2021: Predictions, Reminders and Strategies

January 18, 2021
I am such a big fan of setting expectations up front with everyone. "Take Flight" basically is built on setting expectations for you on how the world of real estate brokerage works. My goal has always been that I want to prevent as many "real estate heart attacks" as possible. When you have one, it's too late and it requires a major re-focus and pivot to get your business to where it needs to be. So, I want to set some expectations with you today based on what I am seeing in the market so you can better go back and set expectations with everyone in your life including your clients and your family. 2021 is shaping up to be a year, depending on the market you serve, that could be a record breaker for many of you. Demand will be strong. If inventory levels cooperate, your production will be as well.
Predictions:
Note, I am not an economist but I have been in the business 23 years and have seen 3-4 real estate cycles. The 2021 real estate market, in my opinion, will be unlike anything that we have seen. 5 trillion dollars of stimulus will or has hit the economy in fewer than 12 months, which will propel spending on all products and services. Real estate and related industries will be winners.
  1. Inventories in second home and suburban markets will be less than one month consistently, especially under the $1M mark.
  2. High net worth individuals will look to take some cash out of the equities market and put into hard assets (real estate and precious metals) as part of a diversification adjustment.
  3. Those people that have moved out of the city during the pandemic for more space, will start to migrate back to urban environments for the fast paced life style.
  4. 30-40% of society hasn't even ventured out because of safety concerns but they have still stress tested their lives and know they need and want to move.  That group will enter an incredibly difficult market for the buy side of their move.  Their current home, if desirable, will sell quickly making it really difficult for move up buyers.
  5. A large portion of transactions will be difficult. Mentally prepare for it.
  6. Chicago (downtown) will start to hit the radars of those that plan to live a dual geographic lifestyle post-pandemic and want a city to be part of that lifestyle.  Cost per square foot for a world class city is 2x, 3x, 4x less than other major markets and mid markets. NYC and San Francisco have become difficult and quite expensive to live in. Those markets will bounce back, but downtown Chicago is on sale currently and has a real opportunity to gain traction as a second home market (not primary).
  7. As the pandemic lifts, the momentum will start to switch back to entertainment, dining and travel. Real estate will not be the clear main driver like it is now.  Keep an eye on the 2021 fall market. It may not be as robust at 2020. Your focus should be on spring and summer. (Whatever your goal was for 2021, try to hit it by October 1).
  8. The rental market in the city will rebound quickly this summer as people go back to work in office environments.  Many in the younger population went home to live with parents to save money and avoid paying for a "large, expensive storage closet."
  9. There will be continued pressure on inventory as the stress testing will start to wear on a percentage of familial relationships.
  10. It will be difficult to build because the cost of construction and materials continue to rise. The zoning demands are also becoming tougher. The numbers will just not work on most projects. The smaller, lower priced product will be almost impossible to build.  Memories of 2008 are still etched in the minds of many.  The fact is, we are just not building enough mid-priced properties.
  11. Contractors will adapt.  They will move to a rehab, value-add model to supplement their core strategies.
Reminders:
  1. You are a real estate broker, not a real estate order taker. Big difference. Requires different and upgraded strategies in an active market like we will see this year.
  2. In 2021, your time will be your biggest asset. Look at it like money. Invest it wisely into the right opportunities.  "If's not a Hell Yes, it's a Hell No."
  3. With inventory so tight in most hyper-local markets, listings are everything right now. To get listings, you need to have a strong network of past clients that know you, like you and trust you. For those of you that have followed "Take Flight" and "Ninja Selling" principles over the last several years, you will benefit greatly from those relationships you've fostered and created. You have to carve out time to touch at least 3 to 5 of your sphere and past clients each day to maintain that momentum.  Again, relationships have never been more important.
  4. Real estate brokerage is seasonal and cyclical.  You are in mode of transacting right now.  Your level of self development, processes, marketing and personal branding will support you at that level.
  5. Maintaining a strong feedback and communication loop with your current and active clients will continue to be so important during this period of time. You need to be their rock during a difficult and stressful time.  Yes, selling a home is difficult for your clients. Don't forget that.
  6. Buyers and Sellers, if left to negotiate themselves, most likely will have a difficult time getting the transaction over the finish line. I've never been more confident in the trajectory of the real estate brokerage industry.
  7. If you are showing an off-market property, make sure you have compensation agreed upon before the showing via letter from brokers manager or in the form of a commission agreement.
  8. Rental fraud is at an all time high.  Intense background checks are necessary.  Be incredibly careful renting anything sight unseen.
  9. If you are visiting a property and your client will not be on site (preview, virtual showing), please make sure the listing agent knows that up front.
  10. Be a pro. Treat your fellow brokers like you want to be treated even if you feel like it isn't always reciprocated. You will win multiple offers just because of your reputation.
  11. Be careful while showing properties. If something feels off as a showing is requested, pivot or call me.
  12. Don't forget to "power down" occasionally.  Your body will need it to get through these next 8-10 months.
Strategies:
  1. Choose your clients wisely. Interview them as much as they interview you. You need to make sure you are focused on those that are serious about selling and those that are serious about buying. This is not a time for your clients to "test the market" for deal. Depending on your relationship with the client, the smart thing to do is walk away from those opportunities. An overpriced listing is worse than no listing at all. You need to firmly communicate this to avoid wasting their time as much as yours. You should be closing 90% of the opportunities you engage.
  2. The downtown city pricing is down 10-15%. Price accordingly or have your clients wait the pandemic out and list next year. Now is not a time to list if they are not serious about this reality.
  3. You will need to get creative to find properties for your buyers. In some markets, they may not make it to the MLS.
  4. Build in "Home Purchase" contingencies into your listings where your clients are move up buyers.
  5. Educate your clients on your value. Make sure you tighten up that pitch.
  6. If your business has a land acquisition component, start adding a value add component. The rebirth of our urban environments and housing inventory will rely heavily on a "freshening up" of what is already there.  Most buyers do not have the patience for a project. They want move in ready.
  7. In a multiple offer situation, it's not always price that carries the most weight. Can the buyer, the broker, lender and transaction team get it across the finish line? Your reputation has never been more important. Bring this element into your multiple offer selection process.
  8. You must have a Morning Ritual to plan your day and stay on top of your current inventory. IF you don't, you will play on defense and things will fall through the cracks.
  9. Inventory management will be key.  Keep having market and pricing discussions as necessary with your clients.  "Hope" will not get it done in this market. On-target pricing will.
  10. The phone is your friend. Not your enemy.
  11. Get your calendar out, and schedule 2-3 day getaways appropriately spaced out. Identify a partner that can watch while you're away and you'll watch their business while they are away.
  12. Newer agents, this is where you build your reputations.  Find experienced, top producers that need your help.  Dive in and learn this business.  It's the only real way to learn.
Team,  my strategy, as your manager and leader during this time, is to be "Air Traffic Control" during the week and on the weekends. If you are out hustling, I will be too. There are no questions that will be a "bother" to me. Pick up your phone right now and add me as a "Favorite" and call me when you need me. I'm rooting for you and supporting you to make 2021 your best year yet!