The real estate market can be unpredictable, and agents must adapt their business model to cope with varying market shifts.
From the 2008 housing market crash to the coronavirus pandemic, agents must find ways to remain competitive.
In addition, with ongoing talks of a possible recession and a potential downward state in some regional housing markets, agents need to put strategies into place for when markets shift again in the future.
A down market can indeed be a difficult time for real estate agents. And with fewer homes selling, finding clients and making a living can be more challenging. However, there are still opportunities for agents willing to adapt their strategies.
To help you navigate these changes, you’ll need a mind shift and strategic planning. For example, here are four practical tips for an agent willing to make the changes and create a plan;
First, explore alternative sources of revenue, such as rentals or out-of-state asset purchases.
Second, focus on cultivating relationships among new clients and maintaining existing ones – after all, word of mouth is still a powerful sales tool. In addition, real estate is a relationship business, so working with your sphere to generate more referrals is excellent.
Third, consider taking advantage of digital and online tools like video text messages, video conferencing, or virtual touring options when going in person isn't possible. The more ways you can provide excellent service, the better you’ll stand out from the competition.
Last, staying up-to-date on market trends will help you stay ahead of any potential industry changes so you can respond quickly and effectively should the need arise.
A down market can be difficult for real estate agents, but it can also be an opportunity.
This isn’t the first time the market has been upended in recent years, and it won’t be the last time either. Therefore, you need to be strategic in your planning and operations to thrive so that you can weather the storm of a down market.
But like every down, there’s an up, so looking for opportunities where others see none will be your biggest advantage.
By understanding the opportunities in a down market and working with a qualified real estate agent, you can make the most of this time and find the perfect home for your needs.
What Are The Stages Of The Real Estate Market
Look, we’ve just been in a seller's market, which is the opposite of what we’re seeing now, which is transitioning to a buyer's market.
A seller's market means that there is low inventory and ample buyers, driving prices upward. On the opposite side is a buyer's market, which is when there are too many homes for sale and not enough buyers, giving leverage to buyers.
A down market is when there is little inventory, which favors sellers. In this down market, inventory is low, and due to increases in interest rates, fears of a recession, and inflationary concerns, there aren’t many buyers either.
But don’t worry; real estate markets are cyclical in nature, with housing prices rising and falling as local economies, national events, and interest rates change over time.
Experts typically agree that a full real estate market cycle lasts 12 to 14 years, with up to seven years featuring an upward trend and the other six or seven being flat or down.
And many experts break the cycles into eight distinct stages to make the processes easier to follow.
These stages vary in length and consist of slowing activity (stage one), where buyer activity starts dropping as buyers become unsure about prospects.
In rising activity (stage two), prices start creeping upward as seller's gain confidence in the market's long-term growth potential.
Followed by strong demand (stage three), which sees intense bidding wars breaking out for properties as buyers rush to secure opportunities before they disappear.
There is also the peak stage (stage four) which sees the highest housing prices of the cycle before it slows back down (stages five to seven).
Finally, there is usually some kind of downturn at stage eight when buyers realize that prices are too high and start to back off from current housing purchases altogether.
Stage 1: Slowing Activity
Stage 2: Rising Activity
Stage 3: Strong Demand
Stage 4: Peak Stage
Stages 5-7: Cooling Period
Stage 8: Bottoming Out: Lack of buyers on the market
These stages can happen quickly or may take a few years.
The problem that most agents have is that there could be a cooling market, summer sales pick up, and the agents think the downward turn is over when in reality, the summer was just that year’s peak, not over a long-term cycle.
Understanding the cycles and how they may impact your business will give you the insights you need to prepare and plan for your short-term and long-term goals.
Finding real estate opportunities in a down market should be part of your long-term planning and is necessary to survive a down market.
How To Survive In A Down Market
You know that as a real estate agent, you often face many things to do, and balancing that with a challenging market can be highly stressful, particularly during times of economic downturn.
To survive, agents must be strategic with their marketing, focusing on cost-effective methods to reach their target audience to find real estate opportunities in a down market.
