In the short 10 days that have passed since the time I started writing this column in early March, the number of COVID-19 cases has more than doubled.
This week, the White House’s tone changed from “this too will pass” to a much more sober admission that we, as a nation, need to take this seriously. Gov. Tom Wolf of Pennsylvania, where I live, has asked nonessential businesses to close and even shut down our state-owned liquor stores. This crisis is real.
The novel coronavirus is a global pandemic few can deny at this point, and our industry will be seriously affected no matter how short or how long the situation lasts. How can a real estate broker mange through this period of significant uncertainty?
March is Inman’s concentration on leadership in general. To make it through the next few months (or longer), brokers need to step up their leadership game and steer their brokerages through these rough seas.
Many are panicking right now. We need to keep calm and manage through the crisis. Falling victim to the herd mentality is the quickest path to lose your way. As the broker in charge, agents and staff will be looking to you to lead them through this troubling time.
Not all agents — or brokerages — will be left standing when this is over. It’s your job to protect your office and your clients to the best of your abilities. Strong brokers will develop a plan, execute that plan, and lead their group out of crisis.
Find credible sources
You cannot effectively lead the group if you’re not educated about the situation at hand. No matter what that crisis is, you need to know what the facts are. However, don’t simply click on every Facebook story that pops up in your feed, or follow the rabbit hole down multiple web pages that mention the coronavirus.
My background is science journalism, which makes me inherently skeptical of layman’s articles. I also have my master’s degree which trained me in writing papers and doing research. Reading newspaper or magazine articles online is OK, but I urge you to go to the source of first-hand knowledge in times like this.
Just as we urge our agents to point clients to the source of information (Mr. Buyer please call the township to verify that you can have three horses on that parcel), go to the source directly. Don’t quote talk show hosts or rely on radio shows for information. The best practice is to trust, but verify. For information on COVID-19, I recommend these sources:
- CDC Coronavirus Information
- Johns Hopkins University
- National Science Foundation
- National Institutes of Health
Once you know what we’re dealing with and understand the implications of having thousands of people potentially infected with this virus, your next move is to break down the steps required to protect your brokerage and clients.
Real estate is a people business. We meet clients at their houses and in our offices. We mix and mingle at social gatherings to build our referral networks. We attend conferences and association meetings. We need to adjust our behaviors to protect both our agents and our clients.
Experts urge us to practice social distancing right now to “flatten the curve.” If you don’t know what this means, click the hot link to understand why it’s crucial that we limit our face-to-face interactions with others right now. This is why governors are shutting down bars, restaurants, gyms and as much travel as they can.
Here is a list of things we can do to prevent the spread of the virus:
- Encourage the use of hand sanitizer and disinfectant wipes at the office, including on door handles, surfaces (desks) used at closings and more.
- Agents should not be driving clients to houses. If they’re still doing showings, meet the client at the house, don’t put them in your car.
- Cancel all open houses.
- Use digital signatures, even if an in-person signing is possible.
- Limit face-to-face interactions.
- Open the office only by appointment.
- Allow admins and staff to work from home.
- Encourage agents to work from home as much as possible.
- If involved in association business, limit interactions to phone or video calls.
The good news is that real estate is also a flexible business. We can make our own hours (for the most part) and choose to take a client on a showing or not. Agents who fit “at risk” profiles should seriously reconsider listing or showing houses at this time. Do business as much as possible over the phone, via video conference and online. We are lucky to be in an age where this can happen. Be cautious.
Communicate to your agents and staff what the office polices are. Are staff members allowed to take files home to work on them? Should agents be meeting clients in the office? Set those policies, then communicate them to the group.
What is your office cleaning procedure? Is there a cleaning service that comes in once a week or month? What do they do or not do? You may want to have a conversation with your contact there, and go over the company’s cleaning and sanitizing procedures.
Are they wiping down all the desks or just the conference room? How are they disinfecting the bathrooms and break room? Do you need to increase the frequency of their service? Talk to them.
What happens if you have an agent or staffer test positive for the virus? I’m reading that a significant percentage of the U.S. population will contract the virus. Many will never even realize they are COVID-19 positive as they may be not even exhibit signs or symptoms.
If you find out one of your group is positive, what do you do?
First, your policy should be that any member of your brokerage who tests positive should report it to you immediately. Second, isolate that person. They should be allowed to go home and not be mandated to work in the office.
