Take cues from real estate history lesson | Inman News

Take cues from real estate history lesson

Technology gives us tools that weren't available in past downturns

By David Fletcher, Wednesday, March 2, 2011.

Inman News™

Flickr image courtesy of <a href=Flickr image courtesy of Daniel Morris.

As the story goes, a herd of buffalo stampedes across a wide-open range under a cloudless sky when the herd’s leader suddenly stops in his tracks. One of the herd’s older members lumbers over to the leader and asks why he stopped.

With his big brown eyes, and deep and whispering voice, he turns to his fellow buffalo and says, "I thought I heard a discouraging word."

The first time I experienced a real discouraging word in real estate was during the 1973-75 recession.

I had been in real estate for two years, serving as project manager of a 778-unit condominium project in St. Petersburg, Fla., selling about 25 units a month. Seemingly overnight, we jumped from the real estate fast-track to a housing train wreck.

It is not easy waiting in gas lines wondering what your next move needs to be because sales went from about 25 units a month to fewer than five, especially when unused construction cranes were nicknamed the Florida state bird, and unfinished high-rise condominiums cast long shadows over the entire state.

Hundreds of presale buyers canceled their contracts.

All of us just knew that the condominium industry was doomed, and several major developers thought it to be such a bad concept they wanted to find a new word for "condominium."

It was a time of stagflation, where high unemployment coincided with high inflation. Some described it as a period of "malaise." There was oil trouble throughout the Middle East. Sound familiar?

It was a difficult time, but our country got through it.

Then, when things started to level out, a second recession began in July 1981 and lasted until November 1982, the year interest rates soared to 21.5 percent.

In those days, you’d be hard-pressed to find a banker, developer, builder or Realtor in the country who believed the housing industry would ever see single-digit mortgage rates again — ever.

Twelve percent became the target rate to turn housing around, and that is exactly what happened. Sellers were "buying down" the rate to 12 percent, and buyers were closing sales.

You can understand why some of us more experienced agents don’t get overly concerned about interest rates moving up from 5 percent to 5.5 percent.

It was a difficult time, but our country got through it.

In 1990, the Gulf War and other factors sent us into another recession, but it ended in 1991. During this period, many homebuilders were unable to obtain loans to buy land or build homes on speculation. Without builders, developers lost their subdivisions. Sound familiar?

It was a difficult time, but our country got through it.

After that war ended, loans became plentiful again and the U.S. saw one of the longest periods of prosperity in history, from about 1992 to 2006.

Technology gives us access, history gives us perspective, but it is experience that gives us quantifiable belief in our country and our future.

Now here we are, for whatever reasons, in the worst housing slump in memory, with a recovery not in sight, and with rapidly rising gas and other prices staring us in the face.

As a commission-based sales agent who uses your car as your office, what do you do? Real estate is a local business. You can still make a great living by understanding the times and knowing what to do.

It’s time to put the proverbial box, which very few of us ever thought outside of, and think outside the car. Because it will not only cost us sales, it will get expensive if we don’t.

We have technology tools this time that we did not have in previous recessions. We can dig deeper to determine the price we are willing to pay to adjust to the times — not in terms of cash, but in terms of will.

Will the term "prequalify" take on a new meaning for the way you do business? Will you continue to put prospects in your car if they are financially qualified, regardless of other qualifying concerns, like when they plan to purchase, how settled they are on general location, and such?

Will it force you to put more emphasis on listings so you don’t have to do as much driving? Will homebuilders start authorizing commissions or referral fees for you to register a prospect by phone or Internet instead of having to bring them to the sales office?

What about sales training?

Thanks to mobile technology, will you look for more training through podcasts and webinars as opposed to going to conventions?

Are you willing to reduce your commission if your buyer purchases sight unseen? Think condo foreclosures on this one.

One of the lessons you learn along the way as a commissioned sales agent is this: When you are confronted with an unpleasant reality, you must dig deeper within yourself to test your resolve, and determine the price you are willing to pay to respond in a way that makes you better, not bitter.

It may be difficult, but you can get through it.

David Fletcher has been a Florida real estate condominium and new homes broker for 30 years. He is the founder of New Homes Niche, a builder-certified co-broker training system designed to assist prospective short-sale buyers move into new homes. You can reach him by e-mail: davidf@newhomesniche.com.

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