#378 – Mail-Right Show: Is the Real Estate Lead Generation Industry Collapsing?

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Is the Real Estate Lead Generation Industry Collapsing

Growing a successful real estate business means creatively and strategically generating leads. In addition to referrals, many real estate professionals turn to “online leads” to generate more business. In this episode of the Mail-Right show we look at some problems this particular model might be facing in 2023

Episode Full Show Notes

[00:00:00.000] – Robert Newman

Welcome back, ladies and gentlemen, to episode number 378 of the MailWright podcast. John gets the prize. He’s done this 378 times. I’ve done it about 250 times. But nonetheless, that means that John has done a hell of a lot more than I have. We’re super excited to be here today. We’re going to talk about one of my favorite subjects and something that John has also talked about quite a few times, which is, is the real estate lead generation industry collapsing? It’s a very clickbaity subject line. I apologize; it’s not John’s fault. I actually created it on my channel. But you know what? It’s a really good question. So before we get into answering that question, let’s make sure that you know who your magnificent hosts for the podcast actually are. John, why don’t you go ahead and introduce yourself to our new audience members?

[00:01:06.360] – Jonathan Denwood

Thanks, Robert. I am the joint founder of mail hyphen write. Com. We build beautiful websites on WordPress, Semi or full custom. Plus, we have a great CRM lead generation platform with some great digital products and services. And I’d love you to come and sign up for it. Back over to you, Rob.

[00:01:30.750] – Robert Newman

Copy you. My name is Robert Newman. I’m also the founder of a real estate marketing company by the name of Inbound rem. Quite a few of you probably already know who I am. And if, for some reason, you do not, go to my website stat immediately if you want to learn anything about how marketing is changing, how marketing is going digital, personal messaging, personal branding, and SEO, which is what I was historically known for. But these days, with all the automation and AI user behavior, how people use the web is becoming synonymous with how people find you. I talk about that a lot. Today, we’re going to talk about it even more. I can’t wait to get into this. So we’re just going to jump right into it. It is the real estate lead generation industry collapsing. John, I want to do a mathematical equation for you, which we’ve talked about in different ways. So let’s say that in 2022, we had 3 million people doing an average of 30 searches per person for real estate. That would be 90 searches. Would you agree that it doesn’t matter somewhere in that search process, whether it’s Facebook, Instagram, or Twitter, it doesn’t really matter?

[00:02:43.650] – Robert Newman

But when somebody is searching, regardless of where they’re searching, most marketers are trying to capture them somewhere in that process. Would you agree with that?

[00:02:52.390] – Jonathan Denwood

I would.

[00:02:53.480] – Robert Newman

Okay. So you have 90 million searches happening in 2022. In 2023, the year that we’re now between interest rates and between a lowered inventory in most marketplaces, you have watched the overall interest in real estate drop. Nobody’s published the number yet. Nobody knows exactly what that number is. But looking at Google Insights and a number of other tools that I follow, the number is 30 % fewer people are doing searches this year than last. Let’s use that math. So if 90 million searches were happening this year and 60 million searches are happening in 2023, that would mean that you have 30 million fewer times to try to capture somebody to turn them into a lead if you’re doing some marketing, right?

[00:03:45.000] – Jonathan Denwood

Yes.

[00:03:45.870] – Robert Newman

All right. So then let’s add in the additional information that… How do you think most Realtors, like the average Realtor, not somebody with a $10,000 budget per month, let’s just say you’re a little Realtor and Podunk nowhere, and you’ve got a budget of $100 per month to market yourself, how do you think people are doing that, Jon?

[00:04:07.250] – Jonathan Denwood

Well, I think they’ve got to utilize, if that’s their budget, they’ve got to utilize very guerrilla marketing and sweat equity. If they’re going to move the needle or to buy most of it they’re going to have to do themselves. And it certainly won’t be through paid promotion. So it would be posting on social media themselves. Video, we’ve been hammering away for the past two years about video, haven’t we? Something which you can do, which you got a fantastic bit of technology in front of you. And you got Instagram, TikTok, you got Facebook, you can put that video on. So that’s what you’re going to be looking to do, aren’t you? But most won’t be doing anything.

