How to be a Bigger Player in a Normal Market
We all know the market’s changing, and it doesn’t take a brain surgeon to figure that out. We know that things are different today than they were six months ago. Very different today than they were in January, February, March of this year. What I want to say to you to start is the following: it’s really more of a mindset and activity issue—meaning the market that you’re involved in—versus an economy issue. Everybody wants to make this something different than it is. This is a mindset and activity issue when agents are working. Things always happen in a positive fashion. When agents are not working, for whatever reason, obviously things don’t happen
Agents Influence the Market
I have said for many many years real estate agents are the creators of a good market and the creators of a bad market. We create a good market by working doing our jobs. If you’re talking to people all the time about real estate somebody is going to go, “Whoa! I hadn’t thought of that. Maybe that’s something we should do. Buy or sell.” But if you’re only talking to yourself, and never talking to the public, it’s hard to spread the word and get people into the mindset that they should buy or sell. So I want to say to you emphatically, if your market is not good it is a mindset and activity issue. If your market is really good it’s because of a strong mindset and the activities involved.
Entering a Normal Market
What we’re entering today is what I refer to as a “normal market”, meaning that we’re back to the way things should be. We’ve had an abnormal market for the last five or six years—accelerated appreciation, multiple offers, properties being on the market for 24 hours or less, sellers being very greedy, a strong sellers market, almost non-existent interest rates. The good players, people and agents like yourself accelerate their production in this type of a market. Why? Because, see, when you have an abnormal market, it doesn’t take any talent or still to succeed. However, when you have a normal market—talent, skills, mindset activities—are what separates you from all the rest.
I’m defining a normal market with 12 separate thoughts (in no order of importance). Review this virtually twice a day, all this week. Burn these into your head so you can discuss them intelligently with both buyers and sellers.
1. Increased Buyers Options
Normal listing inventory listing inventories are growing again, coming back to normal inventories, meaning buyers have choices. When buyers have choices prices go flat or decline. That’s a normal market. Abnormal—prices shooting up, multiple offers bidding prices up over list price. Normal—inventory is growing.
2. Decreased Seller Profits
We’re moving quickly from a seller’s market to a buyers market, which makes sellers very unhappy and buyers very happy. So what happens often when you go to a normal market the sellers that are used to making a lot of money quick become very unhappy with you when you discuss pricing with them. Got to tell them the truth about pricing. That’s called normal.
3. More Expired Listings
Agents that work the expired market will see expired listings once again, and as an agent you can expect more anger and frustration on the sellers part. As they’re looking backwards at the higher prices we’ve had from the year before. Just because you and I know the reality of the market doesn’t mean our sellers understand the reality of the market. Market stats, being honest, being up front, being a little confrontational with your sellers is what divides you from the rest.
4. The Importance of Sales Skills
Listings will be on the market for extended periods of time, versus a few days when we had multiple offers. Over the last several years, unskilled agents could take a listing, it would sell quickly, and the agent thought they had some kind of sales talent. It’s been fascinating to watch people that have zero talent get a listing and many times by mistake. Two hundred, four hundred, six hundred, eight hundred thousand dollar property. Get it as six percent, it sells, 3 percent it comes to the house. They’re on an 80 percent split, and they think they have talent when really the truth is the talent takes place in a normal market. We’re coming into that now.
5. Agents are in Demand
For Sale By Owners are not selling quickly, and more than ever, the need for a good agent’s advice once again is the difference. Do you really understand the sales process on a listing? How to get a listing sold? Do you have a good strong plan of action, a sales plan for your sellers. If you have one, you can get the expired from before and the For Sale By Owner.
6. Price Reduction Strategies
Sellers are lowering prices throughout North America, and skilled agents are helping to make those decisions on a regular basis a little faster. If you don’t have a price reduction strategy, start looking at that for yourself. Because all you have to do is look at some of the listings that you may have, and watch the fact that the days on market is extending, and the quickness of getting that high price is ending, which means that we have to learn to lower prices.
