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At the recent Keller Williams Mega Agent Camp, the shaky economy was a common topic of conversation. Most people used hushed tones and euphemisms to describe the “softening market” or “economic uncertainty”, but Gary Keller didn’t mince words: a recession is not only possible, but likely. Whether you believe these predictions or not, agents need to start preparing — yesterday — to avoid washing out the next time a recession hits.
As a top-producing agent during the 2008 recession, I was unprepared. But instead of slashing my commissions, cutting my marketing budget and panicking, I put in the sweat equity to find ways to thrive. In this article, I’ll walk you through the seven actionable strategies I used to not only stay afloat, but actually grow my business in one of the worst recessions in American history.
1. Focus on “must sell” not “wanna sell” leads
One of the biggest mistakes agents make during recessions is spending too much time and effort working their past clients and sphere. It sounds counterintuitive, right? When competition for leads heats up, why wouldn’t you double down on the people who already know, like and trust you? Well, think about the people in your database right now. How many of them have sub-3 % mortgage rates? How many have significant enough equity gains from the last few years to make trading up to a bigger or better home possible?
If you want to thrive during a recession like I did in 2009, you must focus on homeowners who need to sell. Yes, they will be harder to close, and many will be dealing with personal or financial situations that will make you want to pull your hair out. But if you have big goals like I do, working tricky leads who actually need to move could just be the best career decision you’ll ever make. You can focus your listing marketing dollars on homes you know will sell, and you’ll learn skills to help sustain your career no matter what the market is doing. That’s worth a few more gray hairs, isn’t it?
Here are a few examples of my favorite “must sell” leads to work in a recession and where to find them:
Must sell leads and sources to work during a recession
| Lead type | Source | Cost |
|---|---|---|
| Inheritance leads | $6 per Lead | |
| Relocation lead | Free to $200/Month | |
| Tax Lien leads | $119/Month | |
| FSBO leads | $49.99/Month | |
| Expired Listing leads | $199/Month | |
| Pre-Foreclosure leads | $49.99/Month | |
| Divorce leads | $300 for 1,500 Leads |
2. Get clear on your value proposition
With an unsettled market and new commission rules, it has become more important today than ever for agents to know their value. It’s easy to show value when home prices are rising. Sellers are happy that they sold their home for more money than they bought it for, and home buyers are happy you found them an asset that will increase in value. Demonstrating your value as an agent in a recession is much more challenging.
Unless they need to move, sellers will almost always be disappointed with the price you can sell their home for. Buyers? They now have to sign an agreement that spells out exactly how much your services are worth!
If you can’t articulate your value proposition clearly and persuasively in a recession, you might as well go back to law school or start that cupcake business. You’re going to crash and burn as an agent.
Here are two ways you can differentiate yourself from the competition to stand out when the recession hits:
Hyper-local market expert
Offer your clients data-driven insights into the local market. You can analyze or, better yet, predict local market trends and share your insights on social media, your website or even on calls to your sphere. If you get a listing presentation, focus on data and your analysis of that data to prove your value to homeowners. Sure, homeowners love to hear about your marketing prowess, but in a recession, they only want to know one thing: how much money you can get them for their home. Offering a shrewd analysis of your local market can position you as an expert who can help them get a bigger check on closing day. That’s valuable.
Here are a few resources you can use to become an MIT-level data analyst in your local market:
Master of negotiations
After your local market expertise, your second most important value as an agent in a recession is your negotiation skills. Again, how much more money can you put in a homeowner’s pocket?
If you wish to upgrade your negotiation skills, consider signing up for a Real Estate Negotiations Expert (RENE) designation available through your local Association of Realtors. This course will teach you the fundamentals of bringing two opposing sides together and how to work with different personality types. This is important because the more challenging the market becomes, the more people’s true personalities will emerge. Even better, you can use your designation in your marketing materials to remind leads of your value as a negotiator.
3. Don’t reduce your commission
Many agents — especially those who don’t know their value — believe that if they reduce their commission, they will attract and convert more clients and make more money. Reducing your commission during a recession will have the opposite effect for two reasons:
Erosion of your perceived value
Cutting your commission can lead to the perception that your services are less valuable, undermining your presentation and leading to a lower appointment conversion rate. Worse, customers might start associating your personal brand with lower fees, making it difficult to return to pre-recession rates without losing customer trust. This can negatively affect your reputation in the long term, making it harder to recover once the economy improves.
Risk of a price war
Agents that advertise lower rates can trigger a price war with competing agents, harming all parties involved. In a race to the bottom, others may sacrifice profit margins to maintain or gain market share, which can lead to financial instability, especially when maintaining a healthy cash flow is crucial. Instead of competing on price, find more sustainable ways to stand out by focusing on differentiation based on value, service and innovation.