[00:05:05.750] – Robert Newman

I agree with everything you said with one small adjustment. So one of my clients, and a shout out to him because he’s an avid listener to the show, that’s Brett Wallace. Brett, thanks for listening to the show. We appreciate you tuning in all the time. And we’re going to say this, Brett gave me this information. I’m just regurgitating it. So thank you for sharing with me, Brett. Brett ran an experiment. You know that we do SEO, so we mostly do organic traffic. We don’t do a lot of paid? He and I. But he was curious to know what would happen if he put $10 a day and he just did a video on a specific area is what he did it on. And then $10 a day got him close to 1,000 views. It was surprisingly effective. He got well under a dollar of view to the video. So with $100, you could theoretically generate a good amount of traffic. But here’s the key to this marketing, John, is most Realtors are leveraging listings and most Realtors are not educated enough to understand that they could do the same thing using other people’s listings and act the buyer’s agent.

[00:06:08.750] – Robert Newman

So they’re mostly waiting to lay themselves out of listings. So when I say the following to everybody listening to the show, understand what I’m saying. I think that paid advertising usage from the real estate industry has dropped by almost 50 % between 2022 and 2023. And why am I saying that? Well, there’s far less listings for people to advertise. They understand how paid is working far less. The numbers seem to indicate that that’s where people are at. So already in this early part of the conversation, John, you and I have talked about two different things, and we have certainly in a very educated way said, Well, we’re probably looking at somewhere between a 30 and 40 % decline in the amount of advertising that’s happening. So is the real estate lead generation industry collapsing? Well, that’s shrinkage for sure. But here’s the subjects that we’ve talked about in other shows that are also problematic for the average real estate agent. So what has happened in 2021 and ’22 in the busiest real estate markets ever in history? What do you think happened, John? And I mean, that’s a very broad question, so let me be more specific.

[00:07:18.330] – Robert Newman

What do you think happened with people using paid advertising services, real estate marketing companies like Mike mine, like yours? They’re spending whatever, a few thousand dollars a month, like Sink, like KV Core, like real estate webmasters spending $3,000 a month. They’re spending $7,000 a month on Zillow, 2021 and 2022. And now here we are in 2023. What do you think is happening with those people spending $3,000 to $7,000 a month on those services I just mentioned?

[00:07:45.730] – Jonathan Denwood

Well, they’re getting less results. A actual client actually buys a property and they get a commission cheque. Right.

[00:07:55.760] – Robert Newman

Here’s the thing. Less searchers mean less response for those of you doing paid advertising. That’s it. That’s a fact. If all of the people listening to the show recognize that they had a 30 to 50 % reduction or more, for me personally, if I was your CMO, your chief marketing officer, that’s what I would be, or your chief operating officer, that’s what I would be telling you to expect. You should be expecting a 30 to 50 % decline in your results at minimum in 2023. So for some of you who are listening to the show, you take 30 % to 50 % less results, plus a 3,000 to 7,000 dollar budget. Now you have to ask yourself the following question, because this is leading up to the subject of this podcast is the real estate lead generation industry collapsing? And I think it would be better to say is the real estate lead generation industry collapsing for you, for the person listening? So you take that money, John. And if you had a client, let’s say you’re doing $10,000 a month in advertising, you’re making $40,000 a month commission, it’s easy to figure out you’re doing a 4 to 1 return.

[00:09:09.070] – Robert Newman

But if everything we just said happened, you are now spending the same amount of money, but instead of making 40, you’re making 20 and you’re spending 7 or 10, that’s a much narrower margin for you to be… Would you agree? You’re like, ou’re working on a much smaller margin for error and that $7,000 that you’re spending seems like a lot more money to you, even though it hasn’t changed. Do you understand what I’m proposing?

[00:09:43.880] – Jonathan Denwood

Yeah, I’ll.

[00:09:44.380] – Robert Newman

Tell you. What I’m proposing?

[00:09:46.360] – Jonathan Denwood

Yes.

[00:09:48.830] – Robert Newman

Okay. So now, finally, I get to the point. I have been getting the reason that we talk about this ad nauseam. The reason I created a video about it is that I get this question all the time, almost every day, John, I’m getting clients asking me, Is the real estate lead generation collapsing? I’m literally getting that question. I’m getting it all the time, which is why I decided to do a video on it. And the answer is it seems like the sky is falling to about 80 % of the real estate agents that I talk to because the real estate marketing industry has changed so fast in the last 6 to 12 months that it’s like night and day if you’re spending money on paid advertising. Because number one, you are no longer easily pulling down a three or four to one return no matter what advertising. Many people that I’ve spoken to who are using Zillow are telling me that they’re losing money. I’m using very generous math in all of my examples because my clients are calling me and saying, I’m spending $7,000 a month and I’m not even making three or four.

