Working as a real estate agent and top productivity coach provides me a unique opportunity to learn from other real estate agents and also to use my own day-to-day experience to truly understand what is going on in today’s marketplace. Spending all of this time in the field grants me a unique perspective on the pain points of the profession — plus occasions to seek out answers to these questions.
Our industry has never had more doubts about the future and what is next for real estate agents. The following are four of the most common fears, and why my colleagues and I are in a better position than many of us may think.
Fear: IBuyers are going to put me out of a job.
An iBuyer is a real estate company that buys properties at a discounted price instead of the seller hiring an agent to get the home sold. In some cities, they are now a significant portion of the real estate transactions in the market. But are these companies truly something to worry about?
The reality is that change is coming. The industry is always going to be evolving, and agents are always going to play a major role in these changes. The fact that some large franchise companies have added iBuyer programs to help keep their agents competitive should tell you everything you need to know. This is a very real change, and it’s something you need to be prepared for in any presentation. The most important thing for agents is to understand the pros and cons of these programs so that they can educate their clients and help them make the best choice in every situation.
Fear: The housing market is going to crash.
For the past three years now, I’ve been getting angry messages because I continue to tell investors to buy, buy, buy. Usually, the message is from somebody who got scorched in the last downturn and thinks this is irresponsible advice. But there are three main factors that are different today, and they make all the difference in whether or not the bubble bursts.
1. The types of loans you can get now versus what you could in 2006-2007: Adjustable-rate mortgages (ARMs) were high-risk loans that home buyers were acquiring in order to qualify for bigger and more expensive homes than they could actually afford. The program allowed for a teasingly low interest rate that would adjust at the end of three, five or seven years. This allowed home buyers to qualify for more home on their debt-to-income ratio in hopes that they would be making more money when the rate adjusted down the road. It was a recipe for disaster, and when the housing boom slowed down, suddenly homeowners saw their monthly mortgage increase 30% to 50%.
2. Interest rates and down payments for investors: Before the recession, most homes had interest rates around 6% to 7%. Houses didn’t cash flow, and therefore, it was easy to walk away from a home that had little to no down payment. Since 2010, if you’ve bought an investment property, odds are you have a historically low rate and a nice cash flow due to rising rent rates.
3. Housing demand: Due to the fear of loss and the lousy economy of 2007–2011, there is a massive housing shortage in most markets across America. There are not enough homes for the number of people looking to live there. This means that the supply and demand equation still favors the homeowners and pretty much wipes out any argument for homes sitting vacant due to a recession.
Fear: Commissions have to be cut in order to beat out flat-fee companies.
In every market, there are low-fee companies that will sell a client’s house at a discount. It may seem like these companies are new due to massive marketing budgets that aren’t afraid to buy up half the billboards in town. But the truth is these companies have always been around and will forever exist. There’s a reason the Four Seasons still sells out while the Motel 6 always seems to have the vacancy sign lit: People will pay for value and service.
Over the last two years, I have acquired more clients because of these companies, I would argue. People will always do business with those they trust, especially with the most significant investments in their lives. This is an opportunity for agents to really expand through their social media channels and display their expert individual knowledge. Sharing potential investment opportunities and breaking them down helps clients and followers understand the value of an agent and their team, and makes you the obvious choice for top value and service.
Fear: Technology is going to replace agents.
While real estate is one of the few careers that has yet to be replaced much by technology, it doesn’t mean that is reflective of the future of the industry. In regards to technology, smart agents will take this time to fully and truly embrace it. It’s coming to help us or hurt us, but I think we all get to decide.
Technology means access to more people, the ability to work from anywhere and a chance to reach the masses through new marketing channels. Your attitude on technology is what will determine whether it catapults or destroys your business.
As it turns out, real estate agents have less to fear than it may seem, but plenty of opportunities to learn and prepare for what’s coming.