Interview: Local Agent Thoughts On Housing Market Downturns
We wanted to find out how real estate agents cope with market downturns or even seasonal market changes so we went out and interviewed a Realtor that has been in the business for quite a long time. Bill Gassett, a top Franklin Massachusetts real estate agent has been selling homes for nearly thirty years. He is a RE/MAX agent located out West of Boston that has been through both up and down markets and everything in between. We thought Bill would be the perfect candidate to answer some of our questions.
What type of challenges do realty agents face during a recession or economic downturn?
One of the things that is almost always affected in a recession is the real estate market. In most cases the real estate market follows what is going on in the economy. If the economy is rolling along the real estate market typically follows suit. Conversely the market will also be affected negatively is the economy is not performing well. Two things that can have a dramatic affect on the real estate markets performance are interest rates and the stock market.
Both of these forces however can have varying effects on different types of buyers in the market. For example interest rates are more likely to have a greater impact on first time home buyers as a rate can really change a buyers purchasing power. The stock market on the other hand has a very powerful influence on those who are more wealthy and are heavily invested. Many luxury home buyers will be completely swayed whether to purchase a home based on how well their portfolio is performing.
Each of these things of course can impact the amount of sales a real estate agent is looking at in a given year. This would especially be the case for an agent who has not established themselves well enough in the business.
Is there a particular way realtors should approach selling/buying homes for clients during a recession?
There really isn’t a different approach for a Realtor when selling homes for clients during a recession. There are however some Realtors who will make the mistake of spending less on marketing because of a lack of funds coming in. This is a big mistake! When times are tough the best of the best spend more money on marketing not less.
How does a real estate broker keep his/her head above water when clients are not arriving to buy or sell houses?
One thing that is kind of unique about the real estate industry is that the pay is commission based. Most real estate agents do not earn a salary so it is important to learn how to budget properly especially when times are tough. A Realtor should not only be investing a portion of each of their commission checks back into the business but also setting aside money for those times when things get tough.
Are there any tips and tricks to selling or buying a home that real estate agents can employ during economic strife to increase the likelihood of a successful purchase/sale?
The best tip of selling a home in any time is to make sure you are giving accurate pricing guidance and then doing an exceptional job of marketing. One of the things that often occurs in down markets is real estate agents not having “the heart” to tell people what their home is really worth. A real estate agents needs to put their emotions aside and treat the situation like a business.
When you are in a real estate market that has turned for the worse and continues on that path the worst thing you can do is overprice a home. The seller then starts to chase the market down when they begin to make price changes. Each price drop doesn’t do much because the value of their home has already dropped below the reduction.
Whether the real estate market is up or down a home has a market value. A real estate agent can never lose sight of this. When you price a home properly they always sell regardless of the market. There will always be folks that need to buy and sell homes!
Personally, what do you do to keep your spirits up during the slow season?
Fortunately for me I have been in the business long enough and make enough sales during the busier time of year that the slow season does not affect my spirits. As much as this may come as a surprise, I actually welcome the slow season, as it gives me a break to re-charge my batteries.
I use this time to make improvements that will help my business in the coming year. For example making my website become a better resource for both buyers and sellers is something that becomes a focus. With both buyers and sellers using the internet as a resource for selecting a real estate agent it makes sense to make sure you have a great web presence!