It’s OK to Talk Business
Today, amid all the Coronavirus news, we called our clients to check in. Nearly every agent we spoke to discussed how they’re taking every precaution to prevent their employees and clients from possible exposure. They care about the health and safety of their communities, just like we do.
But they also want to know the best way to approach homeselling. A real estate agent’s business isn’t some distant investment, it’s their livelihood. They want to know, will the market slow down? What are other agents doing right now? What’s the best way to respond?
These are important questions to ask. Talking about business during a crisis is far from heartless; it’s prudent. Several top agents shared valuable and practical actions that we’re excited to pass on.
We were surprised to learn that many agents see this outbreak as an opportunity to build more and deeper relationships with homeowners, which could mean more new listings after the virus blows over.
First, we’ll talk about what the virus likely means for real estate, and then share what these agents are doing now to come out ahead in the future.
Economist Austin Goolsbee spoke on NPR yesterday afternoon, easing fears of a looming recession. He said “Virus economics” are different from regular economics. For example, the 2008 crisis was a direct result of an off-balance economy. Today, by most measures, our economy is well balanced and strong. When a non-economic event – the Coronavirus – causes economic disruption, the long-term outlook depends on how well our underlying economic condition can weather the storm. Right now, our industries are well capitalized, homeowners have equity, employment is high, and interest rates are low. So, the deck is stacked in our favor.
Even so, the Coronavirus, coupled with an oil dispute at just the wrong time, sent investors into a tailspin over the last seven trading days. The ups and downs will continue, but once investors start getting tempted by the low prices, it will pick back up. When other investors see that prices are rising, they’ll follow suit. The money people and companies pulled out of the market is right now sitting in bonds or bank accounts, waiting for the virus to blow over. For some, a portion of those funds may be needed to cover expenses during reduced revenue or paychecks, but the majority will be available for re-investment when the time comes.
Major closures, cancellations, and travel restrictions will have a big short-term impact on industries like pro sports, tourism, hospitality, travel, and brick and mortar businesses both large and small. Congress may allocate $50 Billion in SBA loans to patch these businesses through; if approved, the loans won’t substitute for revenue, but they may at least enable companies to keep the lights on – and folks employed – until they can begin doing business again.
The good news is that customers for these businesses will be there after the virus tapers down; all those airline tickets, basketball game seats, and Laser Tag sessions that people won’t buy in the short term has nothing to do with the economy. This is what Goolsbee means by Virus Economics.
What about Real Estate?
As businesses slow to a crawl and the stock market continues to react to uncertainty, how will this affect real estate? For now, not by much, but that could change.
A recent National Association of Realtors (NAR) survey found that 78 percent of agents saw no change in business. However, NAR projects transaction volume may be between 8 to 10 percent lower than what the 2020 spring market would have normally seen. Since spring volume is higher than winter in most markets, that means that transactions will increase as we head into April and May, just not at as high a rate as the pre-Virus forecast.
What we’re hearing from our own clients is that buyers are still planning to buy, and sellers are still willing to sell (but that in most markets, inventory is still tight). In badly affected areas, some agents are no longer driving buyers to showings or holding open houses, but they’re finding workarounds and still doing deals. There’s a lot of disinfecting and elbow-bumping happening. But so far, no noticeable difference in listings or offers compared to this time last year. In fact, most markets are still seeing near record-high prices, and one agent pointed out that low interest rates are still a powerful driver in attracting buyers.
Most families and businesses realize that life will soon resume. Homeowners may see fewer offers in the weeks ahead due to buyer uncertainty, or they may see more offers because buyers want to take advantage of 4% mortgages and actually have time to plan a move. No economist or expert can tell us for sure how the market will respond, and that’s because no one knows for sure how quickly we’ll contain the virus and move on.
Of course, sensational stories sell, and the media is covering the virus non-stop, so it’s possible that buyers and sellers may recoil out of fear alone. Proactive agents will work to curb this by providing information, guidance, and positioning themselves as a local expert on the subject.
Lemonade out of Lemons: How Top Agents are Responding
And now for the exciting part.
As mentioned previously, several top agents we spoke with – some in badly affected markets like Kirkland, Washington – are remaining optimistic and figuring out how they can become a go-to expert during this crisis.
In Calabasas, California, one of our top luxury-home agents just published an article in his paper about the potential impact of stock market fluctuations on real estate. His strategy is to present the tough questions other agents may be tip-toeing around, so he can be the real estate agent homeowners reach out to for answers. While he’s not worried about a long-term problem, he recognizes that many people in his market are eager for guidance when it comes to selling their home this spring.
In Austin, Texas, a heavy-hitter top agent we’ve been working with for years just put out a video. “I’m like an umpire,” he said; rather than deflecting or denying the real worries people face, he’s making educated calls to calm fears and help homeowners make an informed decision. While he understands the situation is outside of his control, he’s in control over how he responds to it. He’s wary of printing virus-related news articles because the situation changes rapidly, so instead he’s considering publishing less time-sensitive content, such as “Selling a Home Safely and Effectively during COVID-19.” Articles with best practices and guidance during Coronavirus will remain relevant for at least 4-6 weeks. And people will read them.
In Kirkland, Washington, another top agent is doing the same. “I think it’s good to talk about it,” he said, “I plan to address it head on in a cover article next month.” He plans on keeping the tone positive and providing balanced information that eases homeowner’s concerns. He explained that he wants to be a source of information for his market. Few if any agents will be doing so, and it presents a phenomenal opportunity to connect with the market. As newer or part-time agents roll back marketing out of uncertainty, he’ll have fewer competing messages in the mailbox – and at the same time, more homeowners will be spending more time at home.
During a different (and far worse) crisis, one of our highest producing agents out in Phoenix, Arizona, had a similar approach. During the 2008 recession, he didn’t stop marketing but instead adjusted his messaging. He held regular seminars on foreclosures and short sales, and sent a 12-page paper with housing market updates to about 40,000 homes almost every month. People gobbled up his content and filled his seminars to packed. He was able to do enough deals this way to survive, but when the market eased up, his business exploded. All those relationships he built during the crisis became loyal, repeat clients. He was recently ranked #25 in the USA for volume of homes sold by the Wall Street Journal. His strategy worked, and it will work for our agents too.
While times are anything but ideal, it’s great to know that our agents are thinking about how they can grow and thrive rather than coiling back in fear.
We should have known that. Our agents aren’t like most people – they’re doggedly determined individuals, who can be dropped into a pit of dirt and emerge carrying diamonds. They don’t give up. They don’t get swept up. And when the world gives them lemons, they make lemonade.