What the "Shift" is going on?! November Market Update

All right, so we're live in Facebook and we're recording. So I would say on behalf of Game Changers Nation and Real Estate B School or if you are a guest to our Tuesday production Mastermind call, welcome. And I think Stacy said it really well and I love Justin's comment there that there's so much like just blood and guts headlines around fear, uncertainty and doubt now. And the thing I like about, and I watched both of these, I'm going to try to get through 2kcm today. So at the end of every month, keeping current matters, which is fairly, they're not going to give you the, the, the bleeding headlines, right? They're just going to evaluate the data and give you tools that you will need to be able to navigate a market like this on your own. Let me see here. Let me just change my view. All right, now I got gallery view. And so that's at the end of the month and we get a copy of it like 9th or 10th of the month. And then every Monday morning KCM is doing an update so they're looking at the most recent numbers. So I'm going to try to get through the core monthly market update from KCM and then I'm going to open it up for comments and like, what's working? How are you guys staying in the game? Tom, for those of you that are still selling a bunch of real estate, for those of you that have been through a market shift especially, I want you guys to chime in and then we'll end this call. I think it's about 12 minutes, the update. So I'm going to play this first, keeping current matters. And again to Justin's point around the biggest casualty I think of uncertain times, it's going to be agents that I don't think they can make it through this. Regardless of what happens in the market, if you're getting sucked into the headlines, you're probably not going to show up the way that you need to show up in your real estate business. And that's just straight up truth. I went just until recently and it didn't. I hate that I even got sucked into the vortex of news. I have physically removed the television from my bedroom at this point, but I went a full 10 years without watching any news at, at all. And that was all my big growth years in my real estate team. So if you have a source that you're getting sucked into outside of just the facts about what's going on, just be really careful of that. So let me share my screen and we Will get after it here. Keep the chat going. So the, the thing that's challenging a bit about not being physical physically together, it seems like we're, you know, we're community, but we're not physically together. Right. So get in the chat. Comment if you can add color to one of the comments or stats or if you're seeing something in your market that matches the national statistics, which, you know, kcm, that they view national data or something that you use, they're going to make a comment about, like, interest rates and maybe how you, you know, you got a seller to buy down some points. Keep a running sort of chat so we can sort of engage and have something to talk about. When this first part's over, then we'll take a break. I want to hear from some of you that know without a shadow of a doubt you're going to kick the shit out of this shift. I want to hear from you. And then we'll do the second part of this. Okay. All right, so let's get the party started here. Oh, no, I'm just having one of those days. All right, so I'm gonna need. Stacy, if you can unmute.

Okay.

Oh, my Lord.

God is testing me. Who put the thing in there about God? God is just testing me today. All right, let's see if that's going to make a difference. Oh, no, it's making me quit. Zoom to share my screen. Oh, I'll just pull it up. How about that? Do you have. Actually, let me see. All right, let me. Let me try now. Is it working now?

Yes.

All right. All right, so let me. Let me get the monthly market report update. And if you guys don't have a KCM subscription, I don't have, like an affiliate deal with them or anything. It's about the coolest thing you can sign up for. That only costs, like, everything costs more than, you know, a lot of money in real estate. Everybody wants to get a monthly recurring payment out of you. This is, I think, like 29 bucks. And you get a blog and a whole bunch of cool stuff. So for those of you in Game Changer Nation or Real Estate B School, I. I will be posting all of these slides as either, I think, a PDF or even JPEGs. And you guys can use some of these, pull them up on your phone, save them to your phone. You can use them with clients. All right, so I'm going to run this at. I listened to it at 1.25 this morning. You guys tell me if it's too fast. Go in THE chat Welcome to your.

