As we come off a boom market and head into a slowdown, it’s vital to understand how your brokerage can continue to prosper, even if we see unit sales off 30% to 40%.
Historically, the biggest downturns, from 1979 to 1982 (unit sales down 49% peak to trough) and 2006 to 2009 (down 45% peak to trough) took place over 2 to 2.5 years. This one is happening a bit faster.
In the 2006 to 2009 downturn, 24% of the RealTrends 500 firms from 2006 did not still exist as separate companies by 2010. Alarming, and it should cause you to be concerned.
Other than the normal prescription of cutting costs, where are the opportunities for brokerage firms to grow, survive and even prosper in this kind of a downturn?
In a white paper we published in 2014, entitled Against all Odds, we outlined the stories of 17 firms that grew their agent count, transaction count and per-person productivity through the very challenging market of 2006 to 2009.
Here is a summary of what those 17 brokerage owners shared with us.
- Be intentional with your planning and focus.
- Regardless of how close you think you are to your agents, get closer.
- Be and act strategically.
What did they mean?
Here are some activities and strategies you should be discussing with your leadership teams:
Retraining agents. Assume the market will take two to three years to recover. How should you retrain your agents? What markets should they focus on? What new skills do they need? Should you be fearful of your business’s future? Think about what they are thinking.
Lifelines for small- and medium-sized firms. What are the opportunities to provide a lifeline to small- to medium-sized brokerage firms, many where the owner is primarily making money from their sales and not from the brokerage? These owners are feeling enormous pressure both in their sales business and their brokerage business. What are you doing to reach out to them, particularly in and around your current market location?
Engage in deep thinking about your business. Bring your whole team into the process of identifying what needs to be done. Involve them deep inside your thinking and the business. Get all the help you can. No principal owner can do it all on their own. Identify incremental improvements in all your processes, don’t just look for the home runs.
Overcommunicate with your agents and staff. Communicate as clearly and frequently as possible about progress and highlights of successes. Be reassuring without false promises.
Final thoughts
In the study, each of the brokers interviewed said they developed a more focused recruiting program than they ever had. A majority credited this more than any other single change they made in how they operated.
There are no single panaceas to survive and prosper through these kinds of housing market retreats. But from those who have gone before, these are some very good reminders.