The Kubler-Ross Model and Real Estate

If you are a Real Estate Agent and your business has or will be impacted by the Coronavirus pandemic, you might want to familiarize yourself with the five stages of grief as described by the psychiatrist Elisabeth Kubler-Ross.

We may be in for some tough time ahead but if you can get a grip on what you might be going through psychologically, chances are you will be better prepared to navigate this crisis and emerge in a good position on the other side.

And having worked through the 2008 recession and housing crisis, I am confident in the outcome even if there is a temporary disruption.

But before I get into the psychology of all this, let me start with:

  1. For the foreseeable future, whether it be weeks or months, the Real Estate industry will, for the most part, grind to a halt. Agents are effectively out of business.

  2. When business starts up again, at a minimum, we will be in a different market and quite possibly, the industry will be changed in very fundamental ways.

So why do I think that the Real Estate industry will grind to a halt?

Well, beyond the fact that in California we are all supposed to be staying at home with a few exceptions, what we know from previous times of crisis, 9/11, 2008, is in uncertain times, Buyers stay on the sidelines. On top of that throw in the decline in equities, loss of job and uncertainty about the future and it is far from an optimal selling environment.

And, when we are past all this, which will happen, we simply don’t know how quickly the public will engage again in the home buying process and in what numbers. After 2008, Buyers didn’t really engage again until they felt that there was adequate footing under the Real Estate market and that the job market - or at least their job, was secure. And there were also some government financial benefits.

I don’t think we are going to see 2008 again because recession does not equal a housing crisis. We may see a softening of prices even with record low mortgage rates. Prices are always a function of supply and demand. We entered this crisis with limited supply and strong demand. If we come out of it relatively the same, prices will hold. But if there are more listings and less demand, that is an entirely different situation.

And now the psycho babble.

The Kubler-Ross Model

Elisabeth Kübler-Ross, A Swiss psychiatrist, introduced her five stage grief model in her book On Death and Dying. You may have studied this in a college level psych class. I think there’s a lot of it that applies to Real Estate and more broadly the situation we are in.

The model was based off her work with terminally ill patients. While it is widely accepted today, it has been criticized because people mistakenly believe she is stating that the step have to happen in a specific order and that all people go through all stages.

Not true.

These stages are not linear and some people may not experience all of them. Others might only undergo two stages rather than all five, one stage, three stages, etc. It is now more readily known that these five stages of grief are the most commonly observed.

You might think I’m going a little over board to be referencing a psychological model based on death. The issue is not death but grief which for the purpose of this discussion we’ll consider to be “deep sorrow”.

And for many people, not just Real Estate agents, it would be understandable to feel deep sorrow considering what’s going on in the worlds right now in terms of the human toll and suffering including uncertainty and loss of income.

Actually, in a book co-authored with David Kessler and published posthumously, Kübler-Ross expanded her model to include any form of personal loss, such as the death of a loved one, the loss of a job or income, major rejection, the end of a relationship or divorce, drug addiction, incarceration, the onset of a disease or an infertility diagnosis, and even minor losses, such as a loss of insurance coverage.

Let’s take a deeper dive.

The stages, popularly known by the acronym DABDA, include:

Denial: The first reaction is denial. In this stage, individuals cling to a false, preferable reality.

Anger: When the individual recognizes that denial cannot continue, they become frustrated, especially at proximate individuals. A person undergoing this phase would be saying “It's not fair”, "How can this happen”", "Who is to blame?", "Why would this happen?", etc.

Bargaining: The third stage involves the hope that the individual can avoid the cause of grief. Usually, the negotiation is made in exchange for some changed lifestyle. People facing less serious trauma can bargain or seek compromise.

Depression: "I'm so sad, why bother with anything?" During the fourth stage, the individual despairs at the recognition of their situation. In this state, the individual may become silent and spend much of the time mournful and sullen.

Acceptance – "It's going to be okay" or "I can't fight it so I may as well prepare for it."

