In the 1999 Best Picture winner American Beauty, Annette Benning plays a high-strung suburban real estate agent struggling to make a sale and work her way into the higher echelons of the industry, always threatened by Buddy King (Peter Gallagher) – the king of the game in the local area. It’s safe to say the film hasn’t aged well, both due to star Kevin Spacey’s off-set transgressions and the broad satire, but Benning is excellent. She’s funny, always on the edge of a nervous breakdown, and despite being a nearly cartoonish portrayal of a real estate agent, her concerns and worries about self-confidence and her abilities still ring true.
The real estate industry is fraught with challenges, and they’ve been well-documented in dramatic films, from Jack Lemmon’s desperate salesman in Glengarry Glen Ross to the crooked dealer in Poltergeist. It’s a high-stress job. All the benefits such as setting your own schedule, working to help families find their dream home and the unlimited potential to earn money come with caveats. But with great risk can come great reward.
Here are some of the biggest challenges in real estate industry:
1. Rising Rates and The Economy
As you may have guessed, the economy is one of the biggest challenges in real estate industry. In today’s environment, the economy is shaky all over North America. America faces a looming recession, which will have ramifications in Canada.
Last year, the Counselors of Real Estate released a report that noted the possibility of a recession will have a serious effect on rates, worsening the affordability crisis and making shareholders nervous. Before the election next year, things only look like they will worsen. While some real estate agents may thrive in spite of the economy, many may expect unreliable incomes and will have to use commission advances to offset their real estate losses.
2. Political Uncertainty
The 2018 mid-term elections in the states shook up Washington in good and bad ways, but Trump – a former real estate mogul – seems deadset to make matters worse. In addition to his seemingly fly-by-night decision making which has stocks constantly rising and falling, his trade war with China and threats toward allied countries do nothing positive for the real estate industry. Canada, too, has their own concerns, and their own Trump, in the new Right led by Andrew Sheer and Doug Ford. Political strife and turmoil has not been so tumultutuous since the 1960s.
All that aside, unless you’re certain of their standing, it’s not a topic for discussion when you’re working.
3. Generational Change and Demographics
For the first time in 50 years, four very different generations are potential real estate customers: Boomers, Gen X, Gen Y and Millennials. Millennials appear to be the most uncertain, and the effects of their renting and buying habits haven’t been felt yet. Interestingly, younger generations appear to be marrying earlier and trying to secure a future – a drastic departure from the older generations that are often separated or divorced.
Immigration policy will also drastically alter the market, creating fewer homes or demand, depending on the area. This is one of the more unpredictable challenges in real estate industry, since the immigration levels may vary from year to year.
This is where you will need a little psychology in your background. Getting a read on a potential buyer – their desires, their fears – will help you convince them this is the right home for them. Remember that in these fraught political and economic times, your customers are going to often going to be full of anxiety. It is, after all, one of the biggest decisions they’ll ever make.
Having the crime rates, type of community, school ratings and other things that will concern a customer off the top of your head will not only put them at ease, but make them feel you are an expert.
Technology has changed, and will continue to change, how we buy things, from Blu Rays to homes. An agent will have to quickly adapt to the newest technology and use it to their advantage. At the very base level, this will at least involve mastering the likes of craigslist and kijiji, but there it can be much more complex than that. Some people – particularly the extremely wealthy – have been known to finance entire homes via the internet.
Mastering social media is going to important to market yourself to potential clients, and it’s best to learn yourself rather than hire out the advertising.
Understanding and selling the new technology to renters or buyers is also key. As demand grows for Smart Homes and connectivity, an agent should be knowledgable about the latest in tech to make a home more appealing.
The U.S. recently received a D+ in infrastructure from the American Society of Civil Engineers, and though politicians regularly work it in their stump speeches, little has been done to improve the rating. New housing developments are going to require better, stronger infrastructure. This includes basics like water, power and sewage systems. Public transit is also a factor.
The cost of water, especially after the disaster in Flint, Michigan, is only getting more expensive, making home ownership in some areas less attractive. Enviromental factors will often be tricky waters to navigate.
Commonly, people believe the commission a real estate agent receives goes right into their pocket. This, however, is a fallacy. Due to brokerage, MLS dues, operating and marketing expenses and taxes, an agent typically only makes approximately 30 per cent of the commission.