss the keywords which really matter. Here's an example:

John... please keep me in mind if your future needs require a Phoenix based real estate finance professional. A brief summary of my experience:

• VP Finance- Gables Residential, a nationally recognized multifamily REIT
• VP Investments- Brookstone Capital, debt and equity partnerships for real estate projects
• Sr. Analyst- Deloitte & Touche, specialization in real estate and manufacturing

• BSBA- University of Arizona
• MBA- Arizona State University
• Licensed Real Estate Agent, Arizona

I'd be happy to forward a complete resume if you're interested. I'm available on a contract or full time basis. Thanks in advance for your consideration.

Bill Smith

bill.smith@anywhere.com

602-333-5555

Step 4: If you don't receive an email reply, send a resume by mail one week later

Your mail follow-up should include a cover letter that is virtually identical to the one above; the only change would be to the closing paragraph ("I've attached a complete resume..."). Resist the urge to ramble or write something longer; it will do more harm than good. The cover letter needs to clearly define who you are, what you do and where. Keep it short and sweet for maximum impact. The goal is to detail your experience in as few words as possible.

Lessons Learned in the Search Business

We've learned our fair share of lessons after 25 years in the search business. Some were learned the hard way, many times more than once. Save yourself time and trouble by heeding these tips.

• The best indicator of future performance is present & past performance. The shrinks refer to it as direct behavioral observations. We call it the Duck Theory: “If it walks like a duck...”

• Direct observations are better than inferred ones. The fact that John describes himself as a “people person” is encouraging. However, if he frequently slams his co-workers and supervisors during the interview process, it’s probably not true.

• “How did...” trumps “How would...” Hypothetical questions tell you what a candidate might do, whereas behavioral questions... focused on past actions... yield what they actually did. One is fiction until proven to be fact; the other is just plain fact.

• Recency, Recency, Recency. Like the adage "location, location, location" the best history is recent history. What someone did five years ago is less important than what they did last year.

• Rarely is anyone as good or bad as we think they are. Also known as the “divide by two...or three” rule.

• Everyone has hot-buttons which skew their objectivity, i.e. the attributes we like to see in people. Recognizing yours will help maintain objectivity.

• Never make a hire / no hire decision based on any one thing, whether it is an accomplishment or failure, praise or criticism, good or bad reference.

• If you don’t know what you are looking for, how will you know when you find it? The better you define what success should look like in a position, the easier it will be to assess those abilities in others.

• The more comfortable both parties are during an interview, the more open and authentic each will be. That means no more trick questions or acting like an armchair psychologist. Give candidates an outline of what to expect as well as “permission” to flip a question back to you at anytime, or to ask one of their own. (Learn more in our post The Naked Interview.)
  

• The interview and hiring process should be like a courtship: it starts with Attraction (dating), evolves into Assessment (learning about each other) and concludes with Acceptance (proposal). And like a marriage, it takes Adaptability & Alignment of expectations on both sides to make it work over the long haul.

• If a candidate needs more than 24-48 hours to accept/decline an offer, then something in the prior statement was not handled correctly. An effective interview process comprises more than one visit and plenty of opportunities for both sides to learn about each other. The decision should be pretty clear by the time an offer is made. Taking longer than a day or two will not make the decision any clearer or easier. Imagine proposing to your spouse and hearing “I really appreciate the offer. Do you mind if I take the weekend to think it over and get back with you?”

• Counter Offers tend to be short-lived solutions. Case in point: employee resigns in order to pursue another opportunity. Employer offers him a raise, bonus or promotion to entice him/her to stay, but never forgets how the employee leveraged the situation to his/her advantage. The relationship is never the same. It’s also a poor way to go about getting a raise or promotion. Historically, the relationship sours within twelve months and the statistics bear this out.

FDIC Employment & Acquisition Opportunities

Similar to the RTC days, the best avenue for real estate professionals to secure gainful employment in the near future might be with the FDIC. To date, the Fed has given banks a long leash to curtail an onslaught of failures; hence, the "extend and pretend", "pray and delay" monikers. As the economy shows signs of strength, the Fed will begin flexing it's regulatory muscles and require banks to address the deals they've been nursemaiding for so long.

Until those assets are re-traded, no one knows for sure what the total impact will be. However, when you consider there's an additional $2 trillion of commercial real estate debt due to reset between 2011-2013, half of which is valued less than what is owed, it doesn't look good. Clearly, the FDIC is faced with becoming the largest REO owner and employer in the nation. So, if you're in the job market or looking to acquire real estate assets at great prices, get ready.