Monthly market report for November of 2022. My name is Kate Rezebeck and today David Childress and I are going to walk you through several of the most important, important topics we can be talking about in the housing market right now. We're going to give you the latest update on mortgage rates and prices, something we're following very closely in today's housing market. We're also going to bring you the latest we have on foreclosures. It's a big question that people have right now around foreclosures and what that looks like in this country. So we're going to bring you the latest on that today and we're going to wrap by answering or helping you answer the question, should I buy a home right now? You know, a lot of clients and buyers are asking, is this a good time to buy a home? And while everyone moves through that process at a different pace or for different reasons, we want to help you answer that question. So I'm going to kick off today with a quote from Donald Miller, who is the author of Building a Story Brand, a book that we read and certainly learned quite a bit from over the years. And it says people do not follow the best leaders. They follow the ones they can understand the easiest. You know, this is exactly the essence of what we're talking about. It's so important to bring clarity, bring facts, bring vetted research, and help your clients understand in the most simple and effective way what is happening in the housing market so they can make the best decisions. And that's where your relevant market opinion based upon fact comes into play. So hopefully we're going to be able to help you formulate that today, bring you the data, bring you the insight so you can have that relevant market opinion based upon facts and be the expert that your clients truly need in this market. So I'm going to start today with an update on mortgage rates and the big question, will mortgage rates keep rising? So let's start with a graph that you've certainly seen us share before. And it says mortgage rates are rising this year. This is the Freddie Mac 30 year fixed rate from January of 2022, so very beginning of the year through where we are today. Of course, this is a look back. So this was released at the time of this recording right in the beginning of November. And what we can see as is mortgage rates have been climbing drastically this year. This is what we've all been feeling. Look at that steep incline. And you know, they even ticked up over 7% over the past couple of weeks. And you know, that's causing the cooldown in the market that is causing people to pause their plans, say, hey, I'm not really sure that I want to buy right now. Some people are being priced out of the market. We're seeing, seeing all of this happen. Mortgage rates have actually, if you look at this graph, they have more than doubled in this year. That has never happened before in a calendar year. So really important that we keep our eyes on mortgage rates. And, and you know, the, the pain that people are feeling is because they're rising so fast. It's not necessarily just about that 7% number that we're starting to see them tick around. It's about the rapid rise. And I think this quote really from Freddie Mac really says it. Well, it says US 30 year fixed mortgage rates have increased 3.83 percentage points since the end of last year. That's the biggest year to date increase in over 50 years. So that's certainly making people press pause. It's making them question their plans. And as the market expert, it's important to help clients understand why is this happening and what do we experience, what do we expect going forward? And you know, I think at the end of the day, we've been saying this for a while now is this is all about inflation. So take a look at this quote from George ray too from realtor.com it says with inflation still running at a 40 year high and the Fed expecting a few more rate increases to combat it, mortgage rates will experience upward pressure through the end of 2022. So why is that? Because the Federal Reserve is making moves to raise the federal funds rate. They're trying to lower inflation, they're trying to slow down the economy and in doing so, they don't call mortgage rates. But mortgage rates tend to respond. And that's exactly what's happening. It's what we've been saying, you know, for, for the bulk of the year now is that while inflation is high, mortgage rates are going to remain high. So we're seeing that expected upward pressure through the end of the year. Now the good news is, and I think this does it. Well, this is Mark Fleming from First American says while mortgage rates are expected to continue to drift higher over the coming months, much of the rapid increase in rates is likely behind us. So we're not talking about mortgage rates doubling again. You know, mortgage rates are feeling that pressure. The Fed is making active moves to lower inflation. Mortgage rates respond. We're still seeing high mortgage rates, but we're not expected to see the exponential increase as we continue to go forward. So, you know, as we start to see the Fed making moves to lower inflation to really kind of get this under control and to, you know, see what's happening in the economy around us, the question starts to come into play. What about a recession? You know, that's the next, next thing on, on the radar is what happens? Is there a recession around the corner? And this data from the Wall Street Journal is really helpful. And it is a survey where the Wall Street Journal asked economists, what are the chances of a recession happening in the next 12 months? And we've been following this all year. And you can see over on the left side of your screen, In January of 2022, about 18% of economists said, you know what? I think we're going to see a recession over the next 12 months. Well, as the inflation has stayed high, we've seen economic pressures in the world around us. We've seen the housing market change. That percentage of economists who are expecting a recession over the next 12 months has continued to increase. The latest data released in October shows that 63% of economists feel that there's going to be a recession sometime over the next 12 months. And this is reflective of where we've seen the economy go over the past year. And it starts to spark the question, what does that mean for the housing market? And so as we look at the housing market, there's a lot we can learn from history. And you've seen us share this graph before, but let's keep in mind that a recession does not mean falling prices. Okay? So in four out of the last six recessions in this country, home prices actually increased. Now, we all remember the housing crash in 2008. I think that's fresh in our minds and people are fearful of that. But what we have to remember is we have a very different landscape right now when it comes to inventory, when it comes to lending standards, equity, all of the factors that are driving the housing market in a different direction. Now, what this graph does not mean is that we won't have falling prices, but it does mean that it doesn't happen every time. So when we think about what happens in the housing market, if a recession is is in play, we have to put this context together. And I think one thing we can also learn about what history tells us is that a recession more likely means falling mortgage rates. Because in those same six recessions, mortgage the sound muted Lars to help your clients understand, share these visuals, help them understand, what does history tell us you know, we're going to have to see how this plays out. We're going to have to see what happens with inflation, what happens with mortgage rates. We're going to talk about prices in just a moment as well. But it.

Does it sound back?

