This month, Matthew Ferrara, philosopher and real estate expert, walks us through what brokers and agents should be doing to adapt to a changing real estate market.
The most important steps brokers and agents can take in shifting conditions is to stay focused on local conditions.
Avoid becoming distracted by big – sometimes surprising – headlines about changing regional or national numbers. The numbers that matter most to real estate professionals and their clients are local numbers. That means we need to know our market’s trends in:
- Listing inventory
- Days on market
- Absorption rate
We have the data – from our MLS and company reports – to analyze the conditions that affect our clients most. Even when we talk with colleagues across our Brands worldwide, it’s always about translating their insights into local market conditions that creates opportunities for our clients succeed.
At the same time, we should take practical steps to prepare for predictable trends. Start by reviewing business strategies and operational plans that might have been created months ago. When markets change, it’s a signal for us to:
- Review budgets
- Measure our market effectiveness
- Measure our lead generation results
- Strengthen our technology
- Sharpen our sales skills
- Sharpen our negotiation skills
Times of change are not a time to pause. Rather, we should be focusing on maximizing existing resources, tools, and training. Remember to get advice – from colleagues, managers, and business advisors – and adjust tactics to align with the market that is emerging, not the one we had last year.
For company owners, it’s a time to evaluate operating efficiencies and sharpen budgets, while looking around the market for expansion opportunities. Turbulent periods create the conditions for attracting talent with proven productivity and technology. They open new markets as inventory patterns shift, people work from home, and consumer preferences change. Keep an eye out for opportunities to merge or acquire market-share, expand your presence in diversity markets, and pick up business from competitors who were merely riding the last wave.
Are we entering a real estate disruption or correction?
There are a lot of reasons to think this shift is more of a correction than a recession. Here’s why:
Key economic fundamentals make it unlikely to see a major market collapse
Currently homeowners have more than $28 trillion in equity, so there’s little reason to expect widespread foreclosures if the jobs market softens. There’s a historically high demand from over 80 million millennial consumers entering peak earning years and forming households at a record pace.
At the same time, mortgage rates, while higher than the recent past, remain historically well below the fifty-year average. Strong nationwide employment and household savings are cushioning the inflation impact so far. There’s a lot of signs that the housing industry may not experience the brunt of the disruption, even if the economy cools further.
There will be disruption! But it will be a creative disruption.
Changing times are perfect for innovation, creativity and risk-taking – and nobody does that better than the real estate industry:
- Agents always adjust sales and marketing techniques.
- Time and time again, brokers have proven their ability to apply technologies to drive service and sales growth.
- There are more technology, service and finance partners investing in our industry than ever before.
These conditions almost certainly indicate there will be lots of disruption. Best of all – we will be at the forefront of it!
Just a few short years ago, we radically changed during the pandemic, applying video, mobile, and touchless transaction technology to help the industry reach 15-year sales highs.
Now it looks like we will do it again—only this time under far more predictable circumstances. We will see creative disruption. What does that look like? It likely will feel a lot like the real estate industry leveraging our abilities to:
- Work remotely
- Use mobile marketing
- Take advantage of relationship-based sales techniques
All of this will be in service of purposefully improving the outcomes for ourselves and our customers.
We’re already doing this by deploying integrated sales, marketing, and customer relationship management platforms at record pace, investing in our sales, manager and leadership development, and expanding our global brands in a way that is already disrupting – for the better – the way real estate is done in every market.
Preparing for change, while maintaining growth
The industry can do three specific things to be prepared for significant changes:
- We must remind ourselves every day that change is what we do!
Our job description is to deal with the unexpected. There isn’t a transaction that ever goes “by the book” and that’s the very proof that we’re ready for anything. Want proof? We close more than 6 million transactions a year!
We find problems and solve them. See opportunities and pursue them. Notice trends and adapt to them. Our first step is to maintain a strong, optimistic belief that our brands, brokers, managers, and colleagues can and will handle whatever happens.
- We must get into “fighting shape” now
Although we worked hard work and stayed busy in the last market, the way in which homes were sold may have eroded some skills we will need in the next market.
When houses sold in hours or days, with multiple bids and few negotiations, some professionals never got a chance to practice some critically important sales techniques like:
- Pricing properties
- Staging properties
- Writing advertising copy
- Overseeing photography
- Creating videos
- Open houses
- Negotiations with conditions and concessions
Most of the firms I coach have already re-invigorated their core training programs to ensure their salespeople and staff recharge their business fundamentals and integrate technologies to stay sharp. Training, role-play, coaching and accountability will contribute more to success in the next market than fluctuating interest rates.
- We need to strengthen relationships in our sphere of influence
Our past clients, current contacts and new prospects need to know we’re available and back to work. They need to know we are analyzing trends and have an updated plan for success. The vast majority of sales and referrals most people ever receive come from their sphere of influence. Make sure you keep in touch with them. That means:
- Make the calls
- Send the texts
- Drop by the house
- Have a video chat
- Reconnect on social media
- Get your database in shape
- Update your marketing messages
- Update your presentation tools
- Upgrade your video camera
- Keep your social media content fresh
Managers should rekindle conversations with new and existing talent and refresh their knowledge of the resources and opportunities they need during turbulent times.
Tools and techniques critical to success right now
Everything we learned in the global health crisis helped us become proficient with the things we’ll need to navigate an economic shift. This includes essential tools such as:
- Cloud-based platforms with CRM
- Market analysis
- Presentation tools
- Transaction management tools
- Video conferencing
- Social media
- Mobile-friendly transaction management tools including:
- Finance systems
- Closing systems
- Finance systems
All of these tools are already best practices at the best brokerages. We can lean on them further to gain market share and clients while companies that simply surfed the hot market scramble to catch up.
What we need to be communicating about the housing market
The most important message is: We’re ready for anything!
Our brokerages and the brands that support them have the resources to deal with change because we’ve done it before. From investment capital to cash flow, cutting edge technology to always-available training, the amount of management, coaching, marketing, and sales support is better than ever. We’re starting from a very good place, too: Over the last few years, the industry outperformed the previous fifteen years of records, which has left strong companies in prime positions to handle change.
The message needs to be bold but also wise. We need to be clear and careful when we talk to consumers about the realities of the market. We must help sellers adjust their expectations and buyers navigate different conditions from just a few months ago. But that’s the job – every day, every market – and we do it well. If we remain confident, we can help the public remain confident that with our help, home ownership remains very much within reach.
How to keep a strong, positive attitude amidst the anxiety and headlines
The best way I know to keep a strong attitude is to be proactive with my self-talk. This means I carefully curate the words I let into my mind and attitude– especially from my smartphone, TV, and social media feed.
To start, try unsubscribing from negative-driven headlines and pessimistic posts. Reconnect with success stories and good news from people you trust. Tune into your managers and leaders. Follow inspirational voices in our industry.
Personally, I also proactively reach out to people I value, in order to have positive conversations. Nothing helps me remain confident in my success than discussing with a client what’s going right for both of us.
Listening to good stories from peers re-energizes my attitude and sharing a few ideas of my own reminds me that I’m on the right track. When someone says, “It’s so good to hear from you!” I receive the energy I need to dispute negativity and pursue positivity around me. When I say, “Thank you for our conversation,” I share a dose of gratitude for both of us. Best of all, these little bursts of optimism come from staying in contact with friends and clients—and making new ones. I get energized by doing my job. That’s how I create all the good energy I need to turn a shifting market into an endless landscape of opportunity for myself and my clients.
–Matthew Ferrara, Philosopher