[00:10:58.520] – Robert Newman

And now they’re canceling their real estate marketing. Many agents are canceling real estate marketing contracts. Zillow and other people that I know inside real estate marketing companies, and I won’t mention them by name and I won’t mention the companies out of respect for the people who are calling me, but they are freaked out. I have many people that I’ve worked with over the years because everybody knows that I’ve consulted with big marketing, other marketing companies, luxury presence, agent image, and that’s just the start of the list. There’s many more smaller ones that you’ve never heard of, smaller shops here in LA. And I still am in touch with many of these people. And these guys are calling me going, What’s going on over there? Because we are dying.

[00:11:42.780] – Jonathan Denwood

Can I interrupt a little bit? Sure. Why the bloody hell is this a surprise to people? I’m not trying to be funny here, but the past two years before, let’s say, six months ago, because of COVID, because of shortness of supply, you cannot have a market that increased house prices, increased over inflated price before COVID, a market that was, in my opinion, overpriced. With COVID, it went on steroids and you saw a 40 % increase on that of the average house. What the bloody hell do you think is going to happen?

[00:12:36.440] – Robert Newman

I understand where you’re coming from. And you and I have talked to you about this before, but it was funny when in 2007, there were a lot of smart agents out there who understood that the mortgage industry was overheated. It was so overheated, John. You’re so overheated. A lot of real estate agents were selling mortgages on the side. It was just overheated. It was so easy to get these mortgages, and you made such a good commission on it. It almost didn’t make sense not to sell both services. There wasn’t all the paperwork.

[00:13:15.270] – Jonathan Denwood

I’m not having a go at anybody, really. It’s a commission based. I’m not having a go. What I’m saying is why are they so surprised?

[00:13:28.260] – Robert Newman

Because when you’re in the midst of it, I think that it surprises people the way that it actually ends up rolling out. I don’t think anybody’s surprised that the real estate market is changing. What is surprising people is the sales numbers on 2023 and 2022, we’re not collapsing the way that everybody thought we were. But inventory is still fairly rare. Home prices are still shooting up in busy marketplaces. But what has changed for all of everybody listening to the podcast is that you don’t have 20 or 30 properties anymore. When you get a single property, your job… I just talked to a consulting client, and I’m not going to name her by name either, but I will say she’s literally the top agent in the areas that she serves. Number one, no competition. And it’s in the East Coast, New Jersey. She got a million dollars listing. Her job, John, became fielding and sorting through the 20 offers in 48 hours that they got on over a million dollars property, which is an expensive property for the area that she’s in. 20 offers in 48 hours. That just takes you time to sort through all the offers so that you can ask the proper consultant to your client and say, We have 20 offers.

[00:14:46.850] – Robert Newman

These are contingencies, cash, exceptions. Do you see what I’m saying? You have to know what all those offers are so that you can then turn around and consult with your client. She’s got two days of work to properly read through all of the offers that she got to turn around and then say to the client, Good news is we have 20 offers. The bad news is here’s what I feel are the top five and we have to choose. Do you see what I’m saying? Unless there’s just somebody that came in, no contingencies, no anything, million to $200,000 above asking all cash. And then obviously in that circumstance, you’ve got one offer that takes the cake and you just run with that. And then every other than 19 other people that bid on that property are done. They don’t get it. They don’t get the property. It’s a weird market that we’re in, Jon.

[00:15:39.320] – Jonathan Denwood

It’s a fair because obviously you’ve got somebody that’s in the field just told you something. The only way I can rational is that, and it’s not based on data, it’s based on my gut feeling, so it might be totally incorrect, is you have the top echelons, somebody that can look at a million dollar house, they’re in the top 5 %. But you could say that almost every house in Southern California is around that. So you’ve got to quantify this. But that’s around if they can borrow. But if they can afford a million dollar house, they’re in the top 10 %. Only 10 % of the population are more than 100,000 a year. Only 10 % of American working population and more than 100,000.

[00:16:43.290] – Jonathan Denwood

So the fact, 60 % of the population haven’t got $400 in savings.

[00:16:50.440] – Robert Newman

But.

[00:16:52.550] – Jonathan Denwood

They’re top echelon, they’ve done very well in the stock increases. They’ve done very well over the past three years in property. They’ve done very well in stimulus checks to businesses. I know quite a few people that have quite a pool of capital. They’re not doing much with it. You cannot put UB very ill advised to put that capital in commercial property. That would be, in my opinion, until the market calmed down a suicidal. And we have got inflation between 6 and 10 %. So just keeping it in the bank for years, most people of that type of capital are putting it into short term treasuries because they’re getting 5 %. So there is a lot of money out there. But on the other hand, I think you are correct. You’re dealing with a very fragmented, confusing market because there’s a lot of people that got property. They’re looking at what somebody got six months ago, eight months ago. They’re unwilling to move on the price. And you got a load of buyers with interest rates just going up. They’re just saying, Well, we’re not buying until you lower the price. Correct. So everybody’s looking, most markets, everybody’s looking at everybody else.

