What Are The Benefits Of A Real Estate Market Cooldown?

What Are the Benefits of a Market Cooldown?

Welcome to Mike Ferry TV. My name is Tony Smith, the Vice President of The Mike Ferry Organization, and I'm really excited about today. In fact, I can't even wipe the smile off my face when I read the topic. The topic for us today is “What Are the Benefits of a Market Cooldown?

Now you might ask, you know, why would I be smiling about a market cooldown? In The Mike Ferry Organization, the agents that we've worked with for 50 years, these agents understand the benefits and the byproducts and the magical things that can happen in your business in market cycles. If you've chosen Real Estate as your career, which I'm assuming you have, and you're going to be here for a long, long time, it's important to understand how valuable and what the benefits are of market cycles.

The up and down, you know, I wrote down, the MFO Sale System is designed for you to succeed in any market and up market. A down market. We've been tried and tested. I don't know if you've seen this, but you know, there's these charts and graphs out there. If you go on the Internet, you can find this Real Estate chart of emotions or this Real Estate graph of emotions. And what it does is it shows the market cycle going up and then going down and it shows that cycle and then it puts the emotions next to it, how the Real Estate world behaves.

And it's like that. The graph says, okay, so it starts out. The market's starting to go up and it says, “Optimism.” And then it gets into “Excitement” and then “Thrill.” And then as it gets to the peak, it's “Euphoria” and everybody's thinking, “What can I buy next?” What can I buy next? Right? And then a market cycle starts to cool off or taper off and it starts to get into “Anxiety”, right? “Denial”, “Fear”, “Depression”, “Panic”, “Hopelessness”, right? “Desperation”. And a market goes like that, and these emotions come rolling along with it.

Well, here, Mike Ferry and The Mike Ferry Organization, we have a platform that works on what is called the “180-Degree Rule”. The 180-Degree Rule says, “Hey, let's look at what the mass of people is doing. And we go 180 degrees in the opposite direction.” And so, what are the massive agents doing? Oh, they're excited, they're thrilled, they're euphoric. And then they're depressed and they're desperate. Right? Well, we use the 180-Degree Rule on that because it works. Whatever the mass of Real Estate Agents is doing typically is not the right approach, because the productivity of the masses is so low, and the productivity of Mike Ferry trained agents is so high.

So, you know, if you ever listen to Warren Buffett talk, he says things like, “I have a pattern in my life in business. I like to run when everyone else is walking so I can walk when everyone else is running.” Well, isn't that the same as the 180-Degree Rule? And that's what happens in a market cool off.

So, if we really lock-in and start to understand the enormous benefits, if you just pay attention and you keep your head in the game, the benefits. Right? You've heard Mike Ferry say this before and he's probably said it on Mike Ferry TV, “Show up, pay attention, tell the truth, and don't be attached to the outcome.”

Okay? Now if you can grasp that and hold on to that thought during this cooldown cycle, it can become a huge benefit for you in the growth of your company. In fact, many, many companies, if you look at their big windows of growth, they come in cycles when they're downward, cycles when they're trending out. That's when companies grow in so many ways. I'm hoping you're looking forward to it.

9 Benefits of a Real Estate Market Cooldown

So, here's what I wrote down here. So, I wrote down like this, okay, there are eight, nine little reasons I've written down. There are probably 100 but eight or nine benefits of a real cooldown.

The first one I wrote down is … Your competition will mentally and eventually physically decrease. There's a rule there are 1.8 million Real Estate Agents in North America today.1.8 million. It's the most we've ever had, okay? You have to ask yourself this question. The market has been basically going up since 2011, 2012. It's been going.

There was one little blip in 2019. Most people didn't even feel it. How long have you personally been in the Real Estate business? You have to think 1.8 million Real Estate Agents. How many of them have not even experienced any kind of a turndown at all? What, 4 or 5, 6, 700, 800,000 of them have never seen it. Have you?

So, what we do know there's a fact of life is as markets change the mentally first and then eventually physically, agents will remove themselves from the market. They start out mentally, they get in that, you know, the “denial” phase, right? The “fear” phase, “desperation”, they get panicked and so they mentally start panicking. It's not good for business. If we can stay strong mentally, we don't panic. We don't stay in denial. We take really positive forward action our competitors are pulling themselves out of the game and we stay head-on in the game. We win.

And then physically if a market does cool off quite a bit, there's a lot of agents that are dancing around on a shoelace anyway. You know, they've only closed two or three transactions. They haven't taken a listing in five months. Their money is starting to get dwindle and it'll be that that final straw that causes them to pull out.

There's some long, long, long, long term agents that have been around for 40, 50, 60 years selling Real Estate. They see a cooldown in the market, and they go, you know what? It's time. It's time for me to retire or step away from this. Better for those that want to stay involved. Where do you stand in that? Stay mentally involved.

Number two, I wrote down … All of the off-market sales and For Sale by Owners, sales will decrease over the last couple of years. I don't know if you've noticed, but they were predicting there's going to be, what, 5.7, 8, 9 million sales somewhere, just under 6 million sales this year, okay? But the number of properties that we're selling off-market, not in the MLS, we're at all-time highs.

