Being a seasoned real estate agent is not easy right now. Some of my sharpest Realtor® friends tell me they’re facing three simultaneous challenges: (1) their business model is fast becoming obsolete, (2) tight inventory, and (3) Baby Boomers who want to move but are having trouble qualifying for a conventional home loan.
After hundreds of hours of development, we believe we have a strategy that will help agents make money while making a difference for some of their clients who really need help. First, let’s look at why real estate agents need to change their business model.
There are three types of people when it comes to technology; digital:
Millennials are digital natives. They’ve spent their entire lives surrounded by and using computers, video games, video cameras, cell phones, etc. To them, a fax machine is as outdated as Morse code.
Digital immigrants are those of us who learned this technology language to adapt. Some of us learned better than others. Scientists, however, tell us that a language learned later in life goes into a different part of the brain. It’ll never be second nature to us.
Digital illiterates are those who chose not to learn the new language. Some can’t download a PDF, some don’t have smart phones, and some don’t even have a computer. Half are sad or frustrated about it, the other half say they don’t care.
Think about this for a minute. Whether we’re talking the school system, or a branch manager responsible for training new agents, we have digital-immigrant instructors trying to teach a population (digital natives) that speaks a different language.1
Demographics are driving the change and challenge agents are facing. More and more it’s going to be about Millennials. Notice the image below, since 2015 Millennials are the largest cohort.
The bigger story concerns the workforce. Since 2015, there are more Millennials in the workforce than Gen X or Boomers.
Digital-native Millennials cannot be reached by the same strategies that worked on their parents or grandparents. Real estate agents relying on old-school methods like printed open house flyers will not connect with this generation. They expect video with exciting drone footage, like they see on all the fixer-upper TV shows.
While Boomers currently have the most wealth, future jobs and incomes tilt toward Millennials – which is relevant when qualifying for a home loan.
For seasoned agents (say those over 50), transitioning to the new reality is not trivial. When Tom Ferry gave the CAR Expo Keynote two months ago he said:
I just talked to a Realtor friend who has her SRES® designation. She’s exasperated at how much the business is changing and she feels like she can’t catch up or keep up. While she’s proud of her digital immigrant skills, she says she’s not close when it comes to video marketing on Facebook. She’s paid for a course or two but doesn’t have anything to show for it.
She has resigned herself to not competing for Millennials. The good news is the strategy behind this message is aimed at digital immigrants and illiterates. It’s perfect for my Realtor® friend. It doesn’t matter that she’s not cutting edge.
Another agent headwind is today’s tight inventory conditions. The National Association of Realtors (NAR) reports that: “unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago.”
One of the reasons there is an inventory issue has to do with homeowners (Boomers) not being able to qualify for a home loan; therefore, they cannot move. Don’t be fooled by today’s low unemployment numbers. They fail to count those who’ve left the workforce – some not by choice. Many retired people are stuck in the wrong home.
Tell me if this sounds familiar. A couple or a woman lives in a home where they raised their kids. The house still has a mortgage balance because of previous cash-out refinances that covered a job loss, college expenses, or a wedding.
The house no longer fits. Maybe it is too big, or the yard’s too big, or it’s in the wrong neighborhood, it has deferred maintenance, it’s not near the kids, or it’s just too expensive.
Because the owner cannot qualify for a conventional loan, they stay stuck in the wrong house thinking their only choice will be to eventually sell and rent, which is something they really don’t want to do.
Imagine you’re an agent with a buyer; but can’t find them a home. What if there was a way for you to help a Baby Boomer homeowner sell a home, and buy a different one, one that fits better; without them having a mortgage payment. And what if that sale freed up some of their equity, which became an emergency fund. And then what if you could help your original client buy the home you just helped sell.
If you knew how to do this, a sale and two purchases, and your peers did not know how, would that help you differentiate yourself?
Authors Kim and Mauborgne wrote a book called Blue Ocean Strategy. Their premise is that the way to profit is to redefine the market and/or the basis of competition. Think Cirque du Soleil compared to a circus. The goal is to unlock new demand while making the competition irrelevant.
We have invested hundreds of hours building a course specifically to teach real estate agents how to do this. We teach them how to help retirees and seniors get out of the wrong home and buy one that fits better – how to have a win/win outcome without stepping on your current business plan or strategic relationships.
Imagine if you could do that two or three times in the next year. Imagine if you were one of the few who knew how and/or who had the resources and relationships to do this in a predictable, profitable manner. That would be a Blue Ocean Strategy. And that is what our reverse purchase class is all about.
Think about honey bees. They don’t wake up thinking about pollinating 400 different agricultural types of plants. They head out each morning looking for nectar. The $19 billion worth of crops they help produce is a by-product of their efforts. That is a good analogy for what we’re talking about.
Working with real estate agents, without them having to re-tool their business, to make a living. In the process, we positively impact the supply-constrained housing market and make a life-changing difference in some senior’s finances.
If you’d like to learn how to do this, click the Learn More button below.
Or, go to www.reversepurchaseclass.com.