I’ve been flooded with emails from people wanting to know are we headed for another Great Depression. Now just to set the record straight, neither the Secretary of the Treasury, nor Warren Buffet are calling me asking me for my input…but I don’t mind providing my understanding of where we currently fit into history.

Panic doesn’t cause depression; bad policy does. Foolish decisions regarding increased taxes, trade tariffs, and monetary policy are what caused the Great Depression. A great read on the subject is a book called The Forgotten Man – A new history of the Great Depression by Amity Shlaes. You’ll see how the 1929 stock market crash did not cause the Depression.

Another great example of how different a time this is to 1929 is that during the Great Depression countries, especially America, were isolationist by nature and tried to enact a win-lose economic policy. Just last week the Fed, European/British and Canadian Central Banks all lowered rates in unison and even though this cut won’t do much to bring up the credit market, it is a radical contrast to what took place during the Depression.

We are obviously in a recession and will be for a time but, as we are already seeing out West, there’s plenty of demand for discounted homes. Many short sales and foreclosures are in multiple bid situations. There’s money to be made in times like this but it requires us to take the emotions of our fears and apprehension and pour it into the diligence of our daily activities to generate leads.

I don’t know about you, but I am keeping my eye on the situation and then putting my head down and getting back to work.

Hope this helps.

It’s a good life!

Brian

Over the years many of you have heard my buddy Joe Niego talk about not having a spray and pray approach when it comes to the focus of your business and how to generate a lead…and he is so right. That’s why we teach the working by referral system – to help you maintain your focus.

However, in order to get an offer accepted today, the rules have temporarily changed. Helping a buyer has always been a process of elimination. You educate a client in a geographic area and start eliminating homes that they don’t want until they find the one or two they like the best. You then write an offer, negotiate, get it accepted and work on getting it closed.

Today if you write an offer on a short sale or a foreclosure you have approximately a 1 in 4 chance of getting it accepted – even if it’s the best offer. You have a 1 in 3 chance of even getting a response. Many of us are frustrated because this is not how the business is supposed to go. Well folks this is how the business is going today. You need to educate buyers that we’re going to follow the spray and pray approach.

“We’re going to find a home you like, write an offer and there’s a pretty good chance we may not hear back. There’s also a pretty good chance the offer will expire without hearing back so immediately after writing an offer, we’re going to look at more homes. We may have to write offers on five homes to get one accepted.”

This is not how I like to do business and I’m sure it’s not how you like to do business but right now we need to have different expectations and so do our clients. As long as short sales and foreclosures are the first choice of buyers we have to educate them that they going to have to put up with a season of frustration for the opportunity to get one of these deals.

As I told a young buyer the other day; you’re buying this home for $100K less than it sold for a year ago…it will eventually regain it’s value and how long would it take you to save $100K?

So yes we’re going to have to spray a lot of offers into the market but don’t forget to pray. You’ve got to have faith in this market: Faith that things are going to work out; Faith that the market will turn; and faith in the intrinsic value of real estate itself.

I have faith in you.

It’s a good life!

Brian

One observation I have of our society at large today is the extraordinary lengths to which people go to avoid pain at all costs. It seems as though any discomfort must be remedied immediately. As markets tighten and the fed rushes to change rates, people feel the pinch and the government sends out billions in rebate checks, and the many borrowers who overextended themselves begin to use their house as an ATM, it can seem like the only solution to search for a bail out.

The real estate business is going through a time of challenge and stress but it’s part of the natural order of things. Prices go up, prices flatten out. There’s no inventory followed by too much of it. I’ve always said it’s a good life; not a great life. Sometimes we have to realize that part of this life requires us to endure discomfort and persevere through tough times, feel fear and all we can do it suck it up, put one foot in front of the other and do the best we can for that day.

Don’t look for someone else to solve your problems. Don’t wait for the market to correct. Don’t expect a government program to bail you out. As you persevere and push through you’ll be strong, better and more resilient on the other side. You’ll have a better business and be more equipped for life.

It’s a good life!

Brian

A couple of years ago, buyer or seller objections were likely related to the lack of inventory, or to multiple-offer scenarios. While this presented its own set of challenges at the time, today inventory is up, the market has adjusted and objections are a big piece of the puzzle you have to solve. Oftentimes an objection is the only thing standing between you and doing business with someone.

Typically, objections are just smokescreens for peoples’ fears. Instead of telling us they are afraid, they’ll throw up a smokescreen as a way to get time to think. When making a decision, we are committing to something and that can make us nervous. And if there’s one thing that can make people nervous, it’s buying or selling a home.

