Most agents grow their income when the market grows, but what happens when the market goes into decline?
Market cycles see you progress from the peak to the start of the decline, a declining market, to nearing the bottom, to being at the bottom, the beginning of the recovery, into growth, nearing the peak, until you hit the peak again.
The distance between the peaks in any market is somewhere between 7-12 years, and the great news is it's getting faster. Since the rapid uptake of mobile devices, everything is getting faster.
You need to be intentional about your numbers if you want to grow your income in a declining market. In most markets across the Eastern States (bar mining towns), we've seen a 6% decline in average sale prices, with further to go, combined with bouncy volume (some months up and some months down) and a 5-year run which saw declining fee's masked by a good market.
So if you add it up, say a 10% decline in average sale price, 10% less volume and 25% reduction in fees in city markets (i.e. 2% to 1.5%), that's a 39% decline overall.
The only way to beat a growth stall is to:
1. Decrease your cost of lead acquisition through customer experience. One customer served well leads you to your next customer. This is critical so that you control the overall margin - the difference between what it costs you to provide the service, and what you charge the customer.
2. Reduce churn - sell your property management properties to your current investors first to keep them in the ecosystems and check your past client program is keeping your past clients not losing them to the competition. The theory is that past clients pay more which increases your average fee.
3. Grow into new markets - not just geographically, but also property type, apartments versus houses, low end versus high end.
4. Focus on agent productivity - by getting more face to face appointments booked.
5. Reducing the ETA for the customer - keeping days on the market short so that you can keep your volume high.
6. Increasing the spend of the customer by raising fees and marketing.
Pricing of your services (better known as the fee you charge), is the fastest way to profit and the quickest way to bankruptcy. The industry is fascinated with competitor pricing; I hope the competitor you're following has priced their services correctly to allow for profit, so you can reinvest to reinvent what you do for the customer. The only way to compete is to make it easier for the customer.
It's critical you focus on the numbers if you want to achieve your goals. You need to make the small changes to get the significant results, and if you fail to pay attention, you'll fall well short of last years numbers.
This article first appeared on Elite Agent: https://eliteagent.com/growth-in-a-declining-market/