Take a look at your admin and staff policies. Be lenient when it comes to sick leave. It’s best for the brokerage if sick workers stay home. Work from home policies need to be addressed. Will the worker be paid or unpaid? Think about it now.
We have many tools now that can allow a worker who has to be isolated (but may not be seriously ill) to work from home. Look into Zoom and Microsoft Teams for conferencing solutions. Google Business, Microsoft, Slack and other platforms make keeping the team connected easier than ever before.
Make a plan as to which (if any) staffers can work from home, which platforms they will use to communicate with you and the office, and how this scenario will play out before you must implement the process.
Prepare for delays
We’re already seeing our showings grind to a halt here. Pending sales are up in the air. Plan on closings being delayed, and some canceled completely. Even those that look solid may not be — because of things that are out of our control.
Here, we’re seeing municipal offices close down, and we can’t get final readings for closing sheets or documents recorded. This will be the new normal for the immediate future.
Your agents need to be coached that no closing is rock solid until you walk away from the table with your check. Yes, we train our agents that they’re business owners and need to have cash reserves, that they can’t count their chickens before they hatch, and yada yada yada. Yet, many of them still live from closing to closing.
These are the agents who are waiting outside a broker’s door for that closing check so they can pay the mortgage. And these are the agents who are at highest risk to drop out of the business when we hit a recession.
Cash flow issues
Loan and title issues and other closing problems will delay or completely derail many sales. This means your cash flow will suffer — and yet you still have bills to pay. Rent, mortgages, utilities insurance — they all need to be paid, whether or not we’re closing the deals.
Do you have a line of credit? If not, try to get one right now. Ironically, the best time to get a loan (or line of credit) is when you don’t need it. It may in fact be too late for you to get one if you need it.
If you do have one, you might want to tap at least part of it right now, and hold it in cash or a very accessible savings account. Having cash on hand may be necessary later. If not, you just pay the line back. A line of credit now can help you bridge the bad times if closings dry up.
If your business relies on rentals (if you personally own rentals or you manage rentals) get ready for issues here. Tenants who are out of work will soon be slow pay or no pay. Are you ready for this?
In some parts of the country, cities are issuing eviction moratoriums. If you own the rental, you still have expenses but will have reduced income. Your landlords won’t be happy. How will you handle this? Your tenant’s cash flow issues will now become your issues.
Supply chain issues
No, we’re not retail stores, but supply chain disruptions can affect us as well. Last week, I was in the office when I realized we only had five rolls of toilet paper left. Seriously? I’m not one of those toilet paper hoarders. Normally, I would just hop on Amazon and order a case. Nope. Amazon was sold out of everything I clicked on. Boxed.com? All sold out.
I went to a local office supply store and got 40 rolls delivered the next day. Similarly, a client of mine who was in another state went to the big box stores, and they all were sold out. She went to a small corner bodega and found plenty of what she needed. Don’t go with the herd mentality. Think outside the box. Look for alternate suppliers. Plan for delays and order in advance so you don’t run out.
Alternate lines of business
Take a look at where your cash is coming from. What lines of business dominate? Can you add alternate lines to keep you afloat if necessary? In 2009, I opened a property management division. Yes, it was a major pain, and I didn’t enjoy it, but it did make enough money to pay the rent, which was a nice cushion during the bad months. Where can you branch out or expand?
- Estate work
- Property management
- Association management (running HOA’s)
- Short sales
Nobody likes to think about their own mortality, but do you, as the broker, have a succession plan? What happens if you get ill and are out of the office for an extended period? What happens if you pass away? Do you have a plan in place?
How will agents get funds out of escrow if you’re the only signer on the escrow account? How will they get paid if you don’t have another person on the bank accounts? Have you considered a coronavirus-related contingency?
Do you have a broker in the wings who can step into your shoes? Is this person in-house and already holds a broker license under you? Or are they out of the office and will step in from another brokerage? What will you do?
Like making a will or signing power of attorney documents, nobody wants to think about the worst-case scenario. However, these are difficult times. You must think about what can or will happen if one of your group tests positive for COVID-19. You must plan for the company’s future if you can’t sit in the broker’s chair.
What will you do now so that those who trust you — your team — is taken care of, should the worst case scenario play out? This is what they expect in a leader.
Be smart. Stay safe. Stay healthy.