In this last stage, individuals embrace the inevitable future which typically comes with a calm, retrospective view and a stable condition of emotions.

Here’s how I see these stages manifesting with Realtors.

DENIAL

This is where the industry as a whole seems to be right now at the end of March and just a couple of weeks into being safer at home.

I see the manifestations in:

  • New Listings

  • Mixed Message as to “Essential Industry:

  • Happy Talk from the Coaching community

NEW LISTINGS

Surprisingly I still see a flow of new listings hitting the market. With few exceptions I think that any agent who puts a new listing out now is doing a real disservice to their client.

New listings seem to fall into two different buckets. The first are those that come out with an almost business as usual attitude. Not surprisingly I see some of the most successful agents going that route which is very disappointing.

Other agents are listing properties that I see as possible to sell in that they are vacant. While there is still a risk of infection - even in a vacant property, that is much different than a home that is being lived in where infection to multiple parties is possible. The vacant properties are the exceptions.

IS REAL ESTATE AN ESSENTIAL INDUSTRY?

I saw that as of March 28th, residential Real Estate was reclassified as “essential”. I understand the thought process behind that, people need housing, but I don’t think Real Estate sales per se should be considered essential.

Unfortunately, many Agents will interpret this to mean business as usual putting themselves and others at risk.

HAPPY TALK

If you are not in the Real Estate business you might not be aware of the “coaching” industry. Many Agents pay “coaches” to help them build their business. The coaches basically serve the purpose of sales management in other industries because at Brokerages, most Sales Managers really function in a compliance role.

A lot of coaches right now are running around with a lot of happy talk about how agents can continue to do business during this time. I think that is irresponsibly raising people’s hopes.

While there is an argument to be made that we could use this time to work "on” our business as opposed to “in” our business, for the most part our time would be best served focused on keeping ourselves and or family healthy and if possible exploring what can be done to help others in our community.

If you are in a position to do so. Helping in the community will be more likely to get you clients when this is over than trying to get someone to buy or sell a home in the current environment.

ANGER

I’ve spoken to some really angry Agents this week. Deals that fell out of escrow, listings canceled, Buyers putting their home search on hold. Then throw in the money they are already committed to spending whether it is Brokerage desk fees, advertising programs, or other fixed expenses we all have, many of which can’t be canceled, and people are angry.

If we are all hunkered down for an extended period of time, expect a lot more angry agents.

BARGAINING

It seems to me that the Agents who are touting the use of Virtual Tours and Video showings are in the bargaining phase. Remember, these don’t have to go in sequence so some may start with bargaining and then if their solution doesn’t work go into denial or get angry.

As far as I can tell, there is absolutely no evidence to support that someone will buy a home based on a 3D Virtual Tour or a FaceTime or Skype walkthrough. You might (correctly) say, well what about people who buy newly constructed homes before they are finished? I don’t think that translates to resale properties. The Buyer of the new home has already weighed the pros and cons and made that decision before they walked into the builder’s office.

One protocol for showings some agents are trying to implement is that after a potential buyer sees a property virtually, they can schedule an in person appointment. As a strong advocate of social distancing at this point in the outbreak, I am really against this practice as a public health precaution.

DEPRESSION

I have to say that for the most part, Agents I’ve spoken with haven’t really been depressed about what’s going on - but I assume there are some out there who are.

I actually have to say that, if anything, I see a lot of people in the Realtor community really stepping up and showing leadership in terms of the public service they are doing in sharing information on social media and elsewhere.

ACCEPTANCE

I’m there, but that may be just me. I’m pretty sure that we will be in a different Real Estate market when things start up again and I’m good at navigating markets.

Personally I’m working on a lot of business projects that I needed to get to anyway. When we are past this pandemic, I don’t want to be saying to myself “oh I really should have done - fill in the blanks, when I was sheltering at home for all those weeks (months?). As I once heard a very successful Broker say “Get shit done!”

That’s all we really have in our control anyway.

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