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The housing market has been in full decline for almost two years in most markets. In fact, CNN Money ranked the housing bust as the most important news story of last year. How do you cope with it?
Out of curiosity, I'm fascinated to know if any realtors have prepared themselves for this bust. Did you know that the homebuying mania would slow down? Did you save any of your earnings from the past few years in anticipation of a bust? Do you still perform your job fulltime, or have you started working other jobs to cover the rent/mortgage? With the housing market in full decline, how do you market yourself to compete against all the other realtors that are fighting for buyers?
I know this may seem like it's coming across as an attack, but I'm fascinated with how an industry prepares itself for a full out bust.
How do I cope with it?.....I work harder and smarter. I actually came into the market as it was coming down from its peak, so I am using this time to focus, market, and learn everything I can in this business - something many people were not able to do in the "fast" market. Things new agents never learned in the "fast" market.
The housing market is like any other market, it has its peaks and valleys, but....people will always need a house. People will always be buying and selling whether its because their families have outgrown their home, their jobs have taken them elsewhere, or there is a divorce/death in the family, etc.
Did you know that approximately 60% of people's wealth is in the equity of their home?
Real Estate helps the economy and fuels many other businesses: furniture companies, contractors, painters, movers, etc.
I still am performing my job full time. I actually had two jobs early last year but stopped one of them to focus on real estate. It's hard, if not impossible, to be successful as a part time real estate agent in today's market. Buyers and sellers are looking for dedicated agents now, more than ever. I'm not saying it's easy, I'm not saying it's not a struggle, but not many things are "easy" in life.
Aaron, my life and my occupations have been full of risks. There are risks in many occupations. In fact, today, there are very few occupations that are without the risk of not having an income tomorrow.
The beauty of the real estate business is that one is an independent contractor; and a good agent will get out of the business exactly what s/he puts into it.
The agents who know how to develop and follow a business plan and have the funds and knowledge to market properly, and serve their clients in a highly professional manner, will survive and do well. The housing market has slowed, not disappeared. This is not the end of the real estate world.
I would never work at real estate part time, because I don't believe one can stay on top of the business and serve their clients properly on a part time basis. On another post, I made the statement that with the clients I'm working with, I am on track to meet the goals I've set out in my 2008 business plan.
I would never work at real estate part time, because I don't believe one can stay on top of the business and serve their clients properly on a part time basis. On another post, I made the statement that with the clients I'm working with, I am on track to meet the goals I've set out in my 2008 business plan.
Bill, are those goals along the same lines that you had set for yourself during the 2001-2005 run up in prices? Has your amount of business (and level of income) remained constant through these years, or have you noticed a drop off? If there has been a drop off, did you and your colleagues prepare for it and are simply riding out the storm at this point?
Let's see - just about 40 years in the RE Business - this is the 4th "cycle" I've been through - each time, business gets better -
Greatday, thanks for the reply. Did you see this downturn coming? Since you've been through a few busts already, do you generally budget for them or do you just roll with the punches?
If the market is down 40%, that means 60% as many homes sell. In my market, I need less than 1% of the market. Y'all can split up the rest any way you want to...
Nothing but opportunity!
Bill, are those goals along the same lines that you had set for yourself during the 2001-2005 run up in prices? Has your amount of business (and level of income) remained constant through these years, or have you noticed a drop off? If there has been a drop off, did you and your colleagues prepare for it and are simply riding out the storm at this point?
Aaron, I am well prepared for anything. I can't speak for my colleagues about how they have prepared.
My paternal grandfather had built up a really nice farm in Tennessee, but due to the way the real estate contracts were drawn up and worded, he ended up losing the farm. It was disastrous for him, but he kept on working on other things. His financial situation never recovered, but he never let it dampen his spirits, and neither did my grandmother. She was a very bright lady who usually came up with some quotable sayings.
My grandfather died, and later my grandmother went into a nursing home, and the state took her home to pay the bills. She had 11 children, and close to 50 grandchildren, and I don't know how many great grandchildren when she died. But one day when we were talking to her she said:
"I came into this world with nothing, and I'm going out with nothing - but the world is sure gonna know I've been here"
Greatday, thanks for the reply. Did you see this downturn coming? Since you've been through a few busts already, do you generally budget for them or do you just roll with the punches?
I don't mean to be flipant - you asked a great question but, "what goes up must come down" -
Everything we went though during this last cycle has been gone through before -
Budgeting is everything -
Also, my business is all referal based after all these years - and, business is good
The reason I'm curious about how realtors are planning for this downturn is because the numbers seem to be getting increasingly more grim. For example, the National Association of Realtors (NAR) lists that they had over 1.3 million members in October 2007. In addition, the NAR states that the sales pace of existing homes is at a rate of around 5 million homes a year. (http://www.realtor.org/press_room/news_releases/2007/ehs_dec07_ehs_rise_in_november.html - broken link)
That works out to less than four homes sales per realtor. But if you factor in that most home transactions involve two realtors, the homes per realtor drops even lower.
The median selling price of a resale home is around $210,200 (source from previous link). 3% of that (the typical commission for a realtor) is $6306. And that's before the brokerage takes their sizeable cut.
So it would be fairly generous to say that the average realtor earns more than $20,000.00 per year at the current sales rate. Sure, some people will earn a lot more than others, as always, but the numbers are very sobering.
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