Will You Survive the Real Estate Meltdown?

Color Commentary for Monday, September 3, 2007
By Kent C. Madson, RE/Max Hall Of Fame and Cofounder, ThinkTQ, Inc.

"Figures released this week showed foreclosures in July up by 9% compared with June, and by 93% over the year before. It may be little comfort to overstretched mortgage-holders to know that the lenders are also sharing the pain. Accredited, a subprime lender, said this week it would stop taking loan applications and let more than half its workforce go. And Lehman Brothers became the first investment bank to close its subprime-lending arm, at the cost of 1,200 jobs."
~ The Economist Aug 23, 2007

Executive Summary...

Central banks struggle to restore calm without breeding complacency.  
Aug 23rd 2007 The Economist LONDON & NEW YORK

"This market has boomed in recent years. It now accounts for roughly half of the more than $2 trillion of commercial paper outstanding. But issuers have been caught out by a cashflow mismatch", says Louise Purtle of CreditSights, a research firm.

The worry, about the mortgage collateral, is particularly stark.

Rating agencies badly misjudged default rates in subprime mortgages and are now having to downgrade reams of securities linked to them. With the credibility of ratings in tatters, investors have been left without a compass."

Home Truths Continued Below...

Rather than just present more gloom and doom rhetoric, we are offering a specific, actionable solution to the question, "What must I do to survive the current market meltdown?"

The heart of the matter is this. Homes will continue to be bought and sold—even under these extraordinarily adverse market conditions.

But, and this is a huge BUT, only the MOST effective, efficient, highly-motivated and hyper-productive people will even have a chance to profit from this market, and the extraordinary opportunities that always present themselves in turbulent times.

As our dear friend, Dr. Robert Schuller says, "Tough times never last, but tough people do."

Today, you have a choice: sharpen up... toughen up... and smarten up... or simply accept failure, and get out of the way of those who are determined to make their mark in this industry.

The bottom line is this.

You can aspire to survive, perhaps even thrive during this meltdown... or you can choose to silently go back to doing what ever you did before you got involved with real estate. If you think you are "good enough" you might want to rethink your position.

Because today, good enough isn't.

Background...

For the past several months, the real estate market has been in a well-publicized tailspin, sending shock-waves throughout the entire economy.

The problems with sub-prime loans, negative equity net of sales commissions, and the pull-back by investors in the secured credit markets have led to a highly unstable economic environment for real estate professionals, mortgage brokers and the entire financial industry as a whole.

As of Friday, August 31, even the President of the United States has weighed in on the problem. Since early 2007, over 50,000 people have been laid off in the financial services and mortgage banking area, with another 150-200,000 real estate agents expected to bite the dust... a fall out that will affect the nation as a whole.

The problem is clear.

A "macro-economic" solution for the market at large is far less so.

However, on a day-to-day "micro-level", the dual crises in real estate and financial services has an outstandingly simple solution for each player, regardless of their position.

To survive, perhaps even thrive under these conditions, you will have to out-smart, out-hustle, out-compete, out-produce and out-perform your competition—every single day of your life.

Put simply, this has become a "survival of the smartest" new day in the world of real estate sales and finance.

Only those people with the fundamental skills to perform at the TOP of their performance potential will survive. In fact, these people will not only thrive, but pick up significant market share as their less-productive competitors fade into oblivion.

As a 20 year real estate veteran, a member of the RE/Max Hall of Fame, and cofounder of ThinkTQ, Inc., my advice is simple: Perform as if your very life depends on it... because it does.

You have to STOP focusing on the problem and START implementing the solution: turn up your Time Quotient (TQ)—or watch your chances of survival evaporate faster than a non-qualifying loan package!

ThinkTQ, Inc. is the world's leading publisher of virtual training programs for personal and professional excellence. We have tens of thousands of members who are directly or indirectly involved in the real estate and financial services.

Over the past 30 days we have been inundated with questions from this group... each asking the question differently... but all asking the exact same question: "How can I survive this meltdown? What do you recommend I do differently to take advantage of the opportunities that will ultimately result from this terrible situation?"

