Words To LIve By In A Down Shift

[Sandy Noll]

Many agents are feeling the bite of a down shifting market. This in turn trickles down to lenders, title, escrow, inspectors and appraisers. While it does seem tough out there, below is an article written by Gary Keller back in 2001, but applies to todays market. Great words of wisdom!

WHEN MARKETS SHIFT - Six Truths to Consider
Gary Keller
Chairman & Founder
Keller Williams Realty International
September 20, 2001 And is Still Valid today!!

Truth One: Markets shift - this is a way of life. Markets go up markets go down. It is an ongoing and never ending series of progressions and regressions. The cycle lives on. So, you have a choice: to rise and fall with the tides (be reactive) or rise and fall with your own intent (be proactive). The bottom line is that people buy and sell homes in all markets. Only the number of units and sales volume change. And, the larger truth is that markets are always in a shift transition. They never (except in a true depression) stay at the top or bottom.

Truth Two: When markets shift up, both reactive and proactive work. When markets shift down, only proactive works. Think of a shift up as a "might/might not have to" market. Think of a shift down as a "have to" market. The hard part is always fighting inertia or habit, and facing the key question: can you shift?

Truth Three: Make no mistake, when the market shifts new strategies are required. Market shifts require strategy shifts. Market shifts create new rules. New rules require new strategies.

Truth Four: You can put your faith in the Theory of Equilibrium. This is an economic concept that, in our industry, says: the number of agents in a market equals the amount of gross commission dollars that the market generates. The Fed knows this concept they use it to influence the economy. They lower interest rates to help more people qualify for home loans. Lower rates lead to more buyers. Higher rates lead to fewer buyers. The law of supply and demand lives on. For us, the law works like this: the amount of gross commission dollars that the market generates determines the number of agents in a market.

Here is the example I lived through in Austin, Texas. In 1986/87, we had about $1.5 billion in sales volume and there were about 5,000 agents in the Board of Realtors. In 1987/88 the market shifted down to $600 million sales volume and the number of agents dropped to below 1,800. Oddly, I had never done the math on this until yesterday. But, here is an interesting point you cannot ignore: the $1.5 billion divided by 5,000 agents equals $300,000 volume per agent. In 1987/88, the $600 million divided by the 1,800 agents equals $333,333 volume per agent. This is incredible - the number of agents dropped in nearly direct proportion to the closed sales volume. So, the point here is, while others back off, you press on. Maintaining your sales volume and your net income is actually, in the downshift, a massive increase in business relative to the market. When the next upshift occurs you explode.

Truth Five: The issue is not the so much the shift, but how long the lag continues before equilibrium is hit. No one knows how long this will be, so you just have to get after it, be more focused, cut expenses to the bone and hang in there. The larger point to consider is that the drop off of agents is quicker in a downshift and the increase of agents is slower in an upshift. This explains why agents who hang on during the downshift, grow and prosper when the upshift occurs.

Truth Six: In a downshift, it is "all hands on deck" time. No matter what your role or what you like to do to get business, when the market downshifts it is "back to basics" and "prospecting rules" time. There are two ways to get business: prospecting and marketing. In a downshift you keep doing both, but you personally (and all your team members) now spend a fair amount of time each day prospecting. You don't drop marketing. You think "marketing plus" adding call followup and personal contact to all marketing. And, to that you add straight up prospecting. Cold calling, warm calling, door knocking, open houses are now back in style! No more cherry picking leads. Followup, personal contact and servicing are key. Why? Because real business leads are precious and few.

Let this phrase keep you focused:"I am an opportunist . . . and, this is an opportunity!"

Thanks for the great words to live by!!

Sandy Noll
Realtor, eAgent
Keller Williams Realty
425-890-0878
[e-mail]
http://www.letsachieveyourgoals.com/
Woodinville, Kirkland, Bothell