“Where’s the Industry Going?: “Embrace the Chaos
The question of the day from Tuesday to 2022 Gathering of Eagles conference was, “Where is the industry going?” After two years of unprecedented housing market conditions, markets across the country are beginning to slow. And although the general consensus seems to have viewed this as a cyclical change, returning the market to more “normal” conditions, many uncertainties remain – not just about the market, but about the future. commissions, as well as how homes will be bought and sold.
Two industry executives, Glenn Sanford of eXp Real Estate and Christy Budnick of Berkshire Hathaway Home Services, shared their thoughts on the future of the industry. Mark King of Keller Williams, was scheduled to present, but was unable to attend due to flight issues. However, he shared his views in a phone interview with Actual trends.
The three leaders recognized the changes in the market and the challenges for real estate professionals.
“I think everyone in this room has felt it, the market is changing,” Budnick said as he addressed the crowd in the International Center at the Broadmoor Hotel. “I think despite that, we’re on track for our second best year since 2007. Volume will likely be down slightly due to price appreciation.”
King shared a similar sentiment: “There are a lot of alarmists out there right now, but if we go back to the data, I’m optimistic because I don’t see a giant house price crash coming. I think we’re going to see things move towards a 10% to 15% decline in units, but if we had a 10% decline in units, it would still be the fourth best year in real estate history.
And while Sanford generally agreed that the downturn contains different variables than 2008, he also cautioned participants to be cautious.
“We don’t know what’s going to happen and we don’t want to rely on it being temporary,” Sanford said. “In 2008 people kept saying that would change, and look what happened.”
Agent and broker preparedness will be key to whether individual agents, brokerages and franchises will sink or swim over the next few years, the three experts said.
“We have to be prepared for this downturn,” Sanford said. “Some of us have more variable cost structures than others, but I seriously suggest: don’t renew leases if you don’t have to.”
According to Sanford, the two biggest liabilities for brokerages are too much debt and too many fixed expenses, especially one of the biggest expenses: the rent for physical office space. Sanford and eXp eliminated this cost by creating a cloud-based brokerage. Going forward, some brokerages may be forced to close their offices to save on expenses, and Sanford believes the strong footing of its business in its virtual model will help the brokerage continue to grow.
“We’re always striving to make our model more attractive to agents,” Sanford said. “As a virtual model, ours is already stable and that may be even more attractive to other agents if their brokerages are forced to close physical offices and need to find a way to operate virtually.”
Cost reduction was also a point addressed by Budnick.
“We have to be ready now,” she said. “It’s really important for brokers to look at their budgets and see where they can cut things that won’t go too deep.”
But King warned: “The mistake I see both brokerages and agents making at times like this is that they are cutting back on the things that bring them business or the things that bring them business. help grow their business.”
Although cutting costs was an option discussed by executives, Budnick and King also stressed the importance of education and coaching for agents as they strive to continue to grow their business, despite a general market downturn.
“For the individual realtor, the market really doesn’t matter,” King said. “It comes down to education, training and what you do to increase your skill base. We’re moving from a speed-based market to a skill-based market right now, so coaching and training is extremely important right now.
At Berkshire Hathaway, for Budnick, that means focusing education efforts on mid-level production agents, who don’t need the same grip as new agents and don’t have the high commission shares of best producers.
“We’ve developed a coaching program for these two- to four-year-old agents and we’re using it to improve the stickiness of our middle agents,” Budnick said.
Both Budnick and King stressed the importance of ensuring agents know how to properly price homes and can comfortably discuss price reductions with their clients, as well as the wide variety of mortgage products available.
“They need to be knowledgeable about creative financing and I wonder how many industry officials are currently aware of the different financing options and the impact of higher interest rates on the types of financing that buyers may want to use,” King said. “But industry officials today haven’t had to use these products, so they don’t know about them.”
For Budnick, better agent training is also a chance for agents, especially buyer agents, to show buyers their worth.
“Buyers are getting savvier,” Budnick said. “Let people know what you do and what services you provide and be professional. And do these things before the decision in the class action lawsuit against the buyer’s agent commission is made.
Although there is little certainty about the long-term direction of the housing market, no matter how well prepared agents and brokers are, the three leaders agree that some chaos will persist.
Sanford’s advice: “Accept chaos. Use it to enhance the spirit of innovation and grow your business. »