Robert Sharoff is an architectural writer for The New York Times, Washington Post, Chicago Tribune, and Chicago Magazine. With photographer William Zbaren, he has produced books highlighting the architecture of Detroit and St. Louis. He is a former senior editor with REALTOR® Magazine.
New Company Diary: How Quickly Things Change
Personal crises and market shifts present tough challenges for our new business owner.
November 1, 2000
My father died last month in Ireland. He was 56. Heart trouble. He was a dreamer, like me, and totally fascinated by the United States and what I was doing in the real estate business. When I was a kid, he used to show me pictures of penthouses in Manhattan and ranches in Montana. He always felt that everything was bigger and better here. For years, we talked on the phone almost every day. He was my biggest supporter.
My first day back wasn’t good. I had clients calling and saying, “Hey, sorry about your father, but let’s get down to business.” I know the world goes on, but there's a void in my personal life that’s going to be there for a long time.
The big business news is that the market has slowed. It could be the election, the stock market, or the situation in the Middle East--or maybe it's all three--but showings are way down and prices are more realistic than they've been for a while. This may or may not be temporary. But people panic. I deal with a lot of developers, and they’re very panicky people.
The upshot, though, is that the days of buying a condominium on the North Side of Chicago for $300,000 and then flipping it for $400,000 six months later are over--at least for now.
All of this means our company’s going to have to work harder and be more pro-active in our approach to customers. Over the last seven years, the market has been so strong that it made even silly people look smart. You just couldn't lose.
Now, however, you really have to do your homework. Spend look-up time on comparables, and make a reasonable judgment about what's possible. You absolutely don’t want to promise more than you can deliver. My approach with sellers is to say upfront, “Look, if you want to carry it for four months, we can get you the price you're talking about. But if you want to sell it now, this is where you need to be.”
Everybody has to give a little. We did a deal the other day in which the seller--a builder--wanted $419,000, but the buyer stopped at $398,000. To get the deal done, I agreed to kick in $1,000. So did the other broker. That got us to $400,000, the magic number. We still made $10,000 and the builder still sold his unit. These days, you have to be willing to do that.
The interesting thing about this new market--for us, anyway--is that even though showings are down, the conversion rate has doubled. There are fewer buyers; the lookers have retreated for now. But the ones who are left really want to buy.
Another thing I've been stressing to my salespeople is the importance of staying in touch with clients. It's easy to call a client when you're coming off a week with a lot of showings and offers. It's a lot harder when the market is slow, and maybe there isn't much to report. But that's when clients need to hear from you. They want to know you're still on the job, still doing what you can no matter what the market is doing. I do it every Monday--sit down and call 40 or 50 people to tell them what's going on with their listing.
Finally, I had to fire someone last month--the first time that's happened. I'm not a big fan of firing, but it's something no business owner escapes. What happened was the guy made the mistake of thinking he wanted to be a developer in addition to being a salesperson. It stressed him out, and his sales really suffered. And then there were problems with his developer partners, who were also clients of mine. So I had my clients fighting with one of my employees. The lesson here, I think, is don't try to have two careers at once.
After all the changes in the last month, I feel like one is more than enough.
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