Episode 52 - Recession Proof Your Real Estate Business!

Episode Highlights:

• 🎉 One-Year Anniversary Special: Celebrating one year of If You List, You Last podcast!
• 📉 2024 Housing Market Outlook: Lowest transaction levels since 1995.
• 💡 Key Topics: Mortgage market update, inflation’s impact on interest rates, and recession-proofing your real estate business.

Mortgage Market Update:

• 🔎 Why interest rates are rising despite the Fed lowering rates.
• 📊 The role of inflation and mortgage-backed securities in driving rates.
• 🏠 Impact of rising rates on housing prices and buyer behavior.

Recession-Proofing Your Real Estate Business:

• 8 Key Questions: Discover niches like senior housing, probate, investors, and military relocations.
• 5 Mistakes Agents Make: From neglecting databases to avoiding marketing investments.
• $10,000/Hour Activities: Building referral networks, creating targeted Facebook groups, and leveraging ISAs.
• 🛠 Systems & Strategies: Focus on building databases, branding, and sustainable business practices.

Are You a Real Estate Entrepreneur?

• 👷 Agent Types: Identify if you’re a hobbyist, hamster-wheel agent, or entrepreneur.
• 🛠 Tools for Success: Learn the 10 processes that simplify real estate growth.

Get Connected:

• Join the conversation on Facebook: Real Estate Asset Advisor Group.
• Visit www.bobmangold.com to schedule a meeting or access resources.

Call to Action:

• ✅ Ready to recession-proof your business?
• 💼 Learn how to work smarter, not harder, and double your closings next year!

Join our Facebook Group at: https://www.facebook.com/groups/realestateassetadvisors

Visit our website to watch replays of our Wednesday "Elevate Business Briefings" at: www.RealEstateAssetAdvisors.org

Download a copy of my book, "If you list, you last!" at www.IfYouListYouLast.com

Transcript

Hey, welcome fellow listing agents, Bob Mangold, the listing coach here with episode 52 of the, If You List, You Last podcast. Now this is our one year anniversary since we started the podcast. And, I really hope that our loyal listeners or folks viewing us on YouTube have been helped by the information that I've been sharing this year.

I'm excited to have you here today. Because this should be a topic that resonates with every single agent. I thought I'd share a special topic on our one year anniversary. Now, this should be especially relevant after the 2024 housing market, because it'll be the lowest number of transactions since 1995.

Now, just a reminder, make sure you join our Real Estate Asset Advisor Facebook group, so you can join in on the conversation, share your thoughts, comments, or questions on any of the topics I discuss right here on the podcast.

And you can always connect with me at www. bobmangold. com. So grab a cup of coffee and settle in. Let's get to it. Let's talk about this week's mortgage market update. The number one question I've been getting over the last week or two has been really about interest rates and why they're not going down.

They're actually going up. And everybody thinks because the Fed raised the Fed fund rate, or I'm sorry, lowered the Fed fund rate, that interest rates would follow. And that's not the case at all. Anybody who's a loyal listener knows that mortgage backed securities are what determines interest rates and they're not tied to the Fed fund rate.

10 year treasury has a little bit of impact psychologically. But at the end of the day lowering that Fed fund rates has nothing to do with it. But the question is why are interest rates going up now? If the economy seems to be better and all these things are going on and the answer is actually pretty simple.

It's inflation. So here's how that impacts in a negative way. Inflation impacts negatively interest rates. So let's just use a mortgage backed security. When you take and buy a mortgage backed security, you're buying a 30 year note. At whatever the interest rate is today. If inflation is high let's just call it in a 3 percent range, which is about where it's at real inflation's around 7%.

Remember you're getting a fixed payment for the next 30 years. At a 5 percent interest rate. If I use that as the example as inflation continues to go up, it eats away at the return or the buying power of that bond, the mortgage backed security bond. So the way that has to be offset for investors to buy more or invest more in mortgage backed securities is real simple.

You pay a higher interest rate. So the higher the interest rate, the more open it more, it opens the market to investors so that they can get a decent safe, secure yield on their investment. But remember that inflation rate eats away over that 30 year period, really any return. So if go back two years when inflation was at around 9%.

