How real estate agents can survive downturns and stagnant property markets

The property market in New South Wales is overcrowded with real estate agents struggling to get a piece of the pie, and they are squeezing each other out of business.

Figures from the Department of Fair Trading (Real Estate Section) in Sydney for the end of May 2012 show there are 17,364 current licensed real estate agents in NSW.

When the property market is practically stagnant as it is at the moment and real estate agents are suffering you have to ask the question “How on earth do they survive?”

Perhaps more to the point “How do they survive in the downturns?” and live to see another day?

In 2012 so far the evidence of trials and tribulations for real estate agents is there to see all over Sydney with mounting mergers and acquisitions to share debt or overheads in businesses’ valiant efforts to avoid going under. This is particularly true of Sydney’s eastern suburbs, where agents have always enjoyed astronomical commissions on residential sales in wealthy suburbs like Darling Point, Point Piper and Vaucluse.

Of course you could argue that recent sales of multi-squillion-dollar waterfront homes have fallen back from $50 million plus to $30 million because of the GFC, the strong Aussie dollar, the European economic crisis and the simple fact that everyone is scared to death about what will happen in future.

So where does all this leave NSW real estate agents? Their best efforts to make even a reasonable living are mostly stranded now like whales on a sad beach. Their songs of past success floundered by an apathetic property market where people don’t know whether to buy or to sell.

When whales are stranded on that lonely beach there is a way for them to survive through help from others.

Here is that help if you want it and are prepared to listen:

• Stand out in the crowd. Don’t sit back and wait for business to come to you. You have to draw attention to your company, your brand or yourself as an individual.
• Do anything you can that differentiates you from your competitors. It doesn’t matter what it is; the point is to do it. It may be red balloons outside your agency window, a snake-charmer in the front yard of your open inspections; or just give a red rose to every lady you meet during your business day (this works wonders).

I can’t quote names or places, but I am going to tell you how I once did it with the help of others.

Some years ago I met a senior property executive for a coffee to have a talk about the real estate industry, which was in bad straights at the time but moving up from 8am on the property clock heat meter.

We discussed how to differentiate a new brand. By our second cappuccino we had agreed on how to make the new business really stand out in the market, but there were huge risks involved.

This is what we did:

• We agreed to concentrate on a single niche market (do what you know best and don’t offer a wide range of options).
• We decided to specialise in the sale of prime waterfront homes in Sydney’s eastern suburbs (you can’t be any expert on everything).

How did we do it?

• A lot of courage, and financially a big risk.
• The first thing we did was to re-name a 10-metre cabin cruiser that already belonged to the company, and we called it “Waterfront”.  It was berthed nearby our new office and hosted up to 12 guests.

Then we invited prospective waterfront property buyers to see their dream properties from the water on Sydney’s glittering harbour and disembark for guided inspections of the homes we were selling. I should not say this, but “Boomerang” comes to mind.

• We convinced the local municipal council at the time to put all their property records for the area into a digitised format that we could use for direct marketing campaigns to waterfront owners. It was the first time ever in Australia that this was done, from old ledgers to the new digital era. Then we transferred this data onto a PC and used the information.
• We engaged a well-known aerial photographer who was a specialist in waterfront homes in Sydney’s eastern suburbs, and together we published a high quality book showing these properties from the air. This had never been done before.
• We distributed the hard-cover book personally by hand to every single waterfront home that was included in it for free. Of course we had branded it with our business name, but it was not directly about us. In fact we didn’t even include a contact telephone number in it, just our logo.

Publishing the book alone cost about $30,000 in those days. We recovered the investment in six months and established our brand forever in premium residential property. This brand is now one of the best-known in the world today.

The glossy book that we gave away (which was my baby and for which I nearly lost my job then because of the cost) has been much loved by thousands of people over the years.

We didn’t need to knock on the doors of some of the greatest homes in Australia to list them for sale. We were already inside sitting proudly on their coffee table, and we are still there today. 

Summary:

• Concentrate on just one speciality.
• Think outside the box.
• Don’t do what everyone else does. 

“The one who follows the crowd will usually never get any further than the crowd.”

~ Albert Einstein

Tim Mansfield is a 30-year global  veteran in the real estate industry and Founder and CEO of Sydney-based buyers’ agents PrimePropertyBuyer. You can follow Tim on Twitter by clicking here.