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After a record-breaking two years the real estate market has begun to shift as the pandemic, inflation, rising mortgage rates and other worrying economic trends tempt consumers to sit on the sidelines.
As a result, many market factors have begun to reverse with existing, pending and new home sales taking a nosedive in June and July, average days on market steadily increasing, mortgage demand plummeting and once-common bidding wars taking a backseat.
Although this turnabout has much of the industry white-knuckling its way into the latter half of 2022, Sotheby’s International Realty CMO Brad Nelson, Engel & Volkers CEO Anthony Hitt and Douglas Elliman CEO Scott Durkin said there’s still plenty of opportunity for agents to succeed — only if they’re willing to make the necessary changes to thrive.
“We knew that there was no way the last two years were going to be sustainable,” Hitt told the Luxury Connect crowd on Tuesday. “We knew the market was going to change. I don’t think there’s any question that the market is softening.”
“But I do believe we’re absolutely in the market of opportunity, and I think this is where you know careers are made,” he added. “If you really want to build your career, whether you’re already doing really well or whether you’re looking to really make your name and build your career, this is where you double down.”
As evidence of the magic of tough markets, Hitt and Durkin swapped stories about navigating pivotal moments in their careers during the Sept. 11 attacks, which sent the United States into a tailspin.
“I became an agent in Santa Monica, California back in 2001. Right after September 11,” Hitt said. “Actually, the first my first day in real estate was Monday, September 10.”
Durkin added, “Interesting. September 10 is when we sold our company to Realogy [now Anywhere] and thankfully, they stuck with the purchase. There are a lot of moments like that. We all sort of live parallel crisscross lives.”
Both men said they survived those tumultuous times by mastering basic business and sales skills, providing clients with specialized data to make better decisions, leveraging their negotiation skills and identifying out-of-the-box opportunities for clients to buy and sell.
“I feel the best agents know how to work in a market like this,” Durkin said. “You can do a lot more deals in a market like this because you can take third-party information that’s out there, turn it into something that’s not so self-directed.”
“You can get your sellers to bring down prices, you can get your buyers to make offers,” he added. “We have never gone backward in real estate. So when there’s a hiccup, we continue to ascend and develop our great skills and also make a lot more money as agents and as brokers.”
Hitt also encouraged agents to invest in networking events, such as Inman Connect, to stay on the cutting edge of real estate trends and technology and build invaluable relationships with other agents.
“This is when you learn more about movements like this and network,” he said. “There’s definitely some huge potential out there.”
In addition to building skills, SIR CMO Brad Nelson said agents must sharpen their value proposition and how they market it to potential clients — most of whom are a little leery about homebuying and selling at the moment.
“I think the market is normalizing, and while the business has been incredibly active for real estate agents like those in the room, and it’s been perhaps very fast-paced for sellers, it’s been incredibly frustrating for buyers,” he said. “Anyone who has been working in the high-end market knows that inventory levels have been in such a drought for so long.”
“But as a marketer, I’m quite excited about this market because we’re starting to see very high quality and high caliber inventory presented for the first time [and] it kind of gives us something to work with from a marketing point of view,” he added. “I think you have to keep in mind that while we have to manage the expectations of sellers, there’s a wonderful opportunity to re-engage buyers who have been frustrated.”
In addition to re-engaging your current sphere, all three men encourage agents to expand their bandwidth and search for goldmines in other markets and even other countries as international buyers ramp up their activity in the U.S.
“We’ve been waiting for those international buyers to come back and they’re definitely coming back and forth,” Hitt said. “We’re seeing Canadians buying back in the United States again [and] what we’ve seen right now with the euro and the dollar being almost exactly the same, is a lot of our clients are now going [to Europe] and buying properties that they would’ve only dreamed about.”
As the real estate industry braces for what the rest of 2022 will bring, Nelson encourages agents and leaders to hold tight to the creativity and innovation the past two years have provided, from Zoom calls to virtual tours and video-first marketing content.
“I think our industry [had] incredible creativity at the height of the pandemic,” he said. “For those of us who live in New York State it was illegal to show a property in person, and so our only options were virtual alternatives, FaceTime, virtual reality, video content, etc.”
“But once we came out of the lockdown at the absolute height of the pandemic, we didn’t have to do much marketing for property to sell very quickly,” he added. “Agents really need to get honest with how they are fulfilling their fiduciary duties with their sellers. To default back to whatever you did before COVID, it’s not going to work. The newspaper ad is not going to work.”
Hitt and Durkin also lauded the crucial role technology has played over the past two years but encouraged agents to step from behind the screen and build relevancy and connection through face-to-face interactions.
“Video, obviously, is very popular and there are a lot of reasons why you should focus on it, but I think probably the thing that’s the most interesting for me right now is relevance,” Hitt said. “How are we relevant to our clients? How are we relevant to our communities?”
“One of the ways you [remain relevant] is you take your expertise, you take the data, and brutal honesty about [where we are] and share those insights,” he added. “I think that’s one of the ways we can prove our relevance to the market we’re serving in.”