By DAVID FLETCHER
It seems like just a few months ago that unqualified buyers were purchasing overpriced homes for no money down and approved for a mortgage with no closing costs they could not afford, supported by "made-as-instructed" appraisals.
Overpriced condominium developments sold out in a weekend to buyers who just wanted to brag about owning one, or so it seemed.
Those who obtained a 30-year fixed-rate mortgage seemed embarrassed to admit it to their much smarter friends, who bought with a first and second mortgage and had nothing invested.
Who among us had the thought to challenge the fact that mortgage costs came in higher than the good-faith estimates?
Those were the days of: "Welcome to homeownership, everybody!"
Then one day, as this unreal world was spinning out of control, Fannie Mae yelled, "Stop!" and the lenders got off or fell off.
The housing industry was out of control, but help was on the way.
State (and in some cases, local) governments decided to help appraisers become more objective, mortgage brokers more qualified, and lenders more accountable.
Only one — the residential real estate profession — was left to figure out what to do with itself. And to its credit, that is exactly what it has done.
The industry adjusted, as it always does. Profits and size may be down, but for the most part broker-owners both large and small are still doing business.
"Very few brokerages have gone out of business," according to Ed Forman, president of Watson Realty Corp., a 44-year-old company with 1,322 agents, 400 employees and 40 offices, spread across Southeast Georgia, Northeast Florida and Central Florida.
"Very large companies are becoming stronger," while small brokerages have survived because of low overhead costs, according to Forman.
Forman, a 38-year real estate veteran, shared some insights on how he guided his company through major changes as the recession took hold.
Much of what he said is applicable to most brokers and agents. He offered seven important lessons that he said must be learned and understood, and he made some interesting predictions.
His seven actions and lessons learned:
1. Question everything done in the past and what you are doing in the future.
"You must know the truth about your company. This market clearly reveals the strengths and weaknesses, which is great information for future direction."
2. Review your value proposition.
"We have spent a great deal of time reviewing our value proposition. It is very important to find ways to become more agent-centric. Our review also helped us strengthen our leadership team significantly."
3. Protect your cash.
"Cash will see you through any challenging market. It will not only see you through, it enables you to seize additional opportunities. If the expenditure doesn’t grow your business, don’t do it. I will not sign off on any expense that it is not cost-effective.
"If the expenditure isn’t going to move our company forward, the answer is ‘no.’ "
4. Be decisive.
Forman said that the Watson leadership team learned that it would have to be decisive and prompt to get in front of short-sale business and provide the best support for its agents and customers.
He brought in a national company to offer certified short-sale training for all agents.
He required all of the company’s managers to receive training for a "Certified Distressed Property Expert" designation.
Secondly, when Forman recognized that the agents were spending too much time on the phone processing short sales, he said it made more sense for Watson Title staff to provide this service.
"This not only helped the agents and made the process more efficient, it increased our title company’s business," Forman said.
5. Embrace market diversity.
"We observed that some of our offices are in a noticeably stronger market than the others. One major lesson learned was the importance of market diversity, not just in the number of offices and their locations, but that one piece of business can generate multiple sources of revenue.
"Our sales numbers dropped, but we had other services including mortgage, title and property management. Watson also has heating and air conditioning, plumbing, electrical and maintenance companies. With fewer people entering the business, our real estate school is a huge recruiting advantage to capture people interested in a real estate career."
6. Cross-train your staff.
"One of the most important lessons learned is the value of your staff and how important it is that they be cross-trained to perform a variety of functions."
7. Streamline your technology.
"We learned that we must do everything possible to provide our agents with technology that helps a mobile workforce connect to its clients in a way the clients want to communicate. Whether it is by e-mail, text messages, Internet or online chat, technology allows us to more effectively connect with consumers and transact business. IPhones and iPads have changed the way we do business.
"A more mobile workforce, working within a wireless environment, changed the way real estate will be done, forever. We have a wireless environment in every office. Our agents can go from office to office with their iPads or laptops and are totally connected to our systems and programs.
"We have, just as many firms do, an e-business team with the technology and people whose sole job is to manager Internet leads. Social media is playing a huge role in networking and exchange of information and delivery, there is no question," Forman said.
Is there such a thing as a downturn-proof real estate business model?
"I would say ‘no’ in most markets. An exception is the government advantage in Washington, D.C. (where I worked for many years), where the jobs are plentiful and stable," Forman said.
Dave Fletcher has been a licensed Florida real estate broker for more than 30 years. He has served as broker of record, marketing consultant or adviser for more than 60 communities. He specializes in fractured condo sales.