No one can deny that the market is changing. In these difficult times, strategic budgeting is absolutely crucial to your survival as a real estate agent.
Right now, a lot of the country has been ordered to shut down and shelter in place because of the coronavirus. And even if your state or area doesn’t have such tight restrictions, a lot of us aren't doing anything because we want to protect ourselves and the people we care about.
That’s why it’s more important now than ever to plan for the future so you can stay a few steps ahead of your competition and get more business when things return to normal.
Marketing and Advertising
If you are able to spend money on strategic advertising — or make cutbacks in other areas — you can set yourself up to have a bunch of leads or listings as soon as we come out of this.
Right now, a lot of agents are going to pull back on advertising because they don’t want to spend money. They're going to hoard their cash and stay frozen in fear. They're going to sit on the sidelines.
The agents who keep working are the ones who will come out on top in the end. Yes, these are scary times, and people are trying to be thrifty with their money and resources right now. That is 100% reasonable and understandable.
But if you are able to move things around and spend where it matters, you’ll set yourself up for a big return in the future.
Think about farmers. Every farmer needs to till the soil, plant the seeds, nurture and water those seeds, get them to grow, then harvest the crop. Right now, everyone is stuck at home, so most people aren't doing a whole lot of anything. They're not marketing, they're not advertising, and they're not getting out in front of clients. If you're prepared and ready, you can be ready to harvest your crop when everyone else is just starting to plant and water their seeds.
When this is over, the market may be temporarily smaller because people are recovering financially. That means there might be an even smaller pool of listings being fought over by every agent in your market. Do your best to give yourself an unfair advantage, like a kid who got the test prep materials a week earlier than everyone else for the big test.
And think about this: if there's less ads being put out by other people, yours will have a greater impact. If you are able to invest in advertising now, you will most likely get higher conversions. Less noise = higher conversions, and higher conversions = lower cost per lead.
Setting a Budget
The first step is to determine how much money you can realistically spend on marketing and advertising.
How much cash do you have? How much credit do you have available? Can you obtain more credit? If you're a real estate broker and have people on your payroll, you will likely qualify for bailout programs like SBA loans at low interest rates.
If you have the ability to charge things now — not necessarily max yourself out — consider the value of doing so, especially if you will get a big return. If you're in a really bad spot financially, talk to your bank. See if you can defer student loans or your mortgage payment, maybe even your rent payments. Of course, I’m not recommending you default or negatively impact your credit score. Be smart and evaluate what you personally can afford to do.
I talked to my banker recently, and she said, “Hey, is there anything you need in your business?” I asked her what agents can do if they’re in a bad financial position. She said there are a lot of options, and banks are likely going to have bail-out programs to help people defer payments without hurting their credit or spiking their interest rates.
If you don’t have an emergency fund to fall back on, don't panic. Be strategic, sit down, and create a plan.
Investing Your Money
If you want to invest money right now, where should that money go? Do you want to put money into lead generation? Direct mail? Running ads on Facebook? Focus on efforts that are going to help you convert those leads into sales and deals when this is all over.
Even in these difficult times, you can do a lot of prospecting. You can mail letters, postcards, magazines, and books. This is an effective way to reach people right now because everyone is home. If you focus on advertising marketing, the ads you run will reach more people because people have more time than ever to read them.
Because we are in a state of emergency, a lot of states are starting to crack down on cold calling. But that doesn’t mean you can’t reach out to people in your sphere of influence and ask them how they're doing and how you can help them. This isn’t considered cold calling because these are people you’ve already formed a relationship with.
Think about your business investments from a strategic standpoint. What can you do? How is the market going to change?
If you look at the beginning of the last recession, there weren’t a lot of short sales like there were toward the end of the recession. In the beginning, banks weren't as lenient or as flexible. But as things progressed, everyone was willing to do a short sale.
Don’t jump into anything too early or make assumptions about how things will go. For instance, the government is putting a hold on foreclosures for anywhere from 6 to 12 months. If you wanted to get into short sales or foreclosures, it may be too early to focus your efforts on that.
If you want to start fostering those relationships and learning more about how to deal with those types of properties, that could benefit you down the road. But as far as something that will benefit you as soon as the pandemic ends, that may not be a smart financial investment right now.
Instead, think about what you should do now to set yourself up for success. What are you good at? What are you leaning toward? What are your strengths? What are your weaknesses? Create a strategic plan on how you're going to invest your time, your energy, and your money to grow your business. Plant your seeds, nurture them, and be ready to reap the harvest when things turn around.
Where to Cut Back
Put together a list of necessary vs. unnecessary expenditures. Think about what you need vs. what you want. Here are some areas you can save money right now, both in your business life and your personal life:
- Long-term business investments — For example, if you’ve been trying to increase your search engine optimization and get your content to rank on Google, that may be something you want to circle back to during more stable times.
- Marketing programs that aren’t working — If you hired an expensive coach and haven’t seen much progress with the strategies they’ve given you, consider letting them go or finding a marketing program that actually works for you and your business.
- Office supplies — If you were thinking about ordering a bunch of high-quality business cards or investing in an expensive new business phone, think about whether those things will significantly improve your chances of getting listings after this ends. If they don’t, cut them out or put those purchases on hold.
- Food expenses — Consider meal planning and preparing food that will save you money and last you several days. Cut back on delivery and takeout. Instead of getting Starbucks every day, start making coffee at home. These little cutbacks on more luxury items can really add up.
- Personal splurges — It’s tempting while you’re stuck at home to think of all the things you would love to have around the house, like a new TV or exercise machine. But even though those things would be nice to have, they aren’t necessarily a smart investment when you’re trying to save money. If your kids are bored at home and you’re tempted to buy a lot of new toys to keep them distracted, look for fun things you have around the house or toys they haven’t touched in a while. Encourage them to create with things you already have.
- Vacations — If you had an expensive vacation planned for this summer, you may want to consider postponing it and trying to get your money back now. Most places have deadlines for when you can get your deposit back, so make sure you don’t let them pass. If you rebook your trip when this is all over, there’s a good chance you’ll be able to book at a steep discount because the tourism industry will be trying to entice people.
- Miscellaneous services you aren’t using right now — If you pay for an expensive parking lease that you can’t use right now because you aren’t at home, see if you can suspend it without losing it when you return. If you pay a monthly fee for the gym, cancel and rejoin when it reopens (though many places who were forced to close have put a hold on charging people until business resumes).
The most important thing is to constantly reevaluate your position and adjust as things change. Right now, we're in a short-term lockdown. Things can change so rapidly.
Plan ahead, but be willing to change your plans if needed. My best advice is to be smart and keep doing smart things so you can survive and thrive in this changing economy.