On this episode of my MMPT, I will discuss the advice I've been giving agents on how to position themselves for our "new normal" in the real estate market . The market has shifted. You know it. I know it but now what? What tools and skills are needed? What mindset is needed? How do you navigate this market while keeping your sanity? Today, I will give you my thoughts and help you lay out the basic groundwork to build your quarterly business plans around for the foreseeable future.
First, let's rewind. As a real estate broker and a leader, I've had to do a hard "pivot" 7 times in the last 20 years in the Chicago market. 2022 is/will be my 8th.
2001 - went full time in the market. I had to pivot from corporate life to becoming a full time real estate broker. I was taught how to be transactional selling primarily new construction condos on the north side of Chicago. I was 100% self taught on the basics.
2007 - 1.5M in commission evaporated in the fall of 2007. I had my "real estate heart" attack in February 2008 when I realized that the market/economy was not improving any time soon. Buyers wanted nothing to do with real estate. Sellers were in denial. I had to either pivot/change or not survive. I started my journey to build my business. Again, 100% self taught through virtual mentors, Youtube and Google. It was during this time that I learned to become a high performing real estate broker doubling my business 4 times in 5 years.
2013 -2016 - the market woke up and buyers jumped back in for the first time in 5 years. Most of the excess inventory was purchased and we got back to a normal market of 5 months of inventory plus or minus. Bad product didn't sell without massive price drops. Nice product sold if priced right. Multiple offers happened but were rare. Agents had to pivot learn how to price, become good marketers, learn new market tactics using social media etc. In 2013, I got into leadership at Jameson Sotheby's International Realty. I had to pivot to the market while also pivoting to becoming a leader.
2017 - 2019 - the market was sluggish in Chicago. You had to price properties correctly or they wouldn't sell. There just wasn't a lot of buyers out there left from the feeding frenzy of 2013 - 2016. Most people in their 20's wanted to rent. Lavish rental buildings hit the market giving millennials and attractive living option while giving them flexibility in their lives. Agents had to pivot to the new demands of this type of market. In late 2019, millennials started to hit their late 20's/early 30's and demand started to pick up leading to a strong start to.....
2020 - this year is still fresh in all of our minds. We started strong in the first quarter. Covid-19 started shutting things down literally 2 years ago to the day and we spent the next 3 months pivoting to a completely different market where we just hoped to keep deals for our clients together. After spending weeks isolated in their homes, many buyers decided that they lived in unworkable situations. They needed more space and by July of 2020, we were off to the races. We made 2 major pivots in 1 year (March and July).
2021 - Harvest time. We may never see another year like 2021. Buyers wanted to buy at all costs to take advantage of their new remote work lives, low interest rates, mobility. A decade of pent up demand hit the market in a matter of 18 months. Inventory evaporated. Prices soared. Let's face it, it was an insane year on so many levels.
2022 - As I explained in my call last week (Episode #142: 2022 Housing Market Talk Tracks), the economic realities show that as of today, there is still a lot of demand for housing and incredibly low inventory with the US being down 5M homes. With supply chain issues, lack of labor and construction times, there is no significant, new product in sight. Unless demand changes dramatically, this could be our new normal for the foreseeable future. Based on what economists have said about housing, it could take 5 years for the inventory situation to correct. Similarly, it took 5 years for us to correct from 2008 to 2013. The timeframe could be similar. (keep and eye on affordability at lower prices points).
So team, it's officially time to pivot and accept the fact that we need to adapt to the "broker" mindset. "Order takers" will not survive. (My final market prediction, I think more agents will leave the industry in 2022 than any other year). Brokers "find" properties through their networks (lists) of relationships. Here are the 10 areas that I would really focus on to maintain your sanity and consistent growth in your business. If you do, I firmly believe your best days are in front of you:
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Pivot! This market is what it is. Accept it and adapt. It will be like this for awhile. You have to be a "hunter" and a "farmer" in this market.
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You must master your lists. Your "Hot List", "Warm List", "Top 100" have never been more important. Obsess over them daily. Maintain relationships like you've never done before. Relationships have always been the foundation of a strong business but in this market, your ability to survive is at stake. You should be spending 20% of your time on the phone. If you watch any ELP (Elite Level Producer), they are "making the phone ring and negotiating deals." A relationship based model works in every market. Revert back to your Ninja training. If you haven't done a Ninja installation, make that a priority this year. JSIR has Melanie Frank doing our first installation in October.
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Choose Wisely. "20% of your clients steal 80% of your joy". Create boundaries and be non-negotiable. Let your intuition guide you. "If it is not a hell yes, it's a hell no"
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Set expectations with everyone. Decide now not to invest too much time with someone that is not serious about entering the market as it is today. Sellers and buyers have to be ready for it mentally. It's your job to get them there. Understand the definitions of who should be in your Hot list and Warm list. Focus the majority of your time on your Hotlist while nurturing your warm list.
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Know your role. You are not a financial advisor or economist. You are a real estate broker and your job is to find properties for your buyers and find the best buyer for your sellers. Don't try to make sense of this market. Just do your fiduciary responsibility to the best of your ability.
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"Work smarter". Build your systems, process, habits and routines to support this new market. You should never re-invent the wheel. These are the areas that you spend the majority of time in your "12 Week Year" process. (Go back to episodes #131 and #132 where I put a wrap on 2021)
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"Build Capacity" - Do you have strategic partnerships with like minded brokers in your brokerage and around the country. Is it time to add an assistant? Or an assisting agent?
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Plan breaks in the action. "Sprint and Celebrate". (Episode #140: The Life Hack I Wish I Learned Earlier)
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Take care of your "mind and body". (Episode #141: Are You Planting the Right Seeds) , I talked about planting in the spring and harvesting in the fall. Taking care of your mind and body is like "sun and water" to the growing process. If you do not take care of yourself, you will crater. Build your rituals and take 1 day a week that you do not take appointments. (Top producers have found Monday to be an ideal day).
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Be good person. Be a good broker. The true test of your character is on display in markets like this. Your reputation will win you opportunities for your buyers and could also lose you opportunities. Ask yourself: How am I perceived in this market? Do other brokers find me professional and want to do a transaction with me? If a broker and his/her client had 5 offers on the table and they were similar and it came down to picking a broker that could get it done, would they pick me? Why? Build a list of brokers in the area that have similar product/clients. Make them your best friends. They will become your MLS. Consider them an "internal" client.
Bonus: If you haven't already created your "Financial Freedom" accounts, do it this year. It is my opinion that you want 12 months of operating cash as a 1099 to be able to navigate the next "pivot". See your financial advisor for their thoughts. If you don't have a financial advisor, identify a fiduciary that you can trust.
Team, if you work smart, protect your boundaries and keep your mind and body right, this next phase will be your best. Buyers want to buy and the sellers are out there and you need to go find them.
This next phase will be as much about the mental game as it will be about your skills. You will make a lot of money and live a happy life if you go about it the right way. Not saying it won't be stressful most of the time but this market won't overwhelm you if you don't let it. I have too many case studies that show this to be true.
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