Three top real estate executives offer insight into how they're succeeding in today's market conditions
RISMEDIA, March 5, 2007-When the market gets a little bumpy, tough decisions must be made. Thinking outside the box, modifying the status quo, going back to basics, and imposing cost-savings measures while simultaneously embracing growth are all strategies being used by brokers to maintain and increase profitability. However, according to Virginia Cook, special liaison for large firm relations for NAR, after all is said and done, nothing quite beats superior service and good relationships, as the following brokers can attest. Here, Cook moderates a panel of leading real estate executives on how to become more profitable in today's changing market.
Moderator: Virginia Cook, Special Liaison for Large Firm Relations, NAR
Participants: Anthony Azar, CEO, Realty Executives, Southern Arizona – Tucson
William K. Hurt, President & CEO, ERA Shields Real Estate – Colorado Springs, Colorado
Barbara Weinberg, Broker/Owner, RE/MAX East of the River – Manchester, Connecticut
Virginia Cook: Describe current market conditions in your area.
Anthony Azar: The statistics are difficult to interpret. Obviously, comparing any year with 2005 can be misleading. Our agents report renewed interest and activity, especially from buyers. The overwhelming sentiment is that the market is beginning to move up off bottom. By year end 2007, both the resale and new construction markets should be back to "normal." I should add that, on average, our agents have been in the business for over a decade. As such, they have experienced different markets other than the frenzy and have been able to use that experience as a differentiator in a slowing market to help bridge the gap between buyer and seller.
William K. Hurt: Favorable. We are anticipating 2007 to look very much like 2006 in terms of overall volume. Because our local market experienced reasonable growth in recent history, we are insulated from the major problems seen by other markets. Additionally, our local economy is strong and will continue to grow in 2007 as a result of business relocation to the area and military activity. It is our experience that if a home is priced appropriately and buyer friendly, it will sell rather quickly. The most difficult part of our local experience is helping sellers come to grips with the current reality that the market is favorable to buyers. To exceed 2006 volume, it will be critical to adapt to changing conditions by aggressively differentiating our products and results from discount brokerages and others.
Barbara Weinberg: Many agents, and perhaps some brokers, might think this is a slow or sluggish market, but I see a market of great opportunity. Connecticut had been so hot that agents forgot the basics of their personal and professional success programs. New agents did not learn that real estate requires hard work. The important ingredient for agents' psyche is to realize they are full-time professionals who have an awesome responsibility to clients.
VC: How can brokers be more profitable in a changing market?
AA: A changing market offers opportunities to make tough decisions-for example, closing non-performing locations, personnel changes, jettisoning of programs that agents don't find useful. These cost saving efforts help. However, continued growth is paramount: agent growth, growth in organizational talent, growth in programs focused on supporting agents in the fundamentals, physical growth, etc.-also, investing in high quality systems that allow for growth to be supported without high incremental costs. The slowed market offers a (quickly closing!) window of opportunity for implementation of these systems.
WKH: For brokers and individual agents both, charge full commission and be worth it in terms of the service provided. Another area to examine is how a property is marketed; it must be appropriate. We have seen an increase in overall marketing costs due to longer days on the market. Additionally, examine how Internet resources and company Web sites can support property promotion and bring buyers to listings.
BW: This is the era of "out of the box" thinking. But in any type of market, brokers need to be on the cutting edge of providing new and better services. The services-advanced training classes, lead generation services, technology upgrades, training for new technology, Web sites-could, and should, be sources of additional income. It should be clear to agents, from the broker's viewpoint, what basic bundle of services are provided by the company. Other services can be made available for a fee necessitated by cost and to generate income. We have established an interest in a mortgage company that produces income and, most importantly, provides superior service and accountability to our staff and agents.
VC: What strategies have worked best for you?
AA: In addition to the earlier response, we have had to renew our efforts around the fundamentals, just as the agents have. This market has also created an opportunity for our family of services-mortgage, title, insurance, and home warranty-to really shine. Our capture rates have improved over the past year for very practical reasons. When the market was on fire, agents did not feel the need to be as connected as they are now. When conditions tightened, the strength and closeness of our family of companies has been a real benefit to our agents-and, of course, their buyers and sellers!
WKH: Positive relationships with consumers and fellow brokers, and strong listing inventory that is in great condition and priced appropriately.
BW: We have built a family model for the company, separate from our corporate identify, that I would refer to as a small town model-even though our population is currently at 61,000. Small-town support and caring are very important to me and the folks here. We enable our agents and clients to participate and be part of a close knit family environment. Everyone here is about giving extraordinary service in a manner that speaks loudly and clearly about professionalism and respect. My mantra is to walk the second mile to give and do more than asked. Because we give freely and warmly, we get so much goodwill in return. Is that old-fashioned? Yes, but I believe we are in an era where people want that personal connection with superior service. It has worked for us and made our company successful.
Source: The NAR Power Broker Roundtable, Real Estate magazine, March 2007