CRISIS?

Danger Opportunity+

“Crisis”

C.R.I.S.I.S

A Circumstance Requiring

Immediate

Shift In Strategy!

8

The Market Has Shifted Dramatically• Sales volume and transactions have dropped drastically.• Inventory has reached a breathtaking high.• Buyers continue to be reluctant, and sellers continue to

be unrealistic.• Real estate agents seem dazed and confused.• Brokerage net profits are going red.• Fear is rampant, anxiety is high, and people are getting

out of the business right and left.

9

So, What Happened?

10

People …

• Over spent and under saved

• Over borrowed and over paid

And too many got in over their head.

11

Now they’ll …

• Under spend and over save

• Under borrow and under pay

And the economy will begin to move back into alignment.

12

We Are in the Midst of One Major Shift!

• You shouldn’t be surprised.• Economic history repeats itself. That’s why it’s called an

“economic cycle”.• What’s happening today has happened before. The

economy is in one of the “down” parts of its cycle.• You may have thought we’d either cured economic down

cycles or you would escape the planet before another big one hit.

13

So, the Economy Shifts and Therefore Real Estate Markets Shift

They always have and always will

and

Your life goes on …

Your business and career can too ...

14

… IF YOU DO THE RIGHT THINGS!

15

The next 180 days may be the toughest economic days you’ll see for the rest of your life!

But you better step it up!

16

No Kidding – House on Fire!

17

To Shift or Be Shifted …That Is the Challenge We All Face

Professionally Right Now!

18

The Numbers

That Drive Real

Estate

19

The Numbers That Drive Real Estate

1. Home Sales

2. Home Prices

3. Inventory

4. Mortgage Rates

5. Affordability

20

Home Sales In Millions

• Sales declined 13% in 2008.

• The number of first-time home buyers increased to 41% of home purchasers.

5.0

7.1

5.74.9

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: National Association of REALTORS®

21

In the fourth quarter of 2008, 6 states saw an increase in sales, mainly in areas where the sharpest declines in prices occurred.

CA

AZ

NV

MN

FL

VA

Sales Increased

Sales Decreased

Home Sales Direction

(Year-Over-Year Change)

Source: National Association of REALTORS®

AKHI

22

Home Prices In Thousands

The median home price declined by 9% in 2008.$219K

$0

$50

$100

$150

$200

$250

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

$199K

20-year historical appreciation rate = 4%

23

Home Price Annual Appreciation

5%5%5%3%3%3% 5% 7% 8% 8% 9%13%

-9%

4% 3% 4% 4% 1%

-1%

-15%

0%

15%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

20-year historical appreciation rate = 4%

24

Inventory Months Supply# of months it would take to sell all the homes on the market at the current rate of sales

Slowing sales pushed up inventory for existing homes to 10.4 months in 2008.

8.9

10.4

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: National Association of REALTORS®

25

Mortgage Rates 30-Year Fixed

10%

6%6.3%

4%

8%

12%

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Mortgage rates remained low for most of 2008 at around 6%.

Mortgage rates ended the year at 5.1%, an all-time low since Freddie Mac started its mortgage survey in 1971.

Source: Freddie Mac

26

Let’s put this in perspective …

In 1971: Gasoline 40 cents a gallon

Stamp 8 cents

Turkey 43 cents a pound

Datsun Sports Coup $1,866

Monthly Rent $150

Average New Home Price $25,250

Dow Jones Average 890

And you still couldn’t get a mortgage as cheap as you could in December 2008.

Mortgage Rate in 1971: 7.48%

27

Housing Affordability % of Income% of a median family’s income required to make mortgage payments on a median-priced home

24%

19%

24%

19%

10%

20%

30%

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: National Association of REALTORS®

28

The Numbers That Drive Real Estate

1. Home Sales

2. Home Prices

3. Inventory

4. Mortgage Rates

5. Affordability

29

Home Sales In Thousands

524K

434K437K

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Sales fell 17% in 2008 (back to 2003 levels).

Source: Conference Board/CREA

30

Home Prices In Thousands

172 206 248 276226188164158142 149 150

306K 304K

151 147 155 158153 151 152

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

The national average home price decreased by 1% in 2008.

