Why some of us are still in business!

Years ago when I bought a Century 21 franchise they sent us off to school to learn how to run a business. One of the first concepts that all of us were taught is about having enough company dollars at the end of the month to keep the doors open. Now that is one heck of a concept! A quarter of a century later some folks still don’t get it.

The reason I bring this up is that another local discount broker just shut down. Also, two of the major headlines grabbing discount brokers have filed for bankruptcy in the last year, while another one has “changed their business model,” and others have faded away. It turns out that some business models for selling real estate only work when there is a huge volume of sales. As one of my former mentors said, “Volume cures a multitude of sins.”

There has also been an exodus of agents out of the business, kinda like rats leaving a sinking ship. Except that the ship is not sinking! We did have way too many new agents in the business who did not know how to do a market analysis on a home or qualify a buyer. Many of them started in the business during the overheated market and had no reserves or way to stick it out during a down market. Goodbye, please do not let the door hit you in the backside on the way out!

That leaves a lot of us who have been in a slower market before. This is not the same market that we have ever seen before due to the huge number of foreclosed and short sale properties on the market and a drop in values that is not expected to fully recover for several years.

This means that proper pricing, staging and marketing of homes is paramount again. In the overheated market of 2004-2006 most any idiot could put a property on the market and it would sell. Many of them did. That no longer works.

Good news, we have much better tools for exposing properties to buyers than we did the last time we were in a slower market during the 90’s. The internet explosion has created new opportunities for marketing homes. We now have web sites, blogs, virtual tours, automated searches and email capacity that we never had before. All of this allows us to do a better job marketing properties and keeping in touch with our clients. That is the goal, to be high tech so we can also be high touch.

All of the technology costs money as does all of the advertising we do. My Grandmother used to tell me “There is no such thing as a free lunch.” Turns out she was right! When there is several months’ worth of unsold inventory on the market in the valley it takes an average of three to four months to sell a well priced property with good marketing. With this many homes on the market, overpriced homes do not sell.

With a continuing shift in the market you will see more real estate agents and companies go out of the business. The ones who do survive will be the strong. Companies and agents who give good service and value to their clients will still be around when the dust settles. I plan to be around for a while longer.

Michael Schaller

Century 21 Adobe Realty