Any business needs to measure whether it is growing or contracting to make key decisions on its future trajectory.
As a realtor, it is wise to adopt a similar procedure to evaluate your business, and the best time to assess your business is once per year.
So, the two questions you must ask are: a) how did your business do in 2022, and b) what you will do to increase your business in 2023?
Let’s tackle the first question. You may have made more money in 2022 than in 2021, but did you actually grow your business? In other words, did you increase your market share?
Think of it this way. If the market prices appreciate as we saw in 2022, it is not unreasonable to see individual agents’ revenue growth increase at a similar rate. For example, if the market appreciation was 30 per cent, and your revenue increased by 30 per cent, this would equate to an even ‘trade-off’ between the market and your revenue growth.
In 2022, should you have maintained similar work routines as in 2021 by working hard, putting in similar hours, and your revenue growth equalled the market growth, you maintained your market share. You did ok!
Did your revenue growth result in less than the market growth? Then you lost market share. This is NOT great!
Why is this so important?
Most realtors have had record earnings in the past three years, but it had nothing to do with their efforts and everything to do with the market!
In other words, 10 deals in 2022 at an average of $1,000,000 per transaction makes you more commission than 10 deals in 2021 at $850,000 per transaction.
The year ahead
We all know the market has been changing. 2023 is going to be a drastically different market environment. No one has the crystal ball on interest rate increases, but inflationary moves need to be kept in check, so rate increases are certainly possible.
Additionally, prices in many areas are declining, and public confidence continues to decrease, leading to fewer real estate transactions.
Unpredictability in the marketplace often leads to very stressful times for many agents, resulting in many exiting the business. BUT…some agents can thrive during these times.
How are these agents able to thrive? The answer is this: they pivot to the segment of the public who will be transacting more than ever in 2023: investors.
Working with investors
Why investors? The rental housing supply is at an all-time low which is why rents are at an all-time high. Rental rates in Canada have increased double-digit, year over year.
Many investors have been waiting and have prepared for this time. Many years of price increases have seen savvy investors sell their investment properties to more rookie investors and are now sitting cash rich.
The end of 2022 has seen prices softening in many areas, rental rates increasing, and consumer/personal debt increasing, leading to a perfect storm (some would say) for investors to (finally) acquire good deals.
As investor Warren Buffet so eloquently stated: “be fearful when people are greedy (reflects the last few years) and greedy when people are fearful (reflects what is happening now).
A few known facts regarding investors:
- Investors typically do multiple transactions per year
- Investors are not emotional about their buying decisions
- Investors often look to close quickly
- Investors often buy larger deals
- Investors will become loyal clients when you supply them with properties that meet their investment criteria
Be the smartest person in the room
The question is, are you ready to work with this sophisticated clientele? Your investor client should NOT be the smartest person in the room…. you should.
There are two principles necessary to work with these investors successfully:
- You need to learn the language of investing and
- You need to provide your investors with profitable properties
These two simple principles will help grow your investor’s businesses, enabling you to grow your business. There is no better way to increase your business than by helping others increase their net worth.
Zig Ziglar, a well-known motivational guru, always said that to get what you want, you have to help others get what they want.
There is no better way to increase your business in 2023 than to invest in education and sharpen your skills to help others get what they want.
The investor is transacting more
One last thing to consider: Most agents work in the retail homebuyer space.
If you consider how many agents work in your area, you’ll find there is a considerable amount of competition, all vying for the same client. And this client is transacting less in 2023.
If you then consider how few are working outside of the retail homebuyer space (by working with investors), there is considerably less competition. And this client is ramping up to purchase more property in 2023.
For many agents, 2023 may be the year they exit the business as they have no database looking to transact. Let’s face it, people are scared, and when they are scared, they do nothing.
Conversely, 2023 could be the year you scale up and reap the rewards of learning to work with a clientele who are cash-rich and need someone like you to help them build their wealth in real estate.
Gord Lemon has invested in residential and commercial real estate in Ontario, British Columbia, Alberta, Florida, Arizona and Texas for over 30 years. Over the last 20 years, Gord has shared his experience and knowledge as a real estate investment trainer, and coach with over 25,000 students in Canada and the U.S. Gord is a published author, having written dozens of articles as a regular contributor to Canadian Real Estate Wealth Magazine, the REIN Report, and the Huffington Post. Gord created the InAgent Designation Training, which provides agents with the critical knowledge, tools and skills required to work seamlessly with real estate investors. For more information, go to www.InAgent.com