Yes, it is, that prices will fall. And of course, you can see here that traditionally mortgage rates have come down, so they've risen very dramatically. And what history shows us is that at some point they turn. So that's what we're keeping our eye on. And we're continuing to help you communicate to your clients because again, a lot of fear, a lot of uncertainty when you start to say recession in the housing market. Now, I want to talk next about what experts are saying about home prices, because I think this is another big question on everyone's mind and certainly something that we want to help you answer. We're continuing to bring updates on home prices, you know, very regularly because this is a dynamic that is changing. We've seen mortgage rates rising and that is easing kind of the fury and the frenzy that we've seen in the housing market. But what does that mean for prices? So let's take a look at this quote from Redfin. It says for those bearish folks eagerly awaiting the home price crash, you'll have to keep waiting. As much as demand is pulling back, supply is as well, and that's reducing downward pressure on prices in the short run. So what does this mean? This means houses are staying on the market longer. We're not seeing an influx of new listing. It is still a seller's market. And what we know is that prices are driven by supply and demand. And this is continuing to put upward pressure on home prices. However, it's also giving more opportunities for buyers. So we're seeing that shift in the market. Now I want to bring you the latest update we have on the home price forecast for next year because this part is changing as we continue to have this conversation. So we like to look across the board at several different experts and kind of average them all out. So you can see the full picture here. What you can see here is that some experts are projecting a little bit of appreciation next year. That's what you see in those blue bars, anywhere from 0.7% to 2.6% appreciation. We have other experts that are projecting slight depreciation. So it really kind of, it's, it's scanning, it's a, it's across the board a little bit up, a little bit down, depending how, on how experts are looking at it. And this is where layering in that local data becomes more important than ever. Because what we're feeling right now is some of those overheated markets where prices went up so rapidly during the pandemic, are starting to see more of a shift in prices than some of the other markets that may be holding steady. When we average these out across the year, roughly neutral, flat home price appreciation for 2023. But it's certainly something we're going to continue to keep our eyes on as we go forward. You know, this is where layering in that local what's happening with supply, what's happening with demand in your market helps define where prices are headed in your local area. Now, I want to share another perspective of this because big banks are projecting more depreciation in 2023. So Goldman Sachs, Wells Fargo, Moody's, Morgan Stanley, you can see that they're shifting more towards, you know what, we may see some slight depreciation next year. And, you know, it's a little bit different because some of the big banks follow more of those publicly traded builders versus some of the organizations that follow more existing homes. And so big banks are calling for more depreciation based on that new build type of environment versus existing home organizations saying more appreciation. But what's most important and where they all really tend to agree, and this is data from Wells Fargo that I think really positions this well, is that 2023, maybe a little bit of depreciation, maybe a little rocky next year. But as we come into 2024 and beyond, returning to more normal levels of home price appreciation, and as we continue to look forward, as we look at things like the home price expectation survey saying more normal appreciation in the years ahead, all of that dependent on supply and demand. And, you know, while inventory is still historically low, we will continue to see that in the years ahead. But 2023, maybe a little bit of depreciation, maybe a little bit more neutral, that's really kind of the bot that we're seeing here. And a lot of that has to do with perspective and what you communicate and how your clients look at it. And I think this quote from Freddie Mac really says that. Well, it says, well, there may be a little statistical difference between a small positive number and a small negative number. So talking about some appreciation, some depreciation, there are often huge differences in how they impact behavior. So how your clients look at this and what they anticipate will happen in your local markets may really drive behavior. So you being that expert, being able to share the data, share the insights on what's truly happening both nationwide and in your local area, more important than ever, because that's really going to be the clarity that people need in this message. What we also know, especially as we look back in time, we had, you know, the great financial crisis. There were five years of continued depreciation. No one is calling for that extended long period of depreciation right now. Little rocky next year and then returning potentially to more normal levels of appreciation. So we're not talking about this long financial crisis ahead of us. We're talking about some up, some down next year, and then back to more normal levels as we look nationally at that perspective across the board moving into a much more stable environment. So with that in mind, as always, layer in what's happening in your market, with inventory, with demand, with all of those things that can impact what's happening in your neighborhoods, and then really kind of help your clients understand the bigger picture of what, what's happening in the world around us, in the, in the markets around us. And I think as we start to talk about prices, about mortgage rates, about all of these things that are in play, the next big question that comes up is what about foreclosures? And David's going to walk you through our update here.

