If you are a real estate agent or broker, you are probably wondering and speculating what the longterm effects of the pandemic will be on the industry and your business. I get that this is a truly scary time.
However, I am on a mission to help each and every one of you not only understand what is to come, but prepare for it, and adopt the mindset you will need to come out on top as the longterm effects of the crisis take hold.
In today’s post, we will examine:
How buying behavior is already changing in the industry
Why the rent crisis is going to be a major catalyst for change
What real estate niches are going to win & which will lose
How to communicate your value to attract the majority share of your market
What challenges brokers will face in agent recruiting and retention
The mindset you need to not only survive this but thrive through it
If you are unwilling to stick your head in the sand and give up this article is for you!
If you want to be the real estate professional that causes the largest positive impact on your community this article is for you!
If you want to have a business at all in 18 months, you simply can’t afford to miss this article!
The Impact Of The Rent Crisis
Right now, tenants everywhere are struggling to pay their rent, have stopped paying rent, or will stop being able to pay their rent soon. As a result, the owners of those properties will become financially strained to the point where they won’t be able to afford their mortgage and/or property taxes.
Guess what happens next?
You guessed it; the properties will be foreclosed upon or scooped up in major buyouts by Wall Street investment firms and hedge funds that are now more interested in the property management business this time around than they are foreclosures. If the home is foreclosed upon, both the tenants and owners could wind up on the street.
If the owners are unable to pay their property taxes, the funds that are normally allocated to civil services like firefighters, schools, police, and healthcare are slashed. When funding normally provided to those civil services is cut:
Crime rates rise
Property values fall
People struggle to obtain viable healthcare
Homeless and unemployment rates skyrocket
Educational programs disappear and test scores plummet
Do you see where I am going with this?
The major long-term impact of people not being able to pay their rent will have a trickle effect that will feel very reminiscent of the recession.
I’m not saying all of this to scare you or for some political positioning. I simply want you to understand the headlines that are about to scare the crap out of the rest of the industry. The more you understand now what is to come in the months ahead, the more powerful of a position you will be in every step of the way.
This is all about giving you the leverage to turn this time into the biggest and best opportunity of your entire real estate career.
What Real Estate Niches Will Be Impacted The Most?
Not every real estate niche will be impacted in the same way. Remember, a niche has nothing to do with a random neighborhood you farm but instead is identified by the demographics of your ideal clients. Common examples of real estate niches include first-time homebuyers, luxury waterfront listings, 55+ seniors looking to downsize to a condo, etc..
There are some real estate niches that are about to become cash cows. There are others that are about to be hurt hard. Here is what you can expect from the niches that will be impacted the most for better or for worse.
Cities vs. Suburbs
We are already seeing people flee the cities in a mass migration to the suburbs. This push comes from the realization or perception that living in more rural and remote areas is safer when it comes to avoiding diseases like Covid-19. Furthermore, those that can no longer afford or don’t want to pay the higher cost of living in major cities like New York, Miami, and San Francisco are flocking to the burbs to save money.
On another note, as many people and companies have now discovered how possible it is to work from home, virtual workers will remain more prevalent than ever before. This means it is much easier for those with high-paced jobs in the city to work safely from their home in the burbs without the stress of a long commute.
On May 1st, 2020, articles from the associated press started spreading like wildfire of people mass migrating to the burbs as a result of COVID. In fact, check out this blurb from one of the many articles outlining this effect:
“Ben Greenzweig is itching to move his wife and three kids South, a plan that may get accelerated due to the coronavirus pandemic.
The CEO and co-founder of conference company Momentum Event Group, says he’s looking to move to either North Carolina or South Carolina from the New York City suburbs in Westchester County, for cheaper costs and bigger living space amid fears that a deep and prolonged economic slump in the state could eventually force residents to pay higher taxes.
“It would be an unbelievable escape," Greenzweig, 42, says. He typically works from home which gives him flexibility.
“Our children's involvement in school is the single largest tether keeping us here. If there’s a hint that school won't resume in the fall for my kids, then the biggest reasons for us staying here, which are friendships and school activities, evaporates."
This perspective is quickly becoming the new norm! So what does that mean for you?
Well, if you live in a major city, you should be going after the listings of people wanting to escape to safety like Ben Greenzweig and then refer them out for passive income on their new purchase. If you work in the burbs, then this is the time for you to be implementing strategic sales funnels that attract all those people flocking your way.