Our answer is as simple as it is easy to implement: Dramatically improve your Time Quotient and you will survive. Don't and you won't.

As you will learn in considerable detail below, TQ is a new brand of Working Intelligence that measures the ACTIONS you take to produce the Results you get over Time. It is the formula for true and lasting success:

TQ is the Intelligence Behind Success.

Your Time Quotient (TQ) is a Gold Standard measurement of how SMART you are actually working... how SMART you are at getting the Results you expect over Time.

TQ measures how smart you ACT, not how smart you ARE.

Learn to consistently take smarter actions and you will produce significantly greater Results. Incrementally, you become a great deal more successful—and take far less Time doing it—simply because your TQ is rising.

Improve your TQ, and you will no longer worry about paying your desk fees and advertising bills in the coming months. Instead, you will carve out a larger, more profitable market share as your less-productive, less-effective competitors exit the business.

No question, there will be winners and losers in this market. If you are serious about your profession, read this article word-for-word and take me up on my offer to help.

Invest 20 minutes to take your full TQ Test (free), discover exactly what you are doing right... precisely what you are doing wrong... and specifically what you need to do differently to produce the results you want and the success you desire.

Then, choose just ONE area of your performance and improve it—either a dominant strength... and make it stronger—or a limiting weakness... and eliminate it.

Because I feel your pain, I have set aside One Million personal training programs to be given out from now until the end of October. That's a $40 million GIFT back to the industry that has been so good to me and that I love. Take your TQ Test, choose which TQ program is right for you, and we will send it to you free. All I ask is that you pay the small shipping/handling charge to have it delivered to you.

Because the real estate market is such a vitally important part of global economy, my advice applies to a home owner as well as broker or lender/investor.

The ONLY way out of this situation is to RISE above it.

The key to your success, both personally and professionally is High TQ Performance: High Expectations coupled with Brilliant Execution.

So, Expect More... Execute Better! Start NOW.

Kent C. Madson, RE/Max agent and co-founder ThinkTQ, Inc.

Will You Survive The Current Real Estate Meltdown?

First The Bad News...

Does it look to you like life in the real estate world as you know it is over? The housing bubble has burst.

Worse, we are headed directly into the perfect storm for realtors. Home prices are falling, foreclosures are rising, and mortgage companies — together with their ability to get a loan approved for any one with a breath — are disappearing faster than a realtor at the end of a four-hour open house. Is it any wonder that when asked "How's business," so many in the real estate business are going into a blank stare and responding "What business?"

All and all, it's quite shocking to hear the comments coming in from the real estate industry at this time. "I've never had a listing that didn't sell!" "I keep checking the MLS to make sure my listings are still being published, because no one is bothering to call to set up a showing." "What do you do when there aren't any buyers?" "What am I suppose to tell my sellers?"

"How am I supposed to pay my bills when I don't have any closings this month?"

The sad reality is there are going to be a lot fewer real estate closings next month than last year at the same time... which means that there are going to be lot fewer realtors getting paid at the end of this month than there were before.

The real estate pie just went on a diet and you may well be sitting there wondering if you will still be at the table when it gets passed around—or if you will be sitting out in your car somewhere trying to figure out what went wrong.

To punctuate what I am saying, consider this dire assessment from the CEO of the world's largest mortgage lender:

Countrywide CEO Sees Recession Ahead...

NEW YORK (Reuters) - Thursday Aug 23, 2007 Countrywide Financial Corp Chief Executive Angelo Mozilo said on Thursday the U.S. housing downturn is likely to lead the country into recession, but that the largest U.S. mortgage lender will survive.

In an interview with CNBC television, Mozilo said "markets are in one of the greatest panics I've ever seen in 55 years in financial services."

Mozilo said housing and the economy were not out of the woods. Falling home prices hurt homeowners psychologically and cause them to spend less, he said. The 68-year-old executive has worked in financial services for more than a half century.

