Adjusting To a New Normal

 

Adjusting To a New Normal

The past five years have been the most challenging time frame in my 22 years in  real estate services industries.  Looking back to 2005, bank-owned properties were a tiny percentage of the business, leases were just as rare and the terms “short-sale” and “buy-side” didn’t even exist.  Those items went from being less than 5% of our market to dominating the landscape in less than 30 months with “distressed” sellers peaking at about 85% of the marketplace.  Not to mention that both lenders and title underwriters dramatically tightened their requirements in reaction to the tremendous fraud and defalcations that were exposed, those that survived bankruptcy anyway.


Did anyone adjust smoothly to such rapid and unprecedented change in such a short amount of time?  Was that even possible?  Especially when the old rules were stricken as reactionary and new rules were put in place … then modified … then modified again. (By the way, I don’t think they’re done modifying them.)

Let The Healing Begin

We are now in the fifth year of what has become the first national housing recession.  While there have been some signs of stabilization in the market, we are by no means on our way out of this mess just yet.  But after a few years of continual declines, stabilization is a good thing, right?  Let’s face it, the healing can’t begin until the bleeding has stopped.

While our market is still chaotic, I think we better understand the chaos.  Doesn’t mean we have to like it, but the dust seems to have settled a bit.  We all now have experience in dealing with these once foreign transactions and have learned (& continue to learn) how to work within those demands.  I’m often jealous of people newer to our industries because they have less to unlearn and nothing to compare to.

Where's My Cheese?

The lesson here is simple – the cheese has been moved.  Spencer Johnson wrote the best selling business book “Who Moved My Cheese” back in 1998 and it became required reading by most in the business world.  I don’t think it’s a bad idea to bring that book to the forefront once again.  I still hear too often, “when things get back to normal…”  I quickly interject with, “This is our new normal, so accept it.”  Distressed sales are not going anywhere and tighter guidelines by lenders & title underwriters are here to stay as well.  Expectations by all, must realign accordingly.

The New Normal

Many of the efforts to streamline the entire real estate transaction process were abused which led to fraud, inflated values and a staggering market correction.  Transactions take longer now because there’s more “I’s to dot and T’s to cross” than before.  In fact, the process is more similar to how it was 22 years ago when I started in the industry.  In many ways, the cheese has been moved back to where it once was in regards to timelines, requirements and margins.  So is our “new” normal just the “old” normal, and the decade of ’95 – ’05 the exception?  Maybe we have gotten back to normal after all and just haven’t realized it.