If you're in real estate and don’t know Tim Smith, you should. He’s one of my personal clients serving the whole Coastal Orange County area, brought in over $803,000,000 in volume last year, AND he’s speaking at Summit this August.
The guy is on FIRE, so he clearly knows a thing or two about what’s hot and what’s not in luxury real estate today. I sat down with Tim to talk about the state of the market, how to educate your clients to the fact that it’s the best time ever to buy, and where you should be focusing your energy.
If you want to know about luxury, growing your volume, or being the best version of yourself, watch or listen to this episode, and then make sure you get a chance to see Tim at Summit in Dallas.
In this episode, we discuss…
0:00 – Tim’s take on the OC market
3:45 – Why it’s the best time ever to buy
5:35 – Protesting the housing reports
7:43 – How to get the word out
10:52 – How luxury deals are happening now
12:48 – Off-market sales for the buyer
13:42 – Advising buyers and the problems with developers
16:37 – How to know your market
19:15 – What’s HOT what’s NOT
21:20 – Farming and direct mail???
22:36 – Learn to love eating pickles
25:40 – What’s hot in sales skills
For the majority of my life, I’ve been passionate and dedicated about changing lives by giving away the very best strategies, tactics, and mindset techniques to help you and your business succeed. Join me as we take this to level 10!
Keep up with me and what's new on my other channels:
Website - https://TomFerry.com
Facebook - https://facebook.com/TomFerry
Instagram - https://instagram.com/TomFerry
Twitter - https://twitter.com/TomFerry
Podcast - https://TomFerry.com/Podcast
YouTube - https://youtube.com/CoachTomFerry

Hey welcome back to luxury code, where we decode what the very best agents are doing in the luxury market. So you can take those tools, take those strategies implement in your business and ultimately get better results and nobody better to help us than the tim smith. Cole. Banker newport coast newport coast, newport, beach, southern california.

How are you tim i'm doing? Well, thanks for having me today. Let's move that one up just a tad so tim, i wrote down a bunch of questions. You know, as you look at globally, what's happening around the world. There's some uncertainty, even though the data says we're going to sell 6.3 million houses this year and the luxury market seems to be performing well compared to many other sectors.

What is your broad sense of? What's happening with luxury real estate today, so i'm going to talk specifically about orange county because and if you give a little framework or context for my 22-year career in residential, real estate, the first 20, i really had to sell orange county. Yes and what i mean that what i mean by that is it's a major metropolitan area that i come back to and i think why do not more people not want to live here right, but we just didn't get the demand until coveted and i don't know Exactly what it is we can unpack that, but it has a lot to do with people not having to work from offices like they used to so now, they're hyper focused on. Where do i want to live, and so we're now seeing historic demand? Last year we sold 264 homes in orange county 51 of the buyers we worked with or bought our properties weren't from california. How radically different is that, from times in the past 12 and a half was my highest percentage wow right, so we really are kind of becoming a second home community, we're pitching out the blue or the middle class.

So it's like now newport beach, laguna beach. Dana point chronomar beach, they're on everybody's, mind, yeah and that's something that's very unique. So it's like and, as you know, our marketing has been hyper focused always on outside of california right outside of orange county right, because you always have that struggle, local buyers, local agents. They have an allergy to paying highest prices right and that's what i go for so so i would say that going back to your question, understanding that context, the thing that's making me crazy right now, i'm going to call it the real estate propaganda.

Please right everybody's putting out these housing reports that we're going in the tank and when you hear the buzzwords inventory's up 60 since january, yes, that shit's scary right sales volume is down 27 from this time. Last year inventory, the entire inventory in orange county has all had 18 has been reduced. But like you unpacked that - and this is what i see - yeah we're at 40 of normal inventory, which is the last 10 years exactly 2020 4100 homes, 2012 7100, we're at 2100 right right and the reason and that's all of orange county, not coastal, where you specialize Out a little more, you realize that the majority of the new inventory that 60 is north orange county or yeah, the seller that always likes to peek their head out when the market's at its peak and if their houses were 10, they want 14 or, if it's Worth 8, they want 16.. So what's going to happen, next price reductions and lower sales volume, but if i go out with a buyer, i'm taking a buyer out from arizona tomorrow sold his house in arizona sold.
His house in cabo sent him everything. He could look at from dana point and we have three homes to look at right and he's like none of these are that great. So how do we help so, but yeah yeah yeah? No, i know i know, and i think people are getting numb to bad news. Then you throw the stock market, you throw straight, you throw inflation, there's just so much to unpack, but i feel like it's our job to advise people, and i still think it's the best time ever to buy the house that you want.

