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Q4 Economic Snapshot: Interest Rates, Inflation Weigh On Housing Market

An abnormally hot real estate market fed by low interest rates and the unexpected burst of buying during the COVID-inspired escape from the city may be finally cooling down in response to rising interest rates, inflation and a skittish Wall Street.

While real estate is taking a direct hit from rising interest rates, inflation is also reducing potential homebuyers’ buying power, especially in the low to mid-range properties. But there are a few upsides that could help us weather the storm.

The team at Alliant National has compiled information on the data points that will most impact the real estate market in Q4.

Inflation and Supply Chain

Two of the biggest challenges in 2022 are likely to persist through the end of the year and into 2023, inflation and supply chain disruptions. Additionally, the war in Ukraine has resulted in Russian energy supplies being cut off to Europe and economic pressures triggering inflation, the rise in interest rates, and potential recessionary trends are creating a confluence of uncertainty.

Concerning current economic trends, the September edition of the Federal Reserve’s Beige Book, indicated that economic activity was unchanged, since their July report, with five Districts reporting slight to modest growth in activity and five others reporting slight to modest softening. However, the report also noted that the outlook for future economic growth remained generally weak, with districts noting expectations for further softening of demand over the next six to 12 months.

Market Fundamentals Remain Steady

Despite deteriorating conditions for some home buyers, steady employment numbers should keep real estate moving through the end of 2022. Although the number of buyers competing for each property has decreased in the last few months, homes are still turning over relatively quickly and, in most regions, are sold at the asking price or more.

Continued tight inventory is expected to keep most markets competitive through the final quarter.

While there is no doubt that the real estate market is likely to continue to slow, especially if the Federal Reserve follows through on yet another rate hike, economists remain watchful of other indicators that could bode well for softening the impact.

According to Fannie Mae’s most recent release, GDP is projected to grow 1.3% in the third quarter of this year, followed by 0.7% growth in the fourth quarter.

However, most economists agree that consumers have been far more unpredictable in recent years and better than predicted GDP growth in Q4 could mitigate some of the other headwinds.

Home equity, another positive indicator for the housing market, has increased dramatically over the past decade. The value of homeowner equity in the United States increased from approximately $8.77 trillion in 2010 to approximately $21.1 trillion in 2020, according to TransUnion. CoreLogic reported recently that homeowners gained another $3.6 trillion from 2021 to 2022 as home values continued to escalate, providing some solid financial strength to help homeowners weather a potential downturn.

First-Time Homebuyer Numbers Dropping

During an October Research webinar in September, Selma Hepp, Executive, Research & Insights Interim Lead of the Office of the Chief Economist for CoreLogic noted that the real estate market is experiencing its biggest hit from first-time homebuyers, who are increasingly squeezed out of the market by the trifecta of higher prices, higher interest rates and inflation that is pricing them out of the market.

In spite of that reality, first-time homebuyers, though making up a smaller percentage of homebuyers in recent months, did bump up their participation in August.

Part of that continued interest could be that many buyers are still finding buying more appealing than renting in markets where rents have escalated faster than monthly mortgage payments in recent years. That reality combined with increasing wages in some sectors is helping offset the trifecta.

Strong Employment Outlook Encouraging

U.S. employment numbers have remained strong through the summer, with the economy adding 293,000 jobs In June, 526,000 in July, 315,000 in August, and 263,000 in September, in spite of recession concerns that predicted otherwise. There are 2.0 job openings for every unemployed person, so the demand for labor is strong and should remain so through Q4, though job openings appeared to be on the decline in October.

In mid-September, the Q4 ManpowerGroup Employment Outlook Survey (NYSE: MAN) indicated that the global labor market was likely to remain strong with steady hiring expected to continue through the remainder of 2022. 

ManpowerGroup Chairman and CEO Jonas Prising reported the need for technology talent along with the growth of employment opportunities in finance, banking, and insurance are keeping the labor market strong, especially in the U.S. This along with the fact that the U.S. labor force participation grew to 62.4% in August bodes well for the real estate market as we finish out 2022.

While employment remains strong, the Conference Board Economic Forecast for the U.S. Economy, released on Sept. 14, forecasts 2023 GDP growth will slow to 0.3% year-over-year.

Male Fraudster with phone on dark background

Claims Blog: BEC/EAC – They’re (Still) Here!

The Federal Bureau of Investigation (FBI) has labeled business email compromise (BEC)/email account compromise (EAC) as “one of the most financially damaging online crimes” as it is “the top cyber threat.” BEC/EAC is a scam in which fraudsters trick an unsuspecting party, typically by using a variety of social engineering and phishing tactics, into making payments to fraudulent accounts.  