This may involve increasing social media presence, building relationships with past clients, and networking with other professionals in the industry.
Additionally, pricing properties competitively and being open to creative financing options can help agents navigate a slow market and continue to thrive. It will be essential to stay agile and adapt to the changing market conditions to ensure long-term success in the real estate industry.
We know that the real estate market can be unpredictable and cyclical. As a result, real estate agents can be highly challenging to thrive during a down market.
However, there are ways to survive, even succeed during a downturn, and find real estate opportunities in a down market.
The following tips are good examples of ways to diversify or pivot your services so that your business has many different income streams and multiple marketing opportunities.
1. Diversify Your Services
Expanding your services beyond buying and selling homes may be necessary during a down market.
One way to adapt your strategy is to expand your services beyond buying and selling homes, for example;
Home staging: You can also offer home staging services to help homeowners sell their homes faster.
Home staging is the process of making a home look its best to sell for more money. If you have a knack for interior design, you can offer home staging services to sellers.
When done correctly, home staging can make a big difference in the number of offers a home receives and the price it sells.
For several reasons, offering home staging as an add-on service is suitable for agents during a down market.
First, it can help shorten the time a home is on the market. In a down market, homes tend to stay on the market for longer periods of time. Home staging can help speed up a home's sale, saving the seller money on carrying costs.
Second, it can help to increase the sale price of a home. In a down market, buyers are more likely to be price-conscious. Home staging can help to make a home more appealing to buyers and can help to increase the sale price.
Third, it can create a more positive first impression. When buyers first walk into a home, they will form an opinion about the house within seconds. Home staging can help create a positive first impression and make buyers more likely to make an offer.
Fourth, it can help to differentiate you from other realtors. In a down market, more agents are competing for listings. Offering home staging as an add-on service can help you stand out from the competition and attract more listings.
Fifth, it can help you earn more money. Home staging services can be profitable for realtors. You can increase your income and boost your bottom line by offering home staging as an add-on service.
If you are a real estate agent, offering home staging as an add-on service is a great way to help your clients sell their homes faster and for more money.
Home staging is especially important during a down market when buyers are more price-conscious, and homes tend to stay on the market for more extended periods of time.
Buying and selling investment properties: If you have experience in the real estate market, you can offer buying and selling investment properties to investors.
This can be a great way to find real estate opportunities in a down market and help investors find good deals on properties that will appreciate in value over time.
However, there are viable options that can provide investors with a steady stream of income and long-term profits.
Rental properties, in particular, have several advantages that make them a smart investment choice for those looking to diversify their portfolio.
One of the primary advantages of rental property investment is the steady stream of income it provides through monthly rent payments.
Unlike other real estate investments, rental properties offer a predictable and reliable cash flow that investors can rely on to cover expenses and generate profits.
As long as the property is well-maintained and tenants are paying their rent on time, investors can expect a consistent source of income.
Furthermore, rental properties have the potential for long-term appreciation that can result in significant profits upon the sale of the property.
As the property increases in value over time, investors can benefit from both the steady income stream and financial appreciation.
In addition to steady cash flow and long-term appreciation potential, rental properties also offer tax benefits.
Investors can deduct expenses related to the property, such as repairs, maintenance, and property management fees, from their taxable income.
Additionally, investors can use depreciation deductions to reduce their tax liability further.
Finally, rental properties are considered a more stable investment during times of economic uncertainty. While the value of homes for sale may fluctuate, rental properties continue to provide a steady income stream regardless of the economic climate.
Overall, rental property investment offers a range of advantages that make it a smart choice for investors in a down market.
With its steady income stream, long-term appreciation potential, tax benefits, greater control, and stability, rental properties can diversify a real estate portfolio and generate consistent profits.
Real estate consulting: Real estate consulting is the process of providing advice and guidance to clients on real estate matters.
Real estate consulting services are a way for you to maximize real estate opportunities in a down market by helping clients make informed decisions about their real estate needs.
This can include things like helping clients find the right home, negotiating the best price, and closing the deal.
