Predictions for Real Estate Once the Dust Settles

What's up there, Business freedom Podcast listeners. I'm going to title this podcast episode predictions for Real Estate Once the dust settles with the COVID crisis. And again, taking a little bit of a risk because I know folks are in a dark place. A lot of folks are honestly, in my opinion, watching too much tv, too sucked into social media. And I think it's hurting. I think the only way through this I'm going to do a whole episode on will this make or break you? That is the one I'm going to record next here in a second, so stay tuned for that. I do believe this is going to break a lot of folks in our industry. This is breaking a lot of businesses for no fault of their own. I do believe it's possible to thrive in what is about to happen in our industry. And so none of what I'm going to tell you, hopefully it's not a surprise. I just want to give my perspective around what I see happening in the market. What I've been talking about happening for at least two years, maybe close to three years at an intensive in 2017, I think was our fall intensive. That's when we first started talking in our community in earnest really about a shift and what it would look like and how to prepare. And so I feel like I was, what is it something Stuart Little like the sky is falling kind of thing. And luckily for my own personal economy, I made the right moves financially. I hope you did as well. This really shouldn't have been a surprise. The way this all came about was a big surprise. I think this is going to change the world for a long time. I think once in home shut in, restrictions lift. I think people are going to still be skittish about going out. I think there's just a lot of folks that are in lot of fear and in really bad places right now. So the few things I want to go through and not so much predictions, some of these are obvious, you know the reason. So I think the shift is going to be way different than what I'm hearing with a lot of folks. I think as business builders, as entrepreneurs in the real estate industry, I think we tend to be optimistic and most of us, if you know, strength finder, you know, we're futuristic, which is like we're always kind of out there and we're, we're optim. Optimism is high on our strengths as well. And so those are two for me that are high. And on the, on the one hand it's good because we can go out and we can be we can create stuff out of nothing. You know, I built my real estate business in the worst market ever, the Great Recession. So that's good on the one hand. On the bad side of it is that I hear a lot of folks saying that this is going to be, you know, 60 days and we'll be out of it, you know, 90 days, you know, buyers will be out and everything will be good. The truth is, if you track the numbers, you know, we were set for a shift anyway. If you've been listening to the podcast, I'm not going to tell the long, drawn out story about, you know, I got into real estate. There was 15,000 agents. The Great Recession hit in 2008, and I'm looking at a chart right now. Closed sales in our market went from. This was in April 2007. So I got into real estate in March 5th was my last day at my corporate job. March 5th, 2007. Let's see, March. March was 61, 629 sales available in August. Man, I'm about to sneeze again. My daughter got guinea pigs and we cleaned out the cage earlier today. She had to bear with me. I did this on the last podcast I recorded as well. All right, so August 2009. So we went from 61 in April 2007 to 30,000 in August 2009. So that was about 10, 11 months after all the banks tanked in 2008. So the market shifted well before all the banks announced the end of the world. Lehman and Bear Stearns and all that stuff. And so then we kind of spent what, man, September 2009, to about two years at about 30,000 units. And then we've been climbing since then. March 2020, last month we did 71,000 sides, so 10,000 more than the peak in 2007. And granted, I'm in Charlotte, North Carolina. It is a growing city, so that's not bad in and of itself. But we've been talking about, if you've seen me present on a webinar, I have this slide where I put the life events, my life events, against the number of closed homes in Charlotte. And when I got into real estate, when I got married, when we had kids, and, you know, and I always had the last sort of notation there was, it's going to get fun again. And what I meant by it was the opportunity is ridiculous because folks aren't going to know what to do. So my first quote, unquote prediction is that this is going to be a major economic event in our country. I don't listen to really any news. I listen to two podcasts of guys that are really smart business guys and through that podcast I'm getting what's happening that impacts business owners. They're not real estate related, these podcasts and so that's where I'm getting my information. So I trust these two guys. And there was like what, 2.2 million and then 3.3 million or something unemployment claims in the last couple weeks. The amount of money that's coming out of the market by virtue of those folks not having a job and just businesses that are suffering that may never come back. If you think of all the industries that are suffering right now and the economic impact over the long term, I'm talking 12, 24, 36 months. That is what we're planning for. Like we're planning on, you know, for the last two years we've been right sizing our expenses and really honing in on things that are only returning at an acceptable level to keep in our marketing. Our marketing is down to like 6, 5 to 6% spend right now and we can go even lower on the spend. And so most real estate teams, if you heard me do the last podcast episode, traditional real estate teams were not prepared for what's happening. They were spending money, calling it marketing and they were just giving money to Zillow, giving money to a radio station, not holding it accountable, giving money to instant offer programs out there. 