20-year historical appreciation rate = 4%

31

Home Prices7 out of 12 provinces saw an increase in prices in December.

Northwest Territories

Saskatchewan

Manitoba

Newfoundland

Nova Scotia

New Brunswick

Prince Edward Island

Prices Increased

Prices Decreased

Home Price (Year-Over-Year Change)

Northwest

Territories

Source: Conference Board/CREA

32

11%11%4%4%

-5%

3%

-1%

10%9%10%10%5%5%

-3%

1% 2% 0% 2%

-1%

-8%

-4%

0%

4%

8%

12%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

20-year historical appreciation rate = 4%

Home Price Appreciation

33

61%

47%

0%

20%

40%

60%

80%

100%

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Sellers Market

Buyers Market

Balanced

As a whole, Canada remained largely in balanced conditions for most of 2008 but ended the year in a buyers’ market.

Source: Conference Board/CREA

Inventory Sales to Listings Ratio

34

Mortgage rates remained steady in 2008 at around 7.1%.

In December, rates declined to 6.75%.

7%

13%

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: Bank of Canada

Mortgage Rates 5-Year Fixed

Affordability % of IncomeProportion of median pretax household income required to service the cost of mortgage payments (principal, interest, property taxes, and utilities)

• Canadians have been feeling the impact of high ownership costs as they experienced deteriorating affordability over the past few years.

• Affordability finally improved by an average of 1.1% in the third quarter of 2008.

• Similar to trends seen in the U.S., the steepest market correction is occurring in provinces that were least affordable, such as British Columbia and Alberta.

Property

Type

Q2

2008

Q3

2008Change

Detached bungalow

47% 46% -1%

Standard two-story

53% 52% -1%

Standard townhouse

38% 37% -1%

Standard condo

32% 31% -1%

Average Change -1%

Source: Royal Bank of Canada

36

Economic Snapshot

1. Gross Domestic Product

2. Inflation

3. Unemployment

37

1. Gross Domestic Product

• The economy contracted by 3.8% in the fourth quarter of 2008 primarily due to weak consumer and investment spending.

• The National Bureau of Economic Research announced that the U.S. has been in a recession since December 2007 due to the deterioration in the labor markets.

-0.2%-0.5%

-3.8%

-5%

0%

5%

10%

2005.Q1

2005.Q2

2005.Q3

2005.Q4

2006.Q1

2006.Q2

2006.Q3

2006.Q4

2007.Q1

2007.Q2

2007.Q3

2007.Q4

2008.Q1

2008.Q2

2008.Q3

2008.Q4

Source: Bureau of Economic Analysis

38

1. Gross Domestic Product Annual Year-to-Year Growth

1.3%

2%

0.8%

-0.2%-1%

0%

1%

2%

3%

4%

5%

6%

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: Bureau of Economic Analysis

Despite the contraction in the last two quarters, the overall economy grew by 1.3% for 2008.

39

3.8%

2.8%

0%

2%

4%

6%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: Bureau of Labor Statistics

Inflation averaged around 3.8% in 2008.

2. Inflation

40

2. Inflation Jan - Dec 2008

• Toward the end of the year, there were signs of potential deflation (a downward spiral of prices, earnings, and economic activity) in the economy as inflation ended at 0.1% in December.

• This was a significant departure from the peak of 5.6% in July.

5.6%

0.1%0%

4%

8%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Source: Bureau of Labor Statistics

41

3. Unemployment

• Unemployment increased to an average of 5.8% in 2008 from 4.6% in 2007.

• Unemployment rose to 7.2% in the final month of the year.

5.8%

0%

4%

8%

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: Bureau of Labor Statistics

The economy slipped into recession in November 2008, almost an entire year later than the U.S. Historically, the lag between the U.S. and Canada is usually shorter, giving some glimmers of resiliency in the Canadian economy. The weakening economy and declining commodity prices continue to place downward pressures on inflation. Unemployment increased 0.8 percentage points to 6.6% in December from the record low of 5.8% in early 2008. Most of the increase occurred toward the end of the year and was largely driven by a drop in construction.

