YesTalk 255 - REAL ESTATE'S PERFECT STORM

Welcome to Kevin Ward's Yes Talk for Realtors. This is Kevin Ward. The next perfect storm for real estate is here. And all the ingredients, they're all here. All the ingredients are in place for the next perfect storm in the real estate market. And I'm going to talk about on this video the six ingredients that are happening right now, the things that have come together right now to create this perfect storm and what you need to do about it to prepare and to prosper during this time. Now, just need to let you guys know, I train real estate agents. So this is primarily addressed to real estate agents who list and sell residential real estate. Now if you're somebody who is looking at buying or selling your home or looking at real estate investing, this is going to still have some benefit for you. If you're in other industries, it'll still have some benefit for you. Because I'm going to talk about what's happening right now that is dramatically impacting and is going to dramatically impact the housing market and the real estate market in primarily in America. So here are the six ingredients, the six things that are happening and then we'll talk about the four things for you to do about it as a real estate agent. So number one is interest rates. Interest rates, whoa, they just took off. When you look back In January of 2022, interest rates were at record lows, 2.9%. That kind of fixed rate, 30 year fixed rate mortgage you could get all day today. Just a few months later. Literally in the last four or five months, we've seen interest rates go up from the twos to the fives. Okay, they haven't doubled yet. But this is a dramatic increase. It is the greatest increase in interest rates and well over a decade. And interest rates are not going to come down. They're going to continue to go up. So number one, that is happening, it's dramatically decreasing buyers buying power and it's got people kind of freaking out. So what's going to happen and the implications of that? Well, we don't know yet because we still have a supply, a shortage of housing supply. So it is the shortage of housing inventory of homes on the market that has kept demand so high. So there's, even though interest rates have gone up, demand has not started going down yet. Why? There's no inventory, there's so few houses on the market. And even in the studies that we're seeing across the country, the statistics we're seeing is inventory today is even lower than it was this time 12 months ago. Year over year, it is still going down a month over month. It's starting to increase as we're from April to May, moving into June, simply because we're in the selling season. So it's normal for interest, for house, housing inventory to go up, but rising interest rates put pressure on everything. Second thing, right along with that number two factor is inflation. And inflation is through the roof. Okay, you go back to the very beginning of 2021, just less than a year and a half ago, less than 18 months ago, and interest inflation rates were under 2%. Today, they're hovering in the mid 8s. Okay? And they say that is the highest inflation we've had since back in the early 1980s. So literally in a generation, since back when I was a kid, this is the highest inflation rate we have had. And if you compare it to the same consumer price index that they had back in the 1980s, we're actually well into the double digits on inflation. Fuel prices, food prices, construction costs, automobiles, everything is just going up and up and through the roof. Well, that dramatically affects every industry, it affects every consumer, and it makes people cautious. So what we're seeing is all these things happening that cause people to get cautious and get fearful. And when people are uncertain, when they don't have confidence in what's happening going forward, people get more conservative, they get more cautious in terms of making financial decisions. And selling a house, buying a house are some of the biggest financial decisions that most people make. So these are the first two factors. Number three is a stock market. While interest rates are going up, inflation is going up. Stock market has been going down dramatically. We've been hearing that. We've had eight weeks in a row of the stock market going down, which is the, the biggest, longest downward, downward trend in decades. And 20% drop in the stock market puts us in what they now officially consider a bear market market. What does that happen? Well, it's costing people their retirement. People that have 401ks or retirement funds or in the stock market, they're losing that people. A lot of people that have high net worth, a lot of their money has been in the stock market. So all of a sudden, their net worth is dropping. And again, people get scared. People get uncertain. What do they do? They freeze. They say, we were going to buy, we're not going to buy now. We were going to sell. We're going to upsize now. We're going to wait. And so people go into a holding pattern. Number four are supply chain shortages. What's been going on? Which has been going on for the last two years. Right. This is not something that's new, but it's been around and it's continuing to be here. And it's actually getting worse in some areas. The White House started saying a couple of months ago that food shortages in America were imminent. Now, food shortages is something that we have not experienced in a hundred, nearly 100 years. And so what that does in civilization, what that does in a country is, is it can have a massively destabilizing effect. You've got right now going on the baby formula shortages. Well, this causes consumers to go, like, I don't know what's going to happen next, but I'm not feeling good about it. Okay. Number five is the economy is actually contracting. Economists were surprised and shocked to find out in the first quarter of 2022, the