Gary Keller's Vision Speech - Keller Williams Realty Family Reunion 2009
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Transcript of Gary Keller's Vision Speech - Keller Williams Realty Family Reunion 2009
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CRISIS?
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Danger Opportunity+
“Crisis”
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C.R.I.S.I.S
A Circumstance Requiring
Immediate
Shift In Strategy!
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The Market Has Shifted Dramatically• Sales volume and transactions have dropped drastically.• Inventory has reached a breathtaking high.• Buyers continue to be reluctant, and sellers continue to
be unrealistic.• Real estate agents seem dazed and confused.• Brokerage net profits are going red.• Fear is rampant, anxiety is high, and people are getting
out of the business right and left.
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So, What Happened?
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People …
• Over spent and under saved
• Over borrowed and over paid
And too many got in over their head.
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Now they’ll …
• Under spend and over save
• Under borrow and under pay
And the economy will begin to move back into alignment.
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We Are in the Midst of One Major Shift!
• You shouldn’t be surprised.• Economic history repeats itself. That’s why it’s called an
“economic cycle”.• What’s happening today has happened before. The
economy is in one of the “down” parts of its cycle.• You may have thought we’d either cured economic down
cycles or you would escape the planet before another big one hit.
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So, the Economy Shifts and Therefore Real Estate Markets Shift
They always have and always will
and
Your life goes on …
Your business and career can too ...
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… IF YOU DO THE RIGHT THINGS!
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The next 180 days may be the toughest economic days you’ll see for the rest of your life!
But you better step it up!
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No Kidding – House on Fire!
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To Shift or Be Shifted …That Is the Challenge We All Face
Professionally Right Now!
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The Numbers
That Drive Real
Estate
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The Numbers That Drive Real Estate
1. Home Sales
2. Home Prices
3. Inventory
4. Mortgage Rates
5. Affordability
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Home Sales In Millions
• Sales declined 13% in 2008.
• The number of first-time home buyers increased to 41% of home purchasers.
5.0
7.1
5.74.9
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source: National Association of REALTORS®
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In the fourth quarter of 2008, 6 states saw an increase in sales, mainly in areas where the sharpest declines in prices occurred.
CA
AZ
NV
MN
FL
VA
Sales Increased
Sales Decreased
Home Sales Direction
(Year-Over-Year Change)
Source: National Association of REALTORS®
AKHI
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Home Prices In Thousands
The median home price declined by 9% in 2008.$219K
$0
$50
$100
$150
$200
$250
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
$199K
20-year historical appreciation rate = 4%
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Home Price Annual Appreciation
5%5%5%3%3%3% 5% 7% 8% 8% 9%13%
-9%
4% 3% 4% 4% 1%
-1%
-15%
0%
15%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
20-year historical appreciation rate = 4%
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Inventory Months Supply# of months it would take to sell all the homes on the market at the current rate of sales
Slowing sales pushed up inventory for existing homes to 10.4 months in 2008.
8.9
10.4
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: National Association of REALTORS®
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Mortgage Rates 30-Year Fixed
10%
6%6.3%
4%
8%
12%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Mortgage rates remained low for most of 2008 at around 6%.
Mortgage rates ended the year at 5.1%, an all-time low since Freddie Mac started its mortgage survey in 1971.
Source: Freddie Mac
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Let’s put this in perspective …
In 1971: Gasoline 40 cents a gallon
Stamp 8 cents
Turkey 43 cents a pound
Datsun Sports Coup $1,866
Monthly Rent $150
Average New Home Price $25,250
Dow Jones Average 890
And you still couldn’t get a mortgage as cheap as you could in December 2008.
Mortgage Rate in 1971: 7.48%
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Housing Affordability % of Income% of a median family’s income required to make mortgage payments on a median-priced home
24%
19%
24%
19%
10%
20%
30%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source: National Association of REALTORS®
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The Numbers That Drive Real Estate
1. Home Sales
2. Home Prices
3. Inventory
4. Mortgage Rates
5. Affordability
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Home Sales In Thousands
524K
434K437K
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Sales fell 17% in 2008 (back to 2003 levels).