You know, you look over the fence and you say, “Hey, I'd like to sell my home”. And somebody says, “I'll buy it For Sale by Owners”. They were having pretty good success, weren't they? Well, one little cool down. Do they need your help again? Yes, they need your help. So, these people that were thinking I can sell it myself or sell it to the neighbor, that starts to diminish. And those people go rushing out to go find a great skilled Real Estate Agent. You! Incredible opportunity.

I wrote down number three … Hey, this is a fact of life. The Expired and canceled opportunity. Many of our best agents have made a lot of money working the Expired and canceled listings. Right? You know that group of people that didn't successfully sell well when a Real Estate market starts to cool off, the agents go into denial. Many agents lack skill. And guess what they do? They flat out stop communicating with the Sellers.

So here the Seller world is used to hearing multiple offer, multiple offer, and sell over the asking price. The market cools down, the agent doesn't know what to say to the Seller. Your home hasn't sold in four days. I don't know what to tell you. And so, they just stop calling at all. Don't do that. If you increase your level of communication with your clients, you're going to win. But there will be an increase in Expireds and canceled listings, which is a golden opportunity for some of our hardcore prospectors. Beautiful, right?

Next, I wrote down … Non-motivated and Buyers and Sellers will remove themselves from the market. It's been a fact that a big portion of the Sellers and Buyers out in the world today, it was all predicated on greed. They were running around. There wasn't super, super high motivation, just greed. And boy, the challenge that a non-motivated client can cause in your business.

Well, when a market cools down, many people that don't have a high motivation say, “You know, I'm not going to do it right now”. They simply remove themselves from the equation, which reduces all the drama and the, you know, the frustration and the challenges that come with that. And then what that cause is the motivated Seller start to rise up and you can find them. So, if the pathway clears a little bit, you can start finding the truly motivated people, which is truly an opportunity for you, okay?



I wrote down the number five … Your referrals will go up. Okay, let's face it, for the last few years, the market is as hot as it is, you have to appreciate the public and their perception that you pick a Real Estate Agent. It doesn't really matter. Pick one, your house is going to sell. And so, the perception of needing a highly professional, skilled agent went down to probably as low as the point.

You know, it's kind of like this. So, if you have a cold, just a small cold, a little cough, or something like that, you might just go to any doctor, you go to urgent care, you just go to it. You're not that selective. But if you have a lump, if you have something serious, if you're seriously sick, do you want a really true professional doctor? Yes. It's the same in the Real Estate industry. So, the referrals start to go up when a market cools and you do a great job for your client. People are saying, you know, you have to call Bob. He's an incredible agent. He did a great job for me. He told me the truth. He got my home sold. You should expect and be able to get more referrals. Incredible.

I wrote down number six … If you're building a company where you have staff and if you have a team and you're trying to build a team, when a market cools down a little bit, it opens up the door to finding solid staff members, great Buyers Agents, great team members. You know, the pool of people gets a little bit bigger of people that you could hire, right? You know, there's companies that have decided to fold up shop and there are agents that were in a little risky position financially. And so, they let go of some of their staff or agents that have been buying a lot of leads off the internet. It cools down. They haven't been training those agents. They let those agents go. And maybe there's some great solid quality Buyers Agents that get out in the market. They start looking around. Huge opportunity to substantially build up your team if you're going to have a team.

I wrote down number seven … You have a golden opportunity to improve your skills, your sources and your systems. One thing that a little cool down can do is it can sometimes force you to finally put together the systems, finally add the sources that you need to add, finally get the skill set that you need to get in so many ways. Do you need to refine your Listing Presentation right now? Probably really a great time to look at the Listing Presentation. Objection handlers, the pricing, price reductions. You get a chance to refine all those skills.

I wrote down number eight … Hey, commission cutters and the untested Real Estate Agents might start to disappear. You know, one thing we know is there are all of these companies that have popped up and these agents that have popped up in an up-swinging market, which have popped up all over the place. And many of them won't make the grade, right? You know, there's the commission cutting world. A lot of those people are in a space where if there's a little cool down in the market, they can't afford to continue, so they drop away. More commissions for you, commissions start to gravitate back to normal. Another incredible opportunity.

I wrote down number nine … You have an opportunity to build your own Real Estate portfolio. I know many of you watching have strong goals to have a solid Real Estate portfolio as part of your retirement plan or your investment plan.

Well, do you want to buy when everything's clear up here, or do you want to buy when it cools off in markets off a little bit? If a market gets into a pretty healthy cooldown, I don't know. Time will tell, right? But the idea is you get a chance to pick up assets, right? Hey, we want to buy low and sell high, right? Well, there might be an opportunity to pick up some assets and expand on your net worth. Golden opportunity.

Here's what I know. Many companies’ lead sources and agents have not been tested through normal market cycles. They just haven't. It's been 11 years, okay. The Mike Ferry Sales System. We have been tested in good markets and bad. We've been here for almost 50 years. Mike has the proven methods and techniques for you to succeed.

Hey, we have a Superstar Retreat coming up here in July. It'll probably be one of the most important Real Estate events in the last 5, 10, 15 years because of a market cycle. If you're not registered to be there, I strongly suggest that you get registered because this one is a good one for the books. Thanks for your time. I appreciate spending a little time with you on Mike Ferry TV.