Many agents in Canada are experiencing challenging times. Transactions are down significantly, consumer confidence is low, and the media only exacerbates these issues. Many experts expect a mass exodus of agents from the business throughout 2023.
From a consumer standpoint, poor retail clients don’t know how to interpret the wide range of data bombarding them. There are still multiple offers in some markets, prices are falling in some neighbourhoods, and we are experiencing one of the hottest rental markets on record.
The problem is the consumer is actually scared of transacting in this market. On the selling side, there is confusion regarding the worth of a person’s house, and the buy side is even more daunting.
Buyers are expecting the market to continue to fall; therefore, offer prices are trending down. At the same time, sellers are digging in their heels, not wanting to sell their house for a lower price. We are seeing lower inventory levels, and buyers are looking, but most people are scared of transacting right now.
The question is: who is transacting? The answer: The investor.
Investors have been sitting on the edge of their seats, licking their chops. In fact, they have been waiting for many years for this current shift in the market cycle where the best opportunities present themselves.
Warren Buffet, a world-renowned investor famous for his insights, profoundly declared an investor’s motto: “Be fearful when people are greedy,” which typifies the last decade of mass purchasing and double-digit appreciation. Buffet finishes the quote, “Be greedy when people are fearful.”
Investors look for deals when the public is scared and sitting on their hands, which is an excellent time for liquid investor clients. The challenge for many agents is understanding how to work with an investor client.
Investors are a sophisticated clientele as they are typically more educated than most realtors because they have invested in themselves to become educated, plus they have money in the game. Investors know rental rates and expenses and want details like the expected return on investment (ROI), the property’s net operating income (NOI), and cap rates.
Herein lies the issue for realtors. Investors can tell immediately whether a realtor possesses the knowledge and skillset to serve them adequately. A common scenario many investors experience is this: the investor provides the agent with their investment criteria consisting of property type, price point, cashflow expectations, ROI etc. The agent typically provides the investor prospective properties via the proverbial email drip campaign, which a) puts all the onus on the investor to crunch numbers and b) the properties provided often make no financial sense, completely missing the mark on any of the previously stated investment criteria. Once this happens, the investor is moving on to the next realtor.
Agents fail to realize that the investor is not waiting for a life event like a death, divorce, or work transfer to transact. An investor is always looking for deals, often transacting multiple times per year. Investors are not emotional buyers; they often purchase high-priced real estate and will become loyal clients when the agent provides the investor properties which correspond to their criteria.
Another benefit to understanding the language of investing and possessing the knowledge, skillsets, and tools to work with investors successfully is lead manifestation.
Lead manifestation fundamentally changes how agents interact with anyone they come into contact with. Agents are always looking for ways to maintain relationships with their existing databases. Instead of the latest market update, conversations can be centred around building wealth, which everyone is concerned with and eager to discuss.
Agents can engage people by having conversations centred around retiring earlier, quitting their day jobs, going on more and better vacations, or simply building generational wealth. Agents can have these conversations with virtually everyone, including current and past clients.
Consider this: past clients already know you; they trust you. Why not go back to them and get them excited about the idea of building wealth, which will only lead to more transactions for you and help them achieve higher success?
Lastly, an agent must consider their retirement. Agents all know they don’t have a pension plan. When it comes to retirement, the day they stop selling is when the commissions stop flowing. This is why it’s so important for agents to invest in the industry they are in and purchase investment property themselves. Even one property can change a person’s life, and it’s no different for agents.
Gord Lemon has invested in residential and commercial real estate in Ontario, British Columbia, Alberta, Florida, Arizona and Texas for over 30 years. Over the last 20 years, Gord has shared his experience and knowledge as a real estate investment trainer, and coach with over 25,000 students in Canada and the U.S. Gord is a published author, having written dozens of articles as a regular contributor to Canadian Real Estate Wealth Magazine, the REIN Report, and the Huffington Post. Gord created the InAgent Designation Training, which provides agents with the critical knowledge, tools and skills required to work seamlessly with real estate investors. For more information, go to www.InAgent.com
Working with Investors is absolutely crucial! Investors are less emotional, and are ALWAYS looking for their next deal!
Sadly as an investor , I think it’s a major conflict of interest. Too Amy realtors are purchasing properties for flips and investment and not showing tk their clients. Erodes trust and accountability.
Wow this is so helpful!!