Aaron Zapata

Attention! Are You Watching Or Waiting?

Real estate business coaching

Photo by Razvan Mirel on Unsplash


In his book, Take Cover, Philip De Courcy shares this story:

Growing up in Northern Ireland, I remember my Pastor Ivan Thomp-
son telling the story of a fishing fleet from a village in Scotland heading home. They had been out to sea for several weeks. As they returned, the village gathered at the docks to welcome the boys home. On one of the vessels, the captain, looking through his spyglass, informed some of the crew, “John, I see your Mary,” “James, I see your mother is there,” “William, I see your Catherine and the two boys.” One man by the name of Angus asked the captain if he saw his wife on the dock. The captain looked one more time but informed Angus his wife was not there. So when the boats docked, Angus looked anxiously for his wife but to no avail. Not being able to find her, he made his way sluggishly up the hill to their cottage. In entering the home his wife greeted him with a kiss and said, “Oh, Angus, I have been waiting for you!” Not hiding his disap-
pointment Angus replied, “Ah, but the rest of the wives were watching.” (Pg.80)

As a business leader, I have to always be watching to see what is happening in the market. I have to be observant. I need to look around and monitor the landscape. I can’t sit back passively and react to the events around me. Looking and watching takes the stance of active participation as the leader of the pack.

A leader must scan the horizon putting pieces of the puzzle together without the puzzle box cover.

In the real estate industry, the current correction was easy to predict. The signs were there for the watching. Money was pumped into the economy with pandemic relief funds, interest rates were low, and demand for housing increased with the work from home environment. The unprecedented low rates allowed people to borrow more and bidding wars drove up prices. Some reports show that home values rose 40% during the pandemic. That is impossible to sustain unless things stayed the same. And things never stay the same.

Enter unbelievably fast rising mortgage interest rates. It’s no surprise that home sales came to a screeching halt and mortgage applications have virtually disappeared. At the 2022 Sunwest Bank Economic Forum I attended in Newport Beach on November 3, CEO Eric Hovde showed a chart of loan originations and they are down to a 27 year low! Think about that. If housing transaction volume is already collapsing (down 32% according to his chart from Bloomberg), what will happen in the next few months? More decline.

At the conference I sat next to an executive in the flooring industry that installs flooring in new homes. She said that because they are one of the last contractors to work on a new home she keeps in contact with the concrete contractors. Why? Because they are the leading indicators for her business. When they slow down, she knows her company will be slowing down. Right now, she noted, they are slowing down and she’s watching and preparing.

Third quarter earnings reports were just delivered this week by many real estate industry leaders. The most notable of them came from OpenDoor who emerged as an iBuyer company swooping in and buying homes directly from homeowners, eliminating the Realtor. They competed with Zillow and a few others. While Zillow exited the iBuying business last year, OpenDoor did not. Zillow, at the time looked like the fool, but now, they look like the wise one as OpenDoor just posted nearly a $1 BILLION dollar loss for the Third Quarter 2022. Even with $1.327 Billion in unrestricted cash on their balance sheet and Billions in borrowing capacities, they need to continue making cuts and changes to weather this storm.

More often than not, the watcher who takes action will be criticized when he begins to take actions, because to the average person, those actions aren’t necessary. Noah was criticized for building a boat, right? We saw how that worked out for everyone who didn’t follow him.

How are you doing today? Are you watching? Or are you just waiting to see what happens? Are you aware of the leading indicators that affect your business?

As the saying goes, “Where there’s smoke, there’s fire.” So what signals do you need to pay attention to? What is going to affect your business in the next 90 days? What is going to affect it in the next 5 years? Be a wise leader and take action now.

Don’t just wait. Watch. Take action.


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