U.S. gDP, the gross domestic product, actually contracted. It went down. It declined by 1.4%. Now we're still recovering. And coming out of the COVID pandemic, all the government shutdowns and all the stuff that came as a result of that, that put this artificial cap and squished down the economy, when you open all that back up, your economy should take off. It should continue to grow. Everything looked like, okay, things should be going. Things should be growing, things should be opening up. And all of a sudden, we look and we look at the first quarter of 2022, and the GDP, the gross domestic product, actually went the wrong direction. Now, when that happens two quarters in a row, that is one of the key indicators, as economists say, of a recession. Now, you have other economists saying, we're already in a recession. And some saying, well, it's coming, but not until 2023. Whatever, wherever it is, it is the. It is another ingredient that is going into the pot for perfect storm of real estate. Okay? And then number six is Russia's invasion of the Ukraine. Now, now you may be going like, what in the world does that have to do with us here in America? And especially, what does that have to do with the real estate market? Well, it has a lot of things to do with it, but one, you've got international tension. So you've got a country with the largest nuclear arsenal in the world that is invading another country, and they're pushing all the buttons to potentially expand and escalate that conflict. And so it's just there is an. It is a destabilizing effect in the economies. Plus, Russia and the Ukraine are two of the largest suppliers of food products, primarily grains and fertilizer in the world. So all of a sudden, this comes, another ingredient coming into the perfect storm. Because now you have a lot of instability. You have concerns about international tensions, how this is going to be affected and what China is going to do in reaction to this, what other countries are doing. All of this just creates this sense of chaos, turmoil, uncertainty. And when all of that happens, the mind, the average consumer's mind goes like, okay, I'm uncertain, I'm scared, I'm nervous. And those are the kind of things that create economic downshifts. Now, I am not a pessimist, I am an optimist by nature. But I also look at this and go like, okay, I remember well what happened in 2007, 2008, when everything started tumbling now. We didn't know what's happening. I was like, I've never been through something like this before. I'm like, I don't know what's going on. We just kept on grinding away, grinding away. And. And we thought everything was going to be fine and things weren't fine. Now, this is a very different scenario than what we saw back in the housing, housing bubble collapse back in 2007 and 8. It's a totally different set of ingredients. So you've had all the federal, the Fed stimulus, manipulation of financial markets. You've got all this stuff, I mean, you've got stuff going on with stuff like Elon Musk and Twitter and Tesla and all that. All of those things are just coming into play. They'll affect all of this picture. Now, what do you do about it as a real estate agent? Well, first, this is not a sky is falling conversation. It's the sky is not falling. But what it says is people are going to be looking at the game differently when they think about selling their house. When they think about buying house, they're looking at things differently. They're getting more cautious. One of the things that you may have noticed that is happening around the country is there are more and more real estate transactions that are actually coming to the closing table. And they're not closing, they're falling through. Okay, why people? There's actually being some tremors of layoffs coming. There's people that just get scared. There are people that literally couldn't buy because interest rates have gone up. And they're like, I can't buy the house I want, so I'm not going to go through with it. Or we just don't know what's going to happen right now. So we've decided we're going to take a step back and we're not going to sell or we're not going to buy. And so transactions are getting harder to close. And when that happens, this is what was happening back in the beginnings of 2007, 2008. You started seeing more deals falling apart. The primary reason of that is people are uncertain, they're scared. So what can you do as a real estate agent when this sense of uneasiness begins to creep across the real estate landscape? So the big question is, what do I do about it? As a real estate agent, how do you prepare for all this? So first, the sky is not falling. Don't freak out, don't fall apart. The key is to prepare. But the main thing is you don't have time to mess around right now, okay? Everything is changing. Everything is going to be changing with more and more uncertainty. What buyers and sellers are going to have to see from you is certainty. When you're scared, they're scared. If you're uncertain, you're fearful, they're fearful. So they need somebody to help navigate and guide them through this. So here are four things that I want you to do strategically and as we move into this new world of the perfect storm happening in our real estate market, in our economy, and all of that. So number one is listings. Your focus should be on getting listings. How do you do that? Focus all your lead generation on finding motivated sellers. That's it. Now, I've said this for years. In any market, if you want to grow your business and have stability, you want to control the inventory, which means you want to have listings. How do you get that? You find motivated sellers, okay? But today it's even more critical because inventory is so low, the moment you take a listing, you got business, you're going to get paid. Okay? Now the shift that's happening is as the market slows down, your pricing becomes more