7. Low Producing Agents
Agents who are lacking strong sales skills and discipline are seeing low production now, worse than before, and are leaving the business. Finally we’re cleaning out some of those low and non producing people that don’t know anything. And for those of you that are skilled you almost got to applaud that they’re leaving because it helps you do a better job and it keeps sellers and buyers from looking at the fantasy of unskilled agents.
8. The Frenzy Over
Agents that work with buyers now have the luxury of more homes to show, and the frenzy of having to buy has started to disappear. That’s a big deal. That frenzy we had 2016/17, it was almost scary! Although for those of you the listed property, it was exciting. Take a listing, next day three offers.
9. Interest and Financing
Financing and interest rates have become a factor, once again, for both buyers and sellers. Interest rates have been creeping up slowly we all recognize that that changes the dynamics for both the seller and obviously for the buyer.
10. Your Market Share
Agents that know how to work understand the basics of the sales process. We’ll see their income increasing while the total number of sales is flat or decreasing. Your market share should increase during this type of a market. Because in a normal market those of you that know how to work have the sales skills to put into effect. We’ll see their income go up, the total number of sales stay flat or decrease. You’re actually doing a better job.
11. More Qualified Buyers
There’s less profit appreciation in homeownership today which expands the number of transactions as more people will be qualified to purchase a home. The frenzy is gone but more people will actually be qualified because interest rates are up a little bit but prices are remaining static. That opens up the market for you. This is what we want for you.
12. Solutions to a Normal Market
The skilled agents will start having fun again. For goodness sakes it’s been tough. Making substantial amounts of money in 2019, because the unskilled agents will be more uncompetitive now than they’ve been in the past. So I had a broker recently say to me, “OK, if this is what a normal market is.” And this is a broker that’s been in business for four years. This broker in his forty two or forty three agents have never experienced a normal market before. All he’s ever seen is that type of market. He said, “If you’re saying the my people should do better, what is the solution?” So here’s the solution to a normal market.
Preparing for a Normal Market
- 1. Every agent must aggressively work their database and reestablish the relationship with those they’ve not talked to and been in touch with for a while. If you’re ever going to work your database at a high level, in a normal market, you want to work it nonstop.
- 2. Each agent must get involved in strong direct prospecting. Talking to people, actual lead generation. Conversations versus passive prospecting, including their time and energy spent in social media. At some point you’ve got to recognize you’ve got to be talking to people to make this thing work.
- 3. Aggressively following up on your leads and working hard to get appointments set now. Set appointments for the month of December.
- 4. Strong prequalifying of every buyer and seller before you make a presentation or put them in your car. Why? Because you don’t want to waste your time. Your time is your greatest asset.
- 5. Being 100 percent honest with sellers regarding pricing because of the agent’s knowledge of market stats. Learn the market stats. That is a solution to this problem of a normal market.
- 6. Having a direct response to each objection a seller or buyer gives and being aggressive in asking him to sign a contract. Be the one that knows the answers.
- 7. Taking 30 to 60 days in skill development role play and practice if you want to make yourselves a bigger player in a normal market.
December is a great time for you to go out and participate in listing and selling real estate because the major portion 50 to 70 percent of the agents have stopped completely. I’m excited about your future.
Production Retreat West
If you really want to get involved with us at some point… January 14, 15, 16, we’re doing our annual Production Retreat. I’m going to spend all my time on:
- A) Working buyers
- B) Working sellers
- C)”A Millionaire Mindset”— how the people that make the most money think
- D) How to setup the structure to start developing a mini team
In either case have a great week. Talk to you next week. Thanks for today.
Mike Ferry is the global leader in real estate coaching and training. Watch Mike each week as he discusses a variety of topics to help real estate agents and brokers. Grow your real estate business by improving your mindset, developing your skills and creating a plan of action to increase your production!
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