It is true. The local real estate market here in the Twin Cities has changed the last two years, as it has changed in most markets nationwide.
There are a couple of ways to be successful in today’s market. One way is to work harder, and the other is to work smarter. Most of us are working harder. Buyers look at more homes before choosing one, and listings stay on the market longer and require more effort to market. Lower home prices can mean smaller commissions for more work.
Working harder than I am now isn’t an option for me. I hit that wall where I simply can’t do more so I look at ways to work smarter.
I won’t work with just any buyer. They call me and I say "no" to some of them. I look at how much time I have and I know that I have to spend some of it generating revenue. If I’m showing as many as 50 bank-owned properties in a very low price range to a single buyer, I could be missing out on other business opportunities. It is obvious that my time would have been more profitable with a minimum-wage job.
I pass on listings, too. My new philosophy is that I need to diversify. At one point I had three condos in the same building in a neighborhood where condos sit on the market for a year. I had three other condos listed in the same neighborhood. Last week I said "no" to a $500,000 condo listing. I have never subscribed to the theory that some business is better than no business. I have to make money, and not all business is profitable. Yes, it can lead to more business, but with condos it usually leads to more condo listings in the same neighborhood.
Cutting some of my business expenses has worked well. Each transaction has become more profitable as I put more money into Internet-related marketing and less into traditional marketing, yet managing expenses is getting tougher with higher fuel costs and other inflationary increases in monthly expenses.
Brokerages seem to be cutting expenses, too, and some are closing offices. Some are raising fees charged to consumers and their agents so that they can stay profitable. They may be working smarter, but it is causing the agents to have to work harder.
Which brings me to my last point: Have our current business models kept up with the times? Do brokerages need to tweak their business models? Do they encourage us to work harder instead of smarter? Can we work harder? Do we run our businesses based on traditional business models because there is no better way to run a real estate business, or have we gotten trapped inside the box of providing consumers certain types of services on a certain type of fee structure because that is what we know how to do?
What do consumers want and need? What are they asking for? Can we serve their needs and make a profit? If we cling to our current practices can we work hard enough to be as profitable as we used to be?
Some of the numbers don’t work for my business anymore. I get inquires every day from people who want me to help them buy very inexpensive bank-owned properties. I don’t know how to serve them under my current business model and make a profit. Neither does my brokerage. There are types of listings I can’t service anymore, but there are people who need my services.
Teresa Boardman is a broker in St. Paul, Minn., and founder of the St. Paul Real Estate blog.
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