Source: Conference Board/CREA
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Home Prices In Thousands
172 206 248 276226188164158142 149 150
306K 304K
151 147 155 158153 151 152
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
The national average home price decreased by 1% in 2008.
20-year historical appreciation rate = 4%
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Home Prices7 out of 12 provinces saw an increase in prices in December.
Northwest Territories
Saskatchewan
Manitoba
Newfoundland
Nova Scotia
New Brunswick
Prince Edward Island
Prices Increased
Prices Decreased
Home Price (Year-Over-Year Change)
Northwest
Territories
Source: Conference Board/CREA
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11%11%4%4%
-5%
3%
-1%
10%9%10%10%5%5%
-3%
1% 2% 0% 2%
-1%
-8%
-4%
0%
4%
8%
12%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
20-year historical appreciation rate = 4%
Home Price Appreciation
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61%
47%
0%
20%
40%
60%
80%
100%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Sellers Market
Buyers Market
Balanced
As a whole, Canada remained largely in balanced conditions for most of 2008 but ended the year in a buyers’ market.
Source: Conference Board/CREA
Inventory Sales to Listings Ratio
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Mortgage rates remained steady in 2008 at around 7.1%.
In December, rates declined to 6.75%.
7%
13%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source: Bank of Canada
Mortgage Rates 5-Year Fixed
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Affordability % of IncomeProportion of median pretax household income required to service the cost of mortgage payments (principal, interest, property taxes, and utilities)
• Canadians have been feeling the impact of high ownership costs as they experienced deteriorating affordability over the past few years.
• Affordability finally improved by an average of 1.1% in the third quarter of 2008.
• Similar to trends seen in the U.S., the steepest market correction is occurring in provinces that were least affordable, such as British Columbia and Alberta.
Property
Type
Q2
2008
Q3
2008Change
Detached bungalow
47% 46% -1%
Standard two-story
53% 52% -1%
Standard townhouse
38% 37% -1%
Standard condo
32% 31% -1%
Average Change -1%
Source: Royal Bank of Canada
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Economic Snapshot
1. Gross Domestic Product
2. Inflation
3. Unemployment
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1. Gross Domestic Product
• The economy contracted by 3.8% in the fourth quarter of 2008 primarily due to weak consumer and investment spending.
• The National Bureau of Economic Research announced that the U.S. has been in a recession since December 2007 due to the deterioration in the labor markets.
-0.2%-0.5%
-3.8%
-5%
0%
5%
10%
2005.Q1
2005.Q2
2005.Q3
2005.Q4
2006.Q1
2006.Q2
2006.Q3
2006.Q4
2007.Q1
2007.Q2
2007.Q3
2007.Q4
2008.Q1
2008.Q2
2008.Q3
2008.Q4
Source: Bureau of Economic Analysis
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1. Gross Domestic Product Annual Year-to-Year Growth
1.3%
2%
0.8%
-0.2%-1%
0%
1%
2%
3%
4%
5%
6%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source: Bureau of Economic Analysis
Despite the contraction in the last two quarters, the overall economy grew by 1.3% for 2008.
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3.8%
2.8%
0%
2%
4%
6%
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source: Bureau of Labor Statistics
Inflation averaged around 3.8% in 2008.
2. Inflation
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2. Inflation Jan - Dec 2008
• Toward the end of the year, there were signs of potential deflation (a downward spiral of prices, earnings, and economic activity) in the economy as inflation ended at 0.1% in December.
• This was a significant departure from the peak of 5.6% in July.
5.6%
0.1%0%
4%
8%
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Source: Bureau of Labor Statistics
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3. Unemployment
• Unemployment increased to an average of 5.8% in 2008 from 4.6% in 2007.
• Unemployment rose to 7.2% in the final month of the year.
5.8%
0%
4%
8%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source: Bureau of Labor Statistics
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The economy slipped into recession in November 2008, almost an entire year later than the U.S. Historically, the lag between the U.S. and Canada is usually shorter, giving some glimmers of resiliency in the Canadian economy. The weakening economy and declining commodity prices continue to place downward pressures on inflation. Unemployment increased 0.8 percentage points to 6.6% in December from the record low of 5.8% in early 2008. Most of the increase occurred toward the end of the year and was largely driven by a drop in construction.
