The Great Recession that upended the real estate industry was a difficult time that many brokers would like to forget. But this would be a mistake. The sudden and wrenching economic downturn that ran from late 2007 through the middle of 2009 surely felt much longer for many, but was filled with valuable lessons which wise brokers are still paying attention to today.
When the recession hit, brokers slashed operating and capital budgets to keep afloat in the tumultuous market. Today, many are looking back on these cuts and wondering whether they went too far. Meanwhile, others are thankful that the recession forced them to reconsider how they choose to manage expenses and important financial decisions now that the housing marketing is on the upswing.
“When I look back on what we were spending in 2005 to 2007, it makes me sick,” says Mark Remeis, broker at A.A. Green Realty Inc. “That market downturn was a blessing for us. It made me really delve into how we run our business and what we offer our salespeople.”
Many brokers are thinking along the same lines. When the recession began, leases were often the first expense cut, and many haven’t seen any fallout since reducing their space. “The No. 1 item we addressed very aggressively was our space occupancy,” says Gary Scott, President of Long & Foster Real Estate, who oversees offices in seven states and over 10, 000 sales associates. The company shrunk its space costs by 40% when the recession hit, says Scott. But due to consumers relying increasingly on online searches for homes, he doesn’t feel that the company lost any visibility from reducing space. In fact, he believes that by reducing space they were able to enhance the office and become smarter about how they operated as a business.
Brokers also cut costs by reducing their staff, eliminating administrative and marketing positions, and many haven’t been rehiring despite market growth. “Our folks are working smarter,” says RE/Max Alliance executive, Chad Ochsner. “We eliminated some tasks [from staff]. For example, in our market it’s customary to contact the seller prior to a showing. This was very time-consuming for our staff and a distraction from more important tasks, so we outsourced it.” Ochsner claims that his company flourished culturally after the staff reductions, and that employees were more eager to band together and make sacrifices for the good of the team. Staffers, he says, have been rewarded for their loyalty with Christmas bonuses for the past two years.