Why? Why why why? Well, you go back to what's the definition of a good deal. I would say anything i buy that i hold on to for 10. 15 20 years is going to be spectacular. Okay, so anyone can even argue with the number of millennials coming in the marketplace.

It could be three years so as long as you're not looking to spec it. My problem is still today. I don't have any good inventory to show people, so this is what we're doing we're going to look at the three homes that are available that are subpar and then we're gon na go look at the teardowns and the in betweeners, which that's a long putt. You have to think of entitlement, then you have to go.

Look at what's the cost of construction right now, which is driving people that good inventory, which we still have, none of so so what's selling, what's not selling in the in the coastal luxury market right now. So if it's priced with energy right, what does that mean? Comps are a few percent above comps; okay, it's all selling okay right now, but there was a time when it was like four years or newer was brand new and it sold okay. Those are older, there's two product types yeah, but we're running out of the product type that sets all the trends that and that's the new construction turnkey with 51 percent of buyers coming from around the state. They don't want to do a project, but now they're forced to go look at the law with approved plans, even though they don't want to go through the building process right, so they're going forward with a little bit of heartburn.

But it's like: okay they've been watching the market for six months. Nothing has come up that would really hit their strike zone anyway. So it's like you got ta, be forced to do what you have to do to get the house you want. So what's not.

What's not hot so what's not hot is overpriced in between or lots okay, so so this is interesting because because my note for you was what are you hearing from sellers today - and you mentioned all the normal stuff and by the way in every price range, it's Interest rates inventory inflation, it's the war in russia, it's the stock market and more. But my question is: how are you helping to educate, broadly your marketplace and then differently when you're sitting down one-on-one, so i'm i'm actually like going and protesting all of the housing reports. Specifically to orange county and i'm doing monthly updates and we're doing a bunch of different stuff, because it's just not accurate right and i understand you know showings, you can't dictate everything you do on the amount of showings from last year at this time, because when people Get bad news it's going to give them some pause. Interest rates are up from 2.875 and conforming to 5.875 for conventional you're.
Looking 2.75 to 4.25, that's going to make people think, but is it going to stop them from buying? No, no everybody keeps on telling me prices are through the roof. I still think that we are so undervalued and you can still buy homes below replacement cost right now i don't know if it is, i don't know if it's so much that pricing's gone up or are dollars being that devalued people say inflation's 7.6. When you look at the real, it's probably like 15, some things for me personally, we just ordered the family dinner from panini seems to be a benchmark for us right. 85 bucks yeah, i swear two months ago.

It was 39 bucks right right right. We go on the same trip every year our room went from 2200 last year to 6 500 this year. So it's like, i think our dollar is not becoming like the peso, but it's being devalued as fast as prices are going up, but the best way to hedge inflation, in my opinion, is real estate. Absolutely - and i think everybody that's smart - knows that and i think all of this noise in the marketplace, the smart buyers, will continue to buy they're just going to use it as a strategy and hope that this this scares the sellers a bit so protesting the housing Reports everything you just said: you know we if we take this podcast and just take that piece and then put it on like every possible news station, every possible social site.

Every blog, you know every rag. How do you get the word out? So many people are so confused right now. How do you get the word out at scale? Well, so i had a moment, probably four weeks ago, where i woke up at 2 30 in the morning. I'm like is the housing market falling and i couldn't go back to sleep like i'm building a house, i'm going through all this stuff, i'm like i'm long in real estate, right right, um and then that weekend i had like five or six of orange county's smartest Wealthiest real estate people tell me the market's going in the right right, and so then i had to think about that and i had to go back to the data and i'm like it's just not.