Since 2016, over $43 billion has been lost through BEC/EAC attacks. In 2021, U.S. losses attributed to BEC/EAC cybercrimes were reported to be almost $2.4 Billion. This is more than one-third of the total cost of all cybercrimes reported to the IC3 in 2021. In a recent article from Security Magazine, the author noted that email cyberattacks have increased by 48% in just the first half of 2022. It is no surprise that the title insurance industry has been the target of fraud schemes for many years, especially with wire transfers being utilized more often.

Some common schemes we continue to see include:

  • Seller Spoof – fraudsters impersonate the seller (using an email address that may only be slightly different from the original, or using the actual seller’s email), and provide alternate bank account information for the seller proceeds.
  • Lender Spoof – in a transaction involving the payoff of a prior lender, fraudsters impersonate the prior lender. They often modify the original payoff provided by the prior lender (or create one) with wiring instructions for a fraudulent account.
  • Buyer Beware – fraudsters pose as the settlement or real estate agent using a similar email address, and instruct the buyer to wire their down payment funds to a fraudulent bank account.

There are many ways to protect a person or a business from becoming a victim of these costly schemes. A few tips include:

  • Meticulously examine the email address, URL, and spelling used in any correspondence. Fraudsters use only slight differences hoping you do not critically analyze the spelling.
  • Be suspicious about opening any email attachments from someone you don’t know and be wary of email attachments forwarded to you as they may include malware or other malicious software.
  • View all changes to wire instruction with extreme caution.
  • Always independently verify with the company any payments or wires being sent to a third-party by contacting them at a legitimate number, and be leery of any last-minute changes to account numbers or payment procedures.
  • Confirm with the intended recipient that the wire was received.
  • Be extremely suspicious if the requestor is pressuring you to act quickly.

If you do become a victim, do not wait to take the next steps since time is critical in this process. Have a plan in place and be prepared to:

  • Notify your office management.
  • Notify your financial institution and the recipient’s financial institution.  
  • Contact local law enforcement.
  • Contact your local FBI field office.
  • Contact your cyber-insurance, escrow security bond, and error and omissions provider.
  • File a complaint with Internet Crime Complaint Center (IC3).
  • Contact your title underwriter.

With our increased dependency on technology and the pace of our industry, we cannot let down our guard – we must stay vigilant! Heed the warning that fraudsters are not slowing down or giving up on these fraudulent schemes. If you are presented with any of these situations, the key is to be able to recognize the scam and then shut it down before it can infiltrate your transaction and create a web of issues.

You can learn more about identifying and preventing fraud by downloading Alliant National’s white paper – Escrow Fraud/Social Engineering: Recent Schemes and Prevention Tips.

Resources:

Escrow Fraud/Social Engineering: Recent Schemes and Prevention Tips, Alliant National Title Insurance Company

Email cyberattacks increased 48% in first half of 2022, Security Magazine: https://www.securitymagazine.com/articles/98145-email-cyberattacks-increased-48-in-first-half-of-2022

FBI – Business Email Compromise: https://www.fbi.gov/how-we-can-help-you/safety-resources/scams-and-safety/common-scams-and-crimes/business-email-compromise

FBI – Internet Crime Complaint Center (IC3): https://www.ic3.gov/

Leads

Are your leads qualified? 

Remember, not all leads are the same.

Anyone who has ever dabbled in marketing knows how complicated it can get. From preparing campaigns to working on branding, sometimes it feels like you need a pair of extra arms to get everything done. Yet seen from another lens, marketing is also relatively simple, as these individual activities often revolve around a singular purpose: generating leads. But as you likely already know, not every lead is a good lead. Let’s look at how to ensure that yours are qualified. 

What are qualified leads?

A qualified lead is a lead that has been brought into your ecosystem and evaluated by your sales team as being worth pursuing. Qualifying leads is important for any business but especially for smaller firms with limited time and resources. By applying the right amount of scrutiny, you can decipher whether they truly intend to work with you and where they are in the buyer’s journey. Armed with this knowledge, nurturing your leads and turning them into customers becomes much easier. 

Map to buyer personas

One of the first things to do when reviewing leads is to determine whether they map onto your “buyer personas.” Back in 2020, we covered what goes into building effective buyer personas. Not only must you establish your target audience’s demographics, like gender, age, geographical location and language, but you need to also think about psychological factors like motivations, goals and frustrations. 

As you can probably guess, a good way to determine if your leads map onto your buyer personas is to include the right information fields on your website’s lead generation form. For instance, if your ideal buyer persona is between ages 35-50 and is a tech-centered real estate agent, you need to request that information from anyone who is filling out your form.