There are several reasons why real estate agents should offer real estate consulting services during a down market.
First, it can help to differentiate you from other agents. In a down market, more agents are competing for listings. Offering real estate consulting services can help you stand out from the competition and attract more listings.
Second, it can help you earn more money. Real estate consulting services can be profitable for you as an agent. You can increase your income and boost your bottom line by offering real estate consulting services.
Third, it can help you build relationships with clients. When you offer real estate consulting services, you are providing your clients with valuable information and assistance. This can help you build strong relationships with your clients, which can lead to repeat business and referrals.
Here are some additional benefits of offering real estate consulting services during a down market:
- Help clients save money: Real estate consulting services can help clients save money on their real estate transactions. This can be done by assisting them in finding the right home, negotiating the best price, and closing the deal.
- Reduce stress: Real estate transactions can be stressful, especially during a down market. Real estate consulting services can help reduce stress by providing clients with valuable information and assistance.
- Increase satisfaction: Real estate consulting services can help clients increase their satisfaction with their real estate transactions. This is because they will be more informed and prepared and have someone to help them navigate the process.
If you are a real estate agent, offering real estate consulting services is a great way to help your clients during a down market.
You can help them save money, reduce stress, and increase satisfaction by providing valuable information and assistance.
2. Focus on Niche Markets
Finding a niche market can be a great way to continue generating business when you’re exploring real estate opportunities in a down market.
If you focus on a specific niche, such as luxury homes or investment properties, you can build a reputation as an expert in your field.
A niche market is a specific real estate market segment, such as luxury homes, investment properties, or homes in a particular neighborhood. By focusing on a niche market, you can become an expert in that area and attract more clients.
Focusing on becoming an expert in a niche will make it easier to attract clients and close deals.
For example, targeting first-time homebuyers or retirees can be a lucrative niche during a downturn. Looking at job prospects or losses, the school year ending, or another significant event in your area can also be an opportunity.
Specializing in a specific geographic area or type of property can also establish you as an expert in your area.
Here are some of the benefits of focusing on niche markets as a real estate agent:
- You can become an expert in your field: When you focus on a niche market, you can learn everything there is to know about that market. This will make you more valuable to your clients and help you close more deals.
- You can attract more clients: When you focus on a niche market, you can target your marketing efforts to potential clients in that market. This will help you reach more people and increase your chances of finding clients.
- You can charge higher fees: When you are an expert in your field, you can charge higher fees for your services. This will help you earn more money and offset the challenges of a down market.
If you are considering focusing on niche markets as a real estate agent, here are a few things you need to do:
Do your research: Before choosing a niche market, you must research and ensure demand for your services. You can do this by talking to other real estate agents, researching online, and attending industry events.
Develop your expertise: Once you have chosen a niche market, you must develop your expertise. This means learning everything about that market, including the latest trends, pricing, and financing options.
- Become a member of relevant organizations: Joining relevant organizations can help you stay up-to-date on the latest trends in your niche market and connect with other professionals in your field.
It is also a great way to learn more about your niche so that you can then market that knowledge and expertise. - Attend industry events: Attending industry events is a great way to learn about new trends, meet potential clients, and network with other professionals.
Attending events does a few things, one, it helps you network, providing a wider list of people to add to your sphere, and two, it will further your education about your niche. - Create a strong online presence: Your website is your online storefront, so it's essential to ensure it's well-designed and informative.
You can post regular updates to a blog helping build your credibility and reputation as a subject matter expert in your chosen niche.
You should also ensure you're active on social media and other online platforms. Create engaging posts and videos to get engagement and replies, such as asking questions or running polls. - Be patient: It takes time to build a successful niche market business. So keep going even if you don't see results immediately. Just keep working hard and providing excellent service, and you'll eventually start to see results.
Once you’ve established a baseline of expertise, start marketing that immediately. Don’t wait until you feel like you know everything you need to because you can never stop learning, and it’ll become a stalling mechanism.
To establish yourself as an expert, you just need to know a little more than the person you’re talking with, so get started and don’t wait.
