With talks of a possible recession heating up, you can take measures now to ensure your company’s strength through future volatility.
wood cut out houses with dropping price line

Now that the average home price has returned to its pre-recession high—or even higher in some markets—there’s speculation that the U.S. may have reached “peak housing.” In other words, there may be nowhere for the market to go but down.

Of course, there’s no way to know that for sure until the next downturn hits. But no matter what the future holds, broker-owners can take certain steps to prepare their companies for a potentially volatile market. In order to be a strong competitor, rain or shine, keep these six tips in mind.

  1. Expand your brokerage during boom times. To insulate yourself from a potential market downturn, your company should diversify both its product line and its footprint of offices and sales associates. For instance, when Bend, Ore.-based Cascade Sotheby’s International Realty acquired its nearest competitor in the luxury market, John L. Scott Lincoln City, Cascade gained more market share on the Oregon Coast and added 12 top-performing agents to its team. By securing twice the market share of its nearest competitor, Cascade has taken a big step in creating a luxury market stronghold that could help keep them afloat during a downturn. You should also consider developing skills to represent developers and builders as a way to cope with future dips in inventory.
  2. Craft a compelling value proposition. As the market tightens, agents more closely scrutinize the commission splits with their brokers. To keep them from going to another brokerage with a different commission structure, you need to create a thoughtful value proposition and provide something your agents simply can’t find elsewhere. For example, you could provide access to educational opportunities agents wouldn’t otherwise have, offer extra guidance and support in marketing their listings, or facilitate partnerships with established local brands and networks.
  3. Look beyond recruiting. It’s vital to strategize so you end up with a diverse group of candidates who contribute unique experiences and viewpoints when they’re at work. That said, recruiting also requires that you focus on retention. Give new agents a chance to learn and grow with subsidized training opportunities and a robust, personalized mentorship program. When you help agents reach their full potential, they’re more likely to remain loyal.
  4. Explore where opportunities exist. Establish your market share with various data sources and analytics. Much of this data is available from the Census Bureau and the Bureau of Labor Statistics, but you can also look to industry associations that compile this information, as well as your local MLS. Once you know your market share, build a plan to enter new markets over time. You should always factor in future market conditions, but don’t project out past three years; accuracy declines steadily after that point. Where possible, plan expansions from existing locations to minimize brick-and-mortar costs.
  5. Maintain a growth-oriented mindset. When you put a cap on the earning potential of your agents, you stifle growth indirectly. Keep them motivated by structuring commission splits to give a large share to agents as they increase their transaction volumes. With some due diligence, you can ensure that your side of the split covers all your operating expenses, even during a sustained market downturn.
  6. Don’t compromise on company culture. A strong company culture is critical to a competitive position in the market. Agents do their best work when they’re happy. Working toward a shared goal is also important. To build your culture, identify the values most important to you and your team. Keep these values top of mind in every action you take and consider them when identifying potential hires. Over time, these values become an important part of your organization that pushes the team toward success.

It’s impossible to predict with certainty where the market will go next, but certain indicators suggest “peak housing” may be imminent. If this is the case, it’s vital to build long-term value that allows you to emerge on the other side of a downturn ready to regroup and expand. With the right preparation, you’ll make it through any real estate market.


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