As a real estate agent you face many challenges, one of the biggest being that you have no control over the market you’re in. It shouldn’t be surprising to any agent that the industry experiences seasonality, but also ebbs and flows based on the economy, lending practices, housing affordability and new market entrants. These things invariably affect housing inventory, which means that no matter what, low inventory can be a cold, hard reality of working in real estate.
A broker/owner I know once referenced the phrase “thinning the herd” to describe what happens to agents in a low inventory market. When inventory is up, new agents flood the market and there’s plenty to go around, but when the market gets tough, only the most seasoned agents seem to survive and the rest drop like flies.
So, how do successful agents do it?
Instead of being caught off-guard by the realities of working in a constantly shifting landscape, these survivalists equip their businesses for every possible situation, and they thrive because of their agility.
The strategies these folks use are actually quite simple and can be incorporated into any real estate practice right away. So, if you’re worried about thriving in a low inventory market or just want to build a more sustainable business, think about incorporating these 5 strategies into your practice:
- Diversify Your Business
You’ve heard the phrase “don’t put all your eggs into one basket”? This is the key to success in real estate, but absolutely essential to remember in a strained market. If all of your business is coming from a single segment of the market, like working with sellers to list homes, you’re completely vulnerable when something impacts it. And if I haven’t been clear up until this point, something will always be affecting the real estate market no matter which segment you work in.
In order to create a stable pipeline for your business, make sure that you’ve invested yourself into a variety of areas of the market. By this I mean: branch out geographically to serve multiple regions; work with a variety of buyer and seller types including banks, developers and investors; consider new market segments like leases, vacation rentals or corporate housing.
- Invest Time in Strategic Alliances
You may be an independent contractor, but that doesn’t mean you have to go-it-alone when growing your client base. In fact, partnering is the most effective way to promote yourself to a lot of new prospects very quickly.
Real estate affiliates like mortgage, escrow and title are great resources, but they’re also the first stop for every other agent looking to grow their business. Start by taking a look at your connections outside of the industry – accountants, insurance brokers, chiropractors, dentists, house cleaners, painters, plumbers…. you get the picture. Essentially any connection you have that’s providing a service to others can be a potential prospecting partner!
Now all you have to do is get creative with an offer that incentivizes both of your mutual clients and you’re in business – literally.
Promoting your offer can be as easy as an email or direct mail piece to each of your contact lists, but getting creative here can definitely boost your exposure. Add social media posts about your offer on your business pages and use facebook ads as a means to boost the offer’s visibility. Video and live events can be especially useful in increasing the number of impressions you make!
Pro Tip! You can even get your partners to help pay for some of your existing marketing – like your Service For Life! Newsletter – if you cross-promote them in your content. You can learn all about co-marketing with strategic alliances here.
- Educate Past Clients (to Generate Sellers)
I didn’t want to bring up working with your existing client list… this is a given in any market, but I have to emphasize a key point here that’s essential in a low inventory situation.
Your sphere will always produce the most revenue for you in any given year, and that’s a fact. This isn’t a poke at you to stay top of mind to these clients, you already should be. This is a reminder that your clients chose you as an advisor, and your services shouldn’t be a one-time offering. If you want to serve your clients for life, it’s your job to always be educating them on the opportunities that exist in today’s real estate market.
Picture this… 18 months ago you sold a downtown loft to a young couple and now they’re having a baby. The home they purchased to entertain friends with as a couple isn’t exactly what they need to raise a family in, but they figure they can hold off on making a big move until the child reaches school age. Now, if they were educated on the advantages of the seller’s market they happen to be in, this might instead prompt them to consider upsizing now. Not only would you be listing a house for them, now you’re also going to be selling them a house.
- Position Your Sellers for Success
A low inventory market may be a seller’s playground, but it’s important that they’re realistic about what that market can actually bear when pricing their home. I won’t school you on how to price a listing to sell, but make sure you level with your clients and explain your pricing strategy fully. In a low inventory market it’s particularly important you take a lesson from Goldilocks and the Three Bears when deciding on a price… not too high, not too low… but JUUSSST right. There’s no greater stall to a home sale than a poorly priced listing.
- Position Your Buyers for Success
In a low inventory market, buyers struggle just as much as you do. There are no “deals” in this market, and it’s frustrating to submit your best offers over and over with no acceptance. To help keep your clients from getting frustrated, make sure your buyers understand the market, and are prepared to compete with multiple offers so you have the greatest chance of actually getting them into a home. To do this effectively, you’ll want to set expectations early on, which we cover in depth here.
Thrive In Your Market
Thriving in a low inventory market comes down to 2 questions.
- How well can you adapt?
- How consistently do you work on the basics in your business?
As cliche as it might be, the most valuable piece of advice ever given in real estate is – go back to the basics. Adapt when you need to, but don’t overlook the value of doing the activities that built up your business in the first place… if it worked for you as a new agent, it will work for you even better as a seasoned agent.
So, take a look at your business and focus on how consistently you’re working on the core items. Then, if you’re confident you’ve got the basics covered, maybe it’s time to branch out and adapt your business with some of the strategies we’ve outlined.