Metrics %
1. Real GDP (2008 estimate) 1.8%
2. Inflation Rate (Dec) 2.4%
3. Unemployment Rate (Dec) 6.6%
Canada
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The Events
That Drive the
Numbers
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The Events That Drive the U.S. Numbers
1. An increase in foreclosures and short sales continued to drive home price declines
2. More banks tightened their lending standards 3. The number of first-time home buyers bounced back4. Bank failures and mergers increased5. Government rescue became commonplace6. The competitive landscape redefined7. The available sides per agent fell further8. Commission rates rose9. Economic activity follows demographic trend
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1. An increase in foreclosures and short sales continued to drive home price declines
• 1 in 54 housing units received at least one foreclosure filing in 2008.– Total number of filings: 3.2 Million
• So far, foreclosure prevention programs have not been successful in slowing foreclosure rates.
• Approximately 420K hybrid ARMs are scheduled to reset in 2009.
Distressed Sales
38% 45%
Q3 2008 Q4 2008
Distressed sales (foreclosures/short sales) represented approximately 45% of all
sales transactions in the fourth quarter of 2008.
Source: National Association of Realtors
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Top Foreclosure States% of homes that received foreclosure notices
AKHI
Less than 1%
1–5%
Above 5%
Number 1: Nevada - 7% (1 in 14 houses)
Source: Realty Trac
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2. More banks tightened their lending standards
53%
62%
74%
71%100%
72%
78%
86%
0% 20% 40% 60% 80% 100% 120%
4th Qtr
3rd Qtr
2nd Qtr
1st Qtr
Percentage of banks that
tightened their lending standards
last year
Tightened SubprimeTightened Prime
Tightened Subprime
Tightened Prime
Tightened Subprime
Tightened Prime
Tightened Subprime
Tightened Prime
Source: Federal Reserve
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3. The number of first-time home buyers bounced back
42% 40% 40% 40% 36% 39% 41%
2001 2003 2004 2005 2006 2007 2008
• Historically low interest rates and decreasing home prices continually contributed to positive affordability conditions.
• According to Global Insight, housing prices were 3.8% undervalued based on total market value in the third quarter last year.
• The market share of first-time home buyers rose to 41% in 2008.
Percent of First-time Home Buyers
Source: National Association of Realtors
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3
25
2007 2008 2009
??
Number of failed banks taken over by
4. Bank failures and mergers increased
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Here were a few key acquisitions …
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5. Government rescue became commonplace
Feb 13Economic Stimulus Act of 2008
Tax rebates (stimulus checks)
July 30
Housing and Economic Recovery Act of 2008
$7,500 tax credit for first-time home buyers
Change in loan limits for FHA, VA, and Government Sponsored Enterprises (GSE)
Hope for Homeowners: FHA foreclosure rescue
Additional property tax deduction
Moratorium on risk-based pricing for FHA loans
End of seller-funded down payment assistance
Note: Not a complete list of provisions
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Sept. 7 Fannie and Freddie placed under government conservatorship
Sept. 16 Insurance giant AIG received $85 billion
Sept. 18Federal Reserve pumped $180 billion into money markets to combat seizing up of lending between banks
Oct. 3Emergency Economic Stabilization Act: Plan to purchase up to $700 billion in mortgage-related assets
Nov. 25New plan unveiled to pump $800 billion into financial system to unfreeze consumer credit
Dec. 16 Federal Reserve cuts short-term lending rate to near zero
Dec 29 Treasury announced plan to give $6 billion infusion to GMAC
Note: Not a complete list of rescue efforts
5. Government rescue became commonplace
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reports $50 Million loss in the third quarter of 2008
acquired
acquired
6. The competitive landscape redefined
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Bankruptcy Filings
Layoffs
25% of workforce
45 employees 20% of its employees
6. Competitive landscape redefined
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7. The available sides per agent fell further
Despite a 10% contraction in NAR membership, the real estate industry continues to become increasingly competitive.