critical. So this is number two. So number one is listings. You've got to focus all your lead generation. Marketing, prospecting, everything should be focused on seller lead generation. I'm not saying don't work with buyers. You got a good qualified, motivated buyer, go. But all your lead generation, your focus on generating new business should be focused on getting listings. When you find sellers, you get listings, you own the market, you're going to get paid. Okay? So number two with that is pricing. And that is that the time of being able to be sloppy on your pricing. As a real estate agent, when you price a listing is gone. Because as the market begins to slow down and people start getting nervous and interest rates put push People's buying power down. And as buyers get more cautious, overpriced listings are not going to sell. Now, we've been able to get get away with this over the last couple of years because of such low inventory and such higher demand and interest rates so low that people could overprice listings and still sell it, that an agent could come in, the seller says, well, I want this price, and you know, it's overpriced, and they would still sell pretty easily even if you had to do a price reduction. There was just not anything to worry about. But in a time when the market starts slowing down, days on, the market starts going up, buyers get more cautious. An overpriced listing will sit. And in some of our markets, and we're seeing this, there's regional shifts here that are happening and are going to continue to happen, and that is, in some markets, prices are going to start coming down. So when prices start coming down, an overpriced listing not only keeps it from selling now, but it will cost the seller money in the future because the value of the property is dropping. So now you're chasing the market down. And so at this moment, you've got to become very disciplined and very powerful in leading sellers to price the home. Right now. This is a skill set. This is what I teach my coaching members, is how do you not just tell them? You tell them, they don't agree with you and they don't believe you, then they're still going to fight you on it. But. But you gotta be able to lead them to go, like, okay, that makes sense. Where do we need to price it? We need to price it here. Okay, done. And when you price it right, it's still going to sell and it's still going to sell fast, and it's still going to get them the most money, period. Okay, so that is, number two, you've got to master pricing. And as the market gets worse, whether that's immediately or 12 months from now or 24 months from now, whenever it happens, you got to get very disciplined and effective and skilled at getting the right price on your listings. Okay, number three. Number three is relationships. You have got to build the relationships with your personal circle, with the people that you know. This is where the game is going to be. When the market does completely turn and everything is looking bad, and especially when you get into a situation where more people are distressed, more sellers are distressed, they don't want to talk about it. They don't want to talk about it. When the economy turns down and People stop being able to make payments, or you've got the foreclosure, moratorium and forbearance, all that's gone. People all of a sudden are financially in trouble. They don't want to talk about it. So as a real estate agent, you contact them, they're like, I'm good, we're fine. No, I don't want to talk about it. We notice you had a notice of default filed on your house. I know, I'm good. I've got it covered. They don't want to talk to you. Who will they talk to? People that they trust. So your magic is going to be the more relationships you have and the greater trust you have. Those relationships that people are going to tell you things that they're going through and they're going to share with you things that their friend is going through and say, hey, I talked to my friend. They need to sell their house. They're, you know, they don't want to, but they have to. And I told them they could trust you and talk to them. So this is where building your personal circle, building your relationships is going to be hugely and powerfully important. This is more than ever a relationship game. Real estate's always been a relationship game for top producers, but never more than now. And the main reason is, is because people are less trusting than they used to be. And the big question that home buyers and sellers have is, who can I trust? So when you have those relationships with people that trust you, okay, then you're going to be. You're going to be the one that finds out about deals that other people are not going to find out about. So that's the great, going to be great opportunities for you. Okay? Fourth step whenever a real estate market gets tougher, and this is my belief at any time, this is what turned the door for me back in 2000 as a real estate agent who had been in for about 18 months. And that is get a good coach. Look, if you want to grow your business, if you look at the mega producers, the top producers, they all have strong coaches and mentors. They just do now. They. If they have. If you have a bad coach, it's worse than having no coach. So you want to make sure that you get a good one. But. But I'm not kidding here. You need a coach to prepare for what's coming. You need a coach that's been through a market downturn before. You need a coach that's got boots on the ground, that pays attention and knows what's happening and knows how to prepare you to get through it and build a strong foundation so that when the market does turn and most real estate agents panic, most real estate agents turn in fear that you are looking at this and going like, okay, this is what I've been waiting for. Because the dichotomy that's going to happen in the real estate industry is you're