We are experiencing shifting winds in the real estate industry. There are challenges and storms from many angles: legal challenges to the core of how we do business, technology distributions, new economic models pressuring margins, venture capital coming into the industry distorting normal needs to show a profit to compete, long-term systemic changes from a pandemic, economic uncertainty, rising inflation (for many this is the first time in their lifetime), supply chain distribution, continued challenges in inventory, media chatter of real estate “bubble,” the Federal Reserve not only raising rates but ending quantitative easing, and of course, talk of an impending recession.
Take a breath, that’s a lot, but it is NOT the end. I’ve lived through four recessions while in this industry, including The Great Recession, or as we know it, a Depression for Real Estate. However, we are not currently facing a recession like The Great Recession.
I do want to share what I learned through those four recessions and how I’m better off, how the brokerages I owned and ran were better off, and how my sales business was better off. Also, and more importantly, how others came through BETTER.
- This will end, and it will be shorter than you think. The Great Recession was only 18 months. Yes, a little longer and more challenging for the real estate industry, but we fully recovered and then some.
- Margin, you can not have enough margin in your brokerage, your sales business and your personal budget. Make sure your revenues exceed expenses and make that gap as large as possible. Reduce your expenses, don’t spend money unless the cost of not spending costs you money. Read that sentence again, it changed my life.You can’t always increase revenue, but you can always watch and reduce expenses.
- Get rid of duplicate technology – don’t pay for anything extra that is already provided by NextHome. I guarantee you are wasting thousands on things you don’t need. Agents can also save thousands in duplicate technology by simply switching to your brokerage.
- It will be different afterwards, but it doesn’t mean it can’t be better.
- Really think about what you want to take from this challenge, it will prepare you and propel you. You will get through this if you prepare and have a plan to take action.
- Everything will be on sale: real estate, real estate brokerages, agent databases, other businesses and stocks. Invest wisely! (I wish I would have bought more of all of those during the Great Recession).
- Agents will leave the business, shore up your people, your roster. If an agent is doing less than 10 transactions per year, the likelihood is that they will leave.
- Agents will also switch brokerages at unprecedented rates. This is your biggest opportunity to grow.
- Really get to know the technology and marketing product offering you receive from your affiliation with NextHome.
- Customers will have a flight to quality in the real estate they buy and the agents they choose.
- There are three responses to fear: flight, fight, and freeze. During uncertain times, freeze is the deadliest. Don’t let fear paralyze you – freeze should not be confused with standing your ground.
- Real estate still gets sold, brokerages still function, and some even get more profitable.
- You will be better, many of us saw our net worth get hammered during that recession, two years after it was over many saw their net worth at much higher levels than pre-recession. There will be winners, you can be a winner if you play smart.