No one could have foreseen the havoc this crisis would wreak on real estate, but now that we are in the thick of it, we can adjust to the situation. Here’s how to adapt and trim your budget for the rest of the year.


In challenging times, it’s a smart idea to revisit the fundamentals of good business. This April, go Back to Basics with Inman.

It’s April, and while we should be in the midst of our hot spring real estate market, we’re instead in one hell of a storm. It’s worse than just the mid-winter blues or holiday slowdown.

Here in Pennsylvania, we are in a deep freeze. Our governor shut non-life essential businesses down a month ago. We can’t show houses in person, and we have been ordered not to move forward with appraisals, inspections or closings if a contract was signed after March 18. We’ve been told not to even put signs up or lockboxes on houses.

Although it might not be that bad in most other states, with limited business allowed to move forward here, we are at a full stop. As current contracts move slowly to closing, the pipeline is getting thinner and thinner.

Last year, I wrote that a downturn was likely in the near future. I didn’t have a crystal ball, and I damn sure didn’t see a global pandemic coming. But real estate is cyclical, so all business owners in general (including brokers and individual agents too) should have a plan for when business hits a bump. For more on increasing your income as the market turns, read “5 tips for boosting your bottom line in a down market.”

The article identifies basic ways to help you get through a downturn. It’s a good start. But this isn’t a bump. We are now in a recession and maybe a full-blown economic crisis as the year goes on.

Recovery is unlikely to be swift for the real estate industry. After the changes we’ve been through in the past two months, we are probably not going to open our doors at the beginning of May or June and see a flood of new contracts to replace the spring buyers who are sidelined.

Buyers and sellers might still be nervous and might shy away from viewing houses. Many have lost their jobs and might not even qualify for a loan after we are cleared to do business again.

Brokers need to take a look at the budget created at the end of 2019 and probably consider it useless at this point. I have looked at the budgets of several other brokers plus mine, and based on the numbers I am seeing, I am preparing for a potential 40 percent drop in commission income this year. Expenses must be adjusted accordingly to balance the income loss. Here’s how to adjust your budget for this unprecedented year.

1. Evaluate recurring charges

Look at your monthly credit card statements to see what you are paying for automatically. You’d be surprised at how much you won’t even miss. If you really cannot make decisions here, call your business credit card in as lost or misplaced, and get a new one.

You’ll be forced to re-enter your new card number on each and every platform again, which sometimes brings a new light to those fees. Even small monthly fees add up — and a few dozen $10 a month (or more) services add up at the end of the year.

2. Bid out insurances

Insurance tends to creep up slowly and without you noticing, especially if you’re on automatic payment. I have a folder for each insurance type, and on the front, as I pay the bill each year, I write down the premium so it’s easy to compare year over year. I do this with both personal and business insurances.

Last year, I saw a 25 percent increase in my homeowner’s policy for no explainable reason. I switched carriers and actually cut my bill by 10 percent. Watch your errors and omissions insurance rates, business owners policy, auto and other insurances carefully for increases.

3. Review contractors

I moved our office in January, and it was the perfect time to review all contractors — the cleaning service, HVAC provider, office supply vendor, etc. I cut the cleaning bill while increasing the visit frequency by using a service that already cleans for other tenants in the new building.

I found a local office supply vendor that beat the prices for the big office supply store we used before we moved. You might be able to shave 10 percent off these line items by negotiating with vendors.

4. Negotiate rent

Commercial real estate is in for a crunch. When this crisis is over, a lot of businesses will realize just how expensive space is. Some who work from home now might not return to the office. You might find that some of your staff can still work remotely (admins or transaction coordinators). Some agents who previously used office space might decide to work from home.

Rent is a huge expense. If you’re having a problem paying it, look at cutting your office space down or renegotiating the lease. Tenants across many industries are doing this right now. Your landlord might be willing to work with you just to keep a good tenant in the space.

If they cannot or will not let you cut your rent or space size, consider moving. I moved across town earlier this year and got a larger space with a better parking situation for less money. The move was a hassle, but in the end, it was perfectly timed for this crisis situation.

5. Cut staffing

Next to rent, many brokers’ biggest expense is support staff. If your office is closed, you’ve probably laid off or terminated admins. Fewer deals in the pipeline mean you’ll need fewer hands on the files.

