RISMEDIA, April, 2009-There’s no question that by the time 2008 ended, the world was a different place. The economic decline of the fourth quarter brought with it more challenges than probably anyone could have predicted.
However, with the bad comes the strong. This year’s Power Broker Survey results demonstrate that even in the worst economy since Eisenhower, basic fundamentals and a strong will are more powerful than ever. There’s no denying the tough road ahead, but there are brokers who are preparing and ready for a fight-still stressing a positive attitude, a strong will and a plan for coming out on the other side of this downturn. And as economists agree, the rebound of the real estate market is central to the repair of the economy as a whole.
RISMedia’s 21st Annual Power Broker Survey echoes these trends. With more than 950 responses, this year’s results demonstrate that brokers are eager to show their strength. “We do not focus on problems; we focus on solutions,” explains Tami Bonnell, president of U.S. operations for EXIT Realty Corp.
At Dallas, Texas-based No. 53-ranking Century 21 Judge Fite Century 21 Judge Fite, they’ve adopted a new internal marketing strategy-“We’re not here to survive, we’re here to succeed. If one sets their goals to survive and doesn’t reach their goal, they’ll fail-it’s that simple,” says Jim Fite, the company’s president.
Some firms have their business models to thank for their strength in difficult times. “We ended up phenomenally close to what we’d anticipated,” says Mary Tennant, president and COO of Keller Williams Realty. “Our company came out of Texas during one of the hardest economic times in real estate (1983). Our economic model was designed to thrive in a difficult market. We were born and bred in the briar patch and we’re right back in the briar patch; but now we have a little more of a comfort zone for it.”
In an industry full of proven survivors, brokers are adamant about encouraging their agents, educating consumers, streamlining costs and consolidating where it makes sense in terms of greater efficiency.
“We were very, very reality based,” explains Ron Peltier, president and CEO of HomeServices of America. “This was a year for us to revisit all aspects of our business and to start preparing for a totally different market of fewer home sales and lower sales prices. We put ourselves into a position for being successful moving forward.”
Without a doubt, these market changes are reflected in this year’s Power Broker Survey results, with the total number of transactions down from 2,322,210 in 2007 to 1,925,374 in 2008. On average, real estate firms did over 550 less transactions in 2008 compared to 2007. Total sales volume in 2008 was down more than $175,000,000,000, from $749,201,552,294 in ’07 to $573,924,667,880 in ’08.
“A big part of [getting through this market] is being proactive,” explains Joe Horning, president, Shorewest Realtors, which ranked No. 30 this year. “When you’re being reactive-it’s panic. We’ve been proactive with what we do and our planning. Over the last two years, we’ve questioned every expense-‘Is it worth it? Is it worth our return?’ We’ve had to make the tough decisions and when it comes to personnel it’s not easy, but we’ve had several rounds of letting people go and frozen salaries, but those are the things that will get us through it when the market comes back-and we’ll be better for it because we’ve cleaned up.”
For Peltier, as for many brokers, it’s really more about efficiency than cutting back. “We eliminated a lot of bricks and mortar as well as programs that were no longer relevant, particularly in the areas of print advertising. We are focusing more and more on the Internet.”
Indeed, like Peltier, the majority of brokers have had to make tough decisions over the past 18-24 months. However, brokers have also kept a strong focus on the road ahead.
“I truly love what I do-going to work with my people, helping them achieve personal goals,” says Fite. “While we can’t change the market, we can have an influence-a positive influence-on the market. We choose not to take the negative route. And so, from there, everything’s communicated as the truth.”
“We have to stay positive,” agrees Candace Adams, president of the No. 32-ranking Prudential Connecticut Realty in Rocky Hill, Connecticut, “but also focused. It’s important to streamline initiatives and have a back-to-basics strategy. We have to learn how to work the market-and we may very well be in this market for another year or longer-so we must seize the opportunity and stay optimistic about what it’s all about-sales.”
Chuck McNeal, chairman and CEO, No. 94-ranking, Colorado-based The Group Real Estate Inc., agrees: “Productivity is key within our business model, and with there still being plenty of business out there, we worked to provide a high level of service to our agents so they could provide a high level of service to their customers. Instead of simply cutting our expenses over the past year, we looked for ways to increase our productivity instead.”
For EXIT Realty, the emphasis has also been on productivity. However, according to Bonnell, the company is taking a different approach as well.
“In looking at this current market, there are a couple of things that we do differently-we step outside of the industry and talk to economists and business people from other industries,” she explains. “We’re not just looking at the real estate industry. The difference is how we have faced this market. We went in before the recession hit and prepared for it so that by the time it did hit, we could recover a little bit faster. We weren’t blindsided. We’ve been watching the cycles for a long time and paying close attention.”
At nine-month-old Better Homes and Gardens Real Estate-Realogy’s new brand-President & CEO Sherry Chris is helping brokers focus on what they can and can’t control.
“It’s easy to stray and start worrying about things that aren’t in your control,” says Chris. “What I try to emphasize and say is, ‘Look at what you can do and what you can control, and you’ll come out on the other side of this mess’-that’s true whether you’re a broker or an agent.
“Brokers are doing the things they need to do; things they never dreamed they’d be dealing with-cutbacks, consolidations, etc.,” she adds. “The bonus-if you want to call it that-is that those who succeed in this time will emerge as very strong companies when we come out of this.”
Educating the Masses
One central theme among Power Brokers is the value of education-not just for their agents, but consumers as well. The right recipe, according to Power Brokers, is a mix of old-school tactics and new-school technology.
“We educate, educate, educate from every angle-webinars, teleconferences, live training, interactive training,” explains Bonnell. “And every single bit of our training gets posted to our internal site. I also go out and give a state of the union to our franchises so that they see the bigger picture. And we just don’t go out once or twice a year. Last year, I spoke in 46 states-to cut the records, you have to play more gigs.”
“We have to go back to techniques that have always worked,” urges Chris-picking up the phones, buyers seminars. “All the things successful brokerages used to have to do.”
Adams, whose company completed 8,723 transactions in ’08, seems to agree: “Sales executives need to have a positive attitude and work on keeping their energy focused on the basics-open houses, prospecting, education of the marketplace, and understanding pricing strategy. Pricing properties is one of the most important things we do. We have a pricing strategy class right now that’s standing-room only because sales executives are so eager to be armed with information to go in to a seller to make sure homes are priced properly.”
“We are teaching agents how to survive in the shift,” says Tennant. “We must equip agents with skills and tools they need. Our agent productivity actually went up dramatically in 2008 and education is the reason why.”
According to Horning, educating consumers might just be the key. His company’s put a heavy emphasis on everything-from increasing your knowledge of the market, months of inventory, to pricing, to just looking at the economy and projecting how long and where pricing’s going to fall-and educating the consumer.
“You really need to be out with the consumer,” he says, “because a lot of people are on the fence, especially with the stimulus, so we’ve been promoting it on the website, saying now that it’s been signed, here are the benefits.”
Regardless of region, ranking or results, Power Brokers all know that this too shall pass. But it’s the getting there that they acknowledge is the most-understandably-difficult part.
“At the end of the day, it is all about consumer confidence,” concludes Bob Leighton, president and COO, Jack Gaughen Realtor ERA. “We have survived and prospered through markets like this before and this market is full of great opportunities for those who are serious about the business.”
Maria Patterson, Kayla O’Brien and Paige Tepping contributed to this article.
For complete versions of these interviews, please see our Power Broker series online this month at RISMedia.com.