The Hiring Side- "We've Only Just Begun"

The FDIC is hiring. And, like the old Carpenters' hit, it's just the beginning. In addition to the FDIC, there are the 100+ third party contractors (known as RAC's) who have contracts to support the FDIC's asset management and disposition activities. Many of them will need specialized talent, too. Some of the candidates will come from banking, some from real estate, some from other industries altogether. To see a complete list of third party firms by industry segment, check out the FDIC Receivership Assistance Contractor list.

Applying to the FDIC for an opening is no slam dunk. A separate online application must be completed for each position. Don’t make the mistake of applying for one position thinking the FDIC will consider it for other openings, regardless how similar they might appear. You must submit a separate application for each position of interest. It’s time consuming, but necessary. Some tips on completing the applications:

• The FDIC uses a scoring system to determine fit with a position. It is important that the language in your resume and the your answers on the application match as closely as possible to the job description. For example, if the job description requires “entitlement” experience but you use the term "approvals" in your resume, it may not receive as high a score. Certainly, don't embellish; just make sure you’re speaking the same language. This might mean rewriting your resume to better match the each opportunity.
• A background check will be required on each application as well, but you can copy and paste much of the information to speed the process up. Park the answers (in order) on a separate document as you complete the first application, the go back to it on additional applications.
• If you have any prior experience with the RTC, banks or federally approved workout firms (RAC's), be sure to note that; it is considered a huge plus. Again, don’t assume the folks at the FDIC will recognize a company’s name and draw the right conclusion; instead, spell out the relationship, duties or role. Learn more about the application process.

The interview process itself is rather impersonal. Once your application has been approved for consideration, a brief phone interview is conducted with someone at the FDIC. Assuming the visit goes well, a conditional offer is made subject to final approval and completion of your background check. Don’t be surprised if you are formally hired before you ever meet the person who will be your supervisor.

Good news on compensation: the FDIC is paying market rates. Depending on the position applied for, qualifications and compensation history, the base salaries can range from $100-175k, plus bonus incentives and/or overtime. Each position has a defined compensation range (e.g. $105-125K). The initial offer will always be made at the lowest number; however, if payroll history is supplied demonstrating you are accustomed to making more than the low end, the local office has the option of increasing the offer by up to 25%

FDIC Careers posts positions currently available directly with FDIC offices nationally. Click on View All Vacancies to see the full gamut of needs. To search opportunities with both the FDIC and it's approved contractors, go to Indeed.com. Enter FDIC in What field and City or State in the Where fields.

The Buy Side: Acquiring Assets

The FDIC has a history of selling their assets at 94% of appraised value regardless of what the previous value of the asset was. Obviously, the key driver in the deal will be the appraisal. Given recent challenges in quantifying property values, this could be deal breaker for either side.

FDIClistings.com is a good site to start looking for potential deals. Prescient and the other asset managers have more than 1000 brokers that will list assets on behalf of the FDIC so look through local channels as well.

The Roseview Group works on various bank assets prior to the FDIC getting their hands on a bank. When they dispose of assets, they are interested in the following from a buyer: surety of execution, a desire not to be re-traded, an interest in not being nickel and dimed, a buyer that has a target asset in mind, and someone that will purchase without reps and warranties.

Asking for a list of all assets "for sale" is usually ignored. The RAC's get thousands of tire kickers and they ignore most of them. The surest way to get their attention is to have one troubled asset acquisition under your belt, and a specific new acquisition target or pool in mind.

NOTE: We'll continue to update this post with additional information so be sure and check back.

The Naked Interview

The next time you enter the interview arena– as a hiring manager or candidate– you might want to try getting naked first. OK, not in the literal sense but as described in the business bestseller “Getting Naked”, by Patrick Lencioni. Lencioni’s book addresses the three things that tend to sabotage client loyalty:

1. Fear of losing the business
2. Fear of being embarrassed
3. Fear of looking inferior

The solution: using transparency and authenticity as the foundation for consulting or selling environment– or, as Lencioni says "getting naked". No more posing, posturing or saying “the right things” in order to make the sale. His recommendation is to focus on understanding a client’s needs, helping them find solutions and speaking the truth – even when it might put the relationship at risk.