All right, thanks, Kate. Well, we've talked about interest rates. We talked about prices. What Kate just went through, how to sort of shift the conversation to a couple of things that I think are important right now as we have that conversation. One is what's happening with foreclosures? I'm going to break that down for just the next few minutes and then sort of in this with the question that I think is on a lot of people's minds right now, and that is, should I buy a home? One of the questions being asked of many of us and certainly anybody that's in our business, that critical question and being able to answer it. I think the first two topics of interest rates and prices are critical in answering that question. But we're going to sort of discuss that as we wrap up. But what about foreclosures? Let's kind of start here and I'll, I'll maybe position the statements with this graphic here. This is foreclosure activity by year from ADAM Data, and it goes all the way back to 2005. And something very interesting right here. If you look at this graphic, ever since 2010, foreclosures have decreased in this country. And you know, there's a reason for that. Coming out of the financial crisis of 2008, lending standards became, you know, a lot stricter. We've talked extensively about that on the monthly market report. And you know, as you have a better qualified borrower, stricter standards, you have less defaults. You know, the bars in red here when, you know, distressed properties or foreclosures in this country were over a million units in the year. And every year we've seen less and less foreclosures. And even if you take 2020 and 2021 off the map because they're anomaly years, we've seen that happen. So the question really becomes, are we about to see a bunch of foreclosures coming to the market? And, and what's the update on that? And I will tell you to cover it today. One of the leading indicators of that is delinquencies. And delinquencies are down right now. But if we look at foreclosures, Adam Data says this, only about 214,800 homeowners, we're facing possible foreclosure in the second quarter of 2022, or just 410 of 1% of the 58.2 million outstanding mortgages in the U.S. and you know, this is 4 tenths of 1%. And you know, if you think about that, this is a number that if you were to sit down with a servicer or somebody in the mortgage business that's, you know, in the side that looks at foreclosures and in a portfolio of mortgages, they would generally tell you they're okay with about 1% default rate in a portfolio. Well, where are we at? We're less than half of what they're even, you know, okay with in a, in a scenario, a normalized scenario, foreclosure is very, very low. And oh, by the way, if you continue reading this, of those facing foreclosures, about 195,400 or 91%, at least some equity built up. Now, people do get foreclosed on that have equity in their homes. But the bottom line is people have options. They can, they can sell their home, put some money in their pocket and, you know, sort of move to the other side of the financial crisis they and their family have faced. But, you know, if we continue this, you know, even, even updated here in the third quarter, Rick Sharga said this. Anyone waiting for a huge foreclosure wave will probably be disappointed by this report from Adam Data. Foreclosure activity was flat from Q1 to Q2, and foreclosure starts dropped slightly from August to September. So this is a quote from Rick we follow Rick and certainly trust ADAM Data and everything they're doing. And yet the report that then came out from ADAM Data had this as the headline, US foreclosure activity continues to increase quarterly nearing pre pandemic levels. So more than the pandemic. You know, factually correct, but maybe misleading for somebody that reads this and doesn't dig deeper like you are here on the monthly market report. This market is a critical market to go beyond the headline into really what are they saying? Because oftentimes they're very, very different than maybe what we're led to believe. But the bottom line is there's not this pent up demand of foreclosures coming. We've been talking about this and if you're watching the monthly Market reporter followed this report, then you know that I think we need to still get this message out there. And you know, people wonder, well, are we about to see the wave of just inventory hit the market? Well, this is a look at, you know, the end of October as we're recording this and where's housing supply at? You know, if we look at the same week in 2021 were up almost 40%, 39.5% up over 2020, slightly 6.3% but down over 2019, just over 37%. So you know, 2019, we often say 2017, 2018, 2019, the, the normal years in the market before we went into Covid and you know, everything that we know that brought is the anomaly of real estate this country. So not only are we seeing, not seeing this wave of foreclosures come, we're not seeing a wave of inventory hit the market, certainly more than last year, certainly more than the year before. But if you look at prior to Covid, we are still down across the country and available inventory. You know, I think this, this, this leads into this question that I sort of teased out before. And the question is, should I buy a home right now? I think on top of many people's minds is that question whether you're in the business and do you know how to answer that? Or you're thinking about buying a home and you're going, hey, I'm reading the headlines or I'm seeing what's out there. I know interest rates have shot up and I'm not sure I should buy a home right now. You know, Kate started off talking about the dramatic rise in interest rates we've seen this year in the real estate business, dramatic rise in mortgage rates. There's two things everyone should consider when they're thinking about buying a home. First question is what do I believe about mortgage rates? Kate just gave us that. What do I believe about home prices? Kate just gave us that. And then I'm going to form my relevant market opinion based upon that to help somebody answer an extremely personal question. You know, if they want to wait and it's the best thing for them, we want to help them do that. But we want to educate them on what's happening, certainly nationally, but also with our local market expertise and information. But here's the bottom line. What's the alternative? The alternative is renting. And you know, this slide right here shows the median asking rate going all the way back to 1988. And you've seen this before on the monthly market report. But rents across the country have skyrocketed. You know, I think right now our job in this business is to understand and know what a two bedroom, three bedroom apartment, where we live, what it rents for. If you don't know that right now, I'd get on the phone and I would find that out. What's, you know, a house renting for, you may know that or have seen that out and you know what's out in the market. But understanding where rents are at, maybe you think you know, but I would call right now because they're going up. No doubt. Rental, rental inventory is impacted by supply and demand just like housing is. And we're seeing that go through the roof. But the bottom line is if you're in the rental trap and you're sort of paying through the nose for your rent, then you can't afford to save for a down payment. You can't afford to get into a home which then allows you to build wealth over time. We know that homeownership wins. We maybe get focused on, and I'm not saying we shouldn't be focused on it of a 7% interest rate or we get focused on prices. And there's certainly people that have been priced out of this market. But the bottom line is buying a home over time wins for many, many people that do. It gives them options down the road through the equity. And that's not even counting all the non financial benefits that people buy a home. You know, I think Odetta Cushy said this best and she said this, if you can find a house that meets your financial expectations for a monthly payment and it's a good time for you to buy, then do that. And if you wait for prices to fall, but they never do, you may discover the hard way that the house you found A year ago that you really loved, that you could afford, but you passed up on is more expensive next year. And I think that's the bottom line. Certainly local market dynamics are at play and you need to be the expert there. But there are some people on the sidelines going, I'm going to wait till prices fall. And I don't think they're going to see that. You know, we, Kate, went through the expectations of what experts are saying about the 2023 market and, and really giving that good advice, saying what's most important to you. Let's look at interest rates, let's look at prices, let's understand rents. That's our job today. Because if we don't do that job, here's what's at stake. And I think that, I think Jason Lewis from Parcel said this and said it very, very well. In the absence of trustworthy, up to date information, real estate decisions are increasingly being driven by fear, uncertainty and doubt. These decisions can be hugely consequential for consumers and for businesses. If we don't get the truth out there, a headline is read or somebody is told something and it causes them to be fearful, uncertain and doubtful whether they should or they shouldn't buy a home. Our job is to be the educator. Our job is to use tools and resources to educate people on what is actually happening now in the market. Not to try to convince them to do something they don't want to do, but to educate them so they can make the best decision for themselves, for their family, for those that they care about. And I think is now more than ever, this is a critical, critical piece of what we have to do. You know, in, in a lot of markets, you don't have to do this because everybody's like, I kind of understand what's going on, but there's so many people that deal with so much uncertainty, not only in the economy, but in our, and what we can control, which is the housing market, being educated, delivering our message and helping people make powerful, incompetent decisions. You know, just by listening to the monthly market report, you are doing that. I want to tell you about another resource.

