GROWTH IN A DE­CLIN­ING MAR­KET

Josh Phe­gan

Elite Agent - - CONTENTS -

Most agents grow their in­come when the mar­ket grows, but what hap­pens when the mar­ket goes into de­cline? Josh Phe­gan looks at how to beat the growth stall in ar­eas on the down­swing. SELL YOUR PROP­ERTY MAN­AGE­MENT PROP­ER­TIES TO YOUR CUR­RENT IN­VESTORS FIRST TO KEEP THEM IN YOUR ECOSYS­TEM.

Aprop­erty cy­cle fol­lows mar­ket pro­gres­sion from the peak to the start of the de­cline, then from a de­clin­ing mar­ket to the bot­tom be­fore re­cov­ery and growth lead the way to hit the peak again. The dis­tance be­tween the peaks in any mar­ket is some­where be­tween seven and 12 years, and the great news is it's get­ting shorter. Since the rapid up­take of mo­bile de­vices, ev­ery­thing is get­ting faster.

You need to be in­ten­tional about your num­bers if you want to grow your in­come in a de­clin­ing mar­ket. In most mar­kets across the east­ern states (ex­clud­ing min­ing towns), we've seen a six per cent de­cline in av­er­age sale prices with fur­ther to go, com­bined with bouncy vol­ume – some months up and some months down – and a five-year run which saw de­clin­ing fees masked by a good mar­ket.

If you add it up, say a 10 per cent de­cline in av­er­age sale price, 10 per cent less vol­ume and 25 per cent re­duc­tion in fees in city mar­kets (in other words, two per cent to 1.5 per cent), that's a 39 per cent de­cline over­all. Here are some ways to beat a growth stall:

1De­crease your cost of lead ac­qui­si­tion through cus­tomer ex­pe­ri­ence. One cus­tomer served well leads you to your next cus­tomer. This is crit­i­cal so that you con­trol the over­all mar­gin – the dif­fer­ence be­tween what it costs you to pro­vide the ser­vice and what you charge the cus­tomer.

2Re­duce churn – sell your prop­erty man­age­ment prop­er­ties to your cur­rent in­vestors first to keep them in your ecosys­tem and check your past client pro­gram is keep­ing your past clients, not los­ing them to the com­pe­ti­tion. The the­ory is that past clients pay more, which in­creases your av­er­age fee.

3Grow into new mar­kets – not just ge­o­graph­i­cally, but also by prop­erty type: apart­ments ver­sus houses, low-end ver­sus high-end.

4Fo­cus on agent pro­duc­tiv­ity by get­ting more face-to-face ap­point­ments booked.

5Re­duce the ETA for the cus­tomer, keep­ing days on the mar­ket short so that you can keep your vol­ume high.

6In­crease the spend of the cus­tomer by rais­ing fees and mar­ket­ing.

Pric­ing of your ser­vices (bet­ter known as the fee you charge) is the fastest way to profit and the quick­est way to bank­ruptcy. The in­dus­try is fas­ci­nated with com­peti­tor pric­ing; I hope the com­peti­tor you're fol­low­ing has priced their ser­vices cor­rectly to al­low for profit, so you can rein­vest to rein­vent what you do for the cus­tomer. The only way to com­pete is to make it eas­ier for the cus­tomer.

It's crit­i­cal you fo­cus on the num­bers if you want to achieve your goals. You need to make the small changes to get the sig­nif­i­cant re­sults; if you fail to pay at­ten­tion, you could fall well short of last year's num­bers.

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