I want you to know that with the right mindset and business plan, real estate can be strongly recession proof. The fact is that regardless of what the market does in terms of going up or down, there are always transactions. Prices go up and down. The number of transactions go up and down. But, the fact still remains that even in the depths of the worst markets in history, deals are still closing. Maybe not as many, but that are still happening.
To understand how to not only survive a market crash, but to also grow your business exponentially, you must understand why deals are still closing even during the darkest times in the market…
When a real estate market has experienced a nice uptick in prices and transactions for years and years, each year that goes by is a greater and greater chance of a recession. It might be a small one, or a huge crash. Either way is fine. Once you know how to handle a market downturn, you will have no fear about your future. You will have direction and peace of mind. And, that is what I want for you, a peace of mind that you are safe from anything happening in your market that you might be afraid of.
The first thing to realize is that the market IS changing. Recognize this as early as you can. Do not pretend that it is not happening. React to it. Be on top of the situation and use it to your advantage. Notice that the market is turning the other way and take charge. This is important because inexperienced or unrealistic agents will pretend that the market is not changing and will continue doing taking the same actions with the same mindset as before. These are the agents who will not survive a crash and be forced out of the business. Do not be one of these agents.
Once you recognize that the market is changing, it is time to dig in. Lets talk about the reason that deals are still closing during a downturn.
- Investors want to buy because prices are so good.
- Sellers have to sell because they are in trouble (it is your job to help them get out of trouble)
Most owners will want to hold what they have and ride out the crash. That is ok too. You can create lifelong relationship with these owners for future deals once the market comes back. The magic is in this: Talk to every property owner in your market and ask how you can help them with either buying in the low market, selling because they are in trouble or holding for the market to come back (which will happen). You see, buyers and sellers motivations change during a recession and it is your job to find out what their situation is and help them through it. They are going to buy, sell or hold. 100% of property owners will buy, sell or hold. Guaranteed! And, all three scenarios are going to blow your business up. If you adopt this train of thought and use it, you will make a lot of money in a market crash as all the other agents in your market will run for shelter and get out of the business.
As agents leave the business because “business is slow”, you will gain much more market share as you will one of the last standing agents in a market full of the same amount of owners as before the market went south. Agents getting out gives you a huge opportunity to gobble up market share and when the market comes back up, you will retain your new share of the market and this is when you will absolutely take your business to the next level.
When the market crashed for me and I had to learn all of this, I read over 100 real estate books. I also watched the agents who survived and the ones who left the business. It was an eye-opener for me. What is finally figured out was that the agents who worked the hardest to put their self in front of the most people and was really good at being a likable person in general, were the most successful. You must know what you want and zero in on it like a sniper. Go get it. Put the work in. Don’t be scared of a bunch of hard work. It took me several years after I realized all of this that I came up with the perfect real estate scripts that create life long relationships by being low pressure, letting them know you want to help them, finding out if they already have a relationship with another agent and then getting their email address to stay in touch. It really is genius.
If this article helped you in any way…please share it and let me know if I can answer any questions you may have.
I am an open book
Ricky Carruth, RE/MAX of Orange Beach