“Resolve to perform what you ought; perform without fail what you resolve.”
– Benjamin Franklin, Statesman, a Founding Father of the United States of America
By Ernesto C. Perez II
In my previous post, I said that it is going to be another excellent year for the real estate industry. I pointed out several opportunities available for the real estate service practitioners. I also asked the readers to tell us what opportunities they see in 2013 in the real estate industry.
The Booming Property Sector
According to Metrobank Research, “the real estate sector is experiencing a boom, brought about by a large, historically underserved market which now has more purchasing power than before and is being helped by the current low-interest rate environment. So the boom is quite healthy, expected and well-supported by real demand rather than speculative speculation per se.”
Many banks and property developers agree that the property sector is booming and they don’t see any sign of a bubble. A “bubble” is a situation where the price of an asset, or an entire market rises to a level that is no longer consistent with underlying fundamental value.
It simply means a market condition where the assets are overvalued.
The Bangko Sentral ng Pilipinas (BSP) has put under close scrutiny the exposure of banks to real estate for more than a decade now to prevent a repeat of the 1997 Asian contagion that devastated the real estate industry in the country, and learn from the lessons of the US property bubble that burst in 2008.
Recently, BSP Governor Amando Tetangco, Jr. confirmed to Philippine Star Business Columnist Boo Chanco the absence of a property bubble. But in the same breath, Gov. Tetangco says that the BSP is always alert and proactive in dealing with potential bubble.
According to Mr. Nestor Tan, president of Banco de Oro Unibank (BDO), he does not think that the sector is over-exposed, given that banks remain vigilant and strictly adhere to conservative credit approval and underwriting standards. He stated that banks are compliant with the 20 percent regulatory limit on real estate loans.
Under the law, banks have a limit of 20 percent of their total lending portfolio that may only be lent out to the real estate sector.
Mr. Tan also said that demand-supply conditions remain stable with developers adjusting their project launches with potential demand and price appreciation remains subdued particularly for the low-to medium-cost housing segment.
Boo Chanco stated that according to Nestor Padilla, president of Rockwell Land Corporation, at least for the high end developments, the market is still promising. Mr. Padilla loves to point out that there are at least 20,000 Filipinos with a million dollars to invest and that number is constantly growing.
Mr. Chanco also mentions another observation of Mr. Padilla in that “the prices of property being marketed now are still below the 1997 pre-Asian Crisis levels in dollar terms. And with interest rate at record low, stable inflation and strong investor confidence, there is a market for property developments from reputable institutions with track records.
So how do you profit from knowing these pieces of information?
As the saying goes, “chance favors the prepared.”
First, if you have not registered with the BIR, do it today.
Don’t wait for the time when you are about to close a transaction then suddenly the seller asks for an official receipt from you in exchange for the check for your professional fee.
It’s embarrassing and totally unprofessional to tell the seller that you don’t have an official receipt. Much worst is contacting a fellow broker and asking if you can use his or her Official Receipt so that you can close the transaction.
Second, revisit your wealth goals for 2013. Align it with the current environment. This boom will not last for much long. Typically, the boom and bust cycle in real estate takes six or seven years. When the boom starts, it normally runs up for about 6 or 7 years then it moves into a bust cycle which about 6 or 7 years also.
However, the senior vice president for sales and marketing recently said that the boom cycle of the real estate industry of the country has been going on for 10 years, since 2002. Rockwell Land thought that 2008 would be the start of the down cycle, but the market so far is still on the upswing.
Personally, I think that the boom will last for about 2 to 3 years more before we see start of the bust cycle. Therefore, set your goals to take advantage of the boom while it last and according plan for the bust cycle as well.
Third, identify your niche. Focus on one segment of the market and a particular one or two location. You cannot be a jack of all trade for all segments.
I know of a licensed real estate broker who only handles sale of residential condominium units in Makati City. He does not entertain any other inquiries from other places. If he does get an inquiry not in Makati City, he refers it to his colleagues who are “experts” in the particular location.
Who is your market? OFWs? Expats? Balikbayan? I suggest you focus on a particular segment of the market be an expert in that market.
After revising your goals for this year and identifying your niche, you are ready to go into the next step.
Fourth, revisit your business plan. I said in one of my previous post that you should change your mindset and consider yourself as a business owner. And like a successful business owner, you should have a business plan. If you do not have one, start writing one today. Here are some thoughts to help you with that task.
If you have an existing business plan, make it relevant for 2013 by updating it and making changes to act on the myriad of opportunities brought about by the property boom we are currently experiencing.
Fifth, capture that lead. I read a great article of Jeanna Martinez about 7 Things To Do To Capture That Lead.
Ms. Martinez is a realtor in the US who specializes in residential homes in San Antonio, Texas and surrounding areas. She says that:
“If you are in the real estate business then you are in the lead generating business, at least if you want to be successful you are. Whether we like it or not we must be good at generating, following up on and most important CATCHING leads.
“It’s not enough to just get your name out there; you have to have a good system in place to follow up on phone calls, emails, Facebook messages, tweets, and even the ever elusive walk in lead. If you don’t have good follow up you will find lots of these potential clients leaving as fast as they came.”
I modified some of the rules she follows when she gets a lead.
1. When you get a phone call, an email, Facebook message, PM, tweet or even the elusive walk in lead RESPOND RIGHT AWAY. Return that call, reply to the email, Facebook message, PM or tweet immediately or ASAP, whichever comes first.
2. Gather as much as information you can to be able to pinpoint the exact needs of the client. Then make sure you OFFER ADDITIONAL INFORMATION OF VALUE to the prospect.
3. If the prospect inquired about a specific property SEND ADDITIONAL INFORMATION about similar or comparable properties within the area for them to consider.
4. Set them up on a DRIP CAMPAIGN. This is a technique to keep the prospect engaged with you as a professional. Just make sure that the bits of information you are providing are useful and of value to the prospect. Ms. Martinez keeps her prospects engaged by sending information on a monthly basis. Just avoid being too obnoxious and making a hard sell.
5. For homebuyers who are not cash-buyers, when you talk to them make sure they have been PRE-QUALIFIED. If they haven’t, offer to assist them in getting in touch with a lender.
6. If the lead is via Facebook or Twitter respond via the same medium but make sure you include your phone number and email in the response along with an offer to speak with them over the phone if not in person.
7. Treat every lead with RESPECT.
These are some guidelines for you to adopt to fine-tune your lead generating activity. If you have other rules, tips or techniques on how to capture that lead, we would like to hear from you.
The tips or technique you share will definitely help our fellow professionals hone their craft for the better.