going to have the group of agents that panic and turn to fear and the other ones that go like, I'm prepared and I have certainty. And that certainty is going to be your power, it is going to be your secret superpower, is the certainty that you have of knowing what to do, of understanding the times and understanding what buyers and sellers should do that is going to be in their best interest to help them win. So your skills have to be better, your strategies have to be more pure, your systems have to be impeccable in terms of how to build those relationships, how to be in the right place at the right time in your lead follow up. And all of that has to be in place all the way around. Now I'm going to give you just at the end here a little bit of a bonus of where the best opportunities are going to be to find listings to get them priced right, to build relationships and all of that, and then give you some coaching options. First and foremost is downsizers. People that have been thinking about for years downsizers. Now, this demographic are the baby boomers. The baby boomers are those that today are in their late 50s, early to mid-60s, even their 70s. These are the people that raised their family in their home. They bought a home 10 years ago, 15 years ago, 20 years ago, they bought their house, they raised their family in it. Their family's all gone. Their kids have all graduated and, and moved on. They've got this big house, 3,000 square feet and larger, nice areas, nice neighborhoods. And all of them are going to be downsizing over the next few years, virtually every single one of them. Now, some of them are already downsizing now, but this is where you want to be focusing your lead generation. If you're doing geographic farming or demographic farming or marketing, you want to be marketing to this group who are looking to downsize. Here's the reason they're such a powerful demographic. Number one, they have equity. Number two, they have nice houses. Number three, they have good credit. Number four, they're used to being homeowners. Number five, this is not their first go round. And so they tend to trust real estate agents. They're willing to hire a professional and so when you build the relationships, you get in front of those people, you build relationships with them and you find them at the moment that they are ready to sell, they're going to sell their house, they're going to have equity so they have a down payment for the next house. They've got good credit because that generation, the baby boomer generation, has the best credit in America across the board. So they're going to buy a new house with equity and good credit. So you're going to help them downsize, sell their nice home and then buy another home. So you get to double dip and guess who else they know other baby boomers. So this is where that relationship game comes into place. And you got to be ready. You're not going to go in and hard sell them and convince them it's time to move. But, but you're going to build those relationships so that when they go like, okay, it's time because they bought the house 20 years ago, they've been riding it up. Their kids graduated in 2018 or 2019. They're like, yeah, we've been thinking about downsizing and all of a sudden they look at what's happening in the market and they go like, okay, prices are about to start dropping. We've ridden up the equity of the appreciation of our house. We've got great equity in it. Now's the time to sell, take that equity out, buy another, our retirement home or our final home, that is our downsized home. We're going to stay in if closer to our kids and grandkids or whatever. And that demographic is going to be a perfect way for you to maximize all that is happening here as we move forward. Distressed sellers are going to be another big time niche. The good news is most of them will have equity this time, unlike what happened back in 2007, 2008. Now, last thing here that you need to be aware of in this Perfect storm in 2007-2008-2009-2010, over 4,400,000 real estate agents in the United States washed out of the business. They quit. That's how bad it was. They panicked, they lost their business and they went out. And another, probably 400,000 or more barely survived. They weren't ready and they just, they scraped by in survival mode. Don't be one of those agents. How do you become one of the top 10%, top 5% and the top 1% is by doing the things that I've talked about right now. One, be aware of what's happening to go after listings, get them priced right. Build those relationships and get your skills, systems and strategies in place and dialed in with a great coach. Okay, now I'm going to put a link here in the video that you can click to find out more about our coaching programs, about my training, the stuff that is coming up. You've also got my YouTube videos that you're welcome to subscribe to my channel here. I want to know what you think about what's happening in the real estate market. Are we in a perfect storm? Some of you may be going like, yeah, you're full of crap. This is not really going to happen. I I want to hear what you have to think whether you disagree with me or not. Put your comments in Put your comment in the comments below so that I can engage with you on it. Give the video a thumbs up if it has helped you and get out there and get ready to win in this market.

Hey there, it's Kevin. I hope you enjoyed today's podcast. Are you tired of getting no after no when you're out there trying to get listings and trying to inspire sellers to say yes to you? The Then I'd like to invite you to download a free copy of my no BS listing presentation. This presentation will guide you through exactly what to say that will have motivated sellers saying yes to you over and over again. Stop getting stumped with skeptical seller objections.

Or the famous we need to sleep.

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