Über die Autorin bzw. den Autor

Gary Keller launched his sales career and later Keller Williams Realty International during two of the worst downturns in the recent history of the real estate market. With SHIFT, Gary and coauthors Dave Jenks and Jay Papasan deliver an authoritative resource for surviving and thriving in a shifted real estate market and the latest book in the bestselling Millionaire Real Estate Series.

Auszug. © Genehmigter Nachdruck. Alle Rechte vorbehalten.

SHIFT

McGraw-Hill

Contents

Chapter One

SHIFTS HAPPEN

Real estate is a cyclical business. What goes up must come down. And what is down won't stay there. Shifts are never unexpected but rarely predictable. You know one is coming. You just don't know when. They are, in fact, inevitable—shifts happen.

But we forget. Each time a shift occurs, we act surprised, as if it had never happened before. Once the shift is over, we act as if it'll never happen again. It's like we have amnesia. And that's odd since we deal with something similar every year. It's called seasonality—the seasonal cycle of sales that repeats each and every year. From month-to-month there is an ebb and flow to the real estate business. Within each year, there is a time to make money and a time to save money. It is so natural most simply take it in stride.

There is a natural buildup of listing inventory from January through April and an offsetting decline in inventory from May through October, with an up tick in sales at the end of the year. This seasonal cycle of sales causes a corresponding seasonal cycle of income.

For real estate agents, these graphs are a heads-up and give meaning to the phrase "make hay while the sun shines." The fact is, every year, real estate agents have to deal with the seasonal sales cycle and its impact on their cash flow.

While seasonal cycles occur within a single year, economic shifts happen over several years. Seasonal market cycles are month-to-month and economic market shifts are year-to-year. Just as the seasonal cycles dictate a rise and fall to your income over a period of months, the larger economic shifts create a rise and fall to your income over a period of years. Seasonal cycles feel predictable, short-term, and manageable. Economic shifts feel unpredictable, indefinite, and overwhelming. One feels like business as usual and the other feels, well, downright scary.

The real estate industry has learned to live with regular seasonal cycles, but it is always challenged by irregular economic shifts.

THE ANATOMY OF A SHIFT

Shifts are easy to understand. They occur whenever supply and demand move out of balance. When seller supply exceeds buyer demand, it's a buyers' market. When buyer demand exceeds seller supply, it's a sellers' market. A shift occurs when the market moves from one to the other. Think of it this way. If over time more listings are selling, you're moving toward a sellers' market. If over time fewer listings are selling, you're moving toward a buyers' market.

Why does the shift to a buyers' market create pain? Two reasons. First it leads to fewer sales and less available sales income in your market. Second it tends to be abrupt and precipitous. The misleading aspect of an economic shift is that it seems relatively natural and gradual when looked at nationally. When experienced locally it is usually dramatic and fast.

The national perspective rarely, if ever, matches the local experience. The hard truth is local market shifts are seldom slow and local landings are almost never soft. It's a lot like a pendulum or a golf swing, beginning relatively slowly but accelerating very quickly through the middle. Some local shifts can actually take your breath away.

Several factors can cause an economic shift. Currency exchange rates and political climate are the primary global factors. On a national level it's interest rates and inflation. Population, jobs, and household income take center stage at the city level. And at the most local level, it's neighborhood dynamics and housing prices. All of this simply boils down to buyer demand, which is driven by affordability and perception—how many buyers can afford to buy and how many think it's a good time to buy.

So are shifts bad? Well, it depends. For the real estate industry in a particular market, it certainly can be—the available income for everyone in that market has dropped. For any single individual in their local market, it doesn't have to be—there is still enough available income for them to achieve their goals. The challenge for individual agents? Fear and how they will respond to it.

When shifts occur, fear runs rampant, although not everyone responds in the same way. Some individuals, though they do feel the fear, also know they are in an equal opportunity, unequal reward business. It's really the 80/20 rule at work—20 percent of the people will do 80 percent of the business in any entrepreneurial endeavor. Those who understand this know that they must be better than average to earn the better than average rewards. If individuals understand a shift or have actually experienced one, they know they have to push past the fear and face two tests—first to survive and then to thrive. They have to hang tough until the Law of Equilibrium reasserts itself. Then it's opportunity time.

THE LAW OF EQUILIBRIUM

THE LAW OF EQUILIBRIUM is as old as the real estate industry itself. It is simple and straightforward. The law states that the available income in a market determines the number of agents in that market. As the number of transactions rises, so does the number of agents. Conversely, when the number of available transactions falls, so does the number of agents. People are attracted to the industry by the perceived income opportunity and driven out by the reality of the competition for it.

Since perception tends to trail behind reality, two lag periods show up in every economic shift—the down-lag and the up-lag. The down-lag occurs because the number of agents doesn't decline until the number of transactions has already been dropping for some time. The low point of income opportunity then occurs when the most agents are chasing the least amount of income. The up-lag works in reverse when the transactions increase. The high-income opportunity point occurs on the way up when the fewest agents are chasing the most amount of income.

With relatively few barriers to entry the real estate industry can become flooded with practitioners during a prolonged sellers' market (an upshift). Larger and larger numbers of agents are attracted to the industry and this increases the competition for the existing business. When the amount of business then declines (a downshift) the competition becomes untenable. There are more people but less business and fewer deals. Fewer deals mean less money and less money means lower income for everyone—and eventually it means fewer people doing business. If you can ride out (survive) this initial lag period as more and more people get out of the business you can find yourself in a less competitive market. There is now more business relative to the number of people working to get it. This is the time to thrive.

How long it takes to get from survive to thrive can vary greatly from time to time and from person to person. There is the market's shift and its lag time, and then there is your shift and your lag time. If you don't shift fast, your lag time will parallel the market and you may be at risk. To thrive in the upshift you must first survive the downshift.

Let's be clear here—there is nothing that says that an agent cannot thrive before the market upshifts. In fact, we have known and worked with many agents who had their best years in a "down market." This book is based on the lessons...