Agents and brokers in markets across the country are dealing with their share of anxiety over the economic turmoil wrought by the COVID-19 pandemic. This year’s National Association of Realtors’ midyear legislative meetings – held virtually – featured a series of sessions designed to help members take care of themselves, professionally and personally.
Leigh Brown, a former stockbroker who is now a broker-manager in Concord, North Carolina, took a moment to recognize the magnitude of the upheaval at this moment. “No matter where you are in the country, no matter what state your home orders are in or what your government has said, it’s still unstable because we have so many people out there in various stages of uncertainty,” she said.
But the overall tone of the presentations was constructive and forward-looking. “The key in an environment like this is to control what’s controllable,” said real estate coach Brian Buffini. “You can’t control the virus. You can’t control what a governor or a city official will do. You can’t control a national economy. But, there are certain things you can control.”
Working on oneself
“As Realtors, we know all about turbulence, but finding peace might be a little more difficult for us,” said Arizona Association of Realtors President Paula Monthofer as she kicked off her virtual presentation Thursday. “What we think about when it comes to happiness and peace tends to be working against us. What we tend to think about is that if we get productive, if we get active, if we get moving – that will make us more happy and bring more peace into our lives.”
As part of her work with agents at this troubling time, Monthofer has been asking them to write down three words that describe the world as they see it at that moment. Responses include negative adjectives like “chaotic” and positives such as “collaborative.” Monthofer said it’s an important first step to simply evaluate your state of mind. “Knowing that, you can change your perspective and your expectations to help correct how you’re feeling as things go forward,” she said.
Change isn’t necessarily easy. In order to shift that perception, Monthofer advised members to be honest with themselves and face the emotions that are causing negative feelings like anxiety and dread. It becomes easier to do so when people introduce the concepts of grace, gratitude and growth into their lives. She recommended activities such as journaling, meditation, daily affirmations and practicing self-care as tools for opening the self to being present in the moment.
“It’s exhausting to grow,” Monthofer said. “But nothing at all grows in a comfort zone. It’s a lovely place to rest and relax, but it’s no place to live and it’s no place to get better.”
Understanding the moment
Even with the rapid spread of the coronavirus and the massive layoffs that have ensued, this moment does not compare with the 1918 flu epidemic that followed World War I or the decade-long financial crisis of the Great Depression, Buffini said. Comparisons to the Great Recession that began in 2006 also don’t hold up because this market isn’t threatened by the loose banking standards profligate home equity loans that were common at that time. Still, home sales data has been discouraging the past couple of months.
“How’s the industry going to come back? First, we’re looking at a 10 to 15% drop in transactions,” Buffini said, pointing out that the published reports citing a 50% to 60% drop were based on a platform built solely on data from markets in Italy and San Francisco. The housing shortage will keep prices high and transactions are expected to increase by 13% to 18% in 2021.
“We are looking at something that is really working to our favor. The real estate business was last into this, and we will be first out,” he said. “We have to understand people were sent to their homes. It was a stay-at-home order. Has there even been such an endorsement of what we do?”
But that reemergence won’t happen all at once. Instead, agents and brokers should be prepared to make what Buffini called a “rolling start.” Buffini described how, after an automobile race is paused in the wake of a crash, the drivers don’t immediately return to racing as fast as possible. Instead, a pace car leads them around the track, gradually increasing speeds until the vehicles are once again warmed up and ready to go.
To get ready for the day when business returns to something approaching normal, Buffini offered his Five Circle Fit program, structuring it to serve as a sort of pace car for agents. The plan recommends agents start by taking care of themselves by focusing on five areas: financial, personal, spiritual, family and business. He has started giving out a weekly list of items relating to all five areas, such as a book to read, budgeting tasks or physical exercises.
Building strong financials
Brown finds that agents often focus too intently on spending for their business or counting the money they have coming in the form of pending sales. “Real estate money is dangerous to you,” Brown said. “You get a check, and it’s so much money. It’s like when you’re a kid and your grandma gives you $20 and it’s the only $20 you’ve ever had. You think ‘I can buy a yacht, I can buy an island,’ and then suddenly it’s gone.”
This leads to financial lapses and can create problems as they approach retirement age or when the bottom drops out of the market. Citing NAR data, she said that only 52% of Realtors are actively saving for retirement; 28% are not confident they can retire when they are ready; and 15% identify real estate is their retirement career. Only 35% told NAR they have a savings account, down from 42% in 2017.
Those aren’t comforting numbers, particularly when paired with a market downturn. Brown encouraged those unprepared for the situation to talk to brokers like her, who’ve weathered market disruptions caused by the September 11 attacks and the housing crash.
“If you are a newer Realtor or you weren’t around during any other market disruption, reach out to some of us,” Brown said. “If you’re a member of that old guard and you made it through, raise your hand so people know who it’s OK to reach out to.”
Brown highlighted FinancialWellness.realtor, an NAR tool that’s designed to help agents create a financial assessment. The site also provides personalized suggestions based on data provided by the user, such as what kinds of accounts to open and how much to save in order to reach goals.
Brown recommended agents open four bank accounts for their commission business and implement what she calls the “40-30-20-10 plan.” Every time you get paid, 40% should go into a business account that will be used for costs associated with running a real estate business. The 30% should go into a personal account for things like food, car payments, housing and other expenses. Twenty percent is set aside for taxes and 10% should go back into the community or given to charity.
“When you start looking at money that way,” Brown said, “you’re going to think about your incoming commission differently and you’re going to think about it more wisely.”
Agents also should consider purchasing investment properties, rather than pass every great deal on to a client. “It’s often the horror stories that keep us from buying real estate,” Brown said. “We’re so afraid of the one bad tenant. You’re so afraid of the one bad purchase or the one bad moment that you leave yourself out of a lifetime of opportunity.”
Protecting an investment becomes easier when agents develop relationships with property managers and educate themselves through classes and association resources. The information gleaned by protecting your own finances can also be passed to clients.
“The hedge funds out there and the venture capital companies and the apps don’t help people build for the future in a way that understands where they are emotionally, looks at their risk profile and helps them think long-term,” Brown said. “You get to do that. You’re their local Realtor.”