Metrics %

1. Real GDP (2008 estimate) 1.8%

2. Inflation Rate (Dec) 2.4%

3. Unemployment Rate (Dec) 6.6%

Canada

The Events

That Drive the

Numbers

44

The Events That Drive the U.S. Numbers

1. An increase in foreclosures and short sales continued to drive home price declines

2. More banks tightened their lending standards 3. The number of first-time home buyers bounced back4. Bank failures and mergers increased5. Government rescue became commonplace6. The competitive landscape redefined7. The available sides per agent fell further8. Commission rates rose9. Economic activity follows demographic trend

45

1. An increase in foreclosures and short sales continued to drive home price declines

• 1 in 54 housing units received at least one foreclosure filing in 2008.– Total number of filings: 3.2 Million

• So far, foreclosure prevention programs have not been successful in slowing foreclosure rates.

• Approximately 420K hybrid ARMs are scheduled to reset in 2009.

Distressed Sales

38% 45%

Q3 2008 Q4 2008

Distressed sales (foreclosures/short sales) represented approximately 45% of all

sales transactions in the fourth quarter of 2008.

Source: National Association of Realtors

46

Top Foreclosure States% of homes that received foreclosure notices

AKHI

Less than 1%

1–5%

Above 5%

Number 1: Nevada - 7% (1 in 14 houses)

Source: Realty Trac

47

2. More banks tightened their lending standards

53%

62%

74%

71%100%

72%

78%

86%

0% 20% 40% 60% 80% 100% 120%

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

Percentage of banks that

tightened their lending standards

last year

Tightened SubprimeTightened Prime

Tightened Subprime

Tightened Prime

Tightened Subprime

Tightened Prime

Tightened Subprime

Tightened Prime

Source: Federal Reserve

48

3. The number of first-time home buyers bounced back

42% 40% 40% 40% 36% 39% 41%

2001 2003 2004 2005 2006 2007 2008

• Historically low interest rates and decreasing home prices continually contributed to positive affordability conditions.

• According to Global Insight, housing prices were 3.8% undervalued based on total market value in the third quarter last year.

• The market share of first-time home buyers rose to 41% in 2008.

Percent of First-time Home Buyers

Source: National Association of Realtors

3

25

2007 2008 2009

??

Number of failed banks taken over by

4. Bank failures and mergers increased

Here were a few key acquisitions …

51

5. Government rescue became commonplace

Feb 13Economic Stimulus Act of 2008

Tax rebates (stimulus checks)

July 30

Housing and Economic Recovery Act of 2008

$7,500 tax credit for first-time home buyers

Change in loan limits for FHA, VA, and Government Sponsored Enterprises (GSE)

Hope for Homeowners: FHA foreclosure rescue

Additional property tax deduction

Moratorium on risk-based pricing for FHA loans

End of seller-funded down payment assistance

Note: Not a complete list of provisions

52

Sept. 7 Fannie and Freddie placed under government conservatorship

Sept. 16 Insurance giant AIG received $85 billion

Sept. 18Federal Reserve pumped $180 billion into money markets to combat seizing up of lending between banks

Oct. 3Emergency Economic Stabilization Act: Plan to purchase up to $700 billion in mortgage-related assets

Nov. 25New plan unveiled to pump $800 billion into financial system to unfreeze consumer credit

Dec. 16 Federal Reserve cuts short-term lending rate to near zero

Dec 29 Treasury announced plan to give $6 billion infusion to GMAC

Note: Not a complete list of rescue efforts

5. Government rescue became commonplace

reports $50 Million loss in the third quarter of 2008

acquired

acquired

6. The competitive landscape redefined

Bankruptcy Filings

Layoffs

25% of workforce

45 employees 20% of its employees

6. Competitive landscape redefined

55

7. The available sides per agent fell further

Despite a 10% contraction in NAR membership, the real estate industry continues to become increasingly competitive.

