New home, existing-home and pending-home sales are declining, home price growth is cooling, and iBuyers and other alternative business models are increasing their market share. It’s clear — a market shift is here.
Instead of fearing a changing landscape, Inman Connect New York 2019 panelists Ben Kinney Companies CEO Ben Kinney, Bentley’s North of Boston agent Lisa Sevajian, and Movoto Real Estate head broker Alex Tieu say agents and brokers can find success during a shift by following these three steps:
1. Expect change and embrace it
Tieu says brokers and agents must embrace market shifts and the opportunities it offers to operate your business differently.
“You can’t control the market. You can only control your reaction to the market,” Tieu said. “Life is full of ups and downs. If you can be excited about the downs, you’ll come out on the other side as a winner.
During the last downturn, Tieu says she turned her attention toward short sales — a segment that others in her market ignored. Her agents were able to complete 100 short sales that year, which resulted in a $100 million transaction volume.
“Opportunity is where everyone else is complaining,” she added.
2. Get slim
When home sales slow down, it’s not the time to begin investing in new bells and whistles in the hopes it will attract new clients. Instead, Kinney says, it’s time to begin evaluating your budget and cutting expenses.
“Agents are basing budgets on projected future,” he said. “We need to get our agents into productivity.”
Kinney says he’s encouraged his agents to cut business and personal expenses by 20 percent by focusing only on the technology and systems that truly boost their productivity and profit.
“If there is downward pressure on commission over time, the best thing we can do is adopt, buy, use or build technology that would give agents 50 to 75 percent of their time back,” he noted.
Meanwhile, Tieu says brokers must cut their spending in order to withstand times with decreased revenue. But before cutting the marketing budget or removing a few office perks, she says brokers must talk to agents about the plan and be open to feedback.
“It’s about having empathy for the agents,” she said.
Beyond cutting expenditures, Sevajian says slimming your business includes learning to turn away bad business, so you have more time to dedicate to deals that will increase the bottom line.
“By walking away from bad business, I’m able to stay focused on the good business,” she said.
3. Make yourself indispensable by building relationships
While other brokers may be tempted to up their marketing spend as an antidote to lower sales, Sevajian has redirected her funds toward hosting community events, which include free ice cream socials and yoga classes, and teaming up with local landscapers to offer discounts to clients.
She even delivered home-cooked meals to neighbors impacted by the Merrimack Valley gas explosions that rocked Andover and North Andover in September.
Sevajian says she never mentions her role as a real estate agent during these events, but the trust she’s able to build by giving back has resulted in her becoming the go-to broker in her area.
Kinney says he’s built solid relationships with clients by becoming the trusted source for wealth building and real estate data.
“I want to be the individual someone thinks of when they want to talk about managing the wealth they have in real estate,” he said.
For example, Kinney’s doctor was coming close to retirement and wanted to boost his savings by selling the property and buying a home with lower property taxes.
Kinney estimated his doctor would’ve only saved $5,000 per year by moving to a new home, so he suggested another plan: sell the doctor’s rental property and buy a duplex. The doctor could rent the duplex for $2,400 per month, which would result in a profit of $25,000 per year.
“We didn’t have to list his house,” he said. “It wasn’t the right choice for his family. It takes an individual, not an app, to help people understand all the variables in managing their wealth in real estate.”