Power brokers who lead companies that are household names in the real estate industry say that to succeed in the year ahead, brokers and agents will have to work harder, be better trained, and learn to employ the latest technologies and techniques for down markets.
But don’t call it a down market. It’s a changing market, or, as the title of a panel discussion at the National Association of Realtors convention in New Orleans would have it, a “new market.”
Members of the panel, “The Power Broker Perspective: Managing in a New Market,” dispensed tips for surviving what most expect to be a period in which many less experienced and less committed agents will leave the business.
Brian Buffini, a consultant whose company trains thousands of agents a year, said the current market is “a phenomenal opportunity for professionals,” but that it’s a terrible time to be “a licensee.”
“If you’re a licensee, and not a sales person, you’re dead,” Buffini said. “There’s an awful lot of people in this business that pay dues to the NAR, that have an active license, that don’t sell. I encourage them to get a job” in another industry.
That advice was received with thunderous applause in the packed auditorium, and echoed by Arthur Sterbcow, president of the New Orleans-based Latter & Blum Inc., Realtors.
“Improve the quality of your agent base, and educate them,” on how to provide more information to customers, Sterbcow said. Of those who can’t be trained, he said: “Send them into some other career.”
Agents who have only experienced the boom years will need to learn techniques and work habits familiar to those who have been through leaner times.
“It’s been a pretty easy business for the past few years, and a lot of people developed some pretty poor habits,” said Dave Liniger, chairman of the board and co-founder of RE/MAX International.
Agents can now expect to be “married” to a listing for 90, 180 days or more, Liniger said, and should be in constant communication with sellers via e-mail or text messaging.
With inventories up, brokers and agents must have the data to convince sellers to set a reasonable asking price.
“You’re going to have to be more professional than you ever have before, because you’re going to have to go in and ask for a price reduction before you take a listing,” Liniger said.
“Tell them, ‘I’d rather turn you down tonight than let you down in 60 or 90 days.’ That is a powerful, powerful statement, when you’re willing to walk away from a listing because it’s 20 percent overpriced and you know it’s not going to sell.
“You’re a fool to take it and think, OK I’ll just take it and hang on and 60 days from now I’ll get a price reduction. You better get a price reduction before you get it or walk away from the darn thing.”
Buffini said he also coaches agents on how to get sellers to start out with realistic asking prices. But agents will also have to work harder to bring in potential buyers, he said.
“When I was 25, I could eat pizza and Oreo cookies and lose weight,” he said. Now, he said, it takes some work to stay in shape, because if he even smells Oreos, “the shadow of my backside expands.”
In the same way, agents who were used to making easy sales during the boom years can no longer expect advertisements and open houses to deliver leads to them, Buffini said.
“Just the sheer speed and heat of the market developed a lot of bad habits for people, where they’ve gotten used to eatin’ Oreos and eatin’ pizza and losing weight,” Buffini said. “Now we’ve got to work a little bit. And now we’ve got to watch our diet. Now we’ve actually got to get in the game. One of the things that shocked a lot of people is they actually have to work … they weren’t used to having to generate leads.”
Agents would think, “I’m going to wait for the company to run an ad, and that’s going to generate a lead for me,” Buffini said. “That level of passivity is going to be eradicated.”
Buffini, who built a referral-based business years ago in a down market in San Diego, suggested a lead-generation tool from the days before the Internet: the telephone. Agents and brokers have to “sit your tail down, make some phone calls, call people you know, ask past clients for referrals, stay in contact with people,” he said.
“I would encourage you guys to go back to your agents, and say ‘I went to NAR, and they introduced me to this little piece of technology that is the most proven generator of 90 percent of all business, and it’s called the telephone,’ ” Buffini said.
Earl Lee, president of Prudential Real Estate Affiliates, said brokers have to stop being emotional about their markets, and agents must realize “the market is basically here. This is the third-best year ever in the real estate business.”
“As Brian said we’ve got to stop being secret agents — we’re real estate agents for God’s sake,” Lee said. “Get out there and call somebody and do what you need to do.”
