Gary Keller recently held a Masterclass for the 100 largest Keller Williams teams. Here are his thoughts, captured in notes, about the current and future state of the real estate market.
- The shift is here; if not in your market, it is coming.
- If rates had stayed low, how many homes would have transacted?
- Massive amounts
- This means there is still a pent-up demand for people to transact when they feel it is time.
- We are close to the historical average on rates.
- However, we have a decade of buyers and sellers who think 3% is average and think this is the worst time in history.
- We have to help them see the most important thing is the house, and rates will fluctuate.
- To survive and thrive in this market, we must take our unfair share.
- We do this by being very dedicated to our lead generation (And do more of it!).
- Unemployment: 10,000,000 - 11,000,000 positions available not filled in the US
■ Mostly all in the service industry- Goal is 6%, currently ~3.5%, so to the government, we are better than good.
- Read Harry Dent on predicting what people will spend their money on. https://harrydent.com/
- GDP - code for consumer spending
- Government wants 2%. Above that, we are too hot.
- Spending is the economy.
- 2 consecutive quarters of loss is a recession.
- We are there now. We are in a recession.
- Inflation
- Goal is 2%
- We are at 8.2%
- Raising interest rates literally creates a situation where the government slows down our industry. No other industry has such an impact.
- ■ This is because the housing market is such a driver of inflation
- Inflation literally polarizes a society.
- The rich get richer, and the poor get poorer.
- The rich buy more assets the poor sell, then rent them back to them.
- Two tools the government has to stem inflation
- Interest rates
- Policy
- People have money and want to spend it, which keeps driving inflation.
- Consumer debt is increasing with this inflation.
- Car defaults are at 1.6%, which is the highest in a decade. Still not bad, but rising.
- We are experiencing the second-largest drop in home sales in history
- The first is the great recession (2007-08)
- 4.1M homes in 2008
- 4.3M in 2009
- 4.2M in 2010
- 4.3M in 2011
- Gary predicts 4.1M- 4.2M sales in 2023.
- 65% of adults will own a home in their lifetime.
- More people than ever still getting into the business.
- The number of people getting into the business has not slowed down. There are more people in online RE schools than active agents.
- The number of agents will eventually start to drop as sales get tougher.
- Price reductions are inevitable (GK predicts 10-15%).
- March 22 - 10% of the listings had had a price reduction.
- Now right - 50% have reductions.
- If prices don’t drop, then these reductions take longer.
- The Fed wants prices to drop so affordability to go up.
- Question for sellers...Do you want to wait 10 years for the house and area and stay where you don’t want to be?
- What if it takes 5 years or more for rates to come down and/or never get to 3%?
- Will you never buy and enjoy the wealth-building part of home ownership?
- Consider charging a transaction fee.
- Help cities have affordable housing.
- How can we help? Do cities have land they can sell cheaply and we can build on?
- Run an economic model for your team and use lower conversion numbers (50% or less) as they will drop as the market changes (Editor’s note - ClarityNOW can help with this).
- Track where your success is happening.
- Can you double or triple down on those areas?
- Three things to focus on!
- Number of contacts.
- What are our target lead gen sources? Where is the success going to be?
- Database may drop during this time, and FSBO and expireds may go way up.
- What is your messaging? What messaging is working?
- The money is made coming out of a market shift.
- We need to be doing things to help our agents cut costs (including in their personal lives).
- Give our agents a very clear perspective of what is going on. Be real!
- Think of the work you are doing now as booking things that will hit big in 3 years.
- Your database and pipeline are so important now! Make great notes and reminders down the road so you can follow back up with people.
- Fine-tune your 36 Touch tactic.
- Budget model (Editor’s note - ClarityNOW can help with this).
- Spend the money on lead generation for the channels that are converting.
- To do this, track them at a high level!
- Divide them up among the people or pick who gets the best leads.
- The choice can be easy, the best agent gets the best leads. Want more? Be the best. You can’t afford for agents to be losing leads.
- You either have less money or less people.
- f you have people who won’t do the work or can’t convert, you’ll lose money.
- Be feeding the agents that are working and growing and that WILL convert the leads.
- Whatever you have been doing with lead generation - multiply 2-3 times.
- You just have to have a great average and limit the lows throughout your entire career.
- As leaders, you have to act like business people, not a friend.
- Sometimes, this is making very tough decisions.
- The law of deal-making:
- If you name the price, I name the terms.
- If you name the terms, I name the price, etc.
- Record price adjustment conversations for the entire team, and others can learn. Then mastermind around the conversation.
- Raising rent rates is what will get us back out of this market. A client can buy for that price versus the rent, more people come into the buying market.
- As leaders, it is your job to educate clients on all this.
- It is our obligation as a leader they trust!
- Who is a great older agent that may be looking to retire and sell their database?
- Seek them out. Hunt for them.
- Merger and acquisitions; be on the lookout.
- Meet and discuss all options you have and which directions you want to go that will generate income.
