Truth is, I’ve been working on a three-part series that is not complete. But the following questions from John just went to the front of the line.
These are odd times I’m in right now, and I’m not quite sure how to deal with it.
As of the past week, it looks like I’m now on a 10 appointment per week schedule. I am absolutely slammed. I’m behind on pricing 6 properties that I’m supposed to be done with already. I am left with no "on the business" time so all of my projects have been on halt for a couple weeks now, which is unsustainable if I want to keep growing and improving the company.
10 appointments per week was the point that I was hoping to bring on a listing specialist.
But the problem is, we are WAY down on sales. Right now, I’m having cash flow issues, but I expect/hope those to clear up soon. But looking at the big picture, if you’re looking over the last 4 months, our total market volume (and thus the total available income) is down 35% compared to the same period last year. My GCI is nearly identical (within just a couple hundred dollars) between those two time periods. Net profit is 5K better (3K profit compared to 2K loss).
As far as supply and demand, our market is around 12 months of inventory right now when looking over the last 4 months, compared to around 8 months of inventory for the majority of last year (until October).
Right now, I only have 2 open escrows out of 22 total listings, and zero buyer escrows. I’ve been firing sellers left and right and slashing prices, but I still haven’t been able to get back to the 30% of listings in escrow number.
By the way, I picked up a pretty big new lead source… I’m now the "listing partner" for a home builder with nine communities here. Whenever someone wants to build a house on a contingency, the only way that person can do it with refundable earnest money is to list with me. Otherwise, they have to put up 5-7K non-refundable. We went official with this last Wednesday, and I’ve already booked 5 appointments from them. The best part is, I get to charge the full 6% and don’t pay them any referral fees.
Also, the TV ads have been working nearly as well as the radio ads this month.
Any wisdom or suggestions for me?
The very first thing is to congratulate you on your excellent performance! I wish I had been this far along when I was only three years in the business. Giant plus points are TV & radio ads working well; enough market ethics presence to land a nice builder account; and nicely increased GCI, especially when compared to the market.
Negatives: you are colliding with several different problems, all at the same time. At 8 – 10 appointments per week you normally would bring on a listing specialist. To clarify, I have never "brought on a lister", nor would I ever do that. I always take my most trustworthy buyer specialist and promote them. This person must be a team player – not "a salesman". I would never "hire a lister", as it would be a sure-fire way to ruin what you have built. But that 10 listing appointments a week would have to be a sustainable level, not "I did it for a couple of weeks". You can stand on your head for a couple of weeks.
1. Most listings currently being taken are not selling
2. Zero buyer deals in escrow
3. Overall market has changed enough that "comps" are now meaningless
4. Not enough time left over to work on organizing for the future
The solution(s): First and most importantly, recognize you need to arrive at the level of knowing you don’t know when it comes to prices. Most of your current listings are overpriced. Continuing to do what you are doing and thereby getting even more listings isn’t going to solve anything. In fact, it will only make the problem worse. I went through this too as our inventory ballooned. Handling this issue directly solves problems 1 and 3 and opens the door to handling number 2, as well. It won’t directly fix number 4 but fixing number 4 isn’t your most urgent problem. Getting price reductions (as in 2, 3, 4 or 5 on the same listing – until it actually sells) and only taking listings where it has at least a real chance of selling and has a seller who is fully onboard.
The magic formula: If it is in MLS correctly, on lockbox and not sold it is overpriced. Again: If it is in MLS correctly, on lockbox and not sold it is overpriced. There are NO exceptions to this statement. As in none. Your statement, "I’ve been firing sellers left and right and slashing prices, but I still haven’t been able to get back to the 30% of listings in escrow number" is an excellent start in the right direction. But it is only the start. Otherwise, your profitability is about to nosedive. No buyer deals and 2 listings in escrow screams out, "I’VE GOT A QUALITY CONTROL ISSUE". Price. Just that one thing will "fix" this. No other action will. If you are too short on time – to cope – start screening the sellers much more carefully on the phone so you only physically go to see the truly ready, willing and able.
Get your open escrow board filling up then – once you have "motion" back in your listing inventory then put your main attention on getting more listings. Naturally, I fully expect (based on your past performance) that you will revert this scene so rapidly it will even surprise you.