All right, so let's. Hopefully you guys can hear me. Okay? Let's spend a split second just talking about what we just consumed. Maybe in the chat, chat. In the chat, type your takeaways. But then are there a few brave souls that have either, you know, been through a shift, most notably the Great Recession years, and, and crushed it, or anyone that has a high degree of confidence that they're going to absolutely slay these next couple years. And also maybe even some mindset stuff that you guys are doing to keep after it. You can unmute yourself. And let's get a few people to share some good stuff here. I'll just call on you guys. I'm looking. I'm looking at one person in particular and if she can feel me looking at her, she's going to unmute herself and speak. I gave it away. It's like half of you. So.

Lars, I have something. This is Catherine. This is India. Anyway, you know, it sounds very cliche, but, you know, like the British say, keep calm and carry on. And if you really think about that, I think it makes a big difference. And we need to stop getting involved with all the new stuff. We know what our job is. We need to keep ourselves really educated on the market and just keep going because this too shall pass. I've gone through the. There's a 2003, 2008. I've been through them all. And it's the positive mindset that's going to take you through this and leave you much more successful.

That's so good. Keep calm and carry on. I love that. Thanks, Catherine. Justin Miller, what do you got? And then if you're clever, if you're clever, you're next. And I'm just calling on.

You know, I went through the oh, eight, and it was a really, really tough time. And I think what got us through that and it should be something that we're doing now, what we're doing as a team, we're looking to show up for our clients and help them through some challenging stuff and finding their, their problems and solving those problems for them. So when it crashed last time, just educating people, helping them through those short sales, helping them through different, you know, options, introducing them different people. And I think that's what we're doing now at the same time. And then also, you know, people stop to move. So really targeting on the people that need to move, not people that were wanting to move or just like, oh, I've got a bunch of extra money, I want a bigger yard or this or that. But the people that actually need to downsize, can't do the stairs, have to their parents passed away. Like leaning into that and find out who needs to move, who needs your help and really showing up for them. And the best version of yourself. I think the rental market is huge, a big opportunity because people that are, you know, scared if you can. A good lead source too. I mean, we're pulling a ton of Leads out of rentals that are just people that we're creating awesome relationships with that we're able to set up the, you know, we specialize in timelines. So they might not be ready right now, but if we can get that relationship cultivated and keep in touch with them, position them in the right, right, you know, right mindset to be able to purchase in a year from now, it's a really, a strong thing to do. Just looking for that opportunity to show up and help people, I think is what we're at.

Yeah, that's awesome. And in, in the video when they mentioned, you know, know, the rents in your market. Right. So even though interest rates have gone up, to know that, like, hey, listen, you know, you can either buy a house today and this is what it looks like, you know, you know, marry the house, date the rate or whatever the, whatever the expression is. I'm sure I messed that up. But yet to, to know that rents have skyrocketed. Right. So people have to live somewhere. So there's no, no easy way to navigate housing. Anyone else have any kind of. So Lori's doing a few challenges. Notevember agents sending, using their time block every morning for, to our VA for Monday through Friday with exactly who they are calling and when just to keep a momentum with business development moving forward. Yeah, I still don't, you know, having been in this, this business and, you know, having coached for many, many years, I still don't know of a way to generate business that, that does not involve a like, very rigorous calendar with a commitment to doing the basic core activities of a salesperson. If there was a way, you know, I mean, you're going to do all the other stuff anyway. But if there was a way to do it without just a commitment to being honest with yourself about where you spend your time, I would tell you how to do it. Even if you figure out how to generate leads, you still got to call them. Beth and then Tammy.

