Stay ahead of the next recession
The 2008 recession and ensuing recovery saw the loss of 94,000 active real estate agents in California. These former agents were unable or unwilling to survive in the harsher real estate market, an environment brought on by the recession and slow-moving recovery. Today’s agents will pull through the next downturn when they plan their financial strategies to survive the second act of the 2020 recession, presently expected to arrive heading into 2023.
Forecast the real estate market, for yourself
The first step you can take toward making it through the next recession is knowing when it will occur. Use these two resources to fathom the years ahead:
The yield spread
The yield spread indicates the likelihood of a recession or recovery one year forward. After over a decade of positive activity, the yield spread went negative in June 2019. June’s negative yield spread figure forecasted a recession to arrive within 12 months. Therefore, informed real estate professionals were prepared for the next recession to arrive in mid-2020. In mid-2022, the yield spread is still above the warning level for a recession, but is forecasted to decline rapidly in the latter half of 2022 as interest rates continue to rise. Read more…
Charting the market
Today’s market signals of a soon-to-be negative yield spread, slowing real estate sales volume and imbalanced prices indicate today’s real estate investors have passed the end of the most recent sell phase. Investors who understand the principal of option value are in a hold phase. Sales volume will only decline in the coming months, home prices following in 2023-2025. Read more…
Expand your practice and your thinking
Create more ways to earn income by branching out into similar career paths that build on your experience as a real estate agent.
Become a broker
On becoming a broker, you place a bet on receiving the benefit of increased public acceptance and a higher income. Greater earnings flow to licensed brokers, whether as the result of negotiating a better fee split percentage with your employing broker or simply taking on the risk of running your own business – self-employed and acting alone or by employing other licensees. Read more…
Become a notary public
Though notarization is a simple process, it requires some training and licensure — all within reach to those who want to gain new, marketable skills and top off their income. As a real estate agent, you’re in a prime position to take advantage of these business opportunities and expand your earning potential by becoming a notary public. Read more…
Get your MLO endorsement
Assist your homeowner clients by becoming a mortgage loan originator (MLO). As an agent, you need to hire on with a broker who is an MLO-endorsed licensee with the California Department of Real Estate (DRE). To become a California-licensed MLO you need to meet minimum standards for MLOs, complete pre-licensing education and pass federal lending exams. Read more…
Become a property manager
One of the few recession-proof jobs in real estate, property managers are always in demand to manage the operations of rental units. Before an individual can become a property manager, there are numerous state laws with which they need to become familiar. Read more…
Prepare for distressed properties unemployment will produce
Study the California rules protecting homeowners during the foreclosure process, the tax impacts of completing a foreclosure or short sale and the tricky negotiations for discounts with mortgage lenders on negative equity properties. Then, market yourself as an expert to attract more clients during the downturn.
Foreclosures
Foreclosures inevitably rise during a recession, as many homeowners find themselves with reduced income and unable to make mortgage payments. During 2020-2021, the pandemic produced some temporary foreclosure protections, which are now ended. When you become a foreclosure expert, you can advertise your services to buyers seeking to purchase foreclosed properties and you can help current homeowner clients by directing them to the appropriate resources. Read more…
Short sales
A short sale is a homeowner alternative to a foreclosure sale when the mortgage amount owed is higher than the property value encumbering their home. Real estate agents advertising themselves as short sale experts can help short sellers navigate the more complicated short sale process. Read more…
REO properties
During a recession, the level of property acquired by mortgage lenders through foreclosure – real estate owned (REO) property – soars. To continue making a living during these times, it is essential for agents and brokers to learn how to work with REO properties, be it on the client side, working directly with servicers or even investment through real estate syndication. Read more…
Become articulate with time-honored investment strategies
To maintain an acceptable level of clientele, a more innovative approach into diversification is needed during recessionary periods to develop additional sources of income. Consider spending time learning about popular investment strategies.
Real estate syndicates
Syndication is the act of bringing together in co-ownership a group of investors to fund the purchase, operations, and eventual resale of an income-producing property. A recession is the ideal time to be an agent or broker conducting business as a real estate syndicator purchasing income-producing investment property at the bottom of the market. Read more…
§1031 exchanges
A §1031 transaction or exchange allows an owner to sell business-use or investment real estate and use the sales proceeds to purchase replacement business-use or investment real estate, called like-kind properties, without a tax on the profit. Learn the §1031 rules to become a more attractive option for investors purchasing at the bottom of the market. Read more…
Increase marketing of your brand
Layout in writing your strategy to increase and track your marketing efforts to stay on top of branding yourself and nurturing clients during these disruptive times.
FARM for new clients
The goal of FARMing for real estate clients is to build a database of contacts and be recognizable in your chosen neighborhood of influence. Expanding your FARM and distributing a greater volume of marketing materials is a smart way to increase your client base. Read more about FARMing here. Access 300+ free FARM letter templates here.
Prioritize buyer clients
Buyer’s and seller’s agents will find themselves working harder and more creatively during these economically challenging times. During a downturn, agents typically reliant on sellers will need to make the adjustment to find and hold onto buyer clients willing to purchase during a recession, as they will be few and far between. Read more…
Develop and market your website
As homebuyers and sellers are stuck at home, having a personal website is more important in 2020 than ever. Help your clients find you and your listings online by creating an attractive, user-friendly website using search engine optimization (SEO). Read more…