13.8 13.6 13.5 13.3 12.9 12.6 12.3 11.2 9.5 8.28.4
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source: National Association of Realtors
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0
4
8
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
0
0.4
0.8
1.2
1.62008
NAR Members: 1.2 Million
Annual Sales: 4.9 Million
Existing Home Sales (in Millions) NAR Membership (in Millions)
NAR Members vs. Annual Sales
Source: National Association of Realtors
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8. Commission rates rose
• Commission rates in 2008 increased to 5.3%, the highest level in 7 years. • Rates increased slightly more on the buyer side than the seller side.
– Buyer side: 2.8%– Seller side: 2.5%
• The median commission amount per transaction decreased by approximately 5% on the seller side and 4% on the buyer side due to declining home prices.
5.19% 5.21% 5.20% 5.12% 5.10% 5.09% 5.33%
2002
2003
2004
2005
2006
2007
2008
Source: Keller Williams Commission Study
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9. Economic activity follows demographic trend
Spending by Age Group
The age group with the biggest spending power is the 45 to 54 year olds.<25
25-34
35-44
55-64
65-74
>74
45-54
Source: The Great Bust Ahead
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1980 1990 2000 201019701960195019401930 20301920 2020
9. Economic activity follows demographic trend
“82 years of tight correlation from 1920 to 2002 of the number of 45 to 54 year olds with the Dow Jones Industrial Average ups and downs (economy booms and busts) cannot possibly be a mere 82-year coincidence.”
-- Daniel A. Arnold, The Great Bust Ahead
Source: The Great Bust Ahead
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The Events That Drive the Canadian Numbers
1. The Central Bank cut interest rates 6 times in 20082. Commodity prices and Canadian currency decline sharply3. Restrictions tighten for government-backed mortgages4. Parliament suspended5. Available sides per agent fell
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1. The Central Bank cut interest rates 6 times in 2008
• The Bank of Canada lowered the overnight interest rates to mitigate downward pressures on the economy and stabilize the financial system.
• While rate cuts caused mortgage rates to fall, banks failed to match the rate cut for the first time in a decade on October 8
due to tightened credit conditions.• Despite the credit squeeze, mortgage lending to households
actually increased 12% in December.
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2. Commodity prices and Canadian currency decline sharply
• Commodity prices rose significantly from 2002 to mid-2008.
• Higher prices for energy, agricultural products, metals, and minerals were important drivers of domestic demand and were an important wealth contributor to the general population.
• Decreasing global demand led to a significant decline in commodity prices over the second half of 2008, which ultimately led to weakening of the Canadian loonie.
2007: C$1 1.01USD
2008: C$1 0.83 USD
Exchange rates (Dec. 31)
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3. Restrictions tighten for government backed mortgages
Stricter guidelines were implemented to support stability in mortgage markets.
Requirements Before Oct. 15, 2008 After Oct. 15, 2008
1. Maximum Term Limit 40 years 35 years
2. Minimum Down Payment 0% 5%
3. Minimum Credit Score No set standard 620
4. Maximum Total Debt Service Ratio No set standard 45
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4. Parliament suspended
• Prime Minister Stephen Harper suspended Parliament after facing a vote of no confidence.
• Why? In the face of an increasingly troubled economy, the Conservative party’s 2009 budget (presented towards the end of the year) did not include economic stimulus measures.
• The three very different opposition parties came together in an effort to form a coalition government.
• With Parliament suspended, a vote on the coalition government could not occur.
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5. Available sides per agent fell
In 2008, home sales fell 17% but CREA membership increased 4%. Available sides per agent fell to 8.9 transactions.
9.2 10.1 10.5 12.2 12.7 12.3 12.0 11.7 10.9 11.2 8.9
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
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0
300
600
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
0
60
1202008 CREA Members: 97K Annual Sales: 434K
Home Sales (In Thousands) CREA Members (In Thousands)
CREA Members vs. Annual Sales
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How Did We Get Here?
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The Story Behind THE STORY
The Incredible Global Pool of Money– In 2000, it was $36 trillion.– In October 2008, it doubled to $72 trillion!
