Real Estate Market Myth Busting...with Sean Shallis The Consumers Real Estate Coach

10X Real Estate Marketing & Coaching

Hey everybody, Sean Shalles founder at the Tenex real estate warrior nation. We're also considered the consumers' real estate coach. And I just want to reach out to you today. I had a great conversation while the guys that works with me and he asked a good question. He said, Hey, Sean, you know, we're prospecting our brains out. And you know, the results just aren't getting what they used to get. What's going on there. Are we, you know, or how long are we going to in this kind of a situation, do you think it's going to continue? What do you think? What is the deal? So, you know, I kind of explained to him and I said, you know, the misconception that the general public has right now is that the real estate market is flying. Interest rates are low and everything comes on.

The market sells multiple offers. Well, yeah, it does because we're actually in the complete polar opposite of the economy that I was in when I was working in 2008 and 2009, I mean, 2008, 2009, what's happening. Then you got to realize like, you know you know, that is, that is now almost 12 years ago, 13 years ago, I'm 40 years old as opposed to 54. I walk into my office and in, you know, in the beginning of 2008, I had just opened my new office. I have one kid, one on the way I'm honestly making about 80,000, a hundred thousand dollars a month. And all of a sudden I wake up and against all the better judgment of all my mentors and all my coaches said, don't do it, don't do it. We knew we were going into a declining market. Had we known how bad?

I mean, it was like the perfect storm in real estate. I mean, it was just, it was disgusting to be honest with you. So here's a true story, you know, and will put it in perspective for you. I open up my office. I'm excited as how we went from number 180 on the sheets as a new company to the next month we come out and we're number 90 on the sheets. And what are the sheets while the sheets back then, what they did was every month, the more the real estate association or the multiple listing service would send us out a report and they would fax it to us back then because they didn't email it. And it was about eight pages long. So I, or that it came out on the 15th of every month. So the first month I get it, I was really excited.

I didn't even realize there was a report. And I was like, wow, look at us. You know, the next month that comes out, we're like a number we're like number 16, we go from number 90 to number 16. So within 90 days of opening our office, we went from 180 as a new office. And as the last guy in the lot to number 16, out of 180 companies, well, what I didn't realize was then, you know, all of a sudden it started to get closer to 2008 in September. I go in the office one day, I get the report, I call up the multiple listing sources and I go, dude, you know, I think there's something wrong with my fax machine. I'm missing the last page. And they go, what are you talking about? And I said, well, you know, usually there's eight pages on a hundred.

Yeah, 80 companies. I said, this month, there's only 140 companies. There's only seven pinch. He goes, yeah, well, those other companies went broke, Sean. They're no longer in business. And that's when the reality set in that, Oh my God, this is no longer just a bunch of people talking because we kind of ignored the news. We just, we really didn't watch the news. We just put our head down and showed up everyday and do what we were supposed to do. And, you know, ironically enough, when we started to look around and started to see what was going on, I really got, I really took it. I was like, wow. In a very short period of time, my income went from 80,000 a month to $8,000 a month, literally overnight and six months. I watched the market tumble to go down 40 to 50% and the amount of sales in six months period.

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And and not only were they, did they go down in the amount of sales, but the sales volume went down from lowers. The price of the homes went down by 45% in that same period. So you talk about a perfect storm. You talk about like, what do you do? I mean, I had just opened an office. I have one kid, one on the way I go home. My bills are probably 10 times what I was making or eight times what I was making a month. And I, you know, all I could think of is, you know, I got my health let's just get up and fight another day. And every day we would get up and we will look at the hot sheet to say to the people in the office and go, Hey, look, there was 15 people that actually listed a house yesterday. There was 20 people that actually sold the house. And there was this many people that did whatever else. So w all they kept doing was looking at the, at the hot sheet to remind ourselves that we hadn't gone to zero. We're still doing some business. And really what we did was we had to take a step backwards to figure out our numbers. So prior to that, I needed probably two listings for every sale that I wanted to make.

When the market's shifted all of a sudden

Carrying 110 listings, because I needed anywhere between 10 to 15 listings,

An order sell one house. So I had to keep that many in inventory in order to sell a house, we had to figure it out

New ways to manage inventory. And one of the ways that we did that was

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Figuring out that if we work with developers or investors that, that had portfolios of 10, 20, 50, a hundred homes, we can actually have one conversation with one portfolio manager or one investor or one, one developer and still manage 30 properties. So we still made the same amount of phone calls, but we were okay.

