A recession is something no one and no business ever wants to face. It is a period in the business cycle when economic activities come to a halt, and the decline is usually caused by increased unemployment, falling income, and consumer spending, rising business failures, and falling stock markets.
A recession can occur every few years or so, but today in 2020 it is, unfortunately, the reality we are living. Today, as COVID-19 continues to spread, there is a lot of uncertainty and economic productivity has certainly decreased all over the world. While many industries are struggling and many businesses won’t make it through these unprecedented times, many are trying to remain positive, hopeful, and utilize how they prepared for times like this. Such as the real estate industry. We aren’t saying it is guaranteed that everyone in the real estate industry will be able to weather this storm, but we do believe many will.
Luckily for real estate agents, there are ways to prepare for a recession, but you should always be prepared for the worst regardless, especially in an industry like real estate. So today, we’ll be giving a few tips on how to recession-proof your real estate business. If you think it’s too late to start, you thought wrong. We recommend getting started as soon as you can.
Tip 1: Save Your Money
Suzie Ocie at Influencive says, “Any time you complete a sale, you should be putting away a chunk of cash from that sale into a savings account. Yes, your business should have its own savings account for times such as these, and yes, you should invest in that account every time you make a sale.” While it’s very exciting to get that commission check, it’s important that you do not run off and spend it all. As a real estate agent, you always want to have a financial cushion in the event an economic downturn occurs. Set yourself up to be ok.
We recommend starting a savings account right away. Even if you only have a little bit of cash in there, it’s better than nothing and can really do a lot for you if you are struggling. Think about it: Would you want to lose your entire business for that unnecessary purchase you had to make with your money? While we are all for treating yourself, be sure you are taking care of yourself before you do so.
Whatever the case may be, we are recommending for you to have a savings account, we’re telling you that it should be a necessity for your real estate business.
Tip 2: Invest More Time in Your Marketing
You should always have an awesome marketing plan in place whether you’re preparing for a recession or not. However, a slow market (like now) allows for more time to work on marketing. Which is something you really only look at a few times a year in a normal time.
Suzie Ocie at Influencize makes a good point, “This is when you can sharpen your market efforts for maximum results because if you can get someone to buy during a recession, you can pretty much get them to buy any time.” A few ways you can be working on your marketing are:
- Working on your social media platforms
- Focus on digital marketing efforts and campaigns
- Updating you listings photos
- Video Tours of your listing’s neighborhood
- Doing live videos on Facebook or Instagram
Additionally, you should also be spending time evaluating your marketing strategies. Think about what is working for you? Who is your target audience/market? Questions like these will really make you think about how you can better your business.
Tip 3: Find Different Ways to Make Money
When we say this we aren’t recommending you finding another job or changing your business model completely. However, we are saying to “think outside the box” to add a new income stream when you see the market slowing. Michelle from Real Estate Side Hustles says, 3 recession-happy income streams for real estate are:
- property management
- property tax appeals
- real estate investing
These three income streams can offer more opportunities in a slow real estate market than in a strong real estate market and should really be things you consider in case the market slows down. As we said, you always want to set yourself up for success, even during a recession.
Tip 4: Focus on Lower Price Points
If you think about it, during tough times like a recession luxury items are usually the first thing to go from people’s budgets. This includes luxury real estate as well. Unfortunately, not a whole lot of people are going to be buying expensive homes that may push them over their budget. However, “most buyers will be looking to buy a property they can afford in the current economy. Which will naturally be a lower price point than the real estate they would be comfortable committing to in a quickly-growing economy,” says Michelle from Real Estate Side Hustles.
So if this means you have to sell lower-priced homes, for now, you should jump on the opportunity. A sale is better than no sale, just remember that!
Tip 5: Stay in Touch With Your Buyers
As a real estate agent, you should always have your CRM open or set time aside to look through it every single day. A CRM is an organized way to keep in contact with people. And those people are important to you. You should always be staying in touch with your buyers to let them know that you are still there and they have someone to come back to once they are ready to buy again. If you don’t stay in touch with your buyers, you could lose a lot of business from simply just being lazy. Make time to stay in touch, business doesn’t always come to you.
Tip 6: Stay Positive
While you’ve probably heard this from almost everyone, it’s the truth and probably the best tips we could give. One of the best things you can do for yourself and your business is to not panic. Things will get back to normal eventually, and as long as you’ve continued to work hard and stay on top of things in your business you should come out on the other side with only a few bumps and bruises.
It’s important to know that real estate agents can work through any climate and any storm. However, the work doesn’t come easy and no one else can do it but you. If you’re smart and take these tips into consideration, a slower real estate market is nothing to fear. There are plenty of things you can do to recession-proof your real estate business. If you prepare for a slower market, you will then be able to capitalize on it!