The book affirmed something we’ve felt is wrong with the interview methods many companies rely on. See if this sounds familiar:

• A candidate is invited to interview with a company. Other than knowing the position to be filled and essential requirements of the job, nothing more is shared in advance. The candidate is expected to enter the interview arena “blind,” hoping for the best and speculating on what might be asked.
• The interview itself is largely a pop-quiz process with the company representative asking the questions, the candidate answering.
• The candidate leaves the interview clueless on how well he/she might fit the position.
• On the way home, the candidate invariably thinks of answers – if only they'd had more time to think about it.

That last point is especially true of behavioral interviews, where candidates face questions beginning with “Tell me about a time when...” and, for whatever reasons, none of the best answers spring to mind. Too much is left to spontaneous discovery. As a result, both parties potentially lose: candidates fail to share their best experiences and companies miss an opportunity to learn about the candidate.

Our solution is contrary to most interview formats. Borrowing from Lencioni’s theme, we call it the “Naked Interview.” It’s purpose is to conduct the interview in a more transparent manner. No pop quizzes. No trick questions. No trying to see how candidates react under pressure situations. In fact, we suggest giving candidates an outline of the interview in advance, including the top two or three objectives for this position. Here’s how it might play out...

The Naked Interview

Acme Manufacturing is interviewing candidates for a VP Sales for their East Coast Region. The the top objectives for the new RVP Sales in his/her first year of employment:

• Help select and implement a new CRM program.
• Identify and assess expansion into three new markets.
• Assess the abilities of the incumbent sales team and determine if and where changes should be made.

Dan Smith, a Regional Sales Manager with another company, is one of the candidates being considered. A few days before the interview Dan receives this call:

“Dan, this is Bill Jones at Acme Manufacturing. We’re looking forward to meeting with you and want to give you a heads-up on some key things we want to discuss our time together. Besides the typical sales management duties, we have three overriding objectives we need this person to accomplish in his/her first year in the role:

1. The first involves CRM programs. We want to spend some time talking about your experience with CRM programs, what’s worked and not worked, etc.

2. Second, we want to investigate expanding our services into some new markets. So, any experience you have with identifying new markets. assessing their potential and supervising the start up operations will be of interest to us.

3. Third, we’re not sure if our sales team needs upgrading or simply better training. Therefore, we’ll want gain a solid understanding of your experience in terms of hiring, training and assessing sales teams.

4. Last, I want to reserve some time to answer questions you might have. Give some thought to that and send me your questions in advance of our meeting. I want to make sure I’m prepared to answer them thoroughly.”

Can you see how this strategy might reduce stress on both sides of the interview table? The candidate enters the interview arena looking forward to the visit, not anxious. And, the hiring manager has a much better opportunity to understand the candidate's experience as it pertains to their key objectives.

Traditionalists might say this gives the candidate too much information on the front end, raising the potential for researched or canned answers. However, since we’re basing the discussion on “real time” experience... i.e. the candidate’s past experiences... it is consistent with behavioral interviewing practices. And, drilling down on each topic will ferret out puffed-up answers. Look at the number of questions we can spin the CRM discussion topic alone:

• Was the program in place when you started or implemented afterwards?
• If after, were you part of the selection or design team? Walk us through that process. How long did it take to implement? What were the challenges?
• Is it better to buy an off-the-shelf program or develop from scratch, and why?
• What impact did having a CRM program make? How were you able to quantify the value?

Let’s face it, ask enough questions about any single topic and the truth will rise to the surface soon enough. A candidate’s direct experience and knowledge will become readily apparent.

Appropriate for Candidates, too!

Candidates can steer this process too, although to a lesser degree. If you find yourself headed to an interview, ask the hiring manager to describe the top two or three objectives for the new hire in the first year of employment. Then, be prepared to make comparisons to your own experience and how it speaks to those objectives. Or, ask what he/she most wants to learn about you in your time together. Either way, this will go a long way to enhance the interview experience for both parties.

Market Update- May 2010

Tell the Troops: The Battle's Not Over

Had an interesting discussion with a Division President of a high volume, national builder. One of his employees recently requested a raise and the Division President was trying to determine market rates for her position. In the course of our discussion one thing was clear: his team had been selling, building and closing lots of homes this year, due in part to the (now expired) homebuyer tax credits. Increased sales and a return to profitability– no wonder employees are thinking it's time to ask for a raise. However, no one should be misled into thinking things are "back to normal". Potential challenges remain, lurking like a storm on the horizon. No one knows for sure whether the storm will pass by or head straight down Main Street.

