By Leon d’Ancona
You know the upturn is coming when your newspaper’s articles are not just about gloom and doom. Lately my newspaper has had a healthy sprinkling of optimism in its financial section, and even the front page contained encouraging Canadian economic news. We all know that consumer confidence fuels home sales. This brings me to the point of this article.
In slower markets with lower prices, too few professionals adapt to the prevailing conditions. Most successful adapters are making almost the same income they made in better times. If you step back and look behind the gloom and doom, the strategy needed is pretty clear – change your business plan to the prevailing conditions.
When I want to have some fun on a dreary telephone call, I ask the question, “When is the last time you changed your business plan?” About 50 per cent come right out and say something like, “Uh, I work in C01, mostly with buyers.” About 35 per cent are too embarrassed to admit to no plan and mumble something like, “I am changing strategies because I have decided to do more condos.” When I probe a little and ask, “so what percentage of your market is condo sales”, the answer is either nonexistent or totally wrong.
About 13 per cent have a pretty good plan based on bad assumptions. Only about one or two per cent have a good business plan based on proper information.
In some Canadian cities we see the upturn coming. In others it will be many months away. No matter what your market is doing, now is the time to get ready for the upturn by knowing your market inside and out.
First ask yourself: Would you deal with a stockbroker who never knows what the Dow Jones is doing when you call? Or would you work with a plumber who only fixes certain types of faucets? How about a bank that does not let you write cheques? If your answer is no (real estate is full of contrarians) then ask yourself, would people deal with me, given my current expertise?
In an age when the public has access to massive amounts of information, they rightfully demand in-depth information from their real estate professional that is not available to them. If your expertise consists of what your prospective client read in yesterday’s paper, don’t expect to get her business. Perhaps this lack of information is why there are generally about 15 per cent more professionals who work with buyers, than work with sellers.
Here are three steps guaranteed to increase your income now, and in a market upturn.
Step 1: Time allocation – To participate in the upturn, make a clear-cut decision about how you will allocate your time, with buyers or with sellers. Remember that you can pick a geographical area to list homes, but you have no dominion over where a purchaser wants to buy their dream home. Spending all your time working with buyers can quickly turn you into a glorified taxi driver. The general consensus among coaches is that in a perfect world, you spend 60 per cent on listings and 40 per cent with buyers.
Step 2: The perfect territory – The territory you decide to work in is the wellspring from which your income flows. Start by breaking up your MLS by district, city, county or map-grid. One of the best ways to decide is to pick an area and distill it into FSA (the first three numbers of a postal code). It will likely give you a homogeneous neighbourhood. For example, Toronto’s M2N had the highest turnover in condo apartments; Vancouver’s V0N had the most two-storey type homes sold.
Go to http://www.canadapost.ca/cpc2/addrm/hh/current/indexp/tpALL-e.asp and you get a fabulous breakdown of every FSA in Canada, as well as the total houses, apartments and businesses in each FSA. Bookmark the site and use it often. It’s your taxes at work. Get your money’s worth!
Determine if your pick will satisfy the needs of your clients. When building your territory, consider historical and current facts about: home inventory diversity, current average days on market, units sold, average and median price.
Step 3: Value ranges – Having picked your dream area, determine the price ranges you have just locked into. Clients can generally be divided into three groups, startup, move-up and luxury.
Examine if this breakdown works for you and your prospective buyers and sellers. There are other obvious factors rooted in ethnicity and culture that are wise to consider when determining where you will work.
Years ago I remember spending weeks with clients working on the perfect territory.
Fortunately, today territory models can be done with greater accuracy in less than 15 minutes. This allows for the creation of multiple choices and frequent changes. A great strategy is to have a secondary territory to fall back on. Every week I give free webinars to professionals like you and help them in their choice, using the latest Internet technology. The consensus is amazement with the lucrative simplicity available. You’re welcome to join.
My glass is half full rather than half empty evaluating real estate. Many calls I get ask, “Have we hit bottom”? My standard reply is that you can only see the bottom looking down. Even the most astute pundits can’t pinpoint the bottom to the last dollar. But we all know it is coming. If you’re not ready, some of your competition is! People call the area they work in, their “farm area”, which brings to mind an ancient truth: “He who sows in sorrow, in joy shall surely reap”.
Now is the time to stir up action with prospects. Tell them you’re the expert they can rely on to tell them when the best time is to buy, sell, or trade up.
Leon d’Ancona B.T.L., M.T.L., RRESI, is president and founder of IMS Incorporated, and creator of REality, an online service used by franchises, brokers and agents to improve their bottom line. Author and writer, he is a regular speaker at real estate gatherings throughout the continent, and is well-known for his entertaining, illuminating presentations. Email: [email protected].