If that's the case, why is there only two homes for sale in the port streets and they're, both terrible or two in emerald bay, they're, both terrible or three here, like? I am still struggling really struggling, uncovering inventory that i know people will pay for and that's what i'm finding inventory is increasing, but it's not the inventory that people want. So let let's segue into two things there first, but what am i saying you have to change that question? That's escape that skill. So i'm just saying, are you getting this out? This is horseshit, it's horseshit and the thing that i think is the weaker approach. Is i think, a lot of agents at this point can just be like okay.
This is a great way to get price reductions. Let's go and i don't think it's time yet i don't think that's time yet to start you know, whispering and doubting, because sellers will really they'll really hold on to that, and i don't think that you should right now because i'm not seeing that and we're still Seeing record sales last year we had our best year ever. I think that i've had an up. I think i've been growing ever since we started coaching and every year again, i'm like how can we grow more right? Last year we hit just over 800 million this year, we're at like 4 25 430, already, which this is first quarter.

15. Second quarter, 35 right i mean if everything goes well. This is a 1.2 1.3 billion year yeah and i think how can it continue to grow? Well, i think the strategy is everything that matters and what's interesting is the sellers. They need reassurance.

Yes, right now, i'm not saying i'm not saying every because you said what am i saying specifically: there are homes right now, which i don't think you should take the risk of not pricing it up. Here. It's like we are in a transitionary time. Your home is not one of those homes, that's going to get the record price and if you as a seller, need and want to sell now is the time not to be haphazard.

You need to be prudent price it here, and this is a strategy. So i think specifically, you have to talk in different marketplaces right, yeah, so marketplaces neighborhoods. It's always like you look at all the data. It always goes back to the same thing.

It's we. You know we do the this weekend. Housing show and we're like here's what's going on nationally right inventory is up by this much and then i call my clients in boise idaho, and they go nowhere backwards, like all my clients in florida, they're like what are you talking about texas, no we're backwards by Five percent right now year over year, right, so every single market is different. Two two things i want to hit you with one: are you seeing any of the luxury clients turn to mortgage products like arms? Are you just seeing more all cash deals? What are you seeing there? I'm still seeing a ton of all cash deals that are not contingent upon loan and an appraisal that are still getting financing, because relatively interest rates are still super low, yeah they're from 2.875 to 3.7 or four and a quarter.
But it's like long term. You still want to hit that there's. One thought i just had, because i'm starting - and this is 22 years of selling and trying to set records in everything that we do so keep that's the context as an agent. You can't be both ways and what i mean you can't be one way with sellers and the other with buyers.

I agree and i think that if you're one way of sales and then what the other way with buyers you're really just a buyer's agent - that's trying to get a better than market deal and that's not going to serve you because i do believe agents are actually Bending the markets, we're changing the markets when somebody comes to me and they say i want a deal, i'm like this is not the market the deal is you get this property right and so your ability to convey that because sales is a transfer, it's a feeling And i believe it i still believe in my heart of hearts were a fraction of the cost of all the other major metropolitan areas, but when you check the boxes for what orange county coastal yeah really ha, we have everything here. Yeah - and i could give you a million examples - you go to the summit club in vegas, which is a silver lane. Can we project they're selling paired homes for 3 200 dollars a square foot? We have a hard time getting that on oceanfront or bayfront right. You go to like texas or idaho, or miami it's five, six, seven, eight thousand a foot, we're not there! No and it's like we're better and i know we're better and i can sell it better and i love it here and every time i travel when i come back to my little bubble.

That's safe great lifestyle, clean great schools. I want to do everything i can to protect my little bubble, so what about off-market transactions? So how strong is it now 30 of our business last year was off market on 800 million dollars in sales. 260 transactions? That's a that's a big number! It's probably the most it's ever been, but this is specifically and what i think about. I tell sellers this.