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A “Simple” Way to Look at It
Buyer Demand Mortgage Broker GSEsWall Street –
Financial Institutions
Mortgage-Backed Securities
• Normal qualified potential home-buyers
• Subprime potential home-buyers
• Normal investors
• Speculative investors
Loosened standards in 1999
Everyone Investors
Rating Agencies
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What the Governments
Are Doing
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What the Governments Are Doing
Both the U.S. and Canada have implemented stimulus packages to help the ailing economies.U.S.:
1. American Recovery and Reinvestment Act of 2009
2. Homeowner Affordability and Stability Plan
Canada:
1. Stimulus package included in 2009 budget
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U.S.1. American Recovery and Reinvestment Act of 2009
$780 billion economic stimulus package was signed on February 17.
35% in tax cuts
65% in spending over the next 2 years
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1. First-Time Home Buyer Tax Credit
2. FHA, Fannie Mae, and Freddie Mac Loan Limits
3. Neighborhood Stabilization
4. Commercial Real Estate
5. Energy Efficient Housing Tax Credits and Grants
6. Rural Housing Service
American Recovery and Reinvestment Act of 2009Six Key Housing-Related Provisions
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2008 Credit 2009 CreditCredit Amount Maximum of $7,500 Maximum of $8,000
Effective DatePurchases between Apr. 9, 2008 to July 1, 2009
Purchases between Jan. 1 to Dec. 1, 2009
Repayment Yes (over 15 years) No
RecaptureIf home sold before 15 years, outstanding balance is captured at sale.
If home is sold within 3 years of purchase, entire credit is recaptured at sale.
Revenue Bond Financing
No credit if home is financed with state/local bond funding
Buyers who use revenue bond financing are eligible for credit.
1. First-time Home Buyer Tax CreditKey Changes
1. American Recovery and Reinvestment Act of 2009Six Key Housing-Related Provisions
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1. American Recovery and Reinvestment Act of 2009Six Key Housing-Related Provisions
2. FHA, Fannie Mae, and Freddie Mac Loan Limits– Extends expiration date of 2008 conforming loan limits to
December 31, 2009
3. Neighborhood Stabilization– $2 billion in grants to address the problems that arise when
whole neighborhoods are engulfed by foreclosures
– Funds can be used to purchase, manage, repair, and resell foreclosed and abandoned properties.
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1. American Recovery and Reinvestment Act of 2009Six Key Housing-Related Provisions
4. Commercial Real Estate– Funds for state energy programs to support commercial
property owners’ investment in energy efficiency upgrades
– Potential tax relief for small business owners: • Bonus depreciation and capital expenditures
• 5-year carryback of net operating losses
5. Energy Efficient Housing Tax Credits and Grants – Homeowners will be able to claim a 30% tax credit for
purchases of new furnaces, windows, and insulation through 2010.
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1. American Recovery and Reinvestment Act of 2009Six Key Housing-Related Provisions
6. Rural Housing Service– $500 million for existing USDA Rural Housing programs
– Expectations that financing would be available to fund an additional 192,000 homeowners
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U.S.2. Homeowner Affordability and Stability Plan
Overview
On February 18, 2009, President Obama announced his Homeowner Affordability and Stability Plan designed to help approximately 7 to 9 million families avoid foreclosure by refinancing or restructuring their mortgages.
Some of the measures will require Congressional approval prior to implementation.
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Homeowner Affordability and Stability PlanThree Key Elements
1. Refinancing option for loans guaranteed by Fannie Mae and Freddie Mac to help make mortgages more affordable.
2. $75 billion homeowner stability initiative to assist up to 3 to 4 million at-risk homeowners.
3. Support of low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac.
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CanadaStimulus package included in 2009 budget
Overview1. $40 billion stimulus package over the next two years was
approved on February 2, 2009.2. Similar to the U.S., three-quarters was allocated toward new
spending.3. Key areas:
– Spending on infrastructure investments, communities, skills, and work-transition strategies
– Tax relief for individuals, households, and businesses4. To restore liquidity to credit markets, $125 billion was allocated
to help businesses and households access new loans.
