In these times, double down — on your skills, on your knowledge, on you. Join us Aug. 8-10 at Inman Connect Las Vegas to lean into the shift and learn from the best. Get your ticket now for the best price.
This article was last updated May 23, 2023.
The effects of current economic conditions on the real estate market will shape a generation of real estate agents.
Jimmy Mackin, CEO of Curaytor, says we are entering the hunger games of real estate. He says this based on the estimates that we will have 4.5 million real estate transactions this year. That is the same number of transactions recorded in 2012. The difference is that in 2012 there were 999,000 Realtors and today there are roughly 1.6 million.
This means we have approximately 60 percent more agents than we had in 2012, and we anticipate having a very similar number of transactions this year. It is not a matter of whether challenges will come, but rather how will you handle them.
The following are seven expectations for the coming year and how they will shape a generation of agents.
1. There will be winners
There will be agents that win in this environment. It is not a matter of if someone will have their best year ever; the question is whether it will be you. If you want different results, you will need to do different things or more of the things that work in your business.
The hardest workers will be rewarded. There will be agents that will decide to produce more content than anyone else in their market this year. Someone will hold more open houses than anyone else in her local area. A few agents will identify and execute unique ways to add value to their past clients and their sphere of influence better than anyone else in their market. Someone will separate himself as the dominant agent in his local market this year. Why can’t that be you?
Someone will come out the other side of this recession a clear winner. Act on the needed activities, and you will be that agent.
2. Grit will be revealed
A common definition for grit is passion and perseverance. Your passion and perseverance will be tested in this market. There will be contracts that fall apart at the last minute. There will be a “friend” that lists his house with another agent. Through these challenges, grit will be revealed.
My son is a high school cross-country runner. There are so many great analogies for life in comparison to running, but dealing with pain is one of my favorites. I’ve told my son that in every race, all runners encounter pain. The question is not if the pain will come, but how you will react to it.
Average to below-average runners slow down as soon as the pain appears. But the best runners understand that pain is temporary, and they push through it. When the pain comes, that is the time when champions separate themselves from everyone else. The pain agents will face is the adversity, difficulty, and challenges this market will present.
Adversity, difficulty, and challenges don’t change your character, they reveal it. When tough times come, tough people are revealed. This market will expose the pretenders and empower the professionals. Your ability to overcome the challenges this market presents is building a strong foundation that you can build your business upon now and into the future.
Be the grittiest agent in your market, and you will find success.
3. There will be losers
Some will not survive this market change. Some will hope it passes quickly and make no adjustments. Some will tell themselves everything is going to be fine instead of taking the needed actions. This means we will see fewer licensees this time next year than we do now.
But some agents will do whatever it takes to avoid being one of the people that is out of the business this time next year.
When the dust settles at some point in the future, the agents that persevere will find a market where the number of transactions is increasing, and the number of agents has decreased.
4. The value of a referral will be amplified
As the number of transactions decreases, the value of every transaction increases. One study revealed that over 82 percent of all real estate transactions come from referrals. These include referrals from past clients, sphere of influence, other agents and companies that provide leads with a referral fee to be paid at the time of closing.
Top producers realize the value of a referral, especially during times when there are less transactions. The recognition of the value of referrals will refocus agents on deepening relationships with their past clients and sphere of influence. They will begin to build a database of agents in feeder markets that they can build relationships with on a consistent basis.
This focus on developing these relationships will lead to more referrals and transactions in the short term, plus consistent business growth in the future.
5. Commissions will be compressed
When we are working through the “hunger games” mentioned above, some agents will sacrifice their commission to secure a transaction. During times of commission compression, top agents learn how to share the value they bring and why the premium they require is in the client’s best interest.
The ability to defend a premium commission in this portion of the economic cycle will be a necessity for top agents. The development of this skill will serve the agents well not only in the current market environment but into the future.
6. The difference between value and price will be evident
Warren Buffett says, “Price is what you pay, value is what you get.” Top agents will evaluate all their expenses to identify which ones offer the highest return on investment and which ones have the lowest. They will stop mindless spending and begin to understand the difference between the price they pay and the value they receive.
Agents will also evaluate the service their brokerage is providing and identify the impact, or lack thereof, the people around them are having on their production level. They must evaluate whether the highest split company with the lowest amount of support is truly what they need during a difficult market environment or whether they operate their business without support needed, meaning they should focus on the highest split possible.
The understanding of the difference between price and value, necessitated by this changed market, will affect the agent’s business for the remainder of their career.
7. The strong will get stronger
When I look back over my career, it was during the challenging times that I was stretched and forced to improve myself, my skills and, ultimately, my business. This is your season for improvement.
Your ability to overcome the challenges this market presents will strengthen your confidence that you will persevere and succeed no matter what may come. This is the season where the strong will get stronger. Do the work, and you will be one of the ones who comes out stronger on the other side.
The current and coming market challenges might be difficult, but the struggle will be worth it. Stay humble. Stay hungry. Stay coachable. If you do this, the best for you and your business is yet to come.
