How to survive 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 housing market environment brought on by the recession and slow-moving recovery. Today’s agents will survive the next recession by researching and preparing their survival strategies now.
Time the recession
The first step you can take toward making it through the next recession is knowing when it will arrive. Use these two resources to plan 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 forecasts a recession to arrive in 12 months. Therefore, real estate professionals can prepare for the next recession to arrive in mid-2020. Read more…
Charting the market
Today’s market signals of a negative yield spread, continually slowing real estate sales volume and overbalanced prices indicate today’s real estate investors have reached the end of the most recent sell phase. Investors are entering into a hold phase, as sales volume will only decline in the coming months, home prices following in 2019-2020. Read more…
Expand your practice
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
Take your real estate business to the next level by becoming a broker. Branching out on your own brings on some additional risks, but employing agents is a straightforward way to create more income streams. 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. There is currently no property manager certificate or designation required in California to perform property management activities requiring a license. But there are specific areas of real estate law property managers need to learn in order to succeed and stay on the right side of the law. 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…
To prepare to survive in your agent career during the next recession, calculate how much additional money you’ll need to make now to set aside in the down times. Then, make a plan for how you will increase production to meet future needs when transactions decrease.
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.
Develop and market your website
Over nine-in-ten homebuyers use the internet at some point in the home searching process. Help your clients find you and your listings online by creating an attractive, user-friendly website using search engine optimization (SEO). Read more here.
Become familiar with popular investment strategies
To maintain an acceptable level of listings, a more creative approach is needed during recessionary periods. 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 here.
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 here.
Prepare for distressed sales
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 gain more clients during the downturn.
Foreclosures inevitably rise during a recession, as many homeowners find themselves with reduced income and unable to make mortgage payments. When you become a foreclosure expert, you can advertise your services to buyers seeking to purchase foreclosed properties. Read more here.
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 here.