I've told multiple sellers this as i'm transacting on their property. Why on earth would you sell this off market like i guarantee you'd get more? If you listen it, i don't want to do it. Yeah, like i've, had so many now, i'm just like okay i'll say it once you don't want to get the most. That's fine, i'm going to let my buyer get a good deal yeah, because there's still a big category of buyers or sellers that don't want to hit the market and there's been more.

We've had way more opportunities in the last couple of years to find those off-market deals and double-side them yeah, and they are always better for the buyer right right. So speaking of buyers uh, we talked to luxury sellers and we're gon na. Do some fun in a minute called: what's hot, what's not, but how are you advising buyers i mean so much of your passion and energy about coastal orange county has come out in droves. Already on this show yeah, but like our mutual friend, andy c, who would say we're in a buyer's market, do you want to buy? Why? Because anything you buy today that goes up in value was a deal right right and so, interestingly enough silicon valley, right now, transactions are down right.
Most of his market is really tied to apple stock. That's like the one correlation we see right, some of our new york city, clients january february march april, unbelievable may slowing down a little bit, mostly because the stock market. What do you? What are you saying to buyers that are maybe a little more hesitant today? I mean it's interesting because i'm spent i i do everything i can to spend my time wisely. If there's a buyer, that's on the fence and i spend one day with them and they're not committed to buy, i push them off.

Yeah like i just don't have time to sell people on the market. If they can't see it yeah, they can't see the value. So that's first, but secondly, the last two homes. I've bought i've paid list price because i knew what i wanted yeah so like i'm telling them specifically don't ever let your money get in the way of your buying.

If this is what you want, do you really care if you overpay 300, 400 500 assuming you're, not buying it to flip it, but i'm not even working with spec, like developers like i used to, because i just don't have the patience for them to go through Their pro formas and here's what i need - and you can't justify it, because you can't the data's not there, but it's like i'll give an example. We sold three homes for a developer on newport island january february and may of last year for between six and six four right. So i knew that we were underselling him because he wanted to pre-sell them because he just did which i'm like do not pre-sell them. Even when they were finished, we were closing them, like we left a million dollars to easy.

That's what i said just because of the acceleration, that's what i said yeah and he's like: no, no and then in july, an inferior home in a similar location. That was five years old sold at 7-2 and then we sold the house two months ago. This is less than a year. Apart for eight seven, seven, five, the market is moving faster than that it's outpacing, the the data yeah, and so it doesn't make sense and the developers i've talked to i met with a developer last week, were selling for his homes in san clemente.

How about that? North bay front deal, he passed on a lot that he owned because he needed eight million dollars to make money yeah and he thought he couldn't it just sold for 10 nine because it was new, yeah sure right. So it's like that's what's happening all right. You are for my team - that's watching this, like he has such a wealth of knowledge like if everyone, if every person listening right now how tim this is. This wasn't on my list, but we talked about a bunch.
What does one have to do? Besides curiosity and insatiable lust to be a market expert, what do they have to do to understand their market at the level you you understand it and that you could just tell story after story about it? What does what do you do in your routine? Someone knew is watching this, like, oh, my god, like the guy, knows everything how okay. So i talk with my agents a lot about this and there's a few things in my 20s. It was all about the product right in my 30s. It was all about how to sell, and in my 40s it's all about the story and half my appointments have nothing to do with anything.

I do except for stories, and i don't even go through my listing presentation. I just listen to them, listen to where they're at, and i know i have a story to show them why we can do what we want yeah and, unfortunately, i think there's this need to know everything before you can really start acting, which is completely wrong. Right. Yeah and i have an agent specifically who's - probably one of my best agents and she was that way like once.

I know everything then i'll have the confidence to say the things that you say or do the things that you do and now that she knows everything you know what she says. Oh confidence is a choice right, not to say you shouldn't, take every opportunity to learn everything about your market, but do that in like the twilight right like do that at night, and then you got to be in front of people. I have an interest. I have an 18 year old kid yeah that his mom has been referring me business for years and he's rough around the edges right and everybody in my team, including my office manager like don't hire him, but in the last three months he has literally taken me On nine listing appointments that were unbelievable, this is the newport coast guy.