"I've seen this movie before, and the ending of the movie always ends up in some form of recession," Mozilo said. "I can see the economy slowing down substantially enough to give the regulators, the Fed some pause in what's going to happen next."

It might be added as a somewhat tragic footnote that some 25,000 people in the financial services area, jobs that until recently appeared to be immune from any downturn in the economy, were lost in just the last 3 weeks... and over 50,000 high-paying jobs so far for the year.

Things are indeed going from bad to worse.

To survive, you will have to prepare yourself as you never have in the past. You have to develop a "fight-back" mentality... or find something else to do as your prime occupation... and "do real estate" as an avocation.

Separating The Pros from the Cons...

For many, this is the first time that real estate sales didn't just fall into place. So many realtors and lenders have come into this business, and done really well in the recent past. So, few realize that their success was not attributed as much to their skill and expertise as it was to simply being in the right place at the right time.

In great markets, everyone looks like a pro. Get a listing and go buy a new car. Show up and you get paid.

Now?

Now, things are different.

Now, we're going to see who the real estate professionals really are. With dark clouds on the horizon of every subdivision in America, this is the time when the market is going to separate the pros from the cons.

Survival in a real estate career — not to mention achieving lasting success — is going to be granted to those who have woken up to the hard reality that has always ruled the business world. It takes skill, perseverance and a positive attitude to adapt, to carry on and to thrive while so many others choose to give up and blame the market for their loss.

As real estate trainer Joe Stumpf says, "whatever skills got you to where you are today are not going to be sufficient to get you to where you want to be tomorrow."

Without question, whatever skills you have right now need to be greatly expanded to cope with the fears and insecurities of the marketplace. Including yours.

Think about the chilling impact this article from CNN Money, just last week, has on buyers, sellers and the entire real estate profession as a whole...

Glut of homes hits 16-year high. Sales slip but supply of homes on the market jumps to 9.6 months, pushing prices down for 12th straight month. By Chris Isidore, CNNMoney.com senior writer August 27 2007

NEW YORK (CNNMoney.com) -- Homeowners trying to sell last month faced the biggest glut of homes on the market in about 16 years, as declining sales and growing problems in the mortgage market helped push home prices down for the 12th straight month.

The National Association of Realtors said sales by homeowners slipped to an annual rate of 5.75 million last month, down 0.2 percent from the revised 5.76 million pace in June. Economists surveyed by Briefing.com had forecast the sales rate would fall to 5.7 million in the latest reading.

Not only did sales slip but the number of homes for sale jumped 5.1 percent, the group said, meaning there is now a 9.6-month supply of homes for sale, up from 9.1-months in the June reading. It was the biggest supply of homes by that measure since October 1990.

Even the Realtors' own economist admitted that problems in the mortgage market will continue to take a toll on home sales.

"We are literally swimming in an ocean of homes for sale. In fact, at 4.59 million units, we have the most raw inventory for sale in history," he said. "Until we work through this extremely large inventory glut, we're not going to see any momentum in home prices."

Advice: Focus on Your Overall Performance -- Not Just Your "Technical Skills"...

In these days of declining markets and increasing competition, you may be looking for ways to rethink and recharge your business. For every salesperson, the need for career skills like listing presentations, negotiations and technical knowledge have always been key components to success.

However, in difficult times like these, even more important than having technical skills, the winners are the ones who will focus on and master the basic skills of personal performance. Skills like the ability to keep their energy level high, to stay positive and passionate about each task, to set realistic goals, implement a winning plan, stay focused, organized and make every minute count in producing the results they want by the end of each day.

It's as true as it is obvious. You may know what to do, but if you're not doing what you know, then there is something other than technical knowledge that is keeping you from achieving the inspirational goals you set for yourself this year. It's times like these when basic personal performance skills are so incredibly crucial to your career.

You may have a brilliant multi-media listing presentation on your laptop and a never-fail response for the question about cutting your commission, but how successful will you be if you show up late at a seller's house, cynical about the lack of buyers, discouraged by the lack of office support, with your comparative marketing analysis only half prepared because your printer ran out of ink just before your appointment?

