Real Estate Meets Recession – 7 Ways to Take Control during an ‘Agents Market’

Commentary by Tim and Julie Harris

RISMEDIA, Sept. 18, 2008-There is no doubt that our real estate markets are in a full blown recession. In most real estate markets property is depreciating at 2%+ per month. For example, in California property has depreciated 24% from March 2007 to 2008.

Be clear, we are not anywhere near the “bottom.” Markets will get much more challenging for sellers. More foreclosures, more short sales, more depreciation.

Agents need to buckle down and be financially, mentally and emotionally prepared for real estate markets (and the nations overall economy) to be in a recessive state for some time to come.

Here’s the thing…when you accept the challenge to get your business and personal finances in order you will thrive in this market. Our students know this-this is not a sellers market, this is not a buyers market-this is an agents market. Agents who have the skills and knowledge are making tons of money in this market.

During the first quarter of 2008, 20% of all closings in the US were short sales. Do you know how to do short sales yet?

Here are 7 ways to take control of your finances during and agents market:

1. Wake Up. Stop spending money out of habit. For the next week keep a log of everywhere your money goes. Be totally awake and aware whenever you grab for your wallet. Start questioning yourself on every purchase.

2. Know How Much You Cost to Exist. You are spending money every day-even if you never leave your house. Your housing expenses, your utilities, your food etc. Know exactly how much you are spending per month (see point 1) and then divide by 30. That will tell you exactly how much you cost to exist every day. Bet its more than you think.

3. Go Through Every Bill and Question It. True story: We had a Realtor call us the other day asking to enroll in our short sale program. Her challenge, she was broke. We suggested that she should go through all of her monthly bills and question them. Start with your insurance, price shop. Cut back on Starbucks. Is a cup of coffee really worth $3? She did this and found $1800 that she could completely cut out of her monthly overhead. You need to do the same.

4. Drop Your Spend-y Friends. You know who they are. These are the friends who always want to “go shopping.” People who live to spend should be kept at an arms length in this market. Some people see all of their worth in how others see them. Ask yourself if you think this way as well…become aware of your thought regarding your consumption.

5. Stop Thinking of Yourself as a Consumer. When was it that us Americans went from being called ‘citizens’ to being called a “consumer.” You are not what you consume. You are not what you drive, what you wear. Define yourself by your own terms.

6. Track Your Time…Hour by Hour. For the next week, now that you are tracking your expenses, track your time. Keep a log of what you are doing hour by hour for the next week. Be honest with yourself about where your time is going. Here is the thing, chances are you are ‘working’ 8+ hours per day but, only doing things that will result in a pay check for 1-2 hours per day.

7. Pay Off All Your Debts. Imagine what you would feel like if you had no debts. Most agents work because they have to. They have so much legacy overhead. Meaning, they are paying off the luxury bling-bling lifestyle that they may have been living from the past sellers market. Pay that debt off.

Bonus – Save Money and Protect It. Now that you are in control of your spending, have paid off your debts…start saving. Simple savings plan system. Take 10% (or more) from every penny you earn. If your Mom gives you $100 for your birthday save $10. You get a commission for $10,000…sock away $1,000. Pay yourself first. When you get that commission check go to the back and transfer 10% into a savings account then pay the other bills.

Tim and Julie Harris founded Harris Real Estate University in 1998 and have been recognized as NARs Agents of the Year having been involved in thousands of home sales. Tim and Julie run one of the nation’s top REO training program designed for agents. For more information or to get your complimentary copy of their 7 Part “Agent REO Secrets” guide book, click here.

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