8 ways to prepare your business for a normal market
By Bridget McCrea
The housing market turnaround may not be in clear viewyet, but that isn’t stopping the state’s brokers from preparingfor a kinder, gentler market. Here’s what they say all brokersshould be doing in 2009 to gear up:
1. Cut Your Square Footage
If you’re still operating with huge offices that sit emptymuch of the time, then you’re not on the right track, says JeffCulbertson, executive vice president of Southwest Region forNRT, in Mission Viejo. Culbertson’s firm is operating withabout 48 percent less physical space (by reducing the size of itsoffices, and having more agents work from their own homes)than it had three years ago. “Yet we’re still covering about 90percent of the market.”
2. Focus on Profits
“All brokers should be in the black right now,” says MichaelLyon, CEO at Sacramento-based Lyon Real Estate. “Ifyou’re still looking for money, then you’re in deep trouble.”Those brokers that are in the “red” and struggling to supporttheir companies probably didn’t do enough cost-cutting andstrategizing during the downturn, says Lyon, and will beill-prepared to survive. To get there, he says brokers shouldfocus on reducing debt significantly–preferably down tozero–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 targetwhen times are good, but surviving in a tough economyrequires a plan. “Have a business plan that addresses yourspecific market,” says Rick Hoffman, president and COO atColdwell Banker Residential Real Estate in San Diego, “andthat clearly outlines how you’re going to service that market,what retail outlets you’ll use, and how many agents you’ll needto fulfill that plan.” Also consider the productivity of each ofthose agents, says Hoffman, and how those individual numberswill 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 inModesto, who advises brokers to aggressively train agents on theuse of online marketing and social networking tools like Twitter,Facebook, and YouTube. Make sure that those agents are postingat least six (but preferably more) photos with all of their listings,Melo adds, and that they’re linking all of their listings to virtualtours. “Brokers and agents alike need to catch up to consumers intheir use of technology and automation,” he says, “and find waysto 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 operationalexpenses and redirect company dollars to savings/investment,or to measurable marketing activities. “Seize the opportunityto reconstruct commission schedules and negotiate morereasonable splits with associates,” headds. Other good strategies includeabandoning static Web sites, hiring techsavvyagents, and developing systemsthat tie consumer communications,inventory, and market and communitystatistics into a single user interface, saysLeForce. “You won’t be participating inthe housing recovery if you can’t paythe bills and innovate.”
6. Meet the Market Head-on
When the REO market started gainingmomentum, Culbertson and histeam began training their agents onhow to operate successfully in thatsector. Then when the state foreclosuremoratoriums began to surface, thecompany switched gears to focus moreon short sales, and on training agentsto 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 asa key to any successful broker’s future.
7. Adjust to the Power Shift
There was a time when brokers held allof the cards in the real estate world. Thatpower later shifted to the agent, and is nowin the hands of the client, says Bill Plattos,executive vice president at First TeamReal Estate in Costa Mesa. To operatesuccessfully in an environment whereconsumers have all the information theyneed (and more) at their fingertips, Plattossays brokers must train agents on how to“tune into” exactly what those clients arelooking for. “They basically want informationthat’s free, easy to find, and online,”he says. “That doesn’t take much brickand mortar, but it will require a focusedapproach that takes into considerationthis new ‘evolution’ of real estate.”
8. Brace for More Change
“It ain’t over yet,” says Tom Iovenitti,president and COO at ColdwellResidential Real Estate Brokerage inOrange County and Desert Resorts.“Congratulations on weathering thestorm so far, but there’s still a lotto go through.” Those brokers whohave converted a high percentage oftheir business to REOs, foreclosures,and short sales during the downturn,for example, must brace themselvesfor a quick transition back to “normal,customer-service-oriented (versusbank-focused) business in the nearfuture. Those that don’t will just findthemselves struggling again,” saysIovenitti, “only this time in a healthymarket.”
Bridget McCrea is a freelance real estate writer.