We all know spring is the busiest time of the year for the housing market, according to trend. However, there’s no surprise that this year will look a little different due to the recent global outbreak of COVID-19. It’s crazy to think that only just 2 months ago things were still somewhat normal. But as many have quickly realized, lockdowns, 6-foot social distancing, elbow bumps and virtual meetings have become the “new” normal. Unfortunately, it didn’t take long for the economy to plummet and for the United States to officially enter a stagnant market. The U.S. housing industry is on lockdown. With the virus having a complete timeline of its own, there is still so much uncertainty and many still do not know what to expect in the weeks, (or months?) to come.
However, what we can do is start thinking about the future. We can start thinking about the consequences the real estate market is about to undergo, and how we can be prepared. We can shed some positivity on how we can still make things work, we can get creative with our situation and we can come up with a few solutions. With millions of Americans following stay-at-home orders, and working from home to try to stop the spread of the virus, many have taken different approaches to the spring ritual of house hunting. Are buyers still looking? Are real estate agents waiting or adjusting so they can keep going? That’s where creativity needs to come in.
So, what are some methods to shift away from, but still keep? Fortunately, we can still do most of the work while following stay-at-home orders, it just takes adjustment from all sides. We encourage you to read these tips below so your real estate business can be prepared even during the worst of times.
Tours and Open Houses
Sheltering in place and working from home means going virtual. This was once a concept that has kept the industry divided for more than a decade of: Will real estate eventually transition primarily to digital? Since this historic time, we now know this has become the new normal. Will we shift back to our traditional methods once this is over? Only time will tell.
Currently, real estate agents need to be more creative than they’ve ever been to have their listings stay relevant and to still sell these properties. Most have been working on their virtual presence and have been conducting virtual tours for and with their clients. This consists of agents going by themselves into a property, and having video previews of their listings, or giving potential buyers a tour via FaceTime. While many have been using this method to market to their out of state or foreign clients for years, it has now become the most important tool in a real estate business.
Another tool real estate agents are utilizing during this time is their social media platforms. Many are hosting virtual open houses on Facebook and Instagram to expose a listing to everyone without a potential buyer even needing to be in the area. Social media is also a great way to keep other agents and their buyers up to date and to show them that you are still actively working to sell your listings.
It’s important to keep in mind that for a buyer it can be extremely hard to commit when never seeing or truly getting a feel of what the property is like in-person. So, what we can recommend is to be prepared to answer many specific questions. How high are the ceilings? How noisy are the surroundings? One common request has been to take perspective photos of spaces, such as different views from where the sofa could be, or from where the bed in the master bedroom would go. These are just a few things buyers will not be able to get a feel for because they can’t actually experience it for themselves. Remember to be honest, detailed and prepared to answer all types of questions so you can seal the deal.
Conducting Inspections and Appraisals
As far as inspections go, inspectors are still inspecting homes but are taking extra precautions. The inspector will now inspect the home completely alone. No buyers, sellers or agents will be able to walk the property while the inspector is there. While on-site, home inspectors should be taking extra precautions by:
- Wash hands multiple times during every inspection, especially after they have to touch things like faucets, light switches or door handles.
- Keep hand sanitizer with you at all times as well.
- If available, use disinfectant wipes or the equivalent on faucets and door handles.
- Inspectors should wear a face mask when conducting the inspection.
- If any inspectors have a fever or cough, they should not conduct the inspection.
The Federal Housing Finance Administration authorized coronavirus alternative appraisal methods. Due to COVID 19, appraisers who are still performing in-person inspections are requesting that the homeowner vacate the home, and they are wearing masks and gloves. However, some homeowners aren’t even letting appraisers inside their homes, which is completely understandable. With situations like this occurring more frequently, alternative appraisals are necessary.
Fortunately, the real estate industry has developed two alternatives.
- Desktop Appraisals – With a desktop appraisal, it is just as it sounds, the appraisers never leave their desk. Instead, they do market research, pull comps, and can determine how much the property is worth without ever visiting it. They can also use tax and MLS records to make their decision. It is also important for the appraiser to pay attention to other recent sales in that specific area.
- Hybrid Appraisals – A hybrid appraisal is very similar to a desktop appraisal, except the appraiser performs a few extra tasks. They may look at photographs of the interior and exterior of the house, watch a 3D virtual tour, or drive by to see the exterior of the home.
The good news is that digital advances have made coronavirus alternative appraisal and inspection methods possible.
How to Close Without Being at the Table
It’s important to know that closings are still happening.
As of January 1, 2020, remote notarizations became legal in Florida. In addition, curbside or “porch signing” closings have become a logical extension of signing loan documents and distributing money at the office of a title company or escrow office. When items are passed between the signers, one person places the item in a neutral area, steps back, and provides a safe 6-foot distance to allow the other person to disinfect and pick it up.
So what’s the takeaway? Bottom line, you can still successfully operate your business during a pandemic. Now, more than ever, as a real estate agent, your creativity and work ethic needs to be at 110%. You are doing what was once considered impossible, and that is an accomplishment in itself. One thing we know for sure is this: we are in this together and cannot wait to be with you again.