In a world of high competition, expert technical skills are the norm.

It's the basic personal skills of attitude, focus, organization, timeliness and the ability to take massive action that will separate you from your competition... and determine if you will even be in the business one year from now.

So the REAL question becomes, how well are you performing in your career at this point in time? How would you know for sure?

BusinessWeek recently did a survey of over 2000 U.S. executives and managers. When asked "Are you one of the top 10% of performers in your company?" 90% of the respondents said "Yes." So, either only the top 10% of the performers are allowed to be executives and managers in the companies surveyed or there is some serious self-delusion going on with the 90% who all think they are all in the top 10%!

Come on. One has to wonder, who's kidding who?

How would you score yourself in regard to your performance skills right now? Brave enough to throw yourself into the same 90% of those who think they are in the top 10%?

An even more important question is this. How high do you think your basic personal performance skills have to be to survive this downturn in the real estate business? How high will they need to be to achieve the goals that you set at the beginning of this year?

Test Your TQ and See Where You REALLY Stand...

There is an easy way to find out exactly where you stand. Go to ThinkTQ.com/TEST and Test your TQ!

ThinkTQ is the leading company in virtual personal performance training. They are experts in identifying and then reinforcing the positive actions we all must take every day to succeed—regardless of what we do.

They have established what has become the Gold Standard of personal excellence. It's a list of actions that, if taken consistently, will dramatically increase your probability of succeeding.

Fail to take these actions and you will cause your career to self-destruct.

To help people cut through the blur of their day-to-day actions, TQ created the world's first Time Prism—a tool that separates your performance into 10 unique color-coded areas, each critical to your overall success... in three broad categories:

• WHO you are as a person: your physical and mental ENERGY level... your sense of purpose and MISSION... and your ATTITUDE.

• WHAT you do: your ability to set crystal-clear GOALS... your power to make PLANS to support your goals... and your ability to PRIORITIZE your activities.

• HOW you do things: your ability to create powerful interpersonal SYNERGY... your ability to get and stay ORGANIZED... your ability to OPTIMIZE the use of your precious time... and finally, your propensity to take bold ACTION.

The Time Prism breaks down your performance and instantly reflects how smart you are working... how much power you have to achieve your goals and aspirations. It helps you SEE exactly where your performance is strong and vibrant, and where it is weak and faded.

Take immediate steps to improve each area of your performance and you will succeed brilliantly. Don't, and you will have a hard time even remaining in this industry long-term.

The following is a short introduction to this exciting new program. To gain a huge insight into your current level of success, answer the following questions on a scale of 1 — 10 as they relate to your real estate career... where a 1 is poor and 10 is excellent.

(No one is looking so there is no reason to kid yourself when you write down your score! Be honest, as this is a huge first step towards making it through the next two years as a Top Producer.)

Want to get the real results? Invest 20 minutes to take your full TQ Test Online (free)...

The Ten Simple Questions That Drive Your Success...

• How's your personal ENERGY level right now? Do you have the physical and mental energy to start out strong, go immediately from task to task and keep going strong all the way through your last appointment... however late it may be? Or are you constantly stressed-out, burned-out and running on empty?

  Rate your ENERGY level:
  1=Poor 10=Excellent #____

• How's your sense of MISSION and passion for your real estate career right now? Do you have an inspirational vision for how you want your career to unfold? Are your most important values in life matching up with your daily activities? Are you connected to the big "why" for what you're doing each day? Or do you feel you are trading the only life you have to live on things that are simply unimportant?

  Rate your sense of MISSION and purpose:
  1=Poor 10=Excellent #____

• How's your ATTITUDE? How often are you positive, motivated and encouraged to take the next step? Are you focused on solutions rather than problems? How often do you speak in a positive, optimistic and encouraging voice? Or have you lost your passion and enthusiasm for this business?

  Rate your ATTITUDE:
  1=Poor 10=Excellent #____

• How good are you at setting crystal-clear GOALS? How well can you describe exactly what you want to make happen this year? Inspired by what's possible, enthused to give it all you have for a highly desirable reward? Daily goals? Weekly goals? Monthly goals? Or are you a little vague when it comes to clear and tangible goals?

