Basic guidelines for real estate principals in a post-Covid-19 world
The real estate sector has also caught onto the phrase that ‘everything is going to change’ and ‘the world will never be the same again’. However, every estate agent is asking: “How will it change? How will it be different?”
It is not so long ago that the threat of the online agent entered the world of the ‘traditional agent’ with a strong prediction from many experts that technology will take over the role of an estate agent. That myth, at least, has quickly come and gone.
The world will be living with the disease of Covid-19 for some time: until a vaccine is found, there will be a trust issue between people. This is the underlying ‘root cause’ that will cause people to change the way they move around and the way in which they communicate. Our everyday lives and indeed our very existence will change due to the inherent and real fear of the virus.
Each industry sector will have to undertake specific changes with reference to their customary methods, the type of operations, and the level of movement and interaction required to get the job done while ensuring the customer’s ultimate safety.
I believe recuperating economically from the Covid-19 disaster has less to do with an impressive strategy and the use of technology and much more to do with inner strength and the belief in a basic plan. Here are few guidelines to owners, principals and sales managers of real estate firms on how to formulate a simple basic plan in a post Covid-19 world.
5 Basic principles of management
Even preceding the Covid-19 crisis, it was good practice to focus on five basic principles of management: 1. Sales Management; 2. Human Resources; 3. Administration and Technology; 4. Finances; 5. Marketing. Post Covid-19 the changes which are required are incorporated within these principles.
1. Sales Management is one of the most crucial elements of a real estate business. The Covid-19 crisis is a good example of how quickly a real estate businesses can go into liquidation. If there are no sales (or rental income), the business simply can not survive beyond a certain period. The main objective of the principals, owners and sales managers is to create sales and/or rental income using a team of sales agents. In a healthy business all agents are actively involved in activities that will result in sales and/or rentals. The perfect business is one where all agents are fulfilling their role and are bringing income into the business on a monthly basis.
The role, as opposed to the objective, of the principals, owners and sales managers is completely different from the sales agents and as the business grows, this becomes more evident. Creating sales through people needs a master plan for creating success. Fulfilling this role ultimately requires the person to be a role model, a great coach, and having the ability to inspire champions. It is at this level where the change is going to take place in future. Principals, owners and sales managers will need a winning approach to inspire change within their sales teams.
The competition will come back stronger than ever; do not rely on the myth that they are all going to throw in the towel. Responsible owners, principals and sales managers will identify a need to curtail costs while still delivering exceptional service, and will need the buy-in of the sales agents in this regard. Sales agents that succeed deliver world class service and understand the science of a sale, completely. The principals/sales managers that will outperform their competitors in the post Covid-19 period are those who are natural teachers: inspiring leaders who personally understand the true mechanics of concluding a sale in a way that will make the customer return with every future property transaction.
2.Human Resource Management includes the process of finding compatible candidates to join the business. The employees are entrusted to look after the firm’s customers, ensuring that every customer will return time and time again. Good leaders can set standards for these employees, creating policy and procedures so that everyone in the company understands the rules in the marketing, financial and administration departments alike. Great leaders explain to new recruits the importance of their sales performance ensuring that each newcomer understands the challenge ahead of them. Each employee needs to understand that non-performance in terms of sales and service to customers will result in termination of their service.
The industry at large has become accustomed to low service standards; hence many customers may perceive the fees to be high. Where this is the case it appears to arise from sales agents receiving higher proportions of the said fee without requiring specific standards in place in terms of service and support.
The customers, especially in the upper quartile of the market, will still demand a much higher level of service and performance. Whether this is delivered by the traditional 50/50 company/agent fee split, or whether that split is 20/80 is irrelevant to the customers. Customer support is the only requirement of the buyer and the seller at the end of the day. If the post Covid-19 market requires a move away from traditional to a different fee model, all that has to happen is that the cost for customer support moves accordingly. The model offering may change and paying agents a higher portion of the said fee (to account for the fact that costs now need to be shared) without ensuring that the customer support is in place will end in disaster. Human resource management will be required to ensure that the correct model is individually applied to each sales agent. It is simply a fact that some agents fit into one model better than another. Real estate has never been a one size fits all industry.