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Canadian Stimulus PackageFive Key Housing-Related Provisions
1. Home buyer tax relief– First-time home buyers to receive $750
2. Increase in withdrawal limits from retirement savings plans– Withdrawal limits for Registered Retirement Savings Plan (RRSP) to
increase from $20,000 to $25,000 for first-time home buyers
3. Home Renovation Tax Credit – Up to $1,350 in tax relief to reduce the cost of renovations – Renovations must be between $1,000 and $10,000 and occur between
January 27, 2009 and February 1, 2010.
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Canadian Stimulus PackageFive Key Housing-Related Provisions
4. ecoENERGY Retrofit program– Funds to support home energy efficiency retrofits
5. Social housing investments– Construction for low-income seniors, persons with
disabilities
– New social housing units
– Renovations, energy retrofits, and additional support for existing social housing units
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How Do We Recover?
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The 4 Keys to Housing Recovery
44 Stimulate Economy
Create Jobs
Stabilize Banking System
Stabilize Home Prices
1
SURVIVE
THRIV
E
4
3
2
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So, What Can You Do?
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1. Get Real and Get Right – Right Now!
2. Re-Margin Your Personal and Professional Life – Right Now!
3. Focus on Lead Generation and Conversion – Right Now!
4. Get Sellers to Price Ahead of the Market and Stage Their Homes – Right Now!
5. Help Buyers Find Their Motivation – Right Now!
6. Get Involved in Short Sales, REOs and Foreclosures – Right Now!
The Six Fundamental Secrets of Success in a Shift
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First, Get Real, Get Right! Right Now!
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GET REAL!
Today, the next 180 days, will be the most critical period in your career! Period!
If you get real and get it right – You catapult!
If you don’t get real and get it wrong – You get laid off!
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• You’ve been living through the era of average and now you’re living in the “ERA OF EXTRA”.– Average effort may have done fine in the past– But not in the “ERA OF EXTRA”!
• Average is now being laid off!– 100,000+ in Auto Industry! And climbing!– 150,000+ in Real Estate Industry! And counting …
GET REAL!
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The Bar of the Past!
THE ERA OF AVERAGE EFFORTAcceptable Level of Success
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The Bar Has Now Been Raised!
Unacceptable Level of Success
THE ERA OF EXTRA EFFORTAcceptable Level of Success
THE ERA OF AVERAGE EFFORT
What you got for average effort – now requires EXTRA EFFORT to achieve!AVERAGE just got dramatically cut
back or just plain laid off!
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GET REAL!
Look at it this way:Both your swing and the size of the field you’re playing in matter! A swing in one size of the field knocks a home run, while in another size of field it could be a popfly to the infield.
A swing in one field may not cut it in another!
Effort Matters Today More Than Ever!
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GET REAL!
This is your best opportunity for the biggest
professional DEFINING MOMENT in your life!
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GET REAL! WHY?
1. You will never see a worse economic crisis in your lifetime than right now!
2. Great success is always launched by great motivation and momentum!
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GET REAL!
Truth: Little effort becomes a habit and leads to little results.
Big effort becomes a habit and leads to big results.
So choose the RESULTS you want –
Then choose the EFFORT.
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AVERAGE
Complete Failure
Massive Success
Most People
How Do You Get Out of Being Stuck in the Middle?
GET REAL!
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Now That You’ve Gotten Real ...
You Must Get Right!
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GET RIGHT!
Truth:
When you’re doing the right things professionally ...
the right amount of success and money will come to you.
This truth is how you know when YOU’RE doing the right things and when YOU’RE NOT.
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GET RIGHT!
If the success and money aren’t there then you may be in the right area professionally for you, but you’re still not doing the right things. It’s a simple truth that should set you free.
The GET RIGHT question:“There is a reason why I don’t have the professional success and money I
desire, what is it?”
The answer should inform your IMMEDIATE ACTIONS!
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GET RIGHT!
If this is going to be your DEFINING MOMENT,you’ll need to do 3 things:
1. Focus Only on What Matters
2. Be Willing to Do Whatever It Takes
3. Bring Intensity (Hint: Extra Effort)
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GET RIGHT!