  Rate your ability to set achievable GOALS:
  1=Poor 10=Excellent #____

• How well do you MAKE PLANS to support your goals? Do you have an established business plan for what you're going to do this year? Marketing plans and budget in place? Steps written out to achieve each of your goals? Or are your plans all in your head, with little on paper?

  Rate your ability to set make rock-solid PLANS:
  1=Poor 10=Excellent #____

• How often do you focus on your #1 PRIORITY? How often do you prioritize your to do list? Do you stay focused on the actions that give you the highest return, or do urgencies rule every minute of your day? Or are you constantly busy with "C" tasks and rarely get to your high-payoff "A" list?

  Rate your ability to PRIORITIZE your activities:
  1=Poor 10=Excellent #____

• How effective are you at teaming up with others and creating strong interpersonal SYNERGY? How well do you communicate with your staff and your clients? How well do you delegate routine tasks to others? How good are you at putting everyone involved on your same team? Or is this an area of your performance that needs a quick adjustment?

  Rate your ability to create true SYNERGY:
  1=Poor 10=Excellent #____

• How well ORGANIZED are you? Do you work from a master list? Check off everything every day from your to do list? Have you created complete systems to automatically check off all the critical steps of every transaction? Or are you disorganized, and a little more haphazard than you'd care to admit?

  Rate your ORGANIZATIONAL skills:
  1=Poor 10=Excellent #____

• How well do your OPTIMIZE your time? Are you making each and every minute in your day count? Are you maximizing the use of your most precious asset, time? Ever go into the office all day and never get anything done? Stay focused or do you ever get distracted? Or are your time management skills costing you more than you think?

  Rate your ability to OPTIMIZE the use of your time:
  1=Poor 10=Excellent #____

• Are you truly ACTION-ORIENTED? How often do you take positive action? Are you getting yourself to actually DO all the things you know you should do? Are you making all the calls you could make? All the appointments you could be making? Completing every step of every plan you make? Or do you find yourself constantly "getting ready to get ready", all dressed up with nowhere to go?

  Rate your propensity to take BOLD ACTION:
  1=Poor 10=Excellent #____

Why did we have you subtract 20 points?

Because people rate themselves much higher -- a full 20-30 points -- on these 10 general "warmup" type questions than they actually score when completing the full TQ Test. To give you a quick evaluation, we want you to start out in the right general area, with a number that is a close approximation of what your actual score will be!

A Quick TQ Analysis...

So how did you do?

If you scored under 70, consider this your wake up call. Your survivability is seriously in question. Improve your TQ now, or prepare yourself to face some rather bleak times in the months ahead.

Did you score 70 or over? See anything you could do better? Any chance you can now see areas of your performance that, if left as they are, will make these difficult times even more difficult or possibly even ruin any chance you might have of succeeding?

See any areas that you KNOW you can immediately improve and thereby greatly increase your survivability probability?

Now that you can actually SEE areas of your performance where you need help, you can get started on whatever is holding you back, regardless if it is your personal energy, lack of mission and passion, a poor attitude, lack of goals or plans or if you just need better time management. The key is, once you know what the better actions are, it's much easier to get right back on track and start making more sales.

To create any hope for long term success, you first need to come to a full understanding that YOU are the one who will cause this to be a good year or not. Not the lousy marketplace or the lack of buyers.

By first taking full responsibility for the personal actions you take every day, regardless of outside circumstance, you ha ve a much higher probability that you'll still be here next year and the goals you set for yourself will actually come true.

Never before has there been such an absolutely critical time to start working on your real estate business—by first working on your commitment to personal excellence. Just think about it for a minute. Here is what you are up against. The marketplace, the press, your coworkers, your friends, your neighbors, buyers, sellers, and borrowers are all going to be focused on the negative.

You need to be focused on the positive.

Now, The Great News...

