It was recently highlighted that in some markets there are more agents than deals being done. On a national level, there are around 5 million home sales per year, and 2 million Realtors. In some markets, there are more than double the number of home listings than agents. However, this doesn’t account for all of the real estate investors and for-sale-by-owners going it alone. So how does this impact the real estate market, viability of making money in real estate, and how can those serious about winning survive and thrive?
Fortunately there is a way for investors to beat out the competition, regardless of how much there is.
When you’ve got over 21,000 Realtors in a market with just 8,000 MLS home listings, it’s pretty obvious that the tank is a little crowded. Moreover, when there is a saturation, morals and practices may be compromised. According to Inman News, the amount of people invested in a market can drastically impact the ethics practiced. When desperate, individuals may consider short cuts, or at least engage in questionable marketing and sales tactics. While negligent practices will eventually catch up with those using them, it can be demoralizing to those going about it the right way. However, it doesn’t mean it can’t be done. In fact, the best way to invest in real estate is with everything on the table. Let people know you are the best option and that your priorities are in order. Your commitment to others will eventually win out over ill-begotten attempts.
Perhaps even more importantly, a massive percentage of Realtors drop out each year, with many failing to renew their real estate licenses. Essentially, this business has a cycle that is always replenished. There is big money to be made in real estate and you can partake in it if you outlast those around you. That is where a solid education comes in. Most just don’t understand what it involves until they have been in for a few months. The more you know, the easier things will be come. Ultimately, you can mitigate risk and increase returns with the proper education.
When the Data Doesn’t Matter
The volume of players in the U.S. real estate industry means that the top 3% to 7% are doing the vast majority of the business. In fact, there is a large population that fail to complete one deal in a given year. Good agents and active real estate investors, on the other hand, may do 10 plus transactions per month. However, as laid out above, a large number of local real estate licensees might not necessarily correlate to a lot of direct competition.
What does it take to Compete and Win in the Shark Tank?
The first step to success, and becoming one of the top producing real estate agents or investors in your market, is learning the best practices, habits and systems. What are others applying to excel, regardless of the competition in other markets? How have other small firms disrupted to gain market share in other industries? Look at Virgin, T-Mobile, and Amazon.
Learn your competition. Who are those that are really doing the business? Looking around at yard signs, bench ads, print magazine ads and billboards can provide some clues. Looking at who has the top Google rankings can also be helpful. Another option is looking up which real estate agents and investment firms have the most real estate listings. Note that not all listings on a Realtor website are their own. What are these companies and individuals doing that is really working, and what is resonating with consumers?
Armed with this information, find the holes. Where are consumers being let down? Think outside of the fish bowl. Look for ways to differentiate, without pricing yourself out of business. Once you have an idea, get out there and make things happen. Be a problem solver and deal maker versus a bystander.