George Schechter has an entirely new business model. A real estate agent at Compass Florida in Coconut Grove, Schechter has 12 years of experience in the real estate industry, so he’s familiar with its cyclical ups and downs. But today’s housing market has forced him to pivot to remain successful.
“This market is like nothing we’ve ever seen,” he said. “In certain neighborhoods, such as Coconut Grove and Coral Gables, we’re at 25-year lows in inventory, with buyer demand I’ve never experienced.”
A recent example of the frothy market in South Florida: Schechter listed a house in Coconut Grove on a Friday at 7 a.m. for $895,000. By 10 a.m., he had 62 showing requests and by Monday, 27 offers. The house sold for $1.5 million.
There’s plenty of advice available to help buyers and sellers navigate the current housing market. But what about real estate agents? What are they doing to adapt and ensure their survival during one of the most challenging markets in history?
“So many people got into the business last year because of the pandemic,” said Sherri Johnson, a national real estate coach and speaker. “Licenses went up dramatically due to job changes, and it does weed out the amateurs, the folks who can’t adapt to change fast enough. The cream of the crop always rises, though – anyone who is a good agent can sustain any type of economic or health crisis or any issue going on in the country.”
Schechter has pivoted to survive in one of the most competitive housing markets in the country. According to the Miami Association of Realtors, real estate in Miami-Dade County posted its best April sales month in history. Total home sales surged 151.3% year-over-year, single-family luxury ($1 million and up) transactions jumped a whopping 541.1 percent and median prices increased 34.8 percent year-over-year in April.
Redfin recently reported that the housing market was more competitive in April than any time since the company began tracking national housing data in 2012. A typical home that sold in April went under contract in 19 days, 16 fewer days than a year earlier and the fastest pace on record. And in April, 49% of homes sold above list price, the largest share on record.
Danny Hazim, 25, an agent with DLP Realty in Bethlehem, Pa., now works seven days a week, 12 hours a day. He gets up at 8 a.m., goes through emails, then gets on the road for showings, arrives home at around 7 p.m. and writes offers. “It’s very stressful and tough,” he said. Now in his third year in the business, Hazim expects to close over 50 deals this year. But that might sound better than it is.
“If I sell a house and make a $3,000 commission, it might have taken me six months to make that,” he said. “If you count all the driving, all the time and the money spent on gas, it’s so little.”
Indeed, according to the National Association of Realtors 2021 Member Profile, the median gross income for a Realtor in 2020 was $43,330, down from $49,700 in 2019. Realtors with 16 years or more experience had a median gross income of $75,000, a decrease from $86,500 a year earlier. Only one out of four Realtors earned $100,000 or more.
Dealing with sales
Schechter, of Compass, has changed how he handles the listings that are so difficult to come by these days. Rather than listing a home in the MLS, waiting for showings and then for offers to eventually roll in, Schechter creates a sense of urgency by listing homes on Thursdays, holding open houses on the weekend and then asking for “best and brightest offers.” With 165 people showing up at a recent open house, he’s found that to be a more effective way to show a house than to arrange individual tours.
Once the offers come through – he recently received 27 offers on a listing – he prepares an Excel spreadsheet that lays out all the details of each offer, from closing date to purchase price, financing details, down payment and inspection period. He goes through each offer, making sure his clients understand all the terms, and then they choose.
Schechter, who refers to himself as a “bona fide real estate geek,” also spends about seven to eight hours a week studying homes on the market. “Even if I don’t have clients interested in them, I can now turn a buyer I meet on the phone into a hard-contract buyer within 72 hours just based on that knowledge,” he said.
Bidding wars galore
While real estate agents are faced with a lack of inventory on the sales side, they’re also coping with frustrated buyers.
Craig Brody, an agent for Douglas Elliman in Boston, has only been in the industry for three years, but he’s noticed the changes. “There’s not any inventory, and you are going out with buyers desperate to get a place, putting offers on homes they don’t even love – and then not getting them,” he said. “It’s very tiresome.”
To avoid wasting his time, Brody now tells buyers they need to be prepared to make an offer on the spot if they see a house they like — and that the offer needs to be over list to be successful. “I tell them if they’re not willing to go eight to 10% over asking, they have no shot,” he said. “Our time is our money – when there’s no inventory, and they’re getting 15 or 20 offers on a place, it feels like you’re just wasting time.”
Alison Malkin has another strategy — when there’s no inventory available for her buyers to purchase, she creates it. “I have a sphere of influence with past clients,” she said. “I always stay in touch and ask them for business, but I’ve intensified that.” Instead of reaching out once a quarter, she is now in touch once a month, keeping them posted on market conditions and helping them craft a plan to capitalize by selling their home at the peak of the market. Malkin, broker/owner of RE/MAX Essentia [cq] in Avon, Conn., has closed eight off-market deals since January by knocking on doors to see if people are interested in selling.
Certainly, buyers are frustrated when they spend weeks looking for a home, making multiple offers and not winning any. Hazim said he recently worked with a couple who made more than 12 offers on homes and were outbid each time. “It was very tough to give them the news that they didn’t get the house because I knew how badly they wanted it,” he said.
Gloria Castellanos, an agent with The Agency in Beverly Hills, Calif., said one of her clients got very emotional — crying — when she lost a house in a bidding war. “I’m not made of stone,” she said. “I’ve been doing this a long time so I try my best to set expectations right from the beginning, but I feel their emotional pain.”
To cope, Castellanos makes sure she takes care of herself. “I do my self-care so I can be there for my clients,” she said. “My workouts and morning routine are super important to be mentally prepared for what the day brings. Whether it’s reading, journaling or meditating, real estate agents should make some time for themselves to make sure their mind is clear.”
Johnson, the coach, said that any agent can survive this market if they’re flexible and adapt. “They need to re-engineer how they look at the business,” she said. “Instead of thinking that something is in the MLS, they have to make it happen. That will create an anything-proof, recession-proof, health-crisis-proof economy for any real estate agent.”