Market your services: When exploring real estate opportunities in a down market, you’ll want to develop your skills and then market those new services to potential clients.
You can create a website, attend industry events, and network with other professionals. You can also begin promoting your new expertise within your sphere of friends, family, colleagues, and past clients, asking them for referrals.
3. Improve Your Online Presence
In today's digital age, having a strong online presence is essential for any real estate agent. With so many people using the internet to research homes and agents, you must have a website and social media presence that showcases your expertise and experience.
As you’re exploring different ways to find real estate opportunities in a down market, improving your online presence is crucial to finding new prospects.
Here are some of the benefits of having a solid online presence as a real estate agent:
Increased visibility: When you have a solid online presence, you're more visible to potential clients. This means they're more likely to find you when searching for a real estate agent.
Increased credibility: A strong online presence can help you build credibility with potential clients. They will likely trust you with their home-buying or selling needs when they see that you have a professional website and active social media presence.
Increased leads: A strong online presence can help you generate more leads. When potential clients find your website or social media pages, they can contact you to learn more about your services.
Increased sales:* A strong online presence can help you close more deals. When potential clients trust you and know you're an expert in your field, they will likely work with you to buy or sell their homes.
There are a few tips and tricks to focus on, such as ensuring your website and social media profiles are up-to-date and visually appealing and considering investing in online advertising to reach a wider audience.
If you're not sure where to start, here are a few tips for improving your online presence as a real estate agent:
- Create a professional website: Your website is your online storefront, so it must be well-designed and informative. For example, your website should include your contact information, a portfolio of your work, and testimonials from past clients.
- Be active on social media: Social media is a great way to connect with potential clients and build relationships. Ensure you're active on the most popular social media platforms for real estate agents, such as Facebook, Twitter, and Instagram.
- Optimize your website for search engines: When potential clients search for a real estate agent online, you want your website to appear in the search results. Therefore, make sure you optimize your website for search engines by using relevant keywords and phrases.
- Use high-quality photos and videos: When it comes to real estate, visuals are key. So, ensure your website and social media pages are filled with high-quality images and videos of the homes you've sold or listed.
- Write clear and concise descriptions: When you're describing homes on your website or social media pages, be sure to be clear and concise. Potential clients should understand what each home has to offer quickly.
- Offer valuable content: Besides sharing photos and videos of homes, you can also use your website and social media pages to share valuable content, such as blog posts about the real estate market or tips for home buyers and sellers.
- Be responsive to inquiries: When potential clients reach out to you, be sure to respond promptly. This will show them that you're interested in helping them and that you're a professional.
4. Keep in Touch With Past Clients
Whether it’s a boom cycle or you need to explore real estate opportunities in a down market, it's essential to maintain relationships with past clients.
Keep in touch via email or social media and offer your services for future real estate needs. You can also provide incentives for referrals, such as discounts on future transactions.
As a real estate agent, keeping in touch with past clients is essential. This is because they are a valuable source of new business. In fact, a study by the National Association of Realtors found that 80% of home buyers and sellers use the same real estate agent for their next transaction.
There are a number of ways to keep in touch with past clients. First, you can send them regular newsletters, e-blasts, and postcards. You invite them to events like open houses or networking events. Finally, you can always call them or send them a personal note.
Keeping in touch with past clients means you're doing more than just staying top-of-mind. You're also building relationships and fostering trust. And, when your clients trust you, they're more likely to refer you to their friends and family.
In addition to referrals, keeping in touch with past clients can lead to repeat business. For example, if a client is happy with the service you provided when they bought or sold their home, they're more likely to use you again when ready to make another move.
Of course, keeping in touch with past clients takes time and effort. But, the investment is worth it. You can generate new business, build relationships, and foster trust by staying in touch with your past clients.
And all of these things can help you grow your real estate business.
Here are some additional tips for keeping in touch with past clients:
- Personalize your communications: When you send communications to past clients, ensure they're personalized. This means addressing them by name and including information that's relevant to them.
- Be timely: Don't wait until you need something from your past clients to contact them. Instead, stay in touch regularly, even if it's just to say hello.