You were managing, or how housing and our inventory, you know, 10 times the amount of inventory. So that was, that was one thing that we did was pretty smart. The second thing that we did was every morning we would come

Men. And like I said, we would look to see what was positive. That was going on. Then the other thing that we did about three times a week, whenever, you know, you can't stay positive all the time, we would play the song from mighty Python. Always look on the bright side of life, which is a song where if you see the skit, there's there's three guys nailed to crucifixes, and they're saying, don't always look on the bright side of life and their feet are going back and forth. It's just you know, it's just a, it's what they would call a pattern break to break the tension and the office, and to show people like, Hey, you know what? And thank God. You know, I've always led by example. So I wasn't asking anybody to do anything I wasn't doing. I remember one of a very large yellow company in the Northeast port, my firm and the owner of that company came in and the president who's been in the business for probably 60 years. At that point, he said, I don't know how you guys are doing it, but you're doing more business in three of our offices combined. And he goes, we cannot figure out how you guys are appraising properties, because there's

Nothing been trading or nothing selling in order to get it appraised.

And, you know, one of the things I said was, you know, Jim, when, when do you get more excited when you're going down on the, on the rollercoaster, or when you go on up, he goes, man, you know, obviously going down, I said, well, market's going down pretty quick. And I said, people get excited. And I said, well, people get excited when they make decisions. When they're excited, I said, numbers bore them to death. And I said, you know, markets go up on elevators, go down on escalators. And I said, you know, I actually, I apologize. They go up on escalators and they go down on elevators. And

At that time, really what we were doing was just focusing on what was it going to take in order for us to do another transaction? And really what we do is we figured out the numbers. I probably, you know, thankful that that happened at that time. I wasn't thankful that, you know, it happened right when I opened my own office, but thank God I had really good people around me. I was trained by really, really good mentors and coaches over the years to basically, you know, not, I look back. I was, I was, I was like a weapon. I was designed to withstand pretty much the worst economy in the worst real estate market we've ever experienced. So why am I reflecting on the past? And that whole experience is because we learn a lot from our past that we can project into the future. So

When you know, over the,

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You know, I I've, I've talked with people and they said, Oh, you know, I'm working with so-and-so and he's a great coach and a great mentor. And I said, you know, you realize that they've never worked in a down economy or a sideways economy. And they're like, what are you talking about? I said, well, you know, when the market is going straight up, anybody looks good. I say, because there isn't anything that's going to affect them going forward. But I said, when, you know, the, the really the people that shine are the people that shine when the market is not doing so good or they're outperforming the market. So if the market went up 10% and your, your business went up 15%, that means you outperform the market by 5%. But if you have people like what we did in 2008, everybody else went down 40% and we actually stayed the same.

We did stay the same. We stayed the same in the amount of sales we did, but we didn't stay the same in the amount of money we may, because again, the volume went down almost 50%. So we only made half as much money and actually less because of what they would call the momentum effect. It takes time in the real estate business to actually get momentum and get into a groove. And usually that momentum phase is about 60 and 90 days in order for somebody to get into a phase where they start to create a duplicatable, repeatable, trackable business that can be monitored and tracked and increased or decreased. So you fast forward now it's 2021 and people are all like, you know, Oh my God, the market is going crazy. Well, yes, there's the, the real estate market, when we put a house on the market, there are six or eight offers on the property. There's, there's a ton of people out there trying to buy it. And yeah, the market is flying and the interest rates are super low. They're below 3% in some cases. I mean, that's all well,

Well, good. The challenge though, is, is that it doesn't matter how low the interest rate is, if you can't find and the house to buy again, I'll say that again. It doesn't matter how well the interest rate is if you don't have the inventory to sell. And so why am I, why am I bringing that up even more? Why is that? Even in the conversation, Sean, I don't understand. Well, you know, when you look at you know, any business for that matter, you know, it's supply and demand. So if I look at, and, and I recently got a I recently got an image from somebody in a report from somebody that showed that across the United States, on average, it's a 40 to 50% less inventory at this time, a year than this timeline last year and a year before that, as a matter of fact in the year before that, well, this sounds familiar, doesn't it?

