Above, from left, Mary Lee Blaylock, senior vice president, HomeServices of America, chairperson, BHHS California Properties; Scott Durkin, president & CEO, Douglas Elliman Real Estate; and Howard ‘Hoddy’ Hanna, chairman, Hanna Holdings, Inc., at RISMedia’s 2023 CEO & Leadership Exchange. (Photo by AJ Canaria)
Change is coming to the real estate industry whether you like it or not. That may seem foreboding to some, but it doesn’t have to be for those willing to meet it head-on.
In the face of the factors influencing the trajectory of the industry, Mary Lee Blaylock, SVP of HomeServices of America and chairperson of Berkshire Hathaway HomeServices California Properties, emphasized the importance of preparing agents for the future and staying updated in terms of emerging and current market trends.
“We have an obligation to be the experts in the areas that are not only here but that are coming,” she said to several hundred industry leaders and brokers in attendance at RISMedia’s 35th Annual CEO & Leadership Exchange at the historic Mayflower Hotel in Washington, D.C.
“We have to anticipate, and we have to understand exactly what we think is coming and try to create some training and some structure around that that makes sense for the agents,” Blaylock continued. “It’s one thing for us to talk about things in this room that are big picture, and we should, but how does it apply to the end user at that end state when they’re asked a question on the fly? We need to prepare them for the answer.”
Blaylock was joined by Scott Durkin, president and CEO of Douglas Elliman Real Estate and Hoddy Hanna, chairman of Howard Hanna Holdings, Inc., in a panel discussion titled “Under Siege: Is Real Estate as We Know It at Risk?” where they delved into the most prominent challenges and threats to the future of real estate and the housing market.
Legal battles challenging the agent commission structure have undoubtedly topped many leaders’ concerns. That has only grown stronger as the trial date of one of the most prominent lawsuits approaches in the coming weeks.
As such, the panelists agreed that training and preparing agents for any shifts that come down the pike when the dust settles is paramount to growing and thriving in the future.
That aligned heavily with comments made by James Dwiggins, CEO of NextHome, in an earlier session where he addressed the need to be proactive in preparing for the industry’s future evolution as the lawsuits make their way through trials.
Dwiggins pointed out that he and his company have already begun training agents for the fallout from the trials, which he urged others in attendance to do as well so they can avoid making “knee-jerk reactions” when the dust settles.
“We have to figure out how to develop better leaders in this industry,” he said. We have to get more professional in this business. We have to be stronger with how we talk about things. Tech aside, it comes down to people and figuring out how we can do a better job of articulating our value.”
Aside from legal troubles that threaten to upend the longstanding commission structure, the industry has also had to contend with a list of recent shifts and factors that have changed the trajectory of the housing market, including surging mortgage rates and the ripples that elevated inflation and the Federal Reserve’s response have sent throughout the market.
Housing supply shortages aren’t a novel issue for the industry. However, the problem has undoubtedly grown in recent years as many homeowners capitalized on the pandemic-era mortgage rate dips, subsequently locking themselves into their homes as rates have surged.
The growth of corporate builders and investor-owned properties in markets nationwide has added complexity to the situation, according to Hanna, who claimed that the supply of homes for sale has continued to wane under these factors and others over the past decade.
“In the last 10 years, homebuilding has come to an average of 800,000 single-family household starts a year,” he said. “Before 2008, we averaged about 1.2 million housing starts a year. That’s roughly 400,000 starts over a 10-year period. That’s 4 million houses that aren’t coming on the market every seven or eight years as resales.”
While many in the industry enjoyed the high times of the frenzied 2021 and 2022 housing market, the slowdown has forced many companies to make tough decisions in their business as the economics have taken a hit.
According to Durkin, that includes taking a more rigid stance on agent productivity as you assess your business. He indicated that Douglas Elliman implemented radical changes to adapt to shifting times, including removing non-producing agents.
“In a hot market like the last couple of years, you ignore the bottom quartile, but now it’s so important because (productive agents) are where you get those fees and get your margins a little higher,” he said. “The agents that produce are always watching as if they were the owners.”
Against the backdrop of a hybrid work trend—and debate—that has taken hold in several industries, Hanna admitted that the Pennsylvania-based company has downscaled and consolidated offices to adapt to the changing times that no longer require as much physical space as in the past.
“We found in the 1990s and the early 2000s, we had to have offices in each neighborhood,” Hanna says. “You may not have to do that anymore. It just doesn’t make any sense with the way the industry is going and where technology has taken us.”
Hanna also pointed out that the rise of remote work during the pandemic has forced many brokerages to reevaluate the need for brick-and-mortar office space.
“That has changed dramatically, but it was on a slide before the pandemic,” he adds. “People were not coming into the office as much because we have taken great steps in creating technology opportunities that you can really do a lot from home or your car.”
Aside from staying tuned into the emerging trends in the market, Blaylock emphasized the need for continuous recruitment and training agents.
“There’s a lot of factors that play into the world that we’re in right now,” said Blaylock. “If we stop the noise a little bit and just focus on what we do really well and double and triple and quadruple down on it, that’s what’s going to make or break how we end this year.”
Durkin echoed similar sentiments while also stressing the importance of maintaining relevance with existing and prospective agents. Toward that end, he suggested that leaders continue to embrace social media in their marketing efforts and urged attendees to stay on top of the latest platforms.
“The playbook has changed, as far as I’m concerned,” he said. “Double, triple, quadruple down on that and just get out there and be focused and use social media. If you’re running low on funds, social media is pretty much free, and you can post every 10 minutes if you want.”