The last couple of years have been amazing for most real estate agents. Record prices, plenty of people looking to sell and a tonne of buyers all throwing money at them.
Good agencies should have been paying off debts, increasing their market share, investing in future talent and putting money aside for a rainy day.
Those who didn't are likely to be pretty nervous now.
In any business, you need to increase your sales or decrease your costs to make more money.
For the first of these two, success in real estate comes down to:
1 - your average sale price
2 - how many people will choose you to sell their place
3 - how many of these listings will be converted into a settlement (no sale, you work for free)
Agency principles that are being honest with themselves right now need to face the fact that each of these are likely to decrease in the coming year. Add them all together, and the top line sales in most agencies around the country are going to be squeezed.
Running a real estate agency can be a very profitable business in boom times. But when the market runs cold, it is easy to lose money. And fast.
Most agencies would have been busy recruiting and training over the last few years. Good agents bring in additional revenue. Average agents are borderline profitable and can be a drain on resources.
This is manageable when sale prices and transaction numbers are going up. But when things get tight, newer agents are an easy target.
Staffing costs are by far the biggest cost to a real estate agency. Margins can be trimmed elsewhere to save costs, but this is the big ticket item. Whenever the market tightens, junior staff are the first to be cut.
In real estate, it takes at least a few years to be successful. Some great agents take five years to make it. At the very least, it will be two. We see the first three years of an agents career like an apprenticeship. Plenty of coaching, skills training and encouragement along the way.
Unfortunately, there will be some really good people out there that are about to lose their jobs. They could have made it through what is always a gruelling first 12 months (where most people give up due to poor wages, long hours and plenty of rejection). But they haven't brought in enough business to survive.
If you are an agent and you are reading this, it might be worth getting in touch with us. You may have lost your job recently. Or work in a toxic environment. Or you're running out of time to prove yourself.
We always take a long-term approach to everything we do. We don't expect our junior agents to be cold calling and door knocking. And we certainly don't put a gun to your head with unrealistic targets and work expectations.
If you also have a long-term approach and understand the value of doing the right thing, day in day out (and real estate is in your blood)... send me an email ... dave@lanecampos.com.au
