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2019 Market: Opportunities and Challenges

2019 Market: Opportunities and Challenges

An uncertain market creates opportunity for brokers who learned from their mistakes in previous down markets.

With the housing sales forecast for 2019 decidedly uncertain, this sets up to be a challenging year for all incumbents, regardless of their size, market, brand name or business model. The news about executive leadership changes does not affect the market overall.

As to Realogy’s launch of two new brands, we think that it creates new opportunities for them to grow their franchise reach. But, just as important, their unique approach to the potential for ownership of multiple brands sets up opportunities for growth of their own franchised brokerage firms that were not there before. It also opens the door to having capital from outside the industry.

KEY QUESTIONS FOR OWNERS

• Given that recruiting and developing talent are absolute keys to success in brokerage, how much of your time is allocated to these areas?

• Do you have a real budget and business plan for 2019?

• How much time have you allocated for relationship building activities with your highest producing agents?

• Do you have a system for building both vertical and horizontal communication with and among your management, staff, and agents?

• How many new services, programs, etc., are you planning to launch this year? Do you have the resources of time and people to launch them well? What are you going to cease doing so as not to overload or confuse your team?

• Do you have a cost reduction plan in your file for what happens if sales cool at any point?

• Do you have a minimum of three months cash reserves or access to cash available to you?

No one can say for sure what 2019 housing sales will look like, but when we examine a half-dozen forecasts, it seems that they all fall within up 3 percent in unit sales to down 4 percent or so in unit sales. So, bet on flat sales (at best), and you’ll likely be safe in your forecasts and budgets.

Do remember that tight inventories and a rising number of new agents are putting downward pressure on commission rates and vigorous competition for productive agents is putting downward pressure on gross margins.

Those who plan best and focus on only a few key areas will come through this rough patch in better shape than they entered it.

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