[00:18:32.660] – Robert Newman

Here’s what we’re going to do. When we come back, we’re going to go to break. And when we do, John, I’m going to make some predictions. Now, I just want to say to you and to the audience at large, I got very lucky. I made some predictions in November of 2022. I recorded them to my YouTube channel and uploaded them. Okay, so they’re there. They’re there for prosperity. I feel like one of my main predictions has played out exactly like I said it would. I said that we would do… Everybody was predicting that real estate would collapse in 2023. And I said that I felt like the hot wind from the hot market, regardless of interest rates, regardless of everything, was going to carry us through 2023. And it was somewhere around 2024 that we had to probably look for a true adjustment inside the real estate space. So far, that prediction has been 100 % true with some major things happening in the market that are staggering in implications. So I’m going to make some additional predictions with your help. I’m going to ask you your predictions, and we’re going to measure predictions. We’re going to use this show as a benchmark for anybody who’s interested to find out what’s happening with a note towards the lead generation industry.

[00:19:41.200] – Robert Newman

This is going to be a lead generation specific message because that’s what the title of the podcast is and that’s our industry, John and I’s, and I want to speak to that directly. So stay tuned. Wherever you watch this, do us a favor, give it a thumbs up if you’d like, if you think we’ve done a good job, tell us we suck if you think we suck, and we’ll catch you when we come back from break. Do you want quality leads from homeowners and buyers right in your own neighborhood? Then you need mail right. It is a powerful but easy to use online marketing system that uses Facebook to generate real estate leads at a fraction of the cost you’d pay from our competition. We stand behind our work with a no question asked 30 day money back guarantee. So don’t delay, get started today. Go to mail. R ight. Com. Welcome back to the Mail. R ight podcast. It’s episode number 378. The subject of this podcast is the real estate lead generation industry collapsing. I, during the first with John’s help, we illustrated how we both thought, or I illustrated… Here was my point.

[00:20:48.640] – Robert Newman

My point was more like, John’s point seems to be why is anybody even surprised? Why are we even talking about this? Why are we even having the conversation? My point was, I think that I’m getting a lot of calls and a lot of messages, including, by the way, guys just like me who are in the industry, and they’re scared to death that it is collapsing. And John’s point seemed to be, well, why are they even…

[00:21:10.660] – Jonathan Denwood

Well, no, I just want to clarify. I think it is very important that you really look at your marketing budget and really listen to someone because I think investing in video, investing in SEO, investing in content on your website, reducing the budget on paid for lead, basically reduce your Zillow, reduce your Google, reduce your Facebook paid advert. Now, reinvest in your website, the actual content on the website, video, other forms of marketing. I think just relooking at your marketing strategy in the next six months is really important. So I’m saying no. But what I am saying is I am surprised that people are surprised at the way the market is going.

[00:22:15.080] – Robert Newman

Sure. Well, ladies and gentlemen, in November of 2022, I made some predictions, which we cover before break. And I’m going to make a few more. And, Jon, you can either poke holes in my predictions, just agree with them, say that I’m just fucking out of my mind. Excuse me. Or you can agree, or you can say you can do whatever.

[00:22:40.230] – Jonathan Denwood

There’s only one of us that is bonkers in this podcast and it’s not you.

[00:22:48.160] – Robert Newman

So you can disagree or agree or whatever it’s going to be. But I’m going to say this. I actually have some small adjustments to my original predictions. My larger prediction is 100 % correct. But boy, oh, boy, did I not see the rapid and almost global collapse of regional banks everywhere? I did not see that coming again in 2023. And as a matter of fact, I may have specifically said something, and I think a lot of other podcasters like us have said, oh, we’re not due for another bank collapse like we were in 2007. And boy, should we have shut our mouths. Wow. Did we get that one wrong?