13.8 13.6 13.5 13.3 12.9 12.6 12.3 11.2 9.5 8.28.4

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: National Association of Realtors

56

0

4

8

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

0

0.4

0.8

1.2

1.62008

NAR Members: 1.2 Million

Annual Sales: 4.9 Million

Existing Home Sales (in Millions) NAR Membership (in Millions)

NAR Members vs. Annual Sales

Source: National Association of Realtors

57

8. Commission rates rose

• Commission rates in 2008 increased to 5.3%, the highest level in 7 years. • Rates increased slightly more on the buyer side than the seller side.

– Buyer side: 2.8%– Seller side: 2.5%

• The median commission amount per transaction decreased by approximately 5% on the seller side and 4% on the buyer side due to declining home prices.

5.19% 5.21% 5.20% 5.12% 5.10% 5.09% 5.33%

2002

2003

2004

2005

2006

2007

2008

Source: Keller Williams Commission Study

58

9. Economic activity follows demographic trend

Spending by Age Group

The age group with the biggest spending power is the 45 to 54 year olds.<25

25-34

35-44

55-64

65-74

>74

45-54

Source: The Great Bust Ahead

59

1980 1990 2000 201019701960195019401930 20301920 2020

9. Economic activity follows demographic trend

“82 years of tight correlation from 1920 to 2002 of the number of 45 to 54 year olds with the Dow Jones Industrial Average ups and downs (economy booms and busts) cannot possibly be a mere 82-year coincidence.”

-- Daniel A. Arnold, The Great Bust Ahead

Source: The Great Bust Ahead

60

The Events That Drive the Canadian Numbers

1. The Central Bank cut interest rates 6 times in 20082. Commodity prices and Canadian currency decline sharply3. Restrictions tighten for government-backed mortgages4. Parliament suspended5. Available sides per agent fell

61

1. The Central Bank cut interest rates 6 times in 2008

• The Bank of Canada lowered the overnight interest rates to mitigate downward pressures on the economy and stabilize the financial system.

• While rate cuts caused mortgage rates to fall, banks failed to match the rate cut for the first time in a decade on October 8

due to tightened credit conditions.• Despite the credit squeeze, mortgage lending to households

actually increased 12% in December.

62

2. Commodity prices and Canadian currency decline sharply

• Commodity prices rose significantly from 2002 to mid-2008.

• Higher prices for energy, agricultural products, metals, and minerals were important drivers of domestic demand and were an important wealth contributor to the general population.

• Decreasing global demand led to a significant decline in commodity prices over the second half of 2008, which ultimately led to weakening of the Canadian loonie.

2007: C$1 1.01USD

2008: C$1 0.83 USD

Exchange rates (Dec. 31)

63

3. Restrictions tighten for government backed mortgages

Stricter guidelines were implemented to support stability in mortgage markets.

Requirements Before Oct. 15, 2008 After Oct. 15, 2008

1. Maximum Term Limit 40 years 35 years

2. Minimum Down Payment 0% 5%

3. Minimum Credit Score No set standard 620

4. Maximum Total Debt Service Ratio No set standard 45

64

4. Parliament suspended

• Prime Minister Stephen Harper suspended Parliament after facing a vote of no confidence.

• Why? In the face of an increasingly troubled economy, the Conservative party’s 2009 budget (presented towards the end of the year) did not include economic stimulus measures.

• The three very different opposition parties came together in an effort to form a coalition government.

• With Parliament suspended, a vote on the coalition government could not occur.

65

5. Available sides per agent fell

In 2008, home sales fell 17% but CREA membership increased 4%. Available sides per agent fell to 8.9 transactions.

9.2 10.1 10.5 12.2 12.7 12.3 12.0 11.7 10.9 11.2 8.9

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

66

0

300

600

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

0

60

1202008 CREA Members: 97K Annual Sales: 434K

Home Sales (In Thousands) CREA Members (In Thousands)

CREA Members vs. Annual Sales

67

How Did We Get Here?

68

The Story Behind THE STORY

The Incredible Global Pool of Money– In 2000, it was $36 trillion.– In October 2008, it doubled to $72 trillion!

