Tuesday, August 27, 2024
I’ve been thinking about the long awaited and very welcome words said Friday by Federal Reserve Chair Jerome Powell: “The time has come…” for the group to begin reducing interest rates, as early as next month. For those of you who have been hanging on, getting by and hoping for relief for the past two and a half years, it appears your patience will soon be rewarded. Let’s look at what we know and how you can prepare.
“The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” Powell stated, leaving experts to anticipate a series of rate cuts during the remaining months of 2024.
There are two key dates to watch in September. The first is Sept 6th, when the August employment report will come out. Experts say that report is critical to determining the amount and pace of rate cuts ahead. If it shows a second consecutive month of weak hiring, many think we could see a rate cut of up to a half a point.
The second important date is the day the board meets, Sept 18th. Some suggest a series of cascading one quarter point cuts for multiple months is the more likely scenario. Either way, it seems we’re close to a state commonly referred to as Game On. Are you ready?
Many of us have some preparation to do. Here are some suggestions:
If you haven’t yet had conversations with your lender partners about their forecast for refi levels at certain lower interest rate benchmarks, now is the time. By understanding what they’re anticipating for each new level of cut, you’ll be better prepared to adjust your staffing levels appropriately and timely.
If you haven’t yet discussed pent up demand with your realtor and broker partners, invite them over for coffee and make them aware of how you plan to be ready and responsive in servicing their uptick in purchase deals.
Let any investor clients know should they decide to finance some deals they initially paid cash for, in order to free up their capital again, you’re here to service them expertly as well.
A similar conversation with your builder clients is important, too. Their definitions of great service might begin to shift focus away from pricing more favorable to their bottom line, toward a need for quicker and more hassle-free service.
If you’ve had to ruthlessly cut expenses and make hard decisions in order to get by, you might need to reinvest in information, learning and market immersion as well. Whether that’s your state or federal trade association memberships, media and industry news such as our publications, or signing up to attend new educational webinars, chances are there are some current news and events that you and your staff need to brush up on, in order to handle large volumes of transactions efficiently and correctly.
If you haven’t yet formed a company policy about the disbursement of real estate commissions in the post MLS settlement world, draw one up and circulate it widely in your market. A congested closing room isn’t the place to discover that no one is clear on how commission amounts will be confirmed and paid.
If you have staff hanging on to PTO days, encourage their use now. It sounds as if Santa might be bringing us a very busy holiday season at our offices. And speaking of staffing, if you have employees who are struggling now, it would be a good time for a difficult conversation with them. It can be hard to hear that it’s time for an “up or out” plan; you’ll actually being doing them and yourself a favor. Employees who struggle during relatively slow times rarely do better or enjoy their work more during extremely busy times.
Don’t overlook your high performers either. Make sure you and they have a professional development plan that will help enrich their talents during a crunch. You’ll want to avoid simply leaning into their existing skills once again and risking their burnout as a result. High performers sometimes enjoy different rewards, rewards that help them become even higher achievers are often great perks. Reward your workhorses as lavishly and often as you can.
If you’re mid-implementation with a new tool or software, step on the gas and get any wrinkles smoothed out now. Soon you’re going to need the ROI of greater efficiency, reduced liability, or whatever your original intention was that led you to make the purchase. If you don’t stitch up any gaps now, bad habits will set in, and full implementation success will evaporate in the name of the daily churn and burn.
If you’ve been holding out making an expenditure for new tools that you know will make your operation sing, the time to implement just got shorter. You might want to act quickly and get those tools in place, while there is still a bit of calm before the glorious storms we’ve been waiting for arrive at our door.
This is the race we’ve been crouched in the blocks and waiting (desperately) for the signal to start. Let’s be ready for that starting pistol to fire.
We’ve nearly made it through the grim. So, let’s lace up our shoes, make sure we’re properly tooled, warm up those muscles that are a bit atrophied and …. Let’s Go!
Until Next Time,
Mary Schuster
Chief Knowledge Officer
October Research, LLC