To get through this tragically dark environment, you have two choices. You can drag into work drained, directionless, and pessimistic. Look around and be vague, unprepared, scattered and then go about your day, unsupportive of others, working in a haphazard and distracted way as you hesitate to take any action.

Or you can choose to raise your head up and commit to make every choice and every action a positive one. Taking into account the 10 categories listed above, you can choose to show up as energetic, passionate and enthusiastic. You can be self-directed, well-planned and focused on what you want to make happen. You can lead by example and support others. You can become highly systematic and take massive action—all directed at the exact positive results you want to produce in the world.

It's your choice.

FACT: You have no power to change the real estate market place. However, homes will be bought and sold, and loans will be placed in the next year. Will you get your share of the reduced pie called the real estate business? The answer can be YES, but to do so, you will have to out-smart, out-hustle, and out-perform your competition—consciously improving your personal and professional skills every day.

In a way, this is a life and death issue.

Your success depends entirely on your commitment to personal excellence, what we at ThinkTQ.com call High TQ Performance: High Expectations coupled with Brilliant Execution.

There are a lot of people out there counting on you: your family... your clients... your community... your company. This is the time to get real, get motivated and get going!

A great first step is to go to ThinkTQ.com/TEST and test yourself. Choose one area of your performance to work on starting yet today. Then start taking more positive actions, more positive actions, and then some more positive actions.

Start today.

Kent C. Madson, RE/Max agent and Cofounder ThinkTQ, Inc.

P.S. To clear up a little confusion, my offer is for first time registered users only.

If you haven't registered before, go to ThinkTQ.com/TEST, and complete the quick registration form. You may then browse the site, take the full TQ Test at no charge, and get the TQ Personal Workshop of your choice -- Free. Once registered, simply go to the Special Offers section under TQ Products. Enjoy!

About The Author...

Kent Madson, RE/Max Agent, Cofounder and Vice Chairman of the Board, ThinkTQ, Inc.

Kent has SUBSTANTIAL experience in construction and real estate, and is a full time realtor working inside the most productive real estate office in the entire Boulder/Denver Metro area: RE/Max of Boulder.

Kent has 2 grown children and 2 fabulous grandkids!

Contact Kent directly at [email protected] or 303 441-5632.

Home Truths Continued...

Central banks struggle to restore calm without breeding complacency.

How far it goes will depend largely on the state of the mortgages that serve as collateral for many of the newfangled instruments that were, until recently, hawked with glee on Wall Street.

The outlook is not good.

Not only do subprime delinquencies continue to rise, but defaults on prime and Alt-A loans (those to good-or middling-quality borrowers) have started to climb too.

It may be little comfort to over-stretched mortgage-holders to know that the lenders are also sharing the pain.

Figures released this week showed foreclosures in July up by 9% compared with June, and by 93% over the year before.

Accredited, a subprime lender, said this week it would stop taking loan applications and let more than half its workforce go. And Lehman Brothers became the first investment bank to close its subprime-lending arm, at the cost of 1,200 jobs.

Only the best borrowers—those taking out prime mortgages that conform to criteria set by Fannie Mae and Freddie Mac, the government-sponsored housing giants—can still get loans with any ease. The market for jumbo loans, which are safe but too large for Fannie or Freddie to guarantee, ground to a halt last week...

This contamination up the mortgage food chain was not unexpected.

But Fed officials are said to have been taken aback by the speed with which large non-subprime lenders, such as Countrywide and Capital One, have been hit.

Problem More Serious Than First Thought...

WASHINGTON - August 31, 2007 Offering federal help for strapped mortgage holders, President Bush is proposing to aid hundreds of thousands of borrowers hard hit by the housing slump.

By DEB RIECHMANN, Associated Press Writer 2 hours, 17 minutes ago

Foreclosure and late payments have spiked, especially for so-called subprime borrowers with blemished credit histories or low incomes. Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can't afford to refinance or even sell their home.

Mortgage foreclosures and late payments are expected to worsen. Some 2 million adjustable rate mortgages are to reset to higher rates this year and next. Steep penalties for prepaying mortgages have added to some homeowners' headaches.