Article Courtesy of: Inman News
By: Stuart Siegel
Regardless of the market, a strategic approach to growth is necessary to sustain a real estate business long-term
Following the hottest market in decades, U.S. real estate appears to be normalizing in some markets and cooling in others as we enter the last months of 2022. During these times of market variability, planning for brokerage growth can be challenging. When the market is on fire — as it was in 2020, 2021 and early 2022 — it can be tempting to ride the wave, growing as big as possible and as fast as possible.
Conversely, during times of economic uncertainty, it can feel imprudent to invest in expansion efforts. However, regardless of the market, a strategic approach to growth is necessary to sustain a business long term. Here are three considerations for all brokerage leaders as they approach their growth strategy:
Find the opportunity in every market
Inflation rates reached a four-decade high earlier this year, and remain elevated at 8.5 percent. Economists agree that we are headed toward a recession; however, this doesn’t necessarily mean it’s time to hit pause on growth efforts. When others are hesitant, leaning into this type of opportunistic market can yield growth at a lower cost of investment.
Downsizing or layoffs by a competitor present an opportunity to recruit talent in the market and increase support for your real estate professionals. When others may be giving up office space or delaying on signing leases, the chance for a deal on a new office space in a prime location may present itself.
There is opportunity in every market. Strategic choices to invest when others are pulling back can pay off in the future; however, the ability to make these investments hinges on building reserves and sticking to your growth strategy when business is booming.
Determine the sweet spot for your business and pursue it relentlessly
Success looks different for every real estate business, and the biggest or fastest-growing doesn’t necessarily mean best. Being the top brokerage in your market in terms of size means nothing if your office is a revolving door of agents ever in pursuit of a higher split. Growing beyond your ability to best service clients and creating a culture of burnout is also not conducive to long term success.
Rather than focusing on size as the measure of successful growth, a more sustainable approach is determining the sweet spot of what success looks like for your business and creating an expansion strategy supporting that vision. This could mean achieving the highest average commission of real estate professionals in your market, being number one in terms of productivity, zero percent agent turnover or building a team of only full time real estate professionals.
These goals tend to be longer term and as such, lead to more steady, sustainable growth over time. What’s important is adhering to your goals, having a vision that dictates which growth decisions are right for your business, and more strategically taking advantage of market opportunities as they arise.
Retain company culture during growth
Maintaining culture during growth is a delicate balance, and sacrificing culture in the name of quick growth or hiring one “superstar agent” rarely ends well. A much more sustainable path to long-term growth involves a people-first approach. Build your business around the people who most exemplify your brokerage values and can help to achieve your ultimate vision.
In fact, across our network, we’ve found that prioritizing a culture fit within Engel & Völkers’ brand values when recruiting often correlates with better performance and longer, more mutually beneficial relationships. This is the difference between a brokerage “buying” agents versus agents buying into a brand and culture they want to be a part of and with which they would like to grow.
Retention efforts are also key to retaining culture during periods of growth. Keeping your team engaged, feeling fulfilled, and productive is an ongoing effort, but happy agents will often do the best recruiting by spreading the word to like-minded peers.
Brokerage leaders should view retention efforts as a continuous cycle of re-recruiting current agents. Check in with your team regularly, see where leadership can be providing support or helping to troubleshoot, and perhaps most importantly, celebrate the wins, both big and small, to encourage the drive to keep getting better.
Growth and longevity are likely goals for every real estate brokerage, but finding the balance in achieving both will look different for every business. Take the time to define your ultimate vision of success. This will help guide strategic growth decisions through any market conditions and help you find and take advantage of the opportunities that exist in every type of market.
During times of growth, don’t let the culture that’s gotten your business this far fall by the wayside. Fiercely protect your ethos and the agents that embody your brand values. While certainly a balancing act, prioritizing these elements can help to propel your business to new levels.
Stuart Siegel serves as Chief Strategy Officer for Engel & Völkers Americas.