There is no doubt that the current economic situation in which we find ourselves is unprecedented. While it’s difficult to predict what the next days, weeks and months will bring, let alone longer-term consequences, we can look to recessions from the recent past to give us some idea. As a real estate agent during the housing market crisis of 2008, as well as other market downturns, with added purview as a real estate leader over the last ten years, here are three pieces of advice I have for agents today:
Lesson No. 1 – Create a business plan.
This may seem obvious as agents should always have a plan for their business. Integral to any business plan should be the first steps to take in adjusting business at the onset of a slowed market or economic downturn. However, in reality, only 5 percent of real estate agents actually have plans, and even fewer have a plan for their business during times of uncertainty.
Agents who don’t already have a plan in place should take the time to create one now. It should include a step-by-step course of action for three potential scenarios that we could be facing in the near future:
– An economic blip that impacts real estate for a short period of time.
– A short-term hit that impacts transactions in the residential real estate market for 3-6 months.
– A significant downturn that could have a real impact on the housing market for the long-term.
Planning for each scenario should include (1) how agents will manage their core business or area of specialization, (2) an outline of financials, including and determining necessary vs. expendable costs, and (3) the messages for communications to clients, business partners and vendors.
First steps should be to cut any expenditures that aren’t vital to your core business and start communicating with clients. If this seems overwhelming, start a day (or even week) at a time to get started.
Lesson No. 2 – Be honest with your clients.
When there are fewer sales, every transaction is even more vital to an agent. As such, there could be a tendency to push clients to buy or sell their home, even if it would be more prudent for them to wait. Even if this approach works in some cases, the benefits are always short term and the lasting consequences for an agent’s business and personal brand could be dire. Remember, our ethical duty is always to act in the best interest of our clients.
During the financial downturn in 2008 and 2009, I committed to always being straightforward and honest with my clients, even when it cost me short-term income. In complete honesty, it was the worst year for my career financially. But, when the market recovered, all of my clients were appreciative that I didn’t push them, and my business grew tenfold. Even now, more than a decade later, I still get calls and referrals from clients of mine during that time period.
Lesson No. 3 – This is the time to build your pipeline.
While a slew of sales are likely not imminent, agents shouldn’t turn-off the faucet on all marketing and client contact. But it is still important to be prudent; first agents should identify how much they can afford to invest in marketing. At the very least, they should absolutely stay in touch with their clients, being sensitive to their reactions in the current climate and acting as a counselor to them.
Agents are well served to remember that now may not be the time to be pushing sales, but rather acting as a resource of information. No matter how long this lasts, agents should not completely cut off marketing and communicating with clients as it will be that much harder to build back their business when the economy rebounds (which it inevitably will).
Despite how dire things may seem, the most important thing to keep in mind is that this too shall pass. During times like these, it can feel like our current circumstances will last forever, but the one historical constant from past economic downturns is that as soon as recessions pass, pent up demand leads to an abundance of opportunities in residential real estate. Based on my experience, I believe that the industry will come back stronger and future success will come to those who take the right steps today. And new habits will become new ways to work even after this is over.
Anthony Hitt is the president and CEO of Engel & Völkers Americas, overseeing the global real estate brand’s growth and operations in the Americas. For more information, please visit www.evusa.com.