Prudential California Realty is “rightsizing” in recognition of the market realities of slower sales, said Sherry Chris, the company’s chief operating officer.
“All companies are looking at what the right things to do right now are. We’re rightsizing our company, looking at cost-containment opportunities and growth opportunities,” said Chris.
The state as a whole has seen declining sales — the California Association of Realtors reported a year-over-year 31.7 percent decline in existing-home sales in September, and the median home price dropped 4 percent from August to September.
“One of the challenges is that listings are staying on the market longer, and as such our advertising costs could increase,” Chris said. The company has committed to a shift in some advertising dollars to online and away from traditional print sources, she said. The company will be advertising at the Google search engine and has also announced initiatives to place its property listings on the Google and Trulia.com search engines.
Also, the company is working on ways to improve its offices, she said, “so that they’re more like community centers — agents can meet with consumers in a more casual environment.” The company has a goal to ensure that its offices are at over-capacity in terms of the ratio of agents to desks in recognition that agents are typically in the field, she said.
While traditional offices were equipped with row after row of desks, agents today tend to visit the office less and use wireless technologies to stay mobile. “It’s more important than ever to build a community within your own office,” she said, and to reach out to agents with sales meetings and other events, for example.
“We are not looking at closing any offices,” she said, and the company is actually looking at potential acquisitions and recruiting opportunities “to help infill into our existing marketplaces. We are definitely encouraging managers to bring new agents into the business and recruit more agents.” She did, however, cite an example of an office consolidation in Livermore, a community in the San Francisco Bay Area. The company opened a new office in that community and consolidated its existing office into that office, she said.
Chris said that the market conditions will present special challenges for the huge group of agents who are relatively new to the industry, and there likely will be a decrease in the agent population over the next 18 to 24 months. This shrinkage could translate to an increase in the company’s market share and in increased productivity for those agents who remain in the business, she said.
Over the past several years the company has invested heavily in technology for agent Web sites and customer relationship management tools, she said, and also in a new company Web site, enhanced mapping tools and a new company intranet site, she said. And while the company plans to pursue other technology ventures, she said there is some “breathing room” during this slowing market because the company doesn’t anticipate major new technology expenditures.
The company has also invested in some traditional approaches, hiring real estate training firm Buffini & Co. to teach its managers to become coaches and mentors to their agents. “It’s one of those ‘back to basics’ things,” she said. “In times like this a smart broker-owner will look for that … approach. It doesn’t always have to be the latest technology — ‘What do I have to do to improve my bottom line and the agent’s productivity?'”
Prudential California Realty is also holding training sessions to help agents function in the current market — some agents “have gone from being overjoyed at having one listing” to managing an inventory of five to 10 listings in the current market, she said.
In an effort to improve communication and transparency, the company has launched a blog on the company’s intranet, Chris also said.
In its third-quarter report for the San Francisco Bay Area, Prudential California Realty stated that that sales of single-family detached homes shrank 31 percent in the third quarter compared to third-quarter 2006, while the median price of single-family detached homes grew 3 percent to $753,805.
Chris said that while statewide sales are slowing, there are still pockets in the company’s operating area where the market is strong. A company office in the Oakland, Calif., area reported that most of its latest sales have sold for more than the list price, she said.
“This to me is a market correction. It’s just a leveling out of the market. It’s not a downturn that is going to be going on for an extended period of time. We’re looking at a flat market continuing for certainly the balance of 2006 and at least the first quarter of 2007, with a continued slight decrease in unit sales and a very slight decrease in average sales price.”
She added, “The last down-cycle in the market in Northern California about 10 years ago was much more severe because it really was an economic downturn. This is not as severe in comparison.”
Prudential California Realty is part of a tri-state Prudential affiliation that also includes Prudential Nevada Realty, Prudential Texas Properties and Prudential Texas Realty, and has 5,000 agents and 139 offices.
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