Fear mongering is not my thing. I don’t like planting the seeds of the worst case scenario either. However, in business, there has to be a window of awareness that clues you into the possibilities — whether they be good or bad.
I was in a conversation with a few real estate colleagues, and we were discussing our experiences between 2007 through today. If you have been in this business that long, you know that there were some difficult times for most people when it came to real estate. If that doesn’t mean much to you, it was a financial apocalypse.
As new real estate agents flock to the industry and older agents grow distant from the bad times, it is important for us to remember the survival skills in down markets.
I don’t think it’s a question of if the market drops — it’s a question of when and how far. Sharing our stories, these were three key elements we uncovered to surviving down times.
Diversify
When things get bad, you have to fight for every client. You have to work with buyers, sellers, short sales, foreclosures, bankruptcy clients, tenants and every other potential opportunity to make a living in real estate.
Invest in going wide in business before you have to. That does not mean that you change your business structure or business plan right now. It means that you have thought about a process to widen your reach when and if you need to.
I think it’s important to differentiate between diversification and growth.
Growth by way of expanding markets and building larger teams may not be sustainable through a major economic shift. Both increase overhead while working the same solutions.
When you diversify, you are expanding your ability to solve more problems for your clients. Your product offerings, so-to-speak, increase.
In our conversation, a few agents started property management companies during the crash. This was an extension to real estate sales that kept many companies afloat and served their clients needs at that time.
The broader you can be in your real estate business during a down economy, the more chances you will have to win.
Have cash on hand
A lot of people create a lifestyle around their income with the belief that neither will ever change. Reality is a brutal teacher when your income can’t support your lifestyle.
Keeping cash on hand could have saved the bulk of struggle during the financial meltdown. It would have at least bought some time to figure things out.
This doesn’t mean that we are to keep all of our money in a drawer. It means that we have liquid cash that we can access with little or no legal process should we need it.
People who had all of their money invested in 2008 found it to be, virtually, impossible to cash out without considerable loss. Hence, the crisis.
Putting thresholds on your accounts, keeping some money in a safe or just having an exit strategy are all great ideas. Again, we don’t need to plan for the end of the world, but the best exit strategy is to have enough liquid cash.
Serve, don’t sell
If we are honest, there is always an little sell in our serve. Meaning, we are not likely to serve unless we think it may lead to a sale. That’s called business, and it’s not, necessarily, a bad trait.
When a major shifts in our economy occur, you will find that our sales scripts stop working and that no one really cares about your aggressive nature. People care about problem solving. The problems are bigger than before, and the solutions are few. People need help.
The agents who survived the tough times were able to identify the greatest need and serve that need. They did not exploit nor sell to the need, they served the need. Providing viable solutions for the clients, ultimately, kept them in business.
If you have gone wide, have cash on hand and are focused on service, you stand a greater chance of being a survivor of our industry. That doesn’t mean that you are everything to everyone. It means that you are capable of providing the things that people need when they need it.
It is impossible to predict when and how far the housing market will dip in the next cycle. We just know that it will, according to all of the historical data.
We don’t have to live in fear of that time, but we do need to be aware of it. Creating a diverse plan, securing our available cash and serving the needs of the people are a few key factors to survival.
Kevin Hoover is a Realtor with eXp Realty – Myrtle Beach. Follow him on Facebook or Twitter.