[00:23:35.040] – Jonathan Denwood

I got to say something. You got to quantify this. Listen to some views. Don’t get the wrong impression. I’m very scathing on my criticism of the banking industry in general, not in the US and in Britain. But we got to quantify this. When it comes to Silicon Valley Bank, there are some specifics around the type of clientele that were banking with them, and also the risk management, the CEO, the chief financial officer. There are a number of things going on in that particular bank. The other two banks, they were heavily into cryptocurrency and they were heavily criticized. There’s a couple of very well short sellers who positioned themselves and went online and their predictions of these two particular banks have come true. These two banks, I can’t say what I really want it because I just don’t want to get into it, but they were, let’s put it this way, they were involved in cryptocurrency up to their eyeballs, and seemingly by reports, they were extremely badly managed. When it comes to the Swiss Bank, that bank has been in trouble for over 10 years. It is a basket case. It has been mismanaged for over a decade plus.

[00:25:10.330] – Jonathan Denwood

It’s been on life support. It had to go to the Saudi’s and they invested billions and got 10 % equity in that particular bank. So yeah, the banking industry has some problems. Is the whole thing ready to collapse? Who knows? Because these particular banks were in a lot… They were particularly ropey banks. I don’t know what you think about that, Robert.

[00:25:42.410] – Robert Newman

So I want to talk about that a second, okay? Because I do agree with you. What we are watching happen for those listening to the podcast is a combination of, in my opinion, of three things. Now, I do not know these things. Number one, I subscribe to a blog that I absolutely love called Puck, and I spend a few hundred dollars a year. And if anybody’s listening to this show, I’m not an affiliate. It’s basically the best of the best writers who’ve gotten together and started their own thing. And they’re all really experienced industry people, and you can buy their content. And it’s been an amazing source of information for me. And I’m regurgitating some stuff I heard there. I’m regurgitating some stuff that I heard from Motley Fool, which I also… I pay about $1,000 a year, John, in paid subscriptions to financial bloggers. Not because I’m that big of a finance guy, but because I’m fascinated and it’s worth the investment for me. So I will say this, we were due for an adjustment that happened with crypto. We’re still watching crypto shock waves. The failure of one of the big crypto platforms is rolling out and it’s hitting everybody.

[00:27:06.860] – Robert Newman

It’s hitting nine other companies which are all slowly failing around it. It’s also starting to roll out into the traditional banking industry, which indeed had started to get into crypto and their balance sheets weren’t solid enough to take losses. Though my understanding of the Silicon Valley Bank is that it had a lot more to do with bonds than anything else as to the real reason that it failed. And they made some very bad decisions in investing in bonds that were too long term, and they couldn’t get their money out without literally losing billions of dollars if they tried to execute those bonds early. So they took long term investments on loaned money from their clients deposits. And just like William Cohen, who’s one of the writers for Puck, I’m going to say the following, banking is a confidence game. It’s literally a confidence scam that we’ve all gotten into. The confidence is this, at any given time, if a bank has $92 billion in assets, something like 60 billion of that is invested, and 30 billion sits in seeming deposits in their accounts. But it’s not. It’s our money and they’re going out and gambling with it.

[00:28:14.350] – Robert Newman

Theoretically, banks are supposed to be gambling at very large terms. They’re supposed to be doing safe investments, John. That’s what they’re supposed to be doing. And they’re supposed to be getting a slightly higher percentage return on 90 billion. And when a bank is run well, like with JP Morgan, Chase, they’re going to make something like two trillion dollars in profit. They’re going to make a bucketload of money. But because of some laws that Trump created that took away some of the safety, some of the rules as it related to banking, in order to do what he thought was streamlining the banking process, just like Clinton did back in the 80s with Glass Steele, he removed some safeguards thinking that free markets are going to regulate themselves. And part of the free market is that when you give people the right, they’re going to gamble. And small and regional banks are more at risk when they gamble. Just like Silicon Valley, they gambled that nobody would do a run on the bank, and they gambled wrong. Forty two billion in deposits were pulled out in less than 24 hours due to the incredibly insular nature of their depositor base.

[00:29:27.820] – Robert Newman

And so that created a run on the bank that then made them execute these long term loans, take an immediate multibillion dollars loss. Everybody started to freak out because their bank and all this is transparent. So they started to casually ask around about getting capital. They’re very smart clientele who are much more financially savvy than most other depositors are as a whole and who all talk to each other as well, sat here and said, Oh, my God. These guys are looking for terrible rate money. They must be in trouble. And the remaining of their depository base almost immediately pulled back their deposits.

[00:30:10.510] – Jonathan Denwood

I think you made a key point. This is a witch’s brew of many reasons why that particular bank. But when the CEO asked for it, we need to raise two billion. Don’t worry, your money is safe, but we need to raise two billion. What the hell do you think is going to happen?