A “Simple” Way to Look at It

Buyer Demand Mortgage Broker GSEsWall Street –

Financial Institutions

Mortgage-Backed Securities

• Normal qualified potential home-buyers

• Subprime potential home-buyers

• Normal investors

• Speculative investors

Loosened standards in 1999

Everyone Investors

Rating Agencies

What the Governments

Are Doing

71

What the Governments Are Doing

Both the U.S. and Canada have implemented stimulus packages to help the ailing economies.U.S.:

1. American Recovery and Reinvestment Act of 2009

2. Homeowner Affordability and Stability Plan

Canada:

1. Stimulus package included in 2009 budget

72

U.S.1. American Recovery and Reinvestment Act of 2009

$780 billion economic stimulus package was signed on February 17.

35% in tax cuts

65% in spending over the next 2 years

73

1. First-Time Home Buyer Tax Credit

2. FHA, Fannie Mae, and Freddie Mac Loan Limits

3. Neighborhood Stabilization

4. Commercial Real Estate

5. Energy Efficient Housing Tax Credits and Grants

6. Rural Housing Service

American Recovery and Reinvestment Act of 2009Six Key Housing-Related Provisions

2008 Credit 2009 CreditCredit Amount Maximum of $7,500 Maximum of $8,000

Effective DatePurchases between Apr. 9, 2008 to July 1, 2009

Purchases between Jan. 1 to Dec. 1, 2009

Repayment Yes (over 15 years) No

RecaptureIf home sold before 15 years, outstanding balance is captured at sale.

If home is sold within 3 years of purchase, entire credit is recaptured at sale.

Revenue Bond Financing

No credit if home is financed with state/local bond funding

Buyers who use revenue bond financing are eligible for credit.

1. First-time Home Buyer Tax CreditKey Changes

1. American Recovery and Reinvestment Act of 2009Six Key Housing-Related Provisions

75

1. American Recovery and Reinvestment Act of 2009Six Key Housing-Related Provisions

2. FHA, Fannie Mae, and Freddie Mac Loan Limits– Extends expiration date of 2008 conforming loan limits to

December 31, 2009

3. Neighborhood Stabilization– $2 billion in grants to address the problems that arise when

whole neighborhoods are engulfed by foreclosures

– Funds can be used to purchase, manage, repair, and resell foreclosed and abandoned properties.

76

1. American Recovery and Reinvestment Act of 2009Six Key Housing-Related Provisions

4. Commercial Real Estate– Funds for state energy programs to support commercial

property owners’ investment in energy efficiency upgrades

– Potential tax relief for small business owners: • Bonus depreciation and capital expenditures

• 5-year carryback of net operating losses

5. Energy Efficient Housing Tax Credits and Grants – Homeowners will be able to claim a 30% tax credit for

purchases of new furnaces, windows, and insulation through 2010.

77

1. American Recovery and Reinvestment Act of 2009Six Key Housing-Related Provisions

6. Rural Housing Service– $500 million for existing USDA Rural Housing programs

– Expectations that financing would be available to fund an additional 192,000 homeowners

78

U.S.2. Homeowner Affordability and Stability Plan

Overview

On February 18, 2009, President Obama announced his Homeowner Affordability and Stability Plan designed to help approximately 7 to 9 million families avoid foreclosure by refinancing or restructuring their mortgages.

Some of the measures will require Congressional approval prior to implementation.

79

Homeowner Affordability and Stability PlanThree Key Elements

1. Refinancing option for loans guaranteed by Fannie Mae and Freddie Mac to help make mortgages more affordable.

2. $75 billion homeowner stability initiative to assist up to 3 to 4 million at-risk homeowners.

3. Support of low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac.

80

CanadaStimulus package included in 2009 budget

Overview1. $40 billion stimulus package over the next two years was

approved on February 2, 2009.2. Similar to the U.S., three-quarters was allocated toward new

spending.3. Key areas:

– Spending on infrastructure investments, communities, skills, and work-transition strategies

– Tax relief for individuals, households, and businesses4. To restore liquidity to credit markets, $125 billion was allocated

to help businesses and households access new loans.

