The large majority of my formative years were spent playing sports.
I was fortunate in that I got to play with and against some really good players –– and they were the primary reason that I am now in sales, but I digress …
Over that time, I encountered a lot of coaches, too.
Some were simply little league dads who didn’t know much about the sport but were patient people and great organizers, while others were highly knowledgeable technicians who really enhanced my understanding of the sport –– most fell somewhere in between.
But of all of the coaching types I encountered along the way, my least favorite were the ones that didn’t so much coach us as yelled at us, and generally had nothing to offer us other than non-specific cliches about how we weren’t working hard enough.
Why did they offer cliche in lieu of instruction? Because they didn’t know very much.
I will accept the notion that most cliches contain some truth:
- “Practice makes perfect.“
- “Triumph is only ‘try’ added to ‘umph’.”
- “The harder I work, the luckier I get”.
- “Hard work beats talent when talent doesn’t work hard.”
But after a while, they all kinda say the same thing –– especially when they lack any accompanying specific instruction.
‘Yeah, yeah, yeah, coach, we get it. Work hard. Practice a lot. Keep grinding. Our competition is working harder than we are. We know. We know.’
But cliches substituting for advice only goes so far. When it is 96 degrees on some baked out athletic field in late July and I am wearing 1980s polyester, I would like to accomplish something other than just sweating profusely –– I want to get better.
So please, if I am going to be here in the dust and heat, tell me something I don’t know that will help me improve.
Hard Work is the Constant
Now, to real estate.
Show me anyone who is even remotely successful in this crazy industry and I will show you someone who works very hard. Long hours, weekends, after-hour phone calls –– they are all a part of being an agent.
Working 9 to 5 is for the other industries. Agents work 9 to 5, and then we work from 5 to 9.
I would actually argue that hard work is the constant in our industry, not the variable. And yes, I just said that Realtors work extremely hard. Few outside of real estate get that.
Unlike IBM, Apple, or Tesla where you get to sell a really groovy product with a multi-million dollar ad campaign backing you up, in real estate, you are the product you are selling –– and as such, no one can build the business but you.
And building any business takes a LOT of work –– even in the best of markets.
Adapt or Die
For many, watching mortgage rates go from 3% to 7% and hearing the tone of the news change from boom to bust seemingly overnight is wholly unnerving –– especially if you weren’t around in 2008.
Conversations are happening everywhere in our industry right now between agents and brokers that sound a little like this –– “Hey, my business is down and my clients are petrified. I don’t know what to do and I don’t know what to say. Help!’
If the broker’s answer is some banal cliche about working harder or how change means opportunity –– but offers no real practical advice on how to go about it –– then agents need to question the reason they are at that brokerage.
The bottom line is that success or failure in the coming seasons will not be about working harder –– no, it will be about retooling your understanding of the market and adjusting your messaging.
The New Message
Just so you understand, the new message will focus on the market, not the transaction.
‘Out’ are explanations about escalation clauses, inspection caps and appraisal waivers and ‘in’ are explanations about regional migration, multi-family vacancy rates, and building starts.
It is a subtle, but critical, shift in messaging.
Here is what we are telling our team.
Know Your Market’s Numbers
I am not talking about comps, I am talking about macro (market) numbers.
Comps are and will always be important, but you need to be able to illustrate the relative strengths of various segments –– and that takes more than comps. If you cannot ably demonstrate that owning property in Richmond VA is a great long term hold, and why, then you risk becoming irrelevant.
Learn to Cross Domains
For years, we have only had to think about real estate prices and little else.
Now, a good agent follows the multi-family development market and rental rates.
Why? Because the alternative to owning is renting, and rents have gone up substantially, too.
Those who felt that renting for a year to ‘wait it out’ was a good strategy are coming to realize that their plan is not working out as intended. Most renters have seen their rents increase by anywhere from 10 to 30% in the past 18 months.
Even if real estate prices fall 5% on, say, a $500K home, that equates to a paper loss of $25K. $2000/mo in rent is a guaranteed loss of $24K and delays your start time on a 30 year mortgage by another year.
Every yin has a yang.
Control the Narrative
Your clients are, at some point, going to get spooked because of a blogger or an article from CNBC predicting 2008 redux –– and you need to be able to explain why that is highly unlikely. Remember, even in the worst of times, the market didn’t go to zero –– close to 14,000 homes were sold in 2008.
The bloggers and supposed pundits are having a field day with this shift and are screaming really negative stuff at an unprecedented rate. Most of these so called ‘experts’ have predicted 10 of the last 3 recessions (and no, that is not a typo, and yes, I am being sarcastic). Their record at predicting the future is terrible and have little to no credibility –– but your clients don’t know that. They are scared to death.
The bottom line is that if you don’t inform your clients, then someone else will –– and they will do it poorly.
Don’t let their message cost you business.
Challenge ‘Market Timing’ as a Legit Concept
Please, if there is nothing else you take from this article, it is the ridiculous idea that either agents or clients can successfully time the market. ‘I am going to wait until _______ happens (rates fall, prices fall, market settles, some other event) and then enter the market’ is a fool’s errand.
If Warren Buffet can’t time the market, what makes any of us think we can?
If a client suggests that they are going to wait because they think that they can time the market, then ask them what investments have they made that will pay off in the event that the market does fall. In other words, have they bet against Home Depot, Zillow or shorted the ITB?
Of course they haven’t –– they are just hoping against hope that they will get another chance to go back in time and buy when they should have.
And hope isn’t a strategy.
Sorry to state the obvious, if any of your clients could actually time the market, then they would be calling you from their $27M villa on Lake Cuomo, not their $2,700 per month 800 SF apartment in Scotts Addition.
The points above are just some of what we are teaching –– but there are many more.
Change is Inevitable
Look, all markets are fluid and subject to rapid change –– it’s what markets do –– they change.
And while the rate of change feels particularly rapid this time, remember, it was only a few years ago that not only did we think the entire economy was going to completely collapse, we also thought we all might die from some strange disease we had never heard of!
About 10 years before that, people were literally hoarding cash under their mattresses as the banking system nearly imploded.
And before that, there was the Dot Com bust, and the S & L crisis, and the foreign debt crisis, and the ’87 crash, and Stagflation.
Notice a trend?
The market is always in flux –– and both disaster and rebound are always right around the corner.
The Transaction Count Will Fall
The one thing that is pretty much guaranteed is that over the next several years we, as agents, will be fighting over a decreasing number of transactions due to a decreased listing count. The housing deficit is a real thing and has been building for well over a decade.
Understanding the underlying market fundamentals as well as alternative forms of finance are what you need to master to protect your place in the emerging market. Being able to speak fluently on migration patterns, listing count, absorption rates, ARMs, and the yield curve matters a lot more than it did even a year ago.
It goes without saying, those who can elucidate the impact of changes and offer strategies to deal with the new market are the agents who will emerge victorious. Those who can’t will fall by the wayside.
In closing, I will allow that sometimes our attitude requires adjustment and we all need some good old fashioned motivation –– and a tried-and-true cliche can do the trick. But in a rapidly evolving market, motivation without instruction is largely wasted.
So when you ask your broker about what you should do and they tell you to ‘think outside the box, because it going to be an uphill battle, and it’s hard to beat a person who never gives up,’ then they are in effect telling you that they don’t know what to do, either.