Moderator:
Kymber Lovett-Menkiti, President, Keller Williams Capital Properties, Washington D.C.; Broker Relations Liaison, National Association of REALTORS® (NAR)
Panelists:
Brad DeVries, CEO/President, HUFF Realty, Rector Hayden REALTORS® & Semonin REALTORS®, Berkshire Hathaway affiliates, serving Kentucky, Indiana and Ohio
Cameron Merage, Founder, CEO, First Team Real Estate, Irvine, California
Rei Mesa, President and CEO, Berkshire Hathaway HomeServices Florida Realty, Fort Lauderdale, Florida
Kymber Lovett-Menkiti: The last three years in real estate have been a wild ride, and the times, once again, are changing. While properties are moving briskly in some markets, slower sales are a new reality in others, with higher interest rates and rising inflation taking a decided toll. Lacking a crystal ball to see what the spring market will bring, savvy brokers—most of whom have weathered times like these before—are keeping a close eye on expenses and drawing on their best strategies for staying profitable in the changing market. While it’s been said, and wisely, that you can’t cut your way to profitability, what can we do to keep our edge, and even add revenue, in this normalizing market?
Brad DeVries: Mark Twain famously said, “I want to be in Kentucky when the end of the world comes, because it’s always 20 years behind.” Maybe that’s true, because we’re experiencing a healthier market now than some other areas of the country. But we did see a drop early in the year, with sales down some 30 percent over 2022, and so we’ve been in cost-analysis mode for months. We’ve pretty much frozen hiring except for critically needed roles, and we’re not spending anything we don’t have to.
Cameron Merage: As the largest privately held family-owned realty company in Southern California, we pride ourselves on providing every resource our agents need to grow and thrive. But we started cutting expenses when COVID first began to slow. Salaries are hard to mess with, because we want the best support people, but we do take a hard look at technology—and at space reduction if it comes to that. We don’t just negotiate on leases coming up for renewal. We look at leases with a couple of years left on them, because extending some of those leases early can often get us a lower cost.
Rei Mesa: The Florida market is always in demand, so while we see prices flattening these days, we don’t see them falling in today’s inventory-low market. But we like to keep an eye on expenses in any market and take advantage of every opportunity to increase our efficiencies and our economies of scale. We look at technology to determine where we’re getting the best return on investment. We look at marketing, another area where we need to be more efficient with less—and of course we look at brick and mortar, especially with today’s technology and a large percentage of our sales professionals spending significantly less time in the branch offices. .
KLM: The word “recession” is on a lot of lips these days. Do brokers need to be more aggressive in cost cutting?
BD: Efficiency is the word we’re using. We made a lot of adjustments going into the last recession, and I’m grateful that we did. We’re analyzing expenses now and doing whatever we can to be sure we stay lean and mean.
RM: As the pie gets smaller, the table manners have to change. We are constantly educating sellers and buyers on pricing and value while keeping our focus on short-term and long-term sustainability.
KLM: In our company, we have an agent leadership council, giving top agents the chance to weigh in and provide feedback on what is working or not working. That’s especially helpful when it comes to deciding where to make cuts and where to double down.
CM: Times like these are harder on newer licensees than on established agents. But our company culture was built by focusing on our agents’ pain points, making them feel safe and doing everything we can to provide support. Now, as we look at ways to increase revenue, First Team is digging in and putting more effort into supporting our family of companies.
RM: Our essential services—mortgage, title, insurance, home warranty—help us deliver a better experience for our consumer. This consumer-driven one-stop shopping experience is also beneficial to our company’s bottom line.
BD: If times are tough for us, they’re tougher for our agents. As brokers, we need to be cheerleaders, and we need to double down on services. Agents need to increase their marketing and their calls. We will all have to work much harder to do the same amount of business.
KLM: It’s a good time to also check in with NAR for value-added tools and great resources that can help get us to where we want to be at https://www.nar.realtor/brokers.
CM: And in spite of inflation and higher interest rates, it’s hardly all gloom and doom. Business slowed for us in November and December, but now we are seeing multiple offers on homes that are priced right. Priced right—that’s the key. Not long ago, we fielded 21 offers on a nice home in good condition and priced at $1.3 million.