Yeah, I couldn't figure out the little.

Raise your hand thing. But what I've noticed too is I'm going back to basics, just like the first person said. As far as Catherine said, what I do notice now is we did a.

Phone call campaign just so I went.

Around and picked up food for the food shelf. What's happening with inflation is shelf lines are just massive. And so kind of educating them to what's going on in our community has.

Been very helpful and it also, they.

Kind of remember you.

I just leave a thank you note.

And I pick everything up off the front stoop or they come out and want to talk to me about business.

So my VA is doing the calling.

Just to get me to get in front of them to pick up food. And that's been a nice soft touch. It's the right time of the year to do it. Yeah, that's really good community outreach. Tammy, what do you got?

Yeah, so our team, we've worked through, you know, 2003, 5, 6, 7, 8, 9, 10. And one thing I can say for, for us that I remind myself and our team of, and then for everyone else is people still bought homes, always people still had to sell. And honestly, it was a little easier to sell as an agent in those markets because no one was brave enough for the most part to try it on their. And so this is a really good season, I think, for all of us just to be the knowledge brokers, which, you know, is what KCM is all about. But you know, our team specifically being challenged on any media, which, you know, let's call it video, social media, all those platforms, LinkedIn, that is free advertising where you can get as many touch points as you want all the time. So more than paying for a billboard or doing a mass mail or not saying not to do those things, but people use people they know like and trust. And so in uncertain times, which is what Casey is always all about, if you can put a different spin on it and not necessarily, I'm not saying the case information, that's great, but there are still people who are going to be buying their first home this year and they don't even really understand a 7% bad. Except for someone said it in a scary voice on a headline. So when you say like this is an awesome home, this is what it looks like in your territory, did you know that your payments could be X and then you know the rental rate? Well, you just build their, their faith in why they need to buy a home and telling them it's a really great time because sellers are offering more incentives now and doing other things there. So, you know, like everyone said the basics, but I think really pressing into getting your voice out there is super important because beyond even when you make calls, when your sphere and everyone around you knows that they feel like they can trust you, you're going to walk them through it and you're going to give them information in a way that someone else has it that really helps you connect at a, at a high level. And we all know this. Lots of agents said it was easy for them to get their lice. They drifted away from the business and they're drifting away this year before the annual dues come ready. And so one of the things we talk about on our team is no orphan buyers. So if there was someone who you know, was in the business, I look back in 2018, 2019, 2020, I'm looking at all of my sales where we were the listing agent and we're pulling all those buyers and we're reaching out to them and we're doing CMAs for them, we're calling on them, we're inviting them to our events and we're starting to nurture those because we know that most buyers are orphaned. But especially now with so many agents having gotten in and gotten out of real estate, it's a great time to pick them up in case they're ready to make a decision or connect us. Most of our people don't necessarily buy or sell with us right then, but we give them information so then they refer other people to us.

That's really good to out agent the buyer agent on the opposite side of your listings. That's that orphan buyers program is really awesome. Thanks Tammy, appreciate that. And so there's a few questions in here about and I'll broaden up a little bit knowing your numbers and how many conversations and it could be and it is different by lead source. But how many conversations do you have to have to set a consultation? How many consultations do you need to have to sign a client, a buyer or seller? And as the market shifts it may be a little bit, you know, harder to get a buyer under contract or a seller's home sold. So if, if you're not even in the game of tracking any metric in your business, meaningful conversations on a daily basis is, is the number one leadingest indicator you know of, of success. So if you know when, when we coach bigger teams and they're not productive and there's not this culture productivity, it, it always comes down to the fact that they're just not doing the, the, the sort of contact sport of sales. And it could be anything. It could be if you have a different way to have meaningful conversations with a decision making adult about real estate could be calling your database, it could be calling expireds, it could be, you know, whatever the things are. But you've got to be in the game. It was a mention of 10 contacts today and there's a mention of 25 to 30. We aired toward the higher side to leave no doubt that we're going to crush, you know, if you don't have a bunch of appointments, a bunch of active buyers and sellers. It's okay to generate new business for many hours a day. There's nothing wrong with it. It's not going to hurt you. It's actually not that hard. Right. You're in, most of you are in like a heated or an air conditioned space in a comfortable chair with technology that's doing some of the heavy lifting for you. But I do think we're all going to have to do things in our business that maybe we didn't have to do in the last couple of years because the deals were flowing. And you're only going to find out after the fact that you didn't do enough. Right. So my encouragement is to, to not leave any of that to chance. Just decide now you're going to be one of the agents that's super productive every day. Doesn't mean you can't build marketing systems, doesn't mean you can't do all the things. But as far as the leading metric is, you know, interactions with would be buyers and sellers. Andrea.