4. Don’t cut your marketing budget
When agents cut their commission rates, that money must come from somewhere. Is the photographer and stager going to take less? No. Is your brokerage going to take less? No. So where are the savings to the client going to come from? You got it! Your marketing budget.
Reducing your marketing budget during recessions will stifle your business. Customers are used to seeing your pretty face on social media and in their mailbox every month, and when it stops, they will forget your name within six months. Don’t believe me? What was the name of the salesperson who sold you your last car?
Instead, double down on brand-building
Instead of cutting your commissions and your marketing budget, use the recession as an opportunity to define or refine your personal brand. Taking the time to really think through your mission, vision and values won’t cost you a dime, and can help you stand out from the crowd in a recession.
Here are two quick examples of the ROI focusing on your brand can get you:
Ryan Serhant
Believe it or not, Ryan Serhant launched his brand-focused real estate career in 2010, when the economy was still reeling from the great recession. While other agents spent their time cold-calling or door-knocking, Ryan built one of the most recognizable brands in real estate.
Nike
During the 2008 financial crisis, Nike faced a challenging economic environment as consumer spending slowed. Instead of pulling back on marketing, Nike doubled down on its brand messaging. The company launched the 20th anniversary of the “Just Do It” campaign in the height of the recession. By emphasizing its brand identity and leveraging new digital marketing channels, Nike successfully grew its market share during the downturn.
5. Spend more on direct response marketing
Real estate agents love to brand their names and images. However, during a recession, customers are looking for a solution to their problem, not just a pretty face. Direct response marketing is designed to elicit a specific target audience’s immediate and measurable response.
Unlike traditional brand advertising, which focuses on building long-term brand awareness, direct response marketing gives a specific offer to a specific group of people to entice them to take action. Some examples of this include:
| Target Audience | Offer |
|---|---|
| First-time Buyers | “Move in for less than the first month’s rent and deposit!” (Using downpayment grants) |
| Investors | “Free list of “off-market” homes for less than $300,000” |
| High-equity Homeowners | “Cash offer for your home” |
| Downsizers | “Free list of ranch style homes under $450,000” |
| Must-sell Homeowners | “Guaranteed Sale” or “Sold in 90-days or I’ll buy it” |
Laser-target & nurture leads on autopilot with AI
While direct mail is a tried-and-true direct response strategy, in 2024, you can leverage artificial intelligence (AI) automation to laser-target the right lead with the right offer at the right time. Ylopo generates seller leads using robust MLS data, custom seller reports and cash offers and nurtures them for you using proprietary AI text and voice assistants.
6. Find untapped buyer pools
Like “Must-Sell” sellers who must sell during a recession, some buyer types are also in a “Must-Buy” or at least motivated to buy. The secret to success in attracting these types of buyers is to identify their pain points and find a solution for them.
Think about a renter that has outgrown their apartment. While living in an apartment in the city is great when you’re single, raising kids in an 800 square-foot apartment can be hell. In most cities, the rents have risen significantly over the past three years, and in many cases, you can find starter houses in the “burbs” or the edges of the city for a few hundred dollars more than what they were paying for rent.
Once you have identified the untapped buyer pool, place a hook in the water by showing them that they CAN own a home for just a few dollars more than they are paying in rent. Create a postcard of an example property showing the down payment, interest rate and most importantly, the payment they can have if they make the move. Mail this postcard to high-end apartment buildings where people already pay above-market rents.
This technique can serve two purposes: one, to generate motivated buyer leads. Two, as you will learn next, you can use it to promote your new home communities and deepen your relationships with local home builders.
7. Build relationships with home builders
For those of you who took the time to read the entire article (or at least scrolled to the bottom), I left the best technique for last. Despite their marketing and large presence, home builders are no different from any other “Must-sell” homeowner. Unlike some sellers, homebuilders rarely rent their properties. Therefore, they “Must Sell” them to survive the recession.
The untold truth is that, during recessionary times, many builders reduce costs by eliminating their on-site sales staff. They often interview a few agents to list and market their current inventory and even the homes they plan to build.
If you wish to be an agent, they will consider that you must begin by showing them your value and home sales skills. You can do this by helping them get some of their standing inventory sold. Offer to hold the properties open, market to motivated buyers, and show them your knowledge and experience by keeping them up to date with the new and resale properties that may be their competition.
Recession-proofing your real estate business: The full picture
If you want to be like Ryan Serhant or Nike and take advantage of a down market like I did and try using some of the strategies I’ve outlined in this article. They allowed me not only to survive but thrive during the great recession.