- Be helpful: When you do reach out to your past clients, be sure to offer them help or assistance. This could be anything from providing them with market updates to helping them find a new home.
- Be grateful: When your past clients refer to your business, be sure to thank them. A simple thank-you note can go a long way in building relationships and fostering trust.
5. Cut Costs Where Possible
During a down market, it's essential to keep costs low. One of the real estate opportunities in a down market is to downsize and trim unnecessary expenses from your operations.
Too often, when things are going well, we get too comfortable, and some bills and costs just keep adding up, but because things are going well, it’s easy to overlook.
Consider sharing office space with other agents or working from home to save on rent. Look for ways to reduce marketing costs, such as utilizing low-cost or free online marketing tools.
6. Stay Positive and Persistent
During a down market, it's easy to become discouraged. However, it's essential to stay positive and persistent. Keep up with networking events and continue to market your services.
Remember that the real estate market is cyclical and will eventually improve.
7. Remain Flexible and Adaptable
The key to surviving in a down market is to remain flexible and adaptable. And shifting your mindset will be crucial in your ability to stay afloat and even thrive.
Be open to new ideas and strategies to help you stay afloat in a tough market.
Consider offering creative financing options or discounted commissions in order to make your services more attractive to sellers.
Another consideration is taking on short-term projects or rental properties to provide additional income. You can survive and thrive in a down market by being open to creative solutions.
Mind Shift Change
To be successful in today's ever-shifting real estate market, it is essential to have a flexible mindset. When you’re strategizing real estate opportunities in a down market, one of the most important aspects is to keep a positive spin on your business.
It can be difficult to adjust when dramatic market changes occur, but if leveraged correctly, these shifts can give you a competitive edge in the industry.
How you think about the market and your opportunities will be the deciding factor in whether you succeed. Focusing on the “hows” versus the “whys” will go a long way in staying motivated and achieving your goals.
By changing your perspective, you will see holes in the market that you can fill. As Thomas Edison once said when asked about creating the lightbulb, “I have not failed 10,000 times–I’ve successfully found 10,000 ways that will not work.”
One of the most beneficial ways to handle this situation is to use time wisely and take steps toward developing your business further.
Time management skills like The Pomodoro Method and Time-Blocking will help you organize your day and become more efficient in your workflow, freeing up more time to devote to improving yourself and your business.
For example, you could use this extra time to dedicate to offering new services or attending classes or webinars that allow you to learn new tools and strategies to serve your clients better and grow your business.
To get better organized and strategic and learn how to utilize your time best to be more productive, having outside help, like a real estate coach, can be highly beneficial.
A real estate coach will offer you a variety of strategies for goal-setting and implementation, systems to improve your workflow, tools to make you more efficient, and accountability when you’re lagging in a bit of motivation.
Additionally, getting connected with professional organizations such as the National Association of REALTORS® or even local chapters can be invaluable in giving you support and helping you gain valuable insights on the market that you can then turn into more proof of your expertise.
Networking with other real estate professionals in similar situations can be incredibly helpful during this time.
It will provide a support system between colleagues and allow for valuable information sharing about marketing practices, technology trends, sales strategies, and more.
Investing your time in advancing your knowledge and connecting with other professionals are two great ways to shift your mindset into growth instead of stagnation.
Doing so will undoubtedly provide greater opportunities, regardless of what direction the market takes next.
Opportunities In A Down Market
A down market can present challenges for real estate agents but also creates opportunities for those willing to adapt and work hard.
When you’re trying to find your next deal or exploring long-term real estate opportunities in a down market, creating a plan and following through is crucial.
Understand that during a downturn, many people may hesitate to buy or sell property, leading to decreased overall transactions.
However, this can also mean less competition among real estate agents, giving those willing to put in the effort a chance to stand out.
Additionally, some buyers and sellers may be mainly motivated during a down market, creating a niche for agents skilled at working with these clients.
By staying informed about market trends and being willing to adjust their strategies, real estate agents can find success in even the most challenging economic conditions.
