Compass Family,

We’re heading into the fall market stronger than we’ve ever been, but there’s a lot of economic uncertainty swirling around in general. I’m hearing from agents across the country that your clients have a lot of questions about which way the economy is headed and a number of you have asked me for my thoughts about it.

I feel lucky to be able to talk directly to agents, employees and real-estate developers on the ground from the Bay Area to LA to Seattle to San Diego to Miami to Dallas to Chicago to Philly to Boston to the Hamptons to Nashville and beyond, as well as our investors and other industry experts.

Here are some things I’m hearing in those conversations that may be helpful to you as you run your business in the months ahead:

A recession is likely at some point — but no one knows for sure when it will hit. There are enough other indicators of a coming market correction, like the yield curve inverting and GDP growth slowing, that I’d be surprised if one never came. But don’t trust anyone who tells you they know when it will happen. The Federal Reserve Chief Jerome Powell just signaled on Friday that a recession is not imminent, and that we can expect slower but steady growth.

If a recession comes, it is very unlikely to be as rough on the housing market as the 2007-09 recession. The last recession was catastrophic for our industry — but it was also much, much worse than the average recession and much worse on the housing market in particular. Thanks to tighter lending standards and new regulations, the next contraction will likely be much milder.

Honest, direct communication with your clients is key. It is best to speak to clients with clear, fact-based, data-driven opinions to set realistic expectations. People can deal with reality as long as they don’t have to find it out later. But this clarity must be peppered with optimism. Clients look to their agents to be the calm force of reason in turbulent times.

Downturns and slowdowns are an opportunity for great agents to shine and grow their business. In weaker markets, sellers look for more experienced agents (like all of you) to guide them. These periods can test your abilities, but they also inspire you to elevate the quality of your service even further. Tougher markets don’t mean you will earn less or sell less necessarily, though you may have to work harder for the same amount of sales. And the best agents will even pick up market share. I’ve probably heard over 100 agents tell me that when downturns have happened, that’s when a lot of bad agents left the business and they grew their market share. Remember, we are coming off unusually strong markets.

Thriving in an uncertain or down/“normal” market is often about finding the right clients to partner with. Opportunities abound when a seller’s market turns into a buyer’s market — there are a lot of buyers on the sidelines who will spring into action if things turn — but only if you’re working with qualified and realistic sellers. No one likes uncertainty, but some people are able to adapt to it and others are paralyzed by it. The better you get to know your sellers’ psychology, the easier it will be to predict how they’ll react to changing conditions.

Throughout this macroeconomic uncertainty, 3 things matter more than ever:

  1. Price. It’s wise to put even more focus on pricing listings correctly — and in a bumpy market, pricing aggressively compared to your competition. These conversations can be challenging but the more data you bring to bear (which you can do with our CMA tool and by building custom Collections), the easier they’ll be. After you win the listing, your seller will appreciate the fact that you were straight with them up-front.
  2. Perfection. All images, staging, wording, social media, and everything else that the consumer sees must look excellent. The tougher the market, the smaller the margin for error. This is a prime opportunity to take advantage of Compass Concierge to help your client’s home look its absolute best and Coming Soon to help it get the attention it deserves. These programs are just as powerful in challenging markets as they are in strong markets — if not moreso.
  3. Patience. What might have taken days before may now take many weeks or even months. Exercise patience. Alert your clients to be patient. Again, while setting realistic expectations can be difficult in the moment, it builds your credibility in the long run.

The last thing to remember is that everyone at Compass is in your corner. We’re in it together and we’ve got your back. Let us know — your sales manager, your regional president, and me — if there are any additional ways we can support you or if we can help answer any other questions you’re getting from your clients.

Best,
Robert


Robert Reffkin | Founder & CEO

90 Fifth Avenue

New York, NY 10011

m: 917.841.5555

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