Broker Strategies for Succeeding in Difficult Times
RISMEDIA, January 7, 2009-For those of us in the real estate industry, the Feds’ recent announcement that the country has been in recession since December 2007 hardly came as a revelation. We have been focused on plugging the leaks in our operations for some months longer than that. More than ever, we should rely on NAR resources, such as business toolkits, online and continuing education, and the latest, up-to-date industry research to find new ways to help us stay afloat. These resources, of course, are available to all brokers and members at www.Realtor.org.
For any one who is tired of hearing that “challenge is opportunity,” there are those who truly do find opportunity even in difficult times. This month’s panel of seasoned professionals is among that innovative group.
Moderator: Virginia Cook, Special Liaison for Large Firm Relations, NAR
Participants: Gino Blefari, Founder, Pres., CEO, Intero Real Estate, San Francisco
Doug Ayers, President, Koenig & Strey GMAC, Chicago
Candace Adams, President, Prudential Connecticut Realty, Rocky Hill, Connecticut
Virginia Cook: What kind of cost-saving changes have you been making in your marketplace?
Doug Ayers: I think as an industry, we have been slow to realize how society is changing. So essentially, we’re focusing on three main strategies to take advantage of the changes. First, we’re making sure our agents are among the most knowledgeable in the region. There is a lot of misinformation out there, so I make sure my agents are specialists, not generalists. They are able to boil down local market conditions and apply them for the benefit of each and every client. Second, we’ve changed the way we approach consumers. We’ve re-evaluated our company structure so that we fit better into the lives of our clients. Meeting them at Starbucks or communicating with them through the Internet, is a great alternative-and it gave us the opportunity to shift away from the big office concept and open smaller, less costly locations. In turn, and thirdly, we’ve made changes in our management concept, as our managers may now be managing and coordinating several of our smaller locations.
Gino Blefari: I totally agree with that concept-and I can tell you that “right-sizing” our company saved us more than $9 million in operating costs between December 2007 and December 2008-and gained us 58 % in market share during the same period. We started by taking smaller locations instead of larger ones. We streamlined support staff and reduced some salaries. One day in the future, managers may be managing several of these smaller locations. We also restructured our training program, working at our headquarters instead of offsite. And then there are the little expenses-a lot of them. Eliminating the outside plant service saved us $16,000 last year. Going from a high-end coffee vendor to a generic Starbucks saved over $22,000. Dumping the on-hold music trimmed off $7,200-and cutting janitorial service from five days to three saved us $32,000. These are not insignificant numbers when you are looking for ways to bump up your bottom line.
Candace Adams: Without question, drastic measures are needed in this unprecedented market. We can’t opt out of the recession, but it takes knowledge, clarity and sheer guts to make the hard decisions. Yet making them is absolutely necessary for anyone who is going to survive. I look monthly at the production of each and every office, and I don’t hesitate to make the cuts that are needed. We’ve consolidated offices, reduced staff and instituted smaller, satellite offices. I look at it as the first step toward true regionalization. We’ve also focused more on Internet-based services, which reduces the need for expensive brick and mortar-and we make it clear that increasing productivity by every agent is absolutely expected.
Virginia Cook: How are some of these cutbacks and production pressures affecting recruitment and retention?
Candace Adams: Experienced agents are resilient and cooperative. They handle the pressures really well. And recruitment has not been a problem for us. There are a lot of offices closing out there, and while some agents are opting out of the business, those who persevere are looking for strong, financially secure companies. They gravitate to us for that reason. In the end, I think, the large brokers will prevail.
Gino Blefari: In many ways, the cuts we make are not affecting the agents anyway. They should not be focused on whether the trash can is fuller or on the brand of coffee in the break room. As Candace said, they should be focused squarely on production. In our company, agents know they may not offer to reduce their commission to a client unless they clear it with their manager first. Even now, as our high-end market continues to erode, that rule alone improved our overall commission rate by five basis points last year.
Doug Ayers: I agree that most agents are responding well to the transitions-and that recruiting, when you have a solid direction, is not adversely affected. We picked up 300 experienced agents last year despite the reduction in office space. We know we will continue to thrive as long as we keep our eye on the ball and continue to make the necessary changes.
The Power Broker Roundtable is brought to you by the National Association of REALTORS® and Virginia Cook, NAR’s Special Liaison for Large Firm Relations. Watch for this column each month, where we address broker issues, concerns and milestones.