Looking Beyond the Real Estate Boom

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RISMEDIA-NRRE July 2001

Looking Beyond the Real Estate Boom

By Daryl Jesperson

While many investors are waiting for the stock market to bottom out, the 2001 outlook for the housing industry could hardly be rosier.

It would be wonderful if this period of record real estate sales would last indefinitely. But economic history indicates otherwise. Now is the perfect time to prepare for whatever the long-range future holds.

A Dream Market

As of May, the National Association of Realtors? reported gains in the affordability index, existing-home sales, and in resale prices in most metropolitan areas. And for the rest of the year, NAR predicts existing-home sales to reach 5.15 million, second only to the record 5.21 million in 1999. New homes sales may reach a new high, and housing starts, too, are expected to rise.

This hot market is buoyed by low unemployment rates, low interest rates, and high consumer confidence. Beginning in the mid-1990s, this is the longest boom the real estate industry has ever had. The housing industry still drives the economy.

It all adds up to good news for real estate professionals: It?s still a dream market.

But seasoned brokers and agents who?ve ridden the economic roller coaster since the 1970s hardly see our current boom as permanent. Given the patterns of the past, we expect the housing market to soften sometime. Whenever a downturn comes, it may not be as steep as the recession of the early ?80s, say, but even so, it?s something to prepare for.

Peaks and Valleys

When housing markets are hot, real estate people naturally get caught up in the business at hand, completing transactions that seem to come out of thin air. Agents new to the industry have to be pleased with their choice of entering real estate. And agents who have paid their dues with years of experience have every right to enjoy a booming market.

A period of intense sales activity is the peak in the classic sales cycle. That?s the time when an agent is so busy finalizing current business that he or she neither sets time aside for professional development or keeping in touch with former customers.

When markets slow down and all an agent?s transactions are completed, business slacks off and can even dry up completely. No new customers are calling, and forgotten former buyers and sellers are contacting agents whose specialty mail-outs are on the refrigerator or beside the telephone.

Preparing for the Future

For new agents who enter the industry when transactions are easy to come by, it?s essential to learn the basic sales techniques that will sustain them in the future.

Meanwhile, experienced agents need to re-establish earlier customer relationships. Given the nationwide statistic that people move an average of every five or seven years, customers who purchased homes near the beginning of the boom may well be considering a change. Keeping in touch with baby boomer customers can also lead to referrals with either their downsizing parents or their grown children buying their first home.

To build a book of business, younger agents might even consider approaching retiring real estate professionals and negotiate referral fees for closed transactions resulting from the established leads.

Good markets are also a time for experienced agents to reinvest in their own professional development by enrolling in advanced education courses or pursuing specialized professional designations.

So, how can you do more when you?re already working long hours? For the sake of future sales, perhaps you should consider hiring an assistant?or a second, or a third?to give you the time you need to continue growing professionally.

However you do it, now?s the time to begin smoothing out those peaks and valleys.

Daryl Jesperson, ABR, CRB, CRP, is president of RE/MAX International, Inc., a real estate franchise network of more than 66,000 associates in 4,000 offices worldwide. RE/MAX International is headquartered in Greenwood Village, Colorado, (303) 770-5531. Visit the RE/MAX Web site at remax.com.


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