3.Administration and Technology Management: Should you want to lead your sales team into victory, skilled administrative staff and good technology systems must be available and used by every individual member forming part of the team. Good administrative and technology systems are not in themselves income producers but these elements form part of the support structure and are the lubrication that makes the operations of the business flow smoothly. A lack of proper skills in the administration department results in a lack of service and a lack of proper use of technology will ultimately result in a failure information management, both leading to a reduction or failure in customer support.
The big change is going to be the use of technology by every member of the team. Many companies boast with exceptional technology, yet many of their employees cannot use technology or they do not want to share information with the rest of the team and refuse to use the technology available to them. Principals will have to change the mind-sets of their teams in this regard. Sophisticated technology systems have been around in South Africa for at least a decade with less than 50% of the industry really bothering to use it effectively. This time around, both principals and agents will be forced to utilize technology to be communicating better with a wider network; a network that do not want necessarily to be face to face with your representative unless it is the last step before the sale.
4.Financial Management is one of the key elements in a real estate business. Revenue is vanity, profit is sanity! How will the post Covid 19 world look in our financial departments? It will entail a careful balancing of reduced cash flows. Whilst you may have cut costs down to the bone during the lock-down, a new plan needs to be followed once the doors are open again. Financial planning and forecasting needs to take into account the requirements for marketing, enhancing of employee performance and overall support to the business.
Until a vaccine is available, the interior of a real estate office will change with required employee distancing, stringent measures to clean and maintain the office environment, and many employees operating remotely. Whilst there may be opportunities to take up less office space, the need for efficient bandwidth and increased data transfer abilities may add to the expenses.
What will change? The operations of companies will change as many functions can be done from a core centre. Businesses will re-evaluate their positions and the smaller office may close their premises, making use of a head office hub whilst their agents will work remotely. These kinds of operations have been around in other industries for many years.
Brands will come up with new ideas to assist their networks to cut costs. Embrace those changes as the entire world is moving in that direction.
5.Marketing Management: Everything that you have done before will come back, but with much more intensity. The content and message to your customer needs to be much better than it was before and much more focused. Customers in the luxury market follow brands because they love what those brands stand for in terms of service delivery and expertise.
Specialization and focus will be forced onto your business. The customer will value his/her time and want to get where he/she wants to be as efficiently as possible.
Differentiation in a market where everyone is stepping up in the game will be challenging.
What will change? To get the customers attention in a digital world needs specialization. Your message needs to be differentiated when compared to others. It needs to be new as your customer has changed. The audience are no longer the same and a pre-Covid 19 approach will no longer suffice in this ‘new world’.
In this ‘new world’, everything that was there before will return, but with much more intensity; operations will have to be at a higher level than before and much more specific.
It is a myth that the opposition will disappear; you cannot rely on those myths. Expect that the opposition will be much fiercer than before as everyone is currently busy sharpening their pencils. You will need to make smart changes; not desperate changes.
The economy will continue to decline in the first three months after returning to our offices. The effect of job losses in all sectors of the economy will drive us into a deepening recession. Sales teams need to sell with a different attitude – an attitude of serving.
If you failed to measure everything before, you will have to do so post-Covid-19. For example: Principals who install technology to measure what customers say about their service will be at the forefront going into the ‘new world’.
Technology will remain the source of spreading information, collecting data and bringing people together. Going into the post Covid-19 world will require from principals to make hard decisions especially when it comes to the use of technology and the sharing of data and information within offices.
Teamwork and understanding customers will be the essence of the ‘new world’. A basic plan to serve the customer, implemented by a dedicated team will go a long way.
About the author: Linda Erasmus is the CEO of Fine & Country Sub-Saharan Africa.