When the market cools, agents’ instinctually pull back on their marketing. Don’t follow the herd. Instead, capitalize on the incredible opportunity it provides.

Consumer confidence tumbles, the outlook for new job creation looks bleak, stock prices fall even further, talk of going to war – everywhere you turn, the news is bleak. But real estate has remained incredibly strong, lifting the whole U.S. economy on its back, as home sales have set record-breaking sales year after year. However, recently, things have started to change, and sales have started to soften in many markets across the U.S. Some are actually seeing declining home prices. You may find yourself wondering, “How is this going to affect me, and how can I survive if the market takes a real dive?” You really don’t give it all that much thought if things are still going well in your area, and you have money in the bank; you think it can’t be all that bad.

Don't retreat into mediocrity

The problem is that, almost unconsciously, you start doing things differently. You start watching your pennies a little closer. You take advantage of an opportunity to save some money by printing on a lower quality paper on your house fliers that, a year ago, you wouldn’t have thought twice about spending. However, you think that doesn’t matter since, after all, you are probably the only one that can even tell the difference in the quality of the paper. You don’t renew your ad contract with a local publication because you just weren’t sure it was worth it. You change your vacation plans to a more economical place.

Without realizing it, you have inadvertently set up a self-fulfilling prophecy that you are going to have a slow year in 2003. Most agents aren’t even aware that they are doing it, but they are falling victim to the steady stream of bad news on the airwaves.

What you need to know

Let’s face it, we have no idea what the real estate market is going to do over the next year. But, by thinking about the possibilities, thinking ahead, and taking steps now, you can make sure you will have a great year no matter what happens.

Accept change

The first thing to do is acknowledge that things are uncertain. Realize that this is having an impact on your buyers and sellers. Ask what can you do to help them feel more confident in you as an agent. The funny thing about a slow market is that consumers are still buying and selling, but they start thinking and acting differently. The buying and selling decisions they make are even more emotionally charged. As an agent, this is the time to make sure you are highly visible in the marketplace. When the market is slow, consumers are more likely than ever to call the most visible agent in the marketplace. They feel that if you are active, you must have an advantage over the average agent.

A huge opportunity The good news is that this is the time that most agents cut back their marketing in an effort to save money, and this will make it easier for you to stand out when you actually increase what you are spending. Over the last two recessions in real estate, we have found that, when the market place starts to drop, it’s time to increase your marketing budget by 20-30 percent over what you had been spending. This is also the best time to grow market share and set yourself up to dramatically increase your profitability two or three years down the road when the market starts to expand again. If you follow my advice, you will see your short-term profitability drop slightly, but your sales volume will stay the same or grow slightly.

Next, face the realities of the market and make the adjustments in the size of your farm. If the market slows by 20 percent next year, the best way to ensure that your volume remains the same, or grows, is by increasing the size of your farm by 20 percent or more. This way the number of sales you are competing for remains the same or goes up. This is the only way to grow in the marketplace where the turnover rate is falling.

Don’t count on referrals

If you are an agent who has no farm area, or an agent who is highly dependent on referrals for business, it’s time to aggressively build a farm. Whenever the market place drops, we see a significant drop in the number of referrals from past clients. Just like when the stock market was hot and people were making money, they were happy to give you stock tips and refer you to their stockbroker.

When the real estate market drops, people are emotionally less inclined to give referrals. It’s not because you are not a great agent, but when they question the value of real estate, they don’t want to feel like they helped get you into a bad deal. During the last two real estate recessions, I saw many agents who had been doing great living off of referrals suffer tremendously.

Finally, realize that even in so-called “bad markets,” there is a ton of money to be made. Even in the worst case, and the number of homes sold next year drops by 20 percent, it’s still a huge marketplace with lots of opportunity. Let’s face it, a slow market is not as fun as a hot one, but you can still do incredibility well, especially if you make a few small adjustments now.