81

Canadian Stimulus PackageFive Key Housing-Related Provisions

1. Home buyer tax relief– First-time home buyers to receive $750

2. Increase in withdrawal limits from retirement savings plans– Withdrawal limits for Registered Retirement Savings Plan (RRSP) to

increase from $20,000 to $25,000 for first-time home buyers

3. Home Renovation Tax Credit – Up to $1,350 in tax relief to reduce the cost of renovations – Renovations must be between $1,000 and $10,000 and occur between

January 27, 2009 and February 1, 2010.

82

Canadian Stimulus PackageFive Key Housing-Related Provisions

4. ecoENERGY Retrofit program– Funds to support home energy efficiency retrofits

5. Social housing investments– Construction for low-income seniors, persons with

disabilities

– New social housing units

– Renovations, energy retrofits, and additional support for existing social housing units

How Do We Recover?

84

The 4 Keys to Housing Recovery

44 Stimulate Economy

Create Jobs

Stabilize Banking System

Stabilize Home Prices

1

SURVIVE

THRIV

E

4

3

2

85

So, What Can You Do?

86

1. Get Real and Get Right – Right Now!

2. Re-Margin Your Personal and Professional Life – Right Now!

3. Focus on Lead Generation and Conversion – Right Now!

4. Get Sellers to Price Ahead of the Market and Stage Their Homes – Right Now!

5. Help Buyers Find Their Motivation – Right Now!

6. Get Involved in Short Sales, REOs and Foreclosures – Right Now!

The Six Fundamental Secrets of Success in a Shift

87

First, Get Real, Get Right! Right Now!

88

GET REAL!

Today, the next 180 days, will be the most critical period in your career! Period!

If you get real and get it right – You catapult!

If you don’t get real and get it wrong – You get laid off!

89

• You’ve been living through the era of average and now you’re living in the “ERA OF EXTRA”.– Average effort may have done fine in the past– But not in the “ERA OF EXTRA”!

• Average is now being laid off!– 100,000+ in Auto Industry! And climbing!– 150,000+ in Real Estate Industry! And counting …

GET REAL!

90

The Bar of the Past!

THE ERA OF AVERAGE EFFORTAcceptable Level of Success

91

The Bar Has Now Been Raised!

Unacceptable Level of Success

THE ERA OF EXTRA EFFORTAcceptable Level of Success

THE ERA OF AVERAGE EFFORT

What you got for average effort – now requires EXTRA EFFORT to achieve!AVERAGE just got dramatically cut

back or just plain laid off!

92

GET REAL!

Look at it this way:Both your swing and the size of the field you’re playing in matter! A swing in one size of the field knocks a home run, while in another size of field it could be a popfly to the infield.

A swing in one field may not cut it in another!

Effort Matters Today More Than Ever!

93

GET REAL!

This is your best opportunity for the biggest

professional DEFINING MOMENT in your life!

94

GET REAL! WHY?

1. You will never see a worse economic crisis in your lifetime than right now!

2. Great success is always launched by great motivation and momentum!

95

GET REAL!

Truth: Little effort becomes a habit and leads to little results.

Big effort becomes a habit and leads to big results.

So choose the RESULTS you want –

Then choose the EFFORT.

96

AVERAGE

Complete Failure

Massive Success

Most People

How Do You Get Out of Being Stuck in the Middle?

GET REAL!

97

Now That You’ve Gotten Real ...

You Must Get Right!

98

GET RIGHT!

Truth:

When you’re doing the right things professionally ...

the right amount of success and money will come to you.

This truth is how you know when YOU’RE doing the right things and when YOU’RE NOT.

99

GET RIGHT!

If the success and money aren’t there then you may be in the right area professionally for you, but you’re still not doing the right things. It’s a simple truth that should set you free.

The GET RIGHT question:“There is a reason why I don’t have the professional success and money I

desire, what is it?”

The answer should inform your IMMEDIATE ACTIONS!

100

GET RIGHT!

If this is going to be your DEFINING MOMENT,you’ll need to do 3 things:

1. Focus Only on What Matters

2. Be Willing to Do Whatever It Takes

3. Bring Intensity (Hint: Extra Effort)

101

GET RIGHT!