It’s fine for sellers to offer incentives such as interest-rate buy-downs, said Alex Perriello, president and CEO of Realogy Real Estate Franchise Group. However, Perriello said, “I’ve never seen anybody do it right. They never put a time limit on it.”
If you go into Macy’s for the day-after-Christmas sale, the sale ends that day, “it doesn’t go on for six months,” he noted.
“We need to create an urgency in the market,” Perriello said. Put deadlines on incentives, he urged, or buyers “will sit around and say, well, I’m just going to wait and see what else they offer.”
Perriello maintains that the news media paints a distorted picture of the market, emphasizing the negative and minimizing good news. The real estate industry needs to take steps to convince consumers that housing markets are still healthy and that it’s a good time to buy a house, Perriello said.
When interest rates hit seven-month lows this fall, Realogy ran a full-page ad in USA Today Oct. 6 to let consumers know. The National Association of Realtors has also taken out full-page ads proclaiming that it’s a “good time to buy or sell” a home.
On the day Realogy’s ad ran in USA Today, “there was a very positive article” about mortgage rates in the Wall Street Journal, Perriello said. But the story was buried deep inside the paper, he complained.
“If mortgage interest rates had hit a seven-month high … where do you think the story would have been?” Perriello asked. On the front page, he said, with accompanying graphs, charts, “and a picture of somebody with an adjustable-rate mortgage on the roof of their house, just waiting to jump.”
Perriello said brokers and agents can create positive spin for the industry without going as far as taking out a full-page ad in a national newspaper.
He maintains that consumers aren’t aware that houses are still selling, so he advises his franchisees to include sold listings in their print advertisements. That’s right: buy ads for homes that have already sold.
“If you’re running an ad with 10 listings, put two of them with sold banners on there,” he said. “If everybody in the market follows suit, (buyers are) going to open up the newspaper … and say, ‘Holy smokes, what’s going on? I don’t care what the media says, houses are selling,’ ” Perriello said.
Another piece of advice: When a house sells, leave your yard sign up.
“The best advertising for any company is your sign with a sold rider on it,” Perriello said. “Ask the buyer, can I leave that up for another two weeks … so that people who come through this neighborhood will know that houses are selling? We’ll sell more, and the value of your house might go up.”
“Sold” postcards may get thrown away as junk mail, so send four instead of one, Perriello said.
Much has been made of consumers’ increased access to real estate information on the Web. Putting the same kind of information in the hands of Realtors can generate business, Latter & Blum’s Sterbcow said.
“A lot of us need to reallocate our resources, not so much for content or educational materials for the public,” Sterbcow said. “I think we’re moving a little bit far afield, and neglecting our own agents, (by) not getting them more effective research, data, information, tools, so that when they get a call from the consumer who wants more, they just don’t sound like his brother-in-law down the street.”
In the aftermath of Hurricane Katrina, Sterbcow said, “We learned more than anything the importance of a real estate agent as a human being, as a human connect point to another human being. There is no Internet Web site in existence, nor likely that in my lifetime, that will ever replace that relationship.”
But Real Living chief executive officer Harley Rouda said the industry has yet to harness the power of Internet advertising.
“Our industry seems to have this sense that if (a listing) is in the MLS and its on the Web sites, it’s now exposed to all levels of buyers, and I don’t think that’s the case,” Rouda said. “I think we still have to toss the fishing nets out there and garner as many buyer prospects and as many eyeballs as possible, and that’s where the industry is still falling short.”
In allocating advertising dollars, the real estate industry hasn’t kept up as consumers migrated from print to online media, he said.
“You look at where we spend money to find buyers, and you look at where buyers go for information, and there is still a large disconnect,” Rouda said. “The reliance on Sunday newspaper advertising, in comparison to Internet advertising, is so out of whack it’s mind boggling.”
There’s a herd mentality in the industry, which leads brokers to buy print ads only because their competitors do.
“We’ve got all these dollars chasing this limited number of eyeballs over here, versus really understanding where we have to go for business,” Rouda said.
The challenge for brokers, owners and franchise operators is distinguishing your brand from the competition, Rouda said, which Real Living is doing by placing an emphasis on technology that allows agents to do more deals while delivering a “consistent consumer experience.”