Just as we saw a major influx of real estate investors emerge during the last housing crisis, you are going to see a lot more activity from investors. Unfortunately, not all of it will be positive. Many landlords may need to start unloading their properties to avoid foreclosure after tenants could no longer afford to pay rent. On the flip side, those landlords that are financially able will probably try to expand their portfolios.
Of course, there will also be a sea of newbie investors looking to take advantage of the situation just like last time. If you want to go after these investors, I want to caution you to think of them as first-time homebuyers. They will need a ton of education, patience, and handholding so you should only target these people if you are passionate enough about them to make them your permanent niche. Remember, not every niche is right for everyone so you should make sure it makes sense for you to target them before you begin.
Foreclosures, Short Sales, REOs
Sadly, we are about to see a ton of new foreclosures, REOs, and short sales blanket the markets. In some areas like parts of Florida this is already happening quickly. I can tell you that the town where I live about an hour south of Tampa (one of the top 10 markets in the country) is seeing them pop up at an alarming rate.
Obviously, there are going to be some agents that see this as a goldmine opportunity. However, I again want to caution you and give it serious thought before you go after these people. One thing that happened to a lot of agents that became “the go-to agent” for foreclosures and short sales last time had their businesses dry up pretty hard once the market recovered and they had to invest a fortune to rebrand themselves.
Furthermore, handling these types of transactions is far more complex and time-consuming than many agents realize. In fact, The Balance reports that the average time from contract-to-close on short sales and foreclosures is 4 months! That is a lot more time and work than the 30 days you are used to. Not to mention, you will be negotiating with a bank rather than a traditional seller which requires a certain level of expertise to avoid complications and additional delays.
Remember Your Role As A Problem Solver
No matter what niche you plan to target as we move forward in this new world, the one thing you need to understand to capture the majority market share is to communicate the problems you solve more than the services you sell. I go into depth about how to do this in this article, but I want you to understand is that people are not looking for something to buy but rather something that will solve their problems. For example, if you plan to target people moving from the cities you should emphasize all of the problems that moving to the burbs will solve for them and how rather than just posting local listings.
Expand Your Services To Stand Out From The Competition
Speaking of your services, if you are going to target any of these emerging groups, you should tailor your service offerings in a way that:
Makes you stand out from the competition
Instills trust in the people you are targeting
Communicates the unique value you offer
Showcases your expertise
Draws a bridge between the target’s problems and what you have to offer
For some of you, this may involve adding some brand new services to add more value to your clients. For example, I recently taught this Agent Mastermind webinar that explains how to not only add Residential Property Tax Appeals to your list of services but also how to:
Immediately earn cash for filing them
Get more referrals than ever with them
Use them to make people trust and value you more
Save homeowners thousands of dollars on their taxes
Plus I even give you an exclusive 70% discount off of the kit during that webinar that includes everything you need to start filing them right away! Watch the Agent Mastermind Webinar replay.
Everyone already knows your license helps people buy or sell a house. But they don’t understand how much work that involves so you need to spell out all of your services for them and explain why that service is so valuable to them.
A Mass Migration Of Agents?
Just as we are seeing the beginning stages of a mass migration of people to the burbs, we are seeing agents leave their brokers. Suddenly, the appeal of a virtual broker became very clear to people, and guess who is going to clean up as a result? EXP of course! They have just announced their transition to becoming an international brand as a result of their growth.
Another common theme is that agents will be blaming their brokers for anything or everything that goes wrong in their business and this period will be no different. Although recruiting season is typically around the Holidays, I think now is when you will see even more agents starting to look for a new brokerage. Ultimately, they will choose the one that communicates to them how that brokerage is a problem solver for the agent. It goes right back to communicating value again.
Therefore, if you want to attract all those migrating agents to your brokerage, you will need to make it crystal clear why you provide the most value to them. More than ever, this will mean supplying the most hyperlocal and relevant training content to agents that are struggling to navigate this challenging transition to the new world of virtual real estate. In fact, I have been flooded with requests from brokers to have me write and design a branded version of CE courses and training materials to attract agents to their brokerages as a result of all this.
How Will You Evolve Your Real Estate Business?
Quite frankly, everyone is in a somewhat unique situation here depending on their experience in the business, goals, location, etc.. I know it can be overwhelming and scary trying to figure out what the best moves for your business will be going forward. That is why I am offering completely FREE strategy calls to assess your individual circumstances and give you an expert, third-party strategy on the best way to proceed. Whether you have $30 or $300,000 in the bank right now I promise I have something to help you make the most of this time and come out even better on the other side.