Remember the buyer’s journey

It is not enough to have a lead map onto a buyer persona; it also needs to be in the right stage of the “buyer’s journey.” The different psychological stages a lead moves through include: 

  • Identifying that they have a pain point or problem (awareness), 
  • Researching potential solutions (consideration), and 
  • In the case of a real estate agent, eventually deciding to work with an agent whose services best fit their unique needs (decision).

Using your customer relationship management (CRM) software can help determine where your leads are in this process. For instance, if you have your email marketing software integrated with your CRM, you can easily check and see which contacts are performing which actions in relation to your marketing emails. If a lead has received your emails before but has yet to open them or interact with an element like a hyperlink, then they are likely not ready to enter into a relationship with you.

See, what’s likely happening here with these theoretical leads is that they are interested enough in your business to not unsubscribe from your mailing list, but are not actively absorbing what you are trying to communicate. Therefore, they likely do not have an acute pain point that requires an immediate solution provided by your products or services. When leads are in that state, they may be unlikely to respond to a hard sales pitch and will require further nurturing.

Lead qualification models

Once you ensure that your leads map onto the basic parameters of your buyer personas and are in the right headspace to make a move, you may want to apply additional scrutiny. You can accomplish this by deploying a lead qualification model, such as: 

Each of these models have their own pros and cons, but each can also help someone working on the sales side of things to make an effective and informed decision on which leads merit pursuit. 

Your ticket to better leads 

Let’s face it; few things are more exciting in business or marketing than the prospect of working with a new customer. A new lead kicks off this process, which makes it tempting to spring into action and do everything in your power to convert the lead. 

However, it’s smart to qualify leads before you move forward, or you risk overextending yourself and doing a lot of work that will ultimately fall flat. A steady, strategic approach, where you leverage all available sources of information, is a better way forward. It allows you to better allocate finite resources and expand your client base as a result.

CISA Cybersecurity Awareness Program 2022 banner

Get Ready for Cybersecurity Awareness Month

October evokes many things: skeletons, ghosts, pumpkins and, of course, Halloween. Yet for anyone wanting their workplace to operate efficiently and safely, October should be known for something else: 

#CybersecurityAwarenessMonth! 

This 31-day period is a perfect reminder for businesses to review and, if needed, revise their cybersecurity strategy for the year ahead. Let’s learn more about this awareness month and how you can seize the moment to fortify your company’s cyber approach. 

Where it All Began

Cybersecurity Awareness Month started in 2004 when the U.S. Congress gave October that official designation. Today, the Cybersecurity and Infrastructure Security Agency (CISA) and the National Cybersecurity Alliance (NCA) lead a collaborative, public-private effort to raise cybersecurity awareness nationally and internationally.

Each year, Cybersecurity Awareness Month initiatives are organized under a different theme, with 2022’s being “See Yourself in Cyber” – an urgently important message. It advocates for people to stop seeing cybersecurity as an inaccessible topic for the select few and instead view it as something in which everyone can play a role. 

Four Main Pillars

According to CISA, beginning to “See Yourself in Cyber” involves acting on four key priorities, some of which we’ve already discussed on this blog: 

By taking these basic steps to protect your information and privacy, everyone can gain more ownership over their online life and prevent costly incidents. 

Become a Cybersecurity Paragon 

The silver lining when talking about cybercrime is that more attention is being paid to cybersecurity these days. A trickledown benefit of this enhanced awareness is that more resources are now available that can help even those unfamiliar with cybersecurity improve their firm’s digital defenses. 

One such example are the efforts of the CISA. Each year during Cybersecurity Awareness Month, CISA invites interested parties to join them as “cybersecurity partners.” Those that do receive a toolkit with everything they need to audit their own security posture and raise awareness within their company and industry. Elements of the toolkit include cybersecurity 101 presentations, tip sheets, content assets and much more. 

Visit CISA’s website for more information and to sign up as a cybersecurity partner. 

You Can Prevent Cybercrime 

Do you remember seeing those U.S. Forest Service ads where the iconic Smokey the Bear would proclaim, “Only you can prevent forest fires”? You don’t have to be a marketing whiz to see the beauty of that campaign. Simple, direct and powerful, it outlines the essential role we all play in preventing a widespread problem that can carry a terrible cost if it goes unchecked. 

The same message holds true for cybercrime. A ubiquitous problem that can lay waste to individuals, businesses and even entire communities, cybercrime is nothing to joke about. If you’re a small business owner, for example, one bad attack can threaten your longevity as an enterprise. 