Hey Lars.

I thought that Raul had a really smart comment. He said, I'm interviewing lenders to know and see if they're coming up with new programs to overcome the high interest rates. And I think that's super smart. But you know, when you're, when we're dealing with a downturn or things get crazy in the economy, think about who your buyers and sellers, who your homeowners are going to talk to during this time about their financial situation. So if you contacted 10 past clients a day, what if once a day you reached out to the most trusted advisors in those people's life. So a lot of people, especially before the end of the year, are doing a touch base with their CPA or with a financial advisor and saying what should I do? This is happening, this is crazy. What should I do? And if you can come in with and if you can reach out to those individuals who are advisors to and this is leverage, right? It's a high number. They, they talk to a high number of people who have wealth. And so if you can become someone who is another trusted source of information to be able to say, hey, you know, I'm, I'm helping people navigate this, this market and doing it in a calm way with real information. When they are talking to their clients about what should I do? I need to down or I want to, I have to make this change or we have health issues, we got to move, the laundry's on the second floor, we got to, you know, there's people have to move during this time regardless. But there's also people that are just looking for good, sound financial advice and they're going and think about who they are going to. That could be a referral source for you. So they represent many, many potential buyers and sellers. And if you can, you know, for every 10 potential clients you reach out to, reach out to at least one who represents many that you could have as a referral source and build a good relationship of like a calming source of good information during this crazy time. I like, I always like to think of leverage and how do we, how do we leverage through connections with advisors who people are reaching out to like crazy right now.

Yeah, that's so good. The whole one to many. Super smart. Anyone else have any comments? And it also makes me, I think one thing that we added to our scripts and I think I got it from like 100 days to greatness. Brian Buffini back in 1947. No, I mean it was not 2007, I think, or 2008, early 2008, that I went through that program when I joined ReMax to end every conversation. Like literally every conversation, you know, hey, Lori, by the way, you know, I understand it's not your time to make a move, but who do you know that's looking to buy or sell or invest in real estate that I can reach out to today? You know, so end every conversation. So. So you may not get a lead from every one of those conversations, but I promise if you do 20 meaningful conversations a day, you probably pick up a lead or two every day from someone that you have a conversation with just by asking that. So I would have a little checklist or a little something on your computer where you make your calls and make sure you ask that question to every single call that you have. Super powerful.

Lars, can I add something?

Yeah, sure.

So what we did, you know, in one of our team meetings was, you know, like everyone is talking about high interest rates and stuff. Yeah. So what we did was, you know, we actually pulled up the mortgage calculator and said, okay, what actually it means when the interest rate 4% versus 7% or 6.5 actually means. So we dissected the, the real number and say, okay, you know, every 100,000 is about, every million dollars is about 500 or $600 more payment in a month. So our conversation with the new buyers are, okay, so you're paying $500 a month. Pretty much you're going to pay $6,000 a year, let's say for next two years, the interest rate doesn't go down, probably you'll end up paying $12,000 more or 15,000 more. Yeah, but in reality if I get you $100,000 or $200,000 below the market price, you're still a winner.

So.

And keep in mind that the bond, you know, the stock, you know it's related to the stock bond market. If 10 year treasury comes down, it moves a little. We can always refi you at no cost and stuff. So we have few buyers like that who have actually got intrigued and got in the market to buy.

You know.

Also Raul, you can lean into the fact that their interest rates are a write off. Like would you rather have like, you know, less taxes on a lower purchase price, have a little bit higher interest rate that you can write off? I mean I would take a higher interest rate over a higher priced house all day long because I don't have to pay the property taxes and I can have the write off on the interest tax or on the interest rate. So I think that's a huge thing to lean into as well.

Yes.

And then we also found like two lenders in our market who were very, very creative. Like one of them, they was giving like a straight $25,000. They are not, it's not like the moving the interest rate up and down to get the credit, but they were giving like 20. There's only one bank actually here which is giving like $20,000 giveaway and towards closing cost or prepaid items. So that actually giving a boost. So we closed three deals to them and it was just one of those calls we, you know, we made to a couple of lenders to figure out, you know, what extra they have, you know, and then I have another one where who's doing like in five days, they're doing a HELOC five days. So meaning that there are buyers who would like to buy but you know, they want, they don't have to wait like for 10, two months to get the HELOC done and then do it.

You know, that's awesome. Does anyone have any questions or not fully understand what Rahul was saying in his first comment where he was talking about like knowing, knowing the difference between an interest rate like so if you Wish you had 4% but you actually have 7%, the increase in payment and if we need to refi a couple years from now, yeah, you're going to pay in 15,000 more for the house. But would you rather, you know, wait those two years or risk, you know, you know, the, the home being, you know, 30, 40, 50,000. More like you. You may actually not be in a better position by waiting if you don't quite understand that. I would just run through the numbers on a, you know, average price point home in your market and look at like, what if, you know, 2023 is flat, but then 2024 is, is an uptick on a $300,000 house or a $500,000 house.

