New markets require new approaches and tactics. Experts and industry leaders take the stage at Inman Connect New York in January to help navigate the market shift — and prepare for the next one. Meet the moment and join us. Register here.
The defining narrative of the housing market over the past few months has been that of a slowdown in growth brought about by the steep rise in mortgage rates during the latter half of 2022.
Operating in a dramatically slowed-down market has presented agents with new challenges in growing their business as they contend with reduced revenues along with the additional costs and tasks necessary for running a business.
PLACE, the real estate technology and agent services company founded by brokers Chris Suarez and Ben Kinneyhas sought to meet those challenges, providing agents and teams with business infrastructure support by assisting with services, such as accounting, marketing and transaction and CRM technology products.
The company launched during 2020 and achieved unicorn status in 2021 after raising $100 million in a round of series A financing led by Goldman Sachs.
Suarez, who will speak on multiple panels during Inman Connect New York this month, including one panel on boosting agent productivity, talked with Inman ahead of his appearances to discuss the current market and his company’s plans for 2023.
Inman: What has the market looked like from your perspective these past few months?
Suarez: My perspective is a little bit different from maybe that of the typical real estate agent, because we are a platform that services agents all over the country so we get a good raw view of what’s happening across the US, whether it’s Northeast, Southeast, West or Southwest. And we’ve definitely seen that pullback in number of units showing up. Whether those are established teams or newer teams, established agents or new agents, we are typically seeing a 10 to 12 percent pullback in units on a monthly basis.
I think it feels greater than that because it comes at a time that cyclically and seasonally many of these people see pullbacks as well. So when we’re seeing that, which is normally maybe a 10, 15 percent pullback in units based on season, and then you throw in the fact that, well gosh, we might be 10 or 15 percent below where we normally would be, now you’ve just compounded it. And I think that is what we have to remember is causing a stronger, more emotional reaction to this pullback.
So that’s what we’re seeing today. I actually expect that to continue into 2023. I’m a believer much like many people are, and we have a partnership with Goldman, so we see a lot of that data show up a little early. And I just truly expect a 20 percent pullback in units sold and that’s probably light. We’re planning for a 20 to 30 percent pullback in units across our market.
With that in mind, what’s one way you think teams should prepare for a market like this lasting into 2023?
The first thing we did about six months ago was assume — at that point they were talking about 5, 10 percent — and so we got together with all our partnerships and all our team leaders and said ‘if the market pulls back 10 percent and we match that, if profit is a non-negotiable and that’s the purpose of business, then we better cut those expenses.’
So we have had a real strong push and initiative to reduce those expenses on every one of our businesses between 10 and 20 percent. And that had led us to, if we look at our businesses or teams that are down 15 percent year over year in units or GCI, not to match a 10 or 15 percent drop in profit, but they’ve been able to stay as profitable as they were when they were selling more units.
What’s one thing you see that prevents teams from growing their business?
It starts with that team leader getting stuck and viewing themselves always as a real estate agent and not as a business owner. At a certain point in time, those team owners have to realize that their value proposition has changed and it’s not so much ‘what do I give to a buyer’ or ‘what do I give to a seller’ but more so it becomes ‘what does a real estate agent need in order to support a buyer and seller, and what is my value proposition to the real estate agent?’
So we sort of have to divide up what does a brokerage do for agents and what really should a team do for agents, and I think that’s really what prevents us from growing.
What are your plans for 2023?
I think our foundation has already been built over the last couple of years. When we look at the four key things that a real estate business or a real estate company has to do: It has to make sure their productivity playbooks are best in class, they need to make sure their agent attraction and agent retention playbooks are best in class, they need to make sure their financial playbooks like their economic models or profit models are best in class and their operational playbooks are best in class. I think that’s been a key for us.
We never stop and say ‘we’ve gotten it, these are the best.’ We’ve continued to make edits and adjustments to our production playbooks, our recruiting and retention playbooks, our financial playbooks and operational playbooks, largely through a real focus on talent acquisition leading each one of those verticals in our business. I think you’ll see a renewed focus on that from us.
Email Ben Verde