Therefore, this Division President continues to manage his overhead judiciously which doesn't leave much room for pay raises. However, he can't assume his employees are tracking the economic forecasts like he is. The take-away: Now that the home buyer tax credit window has closed, it's a good time to remind your team that our industry is a long way from being out of the woods. As much as raises might be deserved, survival is still the name of the game and that rumbling in the distance might be thunder. Managing overhead and expenses today might well fund shelter from the storm tomorrow.

Upbeat Attitudes at Spring ULI

Wow! Talk about turning a 180– the energy and attitudes at Spring ULI in Boston were a dramatic improvement from six months ago. With a nod to the conservative forecast above, no one dared claim victory over the recession. However, it was clear that deals were being done, people were busy and there was plenty of forward looking discussion. The one which caught my attention more than any others was given by James Chung of the consumer research firm, Reach Advisors. Some highlights:

Asian American, Hispanic and Mixed Race families will experience significant growth in income, home ownership and as a percent of overall U.S. population. In terms of income earners, Asian Americans will pass White families as leaders of the pack.

Gen X buyers place far more value on community attributes than premium home features. However, they were not afforded the same income opportunities early in their careers as their Boomer parents. Therefore, builder must adapt their product and communities if they hope to tap this segment.

Today, women with equal education earn 79% of what their male peers earn. However, within the next ten years women will earn 1.5 times more than their male work peers. Women are already earning 100-120% of what their male counterparts earn in certain cities. The residual effect is that many of these women will continue down career paths for longer periods of time meaning longer time before marriage and starting families.

White (non Hispanic) families will decline as percentage of population growth and income leadership. In terms of income alone, Asian American families will become top earners yet their percent of homeownership is (today) far lower than their White counterparts. Hispanic families will also see a notable increase in home ownership potential.

To see the complete presentation, drop me an email or visit the website of Reach Advisors.

Social Media staffing: The beginning of a trend?

Dallas developer devotes staffer full time to blog and tweet

08:59 AM CDT on Tuesday, April 27, 2010

By SHERYL JEAN / The Dallas Morning News
sjean@dallasnews.com

Kendall Shiffler spends hours each day on blogs, Facebook andTwitter.

Also Online

Link: Lower Oak Lawn blog

It's her job as social media maven for Lower Oak Lawn, a new residential and retail development in Dallas' Design District between the Trinity River and Interstate 35 East.

Through a blog, loweroaklawn.com, and other social media, Shiffler has quickly become the voice of the Design District. By focusing on what's going on among the area's many design showrooms, art galleries and denizens, she hopes to attract people to Lower Oak Lawn, which has 1,000 apartments and plans for five restaurants (the first one opens Wednesday), a boutique hotel and trails.

Developer Mike Ablon's research showed the target resident was a tech-savvy, 20-something urbanite. So he shortened Lower Oak Lawn to LOL, which means laughing out loud in the social networking world. He also added built-in flat-screen televisions and iPod docks and speakers to the apartments at Alta 1900 Lofts, one of three apartment complexes there.

It's unusual for large companies and even rarer for small businesses to have a marketing person devoted to social media. Ablon's company, PegasusAblon Properties, has 20 employees.

"There isn't anything like this in the industry, so we had to invent it, and to do that you have to be committed," Ablon said. "We hired Kendall on LinkedIn. You want someone who lives in that world."

Shiffler, 25, worked in the city of Dallas' international economic development office for two years before joining PegasusAblon in September. For the job, she had to write a blog post about why she loved social media, submit how many social networking friends and followers she had, and post a blog item about LOL.

Small businesses have lagged in using social media because they don't have the staff or time, said Janet Wagner, director of the University of Maryland's Center for Excellence in Service. That's changing: A study by the center found the use of social media by small firms doubled to 24 percent last year in the U.S.

SOCIAL MEDIA TIPS FOR SMALL BUSINESS

1. Know your target audience or customer.

2. Develop a social media marketing strategy.

3. Make sure your website or blog has the best search engine optimization.

4. Find the right voice for your business.

5. Join Facebook, Twitter and YouTube.

6. Join LinkedIn and other professional networking sites.

7. Start a company or personal blog.

8. Integrate social media into your traditional marketing.

9. Research what your competitors are doing.

10. Address negative feedback immediately. Don't ignore it.