8 ways to prepare your business for a normal market

By Bridget McCrea

The housing market turnaround may not be in clear view yet, but that isn’t stopping the state’s brokers from preparing for a kinder, gentler market. Here’s what they say all brokers should be doing in 2009 to gear up:

1. Cut Your Square Footage

If you’re still operating with huge offices that sit empty much of the time, then you’re not on the right track, says Jeff Culbertson, executive vice president of Southwest Region for NRT, in Mission Viejo. Culbertson’s firm is operating with about 48 percent less physical space (by reducing the size of its offices, and having more agents work from their own homes) than it had three years ago. “Yet we’re still covering about 90 percent of the market.”

2. Focus on Profits

“All brokers should be in the black right now,” says Michael Lyon, CEO at Sacramento-based Lyon Real Estate. “If you’re still looking for money, then you’re in deep trouble.” Those brokers that are in the “red” and struggling to support their companies probably didn’t do enough cost-cutting and strategizing during the downturn, says Lyon, and will be ill-prepared to survive. To get there, he says brokers should focus on reducing debt significantly–preferably down to zero–and “cut whatever it takes in order to be in the black.”

3. Develop a Solid Business Plan … and Stick With It

It’s easy enough to shoot from the hip and hit the target when times are good, but surviving in a tough economy requires a plan. “Have a business plan that addresses your specific market,” says Rick Hoffman, president and COO at Coldwell Banker Residential Real Estate in San Diego, “and that clearly outlines how you’re going to service that market, what retail outlets you’ll use, and how many agents you’ll need to fulfill that plan.” Also consider the productivity of each of those agents, says Hoffman, and how those individual numbers will contribute to the overall success of the brokerage.

4. Max Out Online Technologies

Traditional, easy-to-place print ads are a thing of the past, says John N. Melo, CEO at Century 21 M&M and Associates in Modesto, who advises brokers to aggressively train agents on the use of online marketing and social networking tools like Twitter, Facebook, and YouTube. Make sure that those agents are posting at least six (but preferably more) photos with all of their listings, Melo adds, and that they’re linking all of their listings to virtual tours. “Brokers and agents alike need to catch up to consumers in their use of technology and automation,” he says, “and find ways to keep up with consumers’ demand for quick answers.”

5. Make Every Dollar Count

Scott LeForce, president at Realty World Northern California, Inc., in Tracy, advises brokers to carefully scrutinize operational expenses and redirect company dollars to savings/investment, or to measurable marketing activities. “Seize the opportunity to reconstruct commission schedules and negotiate more reasonable splits with associates,” he adds. Other good strategies include abandoning static Web sites, hiring techsavvy agents, and developing systems that tie consumer communications, inventory, and market and community statistics into a single user interface, says LeForce. “You won’t be participating in the housing recovery if you can’t pay the bills and innovate.”

6. Meet the Market Head-on

When the REO market started gaining momentum, Culbertson and his team began training their agents on how to operate successfully in that sector. Then when the state foreclosure moratoriums began to surface, the company switched gears to focus more on short sales, and on training agents to work those types of transactions. “One of our sayings around here is ‘a market is a market,’” says Culbertson, who sees market-specific agent training as a key to any successful broker’s future.

7. Adjust to the Power Shift

There was a time when brokers held all of the cards in the real estate world. That power later shifted to the agent, and is now in the hands of the client, says Bill Plattos, executive vice president at First Team Real Estate in Costa Mesa. To operate successfully in an environment where consumers have all the information they need (and more) at their fingertips, Plattos says brokers must train agents on how to “tune into” exactly what those clients are looking for. “They basically want information that’s free, easy to find, and online,” he says. “That doesn’t take much brick and mortar, but it will require a focused approach that takes into consideration this new ‘evolution’ of real estate.”

8. Brace for More Change

“It ain’t over yet,” says Tom Iovenitti, president and COO at Coldwell Residential Real Estate Brokerage in Orange County and Desert Resorts. “Congratulations on weathering the storm so far, but there’s still a lot to go through.” Those brokers who have converted a high percentage of their business to REOs, foreclosures, and short sales during the downturn, for example, must brace themselves for a quick transition back to “normal, customer-service-oriented (versus bank-focused) business in the near future. Those that don’t will just find themselves struggling again,” says Iovenitti, “only this time in a healthy market.”

Bridget McCrea is a freelance real estate writer.