Q&A MEMBERS CALL: How to Survive the Winter Months

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Transcript:

Greg has a question about finances during slow times. So I'll address this time of year and what to do about it. If you have Clarus Market Metrics, the company is Terradatum, if you have this available in your market, this is a must get. I'm going to show you how easy it is to use and the whole point of it.

Know Your Numbers

Basically, it pulls up a search diagram. I just chose residential and all MLS, but you can easily do it for zip code or narrow it down to a price point. I did a 2-year monthly, all residential, entire MLS search. You need to know your numbers for your market. In terms of properties that go under contract, you can see what the seasonality is in your market.

When I look at Under Contract Properties, this is my entire MLS. My peak month is May. So actually March through July and August are pretty tight - 2800 to 3200. But December is 1600. A client and I recently had a conversation about how he hasn't listed maybe 10% of what he normally lists this time of year. He doesn't have this data, but he's in a cold area where it's miserable, there's snow on the ground, and people don't want to go out. There, I could see the whole spring market being way less of a self fulfilling prophecy (rather than simply agents getting lazy around the holidays and not generating business).

So you need to know your numbers. I would suspect that in some of the really colder markets, you may only do 3% or 4% of your volume in each of these mid-winter months. If volume is just way down versus the peak months, you could definitely put something together. My client put together a "Sold in the Cold" website. He's got a video of him and he's doing all these cool things.

So it's two-fold. The reality is in some market that things just slow down, and it's not because you were slacking at prospects over the last 90 days. One of the conversations I had this morning was they shifted their approach on lead follow up and lead conversion. They gave it to all of their agents rather than just one of the partners on the team doing it. Now they have no closings for December, because their agents aren't doing the follow up and they're not nearly as good as the one person that was doing it.

That's different than the market just drying up because the cold is upon you. So I love the "Sold in the Cold" website, I don't think he needs to stop it. It's super clever and unique, but just know whether it's the right story for the sellers. So I would know what the truth is and then come at it from two points.

Matching Gross Margin to Expenses

Maybe have challenges for your team in those slower months, and sort of rally around how the market is slower and they'll have to work that much harder in August through October leading into November through January.

But part of it is to have a 90-day cost control. So with radio, scale it back to a third spend. But I think part of it is coming from cost and part of it is doing everything you can leading up to those months.

So Greg asks a specific question about paying yourself during the slower times. The reality is you have to live, so either it's going to come from cash reserves or you take less pay. Either way, when you've got a small team, you should treat it like business and personal, but it's generally all the same money. So maybe around those times, it's spending less personally and in your business to match your gross commission and your gross margin to your expenses. So you're not losing money during those months.