[00:30:33.640] – Robert Newman

Right. And so when I make predictions, ladies and gentlemen, here’s some of those predictions. I do think we’re going to see some more regional banks fail. I don’t think that we’re going to see that impact the real estate business. So even though John and I have been talking about some really scary stuff, and I know that a lot of you are having PTSD from 2007, I know that I got scared. I’m not thinking that there’s a problem. But when I started to see over and over again, because there’s been a few not as big as Signature or Credit Suisse or Silicon Valley, there’s other banks that have failed. It’s like a list of seven or eight, but some of them just are not big enough to make national news. They’re smaller, more regional things. And so I’m going to say that I started to go, Holy shit, are we looking at yet? Because the problem in 2007 and 2008 weren’t that people didn’t want to buy homes. I don’t know if all of you realize that. I was working in the industry when that happened. It wasn’t that people didn’t want to buy homes. It was that they couldn’t get them financed.

[00:31:35.720] – Robert Newman

You couldn’t find a note. There was nobody willing to sign off on a note, even with triple A credit. All of a sudden, great credit really clients could not get a note for their home. And how many people run around with cash to buy whatever they’re going to buy? John, whatever you’re looking to buy next year in Reno, do you have the half a million in cash? Would you even spend it if you had it? I’m not trying to put you on blast, but even if you had the half million dollars, would you sit here and go, I want to put that cash up front into a property and then roll the… That’s a different thing. Normally, you got to have millions of dollars in that cash up front is not a big significant part of your personal wealth to make that decision. That’s a big decision for most people. So the market dried up entirely because you couldn’t get a note, you couldn’t get financing. That’s what happened in 2007. And it didn’t really come back for those listening to the show. It stayed gone all the way through the end of 2009. Financing was incredibly difficult.

[00:32:40.870] – Jonathan Denwood

Well, I was going to say, I don’t think the market really started until the end of 2012, into middle 2013. But other people would argue with me. But yeah, it was a 4 to 6 hard year period. Right. We’re not entering that again. That’s one of my predictions, John. We’re not.

[00:33:00.510] – Robert Newman

Entering that again. The big boys are still going to be there. We’re really not going to see that much impact on how people loan money. The impact is going to come from these interest rates, which they’re going to raise one more time, if they raise it at all. I’ve heard a lot of debate about this, and it doesn’t really matter for those of you who are in real estate. I’ve already started to see in many, many markets with many customers talking to me that people are back in the market trying to buy property at the current interest rates. There was sticker shock and everybody was waiting to see if interest rates were going down. It is incredibly obvious to everybody that interest rates are not going down. That’s not happening. So everybody’s gotten off the sidelines and are buying homes at the 8 or 9 %, whatever the interest rate that John, I honestly don’t know. But they’re all out there buying homes at that price now. They’re buying with that money. And while it’s just going to surprise a lot of lot of people. I think that while this is slowing the market and may impact the market with a decline in 2024, if the Fed holds to its guns and everybody sticks with it while we may see recession, I am pretty sure that these were all the right decisions for the market.

[00:34:28.280] – Robert Newman

I’m extremely excited about them. And I think that in 2025 or 2026, after a short recession, we’re going to watch business finally go back to normal. And by normal, I mean probably interest rates somewhere between the 5 and 7 % rate range, which has been our historic average in the US. I’m not declaring a miracle here. I’m saying that interest rates will go back to average of what they’ve been for decades. And then we’re going to see, finally, real estate agents probably hit another 10 year cycle where things will finally be more… There will be less variants, less of the ups and downs, less of the hills and valleys that we’ve been dealing with over the last number of years, assuming there’s.

[00:35:15.000] – Jonathan Denwood

Not a national pandemic and assuming half the world doesn’t catch on fire, we’re going to see a more normal market. Those are my predictions, Sean. What do you have? I’ve got very mixed feelings in some ways. I think it’s going to be a sizable correction. I do think the prices have to readjust. I do think if you want to sell a property, you’re going to have to be more realistic about the sales price. But on the other hand, I think if you’re realistic about the sales price and I think you can sell it. I think you really need the advice of an experienced real estate professional. And you do not, in these circumstances, want a property that’s on the market for month after month after month. You’d be best to listen to somebody, a real estate professional that got experience and price it slightly below present market value, and I think you can sell it. I personally think there is going to be a correction. For some reason, I agree with you. I don’t think it’s going to be as bad as 207.

