Current Problems and Solutions in Real Estate

And welcome to Mike Ferry TV. It is the week of May the 3rd and we are actually recording this the week before because we’re in Orlando, Florida. Tomorrow we’re doing our first live two day event in probably 15, 16 months. So we’re excited about the opportunity to work this week in Orlando with a lot of great agents in attendance. You know, the problem in Real Estate today, as we all are aware, is the lack of inventory. But there’s a couple of other things going on that I want to talk about today. And I think the biggest challenge we face today is looking at the overall scope of the real estate market in the United States. I can’t speak for the country of Canada. Borders are still closed, so I’m having a hard time accessing the information I would like. But in the US today, with 1.4 million active realtors, according to a NAR and let’s say we’re going to do about 5 million transactions and 5 million transactions is, as you know, is 10 million sites. Well, you divide 1.4 to 10 million. You say, well, the per person, productivity isn’t too bad. But, here’s what I want you to understand. It sure appears that about 10 percent of the agents are doing the majority of all the transactions in real estate today.

Can we take the top 10 percent out of this scenario? We’re probably doing 2 or 3 transactions a year. But the interesting part about that is the average income for those that are working and selling real estate is going up because the average price is going up so dramatically since really May, June of twenty 20 through today. And with the average price going up, average goes up. So it gives the appearance that people are making a lot of money. But at the same time, the turnover in our business is probably the highest I’ve seen in the 46 years that I’ve been organizing and running The Mike Ferry Organization. And with that high turnover in real estate, it only takes place because people are not getting paid. You know, somebody said to me one time, why is the turnover so high? I said, because they’re not getting a paycheck. You know, this is one of those industries where if you’re not doing anything, the paycheck is zero. But if you’re active, the paychecks can be a lot large and you can make a tremendous amount of money. And it’s actually easier to make money in this marketplace today because the number of agents churning is so high. And of course, with most of the last 12 months, most of the real estate brokerage firms not being open and the brokers and managers not having as much direct contact and the training and so forth per person, productivity is really terrible and the turnover is getting worse.

So why is all of this taking place? And my answer is really the training has been reduced to a Zoom call. And as most of you know, you’ve been on some calls now for 12, 13 months. And I don’t think it’s any question we’re about zoomed out in terms of an industry. And I think most industries probably feel the same. Well, we also have to understand that a lot of people keep taking the path of least resistance. You know they’re looking for a way to get rich and Real Estate without any effort or any work and that is because the sales backgrounds of most agents doesn’t exist. You know, it’s a direct selling business. We’ve talked about that for years. And most people coming into Real Estate don’t have any direct selling experience. And as a result, the turnover is high per person productivity is low. But then when you get a paycheck, it’s a big paycheck, which of course, looks good. So if we look at the training today, I mean, I, I watch carefully what is going on in the industry to the best of my ability. Came across a competitor and there was actually probably about a dozen.

And here’s what they teach you on how to become productive, hold open houses every weekend. Well. The last thing you need is more potential buyers in your life, what you need are listings because the person who controls the listings is the one that’s going to control all the offers that are going to be made. Holding an open house is, generally speaking, not a listing oriented activity. Geographic farming, which, you know, Tommy Hopkins introduced that in the 60s and 70s. And at that time it was a very popular and very important. Today, geographic farming almost doesn’t exist because the covid because you’re not out knocking on doors and passing out fliers and doing those types of activities. Plus, most geographic palms are very small. And let’s say you have a five hundred home farm and five percent of them sell annually and you’re going to get a handful of those, and how is that really going to lead to higher per and productivity? But then, of course, you hear this, build a team, build a team, build a team. And we have a client of ours that sent me a note several months ago and they said that the team leader/sales manager, the company introduced a new agent. Here’s Bob Smith. He’s starting new this week, he’s hiring two assistants.

A buyer’s agent to start. He’s building a team. Well, Ron White, the great comedian, said, you know, that probably sounds like you can’t fix one thing and that is being stupid. And that doesn’t even make sense. And of course, then, of course, we’re going to go to buy leads off the Internet, which, again, are almost all buyers. And how many more buyers do you want that get frustrated because you can’t find him a home? And then, of course, social media campaigns are the answer to all problems you could have and run ads on social media. But it’s hard to run ads on social media if you don’t have any income. So what is the answer to the problem? How about maybe working? How about maybe talking to people? How about maybe following up on the leads that you do have that are listing oriented? See, think about it this way. You’re working with a buyer and there is a listing available and you show the property and your buyer rights on offer in most cases for above asking price. And then you make a phone call to the listing agent and they’re going to say, today’s Tuesday. We’re going to present the offers on Wednesdays at noon. And presently you’re number twenty six. Well, here’s my question for you. Is the more competition for you trying to sell a house to a buyer or more competition working on a listing? And the answer is there’s more competition, trying to sell a home to a buyer than working on a listing.

If you’re going on a Listing Presentation., there may be 3 or 4 agents working on that listing. So the odds of you taking a listing are much better than getting an offer accepted. So let’s learn the listing skills. How do we solve the inventory problem? Take listing. How do we take listings? Talk to people. How do we talk to people? Know what to say on a Listing Presentation. So we can you and I solve the per person productivity problem. We can solve the turn over problem by teaching people how to sell. It’s a big responsibility. It’s a big job and it’s an important job. And of course, one of the purposes of Mike Ferry TV is to assist in our knowledge of the market so we can become more proficient, more professional, more productive and make a better living. So let’s spend the next week looking at our weaknesses so we can then look at how to strengthen those and become a better Real Estate sales person. That’s my message for this week. Talk to you next week. We’ll be back in Las Vegas broadcasting from there. Have a good one.