Dr. Lawrence Yun, an economist for the National Association of Realtors, says those selling real estate should not fear a slow-down. “The fear is understandable given the turn in the market in recent months from late August until now. Sales are down compared to last year. Homes are sitting for longer periods, but the fundamentals of the housing demand, the potential buyers, job creation and growth, are strong. 2019 home sales will be similar to 2018 and 2017. They will not be moving drastically one way or the other.”
Dr. Yun says data shows new home sales are up more than 3% in 2018 over 2017, but existing home sales are down 2%. The data is also showing that the price of homes in 2019 will stabilize.
“Home prices are not moving either. They will still increase, but at a much more moderate pace of increase. It will be in line with people’s income growth.”
Dr. Yun says what agents may be feeling more than market forces is the rising number of real estate agents in the industry taking a piece of the same pie. He counsels agents to stay focused on the customer. “Look at the consumer experience. What do they value in realtors? They want someone who knows the local market, who also knows how to negotiate contracts, and someone they can trust through the process of either buying or selling a home.”
Prospecting brings Success
“Most business comes from repeat clients, referrals and recommendations,” says Yun.
This is the same realization real estate agent Drew Armstrong has learned over several decades in business. “I maybe only missed 3 days per year in ten years of prospecting. My partner and I very consistently prospected for a long, long time. Our numbers got better and better. We got to where we were consistently doing 200 deals a year. You get to a point where you are well known in the community, and people would begin to call.”
Armstrong has built a strong business, even if the market does take a turn, it doesn’t concern him. “The thing is even when there are lean years, if you say 60% of transactions that occur when it’s crazy, someone still has to do them. In selling real estate, the first ones who are impacted in lean years are the ones who don’t have the book of business, and they don’t know how to prospect. So, they all leave, and if ten of them are doing ten transactions a piece, that leaves 100 transactions on the table for someone who is good.”
Real estate agent, Ricky Carruth, agrees prospecting is necessary for success. It’s helped him to consistently close on more than 100 properties per year for several years.
“Never stop cold calling property owners, and the good thing about that, it’s unlimited. You can’t call every property owner in your market ever in your whole life. Even if you call them 24 hours a day for the rest of your life, you’d never call them all. And what’s so funny is, is if you did call them all, say it took you 20 years or something like that, to call them all, and you did, and you came to me to tell me I’m wrong. I would say, turn right around and call them all again because now 30, 40, 50% of those properties have changed hands, and all those people are 20 years older. Now, they’re probably going to want to do something. It’s just so never-ending when you get into that property owner game.”
He continues, “and then you start to realize how unlimited the business is. There’s just no way that you can handle it all. When you really get into that mindset of understanding that, it’s unlimited, now nothing can stop you. You’re not worried about losing a deal. You’re not worried about what’s going to happen with the market. You are not worried about anything, because you know you have the mentality, now you understand.”
“When the market crashes, closings are still happening every single day. Closings are happening every day now, and they’ll happen every day from here on out, regardless of what the market does. You have job security for the rest of your life, and it’s crazy that the failure rate is so high in real estate, but the opportunity is still … it’s limitless,” says Carruth.
“When the market feels tight, that’s when I do my best work. It weeds out agents, and creates an opportunity to buckle down and come out stronger with more potential for new business,” says Gino Belfari, CEO Berkshire Hathaway HomeServices.
Gino cautions agents to get in the right mindset for success. He says every day should have time devoted to prospecting. He advises to plan out your whole work year, and to work harder during the last quarter of the year when most agents are enjoying the holidays. “Save your money. You’ve had a good long run, let it cover slower years. My best year was always the recession year.”
Real Estate agent, Aaron Wittenstein, says he feels a shifting in the market, and he’s ready for it. “We are in a changing market. We’ve flipped in the market where we are more 60% buyers and 40% sellers. We are turning much more into a buyer’s market. The interest rates are rising, so buyers won’t buy as much, and listings will sit longer. Prices probably won’t go down very much. So, what we are doing is I brought on two buyer specialists on my team, and we are going to start putting more money into buyer lead generation, Facebook advertising, google, open houses to bring those buyers in, because I know it’s going to be a much larger part of the business, and it’s something you’ve got to get a real good leg up on.”
The power players in the industry have a plan in place to weather any possible down turn in business. However, Dr. Yun stresses fears over the market are more emotionally based than factually based. “They’re having an emotional reaction, but rest assured, next year looks to be similar to this year. Rising interest rates is a negative, but the increase is expected to be moderate maybe 5.5%, and by historical standards, it’s still an attractive rate. The economy is doing well. Jobs are being created. The economy fundamentals are positive.”