[00:36:23.900] – Robert Newman

I think it does really depend on the unemployment situation. Here’s a couple of facts as evidenced from the this is coming in from Redfin. So ladies and gentlemen, according to Redfin, in February of 2023, over the same period last year, home prices are down in California by 6.5 %. I recently read a national report that said home prices were down by 3 % nationally. And in California, we need a huge reduction. So on average, the number of homes that were sold is down 33.4 % year over year. And there were 16,000 homes sold in February, down from 25,000 homes sold in February of last year. Now, here’s what I think is going to happen, because I’ve talked to mortgage officers and real estate agents, and here’s what everybody seems to be noting. I think that I predicted the same thing that you did. I thought we were in for a very dramatic drop, and I predicted that in 2022. I thought prices were inflated by over about 20 % nationally, and I suggested that we would see a 20 % decline. We’ve seen a 6.5 % decline, and I think that we’re going to see a much more gradual slide than I originally predicted.

[00:37:40.240] – Robert Newman

I think that we’re going to see home prices slowly drop market to market, which is the best thing that could possibly happen for people selling homes, for the industry, for real estate lead generation people like me and like you. The best thing for all of us is that these prices go down slowly, that nobody gets put under water fast, that if you see these prices sliding and you took on a questionable note, that you have the chance to get out from under it. I think that these things are all going to happen. And because it’s gradual, we probably have a chance to avoid a dramatic market shift.

[00:38:21.370] – Jonathan Denwood

That’s my opinion. My position is slightly more pessimistic. I think there is going to be a sell in 2023 through 23 into ’24, there is going to be a dependent on the market. It is a regional market with variation. But in the most hottest markets over the last two to three years, I think there’s going to be a sizable correction. But I don’t think the outcome… I do agree with you, though, that the outcome won’t be as bad as the 2007 to 2012 outcome. I think there’s a lot of people that got really fantastic remortgage there. I’ve got a couple of friends that re mortgaged. They will never in their lifetime see deals that they got. I got one friend that got an interest rate re mortgaging that was just unbelievable. He’s got a steady job. He could always lose it, but he works for the state of Nevada. He’s a senior manager. It’s very unlikely that he’s going to lose his job. There’s lots of people that have that. There’s other people that don’t run their own business like you and me. I just feel it really is. But you can never discount a black Swan event.

[00:39:35.550] – Jonathan Denwood

And it’s t also is really determined by the unemployment. But the reason why I think you… I’m a little bit more pessimistic than you, but I do also agree with your general attitude. The other thing that’s discount is there’s a load of people I know. Unfortunately, I’m not one of them. I’m not too bad, but I know a lot of friends that are sitting on a quarter of a million, half a million, million plus in cash. They’ve got that type of assets. They’ve got it in treasures. They’ve got it in other short term notes. But I know a few people, I know lots, lots, lots more people that couldn’t get $400. That is the contradiction of what we are facing at the present moment. I agree. And that 40 % of people, ladies and gentlemen, are going to continue to drive the market. We’re going to continue to see new home buyers down. They’re down to 25 % from 35 %. We’re going to continue to see that rate stay low. And I think we’re going to see the market adjust over the next 3 to 4 years until the new buyers with limited resources and great financing deals can get back.

[00:40:51.200] – Robert Newman

Into the market.

[00:40:52.210] – Jonathan Denwood

That, unfortunately, is not ahead of us right now, in my opinion. We are not looking at that.

[00:40:58.910] – Robert Newman

We are looking at a market where people who are sitting on capital looking for good investments, trying to hedge inflation. Real estate is a great place to go. So I don’t predict that real estate is going to be dead or dying. I do think that the types of buyers that we see and who’s making moves inside it, it’s going to change. I’ve seen a lot of entrepreneurs that I know, John, here in California buying two, three properties, Airbnb them out. They’ve already got equity somewhere else. They leveraged that to buy more properties. The interest rate doesn’t scare them at all because they’re using the property as a business. And so they get to write it off, they get to finance whoever if they get lucky and there’s a high rate of tenancy, and the desire for travel was still very high because of the pandemic. People are pivoting. As with every other economy and every other thing, what always surprises me about California and other places in general is the resiliency of the population, how entrepreneurial they’ll get, how determined they’ll get. And that’s proven to be true in this market as well. My heart goes out to those people who were waiting on the sidelines hoping to buy a home for the first time, though, because I do not think that that is any easier or that it’s a great time in general to do that.

[00:42:27.760] – Robert Newman

Could I be wrong? Of course it could. Over the span of 20 years, it’s always a good idea to buy a house as a primary residence. Over the span of 20 years, it doesn’t matter what you buy out or what the interest rate is. I’m just a little bit more pessimistic because when you got people saying, What’s the event? I don’t think there needs to be event. When you have a.