The reason that bond prices tank like that is that interest rates had to be raised to make up for the inflation. And that's all you're seeing right now. Hopefully over the next few months, you'll see, as we start to drill more oil that you'll see inflation come down. Housing inflation is not going anywhere despite the number of transactions that are lower in the market.

At the end of the day, interest rates are Causing that but it's also helping offset the market a little bit because soon as interest rates drop Say they drop to five or five and a half percent Man, you're going to see buyers coming out of the woodwork and there's still not enough inventory And that'll drive prices even higher.

So the real answer for your customer is You know, will it be better six months from now? Interest rates might be lower but housing prices might be higher At the end of the day, I would tell you to educate them about taking action now and you can deal with the mortgage Later on down the road.

So that's why you're seeing interest rates Actually go up as we sit here right now interest rates are at about six and five eighths where they were under six what was that? Six weeks ago. So we are seeing a negative impact in the market, but just be prepared for it. That's the way it's going to work for right now until we see some things happen with inflation.

So with that, let's get into the important topic today of recession proofing your business and what that could look like, right? So I'm excited to have you here today. Because this should be a topic that resonates with every single agent, especially after the 2024 housing market, which is going to be, unfortunately, the lowest number of transactions since 1990. Now, just a reminder, make sure you join our Real Estate Asset Advisor Facebook group so you can join in on the conversation, share your thoughts, your comments, or questions on any of the topics.

I'll I discuss right here on the podcast. And as always, you can connect with me at www. bobmangold. com. You can even go there and schedule an appointment with me. Grab a cup of coffee and settle in. Let's roll. Can we agree since 2020, we've seen the highest of highs in real estate, right? Great markets. And now the lowest of lows. 

Unfortunately, most agents simply just don't structure their business to prosper,  whether they're in a good market. Or a bad one. So today we're going to talk about what's required to have a recession proof business. Now the first comment or observation I usually get from agents is that I can't control the economy or interest rates.

So you're basically going to just tell me to work harder or double down on the basics like we'll just make more phone calls or Knock on more doors or spend more money on advertising. Well, that's what you're thinking folks. You'd be a hundred percent wrong Let me prove it with eight simple questions, right?

You might want to write these down are people who are getting divorced Do they care what the economy is like or what interest rates are? Or do they just want to get the house sold and move on with their life?  Do seniors that have health issues and can no longer take care of a home or maybe they need to move closer to their kids, do they care about interest rates or what the market's like?

Did you know that 60 percent of all homes sold in the last two years were seniors? 10, 000 people a day will turn 65 for the next 13 years. So that's a niche that will grow for decades. Talk about recession proof.  Do investors and flippers profit most when the market is down? Is that when they're out getting good deals?

Do you know that there are more than 30, 000 flips going on right now in this country when I say going on? Meaning they've already purchased the house. They're in the process of fixing them up and then those will hit the market Guys, if you've ever worked with a flipper, aren't they always looking for their next flip  when military members are reassigned?

Does the military care what the markets or do they want them at their new post next week?  Do families that inherit their parents homes through the probate process Do they care what the markets or do they just want their parents home sold now and collect their inheritance?  Do corporations that relocate their employees care what the real estate market is like or what the interest rates are?

Or do they want them at their new job on monday? And then finally do banks sell the homes they foreclose on no matter what the market condition is a matter of fact the worse the economy The more listings they have After answering those questions, what do you think now? Is the answer to the problem painfully obvious to you right now?

If it's not, let me help you with it. What if you could acquire a database of five to ten thousand of these sellers that would completely recession reproof your business, wouldn't it?  What would happen if you could do that? It would definitely help, right? But just because you have a database, I promise guys, it doesn't solve the problem.

Here's five reasons why. First, the majority of agents don't have a customized marketing plan, a system, or a strategy for generating business from their database. Let's be honest, sending an email once a month from a templated email campaign that came with your CRM, it's just not going to get the job done, is it? 

Sadly, that's what most agents do, if they even do that at all. And then they believe that's an effective follow up system. Now, you need a comprehensive marketing plan that encompasses traditional methods like phone calls and direct mail, and online systems such as, I don't know, Facebook custom audience ads and Google network ads, along with a social media presence. 