I think yeah and they're like unbelievable to the extent because he's bird dog, i can't even teach it right. He doesn't know anything right, the stuff he says, but you know what he knows, how to get an appointment. Unlike anybody in my group has ever shown me right and if i had to just make a prediction: if he's willing to do the work, to get up to speed on being a market expert which takes a long time, he will be my true mentee and i Think that he can surpass what i'm doing, because he annoys me like he'll, do things to me and get me to do things that i don't want to do and i'm like: how is he doing this and he's 19. yeah yeah? So it's like, i think, there's two parts of it.

Having the confidence and understanding confidence is a choice, yeah, and even if you know everything it's not going to all of a sudden make you be that prospector, you have to choose to be that prospector bam. Okay. Let's play a game called what's hot, what's not, i got i think, 14 things written down. You just tell me hot or not hot or not open houses, hot hot farming uh, not not direct mail.
Uh, not interesting, uh emailing to your database, hot instagram, hot calling. Your database hot just hot fire. Thank you very much, uh asking everyone. You know for a referral for a seller fire.

I know it's like speaking. It's speaking. How do you ask? Have you had any thoughts of selling? Well, let's talk about you yeah. So we have.

We your house, let's finish first and then you can close me: okay door, knocking uh, hot okay. I love it. Uh short form video instagram, the short form that kind of fire super fire. Okay, long form, video uh.

I think fire too, but it's all about having the right content right right: okay, uh, google, ads or pay-per-click. Well, i think, i'm just going to say digital strategy, yes in the right place, if you're, if you're targeting geographically and if you're, targeting specific demographics right fire. Yes, yep we're on the same page, uh work, ethic, uh fire right now. Yes, mental toughness and mindset like everything, double triple fire leadership, skills, uh fire, tim smith, yeah.

I took a week off i had like hey. I was telling my team today yeah. I literally took a week off a bucket list week. We played, i know, play cypress points yeah wednesday, and then we got in the car and drove to gabe game, one of the western conference finals.

Yes, and i'm like man. This has been like the first week. I haven't even like looked at my phone, i'm just letting, and so i've been like crushing candy crush i've been doing all that working out, so i'm ready to get but tim smith. I think overall, hot okay, i would say yeah, i would say i'd, say: piping, piping, piping, okay, farming, not direct mail, not it's! Just like a big part of your business was farming in direct mail.

So what happened? There's one telling everybody anything that you're doing hoping somebody's gon na call you passive, yeah, it's crazy! It's like everybody, wants to talk about. What's going on right and there's always just there's a back door, a window, an attic where you can just sneak in there and get listing appointments and people just don't get that so when people like, oh i'm, farming, i'm like! Oh, are you kidding me right now? Yeah like if you're not out in front of people having conversations like save the money, i'm still farming still doing all that stuff. But it's all about you being out there yeah and you really being like that sentinel in a tower for sure, telling people, and now, when i'm telling people that are my people, that i've respected for years and they're telling me the market's falling i'm just like. I'm.

Not seeing it that's not what i'm seeing and you know what i used to just subordinate to your view, i'm not doing it yeah and it's supporting me and we're still getting, because this is a transitional time and i really believe bad news. People start to grow. Tired of it right and there's just been so much bad news now, i'm not saying we're not in a transitioning market and i'm welcoming the winter. You know how are you doing winter sure for sure winters are my growth growth growth markets, we're just not in the winter, yet it's so interesting uh how up like i talked to all these hedge fund guys, and especially all the crypto guys right now, they're, like Oh, the whole world, it's over and i'm like or or or real estate is still hot, and you made some investments and things that maybe are a little too volatile.
You had no control of them like. Let me tell you all my rental properties, hot hot, all my personal residents hot, and if you think that you're not like, if you think you don't have influence over, what's happening in your marketplace, you need to check yourself because you really it's all about mindset right Now right - and i think, there's a few things - steaks in the freezer mm-hmm right. One thing i really 1.0 steaks in the freezer. Everybody should be investing in real estate today.