[00:42:55.090] – Jonathan Denwood

Market over a two year period that goes up by 40 % and you dump 2.2 trillion dollars into a company and don’t figure that you might trigger off a hyperinflation event, I think you’re deluded. And I also think the idea that something can go up by over 20 % for more than two years in classical economics 101, I’m no expert, but whatever I’ve read, any market that goes up more than two years for 20 % will collapse on its own. Yeah, probably true. Well, ladies and gentlemen, when we started the show, John asked me, Did I want to talk about this? And I told him, and I may have even said it on the air, I don’t know. I don’t remember anymore.

[00:43:41.500] – Robert Newman

But I’m going to say, I could talk about this every day for the next 52 weeks, literally. If we just did a podcast talking about the state of the real estate industry. It’s only the second time in my 14 year career where I’ve watched the times become as interesting as what we’re living through. I really don’t know what the specific small blocks are going to be that impact the business tomorrow, but here’s what I know. From years worth of reading, from my own personal experience, it is a scary time when everybody’s scared and shelters for those people that have an above average amount of determination. This is the time to make your moves. Warren Buffett says it, everybody says it. Anybody that you listen to, when everybody is running for shelter, you look for opportunity. Now, there’s a very small handful of you out there that are listening to this show, and I don’t know what that opportunity is specifically. Maybe you do invest in properties. Maybe you find people that are underwater because of these rising interest rates. Maybe there are. But as this thing moves in a side direction, for some of you who are listening to this show, there’s going to be huge opportunity.

[00:44:59.440] – Robert Newman

There’s opportunity to reexamine the way that you’re doing your marketing to get real estate leads. There’s an opportunity to reexamine your real estate business as a whole. What brokerage do you work with? How do you operate as a business model? These times that we live through are going to go to the ones who win the efficiency and marketing games. That is my other prediction. So if you’re not examining your own personal efficiency and your own personal marketing right now and how you’re spending your dollars and how efficient is your business acquiring business and names and then marketing to them, I think you’re making a major mistake. Those of you listening to the show who do do that are going to find that you’re probably light years ahead of your competition. This is going to be the time in the real estate lead generation industry where we start to watch those 20 and 30 year vets who’ve never done anything other than do some of those people are going to go out of business. They just are because they didn’t really market very efficiently to their client base, and they’re going to discover that the client base that they count on for repeat business is not there.

[00:46:13.340] – Jonathan Denwood

I totally agree with you there. 100 %. So shall we wrap it up now?

[00:46:21.720] – Robert Newman

Yeah, let’s do it. How would you like people to reach… Sorry, Jon, I warned you I would love to talk about this. How would you like people to reach out and get in touch with you?

[00:46:30.610] – Jonathan Denwood

Yeah, go to the mail hyphen write website, and have a look at what we got to offer. We really build some nice websites on WordPress that you own. Book a demo, and have a chat with me. I’m looking for some really great champion real estate professionals that can champion mail, especially if you’re looking to move to a digital brokerage situation. We can do some really great special deals for those types of individuals because I’m really looking for those types of people. Back over to you, Robert. All right.

[00:47:05.360] – Robert Newman

Ladies and gentlemen, I will say the same thing I said at the show’s start. Do you want to learn more about me? If you want to find a company that does inbound marketing and content-based marketing with a website you own, you can go to inboundrem. Com. If, for some reason, some of you want to ask me personal questions, you can do so at robert@inboundrem. Com. Footnote for you, Jon, a footnote for everybody listening to this show. 2023 is 100 % my last year on the phone. I’m undoubtedly headed to the Philippines to open a sales office. I’ve said this in past years, but I’m doing it this year. My ticket spot, I’m on the plane; I will work there for the rest of the year. This is it. For those of you listening to this show, if you still want to talk to me directly to talk to me about the website or SEO services, you got it. You have a seven-month timeline. That’s it. And then I’m going to be a CEO and a proper founder. So thank you for giving me the platform, John. I don’t usually self-promote very much on here.

[00:48:04.960] – Robert Newman

So this is just an exception to show. And I appreciate everybody that’s listening. John, if you want, give us some feedback. Email me at robert@inboundrem. Com. Email John. Talk to us. Let us know how you think we’re doing. All right? I would appreciate it. I know John would. We’ll catch you the next time if you tune in.

The Hosts of The Mail-Right Show

Jonathan Denwood & Robert Newman

https://www.facebook.com/mailrightusa

Robert Newman

InboundREM

https://inboundrem.com

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