The Six Core Real Estate Agent Competencies:1. Lead generate, capture, and convert to appointments
2. Present to buyers and sellers and get agreements
3. Show buyers and market sellers
4. Write and negotiate contracts
5. Coordinate the sale to closing
6. Manage the money
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Second, You Must Re-Margin Your Personal and Professional Expenses
– Right Now!
“It is not necessary to change. Survival is not mandatory.”
W. Edwards Deming
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WAKE-UP!
You’re now living in the Extra Effort with High Intensity – Low Overhead Era!
DO YOU GET THIS?
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WAKE-UP!
You’re now living in a period in history where this simple truth rules above all others:
“The Business with the Lowest Costs Wins!”
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The Re-Margin Two-Step
First, you cut your personal expenses! To the bone! Now!
Second, you cut your business expenses! To the bone! Now!
GET IT?
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Re-Margin
First, Personal Expenses
• You can’t let society or the media tell you what your personal life “should be.”
• When the market shifts like it is right now – you follow the “must be” rule.
• You downsize and you do it fast. You get your personal expenses where they “must be” in order for you to survive. (No kidding!)
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Re-Margin
Second, Professional Expenses• When markets shift, the first absolute for any business is to “re-expense” itself.
Immediately!
• “Revenuing” your way out of a shift is iffy at best.
– Generating more income may be impossible in the short run and take too much time in the long run.
– “Now” is the required speed when a shift occurs.
– Get your business overhead lower - now!
– The “Must Be” rule applies here as well!
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“Name a business that has been ruined by downsizing. I can’t name one. Name a company that has been ruined by bloat. I can name dozens.”
Charlie Munger
Warren Buffett Speaks
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Re-Margin
• You must lower your costs now. And revisit this every month!
• Remember, to generate revenue, you generate leads – to make a profit, you manage expenses.
• The profit you seek will always be made in the way you manage your money.
• When the market shifts, you must create a budget that matches your revenue.
• We call this re-margining your business.
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Third, Focus on Lead Generation and Lead Conversion! Right Now!
“If your ship doesn’t come in, swim out to it.”
Jonathan Winters
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You Must Lead Generate.
Think of it this way, if you don’t have an able, ready and willing buyer or seller right now – You’re not in business.
Hint: If a real estate office doesn’t have enough able, ready and willing to lead generate real estate agents – they’re not in business.
And get this -
Passive doesn’t work well in a shift!
Aggressive extra effort with intensity will!
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This size market supports a specific number of agents and real estate companies.
Here’s What’s Happened
Test Question:
Which Direction Is the Market Going?
Lead Generation
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So, unless you get a disproportionate and unfair share of the available number of leads (and if you’re a company – a disproportionate and unfair share of able, ready and willing to lead generate agents) – you’re going to be very very unhappy with your income!
Wake Up and Get Real! There Is No Longer Enough to Go Around!
Lead Generation
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The market shift may have now exposed a real personal dilemma you must overcome:
You love helping people.
But you haven’t yet learned to love hunting for them.
Lead Generation
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The Two M’s of Lead Generation
1
MESSAGE
1Match
Your Market
2Make
an Offer
Response
1Target
Audience
2Market
Conditions
1Direct Offer
2Indirect
Offer
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The Two M’s of Lead Generation
2
1 2 3
METHOD
1Prospect
2Market
Maintain
Time Block
Take ActionPrepare
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Level 1
Sign in Yard
Taking Open Houses Beyond the Basics
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Sign in yard
Level 2
Sign in yard with balloons
and riders
Taking Open Houses Beyond the Basics
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Taking Open Houses Beyond the Basics
Level 3
Directional signs at key corners with balloons
and riders
Sign in yard with balloons
and riders
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Taking Open Houses Beyond the Basics
Level 4
Fliers the week before, email invites, and posted on websites
Sign in yard with directional
signs at key corners with balloons and
riders
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Taking Open Houses Beyond the Basics
Level 5
Go invite neighbors.
