The real estate profession took a nose dive in the last recession, and it also took the longest to recover. However, coming out of this pandemic induced recession of sorts, the real estate profession is emerging as the strongest sector of the economy. Brian Buffini is one of the leading thought leaders in the real estate space. He puts a heavy emphasis on growing your sphere of influence to find lasting success.
The Market Pivot
He wants you to beware of what he calls “the market pivot”. We’ve never seen interest rates this low, and the Feds are saying they will keep them low for the next couple of years.
“We expect to maintain the current 0%-0.25% target range for federal funds rate… through 2023,” Jerome Powell, Chair of the Federal Reserve.
The real estate market is typically “hot” when you see low unemployment matched with low interest rates. Economists are predicting unemployment at the end of 2021 to be 5.5%. By the end of 2022, they believe it will only be 4%.
As the market continues to heat up, you need to be aware of:
a. Decentralization
People are leaving cities for the suburbs or more rural areas. They are leaving behind expensive rents, crime, and some of the most stringent lockdowns.
b. The Changing Face of Relocation
As more people are given the flexibility to work from home, they are choosing to move to places with lower taxes, less regulations, and warmer weather. We are seeing a big exodus out of California and New York. Arizona, Texas, Tennessee, and Florida are seeing a boom of new home buyers.
Buffini advises agents to start building your network of real estate agents. You need to have “go to” local, regional, and national agents you can work alongside to make deals, as your clients look to relocate. He believes you could be receiving up to 20% of your revenue from your networking with other agents. Now is the time to build a database of agents.
In July, 52% of young adults lived with their parents, up from 47% in February of 2020. This living arrangement is causing tensions, and research is showing that many millennials are looking to get into their own homes. Even though they are heavily tech savvy, 94% of them end up choosing to work with an agent who was referred to them. They are also bypassing urban spots for bigger homes in the suburbs. They are passing up starter homes, and spending more money, with help from their parents, to get into larger homes.
The Industry Pivot
Real estate offices are becoming more decentralized. Agents are becoming more isolated and less skilled. According to NAR, the average agent income in 2019 was $35,000. Agents with less than 2 years of experience average less than $10,000 in income. This is indicative of the decentralization taking place in the industry.
However, at the beginning of 2021, there were still roughly 11 million people who had lost their jobs during the pandemic, and they are still unemployed. Get ready for a huge wave of new agents who need the work, and they want to capitalize on the hot real estate industry.
Prepare for 2021
a. Create your Own Inventory
“If you have a buyer, you can go get a listing. We have inventory. It’s just not listed,” says Buffini.
Buffini recommends using this letter for prospective home sellers. He has had success with it.
Subject: I May Have a Buyer for Your Home
Dear Homeowner,
I’m currently working with a buyer who has been unable to find a home in your area. Your home has many of the features my buyers finds desirable.
If you have any interest in selling your home, I would be more than happy to arrange a one-party showing of your property.
Please contact me to discuss.
b. The Real Estate Career Path
This is the typical ascent of an agent: licensee, producing agent, the professional agent, industry leader (starts a team, becomes a broker). It takes time to master the skills you need to advance to the next level.
c. Train and Retrain
You cannot let up for a second in this industry. You must get trained, and continue to train with the best agents and coaches. They will help to hold you accountable, and teach you what you can start doing immediately to get more clients. Skip trying to reinvent the wheel! Learn from those who have already figured out what works. If you are lazy, you’ll get left behind.
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