Because we are actually in the polar opposite market that we were in, in 2008 and nine, 2008 and nine, if you had, have you had buyers, you control the market and this market, if you have inventory, you control the market. Because like I said, there's no inventory, but there's plenty of buyers waiting to chomping at the bit to buy. So really the trick comes is how do I control the inventory? How do I get the most control of inventory to be able to bring in the buyers to myself? And then once I get that buyer audience, how do I hang on to them? And how do I keep their attention long enough to buy a house from me? And for me to find them something or to put their confidence in me. So, you know, I, you know,

No, when you start looking at that and you say, okay, well you know, that's one way to look at it. Well, here's the differences of age and experience in March and April of two of 2020, when the market, when all of a sudden COVID-19 hit, thank God. I'm married to a doctor and she happens to be what I call the COVID czar. She used the Sheila, she's the national mental medical director for a very large corporation. And she and I, she's the love of my life, thank God for my kids. But more importantly she's in charge of this side of the hemisphere and especially in charge of COVID-19 and dealing with that whole debacle. And, you know, at some point I said, okay, well, what does it take for us to be able to operate our real estate business and operate within compliance of COVID-19? And she gave me an outline of what it would take. And I said, okay, great. And in the end of March, I actually had a conversation with my team. And I said,

Well, let's map out the entire

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Real estate process. And it turns out it was, you know, for all intents and purposes, about 105 different people, places and things that you're going to do along the way in order to list and sell a house. And we did it, everything from the first contact with the person on the phone all the way till the last moment where you hand them the keys and you say, congratulations, you're moving in.

And during that,

What we did is we put it all on a whiteboard and we said, okay, let's circle

All the ones in yellow that we think. And again, I'm going to emphasize think, have to be done in person. Well, wouldn't, you know, it probably less than 10% of it had to be done in person. And we went back and looked at it again, and we took another look at it. We said, how many of these things can we really, really, really have to physically be there for, it turns out it was only three or four of them, of the pro three or four pieces of the puzzle where we physically had to be there and we'd had to actually show up and the physically attend that appointment. Right? So once we had the process figured out, then we went to work on starting to figure out where the market was and how we were going to differentiate ourselves in the market and what was going to make us unique and how are we going to help our sellers to one, sell their homes, how we're going to help our buyers to get into the homes, to see them.

And then what happened was, is exactly what's happening now is over time because people were concerned about getting people in their house, out of their house. People trying to, if they sold, if I sell my house, where do I move to? I can't find a piece of him. And I can't find another home because there's nothing in the market. Even though I can get top dollar for my home, where am I going to live? So all those pieces of the puzzle started to come through fruition. So when you start looking at that and people say, Oh my God, the real estate market is flying. It's not always what it looks like on the surface. So if you're an agent out there, how do you, how do you start to figure out how do you dial this in and how do you start getting in front of it?

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Well, first of all, anything that you're going to do, that's going to generate business that you were doing and it's working, keep doing it, except you're going to have to do it three or four times harder. You know, I can, I can honestly tell you, I haven't grinded like this in a long time where we're getting it on the phones every day. We're gonna, you know, I've been doing it for 25 years and now I'm doing it even more so. And we're going back to old school tactics and going back to saying, okay, our closing ratio, wasn't good. Let's figure out where the holes are and let's get better at this because we can't afford to miss an opportunity you know, and to circle back and, and you know, where my associate krill said, Hey, you know, Sean, what do you see where what's the forecast here?

You've been around doing this for years. What do you think is the forecast? And you know, and no, I gotta be honest. I mean, at first I had to sit back and kind of really think about it. And I thought, and you know, I'll tell you the same thing I've told customers all the way through is, you know, in 2008 and nine, we had 2.6 million people out of work. You know, in, in today's market, we have 12.6. Let me say that again. We had 2.6 million people out of, out of work in 2008, we now have 12.6 million people out of work. And what's interesting is because people in my professional opinion, personal opinion, because people have been conditioned now to accept that they can actually work virtually where there's many of these swore that they could never work virtually and they needed an office space, or they needed to get a bigger office and everything else, or they needed more people in that office to manage things.

I think a lot of, a lot of those jobs may not come back. And I'm not excited about that. I'm just being honest with you and telling you, you know, I don't think it's going to be as rosy as we all think. It's not as though we're going to flip the switch and everybody's going to be fine again. And we're all going to go back to our jobs because the job that we had is no longer the same. You know, there's a, one of the people I interviewed is a guy named Jay Kender, who was one of the more successful agents at exp and, and the, in our industry. And, you know, he always said, he always said, he says, you know, I mean, he still says that he's still alive and great guy. He always says, you know, you can't unsee it once you see it, you can't unsee it. And once, you know, once your senior management sees that we can operate differently, we don't have to be in a physical office next to each other. I don't think they're going to unsee it, especially when they look at the bottom line. And they look at the, you know, the, the, the amount of money that is spent on housing and, or an office space and sticks and bricks. So let's just say, if you take me out of the equation

And you just, my opinion is I think we're going to see an increase in, in inventory like we normally do. I think we're starting to make the turn. So we're going to see, you know, there's going to be, there's always something traumatic going on in our industry and any industry for that matter, that's going to affect the market. Every, it seems like every year, there's something that happens in in the market that...