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!