Now that many are predicting popping bubbles and a mass-exodus of less experienced real estate agents from many markets, it's time to take a look in the mirror and evaluate yourself. Are you able to withstand slower times? I read recently that only 40% of ALL Real Estate agents have a webpage (even a free one offered by their broker!!!).
Considering that close to 80% of people are starting their home search online now, this tells me that many many agents aren't able to change and adapt with the times. Are you one of them? Are you going to be left in the dust, or will you adapt to a shrinking, changing market? - Kim
Strategies for a Shrinking Market
How Pepsi and Baking Soda can help you fight a slower real estate market
by Will Dylan
It seems that the more you read these days about the market for real estate, the more you hear the terms "cooling" or "shrinking". While nobody can be certain if or when some local markets will see a real slowdown, forward thinking real estate agents are now busy "shrink-proofing" their businesses - that is, trying to find ways to minimize the damage that could be caused to their personal incomes by shrinking real estate sales.
Changing Markets are Nothing New
Real estate agents are certainly not alone when it comes to dealing with the potential of a shrinking market. Some of the biggest, most popular brand name companies in the world have faced cooling or shrinking markets in their respective industries.
Guess what? They are still around, and in some cases, doing very well. These companies took a strategic approach to handling a slowing market, and the results have been impressive.
But what do Pepsi and Arm & Hammer have to do with your real estate business? Well, both are focused on selling something (a product or a service) to someone (a consumer or client) to make money (commissions). In some ways, what Pepsi or Arm & Hammer do for a living is no different than what you do.
So as you think about how to keep your personal income where you want it to be in the face of a cooling market, learn from the smart, simple strategies used by some very big companies.
Launching New Products/Services
Pepsi has always been the number two player in the cola market. Despite Pepsi's sharp marketing and Coke's disastrous flirtation with "New Coke" about twenty years ago, Pepsi eventually realized that they weren't going to surpass Coke in the cola wars.
Faced with the prospect that their market for cola sales was limited by their runner- up position, they did something radically different for a cola company. They stopped chasing just the cola business, and bought brands like Gatorade, Aquafina, Quaker, Walkers, Tropicana, and more. They kept their cola business going, but also started offering products in other markets, such as Quaker Oats, Aquafina bottled water, and so on.
The result was that Pepsi could offer a complete line of products to consumers, and didn't need to count on cola sales alone to make money. Coke, on the other hand, still counts on sodas alone for most their profits.
Applying the Pepsi strategy to your real estate business, think about what you sell right now. For many of you, 100% of your income comes from commissions earned on the purchase or sale of homes. If people start buying less of this service (i.e. in a slowing housing market) your personal income is certain to fall, since all of your revenues come from this one source.
Could you start diversifying your services? Here are just some examples of services related to real estate that you could start offering to provide additional sources of revenue for you.
Home Staging Services - It seems there are entire cable channels dedicated to the art of staging a home. The impression these shows have created for the public is that good staging has value, and helps homes to sell quicker, for a higher price.
Could you help clients stage their homes for sale? You could use the service as a free offer if a client lists with you (a sales promotion to drive listings) or you could charge a fee for the service (a revenue driver).
Advisory Services - An increasing number of clients are listing homes for sale by owner, to save on real estate commissions. The typical response of the real estate business has been to go after these listings, and attempt to convert frustrated homeowners into listing clients. This approach works in some cases.
What about an alternative approach? Clients who list on their own are bound to need some advice and guidance, but are clearly reluctant to pay the full commission associated with a listing to get it. So why not charge a consultation fee to advise these clients on an as needed basis? Since you are selling your knowledge, you wouldn't be restricted by geography, meaning a whole state could be your trade area for this type of service.
Education - There are thousands of new real estate agents out there, striving to get better at their craft. As an experienced agent, you could sell your time to consult to these agents. (You could handle these sessions out-of-market, meaning you wouldn't train your direct competitors!)
Entering New Markets
Believe it or not, baking soda used to be just for baking. As society changed and an increasing number of families moved to two incomes, there was less free time for at-home baking. Such a trend should have drastically cut sales of baking soda, right?
Arm & Hammer had other ideas. They started promoting the odor absorbing qualities of baking soda. Before you knew it there was a box in every refrigerator in the nation. When that market reached capacity, they started promoting the cleansing properties of baking soda, and you can now find it in such products as toothpaste and underarm deodorant.
The baking soda business recognized their primary client base was shrinking (stay-at-home parents/spouses who bake regularly), and started targeting new markets to drive growth. Same product, new customers. In this case, the new customers were people who valued cleanliness, either in their fridge, or in their smile.
If the market in your area is on the way down, what's on the way up? Where are your next customers going to come from?
The Baby Boom generation (often called "Boomers") are now in their 50's and 60's, a common stage in life where they might contemplate a move to a quieter community away from the city. Have you targeted this market with information about selling?
Alternatively, if you work in an area outside the city limits, have you worked with your local chamber of commerce to promote your town as a great place for people to relocate to when they are tired of living close to the city?
Is your area seeing an influx of new immigrants to the country? If so, you could target this community and increase your presence as a buyer's agent as more newcomers choose to move into the area.
Using Strategy to Build a Better Business
The market may slow down around you, and there's little you can do to prevent it. What you can do is control the key elements of your business strategy, like the products you offer and the markets you target.
You'll still be in the real estate business and you'll still be selling homes, but you may have a modified product lineup or new target markets to help you build a stronger business.
It might even be "shrink-proof".
*Always check regulations in your local area when considering new products or services.
About the Author: Will Dylan is a professional marketer with a major corporation, and author of "Marketing Like the Pros: Real Estate Edition," an audio presentation that puts corporate marketing strategies in the hands of local real estate agents to help them grow their business. His website is www.marketinglikethepros.com
