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Find your Wind
By Joel S. Pate
In Alabama, fall has failed to arrive again. Last week's heat wave is a great reminder of all of the things that we do not control.
Recently, my wife and I visited our daughter's school for homecoming. If you ever have a chance to visit Oxford, Miss., the home of the Ole Miss Rebel's, you should. Oxford is without a doubt one of the finest little college towns around, at least in the SEC. But, boy was it hot.
After the first quarter of the game, I just couldn't take it anymore. So, we headed down to a local watering hole-an air conditioned bar that is-to watch the rest of the game.
During one of the commercials, since I had control of the remote, I started surfing around and came across the local real estate channel. As I watched the show for a few minutes, I thought: These agents have no idea why they are not selling houses when just a few months ago their ego had allowed them to "know" that they were the best agents in the entire world. I can just hear them:
"Every property I list, sells immediately."
"My builder's last three projects pre-sold for more than we expected."
"All of my investors have made money working with ME."
As I watched the show, I wondered what they are thinking now. What are you thinking?
For a guy that is always trying to control the events around him. Trying to develop, to implement, to execute, to measure and re-implement marketing programs to "fill my lobby," the recognition of the "fact" that we do not control markets, but that they control us, is very unsettling.
After years of dealing with changing markets, the good and the bad, I long ago came to understand that I cannot control the market and sometimes it just stops. Many times I have written in this article about the "spigot" running dry. I am speaking of a water faucet. (In technical terms, a valve cock). Many times over the years, the "water" (buyers/borrowers) was just streaming out of the valve without any effort on my part. And then all of sudden, it was like someone had turned off the water. Of course, it never happens just after you have rinsed the soap off of your car, or you have completely filled the water containers. It always happens at the worse possible time. Right?
So what do you do?
I always said, "If I had enough money and more importantly enough common sense, when the market dried up, I would go on vacation." Well, somehow, I don't think I ever had enough money, but I definitely have never had enough sense. I work harder, work longer, worry more, and then one day, just as the spigot had turned off, it would turn back on.
Now, don't think for a second that I am going to morph into a "Que Sera Sera-Whatever Will Be Will Be" guy. Not for one second. BUT, while it is definitely true that you can control your own destiny, by your actions, still you should not plant your corn crop in the winter or fish for Alaskan king crab in the summer, much less if you're not even in Alaska.
There is, without a doubt, a season for everything. Many times, we play to one side or the other too much. We either leave it up to the market, "we can't control anything" or "we can control everything so I'll build a bigger barn if I want to."
Have you ever heard of the concept of "gaining market share in down markets?" Have you heard of mergers occurring when times are bad? Have you heard of redirections when times are tough? Sure you have.
If today's market is telling us anything, it is telling us to make an adjustment. As I think back to the real estate agents marketing their little hearts out on the TV show, I want to yell "don't you know it is really not a good time to purchase a home right now?"
How about it? Do you feel like purchasing a home right now? Besides the fact that your income is down, you know first hand about the market from the appraisals you are seeing. How many deals are falling apart because the appraisals are not coming in high enough? Not all markets are the same of course. Many areas of the country are just fine. But, in many areas, there are so many new unsold homes on the market, that existing homes do not have a chance to sell. Nor does the builder have an opportunity to sell a pre-sale, he has too much inventory.
Sometimes, and I believe this is one of those times, we really must admit to ourselves that it may not be a good time to purchase for anyone, except of course, those that are being transferred and for real investors, etc.
As with the example of families transferring, think about your market. What is going on in your market that will cause buyers to buy, because they have to, or to refinance, because they have to? Even if the timing is off?
If there has ever been a time to understand your market, it is now. How do you uncover the one or two niches that you may be able to exploit?
• Get out of the office.
• Look at the sales in the MLS. Who is selling? Who is buying?
• Drop by those agent's open houses.
• Don't talk to anyone that is worse off than you are. Stay away from stinking thinking.
• Go to a motivational/informational meeting.
• Read the local paper-all of them.
• Move.
On the last one, I'm not kidding. When I first got in the homebuilding business, the market in Mobile was terrible, but, booming in Huntsville. I should have moved. One thing that is absolutely true about a market: You will not be able to improve it. At best, you can only make what the market will let you make and that is if you take full and complete control of your destiny by implementing the right strategies at the right times.
Well, so much for an uplifting article for the week. Sorry. I just could not get over looking at the agents on that TV show. What is really scary is that they really thought, and I am sure that many of them told you, that they were selling so many homes, at higher and higher prices, because they were really that good. Phooey.
If you do not understand that a sailboat rides on the wind, you will blame yourself when the boat stops. Until next week, do some homework on your market. What is selling, and as important, find out why it is selling and why the folks are buying?
Remember, somewhere in your market you can uncover a little hotbed of activity. Just get out there and think outside of the box. As my sailing buddies say, to find the wind, you must climb the mast. Look out onto the waters for the least little ripple in the waves. That's where you will find your wind, too.
Dedicated to coaching YOU to CP Loan Success!
Joel S. Pate
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Joel S. Pate, a dedicated entrepreneur, has spent more than two decades in the building, mortgage, and real estate industries and has been involved in over $100 million in construction loans and over $1.3 billion of residential lending.
As the CP LOAN EXPERT columnist, Mr. Pate provides straightforward, unbiased advice about every aspect of construction permanent lending. If you ever wanted to unravel the mystery surrounding new construction lending, then you should tune in.
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