A number of opportunities can be found in a down real estate market. Some of these opportunities include:
- Lower prices are among the most significant opportunities in a down market. When prices are lower, buyers can get more for their money. As a result, this can be a great time to buy a first home or to upgrade to a larger home.
- More inventory: Another opportunity in a down market is more inventory. When there is more inventory, buyers have more choices. This can make it easier to find the perfect home.
- Fewer bidding wars: A down market typically has fewer bidding wars. This can make it easier to get your offer accepted.
- Better financing options: Lenders may be more willing to offer financing in a down market. This can make it easier to qualify for a loan.
Tips for Making the Most of Down Market Opportunities
If you are looking for real estate opportunities in a down market, there are a few things you can do to make the most of the options possible:
- Focus on buyers: There are typically more buyers than sellers in a down market. This means that you should focus your efforts on finding buyers who are ready to buy.
- Be patient: Selling a home for your client in a down market may take longer. Be patient, and don't be afraid to negotiate.
- Work with a qualified real estate appraiser: A qualified real estate appraiser can help you determine the fair market value of a home. This will help you set a realistic asking price, avoid overpricing your home, and make an offer more likely to be accepted by a lender.
- Use social media: Social media can be a great way to reach potential buyers and sellers. Use social media to share listings, market your services, and connect with potential clients.
- Get creative: In a down market, you must be creative to stand out from the competition.
You can use TikTok to make a catchy video about the listing or create a website dedicated to your client’s home, complete with its own website address.
One tactic I like to use for prospecting, which would work for being creative with your listings, is creating and sending out video text messages to my sphere.
Here’s how it works: Every day, I record 10 personalized videos from my phone and text them to people in my sphere. Of course, I don’t talk about my business or anything like that. Instead, I make the message as personal to them as possible, talking about a birthday, anniversary, or other significant events.
The goal is to remain top of mind for them when it comes time to use or recommend a real estate agent, and it is a great way to nurture relationships with people that already know me.
You could also consider offering discounts, incentives, or other creative marketing strategies–whatever aligns with your philosophies and goals. - Get Involved: Another outreach you should do is get involved in your community.
Becoming involved in your community improves your name recognition, meets new prospects, and adds to your sphere. In addition, attending local events and community organizations and networking with other professionals will help you build relationships with potential clients and referral sources.
In addition to the tips listed above, here are a few more things you can do to succeed as a real estate agent in a down market:
Prospecting
As a real estate agent, there’s no doubt that prospecting is one of the most essential parts of the job.
It’s essential to consistently stay on top of current and potential clients in order to remain competitive and increase lead conversion rates in today’s shifting market.
Agents should consider upping their game with effective prospecting strategies to achieve this.
This could include reaching out to former customers or prospects by sending them personalized emails, or video text messages, sending out the Golden Letter, or revamping your old prospecting letter for a more personable approach.
Additionally, ensuring that your website is properly maintained and up-to-date allows these contacts to find you easily without looking outside traditional modes of communication like social media or phone calls.
Although such efforts require consistent energy and dedication, investing in better real estate prospecting strategies can pay off hugely in the long run.
Role-Playing
As a real estate agent, you can always benefit from role-playing to stay sharp and ready for anything, especially as you try to find real estate opportunities in a down market.
It helps by allowing you to practice conversations with potential buyers or sellers and test out new techniques with other agents without the pressure of an actual client situation.
Role-playing also allows you to work on dealing with objections or situations that are commonly seen. You can look for scripts online or even create your own based on trends that have been present in recent months while talking with leads.
By getting together with a few colleagues, you can create tailored situations for role-play and work on developing answers to common scenarios facing agents in the field.
This is an invaluable opportunity as it helps build confidence in yourself and readiness when moving forward into conversations with clients.
By taking turns practicing your responses, you can better understand how to approach different people and get a feel for possible reactions to the words chosen and the timing of answers or questions.
All these exercises will eventually make face-to-face interactions easier and ensure the highest level of service is provided to clients effectively.
Following these tips can increase your chances of success in a down market as a real estate agent.