Right.

The home could actually go up more than it would cost to, to finance it today, if that makes sense. So, so this is our job to know these numbers, because the reality is, is that there's no inventory. That's, that's the different thing we talk about. And even I brought it up 2008. I don't think this is 2008. I don't think it's gonna, you know, we're gonna go to millions of foreclosures. It's just a different lending environment coming into what we're in now. Housing isn't leading, you know, what we're going through. It's just a totally different monster. But you need to be able to, to slice and dice these numbers with some easy, you know, tools that are probably available even for your phone, you know, so, so I think that's the kind of game we need to play. What did AJ say? Because everyone said so. Yeah, aj, you want to elaborate on that? I was actually gonna, gonna call on you. He said, interest rate on rent is always a hundred percent.

Yeah, true. What'd you say, Lars?

I was going to say, do you want to laugh? I was almost going to call on you because you, you, you went through the, the tough times of 7, 8, 9, 10 here in our market. Right? Yeah.

But my first mortgage I bought back in 91, 92. I paid 9%. And I was ecstatic to get that. So I hear that a lot from, from my renters to, you know, looking to buy. I even from people that bought two, three years ago, they're, you know, crying, hey, you know, I paid 2 and a half percent, 3%. He said, why would I pay 7? I said, well, you decide to rent if you want to, but, you know, do you know what the rent, the percentage on rent is 10 or 11. I said, try 100%. And that stops them dead in their tracks. So, but, you know, when I had that conversation with people, I just let them know that at the end of the day, you know, you're not going to build equity when you're renting a apartment or house. So, you know, to me, owning is going to win every time. As long as you know the home fits what you need. So it's time to move forward.

That's really good. Appreciate that. Any last I'm going to see if I think the update is it's a public facing site so even if you don't have kcm, I'll post it in Game Changers Nation and also Real Estate B School School. So I'll post that update. I think it is not password protected. We'll also post the slides, a folder with all the downloadable jpegs of all those slides that we just went through. This is just, I think, I think one of the comments on the slides, I mean this is just going to be more a cleansing of the weaker agents and I think it's going to be, you know, a mindset challenge more than anything else. So any last tips on mindsets or rituals or things that you're doing to stay in the game mentally?

Kim has a really good question. She just posted that maybe we could just get a quick thoughts from everybody. Kim said, I have a. Oh, go ahead, go ahead.

There you go. Okay.

Kim said, I have a buyer that understands this concept but is now wanting to offer 50 to 100k below the asking price. So as you guys are dealing with.

Those kinds of clients, you know, what.

Are you telling them?

Does has anybody had that happen recently? A couple tidbits for Kim and everybody else.

I can jump in here, Lars, if you don't mind for a second. I just, you know, I've seen this happen time and again and a lot of people are thinking that because of.

Where the market's going or what they're hearing in the news that suddenly they're.

Going to make an offer below asking price and snatch up a house.

And the reality is if you've been on the market for a while as.

A buyer, you've seen and lost a lot of properties.

And if you're going to try and negotiate over 50 grand, and again, every.

Market'S different, but this is what I'm seeing in Boston and where I'm at.

And Florida, that, that amount of money.

To lose that house and then come.

Back on a year later at potentially.

A higher interest rate and a higher purchase price, not only have you wasted your time, but you, you potentially missed the opportunity to get that house that you've been waiting for all along.

So that's really good. And then also I would say without, you know, with them sort of making it up in their minds. Right. Based on some headlines and if you don't have the actual data. Here's what the experts are saying. So six experts are, you know, predicting on average in 2023 that there may be an increase to, you know, you saw that one chart. So that's a totally different conversation than them just making up on a $500,000 house. They're going to offer 400,000. Right? So. So I think having the data. One thing I started doing, and you can use the KCM slides to do it, is a monthly market update. So essentially take the KCM slides, interject some. Some local stats and just do a Facebook live and, and have an inventory like, you know, you. You actually become the market expert. You know, I know JR is doing this on YouTube as well a couple times a week and pretty regularly market updates. So we are out of time, friends. Stay in the game. Next week we have, I think Wally Bressler is schooling us on scripts. Is that right, Stacy? I think so, yes.

I believe so.

It'll be a good one. Invite guests if you want to crush this market. We have the words that come out of our mouth, like that's effectively. And the things we type on the. Wherever we type stuff, emails or in our socials. So much love, everyone. Take care of yourselves physically as well, emotionally, spiritually. We make a big deal out of this business, but it can also get the best of you and suck you into the vortex that it is and all the drama that it brings with it. So don't go there. Much love. We'll see you next week. Be good. Bye.

Bye.