But instead of becoming intimidated and reactive, events like Cybersecurity Awareness Month can inspire us to become empowered and proactive. We can all choose to “See Ourselves in Cyber” and take action to create a safer digital community. 

Woman at office video chatting, and making heart shape

Creating Customers for Life

Creating superior experiences for your customers

Service-based industries live or die by the quality of their customer service. While other industries rely on their products or supply chains, service enterprises primarily differentiate themselves through the experiences they offer. Today’s savviest service-related companies are acutely aware of this. They also know retaining customers is much easier and economical than finding and converting new ones.

Recently, Missy Trubatisky, Alliant National’s Underwriting and Escrow Training Manager, called upon her years of title insurance experience to develop and present a training entitled “Customers for Life.” The presentation offered numerous examples of how title agents can build a superior customer service program and ultimately grow their businesses. Read on for some of the major takeaways.

It’s About Mindset

Perhaps the biggest thing to remember about creating “Customers for Life” and delivering superior customer service is that it is a bigger endeavor than any one action or campaign. Instead, it requires a complete shift in mindset. You must treat every deal like it is the most important of your career. Is this asking for a lot? Maybe. But it’s what your customers expect. And if you are in the services game, why would you want to do anything else? Missy says there are a few easy tricks to start shifting your thinking on this matter.

First, make every situation an opportunity to succeed, not an obligation to fulfill. Next, remember to present yourself professionally – every day and during every closing. Lastly, remember the golden rule, and then go one step further. Treat others not only as you want to be treated, but also as you would want your mother or children treated in the same situation, Missy says.

Opportunity vs. Obligation

You might be thinking: “Sure, it’s easy to talk about changing your mindset. Pulling it off is another thing entirely.” However, Missy says that when you start breaking it down, you quickly realize that it is not quite a Herculean lift. Instead of looking at it as a major undertaking, view customer obligations and opportunities as roughly the same thing.

We all know that working with customers entails at least some obligations. What matters, though, is how you choose to look at it. For instance, agents need to deliver the title commitment – typically within 20 days. Your obligation here is to deliver the commitment before the 21st day. Your opportunity is to deliver it in less than a week. In doing so, you demonstrate superior customer service; you provide the WOW factor. Making an obligation an opportunity isn’t as hard as you might think. It just involves a subtle shift in mindset, she says.

That’s Not Quite All

It would be nice if that was all it took to deliver superior customer service. But there is a bit more to it than that. Displaying ethical behavior, maintaining a sterling reputation, and engaging in effective communication also influences whether you can create customers for life.

How can you display ethical behavior in business? That’s a deep question. There are so many layers to ethical behavior, but for simplicity’s sake, Missy says you can boil it roughly down to integrity and character.

Your character is what others believe they know about the kind of person you are. Your integrity directly impacts how people view your character. It speaks to whether people view you as trustworthy. Trust is the basis of obtaining customers for life, Missy notes. When customers trust that you will do what you say, they will come back repeatedly.

Unsurprisingly, whether people consider your business ethical will determine its overall reputation. It will also dictate its longevity. When you are a service-based business, your reputation is all you have; you must protect it at all costs. This is where accountability comes in. It’s okay to make a mistake. We all do it. What’s important is how you address it. Here’s how you can go about making it right:

  • First, own the mistake
  • Second, figure out how to fix the mistake
  • Third, don’t try to hide it or sweep it under the rug
  • Lastly, learn from it, and don’t make the same mistake again

The final part of creating customers for life involves prioritizing effective communication with your customers. But before you can do that, you must first listen to their needs, Missy says. That means listening from beginning to end. We’re all guilty of formulating our side of the conversation even while others are formulating theirs. When we do that, we miss out on vital information that we need to know. We fail to understand what is important to our conversation partner.

Conversely, when you understand what is important to another person, you can show that you care about them. This creates the foundations of a trusting and mutually beneficial business relationship.

Alliant National: Committed to Building Customers for Life

Building a reputation for superior customer service takes real work, but when you are caught up in the day-to-day minutiae, it can be difficult to make needed changes. Still, there are numerous steps we all can take to improve our customer service and make our clients feel more appreciated and valued. All that’s required is going back to the basics. Missy emphasizes this when explaining the genesis of her presentation and how Alliant National seeks to help agents create loyal, lifelong customers. “Everyone needs a reminder from time-to-time on good basic customer service skills and the importance of developing those skills,” she said. “It’s critical for Alliant National to present these courses to offer a unique perspective to a vital skill.”

Want to learn more about creating “Customers for Life?” Check out Missy’s full presentation here.

This blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on this blog.

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