In case you’ve had your head buried in the sand, the real estate industry is going through some serious challenges. And if anyone thinks that a bunch of pundits talking about it within the industry is going to have any effect on the changes in store, they’re gravely mistaken. The upheaval once the dust settles is going to be significant and lasting. In fact, some are estimating that 500,000 or more agents will entirely leave the industry in the next two years. Between that and the barren wasteland of inventory, this means billions of dollars evaporating. Monthly agent fees will be slashed. Commissions will be slashed. And the value of your business will be slashed…dramatically.
No small change in interest rates are going to “fix” this. No amount of new construction is going to make up for the inventory glut. No hopes and prayers of these lawsuits “going away” will have an impact. The settlements are just the beginning of the changes that are afoot.
If you’re a broker owner, do yourself a favor and check the math. What if you lose 30%-40% of your agents? What if transaction sides stay the same as they are now, or slip another 15% to 18%? What if your gross commissions drop by 30%? What does that do to your business?
If you’re like many others and your business is your life-long passion and one of your greatest assets, it’s time to look at your exit plan. If you don’t have one, it’s time to make one because the value of your company, unlike the value of most homes, is going down. To survive you’ll need to bulk up, shed costs and get extremely creative. Or, find the right company to merge with or be acquired by.
This isn’t doom and gloom for the sake of scaring anyone into doing something that’s bad for them. We’re seeing a very real and precipitous decline in company values every week. We’ve witnessed companies that went from “some value” to “no value whatsoever” in a matter of months. The entire reason we got into this business in the first place was to help owners maximize the value of their business as an asset. Sometimes that means knowing when to get out.
These are no normal “headwinds” simply brought on by economic challenges. Right now there is a perfect storm of epic proportions. Consolidation will continue at a feverish pace. Don’t be left with your head in the sand.
That being said, if you are at the very least interested in confidentially finding out how much your brokerage or team is worth, reach out to us. We would be glad to help. info@rema.global
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