Listen to your client’s concerns; try to help them isolate what is causing the fear and then work together toward a solution. Remember, this is not a sword fight. A transaction is a commission that’s often already spent, but a client is an asset that grows and grows for years to come. Don’t win the battle and lose the war. If you have a desire for approval,  it can be easy to get sucked into an objection so don’t be defensive when you encounter objections. Take a listening approach to this and remember; objections are a smokescreen for what the real fear is.

A professional is excited to deal with obstacles...so go into battle for your clients; not against them!

It’s a good life!

Brian

With two adults and six active kids, you can imagine how much laundry there is to wash at our house. Sometimes we miss a couple of days, the baskets in the kids’ rooms overflow and when all piled together, the mountain of clothes looks like an overwhelming task with no end in sight. We have a choice at that time; clean clothes or go shopping for more.

As grown adults when we get behind on our lead-generation activities such as writing personal notes, making calls or doing Pop-Bys to our favorite clients, it’s just like a pile of dirty laundry. The thought of catching up seems overwhelming, the notes begin to pile up, and rather than sitting down and dutifully going through these one at time we let our minds drift: “Let’s run out to the Realtor® store and buy a talking house sign”, “Let’s go buy some internet leads”, “Let me do anything other than chip away at that big pile of unfinished tasks which will ultimately allow me to get my financial house in order.”

Very few people allow their dirty clothes to pile up for weeks on end, but in my experience, many small business owners will allow their lead-generation activities to pile up. Allowing your laundry to pile up is not the most hygienic thing to do… and if you put it off long enough, you’ll have nothing to wear. Putting off lead-generation activities isn’t too healthy for your business either and eventually will leave your financial cupboard bare!

It ain’t sexy but it’s simple enough: take care of your business before your financial challenges become your personal dirty laundry.

It’s a good life!

Brian

Recent data distributed by Realtytrac, a company that compiles data on home foreclosures, showed that foreclosures are not a national crisis, but more of a regional problem.

There are pockets, places such as Stockton, CA and Las Vegas, NV where the foreclosure rate is in excess of 4%, however, the national average is 1.033%. Considering the fact that 30% of all homes are actually free and clear of any mortgage, the true foreclosure rate is actually seven tenths of 1% of all homes.

Although the media loves bad news, organizations such as MSN, Time Magazine and others are now starting to report factual data such as this to give the market some perspective. They whip everybody up into a frenzy and are then able to present a counter balance story. Either way, know your facts, know your numbers and give your clients perspective.

Great sources for data on the web are NAR, AARP and MSN Money. In print, check out Realtytrac, Swanepoel Trends Report, and Money Magazine. I’ll also be doing my best to distribute solid data so that you can keep perspective and help your clients do the same. Keep your head down working hard.

It’s a good life!

Have you ever noticed when the Fed cuts rates and there’s such a big deal about it in the media that many times it doesn’t show up in a reduced mortgage rate? The only problem with this is that the typical consumer thinks that the Fed rate and the mortgage rate are the same.

It’s a good thing to always be prepared to let your clients know that the Fed rate is the rate at which banks borrow money; not the rate at which they loan money.

Right now, what the market needs is not another rate cut but a loosening of the mortgage restrictions so that more folks can qualify for a home. But don’t worry…every time the market goes through a correction and banks get scared tightening up their lending criteria they eventually loosen up the purse strings again. It’s a gradual process and not one you’ll particularly notice but trust me, banks need to lend money to make money. So folks with decent credit and a good job who may not have large down payments will be able to get back in the game very soon. The recent legislation to expand the conforming loan amounts will certainly help entry level buyers in the more expensive states.

Once first time buyers can buy, move-up clients can sell and the high end will loosen up as well. This is all a very predictable cycle that’s been happening for over fifty years. Stay the course, build your business…there are plenty of opportunities out there.

It’s a good life!

Brian

I’ve always had fun with technology over the years; I appreciate its possibilities, and am excited to be moving into cyberspace with this new blog. This space will be a great opportunity for me to connect with you on a more frequent basis and to share some of my thoughts on business and the market. It’ll be a new dimension to our relationship.

If you’ve ever been to one of our nationwide events, you know how strongly I believe in cultivating relationships as the way to build a rock solid business. Relationships are the cornerstone to working by referral and the surest path to a long-lasting and fulfilling career.

This blog will be somewhat conversational and written in more of a stream of consciousness. If you’re interested in receiving it automatically, click on the RSS Feed button at bottom right and you’ll receive the blog automatically as we update it.

So I’m glad to finally join the blogosphere and keep in touch on a regular basis.

It’s a good life!

Brian