12.30.08

By: Stephen J. Nash
Nash & Lodge, PLLP
nash@nashandlodge.com

       

The year 2008 will go down as an extremely memorable year, mainly for the wrong reasons.  It is a year that the economists told us what we already knew, that we have been in a recession.  It is the year in which the financial system almost collapsed,  companies have essentially been nationalized and every day there seems to be a new bailout with no end in sight.  It is a year that saw a record number of foreclosures, a record number of plans to stop the foreclosures and saw the foreclosure problem spread rapidly into the suburbs and outlying areas.

The good news is that 2008 is almost over.  Goodbye and good riddance.  The bad news is that 2009 might be worse.  The general economy keeps going downhill and nothing has stopped the foreclosure problem.  The hope is that one of the many foreclosure plans will actually work to stop the foreclosures.  Until the foreclosures stop, it is hard to see how the real estate economy will improve.      

Unlike the start of 2008 there seems to be a general consensus that the over-all economy cannot be turned around without a real estate recovery.  That is good news for those of us in the real estate economy because the problems we are facing cannot be ignored.  The real question is whether anybody has a plan that will actually work sooner rather than later.

Our view of 2009 is not much different than our view was a year ago – it is a time to survive.  We foresee many new plans to save the real estate economy which will cause great confusion and in most cases will not work.  We foresee that the next wave of foreclosures are going to be even more difficult to deal with for the homeowner, lender and real estate professional.  Because we believe that 2009 is going to be another tough year for real estate professionals, we foresee a continued increase in inter-industry disputes, more real estate related company contractions and failures and a continued increase in governmental enforcement actions.  Because of the economic hardships that the industry is going to continue to endure, it would not be surprising if a title company, mortgage company, real estate company or some other type of real estate company fails and trust accounts, escrows, commissions, etc. disappear. 

In order to survive 2009 we believe that real estate professionals have to be realistic about what they are facing but also have to remain positive.  While it is hard to remain positive in a bleak world, negativity will bring about everything that you fear.

How can you remain positive in a depressed market?

1. Set achievable goals;
2. Celebrate anything positive;
3. Surround yourself with realistic yet positive people;
4. Stay away from people who only see the negative.

The goals you had in a boom market are not realistic in today's market.  If you don't re-set them to a realistic mark you are doomed to fail and it will be impossible to remain positive.  Little positives that you took for granted in a boom market must be celebrated and appreciated in a depressed market.  It is hard to remain positive if you are surrounded by people who can only see doom but it is infectious to be around people who are positive.  Be careful because there is a fine line between be positive and delusional.  You have to be positive yet very aware of the problems that must be navigated.

How can you turn a positive attitude into money?

1.  You have to accept that you are going to have to work harder to make less money than in a boom market;           

2.  You have to become more knowledgeable than your competition;

3.  You have to devote yourself to meeting your clients needs;

4.  You have to get rid of clients that you can never please.

If you cannot accept that you are going to have to work harder to make money you will never be able to remain positive in this market.  There are no easy short-cuts.  This goes hand-in-hand with having realistic goals.  Goals are great motivators if you believe that you have a chance to reach them even if they are set on the optimistic side of what is possible.  Once you look at a goal as unrealistic, you lose all motivation. 

In a depressed market where you are facing a lot of competition for consumers who are struggling themselves, you have to distinguish yourselves in a way that matters to the consumer.  When people are nervous and fearful they want someone who they believe knows more than them to help them avoid their fears.  By educating yourselves with regard to the many issues facing a consumer in this market you will distinguish yourselves from your competition.  The vast majority of transactions are not “normal” transactions, the issues are numerous and are ever changing.  While the new issues, rules and regulations makes your job more difficult, it also makes you more valuable to the consumer if you keep on top of these issues.

In the boom market a number of real estate professionals lost sight of their clients needs.  They spent money on their own needs to make their life easier with little thought of whether it benefited their client.  Often the client felt as if nothing special was done for their benefit and as such they felt no loyalty to the real estate professional that they used.  Many clients felt that all real estate agents, title companies, lenders, etc, were the same.  Why else would they use someone who had just entered the industry when they could have hired someone with decades of experience at the same cost?

The consumer today is nervous and scared and needs a knowledgeable real estate professional more than ever before.  If you look at the transaction through their eyes, identify what they fear and what they should fear, deal with those issues so that they are protected, you will have a better chance of getting the client, pleasing the client and having a client for life.

The one danger that you must look out for is the client whose expectations are not realistic.  They look at you to solve all of their problems even though all of their problems do not relate to your expertise. These clients can suck you dry yet you will never make them happy.  If you try to solve their problems that are not in your field of expertize you run the risk of screwing up because it is not your field of expertise and the client will turn on you in an instant.  If you don't take care of their problem even though it is not in your area of expertise, they will be upset.  It is hard work to make any money working for realistic people, don't waste your time, money or energy on people who are not realistic.  It won't make you any money, you won't make them happy and you will increase your liability.

While 2009 does not look to be a great year for real estate professionals, always remember that somebody is always doing well no matter what the market is like, knowledge and hard work will put you ahead of many of your competitors. 

Hopefully, one of the numerous plans and bailouts will start turning things around and that 2009 will be a better year than anticipated.  We hope that we can help you achieve success in 2009 by providing you with educational opportunities with our NL Seminars, as a real estate resource through the NL Real Estate Newsletter and the Nash & Lodge website, as a Short Sale of Loan Modification partner through AFM7, LLC or as  you or your clients legal counsel when dealing with legal or regulatory issues.