We were already hearing about the possibility of a recession becoming more likely, and now with the Covid-19 coronavirus impacting trade in some countries, experts are saying this will be even more likely to trigger a recession earlier rather than later.
There are things you can start doing now to protect your real estate career during a recession, and in some cases even flourish.
As a real estate agent, how can you prepare for a recession?
There are some indicators that will let you know that a recession is likely on the horizon. When consumers begin to have less trust in the economy, one of the first indicators is that there are waning sales of big ticket items like homes and cars.
Real estate also sees some shifts leading up to a recession. Home sales tend to slow and then home prices decrease. This is one of the most common reasons that agent income also decreases, so having solid strategies planned will help.
The home sales slowing and prices decreasing also helps transition the market into a buyers market if it was not already heading that direction.
Start now by increasing your current production. If you expect your income to decrease 10% during a recession, then you need to make an additional 10% now to make up that difference. If you expect a larger decrease, you need to generate that larger number now. This usually means you will need to focus on some higher priced homes, or adding at least one additional transaction in a month. You can also consider some additional real estate income streams such as referrals, relocations, or property management.
At the same time, you should NOT be increasing your business or personal expenses. This additional income should be put into savings against a future recession. This recession fund should become a standard part of your business, just like your fund for taxes or retirement.
You can also take some solid steps in your real estate business by increasing your marketing efforts. Marketing experts at Vicky Wu Marketing shared some specific tips of where you can focus:
- Expand your farming marketing to include more neighborhoods
- Increase your marketing materials, either frequency or your list
- Market your real estate website, or build one if you don’t already have one. You need to be sure that you have a site where you can fully differentiate yourself, and where none of the leads can go to someone else – which happens if you rely upon Realtor.com, Zillow, or others
- Be prepared to shift your marketing focus to buyers and home investors rather than sellers
- Become a real estate investor yourself by strategically purchasing investment properties now, flipping homes or adding to your own portfolio during a recession
- Become a foreclosure or short sale specialist and use this in your marketing
- Add international buyers as a target demographic and begin marketing and farming to those groups
One of the first things most agents do during a recession is cut back on expenses (a good strategy), including cutting back on marketing (a bad strategy). It’s even more important during a recession to make sure that prospects know about you, and how you do that is through marketing.
It also makes sense to invest the same – or slightly more – on marketing during a recession since there will be fewer agents doing marketing. This means it’s the perfect time for you to use some of those recession funds you set aside to keep your marketing strong. You will be competing against fewer marketing messages, which will be to your benefit.
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