New markets require new approaches and tactics. Experts and industry leaders take the stage at Inman Connect New York in January to help navigate the market shift — and prepare for the next one. Meet the moment and join us. Register here
Vija Williams has been a fixture in the real estate industry for years, and she thinks there could be hard times ahead.
“I do think it’s going to be a pretty ugly year,” Williams recently told Inman when asked about 2023.
Williams — who serves as head of industry for real estate startup Place — added that she’d love to be proven wrong. But either way, she sees this as a critical moment for real estate professionals to shift to leaner, more efficient operations.
Next month, Williams will take the stage at Inman Connect New York to discuss the ins and outs of the housing business, with a particular focus on teams, among other things. In the lead-up to Connect, Inman chatted with Williams about obstacles teams might face in the near term and how leaders can improve their odds of success. And the takeaway was that while tough times may lie ahead, smart teams can survive.
What follows is a version of Inman’s conversation with Williams that has been edited for length and clarity.
Inman: Talk to me about how teams are faring in this very different market we’re experiencing right now. Teams and the market were booming over the last couple of years, but the market has shifted. So how does that impact teams?
Williams: I notice that a lot of people talk about depreciation versus appreciation and there’s a lot of talk about home values. But that doesn’t really affect us on an agent and a team front like a drop of units does.
We rely on a certain amount of units being bought and sold. And that really dictates the success of the team more than depreciation and appreciation. I don’t mean to sound like that’s not a factor. It’s all a factor. But the challenge with this shifting market is that, I think, it’ll pan out to be down over 30 percent. So if you ask most teams, if they’re beating 30 percent in terms of units, they’re probably beating the market.
To me, the biggest barometer to look at in a market is that drop or gain in units. And you look at how frothy last year was, we just had a ton of units being bought and sold. Plus they’re appreciating. So for sure, teams are affected by the market.
So is a team a sort of lifeboat? When the market is bad, is there more demand to be on teams?
Good teams are doing well, but a lot of teams won’t make it.
A lot of us projected a 30 percent decrease in units which seems to be playing out. One way to combat that as a team is to recruit. You can recruit 30 percent more agents and you can hit your team numbers. But what that doesn’t solve is per-agent productivity. And if your agents are making a living, are they still providing livelihood to their families?
What happens is, the answer is no, they’re not always. So they leave the industry. And we see more churn.
So just recruiting 30 percent more agents probably isn’t the solution. It’s probably more like half-to-two-thirds more agents to kind of mitigate that. But on top of that, you’re having to really make sure that every single agent is trained and supported or nurtured to hit their personal goals. The team goals are really secondary to the individual agents’ goals because we serve the agents on our teams. They came onto our team because they believed we’re the vehicle by which they can hit their income goals, their wealth-building goals. So the really good teams do a really good job with that.
Those are the really great teams that are thriving. The ones that aren’t thriving didn’t recruit, so when they lose agents they lose half or most of their team. They’re stuck in really expensive contracts with online lead portals that they didn’t try to get out of, they can’t get out of. And they’re not making enough revenue so they’re going backward every month. There’s a cycle there that will run a team down to its demise.
So we’ll see both of those, and we are seeing both of those right now.
What advice would you give to team leaders who want to weather the current storm?
I think the big thing right now for team leaders is to reduce expenses: Reduce, reduce, reduce. We can’t say that enough. The market is going to be down 30 percent. Trying to reduce expenses 50 percent would be great. And that is very extreme.
You want to also be careful to really track your ROI on marketing dollars spent because you don’t want to cut money where you’re getting a good ROI. So it’s really important to hold your money accountable in a market like this.
Talk to me about the market as you see it in 2023. Are we heading into a crash? Will it rebound? What do you think next year is going to look like?
I believe we need to prepare for the worst. I believe we need to prepare for a very very deep, bad real estate recession, regardless of what happens. And that means a drastic drop in units being bought and sold. Depreciation in most metro markets. And consumer confidence flagging because potentially you’ve got inflation and broader economic issues.
So that’s what I believe. I’d love to be wrong. I’d love everybody to say, ‘well, Vija said it was going to be horrible and it wasn’t.’ That would be outstanding. And if I’m wrong, I believe if you’ve prepared, then you are right.
If I’ve got a lean mean machine that is profitable and growing in that kind of economy and then the economy turns around, that’s when you see hockey stick improvement. That’s when you see these teams double and triple really fast. It’s because they buckled down in the harder markets.
I think specifically what that looks like for a team next year is, most teams if they haven’t already made the switch they need to start making the switch right now from a marketing-based team to a prospecting-based team. This is the time for teams now to train their agents how to fish, not just give them the fish that they have paid for.
I do think it’s going to be a pretty ugly year. But what I think doesn’t matter. It doesn’t matter because we need to prepare. Prepare for the worst and hope for the best.