- Who is on our bench?
- Your bench is who you are coaching/helping weekly for free.
- That is your bench
- You HAVE to be teaching and training also people outside of KW.
- You will be building our bench.
- Teach agents and then also teach people investing.
- Transaction management.
- Online training or in-person classes.
- They can get leads in the pond.
- Online tutorials and record training; post online.
- One example: Run an ad to recruit agents - “Are you lonely?”
- Your bench is who you are coaching/helping weekly for free.
- Wholesalers:
- Get in with them and help them get at least 1 person in their organization to be licensed, and then you can pay them a referral fee for all the deals they don’t get and refer you to the person.
- Isolate all ventures in the P&L and ensure each is profitable (Editor’s note - ClarityNOW can help with this).
- SOI/Statistics of Income will not always give you what you want and need during a market shift. During a shift, you need to be looking for business everywhere.
- Your business will never exceed who you are as a person. Be a great person!
- Your character will define the success of your business.
- In other words, your character and how you treat others will be the ceiling for your people.
- To recruit the best people on the planet is to go teach.
- Example - Teach Gary’s Empire Building class.
- Understand your leadership style and what you need in people around you.
- The wrong person will also demand things from you and even be more equal to you even though you are the one that built your business. Why would you be equal in something you built?
- An option is they get paid extra for what they bring to the team.
- This goes back to always having a bench.
- Have enough admin support to handle the business so the salespeople can do more each. And this is more profitable.
- Then you are running the rainmaking machine to get top agents.
- You are either agent-based or admin-based.
- If you are salespeople based, have 50 people minimum in your network.
- Admin-based, there is less need for agents.
- Do NOT get in the middle where you aren’t either model.
- Focus on 1:1
- 2:1 admin-based versus agents
- Gary says about 1:1
- This includes inside sales associates (ISA), etc.
- The executive team is the rock of the company.
- For admin-based, Gary is talking about mostly adding virtual assistants.
- You can manage people in a group but can’t manage their performance.
- You manage individually 1:1
- Have a good training calendar.
- Teach a class on building big businesses.
- Do this once a month or a minimum of every 2 months.
- Do this for your business and make sure all attend!
- Most businesses do not have resources like you and have no idea how to build a huge business.
- Be disruptive in your business.
- Find a business crushing it, then find the leader.
- Discover what they are doing
- There is a trend line. To get to the HUGE business, baby steps are taken to get the consumer to buy into the changes.
- In your business, there are two main things:
- Who controls the leads.
- Who has the technology. (Editor’s note - ClarityNOW can help with this).
- Start a charity in your name to give back to the community.
- Taxes (Editor’s note - consult your tax advisor for specific guidance)
- Augusta Rule
- 199A tax code - Maximize the deduction
- QVI deduction
- Tom Wheelwright’s book on taxes
- Win-win wealth strategies (Editor’s note - consult your tax advisor for specific guidance):
- Maximize tax deductions
- ERC tax credit
- Pay dependents
- Employee retention tax credit
- Opportunity zones
- Create an opportunity zone fund (Editor’s note - consult your tax advisor for specific guidance):
- 30 months to deploy money
- After 10 years, you can sell and pay 0 tax
- Cost segregation
- Energy credits
- 45L credit
- Mistakes made in developing an ISA department:
- Rainmaker isn’t involved.
- The leader has no passion.
- Your price is your promised guarantee.
- Use the motivation of why they contacted you.
- They are not to answer all the questions. “That’s a great question, the agent will be able to answer that…”
- Always inspect the department.
- Define what an appointment is.
- Conversation within 90 days of closing.
- Both decision-makers are present
- ISA checks in after the appointment.
- “Hi you met with my partner, agent name, I wanted to check in and see how it went and see if I can help with anything”
- If the agent botches it then it is noted in the CRM.
- KPIs
- Apps booked, App held, Qualified appointment, Closings
- Minimum standards
- 13 appointments
- 90% are in person
- Minimum standards
- Apps booked, App held, Qualified appointment, Closings
- Best agent gets the best appointment.
- Conversion rates are a huge part of this.
- Confirm 24 hours in advance so you’ll know if they show
- The agent is NOT allowed to call the people before the appointment. They can call 1 min after the appointment is late but not before.
- Don’t view ISA’s as a stepping stone
- Call once, call again, text, email, repeat.
- Call 3 times a day the first 3 days
- 40% is the maximum cost of sale, including ISA bonus.
- Goal - 67% set to held rate
- Set your fee based on value… Defend your value.
- The buyer's agency is simply a document that enables us to negotiate our fee on your behalf.
- Lender has to know. Offer a commission menu on not only the list side, but also the buy side
- VALUE is the driver.
- Find a class that teaches on this to the agent role.
We hope these brief notes will give you nuggets to succeed in today’s market. Real estate agents and coaches today trust our cloud-based software platform to help them build a profitable business – see for yourself what a brighter future looks like with ClarityNOW!
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