The Market Is Changing - Are You?
If your auto mechanic told you that your car was leaking oil, you’d get it repaired, right? If your purse or pocket had a hole in it and your money was falling out, you’d take care of the problem, post haste. If you learned that you could save hundreds of dollars in credit card interest every month by consolidating your accounts, you’d certainly look into it, yes?
It’s easy to see that problems like these are a waste of your money. They’re leaks in the system. I call them “profit holes.”
As REALTORS, we have to be alert to the profit holes in our own business. Sometimes they’re not as obvious as the sound of coins hitting the floor or a spreading oil stain under the car, but they’re even more expensive. In an uncertain market, when your income stream may not be gushing as vigorously as usual, it makes a lot of sense to get busy plugging up the profit holes.
So what are they and how do you find them? There are dozens, but I’d like to focus on a few.
- Not looking for business. This is the biggest profit hole in our industry. We’ve just ridden a long wave of truly amazing market conditions. Business was hot; everybody wanted to sell, or buy, or both, and everybody needed a real estate agent. In fact, there are agents working today who have never prospected, never marketed their services; they have simply relied on this seemingly endless high tide of business coming their way. Other agents were so busy they got out of the habit of marketing. Well, the tide has gone out, and who do you suppose is busy now? It’s those consistent prospectors — the agents that were sending out the mailers, making the calls, networking with other agents, and lenders, and their community and sphere all along.
If you want to do business, you have to ask for it. It’s not too late. But if you’re not marketing, you’re giving away your business, and your profit, to someone who is. Remember: especially in a changing market, when people don’t hear from you they assume the worst — that you’ve left the business. Even when people are not buying or selling, you can still offer them a valuable commodity: information. So get in touch with the people you want as your clients, start plugging that profit hole with information and you could be back in business!
- Taking too long to respond to a changing market. The longer you stand there scratching your head and hoping that things will just go back to “normal,” the more money you’re losing. You can buy into the media doom and gloom or you can use your head and get back to work. Yes, market conditions have changed. Yes, home values are changing. Yes, some home owners will be forced into foreclosure by predatory lending practices. Yes, the value of the dollar is down in international markets. Yes, the stock market is shaky. Depending on what day it is, there could be many other Yeses on the list.
You can react with panic — or you can respond with intelligence. What else do you know about the market? Interest rates are low. There’s some amazing inventory out there. And there are buyers and sellers desperately in need of good advice.
- Flexibility is one of your best assets. If you’re still using all the selling tools you used in last year’s market, you’re moving too slowly. Keep your eyes open. Check your expectations. You can’t change the market, but you can always help your clients find ways to make the most of it. Instead of bemoaning the loss of yesterday’s conditions, look for the opportunities in today’s market.
- Overpriced inventory. This profit hole is a strong indicator that several problems are at work: the agent is taking too long to respond to a changing market, lacks presentation or selling skills, and may not be distinguishing between ideal clients and toxic clients.
Pricing is almost always the key to attracting buyers, but in today’s cutthroat market that’s especially true. If you take an overpriced listing because you’re feeling a little desperate, or because you really want to make the client happy, or because you think you can “fix” it later, you’re giving your profit away. The scenario is familiar: the property gets very little activity; by the time you get a reduction the property is “stale”; the seller gets frustrated and gives the listing to someone else. This cycle can repeat many times, until a strong agent comes along who can really articulate the importance of spot-on pricing. That’s the agent you gave your profit to.
Here’s how to plug the profit hole:
- Improve your presentation. Know the comps inside and out. Study how pricing influences buyer and agent traffic, time on market and sales. Add to that an understanding of the relationship between pricing, appraisals and loan approvals. Look at how these variables might be different under different market conditions. Now work on explaining all of that in very simple, understandable terms. Keep at it until you’re comfortable, sound confident and can convince even a determined seller that their “hoped-for” price is way too high.
- Have a “Plan B”: If the seller won’t budge and you’re certain this is a client you want, introduce your strategies to review the price and discuss reductions sooner rather than later. A short time frame will limit your losses and improve the chance that you can get the property sold (at the right price, of course) during the listing period.
Prospecting, responding to changing market conditions, and pricing right -- three very straightforward plugs for the profit holes in your business. If you take the time now to repair the damage, you will not only do more business now, but you’ll also improve your integrity, increase your confidence and be better equipped for every kind of market — guaranteed!
(Patti Kouri, GRI, Accelerated Performance Coaching, is a Master Coach who works closely with executives, managers, and real estate sales professionals. She offers dynamic and innovative techniques to help people achieve their goals and specializes in breaking through limits. “I work with people with big visions for themselves who want to make a dream into reality or create more meaning in their lives.” She is the co-Creator of The Real Estate Game®, and hosts the annual JumpStart Workshop.)
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