You see the secret to success in marketing folks is to be in front of people when they're looking for your help Now there's a book that was written probably 10 years ago by a gentleman named mike koenigs One of the most successful social media influencers in it internet marketing experts In history, the name of the book is you Everywhere now  what the premise of the book is pretty simple You need to be everywhere where you can be seen  because when they want you That's when you have to be available right now So don't rely on people as oh, I remember getting a postcard like, you know a year ago  you everywhere now second Is the lack of a unique value proposition or maybe another way of saying it?

You just don't have any benefit that motivates people to reach out to you and work with you You're just a commodity just another agent Your marketing must always demonstrate the benefits people receive when working with you And here's a hint your promise of good service or my clients love me That's about as effective as that once a month email campaign you have. 

Let me ask you this, why should someone hire you? Think of it this way, if you can't figure out why people should be working with you and only you, how's the consumer  supposed to figure it out? And just as important, once you figure it out, you'll need to be able to clearly articulate the benefits within 30 seconds, or maybe even a few sentences on a postcard.

It's critical to figure this out or your marketing and lead conversion will always deliver abysmal results.  Number three, agents never seem to find the time to handle the details of their business. I hear it all the time. Tasks such as entering new leads from ads or open houses into their CRM. I can't believe agents hold these open house.

They had 10, 12, 15 people come in. And it goes, did you add them into your CRM? No, I haven't gotten to that yet. And then they never do. They never get around to following up with those leads in the first few days of meeting them or when they talk to them.  Here's an example. I teach agents to send a video email follow up to everyone they meet at the open house.

It's personalized, right? So this way it's a personalized email video email for the person using their name. I teach them to ask the lead if they would like an analysis on how to buy your listing or their home And save hundreds of thousands of dollars in payments and interest guys Do you think if you were sending that kind of video email out after an open house?

That people would want to see an analysis like that. That's part of our value proposition Do you think they'd be more inclined to work with that agent yet? I would tell you probably one out of 75 agents do that  yet  We know that would work now the most common excuse I get for not doing this Oh my gosh, the video email software costs me 29 a month  apparently It doesn't occur to them.

The actual cost is the commission that they lose from all the clients that would have worked with them. Fourth, they refuse to invest any money into marketing to their database. Here's what I mean. They have a database of five to 10, 000 potential sellers where they could spend, call it 5 a day, 150 a month on call it Facebook custom audience ads.

Where their ad would be exposed to the members of their database three to five times a day.  Then they won't spend another 100 a month on Google network ads, where their ads can show up in hundreds of the highest traffic websites in their market. And just imagine a lead that's seen you on Facebook twice a day.

Then they go to ESPN or CNN or Fox news or Breitbart or one of millions of websites. And they see your ad again and that happens day after day week after week  Can we agree you'd get closings from that database now? Remember you everywhere now  But again, the actual cost of not marketing to that database  Is two to five lost transactions Our typical agent might save 250 a month in ad spend, yet lose out on 20, 000 to 40, 000 in commission.

Does that make any sense to you whatsoever? Agents who treat real estate like a job are the ones who fall into this trap. Agents that real estate, or agents that treat real estate like it's a business, are Reap the rewards of spending 250. Are you making the right choices?  And finally, number five, the biggest mistake of all.

Most agents spend their time doing 10 an hour tasks. Instead of hiring an ISA for 5, 6, 7 an hour, That would handle their marketing that would input those leads into the crm That would make sure that emails are going out to those people that social media posts are happening Or maybe paying an ad agency to advertise or optimize their google business profile They spend days hours weeks and sometimes months trying to figure out how to do it all on their own What's their time worth when they do that?

I guarantee it's a lot less than ten dollars an hour Worse yet, most never figure it out. They throw up their hands in frustration and never put any of their marketing or systems in place. Then they struggle to figure out why they don't have consistent closings. What if they were spending their time talking to listings or taking listings or maybe meeting with flippers or meeting with divorce attorneys or collaborating with financial planners, estate planning attorneys.

Long term care and Medicare insurance agents, estate clean out vendors and senior housing facilities to promote and hold senior events like maybe every two weeks or once a month.  Not only would you put yourself in front of a ton of senior homeowners, but you'd also be developing referral relationships with those senior specialists.

What if you created a Facebook referral group for local military members? What if you created a Facebook referral group for local military members by Providing help and resources for their families to help them transition either into their new communities. And become a resource for those leaving the area.