If you can't afford go to north carolina, go do whatever, because i have so outperformed my ability to make money with my steaks in the freezer and the 2.0 version of steaks in the freezer. Is the steaks actually multiply bingo, you need more freezers right. The other thing i've always said is, like you got ta find your vision. You got ta, listen to your heart, but you have to learn to love pickles, the things that you don't wan na do right and when i was a kid i hated pickles and i have a million stories of why i kept on eating pickles.

I don't know when i started liking them, but that's this life right you're going to have to do things. You don't want to do. That's broccoli, asparagus, all those things. It's it's email, instagram door, knocking the things you don't want to do most do them, and i have all these funny texts with the casey lester's, the rob cams, all the people here, where it's like you eat the frog, just get it done yes, and do it Flamboyantly the other thing in relationships, i'm learning now more than ever is we have to fill the tank and i'll give a quick story.

I came back from cypress point had an epic time and we were going to drive to get dinner with my wife and her car was on empty and her tire was low and it's something she always has wanted me to do. Yeah because that's what her dad did for her mom yeah and i just haven't, done it yeah, and then i thought, if something. If someone in your life wants you to do something, and you don't have to give up yourself to do it, just do it and do it flamboyantly, because the one thing they want you to do is worth everything right and you just can't go around on empty Tanks expecting and now more than ever, we need a culture. We need people, we need to fill the tank and the greatest story.
I've heard recently when it comes to planting seeds, steaks in the freezer eating pig will fill the tank solely is the pilot that landed in the hudson river right. He spent years putting stakes in the freezer filling the tank planting seeds and they say that landing was so difficult if he wouldn't have done that. We never know when we're going to have to take a big withdrawal right and he did it and he saved all these people, so we need to always be focused on that long game. It's so interesting.

So, for me, thinking about the summit which you're going to be at we've got all kinds of fun things, but we'll see change my summer plans to be there. Thank you. I love you even more and i'm not going to jen blue sorry. Ryan.

Oh, oh sorry, ryan uh, but one of the things that i'm asking ever to think about right now in this environment is there's five. Let's call it key disciplines, work ethic, mental toughness, leadership, repeatable relevant marketing that works and sales skills, and the only thing we didn't talk about was sales skills. What's hot, what's not about sales skills right now. So for me, there's we found the magic bullet and i don't know if it's tied to everything that we're doing this year and we're having another epic year but cyrano.

Oh yeah, like there's something there's something about now when it's all about storytelling understanding, your client and listening and trusting how to work with them be prepared. But it's like there's so many tools out there and now, even now, i'm like going back to the tools going back to the vault to sharpen the saw right and like with serrano there's, not an appointment or anything. I do even in my personal relationships. I look it up because, if, like i have your dna code of how you like to be talked to and how i should talk to you as a buyer and as a seller and how to negotiate.

Yes, and i trust that it's just going to mitigate so much just stuff - you don't want to go through to me. It's um, it's like i'm old school because of my nlp training. It's talk to people in their model of the world, but see if i can get my ego out of the way and just talk to you all that is nlp. You have to be a professional disc profile, but that's what cereal does.

I know yeah things and at first i'm like i don't trust it and then it just like blew my mind and then it not only blew my mind about just having the sales skills, but preparation like preparation, if you you know, fail the plane, you plan to Fail yeah, you should be prepared now. I can't be prepared if you're going on 300 listing appointments a year, there's things you're not going to be prepared on, but knowing your clients and what and listening is like the key. I agree: skills skills, skills, skills, skills timmy. This show was fire fire fire.

I appreciate you, hey newport beach, california, but really you know seal beach down to san clemente, all of south california. People give them a call. Thank you so much for contributing always hey. Take some notes like subscribe share this.
If you've got a couple friends in the luxury market, but any place in the world, if you got value from this share this message and let's get this fire into their hands and their head and most importantly, into action all right guys, we're out you.

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