The Six Core Real Estate Agent Competencies:1. Lead generate, capture, and convert to appointments

2. Present to buyers and sellers and get agreements

3. Show buyers and market sellers

4. Write and negotiate contracts

5. Coordinate the sale to closing

6. Manage the money

102

Second, You Must Re-Margin Your Personal and Professional Expenses

– Right Now!

“It is not necessary to change. Survival is not mandatory.”

W. Edwards Deming

103

WAKE-UP!

You’re now living in the Extra Effort with High Intensity – Low Overhead Era!

DO YOU GET THIS?

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WAKE-UP!

You’re now living in a period in history where this simple truth rules above all others:

“The Business with the Lowest Costs Wins!”

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The Re-Margin Two-Step

First, you cut your personal expenses! To the bone! Now!

Second, you cut your business expenses! To the bone! Now!

GET IT?

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Re-Margin

First, Personal Expenses

• You can’t let society or the media tell you what your personal life “should be.”

• When the market shifts like it is right now – you follow the “must be” rule.

• You downsize and you do it fast. You get your personal expenses where they “must be” in order for you to survive. (No kidding!)

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Re-Margin

Second, Professional Expenses• When markets shift, the first absolute for any business is to “re-expense” itself.

Immediately!

• “Revenuing” your way out of a shift is iffy at best.

– Generating more income may be impossible in the short run and take too much time in the long run.

– “Now” is the required speed when a shift occurs.

– Get your business overhead lower - now!

– The “Must Be” rule applies here as well!

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“Name a business that has been ruined by downsizing. I can’t name one. Name a company that has been ruined by bloat. I can name dozens.”

Charlie Munger

Warren Buffett Speaks

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Re-Margin

• You must lower your costs now. And revisit this every month!

• Remember, to generate revenue, you generate leads – to make a profit, you manage expenses.

• The profit you seek will always be made in the way you manage your money.

• When the market shifts, you must create a budget that matches your revenue.

• We call this re-margining your business.

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Third, Focus on Lead Generation and Lead Conversion! Right Now!

“If your ship doesn’t come in, swim out to it.”

Jonathan Winters

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You Must Lead Generate.

Think of it this way, if you don’t have an able, ready and willing buyer or seller right now – You’re not in business.

Hint: If a real estate office doesn’t have enough able, ready and willing to lead generate real estate agents – they’re not in business.

And get this -

Passive doesn’t work well in a shift!

Aggressive extra effort with intensity will!

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This size market supports a specific number of agents and real estate companies.

Here’s What’s Happened

Test Question:

Which Direction Is the Market Going?

Lead Generation

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So, unless you get a disproportionate and unfair share of the available number of leads (and if you’re a company – a disproportionate and unfair share of able, ready and willing to lead generate agents) – you’re going to be very very unhappy with your income!

Wake Up and Get Real! There Is No Longer Enough to Go Around!

Lead Generation

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The market shift may have now exposed a real personal dilemma you must overcome:

You love helping people.

But you haven’t yet learned to love hunting for them.

Lead Generation

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The Two M’s of Lead Generation

1

MESSAGE

1Match

Your Market

2Make

an Offer

Response

1Target

Audience

2Market

Conditions

1Direct Offer

2Indirect

Offer

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The Two M’s of Lead Generation

2

1 2 3

METHOD

1Prospect

2Market

Maintain

Time Block

Take ActionPrepare

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Level 1

Sign in Yard

Taking Open Houses Beyond the Basics

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Sign in yard

Level 2

Sign in yard with balloons

and riders

Taking Open Houses Beyond the Basics

119

Taking Open Houses Beyond the Basics

Level 3

Directional signs at key corners with balloons

and riders

Sign in yard with balloons

and riders

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Taking Open Houses Beyond the Basics

Level 4

Fliers the week before, email invites, and posted on websites

Sign in yard with directional

signs at key corners with balloons and

riders

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Taking Open Houses Beyond the Basics

Level 5

Go invite neighbors.

(100 minimum)

Sign in yard with directional signs at key corners with

balloons and riders, fliers the week before,

email invites, and posted on websites

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Taking Open Houses Beyond the Basics

Level 6

Get on the phone that morning and

remind everyone!