Those are the 10, 000 an hour activities that all agents should be doing every day.  So guys, it's decision time, 10 an hour, 10, 000 per an hour per hour. You're in a hundred percent control of your business and your time. The question is, what are you going to do?  With that time recession proofing your business is simple  now if you need help with any of these Systems or strategies or ideas or things like that.

Go ahead jump over to my website www. bobmangold. com And check it out  And if you want to schedule a meeting with me feel free go ahead  Because folks i'm going to start creating more and more content geared towards the real estate entrepreneur So let's think of it this way. There's really three kinds of agents You Right and I'm going to be brutally honest with you here.

So if you're offended you're gonna have to get over it If not, you don't have to listen, but there's three kinds of agents Number one is the one that gets into the business because it sounds like a good idea. I've always liked real estate I like touring houses But they don't come into this with any kind of business plan or any thought process about How much money do they need to invest in marketing?

How much time do they need to invest in skills? They just like the idea of well getting paid a lot of money to go out and show houses  Unfortunately, it doesn't work like that. I believe that's the vast majority of agents.  The second tier of agents are those that are doing pretty decent. 5, 10, 12 transactions a year.

They make a decent living. Decent. But they're the ones that have to keep figuring out how to  on the hamster wheel and just keep chasing deal after deal, never really knowing where their next deal comes from.  Does that make sense? They're just working so hard. They don't have time to figure out how to take and replicate or how to duplicate a business model so that they don't have to work that way. 

And then finally, I would say that the third category are entrepreneurs. Who happen to hold a real estate license. Those are the agents that are looking for systems and processes like this where they could find a database of people. They'd be willing to hire the ISAs to make sure that marketing was going on.

They'd actually hire telephone ISAs to be setting appointments for them and doing circle prospecting and driving traffic to the open houses so that all they had to do is focus on taking the listing appointments, overseeing the ISAs. And then work on growing a team of agents to work open houses with them.

And then the last part is building a referral network. What if you were had a referral relationship with I don't know Call it 500 agents across the u. s. And the globe with people being relocated to your area  What if you were doing that work instead of inputting data from open houses and really working the open houses? 

So the question is which one of those three agents are you there's nothing wrong with any one of them folks Just what each person decides To do but if you're an entrepreneur who happens to be a real estate agent  And you're looking for some direction. I don't know. Maybe you've thought about starting your own team or maybe starting your own brokerage  Reach out to me. 

I'd like to talk to you I think I can solve a lot of those problems for you and do it in a way that's Ridiculously cost effective and extremely helpful, but we're going to target building that database first of Recession proof clientele, right? They'll always be FISBO's canceled and expired. So don't worry They're always going to be there and we certainly want to talk to them But imagine having a database of those kinds of targets that I talked about in the beginning those eight different kinds of clients and Imagine if you had a whole network and a database of those people and you were constantly marketing to them, advertising to them, talking with them.

I think we can agree you'd do a lot more business, right?  So, those are the areas that you can recession proof your business. And then going forward, I'm going to start to create more content to talk about. There's about ten processes. That's all you need to put in place in real estate. Is have ten good processes. 

To take care of generating leads then being able to convert them then being able to take and get more listings Then being able to take and build a personal brand  And number five is to build referral relationships and referral networks. If you could do those five things and you had ISAs that could do the work for you, and you could utilize things like AI and video to make sure that you always had a constant stream of business.

Does that sound like the kind of business you'd want to build? It's the kind of business that I do. That's what I help people do.  So I hope that gave you something to think about today. Didn't have to be the longest podcast in the world. But I wanted you to start thinking about these things and maybe start to look at what could I do differently in 20?

Can I do to change the way that I do it? Maybe I close 10 transactions this year What would it take to do 20 or 30 transactions next year? And so those are the kinds of things that will help you and i'm going to start to gear that content that way And quite honestly folks i'm going to just have open and honest conversations with you So that it really does speak to the agents who want to take their business to the next level Listen if you're happy and make four five six closings a year And you're happy with that.

And that's exactly what you're looking for. Listen, I'm thrilled for you. And it doesn't mean we wouldn't be here to help you, but if you're looking to change the direction or the course of what you're doing so that you can make more money and work less hours, that's where I can help you. So hope this quick podcast gave you some things to think about.

And again, gets you to target and focus yourself on listings because as always, folks, if you list, you last.