5,000 down, 2,000amonth, 35% referral fees, did a whole bunch of things that just never made economic sense. And now it's going to be really. I hope they're pivoting hard. I don't wish any ill will on anyone. The first thing I need everyone to know is that this isn't going to be some short term blip that we're all going to just recover from. There are some buyers that are still going to remain in the market. There are sellers that have to sell. I've got to imagine though, credit is going to tighten up the same way it did in 2020, 2010. Credit has been loosening up over the last five or six years with the market on the run that it's been on. So all of the same fundamentals, I feel like that happened, albeit a different trigger, are going to happen again now. And I hope it's not as bad as the Great Recession. I know a lot of folks are going to get out of real estate and hopefully they can go back to the jobs they were doing before real estate because again, I don't wish ill will on anyone. A lot of folks in real estate, they don't need the money. It's a second income for their family. And those part timers are not going to be able to do it anymore. And they're not going to be able to compete with the folks that are in it to win it. And they're going to play the game at a high level. So my second point is that I think models will change. I think the folks that are really going to dig in and figure out a way to get through this and they're going to have the will to get through this. They're going to put some systems in place in their business and lean out their businesses so they come back even stronger. The virtual buyer process and the virtual seller process that we're putting together, I've got to imagine that consumers, once we get it completely tricked out and consumers appreciate the fact that they can have a virtual consultation or they can come into our office. Those are the two options with us right now. You can still come to the office or you can do virtual. And folks are opting for virtual. But post Covid, we're still going to be able to offer that as an option because we're tracking by appointment type, so by buyer, seller. But also if they're coming into the office or if we're doing virtual, we're tracking all of our conversions by agent, by lead source, all of it. And we're putting systems into place to optimize all of that so we can get the best results possible. So I think the models by which we operate are going to change going forward for the better. It's going to make the consumer experience even better. And so, you know, all of the instant offer guys have picked up and they've left town. We're in a major metro Charlotte, North Carolina. So all of the ibuyers are, you know, Zillow pulled out of here and knock and all the other ones, like they all just. It didn't make sense anymore to me. It never made sense. But I'm not that smart. I'm a pretty basic guy. I never think profit is optional. You know, I think some of those businesses are running with deep pockets and I just think it was probably a bad idea to begin with to buy a bunch of houses. I think last time I checked and it was a while ago, like both of the big ones like Offer Pad and I forget the other one, they had like 200 listings and the percentage that were under contract and we were in a hot market in Charlotte, North Carolina was like 10% and we can't keep our listings on the market. It just meant that at the time they overpaid for them. Whatever they did to fix them up and get them back in the market, they weren't selling and the market shifted. And so things are even worse for them now. So just a bad model altogether. I think discount brokers are going to have a challenge in this market. Your discount broker, you're not, by definition, you have no money, provide anything to your agents. Except here, you can have all of the commission. I'll process it for you. I'll maintain a broker license. I can't give you any value because I have no margin to do it. The 295 I kept on the transaction that you just did gives me no margin to provide any coaching, any structure or cadence or accountability or technology or administrative support. It's just. It's gonna. It's gonna lose. Last time this came around, Redfin was coming into our market hot back in 2008, 2009, and they left our market. Of course, they were back in our market over the last two years. And I think we'll see them leave as well. I just don't think the model is going to be sustainable. So that's good news. And so this is a little bit of a downer, if you let it be a downer. I'm going to do an episode called Will this Make or Break youk? That's the next one I'm going to record. And so I'll leave the mindset stuff and the grit stuff and what I'm doing to get through all of this. But I want to talk lastly about what you can control. You cannot control the economy. You can't control, for the most part, you can't control, like, consumer sentiment. You can't. There's just a lot of stuff that's going to happen. I think folks are going to be slow to come out of their houses. I think they're going to be slow to let an open house happen. You know, I think things are just going to be different for a while. The things you can control is your daily routine, your mindset, letting good stuff into your body, physically and also emotionally and also spiritually. The people you hang around with. Right. If there are agents in your office, you know, that aren't worth anything and they're distracting you from the business at hand. You can't. You cannot be around them. And I know physically you can't be around them, but there's probably some folks that are just sort of Debbie Downer right now that you cannot be around and look at this as an opportunity. There's always a pinch when there's a shift where there's going to be a lot of agents for fighting for less homes for sale. That's the time period that you have to fight fight hard. Triple down on the one thing that gets you results, which is new business development. It's the only thing that gets you results for the first and I was really committed 15 hours a week for 2000. Well seven was 10 months. I was in the business then eight, nine, 10, probably three and a half years. I was like the number one lead generator on my team. So that was the I do it then the we do it was I probably shifted more to database and recruiting while the rest of the team was new business developing on all the other lead sources and and then it was they do it and I was able to step out 100%. And so those are the things you can control your schedule. You know, getting to work at the same time every day. Even if work is inside your home. There's things you can do to help your chances of being successful in this market. I'm going to cover all of that in the next podcast episode. Will this make or break you? So stay tuned for that. If you're at the point in your journey where you honestly, you built good business and you just don't know what to do and you're a little bit scared about, you know, what might happen. We only work with folks that have sort of that have traditionally achieved or they've already achieved traditional success, meaning they're on the low end, 3 to 500,000 with an administrator, you know, all the way up to. We have clients in the 5 to 6 million range. So we sort of pick up where other coaching programs leave off. So if you know you are that business minded entrepreneurial real estate agent, you're just sort of caught in our industry and you need a better way to do it. You need the training and implementation support and you're just struggling right now. All I can offer you is a conversation. So go to realestatebschool.com you can click on Apply now and basically just apply for a business growth strategy sessions. There's a handful of questions that will ask. We also have a free toolkit that I put together for non members. That's the top 12 trainings I would have you go through which is marketshifttoolkit.com it's also on the website under resources but you can go to directly to marketshifttoolkit.com as well and grab a copy of the training. So much love, much respect. We'll talk soon.