Sign in yard with directional signs at key corners with balloons and riders, fliers the week before, email invites, posted on websites, go invite

neighbors (100 minimum)

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Taking Open Houses Beyond the Basics

Level 7

Hold 4 other open houses in

the area in various price

ranges.

Sign in yard with directional signs at key corners with balloons and riders, fliers

the week before, email invites, posted on websites,

go invite at least 100 neighbors, and get on the phone that morning and

remind everyone!

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Didn’t You Get it? It is the “Era of Extra Effort”!

• Some agents just stick a sign in the yard and call it lead generation.

• Others go six steps beyond this and call it lead generation.

The big question is:

What do YOU call lead generation?

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Lead Generation

• To make “Extra Effort” happen every day, you must subscribe to one simple belief:

– Dealing with current business never takes precedence over finding new business. Never! Ever!

• You must adopt the position that until your lead generation is done every day, nothing else should get done. All else is a distraction!

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Page 75

• To ensure your lead generation is always your number one priority you must acquire the discipline of “time blocking”.

• Time blocking is setting aside daily blocks of time to execute your most important business priorities.

Time Blocking

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• Think of it as making appointments with yourself.

• Once done, you must protect that time against any and all distractions.

Time Blocking

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Time Blocking for Success

Monday Tuesday Wednesday Thursday Friday Saturday Sunday

7

8:30 to

11:30am

Lead

Generation

8

8:30 to

11:30am

Lead

Generation

9

8:30 to

11:30am

Lead

Generation

10

8:30 to

11:30am

Lead

Generation

11

8:30 to

11:30am

Lead

Generation

12

10:00 to

2:00pm

Lead

Generation

13

12:00 to

5:00pm

Lead

Generation

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When Someone Shows Intent, You Must Immediately Convert it Into an Appointment.

• The ultimate success of your lead generating is directly dependent on your “lead conversion to an appointment” ability.

• One can’t work without the other.– Many agents spend significant amounts of time and money on

their lead production proficiency but neglect their conversion competence.

Get Appointments!

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• Lead conversion is a scripts and dialogues based skill. To master it – you must practice it.

• Your secret weapon: Time on the task overtime.

• Truth: Talent is Overrated! – Practice with accountability to improve

beats talent over time!

Get Appointments!

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Fourth, You Must Get Your Sellers to Price Ahead of the Market and Stage Their Home Competitively.

Right Now!

The Only Way to View Pricing and Staging

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Staging Study

A review of over 2,800 properties in eight cities

found that “staged homes, on average, sold in half

the time that non-staged homes did. The sellers with

staged homes ended up with 6.3 percent more than

their asking price, on average.”

From an October 2006, USA Today article which cites a Coldwell

Banker Residential Brokerage report

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Staging Study Homes Previously on the Market

Vacant Homes

Occupied Homes

Marketed vacant homes that were previously unstaged were not sold after 120 days on market.

Once staged, those homes only took 26 days to sell.

Marketed occupied homes that were previously unstaged were not sold after 102 days on market.

Once staged, those homes only took 45 days to sell.

Source: RESA

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Fifth, You Must Help Buyers Find Their Motivation. Right Now!

“If someone is going down the wrong road, he doesn’t need motivation to speed him up. He needs education to turn him around.”

Jim Rohn

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The Two Main Ways to Energize Buyer Urgency

1. Become the Local Economist of Choice

2. Address Buyer Reluctance

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1. Don’t Wait – The Hazards of Timing the Market

2. Trade Up – The Opportunity of a Down Market

3. Less Is More – Narrow the Field

4. Provide Best Buys

5. Help Them Tap into Their “Why”

Five Strategies to Overcome Buyer Reluctance

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Sixth, Get Involved in the Market of the Moment –

Short Sales, REOs and Foreclosures! Right Now!

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The Big Three

1. SHORT SALES

Individuals or families willing to avoid foreclosure.

2. REOs

Financial institutions with an above average number of foreclosures to sell.

3. FORECLOSURES

Bargain hunters and investors

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Never Give Up – Never Surrender!