Advice from industry experts: Tom Ferry, Grier Allen, and Steve Harney
What’s clear to all of us in the real estate industry right now is that agents need to do two things in the coming months; prepare and pivot. The questions of “How?” and “In what ways?” should be answered using good data and guidance from experts.
Tom Ferry (Founder, CEO Ferry International), Grier Allen (CEO, BoomTown), and Steve Harney (Founder, Keeping Current Matters) recently joined forces in a live session to share some insights into the housing market as well as the state of online home shopping and top/mid-funnel lead generation.
A Temperature Check on the Market
*It’s important to note first that this health crisis is a constantly shifting situation. When you are reading updates to stay informed, pay attention to the date and understand that there may have already been further developments.*
Here are three things Steve Harney notes about the current state of the market.
1. The majority of mortgage loans are going to be fine.
You’ll have to get creative or be patient with the remainder. His estimates show that about 88% of the loans that you’re going to do shouldn’t be affected. Here are a few things to consider about the rest.
The Federal Housing Administration is now requiring a 680 FICO Score, which has knocked out a percentage of folks that will be trying to get a mortgage loan. Non-Qualified Mortgage/Non-QM Loans (loans for people with “unique income qualifying circumstances”) and Jumbo Loans (mortgage loans that finance properties above the maximum conforming loan) are two areas to keep an eye on. The lending groups for these types of loans are taking a moment to say, “let’s step back, take a breath, and figure out what to do.” Steve’s sources indicate that the money will be available, but it may take a few months, so there might be a dip to prepare for.
“It is possible there’s going to be a very sharp, short recession in the next quarter because everything is shutting down of course…we could see a fairly quick rebound.” – Former Federal Reserve Chairman Ben Bernanke
“We do not expect a repeat of the severe recession of 2008-2009…Once the virus infection rate peaks, we expect a recovery to gain momentum into the final quarter of the year and especially into 2021.” – Wells Fargo Investment Institute
The key takeaways here are to over-communicate. Communicate with your lenders and with your clients. Know that your lenders may skew optimistic about loans going through because they don’t want to lose the deal just as much as you don’t. If you think there’s going to be a challenge with your clients getting mortgage approval, communicate that to them and let them know that you’re there for them every step of the way.
2. This is a very different economic crisis than 2008.
For so many agents, the Great Recession still feels very fresh. That’s why it’s easy to retreat or feel an overwhelm of fear. It’s important not to panic here and look at some historical patterns. The 2008 recession was caused by the housing market. Now the housing market is a great force of stabilization in the economy. In fact, many economists are positing that one of the reasons we avoided a recession last year is because the housing market was strong. (Suffice to say, the government doesn’t want the housing market to suffer and hurt the economy further.)
Past data shows, in a housing recession, home prices go down. In an “event” crash or recession (like the dot com crash or 9/11) housing prices actually tend to increase. The patterns point to the COVID crisis playing out as an event recession – which is good news for the market.
“Calm down. Sit down. Think. Plan. Act.” – Steve Harney
3. Be prepared for the bounce back.
“Historical analysis shows us that pandemics are usually V-shaped. They’re sharp recessions that recover quickly enough to provide little damage to home prices.” Steve notes. Additionally, a PricewaterhouseCoopers survey of different industry leaders asked the question, “If COVID-19 were to end today, how long would you estimate it would take for your company to get back to business as usual?” 66% said they’d be up and running in less than a month and 90% said only 1-3 months. This shows further support for things bouncing back quickly. And that’s something that agents need to be prepared for. The demand doesn’t seem to be going anywhere, it’s just going to be pent up when things settle down.
So, what should you be doing right now? Getting prepared for the bounce back. That means connecting with the “research-phase” or top-of-funnel buyers, having Zoom consultations and virtual showings, streamlining your digital process, and nurturing your database.
Patterns in Online Home Shopping
Grier Allen, co-founder and CEO of BoomTown, launched his real estate technology company in the midst of the 2008 housing crisis, giving him a front-row seat to see how real estate agents across the country were adapting and pivoting to survive the recession.
He buckets the most important functions of real estate business into the following 3 things:
- 1. Prospecting for new leads.
- 2. Nurturing your database.
- 3. Closing business.
Unfortunately, at the moment, closing business is going to become more challenging. Grier notes that while consumers may be “sitting on the sidelines,” those transactions are most likely just delayed, not canceled.
In 2008 when agents were faced with monumental challenges in their business, they invested more time into the first two activities: prospecting and nurturing their database. Now is the time to be building new relationships, making connections, and touching base with opportunities in your database.
Here are a few pieces of data that should spark some optimism.
1. The pre-COVID market was incredibly strong.
Experts were predicting that this was going to be one of the most competitive spring markets on record. Grier notes that from conversations with agents and brokers, transaction volume and demand was booming. This means there’s a little bit more wiggle room with a slowdown. And the demand isn’t going to just disappear. But, yes, agents are going to have to pivot and adjust to the changes.
2. Online demand is not seeing a massive dip, it’s holding steady.
Data has been circulating showing the drastic fall in the number of showings from February to March. This is obvious – the physical in-person showings simply cannot happen right now. There are some “portals” of lead generation that simply won’t happen until things get back to normal. You’re not getting that foot traffic to your office or doing in-person houses, networking at events, etc.
However, that massive drop is not reflected in online traffic. In fact, users MoM is only down 7.4% and the sessions per user are actually up 4.1%. That means engagement is up. Paid leads are only down about 2.8% and we’re seeing a dip in cost-per-lead MoM.
3. Social impressions are skyrocketing.
We’re seeing some unprecedented numbers for social impressions – up 35%. It’s not entirely surprising now that everything has gone digital. If you’re looking for a silver lining for your business – here it is. People are online, they’re on social media, and they’re engaged. This means you can put out content and get in front of a massive audience. At BoomTown we’re securing impressions at under $0.01. (You read that right!) So now is the time to be present with your community, share helpful resources and information, and be available for those new opportunities that are going to remember you in 2, 3, even 12 months down the road.
Be Thoughtful With Your Communication
As you’re adjusting to this new way of business and making your game plan for the next few months, it’s more important than ever to lead with compassion. You are in a competitive business. You’re a hustler, and mover & shaker… but you’re also in the business of people and during a crisis, as Tom Ferry says, “The right thing to do is always the right thing to do.”
That means adjusting your language and taking the time to be careful and strategic with your communication.
If you’re using a CRM or a marketing automation platform – turn off your automated messages until you can look at them and adjust them if necessary. You need to be checking these things so that you don’t send anything that isn’t sensitive to the current situation.
When you’re prospecting and reaching out to your leads, be sure to offer guidance, education, and a helping hand – not a sales pitch. Shift the conversation to, “How are you doing? What’s your situation and how can I help?”
“This is where being truly the knowledge broker matters. This is where bringing humanity back into the business really matters.” – Tom Ferry