(100 minimum)
Sign in yard with directional signs at key corners with
balloons and riders, fliers the week before,
email invites, and posted on websites
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Taking Open Houses Beyond the Basics
Level 6
Get on the phone that morning and
remind everyone!
Sign in yard with directional signs at key corners with balloons and riders, fliers the week before, email invites, posted on websites, go invite
neighbors (100 minimum)
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Taking Open Houses Beyond the Basics
Level 7
Hold 4 other open houses in
the area in various price
ranges.
Sign in yard with directional signs at key corners with balloons and riders, fliers
the week before, email invites, posted on websites,
go invite at least 100 neighbors, and get on the phone that morning and
remind everyone!
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Didn’t You Get it? It is the “Era of Extra Effort”!
• Some agents just stick a sign in the yard and call it lead generation.
• Others go six steps beyond this and call it lead generation.
The big question is:
What do YOU call lead generation?
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Lead Generation
• To make “Extra Effort” happen every day, you must subscribe to one simple belief:
– Dealing with current business never takes precedence over finding new business. Never! Ever!
• You must adopt the position that until your lead generation is done every day, nothing else should get done. All else is a distraction!
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• To ensure your lead generation is always your number one priority you must acquire the discipline of “time blocking”.
• Time blocking is setting aside daily blocks of time to execute your most important business priorities.
Time Blocking
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• Think of it as making appointments with yourself.
• Once done, you must protect that time against any and all distractions.
Time Blocking
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Time Blocking for Success
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
7
8:30 to
11:30am
Lead
Generation
8
8:30 to
11:30am
Lead
Generation
9
8:30 to
11:30am
Lead
Generation
10
8:30 to
11:30am
Lead
Generation
11
8:30 to
11:30am
Lead
Generation
12
10:00 to
2:00pm
Lead
Generation
13
12:00 to
5:00pm
Lead
Generation
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When Someone Shows Intent, You Must Immediately Convert it Into an Appointment.
• The ultimate success of your lead generating is directly dependent on your “lead conversion to an appointment” ability.
• One can’t work without the other.– Many agents spend significant amounts of time and money on
their lead production proficiency but neglect their conversion competence.
Get Appointments!
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• Lead conversion is a scripts and dialogues based skill. To master it – you must practice it.
• Your secret weapon: Time on the task overtime.
• Truth: Talent is Overrated! – Practice with accountability to improve
beats talent over time!
Get Appointments!
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Fourth, You Must Get Your Sellers to Price Ahead of the Market and Stage Their Home Competitively.
Right Now!
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The Only Way to View Pricing and Staging
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Staging Study
A review of over 2,800 properties in eight cities
found that “staged homes, on average, sold in half
the time that non-staged homes did. The sellers with
staged homes ended up with 6.3 percent more than
their asking price, on average.”
From an October 2006, USA Today article which cites a Coldwell
Banker Residential Brokerage report
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Staging Study Homes Previously on the Market
Vacant Homes
Occupied Homes
Marketed vacant homes that were previously unstaged were not sold after 120 days on market.
Once staged, those homes only took 26 days to sell.
Marketed occupied homes that were previously unstaged were not sold after 102 days on market.
Once staged, those homes only took 45 days to sell.
Source: RESA
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Fifth, You Must Help Buyers Find Their Motivation. Right Now!
“If someone is going down the wrong road, he doesn’t need motivation to speed him up. He needs education to turn him around.”
Jim Rohn
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The Two Main Ways to Energize Buyer Urgency
1. Become the Local Economist of Choice
2. Address Buyer Reluctance
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1. Don’t Wait – The Hazards of Timing the Market
2. Trade Up – The Opportunity of a Down Market
3. Less Is More – Narrow the Field
4. Provide Best Buys
5. Help Them Tap into Their “Why”
Five Strategies to Overcome Buyer Reluctance
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Sixth, Get Involved in the Market of the Moment –
Short Sales, REOs and Foreclosures! Right Now!
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The Big Three
1. SHORT SALES
Individuals or families willing to avoid foreclosure.
2. REOs
Financial institutions with an above average number of foreclosures to sell.
3. FORECLOSURES
Bargain hunters and investors
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Never Give Up – Never Surrender!