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31 December 2008

The Final Day of an Interesting Year

If you were to use one word to describe this year that is almost over, what would it be? Exciting? Devastating? Complicated? Confusing? Challenging? Most would say thank goodness it’s finally over. Since the beginning of my career, I have always been fascinated by the process of  how one year ends and the next begins. It is a time where one can reflect on the successes and accomplishments of the present year, while establishing a business plan and goals for the next year. It is really the only time we take a look back and forward at the same time.

Think back to a year ago,  most brokers were filled with promise and hope that the real estate market would turn around in a positive way in 2008.  That, as we know, was not the case, and the ongoing downturn left many brokers trying to play catch up by reducing expenses and rightsizing their operations. Some were forced to sell off assets to stay in business, and some decided not to stay in business, either voluntarily or otherwise. And some brokers were able to take advantage of the many growth opportunities presented.

Given the fact we expect 2009 to be another tough year, I have three pieces of  advice I would like to share with brokers as you finalize your business plan and budgets:

  • First and foremost, concentrate on what you can control. Plain and simple. Period. In other words, none of  us has the ability to change the course of the overall economic scenario that will unfold in 2009, but you do have the ability to change your company, your size, and your model. And bigger is not necessarily better. Are these easy decisions to make? No. But they are necessary ones.  There is no more “waiting game” to play. It’s time to make the decisions none of us thought we would have to make, proactively. I spoke to a very large and well respected broker owner this week. He told me he is in the process of downsizing all of his (many) offices, and closing a number of them. He has downsized to a skeleton staff that each manage and support multiple offices. He is doing it now to get ready for the next upturn. He believes offices will look different when we emerge, and I agree with him. Put your head down, focus only on your business.
  • Dramatically reduce your average square feet per agent. 10 years ago the average square feet per agent in an office was in excess of 100. It needs to drop to between 10 and 20. That is a big drop, but it is where it needs to be. The office of the future needs to be a high tech drop in center, nothing more. Check out a company called @ Properties in Chicago, they seem to have figured it out. You can accomplish this in two ways, by recruiting in to your existing space, or by rightsizing your existing space. You decide. I know which way I would go. Making this change now will guarantee profitability in the future.
  • Make a conscious decision to only allow full time agents. This is important not only for your business, but for the industry as a whole. Imagine a world a few years from now where the industry is filled with part time agents, working at other jobs, consumers have lost confidence in agents, in the industry. It becomes impossible to recruit new full time agents to your company, to the business. It is easy right now to turn a blind eye to agents getting a part time job. You hope they will still bring in a couple of sales, but we all know  how unlikely that actually is, especially over an extended period of time. I call this prolonging the agony. And potentially ruining your business. This industry does not need 1.2M real estate agents, The industry needs full time productive agents to meet the needs of the new wave of consumers.

Personally, I will never, ever forget 2008.The thrill and the challenge of launching a new real estate brand this year will always be remembered as the opportunity of a lifetime for our entire team. It hasn’t been easy, but I know we wouldn’t change it for anything… well, almost anything. We worked, and continue to work under extreme pressure. Just like everyone else.

This year we spoke to many brokers across the country and beyond. Brokers who shared intimate details of their business with us, their fears, their challenges, their opportunities. Some of these brokers decided to join our network, all of them helped  shape our value proposition, our service offering. Many people played a role in shaping and developing the brand and the launch. The list is long, but I am compelled to mention several….  Marc and Brian from 1000 Watt Consulting for guiding us through Web 2.0. The BHGRE Advisory Board, John Featherstone and team from RISMedia, Steve Murray from Real Trends. Walter Schild and the Genex team for building our sites on time and under budget, Brad Inman and all of the people at Inman News – you made our launch a success. Mike Staver, our business coach, our partners at Meredith Publishing, everyone at Realogy. Kevin and Pat from Domus Consulting, who were so instrumental in helping launch this blog, the team at Infinia,  and Hugh Mansfield from Mansfield Communications for proving once again that long term relationships count.

Happy New Year, everyone! 2009 will no doubt be another very interesting year.

8 thoughts on “The Final Day of an Interesting Year

  1. Sherry,

    Great observations and advice!

    Full-time Realtors, exceptional support and management and more efficient utilization of space will make a HUGE difference in production and profit. 2009 will be all about “change”.

    Happy New Year!

    Rick

  2. Good advice in any market! Thanks for the courage to say that the industry does not need 1.2 million agents. A trimmer and leaner agent workforce will lead to a healthier industry overall. Imagine consumer confidence. What a novel idea!

    Full-time, experienced REALTORS who worked through other downturns report banner production in 2008, but these stories are drowned in the din of woe coming from so many quarters.

    2009 will be another year of challenges and incredible opportunity. I am very excited as this year winds down and we draw the curtain on 2008. There will be no intermission before another curtain opens and a new year begins.

    Congratulations on the tone and tenor of the Better Homes and Garden launch in 2008 … I applaud your embrace of social media to amplify a positive sounding voice that rings loud against a cacaphony of naysayers.

    2009 is a year of choice … we can choose to be victims of a housing crisis or we can choose to be successful. I don’t think there is any doubt about your choice. You are an inspiration to all!

    Happy New Year!!! Enjoy a fantastic 2009. It’s gonna be a helluva ride.

  3. "Given the fact we expect 2009 to be another tough year"

    Okay, I'm a contrarian, Sherry. A year ago, I feared a dreadful 2008 while most were filled with hope. Perhaps I should be thinking of a late 2009 recovery?

    "Make a conscious decision to only allow full time agents"

    I fear that some of the depressed markets won't be able to support f-t agents. I spoke with an agent, in MI, who reported that her average sale price fell to $40,000. That agent has to move about 50 homes to make what she could make at a W-2 job.

    What are your thoughts of a "hub and spoke" approach? The full-timer (hub) is practicing real estate brokerage while the (licensed) part-timers (spokes)are finding clients for the hub

  4. Brian – your idea is an interesting one for some markets – it is almost like the full time agent having a network of referral agents sending him business and getting paid a fee for it. This can be a successful approach if executed with guidelines. In fact many brokers have “referral divisions” where agents who do not want to practice anymore hang their licenses and receive referral fees for business given to full time agents.The fear that I was communicating in in the post is that brokers everywhere allow anyone who wants to get a either a part time or full time job. That will dilute the professionalism of our industry everywhere, and could have a negative long term impact… Happy New Year to you as well, and thanks for the opportunity to get to know you!

  5. “The fear that I was communicating in in the post is that brokers everywhere allow anyone who wants to get a either a part time or full time job. That will dilute the professionalism of our industry everywhere, and could have a negative long term impact”

    I have the solution. Repeal the 1099 status of employed agents. It worked in the securities industry.

  6. Frances, thank you for your comment, you and I are on the same page. I choose to be in the successful group in 2009, it will take a lot of hard work, but any goal worth accomplishing always does! Look forward to seeing you in NYC.

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