It should come as no surprise that the real estate market is entering a period of oversupply. Because of this fact, the price of houses and other real property is likely to see a sharp decline. For buyers, that’s great news, but for real estate professionals, it could be a warning bell for disaster. Dealing with a market that’s on the edge of depression can be like walking a tightrope.
How can a real estate professional seek to remain solvent during the worst crisis to hit the industry in years? Here, 15 members of Forbes Real Estate Council delve into the key steps that professionals can take to make a profit even on a saturated market.
Members of Forbes Real Estate Council share insights on how real estate professionals can shine in a crowded market.
Photos courtesy of the individual members.
1. Specialize In A Segment
Specialize, specialize and specialize in a particular segment. This specialization creates opportunities to do business outside of previously restricted markets, other than the one you live in. Specialize and nationalize. This is what we’ve practiced firsthand the last three years, and we have quickly become a national leader in the SFR portfolio investment segment. – Jeff Cline, SVN | SFR Capital Fund I, LP
2. Don’t Fall In Love
Maintain discipline and understand the numbers: cost per foot, replacement cost and income stream produced. This will gauge what the investment is worth. Know how you add value and recognize the life cycle to determine when peak value is obtained. There are also distractions and false positives on all of the above. Have a disciplined command of the numbers and don’t fall in love with any deal. – Cris Burnam, StorageMart
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3. Build True Client Relationships
When we started our company, we wanted to provide the best-in-class service for luxury renters. With a focus on the customer and on building true client relationships, we now have repeat business and referrals fueling our brokerage. – Aaron Galvin, Luxury Living Chicago Realty
4. Prioritize People Over Profit
Business is personal. Prioritize the people around you for the long haul instead of short-term profit. Real estate is a team sport. Take care of the people that take care of you, whether it’s your staff, clients or consultants. Do the right thing consistently, over time. – Jason Hsiao, Shaw Investments
5. Let Your Curiosity Lead You
Pursue the path where you are curious. The part of the industry that is most intriguing or that which you find fascinating is telling you something. Don’t chase the money; chase the curiosity with passion and excellence. The money will eventually follow. – Carrie Bobb, Carrie Bobb & Co
6. Find The Motivated Clients
On March 12, incentives and motivation changed for about every current client and upcoming (pipeline) client we have. Our “right now” A clients became “sometime later” C clients. Most new contracts are from two months ago with C clients that are now A clients. With approximately 10% of all homes in the U.S. selling annually, we must find the new 10% in any market. Find the motivated clients. – Joshua Cooley, Keller Williams
7. Go Where Others Are Not
To make money in real estate, it’s important to be early and go where others are not. Find a market or an asset that is undervalued and build your reputation around that. If you invest where everyone else is, you are not finding the best deals. It’s important to trust your instincts and hunt for opportunities that others have yet to discover. – Matthew Murphy, Montage Ventures
8. Anticipate Where The Market Will Be
I learned this hard lesson after 2008-09. There is opportunity in every marketplace, you just have to know how to find it. Like Wayne Gretzky once said, “I skate to where the puck is going to be, not where it has been.” Learn to anticipate where the market will be six months from now and strategize accordingly. Read Am I Being Too Subtle by Sam Zell if you really want to learn how to master this skill. – Sean Lyons, Jackson Dearborn Partners
9. Invest For Cash Flow
All investments are measured by the return. If you’re investing into real estate in the hope that the market will go up, you are just gambling that the past will be as good as the future. Sound real estate investing takes knowledge and the understanding of how to create more cash flow from an underperforming asset. If you can master this skill you will make yourself and your investors a lot of money. – Ken McElroy, MC Companies
10. Become A Real Estate Influencer
Become a real estate influencer. More than ever, you have to become a local market expert that’s everywhere! Who are you and why should I use you? How valuable is your value? Show and tell people that you care and understand who they are and what they need. – Bobby Bryant, Ask Doss
11. Remain Adaptable
In a competitive market, learning to remain adaptable is key. It ensures you are monitoring any rapid changes, and adjusting your service offerings and marketing approaches as needed. When you know what clients need and want and you can adapt to meet those needs, you will successfully navigate a saturated market. – Michelle Risi, Royal LePage Connect Realty
12. Control The Information
Today, everyone sees something different when they look into the crystal ball of real estate. Now more than ever, entrepreneurs need to focus on facts and ensure they have the most up-to-date information available. Now is the time to minimize risks based on uncertainty, whether it be valuation assumptions, market growth projections or the availability of capital in the market. – Max Comess, Hodges Ward Elliott, LLC.
13. Provide A Must-Have Experience
One lesson from the current crisis will be how real estate interacts with its residents and tenants. Real estate entrepreneurs have an opportunity to lead by delivering on experiences that residents and tenants are expecting—everything from sanitation protocols to enabling technology. Transparency and empathy for occupiers will give you a leg up in a saturated industry that is changing. – Benjamin Pleat, Cobu
14. Have A Clear Value Proposition
As the co-founder of a property technology startup, I’ve been able to value firsthand the importance of having a product (or a company) whose value proposition is conveyed quickly and efficiently. Your company, product or service should tell others what’s in it for them in just a few words. – Rodolfo Delgado, Replay Listings
15. Leverage Your Emotional Intelligence
While all the talk of innovation and property technology adds intrigue and new tools to serve with, real estate entrepreneurs should remember that they provide a service on big financial decisions. Get back to the basics and utilize your emotional intelligence and exercise empathy! Showing you care and earning trust-equity with your clients is the greatest tip for success in any industry! – Michael Thomas Chambers, Chambers Theory