You simply cannot afford to keep people on payroll when there is less work to do. It’s inevitable, even if it is unpleasant to let people go. As things ramp up, you can bring people back on staff as needed.

6. Outsource

You might find that as you let staff go, some tasks can be better handled by outsourcing as they are needed. Do you need a bookkeeper on staff, or can you hire a contractor for 10-15 hours a week to do your books?

Some marketing or transaction coordinator tasks could be done more efficiently and less expensively by outsourcing as needed rather than keeping someone on payroll. Look into online platforms where contractors specialize in the service you need.

7. Watch supplies

Sometimes, it pays to buy in bulk — buy several cases of copy paper when they are on sale, for example. When cash flow is tight, pay attention to supplies. Although it might be more expensive to order a few reams of paper at a time, as small broker with limited cash flow, it might be smarter to do that than tie up too much money in bulk ordering. The few dollars saved on cases of paper might not be worth it when the rent is due.

8. Market smart

This is one of the five recommendations from the article I wrote last year, but it bears repeating. Do not cut marketing out completely. Instead, make sure you are spending your dollars in a smart way. Cut advertising — meaning print ads, billboards, radio ads, etc., if you cannot directly track it back to a solid ROI (return on investment).

Do not cut marketing in general — pivot.

For example, I have one online marketing source that brings me a 4-5 ROI. So for every $1 I spend on this venue, I get $4 to $5 back that I can directly track to a closed sale. I am not cutting that source out right now. As long as I see a positive ROI, I will keep it.

I have seen my competitors cut this same tool. I watch it carefully and see them dropping off the platform. I am holding firm, and our leads from it were up 27 percent the first two weeks of April.

If you do cut things out, don’t just hibernate. Practice guerrilla marketing — marketing with your labor and time, not money.

Increase your networking. Although in-person meetings aren’t really possible right now, you can always pick up your phone. Call past clients and referral sources just to ask how they are doing.

Our local chamber of commerce has moved its mixers to a Zoom format. Attend events online. Find ways to still network with your community and show you are still in business and still helping people buy and sell, but remotely.

9. Be careful with debt

If you must take on debt, do so carefully and after speaking to a good accountant. Yes, there are new emergency loans through the Small Business Administration (SBA) due to the crisis. The Payroll Protection Program is actually a loan that turns into a grant if you follow the rules and use it for payroll and allowed expenses. Most loans out there are not forgivable and will need to be repaid eventually. Not all have favorable terms, and some are outright predatory.

Business owners want to think that a loan can save us from drowning or at least buy time until the market rebounds. Some are smart moves, while others will just sink your business eventually no matter what you do. Don’t just sign for a loan without getting advice first.

10. Cut travel

I’m a conference junkie. I love to travel to conferences and learn from brokers all over the country. I come back from industry gatherings pumped up with ideas on how to better serve our clients. COVID-19 has killed that for the foreseeable future.

Even without travel restrictions and social distancing rules, in downturns, travel is still a luxury. If you’re not being paid to travel or reimbursed your expenses by a third party, travel needs to be severely limited. Instead, take advantage of conferences that can be “attended” online, such as Inman’s Connect Now June event.

After this crisis passes, perhaps this is the future of many conferences and learning events. As I type that, I hope it is not completely true, as the friendships and lobbycon meetups can be just as valuable as the conference sessions, if not more sometimes. Agents as a group are social people, and the in-person hugs and late-night lobby discussions make some of the best memories.

If you are a broker who has been in business pre-2008, you are well-versed in preparing for a downturn. I opened my office in 2007 and made it through by cutting my teeth on the mortgage crisis. This is a very different crisis — but with similar tactics. We will survive it. In January, with the move, I began cutting expenses. That was more luck than foresight, honestly.

Nobody could have foreseen what March and April would bring to the real estate business. Now that we are in the thick of it, all we can do is adjust to the situation. Be conservative in your planning, and prepare for a slow recovery. Things might never go back to pre-2020 “normal,” but all we can do is adjust the sails and weather this storm.

Erica Ramus, MRE, is the broker/owner of RAMUS Real Estate. You can follow her on Twitter or LinkedIn.

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