On this episode, I will discuss how you need avoid "the noise" that occurs during a shifting market and how to create the action needed to set up your business for a productive Q3 and Q4 2022 and build momentum going into 2023.
There is no doubt that you've started to see the signs of a shifting market. In Chicago it's not been as obvious as in other parts of the country because we were somewhat late to the party. Some markets have seen a 75%-100% increase in prices over the last year and buyers in those markets are starting to "sit it out" and will wait for a more normalized market. These markets I'm talking about are resort and second home markets. In primary home markets, there is still a lot of demand and velocity. With home prices and rental prices both increasing in primary markets, there is no good exit strategy out of the housing market for those buyers. Either way, the shift has started in 2nd home and resort markets will make it to other markets in the next 6-12 months.
In a way, this is actually good news.
For top, skilled brokers, we need a more efficient market to allow for transactions for all of our clients. A better flow of inventory allows for "right sizing" buyers to enter the fray who can't or won't pay cash and waive all contingencies.
With all of this being said, I cannot remember a better time to educate and set expectations with your clients. You need to stay ahead of the narrative. The media, in need of "clicks," are going to be pounding the drum of the pending doom for the housing market. So, this is how the "noise" is generated. Advertisers pay networks and media outlets when someone pays or clicks on their ad or an article that hosts their ad. My favorite: "Surging Interest Rates push mortgage demand down more than 40% from a year ago" (CNBC, April 6, 2022). This headline disregarded the fact that most of that mortgage demand was with refinances and that an increasing amount of purchase transactions were cash. The 40% implied wrongly that the housing market was struggling. Not true. Jameson is up 36% in volume year over year.
Knowing what we know about the brain, negativity is much more "clickable" than positivity. Negativity generates the fight or flight mechanism in our brain and brings us to full attention. Hence, why people click on "negative" headlines. I do not want to go into a full economic explanation today, as I did that in Episode #142: 2022 Housing Market Talk Tracks. Let's just say that because of the lack of inventory both on the for-sale and rental side and the decade long pent up demand, the lack of new inventory in sight, supply chain issues etc, fully built out, desirable product in a good location, priced within reason will sell. Housing is a basic need and you can't just fully say "I'm out.” ...but, those media advertisers need their clicks so they will try to create a doomsday scenario. So, how do you educate your client, set expectations and create loyalty during a shifting market?
If I were you, I would implement the following strategies over the next 90 days. The summer no fly zone starts August 22nd this year and knowing what I experienced over my 20+ years in the business and building 3 separate businesses that involve real estate brokerage, my experience tells me that I would do the following this summer before that date:
Goal: Have a meaningful conversation with my Top 100 and update my database with several key updates:
- How is their house performing for them in this post pandemic environment? Do they love it? Is it missing key components or is it too big?
- Update them on a current market value of their home within a 5-10% range. "I felt it was important for you to know so you could update your financial statement."
- If they are worried about a recession tanking their value, remind them that a recession doesn't mean a drop in housing prices. In fact, throughout the 5 recessions since 1980, there were only 2 instances where home prices dropped. (1990 and 2008)
- Remind them that you are "open for business" and that you see opportunity presenting itself over the next 3-12 months.
- At the Ninja installation in October, you will learn how to create a "real estate review.”
- Make sure you are sending market stats to your Top 100 via email marketing. Jameson agents, send the Quarterly Snapshot our marketing team creates. There are templates in your ActivePipe.
By having this conversation, you are putting yourself "Top of Mind", securing their loyalty and preparing your business for a shifting market where "right sizing" buyers will have more opportunity.
What is the downside to a conversation like this? Fact: there is no downside.
Now if a large part of your sphere of influence rents or might be considering buying for the first time or in your market, I would have a different conversation. Goal: Educate them on the current rental market.
- Rents went up in Chicago 15.6% in 2021 and demand has increased further in 2022. Rent prices will continue to rise.
- There are multiple offers on most every quality rental.
- Renting is 100% interest. Don't let 5% interest rates stop you from entering the market.
- Buying is cheaper than renting.
- It's time to lock in your housing expense for the next 3-5 years.
- Would you be open to jumping on a group, zoom call with me and my lender?
By having this conversation, you are putting yourself "Top of Mind" in the event they purchase while you build your Top 100 which will fuel your business over the course of your career. Think of your business in terms of a "career" not a "year". What is the downside of a conversation like this? Fact: There is none.
In both of these scenarios, I would make it my goal to have 3 of these conversations a week between now and the "no fly zone" in August. That's 3 conversations x 16 weeks = 48 meaningful, value-added conversations that will propel you into the fall market and into 2023.
Next week, I am going to hit on the topic of "Discipline vs. Emotion" and how they differ drastically as it relates to building a fulfilling life and a predictable and enjoyable business. Discipline always wins over emotion as it relates to completing a project like I've just discussed. Each conversation could/will be the seed of continued business over the course of your career. It just takes vision and discipline to make it a reality.
When I say the following, I mean it; in my 24 years of being in this business and having a deep understanding of what it takes to build a real estate brokerage business, I don't think I've ever seen a more important time to be in front of your clients. When markets pivot, you need to be ahead of the trends.
If you are not contacting your client, another broker is.
If you do what I've suggested in this call, you will absolutely finish the year on fire and go into 2023 with a fully active Hot List and Warm List. I'd love to hear about your success stories when they happen.
