J. P. Morgan, the famous Wall Street banker and financier, was a driving force behind the wave of business growth in the U.S. in the early 20th century. However, he could have easily been describing the real estate market of 100+ years later when he said, “the first step towards getting somewhere is to decide you’re not going to stay where you are.”
Many brokerages held on through the periods of stress, uncertainty and fear for our industry as well as the country, while others in more favorable geographic locations, had an exceptional year. While there remains much uncertainty, the U.S. overall has been in a period of the best demographics for housing recovery ever recorded. For many in the industry, the new year provides welcome opportunity and they are planning ahead for upcoming market shifts.
Here’s what your strongest competition will do well in 2021:
1. Your best competitors create a strong customer experience – In essence, you have three customers: Sellers, buyers and your agents. The best brokers invest in creating a strong, consistent customer experience for each. It builds the culture of the brokerage both internally and externally and creates an ongoing referral base. Brokers focused on customer experience hold themselves and their agents to a higher level of customer support and accountability and they continuously work on maintaining their culture. It doesn’t come cheaply and it’s a challenge for a small-to-midsize brokerage with lower company dollar, but it does pay off dividends in scaling a brokerage.
2. Value is becoming a market driver – The success of most brokerages comes from productivity which is driven by several factors including:
- The number and frequency of transactions
- The number of listings
- Average sales price
These drive the success of the firm as well as its agents more so than simply discounting fees and increasing agents’ commission splits. Strong traditional brokerages generally focus on providing more value, however; even discount brokerages and transaction models today are emphasizing value to the customers and agents. Providing value generally results in an increase in the Per Person Productivity (PPP) which means the agents participate in more transactions, ultimately driving success for all. Interestingly, brokers who focus on value find their average sale prices often increase.
3. Top firms have developed ongoing recruiting strategies – You will see your strongest competition recruiting diligently in 2021. They will invest the time and resources into an ongoing recruiting program, not something that is hit or miss when the broker isn’t too busy. They will also focus on recruiting the right candidates: The best brokerages will add agents who fit the firm’s culture; have proven expertise, and candidates who will be able to increase their personal performance and earnings. Face it, you will have top performers who will leave you this year; it’s the nature of the business. Recruiting is production insurance and the lifeblood of a brokerage. Remember- good recruiting increases agent retention because producers want to be on the winning team.
4. The three golden rules of success: Listings, listings & listings – In every market, brokers are wringing their hands over the shortage of listings. It’s understandable as listings drive the business and when you have the listings, you have predictability and every other broker in the MLS is working for you. The reality is there are available listings; however, with market up an average of 17% there are a lot of units on the market that are selling very quickly and being replenished by new ones. Currently, the larger, well-known companies generally get more of those listings, especially in the premium and luxury price points. The brokers leading your local market are teaching and driving their agents to become primarily listing-focused and in 2021 this will be more important than ever.
5. They will invest in their agents’ success – Today, many brokers and agents focus on marketing and social media. While important, growth companies will also invest directly in building a strong foundation of agent sales skills and techniques. People development is crucial, followed by tech-driven lead generation that is vetted for higher conversion rates and provided to the agents at more equitable agent splits resulting in higher company dollar. Back-end systems; internal agent support to save agents time and increase their productivity; personalized branding; and greater accountability all provide a strong ROI to brokerages that are scaling in their regions.
Instead of trying to do everything themselves, market drivers will leverage outside resources. Companies positioning to scale regionally often look for a growth partner to provide resources such as expertise, nationally-recognized branding, technology, tools, systems, referrals, relocation services, acquisition assistance and ancillary services. Scaled growth requires proper funding and many companies today prefer not to invest their own capital but instead look for a partner to provide the funding needed to accelerate their growth.
2021 is the year to explore opportunities to scale your growth, increase company dollar and have funding to take advantage of market opportunities. If you would like an off-the-record conversation and advice, reach out to me at Rick.Ellis@Realogy.com. Wishing you a Happy and healthy New Year!
-Rick Ellis, VP Corcoran
Experts Predict What the Housing Market Will Be Like In 2021
The housing market has been on fire this year with record-low mortgage rates and a sudden wave of relocations made possible by remote work. Meanwhile, home prices have pushed new boundaries as buyer demand continues to surge. Read what the experts predict for 2021.
Corcoran Expands in Southern California
The Corcoran Group, LLC, welcomes the Better Choice Real Estate Team, in Cerritos, California, helmed by industry veterans, Jana Goncalves and Mauricio Montealegre. Corcoran Global Living continues to advance the firm’s reach across Southern California and the West Coast. Unifying thirteen independent brokerages and teams in its first year, Corcoran Global Living is recognized as the fastest growing real estate brokerage servicing clients across California and Nevada. The firm encompasses nearly 1,500 associates across 43 offices, with annual combined sales of 6.1 billion.
Grow with Corcoran
We’re growing and we’re looking for a few good firms to join us. Does your brokerage have what it takes to claim the Corcoran name in your market? Click here to find out about Corcoran.
The 2020 Pandemic Changed What We Look for in a Home—Possibly Forever
The pandemic has accelerated a shift to technological tools that make life easier for everyone involved in real estate transactions. For home buyers, a lot of features have gone from the “nice to have” to the “essential” column. Learn more about the changes that came to real estate in 2020 that are likely here to stay.
The Work-From-Home Boom Is Here to Stay. Get Ready for Pay Cuts
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Housing Market 2020: Winners and Losers (And A Few Surprises)
In almost every area, the housing market has defied expectations. However, not everyone has benefitted from the boom. First-time homebuyers face increasingly expensive home prices, which has made it all but impossible to break into the housing market even with low mortgage rates. Review this article to see who the winners and losers were in 2020.